Basic Information for Bank Intervew

Basic Knowledge for Bankers Md. Mahbubul Alam, EO

Background of Basel-IIWhat is BIS ?The Bank for International Settlements (BIS) is an international organization which fosters international monetary and financial co-operation and serves as a bank for central banks. The BIS fulfils this mandate by acting as: i) a forum to promote discussion and policy analysis among central banks and within the international financial community; ii) a centre for economic and monetary research; iii) a prime counterparty for central banks in their financial transactions agent or trustee in connection with international financial operations. The Head Office is in Basel, Switzerland, Established on 17 May 1930. The BIS strongly advises caution against fraudulent schemes.What is BASEL-I ?Basel Committee on Banking Supervision (BCBS) brought out the guidelines for calculation of capital charge on Loans & Advances and Investments based on the Risk Weights applicable to the counter –party / borrower- constituent.What is BASEL-II ?Basel –II is recommendatory framework for banking supervision, issued by the Basel Committee on Banking Supervision in June 2004. The objective of Basel-II is to bring about international convergence of capital measurement and standards in the banking system.What are three pillars?Pillar-1: Minimum Capital Requirements- Deals with the maintenance of regulatory capital calculated for three major components of risk that a bank faces: Credit Risk, Operational Risk and Market Risk.Pillar-2: Supervisory Review Process- Deals with regulatory response to the first pillar, giving regulators much improved tools over those available to them under Basel-I.Pillar-3: Market Discipline Requirements- The third pillar greatly increases the disclosures that the bank must make.

WHAT IS MONEY LAUNDERING?Money Laundering means –- Properties acquired or earned directly or indirectly through illegal means;Or, Illegal transfer, conversion, concealment of location of property, acquired or earned directly or indirectly, through legal or illegal means or providing assistance to such activities.STAGES OF MONEY LAUNDERINGPlacement – Illegal funds or assets are first brought into the financial system.Layering – Illegal funds or assets are moved, dispersed and distinguished to conceal their illegal originIntegration – Illegal funds or assets are entered into the economy appearing as normal business funds.

Credit Risk Grading (CRG): It is an effective tool based on pre-specified scale reflecting the credit risk for an exposure.CRG is mandatory from March’2006 according to BRPD Circular No.18 of December’2005

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Usage of CRG: Obligor level analysis Credit Selection & Pricing Monitoring & Internal MIS

History of CRG: LRA introduced in 1993 suffers from subjectivity Risk Grade Score Card introduced in 2003 is not comprehensive CRG introduced in 2005; simplified & user-friendly

Categories of CRG for commercial client:

Number Grading Score 1 Superior Fully cash secured, secured by government/International

Bank Guarantee2 Good 85+3 Acceptable 75-844 Marginal/Watch

list65-74

5 Special Mention 55-646 Substandard 45-547 Doubtful 35-448 Bad & Loss <35

A. Financial Risk (50%) : Probability of failure to meet obligation due to financial distress.1. Leverage: (15%)2. Liquidity: (15%)3. Profitability: (15%) 4. Coverage: (5%)

Debt-Equity Ratio: 15 for less than 0.26 & 0 for more than 2.75Current Ratio: 15 for greater than 2.74 & 0 for less than 0.70Operating Profit margin: 15 for greater than or equal to 25% & 0 for less than 1%.Interest Coverage Ratio: 5 for greater than or equal to 2 & 0 for less than 1.

B. Business/Industry Risk (18%) : Adverse Industrial situation /Unfavourable business condition.1. Size of Business (5%) [5 for ‘Sales 60 crore’ & 0 for ‘Sales less than 2.50 crore’ ]2. Age of Business (3%) [3 for >10 years & 0 for < 2 years]3. Business Outlook (3%) [3 for ‘favorable’ & 0 for ‘Cause for concern’ ]4. Industry Growth (3%) [3 for Strong & 0 for No Growth]5. Market Competition (2%) [2 for Dominant Player & 0 for Highly Competitive]6. Entry/Exit Barriers (2%) [ 2 for Difficult & 0 for Easy ]C. Management Risk (12%): Probability of default due to poor management ability. 1. Experience (5%) [5 for >10 years & 0 for no experience]2. Second Line/ Succession (4%) [4 for ready succession & 0 for succession in question]3. Team Work (3%) [3 for Very Good & 0 for Regular Conflict]D. Security Risk (10%) : Probability of default due to poor quality of security.1. Security Coverage (Primary)- 4% [4 for Fully pledged/substantially cash covered/Reg. Mortg & 0 for no security]2. Collateral Coverage (Property Location) – 4% [4 for Municipal/Prime Area & 0 for no collateral]3. Support (Guarantee)- 2% [2 for high networth & 0 for no guarantee]


E. Relationship Risk (10%): Risk areas in terms of Borrower-Lender relationship.1. Account Conduct (5%) [5 for >5 years faultless record & 0 for Irregular dealings in account]2. Utilization of Limit (2%) [2 for >60% & 0 for <40%]3. Compliance of Covenants/Conditions (2%) [2 for full compliance & 0 for No compliance]4. Personal Deposits (1%) [1 for significant personal deposit & 0 for No deposit]

Major risk components: 5

Total number of risk components: 20

Limitation of CRG: One Size does not Fit All.

CRG REVIEW

Credit Risk Grading for each borrower should be assigned at the inception of lending and

should be periodically updated. Frequencies of the review of the credit risk grading are

mentioned below;

Numbe

r

Risk Grading Short Review

frequency (at

least)

1 Superior SUP Annually 2 Good GD Annually3 Acceptable ACCPT Annually 4 Marginal/ MG/ Half yearly 5 Special Mention SM Quarterly 6 Sub-standard SS Quarterly7 Doubtful DF Quarterly 8 Bad & Loss BL Quarterly

Categories of CRG for NBFI:

Number Grading Score 1 Superior 85+2 Good 75-843 Acceptable 65-744 Marginal/Watch list 55-645 Special Mention 45-546 Substandard 35-447 Doubtful 25-348 Bad & Loss 24 & below

Principal Risk Components

Total Points

Principal Risk Components

Total Points


Quantitative Factor 60 Qualitative Factor 40Capital Adequacy 15 Management 10Asset Quality 15 Regular Environment &

Compliance10

Earnings Quality 15 Risk Management 5Liquidity & Capacity of External Fund Mobilization

10 Sensitivity to Market Risk

5

Size of the Company & Market Presence

5 Ownership (Share holding Pattern) & Corporate Governance

5

Accounting Quality 3Franchise Value 2

EEF (Equity & Entrepreneurship Fund )i. To iincrease investments in two promising industrial sectors viz .,

