Internship Report on Foreign Exchange Operations at Janata Bank 2016 - Md Imran

Internship Report On Overall Performance Evaluation of Foreign Exchange Operations : A Study On Janata Bank Ltd

Supervised by Muhammad Shahidullah Tasfiq Assistant Professor, Department of Management Studies Jagannath University, Dhaka

Submitted By Md. Imran Roll : B-110202056 Section : A, Batch : 7th Session : 2011-2012 Department of Management Studies Jagannath University, Dhaka

Date of Submission: February 22, 2016

Letter of Transmittal Muhammad Shahidullah Tasfiq

Assistant Professor Department of Management Studies Jagannath University, Dhaka SUBJECT: Submission of Internship Report on Overall Performance Evaluation of Foreign Exchange Operations Dear Sir With due respect that, I am delighted to submit my Internship report on Overall Performance Evaluation of Foreign Exchange Operation of Janata Bank Ltd. which is prepared by me. This report gives me a vast experience and valuable knowledge of how to analyze Foreign Exchange Operations. This report has been giving me the practical implement of a theoretical knowledge. I had tried my best to collect information on this report. Finally, I would like to thank you for your valuable guidance and supportive in preparing this report. I would be grateful for any clarification when required. I will be highly obliged if you are kind enough to approve this report and provide your valuable judgment on it.

Sincerely your

______________

MD. Imran ID: B-110202056 Section : A Batch : 7th Department Of Management Studies Jagannath University, Dhaka

Student’s Declaration

I do hereby solemnly declare that the report entitled “Overall Performance Evaluation of Foreign Exchange Operations : A Study On Janata Bank Ltd” embodies the results of my own effort after completion of 45 days work at Janata Bank Ltd., perused under the supervisor of Mr. Muhammad Shahidullah Tasfiq, Assistant professor, Department of Management Studies, Jagannath University, Dhaka

I also confirm that, this report is only prepared for my academic requirement not for any other purpose. It has not been previously submitted to any other university/college/organization for an academic qualification/certificate/diploma or degree.

I further affirm that the work reported in this internship is original and no part has been previously submitted to any books or in any other universities.

__________________

MD. Imran ID: B-110202056 Section : A Batch : 7th Department Of Management Studies Jagannath University, Dhaka

CERTIFICATE OF SUPERVISOR

This is to certify that Md. Imran is

student of BBA program, ID No: B-110202056, has

successfully completed his “Internship Program” entitled “Overall Performance Evaluation of Foreign Exchange Operations : A Study On Janata Bank Ltd” under my supervision as a partial fulfillment of the award of BBA degree.

He has done his job according to my supervision and guidance. He has tried his best to do thi s successfully. I think this program will help him in the future to build up his finer career.

I wish his success and prosperity.

Signature

_________________

Muhammad Shahidullah Tasfiq Internship Supervisor Assistant Professor Department of Management Studies Jagannath University, Dhaka

Acknowledgement

At beginning I will start my report by showing respect and give praise to our almighty Allah who takes care about me to finished report successfully I give thanks to our honorable teacher Muhammad Shahidullah Tasfiq, Assistant professor, Department of Management Studies of Jagannath University who gives me such a attractive prospect to make a report on “Foreign Exchange operations” as well as helped me in every step to accomplish my report and try to provide me a faire practical knowledge as should as it possible. I also will not miser to respect JBL that give me chance to obtain practical knowledge through their internship program. I thank the branch manager Md. Anisur Rahman Khan who helped me to do internship in his branch and provide me a fear idea about practical knowledge of banking activities.

I will show

appreciation to other Bank employees whose taught me as well as suggested me to do work. Finally, I would like to thank authors of the books that I have taken help from, which had made my understanding clear during the making of the report.

i

Executive Summary Main objective of this report is to analyze the performance of foreign exchange operation of Jana ta Bank Ltd. This is descriptive in nature that has been administrated by collecting secondary data. Source of data were collected from annual report of JBL and reading material published by JBL et c. for analyzing data M.S Office and M.S Excel software were used. This report has been shown that trend of export import and remittance increases year by year but in 2011 and 2014 the growth rate of export and import got lowest due to world recession and inflationary pressure respectively. Remittance flows are greatly affected in 2012. Operating profit has str ong positive relation with export and import with significant level lower than .05remittance also has stron g positive relation but significant level higher than .05. In total national market share of export, impo rt and remittance, JBL contribute with the proportion at 14%, 8% and 7% for export, impor t and remittance respectively. Huge amount of remittance come from UAE where most of Banglad eshi expatriate lives and almost 4 overseas branches are situated. Although export, import, remittance increase gradually and their relationship with profitability h as strong positive relation JBL should concern that their export, import and remittance will not be fa ll down that’s why they can develop attractive financing packages such as Pre-Shipment and PostShipment Finance, Export Guarantee facility etc at a law rate for exporters and importers, JBL shou ld increase strong network with the Overseas Exchange Companies and Banks in different parts of t he world to ensure better remittance services for its customers and online Banking in every branc h to

promote Remittance, In case of L/C opening, Bank should provide low margin facility to cli ents. More Import and export item can be included JBL can provide Consulting facility by an exp

ert group of officials for foreign exchange, In case of payment of remittance, they should introdu ce debit card so that customer can withdraw money within a second at anywhere

ii

Table of Contents Part

Particulars Executive Summary

Part one

Introduction

Page No ii 1-4

1.0 Introduction

2

1.1 Origin of the Report

2

1.2 Significance of the Report

2

1.3 Objectives of the report

3

1.3.1 Broad objective

3

1.3.2 Specific Objectives

3

1.4 Methodology of The report

3

1.4.1 Research design

3

1.4.2 Sources of Data Collection

3

1.4.3 Data Collection Procedure

4

Part Two

Part Three

Part Four

1.4.4 Data Analysis and Reporting

4

1.5 Literature Review

5

1.6 Limitations

6

Organizational Profile 2.0 An Over View of Janata Bank LTD

8

2.1 Corporate Information

8

2.2Vission of Janata Bank

8

2.3 Mission of Janata Bank

8

2.4 Core Value of Janata Bank

9

2.5 Business Prospect of Janata Bank

9

2.6 Five Year Financial Performance

10

Foreign Exchange Operations

11-32

3.1 Import

13

3.2 Export

21

3.3 Remittance

27

Performance Analysis 4.0 Trend analysis

33-40 34

4.1.1 Import Finance:

34

4.1.2 Export Financing: 4.1.3 Foreign Remittance:

35 36

4.2 Income From Foreign Trade 4.2.1. Import Earning 4.2.2. Export Earning

Part Five

7-10

37 37 38

4.2.3 Remittance Earnings

39

4.2.4 Comparison of Import, Export and Remittance Earnings Findings, Conclusion & Recommendation 5.1 Findings

40 41-43 42

5.2 Conclosion

43

5.3 Recommendation

44

List of Abbreviation JBL

Janata Bank Limited

AD TK. L/C SWIFT ERC CCI&E UCP IRC KSA UAE USA T.M IMP For

Authorized Diller Taka Letter of Credit Society for world-wide Intra-Bank Financial Telecommunication Export Registration Form Chief Controller of Import & Export Uniform Customs & Practice Import Registration Certificate Kingdom Saudi Arabia United Arab Emirates United States of America Travel & Miscellaneous Import Form

m EXP For

Export Form

m Remt.