1. Software industry, and2. Food processing and agro-based industry (excluding the conventional sub-sectors such as rice mills/flour mills/fishing trawlers, cold storage for potato etc.). and also to encourage entrepreneurs in these sectors

ii. Eligibility for equity support from the EEF: 1. The project will have to be a new one and belong to either of the sectors viz., software industry or food processing and agro-based industry. 2. The sponsors/entrepreneurs applying for EEF support will have to be a private limited company registered under the Companies Act, 1994 and established old companies can also apply for EEF support by setting-up a subsidiary new private limited company. But in case of a software company registered on or after 01 January, 1997 will be treated as a new company. 3. The total project cost (including net working capital) of the proposed project will have to be of minimum 0.50 (half) crore. 4. The project shall have to be viable technically & financially. It should be environment-friendly. Importance shall be given on the appraisal of the entrepreneurship such as: educational qualifications in the relevant discipline, knowledge in the technology / process involved, skill in marketing of the products/services, proven track record in implementing and operating such project, track records in financial conduct specially with Banks/FI. In case of ratio analysis the project has to offer minimum IRR (Internal Rate of Return) of 15%, Return on equity (ROE) of 15%, Debt service coverage Ratio 1.50:1, Current ratio 1.50:1 and Fixed asset coverage ratio 1.50:1 and SWOT analysis should have to be acceptable. 5. The non-resident Bangladeshis will be given preference subject to the fulfillment of the terms & conditions mentioned in the above paragraphs. 6. Any defaulter (as defined by Bangladesh Bank) cannot apply for EEF. 7. Where a sponsor of a project needs term-loan and/or working capital loan from any Bank/FI and also equity support from the EEF, he has to submit application to the Bank/FI concerned. The Bank/FI will have to be satisfied that the project has fulfilled all the terms and conditions required. Where the sponsors/entrepreneurs need only equity support from EEF without any bank loan a Bank/FI will be nominated as representative of EEF for appraisal of the project by Bangladesh Bank (EEF). To nominate such Bank/FI, previous business relationship of entrepreneur with the Bank/FI will be considered. The Bank/FI may determine their project examination fee according to their existing rules. The sponsors/entrepreneurs will have to deposit 15% of their equity in the Bank/FI after the approval of the project by EEF Unit

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The amount of equity support from the EEF to the project, which needs finance from a bank/FI, will be of max. 49% of the total equity of the company provided that such percentage of equity support will not exceed 33.33% of the total cost of the project (including net working capital) of the company concerned. But if the company does not take any loan from bank/FI, EEF support will be of max. 49% of the total project cost from EEF. Projects whose total costs equal or exceed 20.00 crore have to take loan from Bank/FI on the existing debt-equity ratios.

iv. What to be done by the entrepreneurs?1. Apply for EEF through a Bank/FI (Bangladesh Bank will assist you in selecting Bank if no bank loan is sought for)2. Deposit 15% of your proposed equity to Bank/FI after the approval of the project by Bangladesh Bank3. Execute Investment Agreement with the Bank/FI after approval of the project4. Entrepreneurs will have to amend Memorandum & Articles of Association as per requirement of the conditions of Bangladesh Bank5. Issue shares in favor of GOB, EEF Unit, Bangladesh Bank before fund is disbursed.6. Buy-back the issued shares within eight years either at the face value or at the break-up value whichever is higher.

v. Steps to be taken by the Bank/FI :1. Bank/FI will appraise the project and if it seems acceptable to Bank/FI, they will send the project profile with their recommendations including relevant papers to Bangladesh Bank EEF unit.2. Bank/FI will preserve the issued share certificates received from the company on behalf of Bangladesh Bank.3. The Bank/FI shall nominate its representative, on behalf of the Bangladesh Bank (EEF unit) on the company's Board of Directors to attend the meetings as well as in the meetings of the company's shareholders.4. The Bank/FI will monitor the business of the company regularly and send quarterly report to EEF

EDF (Export Development Fund )Export Development fund available at Bangladesh Bank for export at a lower rate of interest. This fund administrated by the Department of Banking Operation and Development of Bangladesh Bank. BTB LC will be opened on deferred basis. Interest/additional amount the usance period shall not exceed LIBOR or the equivalent interest/additional in the currency of settlement.

After opening BTB LC, statement should be sent to Bangladesh Bank. Then Bangladesh Bank will provide fund for payment of BTB LC subject to availability of the fund with them. The fund allotted in favour of AD branch for a period of 180 days to 270 days.

On execution of export as well as realization of proceeds the same to be refunded to BB with additional amount plus interest as per rate quoted by BB. The rate of additional amount is LIBOR + 2.5%.

If the exporter fails to execution export, the AD will repay the same to Bangladesh Bank.

What is security?Security means things deposited as a guarantee of an undertaking/loan, to be forfeited in case of default.What is charge?


It is a legal transaction as a result of which the lender acquires certain rights over the property and the borrower is refrained from dealing in them.What is charge creation over securities?Charging a security means making it available as a cover for an advance.What is document?It means written record which serves as an evidence in respect of a transaction.What is documentation?Documentation is the process of execution of documents in right form and in lawful manner.Obtainment of document properly is called documentationWhy documentation?

1. To cover the risk2. Acceptable to court3. To identify the borrower

What is Pari-passu charge?Pari-passu charge over the assets of the borrower means that the lenders are entitled to have equal rights over the assets as per the agreed share.

Method of creating charge on security: (i) Pledge, (ii) Hypothecation, (iii) Mortgage, (iv) Lien,

(v) Assignment & (vi) Set-Off.

The method of charging used depends upon: The type of property to be charged

The nature of the advance

The degree of control over the debtor’s property required by the banker.

Pledge: Pledge is the bailment of goods as security for payment of a debt or performance of a promise.

Bailment: Bailment is the delivery of goods by one person to another for some purpose, under a contract the goods shall, when the purpose is accomplished, be returned or otherwise disposed of, according to the directions of the person delivering them.

Always based on contract.

Movable properties only (Money is excluded)

Delivery of goods is essential (Transfer of possession)

Ownership is not transferred but only special right of retaining the goods until payment of debt.

Bailment : Transfer of goods & produces or any properties for s specific purpose.[safe custody/repair/prepare & productions]

Goods & produces: ‡h †hB e¨emv K‡i †mB e¨emvi inventory n‡”Q goods & produces |

Hypothecation: Hypothecation is a charge against property for an amount of debt where neither ownership nor possession is passed to the creditor.

It is floating charge, it is rather precarious & Borrower binds himself to give possession of the hypothecated goods to the bank when called upon to do so.

Mortgage: Mortgage is transfer of interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing


or future debt or the performance of an engagement which may give rise to pecuniary liability.

Sub-mortgage: A mortgage of a mortgage. The original lender borrows money against the security of his mortgagor’s mortgage. The original mortgagee becomes the sub-mortgagor and the bank becomes the sub-mortgagee.

Types of Mortgage:

Simple

Conditional Sale

Usufructuary

English Anomalous

Lien: A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid.

Negative Lien: The banker sometimes asks a borrower to execute a letter declaring that his assets are free from encumbrance at the time advance is made. The borrower is also undertakes that the assets stated in the said letter shall not be encumbered or disposed of without the Bank’s permission in writing so long the advance continues. This undertaking is a Negative Lien.

Set-Off: A set-off is a right which enables a creditor to adjust wholly or partially a debt balance in the debtors account with any credit balance lying in his (debtors) favour.

Assignment: An assignment means a transfer of right of property or debt (existing or future) by one person to another person.

The most common types of assignment in banks are: Contract Money, Supply Bills & Life Insurance Policy

Assignment as security is not a good one due to following reasons: Breach of the terms of contract between assignor and his debtor may hamper the

interest of Banker. Value of the assignment does not depend only on the integrity and credit worthiness

of assignor but also on the assignor’s debtor. The assignor’s debtor can exercise his right of set-off; if the assignor has any debt to

him.

A lien differs in that while it is a creation of law under certain circumstances without any agreement whatsoever between the parties, all others originate as a result of agreement of the parties. Then, it is a defensive right, not enforceable at a court of law, while others are positive rights.

Hypothecation Pledge

Constructive delivery of possession Physical delivery of possession

A hypothecatee cannot sell goods without obtaining a decree of the court.

Possible to sell goods without obtaining a decree of the court after giving a reasonable notice to the pledgor.

Letter of arrangement: fwel¨‡Z terms & conditions cwieZ©b n‡j †mUv‡K support †`qv|Letter of disbursement: term finance-Gi †¶‡Î DP Note-‡K support Kiv|Letter of continuity: continuous finance-Gi †¶‡Î DP Note-‡K support Kiv|Letter of revival: Limitation Act-‡K face Kivi Rb¨|


Artha Rin Adalat Ain, 2003:An act to amend and consolidate the existing law relating recovery of loans of financial institutions.Section-12: Sale of certain mortgaged property by the financial institutions.

i. Subject to provision of sub-section 2 below, if a financial institution wants to sell any property of the defendant which have been mortgaged or kept lien or pledge when taking loan and plaintiff has legal rights to sell the same or the same has been placed under the disposal of the plaintiff, the plaintiff shall not file any suit in the Artha Rin Adalat until the same has not been sold or adjusted with the loan so granted to the defendant.

ii. Despite the provision of sub-section (i), if any financial institution file any suit in the Artha Rin Adalat without selling any mortgaged property though it was not under his passion and control, and the same shall be sold according to system mentioned earlier and the amount so received by selling should be adjusted against the debt and the same should immediately be brought to the notice of the Court.

iii. When any financial institution granted loan to a defendant under mortgage of immovable or hypothecated movable property and has been empowered to sell the aforesaid property by Power of Attorney at the time of mortgage, shall not file any suit in the Artha Rin Adalat until such property has been sold and has not been adjusted the sold amount so received against any debt or has failed to sell the property;

Section-28: Time limit for execution of decreei. Despite any other provisions being contained in the Limitation Act, 1908 and

the Code of Civil Procedure, 1908, if the decree-holder wants the execution of decree, subject to the provision of Section-29, shall file an execution suit within the maximum period of 180 days for execution.

ii. If the suit is filed for execution of decree after expiry of 180 days disregarding the provision as provided under sub-section (i), shall be barred by limitation and shall out right be rejected without being taken for any consideration.

iii. If any second suit or any other subsequent suit is filed for execution after one year of rejection or disposal, the self same suit shall be barred by limitation and summarily be rejected without being considered.

iv. If any new suit for execution of decree is filed after expiry of 6 (six) years of filing the first execution suit, the same shall be barred by limitation.

Section-29: Special provision relating to time limit If the Court has fixed when passing the decree for making payment of decreetal amount at a time or in installments, the time limit as shown at Section 28(i) shall be effective after expiry of the said time limit.Section-46: Special provisions and time limit for filing suit

i Anything otherwise contained in the Limitation Act, 1908 provisions of subject to the provision of sub- section (ii) above, a financial institution shall file a suit after expiry of next one year, if a borrower fails to pay back the loan according to the terms of agreement after starting payment schedule as follows:

a) Al least 10% amount of one years payable loan.b) At least 15% amount over the 2 years payable loan.c) Al least 25% amount over the payable 3 years loan.

ii. If the financial institution, in the mean time, have made re-schedule for payment of loan within aforesaid time limit at shown at sub-section (i), subject to the necessary mutatis mutandis shall be effective a new.


iii. In case the duration of total repayment schedule is less than three years as provided under the provision of sub-section (i) and the amount of recovery in the said period is less than 20%, the financial institution shall file the suit after expiry of one year of that repayment schedule according to the provision of sub-section (iv).

iv. Provided, the financial institution has rescheduled for making payment in the mean time, according to the provision of sub-section (iii), the provisions of the said sub-section- (iii) subject to mutatis mutandis shall be effective, a new.

v. If the suit is filed after expiry of the time limit as specified at sub-section (i) or (ii) as may be applicable, the court shall immediately communicate the matter to the Chief Executive of the concerned financial institution in writing and if the suit has not been filed for negligence of any officer of the said organization, the competent authority shall take disciplinary and penal action against the officer responsible for such lapse and the Govt. and the court shall be communicated within 90 days of being informed of the matter of the punishment so taken under the aforesaid sub-section.

vi. The provisions of this Section shall be effective after one year of coming this Act in force. Provided that, if any financial institution wants to implement the provisions of this sub-section before one year, shall be able to do this.

Section- 47: Limitation in imposing claimi. Anything contained in any other laws now in force or whatever may contain in

the agreement between the parties, no Artha Rin Adalat shall impose any claim upon any borrower shall not charge such interest which shall be equivalent to more than 200% (100+200=Tk.300) of the capital.

ii. The Court shall not entertain any such claim which shall be more than 200% of the capital as described under the provision of this sub-section (i).

iii. The provision of this section shall be effective after one year of enforcing the provisions of this Act. Provided that any financial institution is empowered to implement the provisions of this section before implementing the provisions of this Act.

Cash flow:The statement is designed to identify all activities related with cash transactions and shows the net effect on the cash balance during a period of time. In other words, by cash flow statement we show inflow and outflow of cash and thereby net position of cash during a certain period.In cash flow statement all the activities are categorized into 3 groups:-1. Operating Activities: Cash flow from Operating Activities are generally derived from the principal revenue producing activities of an enterprise. Therefore, they generally result from the transactions and other events that enter into the determination of net profit.2. Investing Activities: Cash flows represent the extent to which expenditures have been made for resources intend to generate future income and cash flows.3. Financing Activities: It is useful in predicting claims on future cash flows by providers of capital to the enterprise.Cash flow statement is prepared (basically operating activities) using two methods:-i) Direct Method: whereby major classes of gross cash receipts and gross cash payments are disclosed. ii) Indirect Method : whereby net profit or loss adjusted for the effect of


transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expenses associated with investing or financing cash flows.