Remittance

Part One

Introduction

1.0 Introduction of The Report

1

1.0 Introduction of The Report For any business school student only curriculum activity is not enough for handling the real Busine ss situation, there for it is an opportunity for the students to know about the field of business through t he internship program. This report is prepared on the purpose to better understand about fo reign exchange operation in perspective of janata bank. Now a day’s international business has become ver y

common activities in business and day by day it got an integrated part for doing business. In this globalization era a business organization faces worldwide competition so they have to compete f or their existence and profitability that require them to engage in export and import activities and remittance for their financial transaction worldwide. Banks are the batter financial intermediaries t o complete those activities.

1.1 Originating of the Report Practical work is the best way to better understand about what is learned in theory, so after finishi ng my theoretical study I am sent for an internship program in janata bank and obtain pr actical knowledge and try to compare what I read and what I did in my internship program. For evaluati ng what I learned from internship program I prepare this report. I have always tried my best to reflect my experience of practical work in this report.

1.2 Significant of the Report This internship report is an important partial requirement of four years BBA graduation program. Th is is because knowledge and learning become perfect when it is associated with theory and pract ice. That is, student can train and prepare themselves for the job market. A poor country like Banglade sh has a huge number of unemployed educated graduates. As they have no practical experience been ab le to gain normal professional knowledge to establish networking, this is important in getting a job. While preparing this report, I had a great opportunity to have an in depth knowledge of all the forei gn exchange activities of JBL. Therefore, it is obvious that the significance of internship is cl early

justified as the crucial requirement of four years BBA graduation.

2

1.3 Objectives of the Report

Objective is an important thing for different purpose. Objective helps to go in a good way that relat es with the Report. Primary objective is to learn the real world experience because I have gat hered theoretical knowledge of BBA program and try to match real world experience with the theoretic al knowledge 1.3.1

Broad Objective

The broad objective of this report is to analyze the Performance Foreign exchange operation s of Janata Bank Ltd. (JBL) 1.3.2

Specific Objectives

Furthermore, the specific objectives of this report are:

To know the import, export financing procedure through JBL.



To analyze the trend of import and export financing through JBL.



To examine the division wise import and export financing and remittance.



To analyze the earnings from foreign exchange division of JBL.



To show the relationship export, import and foreign remittance with profitability of Ja

nata Bank Ltd. 

Assessment of the JBL’s import, Export, foreign Remittance with total national Im

port, Export, foreign Remittance

1.4 Methodology of the Report 1.4.1 Research design: This report is descriptive in nature which briefly reveals analyze the foreign exchange operation of Janata Bank Limited. It has been administered by collecting secondary data.

1.4.2. Sources of Data Collection: Mainly this report based on secondary sources of data. I also used some primary data to make the report more rich and informative 3

Primary Source: Take expert opinion from higher officials of the bank. Observation with during the internship program.

Secondary Sources: The secondary data sources are followingAnnual Report of JBL(2010-2014) Website of JBL Brochures of JBL Manuals and Publications of JBL

1.4.3 Data collection Procedure: I have collected Primary data through informal discussion from concerned officer of JBL. Secondar y data has been collected through different manuals, Annual report and other published papers.

1.4.4 Data Analysis and reporting:

For analysis and interpretation of data some statistical tools like MS-Word and MS-Excel software were used

4 1.5 Literature Review

Trade, also called goods exchange economy, is to transfer the ownership of goods from one person or entity to another by getting something in exchange from the buyer. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade. Literature Review has vital relevance with any research work due to literature review the possibility of repetition of study can be eliminated and another dimension can be selected for the study. The literature review helps researcher have been conducted to analyze the Foreign Exchange operation of Banks in Bangladesh and abroad. But there are very few research and literature available on the subject related to Foreign Exchange operation Banks. Bangladesh launched a deep and wide-ranging trade reform strategy in the early 1990s. This included substantial reduction and rationalization of tariffs, removal of quantitative restrictions, move from multiple to a unified exchange rate system, convertible current account and an overall outward orientation of trade policy regime. As a result, the country’s trade integration, measured by the trade-GDP ratio, rose from 18% in 1990 to 43% in 2008. The Bangkok Agreement was established in 1975. Member countries are Bangladesh, India, Sri Lanka, China, the Republic of Korea and Lao People’s Democratic Republic. The

Bangkok Agreement has recently been revised and renamed as the Asia Pacific Trade Agreement (APTA). The APTA has come into force from 1 July 2006. The APTA contains consolidated list of tariff concessions granted by member countries to each other. Under this agreement, China has provided 100% tariff concessions to 83 items of Bangladesh at 8-digit level and Republic of Korea has provided 100% tariff concessions to 139 items at 10-digit level. The BIMSTEC Framework Agreement was signed in June 1997 and Agreement on FTA concluded in February 2004. Member countries are Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan. Under the Agreement, in case of First Track products, nonLDCs will open up their markets for the products of LDCs in 1 year and LDCs will do the same for non-LDCs in 5 years. On the other hand, for Normal Track products, non-LDCs will open up their market for the products of LDCs in 3 years and the LDCs will follow 10 year schedule in order to open up their markets for the products of non-LDCs. Least Developed Member Countries of BIMSTEC FTA will enjoy special and differential treatment.

5 1.6 Limitation of The Study

Some limitations are faced to prepare this report. The limitations in preparing the report are described below. The main barrier of the study was insufficiency of information. Bank employee can’t provid e the information due to security and other corporate obligations. Due to time limitation many of the aspects could not be discussed in the present report. Learning all the functions within just 60 days is really tough. In many cases, up to date information was not published. Lack of experiences has acted as constraints in the way of meticulous exploration on the topic However, omitting the limitations, the report will help to understand the Foreign Exchange Operatio n of the Bank.

6

Part Two

Organizational Profile

7

2.0 An overview of Janata Bank Limited (JBL) Janata Bank Limited is the leading sector bank in Bangladesh offering full range of Per sonal, Corporate, International Trade, Foreign Exchange and Lease Finance. Janata Bank Limited is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailore d solutions for business needs, global reach in trade and commerce and high yield on investm ents, assuring Excellence in Banking Services.

2.1 Corporate Information: Name:

Janata Bank Limited

Registered Address:

Janata Bhaban, 110, Motijhil commercial area Dhaka-1000, Bangladesh

Legal Status:

Public Limited Company

Date of Incorporation as PLC:

May 21, 2007

Authorized Capital:

Tk. 30,000 million (as on 31.12.14)

Paid up Capital:

Tk. 19,140 million (as on 31.12.14)

No. of Branches:

Almost 904

2.2 Vision of Janata Bank Ltd: To become the effective largest commercial bank in Bangladesh to support socioeconomic development of the country and to be a leading bank in South Asia.