A cash flow statement helps management in the area of financial planning and control. In other words, it can serve the following purposes:-

a) A cash flow statement gives management a better idea as to the nature of cash transactions and their impact on cash balance.

b) In case of surplus of cash, it helps management to take investment decisions.

c) In case of shortage of cash, it helps management to take financing decisions.

Operating Activities:Net Earning Plus: Depreciation & Write-offsPlus: Appropriation items i.e. Dividend, Transferred to General Reserves etc.Plus/Minus: Other Non-Operating Adjustments(Increase)/Decrease in Receivables(Increase)/Decrease in Marketable Securities(Increase)/Decrease in InventoryIncrease/(Decrease) in Accounts Payables (Trade)Increase/(Decrease) in Provision for Taxes(Increase)/Decrease in All other Current Asset (Except Cash & Bank Balance)Increase/(Decrease) in All other Current Liability

Net Cash Flow from Operating Activities

Investment Activities:(Increase)/Decrease in Land & Building(Increase)/Decrease in Plant & Machinery(Increase)/Decrease in Equipment(Increase)/Decrease in Furniture & Fittings(Increase)/Decrease in All other Current Asset

Net Cash Flow from Investment ActivitiesFinancing Activities:

Increase/(Decrease) in CapitalIncrease/(Decrease) in Long Term Loan, Debenture/BondIncrease/(Decrease) in Over Draft & Cash CreditShort Term Loans & Current Portion of Long Term LoansIncrease/(Decrease) in All other Non-Current LiabilityMinus Dividend Paid

Net Cash Flow from Financing ActivitiesNet Cash FlowPlus Opening Cash & Bank BalacneClosing Cash Balance

Project:Project is such activity to achieve some predetermined goal by using particular resources in a particular period.Aspects of a Project:(i) Management aspect, (ii) Marketing aspect, (iii) Technical aspect, (iv) Financial aspect & (v) Economical aspect


What is UCP?

The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600 (“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to which they may be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is subject to these rules. They are binding on all parties thereto unless expressly modified or excluded by the credit-UCP is the internationally recognized set of rules governing the use of letters of credit also known as documentary credits. UCP is written into virtually every letter of credit and accepted worldwide

Why do the UCP rules change?The UCP rules were first published in 1933, and revised by the ICC in 1951, 1962, 1974, 1983 and 1993. This latest revision of the rules is the first to take place since 1993, and represents more than three years of work by the International Chamber of Commerce (ICC). The ICC claims that UCP 600 will be ‘modern rules for a changing world’

Who will be affected by the changes?The changes from UCP 500 will have a considerable effect on all those involved in trading internationally who use letters of credit to arrange their payments. Exporters, importers, bankers, lawyers and transporters of goods will all need to refer to the new rules come July

What are the changes?The ICC summarises the changes as:

A leaner set of rules, with a reduction in the number of articles from 49 to 39 A new section of ‘definitions’, containing terms such as ‘honour’ and ‘negotiation’ The replacement of the phrase ‘reasonable time’ for acceptance or refusal of

documents A new provision concerning addresses of the beneficiary and the applicant An expanded discussion of ‘original documents’

Re-drafted transport articles aimed at resolving confusion over the identification of carriers and agents

What are the new definitions?The new definitions are an attempt to avoid the various interpretations made by individual banks and/or their employees to delay or prevent acceptance of documents as well as clarify some terms.The definitions include:Confirmation: means a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation.Honour:

to pay at sight if the credit is available by sight payment to incur a deferred payment undertaking and pay at maturity if the credit is available

by deferred payment to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if

the credit is available by acceptance

Negotiation: means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/ or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.


What is included in the expanded discussion of original documents?Article 17, entitled ‘Original Documents and Copies’ includes a new clause, which states that ‘at least one original of each document stipulated in the credit must be presented’.What other key changes are there?

Article # Title of Article Article # Title of ArticleArticle-1 Application of UCP Article-21 Non-Negotiable Sea WaybillArticle-2 Definitions Article-22 Charter Party Bill of LadingArticle-3 Interpretations Article-23 Air Transport DocumentArticle-4 Credits v. Contracts Article-24 Road, Rail or Inland

Waterway Transport Documents

Article-5 Documents v. Goods, Services or Performance

Article-25 Courier Receipt, Post Receipt or Certificate of Posting

Article-6 Availability, Expiry Date and Place for Presentation

Article-26 "On Deck", "Shipper's Load and Count", “Said by Shipper to Contain” and Charges Additional to Freight

Article-7 Issuing Bank Undertaking Article-27 Clean Transport DocumentArticle-8 Confirming Bank

UndertakingArticle-28 Insurance Document and

CoverageArticle-9 Advising of Credits and

AmendmentsArticle-29 Extension of Expiry Date or

Last Day for PresentationArticle-10 Amendments Article-30 Tolerance in Credit Amount,

Quantity and Unit PricesArticle-11 Teletransmitted and Pre-

Advised Credits and Amendments

Article-31 Partial Drawings or Shipments

Article-12 Nomination Article-32 Installment Drawings or Shipments

Article-13 Bank-to-Bank Reimbursement Arrangements

Article-33 Hours of Presentation

Article-14 Standard for Examination of Documents

Article-34 Disclaimer on Effectiveness of Documents

Article-15 Complying Presentation Article-35 Disclaimer on Transmission and Translation

Article-16 Discrepant Documents, Waiver and Notice

Article-36 Force Majeure

Article-17 Original Documents and Copies

Article-37 Disclaimer for Acts of an Instructed Party

Article-18 Commercial Invoice Article-38 Transferable CreditsArticle-19 Transport Document

Covering at Least Two Different Modes ofTransport

Article-39 Assignment of Proceeds

Article-20 Bill of LadingMany of the articles have simply been reworded or amended to make the meaning clearer. Some of the articles from UCP 500 have been condensed while some have had extra clauses added to clarify certain points.


One example is Article 7, entitled ‘Issuing Bank Undertaking’. This has a new clause (b), which states ‘An issuing bank is irrevocably bound to honour as of the time is issues the credit’.

In general, UCP600 is easier to read than UCP500. It is more direct and also addresses a number of issues that have been causing problems over the last few years.

Export and Import Policy 2006-09

Highest Priority Sector

Software & ICT products Agro products & processing Light engineering Shoes & Leather products Pharmaceuticals products Textiles products

Special Priority Sector

Finished Leather Frozen Food Electrical Goods Fresh Flower Jute Goods Herbal Medicine

Import Policy 2006-09

Import Procedure

Procurement of IRC Signing purchase contract Open LC an Irrevocable Advise LC Shipment of Goods Negotiation of the documents Payment and Settlement HS code no. Pre-inspection Country of origin Enlistment of Importers name, Address, TIN Use of Letter of Credit Exception of Use of Letter of Credit Origin of Goods and Shipment Antropo Trade Import for Re export No IRC required for import of Capital Machineries for New Industry Import at a Competitive Rate

Import Restricted Items

Harmful journals, books, audio, video etc. Reconditions Office equipment Disposable products. Products harmful for the religion Egg Pig and Pig related products.