2.3 Mission of Janata Bank Ltd:

Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy delivering high quality financial products, Providing excellent customer service through an experienced management team and ensuring good corporate governance in every step of banking network.

2.4 Core Values of Janata Bank Limited:

8

Professionalism

Growth

Diversity

Core Value

Of JBL

Dignity

Accountability

Integrity

2.5 Business Prospect of the Bank

Maintaining required capital adequacy Business expansion in capital market Gradual expansion of branch network Progressive automation of the branches Real online banking software will be in function soon Expansion of ATM and credit card 9

2.6 Five Year Comparative Financial and Operational Performance: (TK in Millions)

Particular 2014 Authorized Capital 30000 Paid up Capital 19140

2010

2011

20000 5000 19140

2012 20000

8125

2013 20000 20000 11000

Deposits 516010

286567

361677

409464 478535

Loans and Advances 225732 257801 319773 Investment 57514 195312 198861 Import

183744

Export

118515

305340

285747

90906 108342 197285 176671

188283 144556

153758 153252 154079 Foreign Remittance 72285 52640 100089 103982 106677 Operating Profit 12037 12127 10683

15722

Revenue 316505

49515.63

30614 40635

Deposit Advance Ratio 78.77% 59.71%

14534 240711 74.52%

61.97%

Return on Investment 4.89% 9.39%

7.72%

8.04%

8.47%

Current Ratio 1.3 Income per Share 63.36 Net Profit 9608

71.21%

156525

1.10 98.16

1.06 60.45 55.82

4907 4445

1.03

1.2

148.00 16280

3831

No. of Branches

861

904

873

884

Source Annual report (2010-2014) Table1: Five year at a glance of JBL

900

10

Part Three

Foreign Exchange Operations

4.0 Foreign Exchange

11

3.0 Foreign Exchange nd

As per foreign exchange regulation act 1947 (Article 2 ) Foreign Exchange means Foreign Currenc y i.e. currencies other than Local Currency. It includes any instrument drawn, accepted, made or issue d all deposits, credits and balances payable in any foreign currency and any draft, traveler’s che que, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in a ny foreign currency. Many transactions with overseas countries are respects of import; export and foreign remittance com e under the preview of foreign exchange transactions. International trade demands a flow of goods fro m seller to buyer and payment from buyer to seller. In this case the bank plays a vital role to b ridge between the buyer and seller.

T h e

T T h h e e

E x p o r t e r

B I a nm p k o r t e r

In JBL AD Branch (s) there are a lot of talented officials are working continuously with great effo rt, skill and teamwork are performed in this department. The Bangladesh Bank and the respecte d in charge (s) of this section control them. In exercise of the power conferred by section 3 of the Foreign Exchange Regulation Act, 1947 Bangladesh Bank issues license to schedule Bank to deal with exchange. These banks are known as Authorized Dealers. Licenses are also issued by Bangladesh Bank to person or firms to exch ange foreign currency instruments such as T.C. Currency notes and coins. They are known as Authorize d Money changers.

12

3.0.1 Foreign Exchange Department: There are three kinds of foreign exchange transaction 1.

Import

2.

Export &

3.

Remittance.

3.1 Import Import trade in Bangladesh is controlled under the Import and Export control Act 1950. Authorize d Dealer Banks will import the goods into Bangladesh following the import policy, public notice, F. E. circular and other instructions from competent authorities from time to time. The whole i mport functions of the branch as far I have understood are discussed below:

3.1.1 Registration of importer In terms of the Importers, Exporters and Indenters (Registration) Order 1981, no person can impo rt

goods into Bangladesh unless he is registered with the Chief Controller of Import and Expo rt or exempted from the provisions of the said order. So the following documents are required t o be submitted to the licensing authority for registration as importers:

 Questionnaire form duly filled in and signed  Income tax registration certificate  Trade License from the Municipal or Local Authority  Bank certificate  Nationality certificate  Partnership Deed where applicable  Certificate of Registration with the Registrar of Joint Stock Companies,  Certificate from the Chamber of Commerce/Registered Trade Association  Ownership documents or rent receipts of the place of business  Any other documents required under the relevant import policy. 13

3.1.2 Import procedure: To import through Janata Bank Ltd a customer requires:

Performa Invoice is received by the L/C applicant L/C applicant submit it to the Bank Bank Issue L/C to the applicant favorin beneficiary L/C advised by advising Bank

Goods shipped by Beneficiary & submit the documents to negotiate bank Negotiate bank forward the documents to the L/C issuing bank. Documents checked by L/C issuing bank & inform it to L/C applicant If documents are ok, then L/C value is paid by L/C issuing bank to negotiate bank Goods release from the customs

Submission of Bill of Entry to L/C issuing Bank by the applicant Report to Bangladesh Bank

14

3.1.3 Import Policy Order: Under the import policy and export control act, 1950, the government of Bangladesh formulate s the import policy through Ministry of Commerce. As pe the import policy goods and commodities are divided into four groups 

List of items banned for import



List of items import of which is subject to certain condition



Foot Note: This list contains further conditions with regard to import of items on

banned list and conditional list 

Freely importable item: All items excepting those mentioned in the banned

list and conditional list are freely importable.

3.1.4 Steps in an Import Letter of Credit Transaction STEP 1: The Sales Contract The sales contract is the formal agreement between the buyer and seller specifying the terms o f sale that both parties have agreed upon. The contract should include: a description of the goods; the amount; the unit price; the terms of delivery; the time allowed for shipment and present ation of documents; the currency; and the method of payment

2 Application & Agreement: 1 Import L/C (Letter of Credit): A letter of credit is a conditional Bank undertaking of payment. In other words letters of credit is a letter from the importer Bankers to the exporter that the bills if drawn as per terms & cond itions complied with will be honored on presentation. As per UCPDC 500 a credit may be either: i)

Revocable.

ii)

Irrevocable.

The Credit, therefore, should clearly indicate whether it is revocable or irrevocable. In the absence or such indication the credit shall be deemed to be irrevocable.

15

2 Parties of Documentary Credit (LC): 1. Applicant/ Buyer/Importer 2. Issuing/Opening Bank 3. Advising Bank 4. Beneficiary/seller/Exporter 5. Negotiating Bank 6. Confirming Bank 7. Reimbursing/Paying Bank

Figure: Parties of Documentary Credit

3 Types of L/C: 

Commercial Letters of Credit

Commercial letters of credit are mainly used as a primary payment tool in international trade such as exporting and importing transactions. Majority of commercial letters of credit are issued subject to th e latest version of UCP (Uniform Customs and Practice for Documentary Credits). The ICC publishe s UCP, which are the set of rules that governs the commercial letters of credit procedures. 

Standby Letters of Credit

Commercial letters of credit are a means of payment to be utilized when the principal perfor m its duties. As an example, let us consider an exporter who ships the goods according to the sales contr act and apply to the nominated bank for the payment. If the nominated bank decides that the presentati on is conforming to the terms and conditions of the credit and the UCP rules then exporter will be pa id. This situation is just contrary in standby letters of credit. A payment is made to the beneficiary of a standby letter of credit when there is a breach of the principal's obligation. 

Revocable Letters of Credit

Revocable letters of credit give issuer the amendment or cancellation right of the credit any time without prior notice to the beneficiary. Since revocable letters of credit do not provide any protectio n to the beneficiary, they are not used frequently. In addition, UCP 600 has no reference to revocab le letters of credit. All credits issued subject to UCP 600 are irrevocable unless otherwise a greed between the parties. 

Irrevocable Letters of Credit

Irrevocable Letters of Credit cannot be amended or cancelled without the agreement of the c redit

parties. Unconfirmed irrevocable letters of credit cannot be modified without the written consent of 16 both the issuing bank and the beneficiary. Confirmed irrevocable letters of credit need also confirmin g bank's written consent in order any modification or cancellation to be effective. 

Local or Back to Back L/C:

Back -to -back L/C means one credit backs another. It is new credit in favor of another beneficiary. Sometimes beneficiary seller of a credit himself is unable to supply goods specified in the L/C a nd required to purchase from another supplier by opening second credit. Besides, the formalities and requirements for (L/C opening) the following formalities and documents are also required for openin g back-to-back L/C.

For opening L/C the client is to submit to the bank an application in the printed format of the designated bank. This is called L/C application form which is also an agreement between the import er and the bank. The form is to be stamped under stamp Act. in force in Bangladesh. The importer m ust submit the LCA & IMP and indent or contract. Purchase order/pro-forma invoice (duly accepted by the importer) along with L/C application. Application for opening of L/C duly signed by the importer, Membership certificate from Chamber of commerce or any other recognized business association, Valid IRC,TIN certificate, Three copies o f declaration stating that that income tax for previous year has been paid or income tax return has be en submitted, Trade license ,Vat registration certificate, Valid indent/pro forma invoice, Insurance cover note with money receipt, Any other permit if required as per instruction issued by CCI & E time to

time under present IPO. The L/C application must be completed/ filled in and signed by the authorize person of t he importer giving the following particulars: Full name and address of the supplier of beneficiary and importer, brief description of the goods, L/ C value for US$, etc. (CFR value) which must not exceed the LCA value, the unit price, quantity qual ity of the goods, Origin of the goods, port of loading and port of destination must be mentioned, Model of shipment (Sea, Air, Truck or Rail etc.),List date of shipment and negotiation time (must no t be beyond 30 days from the shipment date),Insurance cover note number and name or the comp any, Tenor of draft (1.e, sight/ issuance/ deferred etc, Mode of advising L/C (i.e. airmail/ full telex sho rt cable etc.),Opening of L/C under UCPDC publication No. 500/- ICC revision 1993, Wh ether shipment/ transshipment is allowed, Instruction to add confirmation if required, LCA Number, An y other relevant information and instruction if any must be mentioned in the L/C application form. A written application from opener is verified a relevant license/ LCA/ permit of the loan/ Barter mu st 17 remain valid up to that period the extension is sought. Increase of L/C amount may be done provid ed the LCA covers the increase in amount. L/C amount can be decreased provided the relevant Indent is amending accordingly and with the consent of beneficiary. Each of clauses of the L/C can be amend ed provided the parties involve the L/C consent to it procedure or preparation and dispatch. Amendme nt is to be typed in the Banks printed format. The copies of the amendment must be dispatched to all

concerned as done in dispatching the L/C. Amendment be kept in the L/C file chronologically da te wise.

Step 3: L/C contains mainly the following instruction: Issuing bank name and address, LC number, Date and place of Issue, Advising bank name and address, Beneficiary’s name and address, LC amount, Tenor and availability of credit, Last date of shipment, Number of days allowed for negotiation, Date of expiry and place of present ation, Description of goods, Port of shipment and port of delivery, Mode of transportation, Instruction f or negotiation bank, Reference of UCPDC, Signature of the authorized office of issuing bank

Step 4: Preparation of L/C Proposal: After checking all documents and other relative facts if the desk official gets satisfaction i n all respects he will prepare the LC proposal in pre-audit memo and place the same to higher authority for approval.

Step5: Transmission of LC: Then transmission of L/C is done through tasted telex, fax or SWIFT to advice the L/C to the advisi ng bank. The advising banks verify the authority of the L/C. JBL has corresponding relationshi p or arrangement throughout the world by which the L/C is advised. Actually the advising bank does n ot take any liability if otherwise not requested

Mail L/C the L/C which is mailed by Beneficiary Form of L/C SWIFT L/C the L/C which is automatically sent to

Beneficiary Figure: Types of L/C form

18

Step6: Advising: The advising bank forwards the letter of Credit to the beneficiary (seller) stating that no commitme nt is conveyed on its part. However, if the advising bank has been asked to confirm the letter of Cre dit and agrees to do so, it will incorporate a clause undertaking to honor the beneficiary’s drafts, provid ed the documents evidence that all terms and conditions of the letter of Credit have been complied with .

Step 7: Adding Confirmation The confirming bank does the confirmation. Confirming bank is a bank, which adds its confirmatio n to the credit and it is done at the request of the issuing bank. The confirming bank, May or May not advising usually, does not do it if there is not a prior arrangement with the issuing bank. By bei ng involved as a confirming agent, the advising bank undertakes to negotiate beneficiary’s bill witho ut recourse to him. Before confirming, it has to observe followingsL/C is issued and there is a request to add confirmation Review the L/C terms Provide reimbursement Drafts to be drawn on L/C opening bank Availability of credit facilities Line allocation from the business and ownership units in the importer’s country Confirm and advise L/C

Step8: Amendments of letter of credit

After issuance and advising of a L/C, it may be felt necessary to delete, add or alter some o f the clauses of the clauses of the credit. All these modification are communicated to the benefi ciary through the same advising bank of the credit. All these modifications are communicated t o the beneficiary through the same advising bank of the credit. Such modifications to a credit are termed as amendment to a letter of credit. There may be some of the conditions in a credit are not acceptable by the beneficiary. In that case, beneficiary contact applicant and request for amendment of the clauses. The issuing bank has to be done the followings – Obtain written application from the applicant of the credit duly singed and verified by bank. Confirm that, in case of increase of value, application for amendment is to be supported by revised indent/pro-forma invoice evidencing consent of the 19 beneficiary; Ensure, in case of extension of shipment period, that relative LCA is valid/ revalidated/ increased up to the period of proposed extension. Confirm that amendment of insurance cover note also be submitted in case of both credit amount and shipment period extension amendment. Maintain proper recoding and filing of amendments; Recover charges for amendment (if on account of applicant) and pass necessar y voucher. The following clause of L/C and increase/decrease of quality of goodsIncrease/ decrease value of L/C and Increase/decrease of quality of goods. Extension of shipment/negotiated period. Terms of delivery, i.e. FOB, CFR, CIF etc. Mode of shipment

Inspection clause Name and address of the supplier Name of the reimbursing Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term and condition of the credit make shipment of the goods as per L/C. After making the shipment of the goods in favor of the importer to exporter submit s the documents to the negotiating bank After receiving all document, the negotiating bank then check the documents against the credit. If th e documents are found in order, the bank will pay, accept, or negotiate to JBL. Branch and bank recei ve seal to be affixed on the forwarding schedule. The bill of exchange and transport documents must immediately be crossed to protect loss or fraudulent JBL checks the document the usual document ar e 

Invoice



Bill of lading



Non-negotiable copy of bill of lading



Certificate of origin



Packing list



Shipping Advice



Beneficiary certificate



Bill of Exchange



Pre-shipment inspection report 20



Shipment certificate.