Documents to be submitted to obtain IRC Income Tax Certificate Certificate from Chamber of Commerce Bank Solvency Certificate Copy of Trade License Any other documents required by CCI&E Asset Certificate Affidavit from 1st class Magistrate Partnership Deed,MOA and AOA


Export Policy 2006-09

Objective of Export Policy

Liberalization of Trade Encourage labour intensive industry Ensuring availability of raw materials to produce exportable goods Increasing productivity and diversification Use environmental friendly technology Assistance for developing backward linkage Disseminating information regarding rules and procedure of international trade.

List of Prohibited Goods for Export

Petroleum and Petroleum Products Jute seed, Wheat seed, Pulse, Onion Living animals and Skins, Bon etc. Fire Arms, ammunitions Radio Active Materials Archeological Objects Raw and wet blue leather Urea fertilizer All kinds of bamboo, wood, cane

Export Procedure

Procurement of ERC Registration Renewal Securing Order Signing the Contract Receiving Letter of Credit Procuring Materials Shipment of Goods Preparation of Export documents Submission of Documents fro Negotiation.

Acts: 6 (six) Core Risksvii. Negotiable Instrument Act 1881 Investment (Credit) Riskviii. Bank Company Act 1991 Foreign Exchange Riskix. Financial Institution Act 1993 Asset Liability/Balance Sheet

Managementx. Company Act 1994 Internal Control and Compliancexi. Bankruptcy Act 1997 Money Laundering xii. Anti Money Laundering

Act2002 Information Technology (IT) Risk

xiii. Artha Rin Adalat Ain 2003xiv. Transfer of Property Act 1882xv. Money Loan Court Act 2003xvi. Foreign Exchange

Regulation Act1947


Chain of documentsi. Original Title Deed.ii. Bia-Deed (if applicable).iii. C.S (1936-1946), S.A (1962) and R.S (Bangladesh) Parcha., Math Jarip/

Parch (Latest)iv. Mutation Parcha with D.C.R.[Rgv fv‡Mi iwk`; Gwm (j¨vÛ)-Gi ¯^v¶i

_v‡K]v. Up to date rent receipt.vi. Municipal Tax receipt (if applicable).vii. Non-Encumbrance Certificate with Govt. receipt.viii. Succession Certificate, if required

cP©vt Certified copy of volume book

1. eÜKx `wjj †iwR‡óªk‡bi Rb¨ m‡e©v”P wd 5,000.00 UvKv Ges me©wbgœ wd 200.00 UvKv wba©viY K‡i †`qv n‡q‡Q

(section 78 A(c) of Registration Act) A_©vr

wewb‡qvM mxgv 5.00 j¶ UvKv ch©š—

t †iwR‡óªkb wd me©wbgœ 200.00 UvKv; m‡e©v”P 500.00 UvKv

wewb‡qvM mxgv 5.00 j¶ UvKvi D‡×© 20.00 j¶ UvKv ch©š—


wewb‡qvM mxgv 20.00 j¶ UvKvi D‡×©


*Deed-Gi date ‡_‡K 120 w`‡bi g‡a¨ gU©‡MR Kiv hvq|2. ‡iwRwóªK…Z eÜKx `wjj e¨wZ‡i‡K †Kvb eÜK AvBbZt ˆea n‡e

bv| ZvQvov eÜKx †Kvb m¤úwË eÜK MÖnxZvi wjwLZ m¤§wZ e¨wZ‡i‡K weµq ev wØZxq ev‡ii gZ eÜK cÖ`vb Kiv hv‡e bv g‡g©I weavb Kiv n‡q‡Q (Section 53D of Transfer of Property Act)|

Dc‡iv³ ms‡kvabx AvBb `ywU 1jv RyjvB 2005Bs Zvwi‡L Kvh©Ki n‡e|

Stamp for Mortgagei. Up to Tk 10,00,000/- 1,500/-ii. Tk 10,00,001/- to Tk

50,00,000/-3,500/-

iii. Tk 50,00,001/- and above 3,500/- + 0.1% maximum 48,000/-

Stamp for other documentsi. Power of attorney (including

affidavit)250/-

ii. Deed of agreement 150/-


iii. Deed of redemption 150/-iv. Letter of Indemnity 150/-v. Letter of guarantee 150/-vi. Letter of undertaking 150/-vii. Letter of hypothecation 150/-viii. Letter of pledge 150/-ix. Letter of continuity 150/-x. Stock ownership declaration 150/-Stamp for other documentsxi. Stock delivery letter 150/-xii. Affidavit 50/-xiii. Certified copy 20/-xiv. D.P. (Demand Promissory-

single) Note20/-

xv. D.P. (Demand Promissory-joint) Note

20/-

xvi. Balance confirmation 4/-

In case of company charge shall be created with the Registrar of Joint Stock Companies & Firms (RJSC) within 21 days from the date of execution of the relative charge documents.

1st charge1st charge to be created within 21 days from the date of execution of documents.i. Fresh Form-XVIII

ii. Enhancement/Modification Form -XIX

iii. Redemption Form -XXVIIIExpenditureValue of Forms 5.00 Stamp 150.00Charge creation feei. 5,00,000.00 50.00

ii. 10,00,000.00 90.00

iii. 15,00,000.00 130.00

iv. 20,00,000.00 170.00

v. 25,00,000.00 210.00

vi. 30,00,000.00 250.00

vii. 35,00,000.00 290.00

viii. 40,00,000.00 330.00

ix. 45,00,000.00 370.00

x. 50,00,000.00 410.00

xi. Then Tk 20.00 for each 5.00 lac

xii. Redeemption fee Tk 20.00

For classification, entire Investments are divided as under: 1. Continuous 2. Demand


3. Term Upto 5 yearsAbove 5 years

4. Short Term Agricultural and Micro-Credit

Basis for Investment classification: Objective (overdue) criteria Qualitative Judgement

Determination of Investment classification status:

Nature of Investment StatusContinuous & Demand

Term Loan Short Term Agricultural and Micro-Credit

Up to 5 years Above 5 years

Below 3 month’s of overdue

Below 3 month’s of overdue installment



STD (Standard)

3 to below 6 month’s of overdue

3 to below 6 month’s of overdue installment



SMA (Special Mention Account) but UC





SS (Sub-Standard)





DF (Doubtful)

12 & above month’s of overdue

18 & above month’s of overdue installment



BL (Bad & Loss)

Charging of Profit and treatment thereagainst:

STD Profit to be charged in the Investment account and the same to be transferred to Income account.