Step 10: Settlement of letter of credit Settlement means fulfillment of issuing bank in regard to affecting payment subject to satisfying th e credit terms. Settlement may be done under three separate arrangements as stipulated I the credit. Step 11: Settlement by payment:

Here the seller presents the documents to the nominated bank and the bank scrutinizes the document s. If satisfied, the nominated bank makes payment to the beneficiary and in case, this bank is other th an the issuing bank, it sends the documents to the issuing bank and claim reimbursement a s par arrangement. Step12: Settlement by Acceptance: Settlement in this arrangement, the seller submits the documents evidencing the shipment to the accepting bank (nominated by the issuing bank for acceptance) accompanied by draft down on t he bank at the specified tenor. Step 13: Settlement by negotiation: This settlement procedure stars with the submission of documents by the seller to the negotia tion restricted by the issuing bank, only nominated bank can negotiate the documents. A factor scrutinizing that the documents meet the credit requirement, the bank may negotiate the document s and give value to the beneficiary. The negotiating bank then sends the documents to the issuing ban k. As usual, reimbursement will be obtained in the pre agreed manner. 3.2 Export Mainly Export L/C is the confirming from the Bank that, if the importer fails to make payment to t he exporter, then the bank will pay the exporter on behalf of the importer. The exporter can lien the L /C to bank and can get the payment before the L/C expire date.

3.2.1 Export L/C: L/C which is received to export/sale of goods from one country to another country or one place to another place within a country) is known as export L/C. it may be received from any bank of forei gn

F x lu G & k T p I f s m y P C / L c v A e h t   g in d a w r o b country, local bank, another branch of the same local bank or received by the export desk from t he

import desk of the same bank. Exporters are allowed to export the commodity under irrevocable lett er

of credit. Under this type of export, exporter will ship the goods as pr terms of the credit and will

get payment as per arrangement of the credit

21

Figure: 4 Export L/C process

3.2.2

Obtaining Export Registration Certificate (ERC):

No exporter is allowed to export any commodity for export from Bangladesh unless he is registere d

with Chief Controller of Imports and Exports (CCI & E) and holds valid Export Regist ration

Certificate (ERC). After applying to the CCI&E in the prescribed from along with the neces sary

papers, concerned offices of the Chief Controller of Imports and Exports issues ERC. Once registere d,

exporters are to make renewal of ERC every year.

3.2.3

Securing Export Order

After getting the ERC the exporter may proceed to secure the export order. He can do t his by contacting the buyers directly or through agent. In this purpose exporter can get help from Liai son office, Buyer’s local agent, Export promotion, Organization, Bangladesh mission abroad, Chamber o f commerce (local and foreign), Trade fair etc.

3.2.4 Obtaining EXP Form: After having the registration, the exporter applies to Janata Bank Limited with the trade license, ER C and the Certificate from the concerned Government Organization to get EXP. If the bank is satisfie d, an EXP is issued to the exporter.

3.2.5 Signing of the contract: After communicating with buyer the exporter has to get contracted for exporting exportable ite ms 22 from Bangladesh detailing commodity, quantity, price, shipment, insurance and mark, inspecti on, arbitration etc.

3.2.6 Receiving Letter of Credit After making contact with foreign buyers and reaching on agreed price and terms, conditions the exporters receive Letter of Credit.

3.2.7 Procuring the materials: After making the deal and on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise.

3.2.8 Endorsement on EXP: Before the exporter with the customs or postal authorities lodges the export forms, they should get all the copies endorsed by Janata Bank Limited. Before shipment, exporter submits EXP. form with

commercial invoice. Then Janata Bank’s respective officers check it properly, if satisfied, certifie th e EXP. Without EXP exporter cannot make shipment. The customer must declare all export goods o n the EXP issued by the authorized dealers

3.2.9 Disposal of Export procedure Original:

Customs

authority

reports

first

copy

of EXP

to Bangladesh Bank after shipme

nt of the goods. Duplicate: Negotiating bank reports the Duplicate to Bangladesh Bank in or after negotiation date bu t not later than 14 days from the date of shipment. Triplicate: On realization of export proceeds the same bank to the same authority reports Triplicate. Quadruplicate: Finally, the negotiating bank as their office copy retains Quadruplicate.

3.2.10 Shipment of goods: Exporter makes shipment according to the terms and condition of L/C. While shipment and after shipment the exporter should obtain or prepare the following documents: 

EXP Form



Photocopy of registration certificate



Photocopy of the contract



Photocopy of the L/C



23 Customs copy of ERF Form for shipment of jute goods and EPC Form for raw jute



Freight certificate from the bank in case of payment of the freight at the port of la

ding is involved 

Bill of Lading, Railway receipt, Postal receipt, Air way bill or Truck receipt



Packing list



Certificate of origin



Shipping instructions



Insurance policy.

3.2.11 Presentation of export documents for negotiation: After shipment, exporter submits the following documents to Janata bank Limited for negotiation.           

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

3.2.12 Examination Banks g the

deal

with

of Document: documents

only,

not

with commodity. As the negotiating bank is givin

value before repatriation of the export proceeds it is advisable to scrutinize

and examine

each and

every document with great care whether any discrepancy(s) is observed in the docum

ents. The bankers are to ascertain that the documents are strictly as per the terms of L/C Before negotiati on of the export bill. Bank officers assigned for examining the export documents may use a checklist f or their convenience.

3.2.13 Negotiation of export documents: Negotiation stands for payment of value to the exporter against the documents stipulated in the L\C . If documents are in order, Janata Bank Limited purchases (negotiates) the same on the bas is of 24 2banker- customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).If t he

bank is not satisfied with the documents submitted to Janata Bank Limited and gives the exp orter reasonable time to remove the discrepancies or sends the documents to L/C opening ban k for collection. This is known as Foreign Documentary Bill for Collection (FDBC).

3.2.14 Settlement of Local Bills: The settlement of local bills is done in the following ways, 

The customer submits the L/C to Janata Bank Limited along with the documents to negotiate



Janata Bank Limited officials scrutinize the documents to ensure the conformity with

the terms and conditions. 

The documents are then forwarded to the L/C opening bank.



The L/C issuing banks gives the acceptance and forwards an acceptance letter.



Payment is given to the customer on either by collection basis or by purchasing the

document.

3.2.15 Modes of Payment The most common methods of payment under a L/C are as follows:

Payment methods under L/C

Sight or Payment credit

Acceptance Credit

Deferred Payment Credit

Negotiation Credit

Figure: Modes of Payment 25 Sight or Payment credit When the credit stipulates that drafts (bill of exchange) should be drawn under it on DP terms involving payment to the beneficiary on presentation of documents, it is known as a “Sig ht or Payment Credit”. In this credit the issuing bank nominates a bank in the exporter’s country as the paying bank. If the paying bank accepts its nomination, its position is that of an agent of the issui ng bank. When the documents under the credit are presenter to it, it pays the beneficiary provided all t he terms and conditions of credit have been complied with. It gets reimbursement from the issuing ba nk for the amount paid. Deferred Payment Credit The term “Deferred” means postponed to a future period or date. When a credit does not require t he payment to the beneficiary immediately on presentation of the documents but after a specified perio d has elapsed, it is known as “Deferred Payment Credit”. According to this type of credit, the payme nt is hot made in full on the tender of documents but by installments at pre-determined future d ates. Deferred payment credit may be used where the beneficiary wishes to allow the importer time to p ay for the document. Acceptance Credit When under the terms of a letter of credit drafts are drawn on DA terms involving payment to the beneficiary on the maturity of the accepted Bill of Exchange drawn under it, the letter or cre dit is

referred to as an “Acceptance Credit” or a “Term Credit”. In this form of credit the beneficiary dra ws a draft for particular usance (e.g. 30, 60, 90 days sight or even longer), payable upon eith er the correspondent bank or the issuing bank. Negotiation Credit In a negotiation credit the documents are accompanied by a sight draft (bill of exchange). The bill of exchange may be drawn on the issuing bank or the importer or any other bank stipulated in the cre dit. The bank, which negotiates documents under the credit, purchases the bill of exchange and pays t he amount to the beneficiary who tenders the documents. The issuing bank reimburses the negotiatin g bank

26 3.3 Remittance Remittance means sending or transfer money or money-worth from one place to another The word Remittance originates from the word remit which means to transmit money/ fund. In ba nking terminology, the work remittance means transfer of fund one place to another. When money transferred from one country to another is called Foreign Remittance. Foreign remittance of JBL may be classified into: Inward Foreign Remittance Outward Foreign Remittance

Remittance

Inward Remittance

Outward Remittance

Figure: Types of Remittance of JBL

3.3.1 Instruments of Foreign Remittance Cash: Dollar, Pound, France Fr. Riyal or any other currency. T.C.: Travelers Cheque. F.D.D: Foreign Demand Draft. F.T.T: Foreign telephonic Transfer T.T: Telegraphic Transfer, Cable transfer or swift transfer. M.T: Mail Transfer. I.M.O: International Money Order. Cheque: By any person & institution. P.O: Payment Order D.D: Demand Draft O.B.C: Outward Bill Collection I.B.C: Inward Bill Collection 27

3.3.2 Inward Remittance: Inward Foreign Remittance Means Remittance received from foreign countries from abroad. In othe r words remittance coming into our country from other countries by the remitter by way of permissib le banking channel through freely convertible Foreign Currencies is called Inward Foreign Remittanc e i.e. payless point of view it is inward foreign remittance. On the other hand remitter’s point of view it is called outward Foreign Remittance. Two forms as prescribed by Bangladesh Bank are used for purchase of Foreign Currencies such as-

EXP Form: Remittances received against exports of goods from Bangladesh are don e by form EXP. Form C: Inward remittances equivalent to US$2000/- and above are done by For m” C”. However, declaration in Form C is not required in case of remittanc es by Bangladesh Nationals working abroad. Utmost care should be taken while purchasing Currency Notes, Travelers cheque, Demand Draft & similar Instrument for protecting the bank from probable loss as well as safety of the Bank officia ls concerned.

3.3.3 Mode of Inward Remittance of JBL: T.T. = Telegraphic transfer D.D. = Demand Draft I.M.O. = International Money Order M.T. = Mail Transfer T.C. = Travelers Cheque

3.3.4 Outward Remittance: The remittance when we sent to abroad is called outward remittance. The term “Outward remittance s” include not only remittance i.e. sale of foreign currency by TT. MT, Drafts, Traveler’s cheque but als o includes payment against imports into Bangladesh & Local currency credited to Non-resident Taka Accounts of Foreign Banks or Convertible Taka Account. Two forms are used for Outward Remittance of foreign Currency such as IMP Form: All outward remittance on account of Imports is done by form IMP. T.M. Form: For all other outward remittances form T.M. is used.

3.3.5 Mode of Outward Remittance: Outward remittance may be made by T.T, D.D, M.T, T.C etc payment of import bills are also

included as outward remittance.

3.3.6 Remittance Chain:

28

3.3.6.1 Step-1 (Remittance Sending Process): Remittance rush to the bank/exchange house nearest to their residence /work place. Fill in the application form (in the case first time remittance)/submit membership card. Go to tellers, deposit form and currency. FDD: Teller make FDD Hand over to the remittance for sending the same to the beneficiary Send to beneficiary’s bank branch through courier. FTT: Teller prepare FTT massages Send soft copy to their processing unit at head office. Deliver one copy of the massage to the remitter for remittance. Processing and Sending: Processing unit at head office compiles messages Sends to the drawee banks.

3.3.6.2 Step-2 (Remittance Receiving Process): FDDs: Drawee branch receive FDDs from beneficiary or through courier. Make payment of FDDs drawn on the branch Send FDDS for collection that are drawn on their banks/branches. Credit proceeds of FDDs upon collection. Send IBDAs to head office. FTTS: Processing unit at head office processes FTT massages Sends T.Ts to the branches. Branches make payment of own remittances. Issue and send payment order to the branches of other banks beneficiaries. Spot Cash payment: Branches receive secret number from the beneficiary Download remittance masseges from web application of concerned institution. Get an application form filled in by the beneficiary. Ensure identity of the beneficiary. Make cash payment to the beneficiary.

Send IBDAs to head office.

29

3.3.7 Remittance Product/Service of JBL: Foreign Remittance Foreign remittance section of Janata Bank Ltd. is an integral part of Foreign Exchange Departmen t. And this section of Foreign Exchange Department deals with 

Inward foreign remittance



Outward foreign remittance



Opening Foreign Currency Accounts.



Governing Wage Earner’s Bond.



Opening Student File etc.



Medical Purpose



Ravels Purpose

Inward Foreign Remittance: Normally, Inward Foreign Remittance comprises all incoming foreign currencies. Remittances issued by the correspondent banks situated in the foreign countries and thereby drawn on Janata Bank, a re considered to be its Inward Foreign Remittances. Followings are the Inward Foreign Remittances, 

FDD Payable



FTT Payable



TC Payable



Purchase of foreign currencies.