SMAProfit to be charged in the Investment account and the same to be transferred to suspense account.

SSDFBL No profit to be charged in the Investment account.

Rate & Formula of Provisioning:

STD Outstanding X 1% (Other than Housing Finance and Consumer Financing).Outstanding X 2% (Housing Finance)Outstanding X 5% (Consumer Financing ).


SMA (Outstanding-Profit Suspense) X 5% SS (Outstanding-Profit Suspense-Eligible Securities) X 20% DF (Outstanding-Profit Suspense-Eligible Securities) X 50%BL (Outstanding-Profit Suspense-Eligible Securities) X 100%

0.50% of outstanding amount of Non-funded facility to be kept as provision for December’07.1% of outstanding amount of Non-funded facility to be kept as provision for each quarter

Securities to be considered as Eligible:

i. Against pledged & lined Deposit 100%ii. Against gold & gold ornaments 100%iii. Against pledged & licensed Government Bond 100%iv. Against guarantee of Government body or

Bangladesh Bank, Multilateral Development Banks (MDBs)

100%

v. Against market value of easily saleable pledged goods

50%

vi. Against market value of mortgaged land & buildings (excluding semi pucca building)

50%

Facility may be/must not be allowed

STD May be allowed if otherwise in order.SMA May be allowed if otherwise in order.

SS Must not be allowed.DF Must not be allowed.BL Must not be allowed.

Rate of down Payment against Re-scheduling:

i. Term Investment 1st time 15% of overdue or 10% of outstanding, which ever is lower.

2nd time 30% of overdue or 20% of outstanding, which ever is lower.

3rd time 50% of overdue or 30% of outstanding, which ever is lower.

ii. Continuous to Continuous Investment

1st time Up to Tk 1.00 crore

15%

Tk 1.00 crore to Tk 5.00 crore

10% but minimum Tk 15.00 lac.

Tk 5.00 crore & above

5% but minimum Tk 50.00 lac.

Subsequentre-scheduling

30% of outstanding,.

iii. 1st time 20% of outstanding.


Continuous to Term Investment

Subsequentre-scheduling

50% of overdue or 30% of outstanding, which ever is lower.

Write Off:

i. At any time in case of Bad & Loss account; but mandatory in case of 5 years elapsed as Bad & Loss account and is duly provisioned 100% thereagainst.

ii. If provision in less than 100%, the Bad & Loss account may be written off by debiting Income account of the year.

iii. All efforts to be continued for realization of written off investment. Legal action to be taken against the account to be written off, if not done earlier.

iv. Responsibilities to be transferred to a separate “Debt Collection Unit” of the Bank.

v. “External Firms” may be engaged for expediting the settlement of lodged cases or recovering the written off investment.

vi. The accounts of written off investment to be maintained in separate ledger and the accumulated as well as current year’s written off investment to be incorporated in the Balance Sheet of the Bank separately under “notes to the accounts”

vii. Though written off, reporting to be made to CIB, Bangladesh Bank as Defaulter.

viii. Permission to be taken from Bangladesh Bank, in case of Director’s related Investment (present/previous).

CIB Inquiry Forms: i. CIB-1A (For Individual/Institution) ii. CIB-2A (For owner information if borrower is Institution) along with

Undertaking Ka iii. CIB-3A (Information of group/related business concern)

CIB Reporting Forms: i. CIB-1 (Borrower Information-Borrowers only) ii. CIB-2 (Borrower Information-Owners only)iii. CIB-3 (Borrower Information-Group only)iv. CIB-4 (Credit Exposure Matrix)v. CIB-5 (Guarantor Information)

†Ljvcx FY MÖnxZv A_© †Kvb e¨w³ ev cÖwZôvb hvnvi wb‡Ri ev ¯^v_© mswkó cÖwZôv‡bi AbyK~‡j cÖ`Ë AMÖxg, FY ev Dnvi Ask ev Dnvi Dci AwR©Z my` evsjv‡`k e¨vsK KZ…©K RvixK…Z msÁv Abyhvqx †gqv‡`vËxY© nIqvi 6 gvm AwZevwnZ nBqv‡Q|

Z‡e, kZ© _v‡K †h, †Ljvcx FY MÖnxZv †Kvb cvewjK wjwg‡UW †Kv¤úvbxi cwiPvjK bv nB‡j A_ev D³ †Kv¤úvbx‡Z Zvnvi †kqv‡ii Ask 25% Gi AwaK bv nB‡j, D³ cvewjK wjwg‡UW †Kv¤úvbx ¯^v_© mswkó cÖwZôvb ewjqv MY¨ nB‡e bv|


Av‡iv kZ© _v‡K †h, cvewjK wjwg‡UW †Kv¤úvbx e¨ZxZ Ab¨ †Kvb cÖwZôv‡b FY MÖnxZvi †kqv‡ii Ask AbwaK 20% nB‡j D³ cÖwZôvb GB `dvi Aaxb ¯^v_© mswkó cÖwZôvb ewjqv MY¨ nB‡e bv|

Large Loan/Investment:

e„n`v¼ wewb‡qvM myweav cÖ`v‡bi ‡¶‡Î DbœZZi SyuwK e¨e¯’vcbv wbwðZKi‡Yi j‡¶¨ Ges wewb‡qv‡Mi ‡K›`ªxf~ZKiY ‡ivaK‡í evsjv‡`k e¨vsK weAviwcwW mvKz©jvi bs-05 ZvwiLt 09/04/2005Bs Ges ciewZ©‡Z mvK©yjvi bs-06 ZvwiL 26/04/2005Bs gvidZ GKK MÖvn‡Ki AbyK‚‡j m‡ev©”P cwigvb wewb‡qvM myweav cÖ`v‡bi ‡¶‡Î evsjv‡`k e¨vsK Master Circular Bmy¨ K‡i‡Q, hvi GKwU K‡i Kwc m`q AeMwZi Rb¨ mshy³ Kiv n‡jv| GB mvKz©jvi `ywUi gva¨‡g e„n`v¼ wewb‡qvM cÖ`v‡bi ‡¶‡Î weAviwcwW mvKz©jvi bs-8 ZvwiL 18 gvP© 2003 G ewY©Z eZ©gvb bxwZgvjv cwieZ©b K‡i GKK MÖvn‡Ki AbyK‚‡j ‡gvU wewb‡qvM myweavi m‡ev©”P mxgv e¨vs‡Ki ‡gvU g~ja‡bi 50% ‡_‡K Kwg‡q 35% G wba©viY Kiv n‡q‡Q| Av‡jvP¨ Master Circular-wU‡Z ewY©Z g~j cÖwZcv`¨ welq wbgœiƒct