Outward foreign Remittances: Remittances issued by Janata Bank to their foreign correspondents to fulfill their customers’ needs ar e considered to be the Outward Foreign Remittances. It comprises the followings: 

FDD Issued



FTT Issued



TC Issued



Endorsement of foreign currencies in the passport.



Sale of foreign currencies.

Foreign Demand Draft (FDD) Issued: People used to send money abroad for various purposes. JBL issues most of the FDD for the purpo se of payment of the application fees to the foreign universities.

For the issuance of FDD; T/M Fo

rm has to be filled up duly. This form is filled up under the Foreign Exchange Regulation Act, 1947. T his 30 form contains 

The purpose of travel,



Name of the country where the applicant will go,



Name of the air or shipping company,



Passport number,



Signature, name & address of the applicant

Traveler’s Cheque (TC) Issued: JBL issues only American Express Traveler’s Cheque (TC). For TC, customer has to fill up T/M form. He has to fill up the purchase form also. For TC, JBL charges commission.

Procedure for issuing TC There are some requirements that are to be fulfilled by the Traveler’s Cheque purchaser. The requirements are: 1.

The client must be an account holder or proper reference from the bank is required

2.

The passport must be a valid one

3.

Air ticket has to be confirmed

4.

Passport holder must be present physically

Steps involved in issuing of TC: 1.

After verifying all these documents the customer is asked to fill up prescribed applic

ation form. 2.

In the application the customer states the amount he is willing to endorse and it is

to be verified that his required amount is within the stipulated.

3.

Then the customer pays cash or by debiting his account the Traveler’s Cheque is issued.

4.

Endorsement is given on the passport and on the ticket. Customer fills up the T/M Form.

5.

Purchased application form has to be filled up by the purchaser.

6.

Entry has to be given in the Foreign Currency Register and in the Traveler’s Cheque Regist

er.

Following Documents must be retained form the clients: 

Photocopy of passport



T/M form (Travel & Miscellaneous)



Others Copy of government order (in case of government employee)



Copy of invitation letter if issuance is against conference/training quota 31

Endorsement of Cash: Cash foreign currency can also be remitted through the cash endorsement in the passport. In case of endorsing cash in the passport, the requirements are similar to those of Traveler’s Cheque. But according to the foreign exchange Regulation Act, 1947 an individual cannot take more than $1500.00 in cash in a year. That’s why; the concerned officer checks the last voyage of the purchas er. If he/she made any voyage and if he/she purchased dollar at that time, then the officer will deduct t he amount and will give the rest to the purchaser. JBL cannot endorse more than $1500.00 as cash at a time. For more than $1500.00, the customer h as to purchase TC. For cash endorsement SEBL maintains a separate register. For giving cash forei gn currency, JBL charges Tk. 200.00 as service charge per passport.

Foreign TT Payable: Foreign remittance section also pays the claim of the foreign TT. After receiving TT payable, SEB L performs the following functions:

1.

Customer has to fill up a “C Form” if the amount exceeds $2000.00. “C Form” describes

the purpose of sending the TT. 2.

The dollar amount comes to the Head office of JBL through American Express, New York.

3.

JBL, branch sells the dollar to Head Office and collects the money in local currency.

Student File Opening: Student can endorse $200.00 at a time in his own name. But if the amount exceeds $200.00, then t he student has to open a student file. For opening a student file, the following documents are required: 

Preliminary application and information for admission.



Letter of approval by the university of the student.



A filled-in application form for foreign currency in abroad.



Transcript of Records” given for the last degree by the university.



Certificate given by the Board for S.S.C. / H.S.C. or equivalent examination.



A photocopy of I-20 form

32

Part Four

Performance Analysis of Foreign Exchange Operations

33

4.0 Trend analysis 4.1.1 Import Finance: Year Import Finance(in Million ) Growth

2010 129413

2011 118525

2012 183744

2013 197285

2014 188284

54%

-8%

55%

7%

-5%

Source: Annual Report of JBL (2010-2014) Table2: Total Import financing of JBL Graphical Presentation:

Import Financing (In Million) 250000 200000 150000 100000 50000 0 2010

2011

2012

2013

2014

Figure 5: Total Imports Financing of JBL

Import Growth (%) 60% 40% 20% 0% 2010 -20%

Column2 2011

2012

2013

2014

Figure 6: Imports Financing Growth Rate of JBL Interpretation: From the trend analysis it has seen that the amount of import financing though JB L has increased over the years except in2011 and 2014. The import financing negative growth in 20 11 and 2014 34

4.1.2 Export Financing Year Export Business(in million taka)

2010 85418

2011 88653

2012 118515

2013 153758

2014 156525

Growth

19%

4%

34%

30%

2%

Source: Annual Report of JBL (2010-2014)

Table 3: Total Export Financing of JBL Graphical Presentation

Export Financing (In Million) 200000 150000 100000 50000 0 2010

2011

2012

2013

2014

Figure 7: Total Exports Financing of JBL

Export Growth (%) 40% 30% 20%

Column2

10% 0% 2010

2011

2012

2013

2014

Figure: 8 Exports Financing Growth Rate of JBL

Interpretation: From the trend analysis it has seen that there is an increasing trend in amount of export financing of JBL over the years of analysis. The export financing has increased from TK 85418 (million) in 2010 to Tk 156525 (million) in 2014.But the export financing growth rate was fluctuating over the year. 35

4.1.3 Foreign Remittance

Year Remittanc e (in Million tk) Growth

2010 45924

2011 56190

2012 52640

2013 72285

2014 100089

25%

22%

-6%

37%

38%

Source: Annual Report of JBL (2010-2014) Graphical Presentation:

Remittance (In million) 150000 100000 50000 0 2010

2011

2012

2013

2014

Figure: 9 Foreign Remittance Performance of JBL

Remittance Growth (%) 50% 40% 30% 20%

Column2

10% 0% 2010 -10%

2011

2012

2013

2014

Figure: 10 Foreign Remittance Business Growth Rate

Interpretation: From the trend analysis it has seen that the Foreign Remittance of JBL was increasing year to year. Highest Remittance was found during the year in 2014 that was Tk 100089 million which was higher than previous years. The foreign remittance growth rate was high in 2014. 36 4.2 Income from Foreign Trade

4.2.1. Import Earning and Portion of rade Earnings: Year Total Earning from Foreign Trade Import Earning Portion of Import Earnings

2010

2011

2852.9

3417.69

1235.47 43%

Import earnings on Total Foreign T

2012

2013

2014

4035.1

5149.21

5835.13

1590.6

1995.77

2287.35

2515.49

47%

49%

44%

43%

Source: Annual Report of JBL (2010-2014)

Table 5: Import Earning & Portion of Import Income on Total Foreign Trade Graphical Presentation:

Import Earnings 3000 2500 2000 1500 1000 500 0 2010

2011

2012

2013

2014

Figure 11: Earning from Import of JBL

Interpretation: From the trend analysis it has seen that the earning from import was gradually increasing while the highest earning from import of JBL obtained in the year 2014. Every year performs better than previous year.

37

4.2.2. Export Earning & Portion of Export Income on Total Foreign Trade Earnings: Year Total Earnings from Foreign Trade Export Earning Portion of Export Earning

2010 2852.9

2011 3417.69

2012 4035.1

25013 5149.21

2014 5835.13

1050.6

1125.64

1543.36

1991.86

2139.3

38%

39%

37%

37%

33%

Source: Annual Report of JBL (2010-2014) Table: 6 Export Earning & Portion of Export Income on Total Foreign Income Graphical Presentation:

Export Earnings 2500 2000 1500 1000 500 0 2010

2011

2012

2013

2014

Figure 12: Earning from Export of JBL

Interpretation: From the trend analysis it has seen that the earning from export is in rising trend from 2010 to 2014. In 2014, export earnings were the highest. Export earnings performance is not awful.

38

4.2.3 Remittance Earnings and Portion of Remittance on Total Gain of Foreign Trade income :Year Total Earning from Foreign Trade Remittanc e Business Portion of Remittanc e

2010 2852.9

2011 3417.69

566.83

701.45

20%

21%

2012 4035.1

2013 5149.21

2014 5835.13

495.97

870.00

1180.34

12%

17%

20%

Source: Annual Report of JBL (2010-2014)

Table: 7 Remittance earnings & Portion of it on Foreign Trade Graphical Presentation:

Remittance Earings 1400 1200 1000 800 600 400 200 0 2010

2011

2012

2013

2014

Figure 13: Remittance on Foreign Trade Interpretation: From the trend analysis it has seen that the earning from remittance is in rising trend but in 2012 the earnings fall dawn to 495.97 million from its previous year and after that the trend rising again upward. In 2014, remittance earnings were the highest

39

4.2.4. Comparison of Import, Export and Remittance Earnings: Proportion of Export Income 39%

Proportion of Income 42%

Proportion of Remittance Income 20%

37%

43%

20%

33%

47%

21%

38%

49%

12%

39%

44%

17%

37%

43%

20% Source: Annul report of JBL

Table: 8 comparisons of Import, Export, Remittance earnings Graphical presentation:

Earning Parcentage of Export Import & Remittance

60% 50% 40%

Propotion of Export Income Propotion of Import Income

30%

Propotion of Remittance Income

20% 10% 0% 1

2

3

4

5

6

Figure: 14 earning percentage of Import, Export, Remittance Interpretation: From the last five years analysis it has seen that JBL earnings from import financin g were highest, and bank earns also from export financing significantly and earnings from remittanc e section were fluctuating trend. 40

Part Five Findings, Conclusion & Recommendation

41 5.1 Findings The major objective of the report is to analyze the foreign exchange operation of JBL. The analysi s of foreign exchange operation of JBL reveals the following major findings. 

From the analysis It has seen that both import and export financing growth was low

est in 2011 because of global rescission and in 2014 the growth rate also shrink becaus e the inflationary pressure in FY 2014 started rising from previous year, and the remittance flo w greatly affected in 2012  Dhaka

Highest percentage of export and import executed by the client though JBL is in division as there have almost 43 corporate branches out of 68. The largest porti

on of remittance of JBL is executed in Chittagong because huge number of Bangladeshi expatria te from Chittagong division 

The largest share of remittance of JBL has been coming from UAE over the years as mos

t of the Bangladeshi immigrant lives in UAE as well as almost 4 overseas branches of JBL are situated in UAE. Other major remittance source countries are KSA, USA & Kuwait with contribution of 22.04%, 13.52% & 10.54% respectively.



The earning from import, export financing and foreign remittance has gradually increased.

As import volume is higher than export and remittance so proportion of import earning also larger than export and remittance 

Relationship of export and import has a strong positive relation with operating profit and

has a significant level lower then .05. Remittance has also strong positive relation with operatin g profit but significant level larger than .05 because of lower remittance volume.  ar in

Market share of export, Import, and Remittance are gradually increasing year by ye compare with the total national export, import, and remittance. It has seen that hi

ghest percentage of market share is captured by export is 14% compare to national export. Impo rt and remittance also have satisfactory market share to national import and remittance

42 5.2 Conclusion There are a number of nationalized and foreign banks operating their activities in Bangladesh. Amon g them Janata Bank Limited is one of the leading commercial bank. Janata Bank Ltd has introduced a new dimension in the field of innovative and benevolent banking in our country. The bank has successfully made a positive contribution to the economy of Banglades h. Its profit is gradually increasing. It plays a great role in International Trade etc. The Bank ensures quality services to the customers. For better growth and healthy economic positio n, it should introduce new and Import, Export finance especially for new investors.

I hope Janata Bank Ltd will do more work for socio-economic development besides their ban king business. To keep pace with ever-changing uncertain domestic business environment and face the challenges of revised global economic scenario, the bank should be more

pro-active and

responsive to introduce new marketing strategy to hold the strong position in home and abroad. For the future planning and the successful operation in its prime goal in this current compet itive environment I hope this report can provide a good guideline. I wish continuous success and healt hy business portfolio of Janata Bank Limited.

43 5.3 Recommendations:

After analysis of foreign exchange operation of JBL I would like to mak e some recommendation that may improve their export, import and foreign remittance in future.

The export and import financing of JBL has increased over the years.

JBL can de

velop attractive financing packages such as

Pre-Shipment and Post-Shipment Finance, Ex

port Guarantee facility etc at a law rate for exporters and importers to maintain and increase t he trend of its import and export business. JBL should increase strong network with the Overseas Exchange Companies and Banks in different parts of the world to ensure better remittance services for its customers and onli ne Banking in every branch to promote Remittance Highest portion of export, import executed by client through JBL is in Dhaka division and remittance in Chittagong division. Bank should concentrate more on other division also to increase its export, import and remittance client in this case they can increase numbe r of corporate branches in other division. In case of L/C opening, Bank should provide low margin facility to clients. More Import and export item can be included Interest could be provide at concession rate on export, and import finance to customers

JBL can provide Consulting facility by an expert group of officials for f oreign exchange In case of payment of remittance, they should introduce debit card so that customer can withdraw money within a second at anywhere. I believe these steps will be helpful to improve the performance of Janata Bank Limited an d the financial sector of Bangladesh.

44 Bibliography

Books: 

Research Methodology Methods and Technique (second Edition) by C.R Kothari.

 Foreign Exchange Regulation Act, 1947; Act No. VII of 1947  Business Statistics ( New Edition) by S.P Gupta, M.P Gupta Bangladesh Bank (1997), Guideline for Foreign Exchange Transactions, Vol-1, Dhaka

Annual Reports: 

Annual Report of JBL 2010-14

Articles: 

Foreign Exchange Manual, Janata bank Limited.



Bangladesh Bank’s Monthly major Economic Trends, Statistics table

Web Sites: 

http://janatabank-bd.com/



www.bangladesh-bank.org

 http://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG TradeMap.Org (For Import-Export Data)

45