1. ‡Kvb e¨w³ ev cÖwZôvb ev MÖ“cf~³ cÖwZôv‡bi AbyK‚‡j ‡Kvb e¨vsK ‡Kvb mgqB Zvi ‡gvU g~ja‡bi 35% Gi ‡ekx AwZµg Ki‡e bv| Z‡e kZ© _v‡K ‡h, m‡e©v”P cÖZ¨¶ (Funded facilities) wewb‡qvM myweav ‡Kvb µ‡gB ‡gvU g~ja‡bi 15% Gi ‡ekx AwZµg Ki‡e bv|

2. ‡Kvb e¨w³ ev cÖwZôvb ev MÖ“cf~³ cÖwZôv‡bi AbyK‚‡j c‡iv¶ (Non-Funded facilities) wewb‡qvM myweav ‡hgb Gjwm, M¨vivw›U BZ¨vw` cÖ`vb Kiv hv‡e Z‡e ‡Kvb µ‡gB cÖZ¨¶ I c‡iv¶ (Funded and Non-Funded facilities) wewb‡qvM myweav ‡Kvb mgqB e¨vs‡Ki ‡gvU g~ja‡bi 35% AwZµg Ki‡e bv|

Z‡e ißvbx Lv‡Zi ‡¶‡Î Master Circular-wU‡Z wKQy e¨wZµg Av‡Q| GB Lv‡Z wewb‡qv‡Mi ‡¶‡Î ‡Kvb GKK MÖvn‡Ki AbyK‚‡j ‡gvU wewb‡qvM myweavi m‡ev©”P cwigvb c~‡e©i b¨vq e¨vs‡Ki ‡gvU g~ja‡bi 50%-B ejer _vK‡e| Z‡e cÖZ¨¶ (Funded facilities) wewb‡qvM myweavi m‡ev©”P cwigvb 25% Gi cwie‡Z© 15% n‡e|

3. ‡Kvb e¨w³ ev cÖwZôvb ev MÖ“cf~³ ms¯’v‡K D³ e¨vs‡Ki ‡gvU g~ja‡bi 10% ev Z`yaŸ© cwigvb gÄyixK…Z wewb‡qvM myweav e„n`v¼ wewb‡qvM wnmv‡e MY¨ n‡e|

4. e¨vsK mg~n ¯^-¯^ e¨vs‡Ki ‡kªYxK…Z wewb‡qv‡Mi wfwË‡Z wbgœ ewY©Z mxgv Abyhvqx e„n`v¼ wewb‡qvM myweav gÄyi Ki‡Z cvi‡et

bxU ‡kªYxK…Z wewb‡qv‡Mi nvi

‡gvU wewb‡qvM I AwMÖ‡gi mv‡_ e„n`v¼ wewb‡qv‡Mi m‡ev©”P wba©vwiZ nvi

5% 56%5% Gi ‡ekx wKš‘ 10% ch©š—

52%


10% Gi ‡ekx wKš‘ 15% ch©š—

48%

15% Gi ‡ekx wKš‘ 20% ch©š—

44%

20% Gi ‡ekx 40%

5. †h mKj cvewjK wjwg‡UW †Kv¤úvbxi cvewjK Bm~¨R Gi cwigvb 50 kZvsk ev Z‡ZvwaK †m mKj cvewjK wjwg‡UW †Kv¤úvbx ÒMÖ“cÓ Gi AvIZv ewnf©~Z n‡e|

6. ‡h me wewb‡qvM myweavi wecix‡Z bM` A_© I bM`vqb‡hvM¨ RvgvbZ (Encashable security) i‡q‡Q ‡m me wewb‡qvM myweavi ‡¶‡Î iw¶Z bM` A_© I bM`vqb‡hvM¨ RvgvbZ h_vt GgwUwWAvi (GdwWAvi) ev` w`‡q wbiƒwcZ A_©B cÖK…wZ wewb‡qvM myweav wnmv‡e MY¨ n‡e|

7. ‡Kvb ‡Ljvcx wewb‡qvM MÖnxZvi AbyK‚‡j hv‡Z ‡Kvbiƒc wewb‡qvM myweav cÖ`vb Kiv bv nq ‡m welqwU wbwðZ Kivi j‡¶¨ e„n`v¼ wewb‡qvM gÄyi, bevqb ev cybtZdwmwjKi‡Yi c~‡e© evsjv‡`k e¨vs‡Ki ‡µwWU Bbdi‡gkb ey¨‡iv (CIB) ‡_‡K MÖvnK m¤ú‡K© nvjbvMv` (60 w`b c~‡e©i) wewb‡qvM Z_¨ msMÖn Kiv e¨vs‡Ki Rb¨ eva¨Zvg~jK n‡e|

8. e„n`v¼ wewb‡qvM myweav gÄyi ev bvevqb cÖ¯—ve we‡ePbvKv‡j, Ab¨v‡b¨i g‡a¨ Ab¨ e¨vsK I Avw_©K cÖwZôv‡bi mv‡_ `vq‡`bvi cwiw¯’wZ ch©v‡jvPbvi wfwË‡Z wewb‡qvM MÖnxZvi mvgwMÖK wewb‡qvM cwi‡kv‡ai mvg_© we‡ePbv Ki‡Z n‡e|

9. wewb‡qvM MÖnxZv Av‡e`bK…Z FY cwi‡kva Ki‡Z cvi‡e wKbv Zv wbwðZ nIqvi Rb¨ wewb‡qvM MÖnxZvi bM` cÖevn weeiYx (Cash Flow Statement), wbixw¶Z w¯’wZcÎ, Avq weeiYx I Ab¨vb¨ Avw_©K weeiYxmg~n e¨vsK ch©v‡jvPbv K‡i ‡`L‡e|

Required documents to be submitted by the branchi. Papers/information to be submitted by the client.ii. Branch’s Proposal Form.iii. Statement of account for the last 1 (one) year.iv. Valuation certificate of collateral in Bank’s standard format.v. Photocopy of the Financial Obligation.vi. Copy of opinion from Bank’s Legal Advisor (BLA).vii. CIB Inquiry Forms along with Angikarnama “Ka”viii. Certificate regarding compliance of documentation formalities.ix. Investment Risk Grading x. Assessment of working capital requirement.xi. Liability position of the client and its allied concern with our bank/other

bank/Financial Institutions.


Major Terms of a Sanction Letteri. Type of investment :ii. Amount :iii. Purpose :iv. Margin/Debt Equity

ratiov. Pricing :vi. Mode of

disbursement vii. Mode of repayment :viii. Validity :ix. Tenor :x. Security :

Documents completed by BLA: (i) Legal opinion, (ii) Deed of mortgage, (iii) Power of Attorney, (iv) Deed of Agreement, (v) Personal Guarantee, (vi) Undertaking, (vii) Declaration, (viii) Letter of satisfaction.

Type of Investment: (i) Bai-Murabaha, (ii) Bai-Muajjal, (iii) Musharaka, (iv) Mudaraba, (v) Leasing (Ijara)/Hire Purchase, (vi) Istisna’a and (vii) Bai-Salam.

Finance against Shares/Debentures:

Value of Shares/Debentures: Average value of last 6 months. Group – B 60%Maximum facility (Taka in lac)

100.00

Other than Member of Stock Exchange Limited

: Group – A 60%Group – B 60%Maximum facility (Taka in lac)

35.00

Precaution/control & securities

i. Pledge i.e. full control over the shares/debentures duly verified the genuineness.

ii. Irrevocable authority to transfer the shares/debentures in favour of 3rd party.

iii. Transfer Deed (Form-117)iv.Memorandum of deposit of shares/ debentures.v. Original license in favour of member issued by Securities &

Exchange Commission.

Contract of Indemnity Contract of Guarantee

1. In a contract of indemnity there are two parties to the contract, namely, the indemnifier (promisor) and the indemnified

1. In a contract of guarantee, there are three parties to the contract, namely, the debtor, the creditor and the guarantor.


(promisee).2. In case of an indemnity, the promisor

(indemnifier) is primarily and independently liable to the promisee (indemnified), if the loss occurs in the transaction.

2. In the case of guarantee, the liability of the principal debtor is primary, that of surety is secondary or collateral, which arises if the principal debtor makes a default in fulfilling his obligation or promise.

3. In the contract of indemnity the liability of the indemnifier arises only on the happening of a contingency.

3. In the case of guarantee, there is an existing debt or obligation, the performance of which is guaranteed by surety.

4. In the contract of indemnity, indemnity is given or, obligation is undertaken, without any request, expressed or implied, of the debtor.

4. In the case of guarantee, the surety undertakes his obligation at the request of third party (principal debtor).

5. In a contract of indemnity, the indemnifier cannot file a suit.

5. A guarantor can file a suit against the debtor, if he pays the debt or performs the obligation.

Required papers/documents for CNG Station:

1. Lease permission of Roads & Highways Department for the land of proposed CNG Station.

2. Copy of lease agreement duly signed by Roads & Highways department and the party on every page.

3. Permission letter of RPGCL for installation of the proposed CNG station.4. Lay out plan of the CNG station approved by RPGCL.5. Permission letter of Titas Gas Transmission & Distribution Co. Ltd for gas line

connection of the proposed CNG station at their letterhead pad.6. Lay out plan of the proposed CNG station approved by Roads & Highway

Department.7. Permission of Explosive Department for installation of the proposed CNG

station.8. Permission of Fire Service & Civil Defense.9. Site location map of the proposed CNG station and property offered as

collateral security.

e¨vs‡Ki MÖvnK wjwRs †Kv¤úvbx mg~‡ni m¤ú‡ì Dci cvwic¨vmy PvR© m„wói wbwg‡Ë AbvcwË cÖ`v‡bi Rb¨ eë¯’vcbv cwiPvjK‡K ¶gZv cÖ`vb Kiv nq|

cl©‡ì 14 Zg mfv|ZvwiLt 21.07.2002Bs

NBFI Gi †¶‡Î MÖvnK †gqv` c~wZ©i c~‡e© wewb‡qvM myweav cwi‡kva Ki‡j †h Penalty Charge Kivi kZ© wQ‡jv Zv cÖ‡qvRbxq †¶‡Î gIKzd Ki‡Z eë¯’vcbv KZ©„c¶‡K ¶gZv cÖ`vb Kiv nq|

wbe©vnx KwgwUi 259 Zg mfvZvwiLt 25.07.2007Bs

A/c:- Bay Leasing & Investment Ltd, Dhaka Main Branch

Liability position (as on 22/01/2007) of the client as under: of 25

Last saved by Mahbub

Facility Limit OutstandingBai-Muajjal(Term)-01 238.86 101.67Bai-Muajjal(Term)-01 500.00 420.52Bai-Muajjal(Term)-01 500.00 443.53

Total 1238.86 965.72

The Branch has recommended for issuance of NOC respecting creation of charges over the assets of the company on Pari passu sharing basis with other financial institutions. We have been apprised that the client desire to avail term investment facility of Tk.500.00lac from NCC Bank Ltd, Tk.500.00 lac from Uttara Bank Ltd & Tk.1000.00 lac from Dhaka Bank Ltd. As such they are in need of the said NOC.

If proposed said investment facility availed by the client; security value will be against our investment as follows:

Total Assetsx Our Bank’s

InvestmentTotal

Liability17533.90 lac

x 965.72 lac12923.23 lac

= 1310.26 lac

Mention goes hereby to the effect that the Board of Directors the bank in its 14 th

meeting held on 21.07.2002 has conferred discretionary power to hon’ble Managing Director for issuance of NOC for creation of Pari-passu charges of leasing companies.

Add Confirmation: Adding of Confirmation. By way of additional protection, the beneficiary of LC may ask for the additional confirmation to a LC by an internationally reputed bank located in beneficiary’s country. In such a case, the opening bank will request the advising bank to add its “confirmation” to the credit being opened. After adding confirmation, the negotiation becomes restricted to the bank who has added their confirmation to the credit.Definition of Accounting: Accounting is an information system that identifies records and communicates the economic events of an organization to interested users.Income Statement: Presents the revenues & expenses and resulting net income/net loss for a specified period of time.Balance Sheet: Reports the assets, liabilities and owner’s equity at a specific date.Cash Flow:Summarizes information about cash in flows & out flows for a specific period of time.Assets= Liabilities + Owner’s Equity

Assets: Are resources owned by a business.


Liabilities: Are creditorship claim on total assets.

Owner’s Equity: Is the ownership claim on total assets.

Depreciation: The allocation of the cost of an asset to expense over its useful life in a rational & systematic manner.Amortization: The allocation of the cost of an intangible asset to expense over its useful life in a systematic & rational manner. Intangible assets mean long-lived assets that do not possess physical substance. For example, patents (official recognition of right of invention), copy right, trade mark, goodwill etc.

Depletion: The allocation of the cost of natural resources (standing timber, underground deposits of oil, gas & minerals) to expense in a rational & systematic manner over the resources useful time. Unabsorbed Depreciation: Where profits are not enough to take care of / absorb the depreciation amount, the same is carried in the balance sheet in subsequent years. Such amount carried forward is called unabsorbed depreciation.The Accounting Cycle/Process: The accounting process is a series of activities that begins with a transaction and ends with the closing of the books. Because the process is repeated each reporting period, it is referred to as the accounting cycle and includes these major steps:

1. Identify the transaction2. Making entries in the appropriate journal.3. Post general journal entries to the ledger accounts.4. Prepare the trial balance.5. Prepare the financial statements (Income statement, Balance sheet, Statement of

retained earnings, cash flow statement)6. Analysis of the financial statements.


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