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Foreign Exchange

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A Research Report
On

Foreign Exchange Operations of
Jamuna Bank

JAMUNA BANK LIMITED

JAGANNATH UNIVERSITY, DHAKA

1

Report
On

:
Prepared To
A.

K. M. Moniruzzaman Ph. D
Professor
Department of Management
Studies
JAGANNATH
UNIVERSITY,
DHAKA.

Prepared By:
Name
ID
Sec
Session

:
Md. Zakir Hossain
: 05122353
: A
: 2005- 2006
Department of Management Studies
JAGANNATH UNIVERSITY, DHAKA
.
Date of Submission:
0th2 November
, 2011
2

Letter of Transmittal
To

A. K. M. Moniruzzaman Ph. D
Professor
Department of Management studies Jagannath
University Dhaka.
Subject: Submission of Internship Report.
Dear Sir,
It is my privilege to let you know that as partial fulfillment of the requirements for the
degree of Bachelor of Business Administration (BBA), I have completed my term paper
report in the Jamuna Bank Limited. I have to furnish a report based on my practical
experience. The report focuses mainly on the foreign exchange operations of Jamuna Bank
Limited.
It was stimulating opportunity and a valuable experience for me to the real business world.
I am grateful for providing me such an opportunity to gather practical experience of
working in a private commercial bank, like Jamuna Bank Limited.

Hope that you would be very pleased to accept my report and oblige me.

Sincerely Yours
Md. Zakir Hossain
ID – 05122353
Department of Management Studies Jagannath
University Dhaka.

3

ACKNOWLEDGEMENT

At first I want to express my gratitude to almighty Allah for giving me the strength,
ability and opportunity to complete the report within the schedule time successfully.
My sincere gratitude goes to my respected internship supervisor, Professor A. K.
M. Moniruzzaman Ph. D, report would not have been possible and such
endeavor really deserves compliment. Thanks to him for giving me the opportunity
to prepare this report which I think will enhance my skill and help the practical
application of my knowledge in future.
I received cordial cooperation from the officers and members of staffs of jamuna
Bank Ltd, Dilkusha / Principal branch, Dhaka and the teachers and staff of
Jagannath University of Dhaka. I want to express my cordial gratitude to them for
their cooperation without which it would not have been possible to complete the
report.
I am reallythankful to Mr. Kamal Uddin, SAVP and operation in charge, Jamuna
Bank Dilkusha Branch for giving me the excellent opportunity to do my practical
coordination in this branch. I would also like to thank to Mr. Shahed Morshed
Chowdhury, JAVP, Mr. A S.M Masouk, SEO, Mr. ABM Mazharul Hoque Sikder,
EO of Import Division, and Ms. Sapna Habib Srabanti, Officer, Customer Care for
giving me the excellent direction with their proper compassionate with me.

Executive Summary
4

A few years back also, banks are nothing but a medium whose only task is to collect money
from people who have excess of it and give it to those people who need it.But very recently
banks have diversified their operations into various sectors. Even, they have notification able
contribution in maintaining the global relation among various countries of the world. The JBL
is one of the newest banks of Bangladesh; in fact, it has been doing business just over 10
years in the country. However, in this short period of time, it has already made a significant
impact on the economic, financial, and social system of Bangladesh. Jamuna Bank Ltd has a
long and relishing heritage. Jamuna Bank Limited (JBL) started its journey in the financial
sector of the country as an investment company back in May 20, 1999. The company operated
up to 1999 with 9 branches and thereafter with the permission of the Central Bank converted
in a full-fledged schedule private commercial bank in June 2, 1993 with paid up capital of Tk.
39.00 crore to serve the nation from a broader platform. The Bank and its first Branch at the
busiest commercial hub of the country at 61, Dilkusha commercial Area,
Dhaka was opened. My Report titled “Foreign Exchange Practices in Private Banks: A Case
Study of Jamuna Bank Ltd.” is conducted to describe the section as well as the organization
where I was placed as an Intern. The first chapter gives a broad over view about the origin of
the report, objective of the report, methodology of preparing the report, data collection
procedure and its source, scope and limitations faced while preparing the report. After the first
part it has been focused in the second part of the report. The overview consists of the
definition and objective of the bank, historical background of the banking institutions and
banking operations in Bangladesh.
The report part started from the third chapter. In that chapter, describe the theoretical
framework of foreign exchange and other foreign exchange activities.The fourth chapter is
highlighted of Jamuna bank with SWOT analysis.The fifth chapter consists General foreign
exchange policy of the bank.The sixth chapter consists of performance evaluation of the bank
in 2009.The seventh & last chapter highlighted with recommendations, problems and
Conclusion.

5

Table of Contents
Chapter-1
Introduction
1.1
1.2
1.3
1.4
1.5

Statement of the research problem
Objectives of the Study
Methodology of the Study
Definition of terms used in the study
Limitation of the study

10
10
11
12-13
13

Chapter-2
Scenario of Foreign Exchange Operations in Bangladesh.
2.1

2.2

Illustrated the international trade in Bangladesh with the help
of a diagram
Scenario of Foreign Exchange Operations in Bangladesh.

15

16-17

Chapter-3
An Overview of Jamuna Bank LTD.
3.1

Background

19
6

3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.10.1
3.10.2
3.10.3

Corporate Information
Organization Structure
Branches information
Number of employees
Vision statement of the Bank
Mission statement of the Bank
Product scheme
Principal Activities
SWOT analysis of JBL

Identification of Strengths, Weaknesses, Opportunities and
Threats of the JBL
Draw conclusion
Prepare action plan

19-20
21
22
23
23
23
24
24
25
26-27
27
27

Chapter-4
Foreign Exchange: Theoretical Background &
Practical Experiences
4.1
4.2
4.3
4.4
4.5

Objectives of Jamuna Bank
Strategies of JBL

4.6

General Foreign exchange policy of JBL

Foreign exchange: its meaning and definition
Types of foreign exchange
Tools for foreign exchange

29
29
30
30-31
31-32
33-35

Chapter-5
Data Analysis
& Findings
5.1
5.2
5.3
5.4

Findings
Performance of the Bank
Key Financial Indicators
Identified problems for the JBL

37
38-40
41-46
47

Chapter-6
7

Conclusions and Recommendations
6.1
6.2

Recommendation for the JBL
Conclusion
Bibliography

49
50
51

Acronyms

52

List of Tables and Figures

SL
01
02
03
04
05
06
07
08
09
10
11
12
13

SL

List of Figure
Framework of the overall structure of the total work
Organization Structure of JBL
Branch Network
SWOT Analysis
The international trade can be illustrated by the following diagram
Types of Foreign Exchange
Profit scenario of JBL
Capital Tire-I
Capital Tire-II
Capital Tire-I & II
Deposit & Deposit Mix
Import Trade
Export Trade

List of Tables

Page
16
28

29
30
44
49
50
71
88
97
98
98
98

Page

01

Ways of classifying products and services

16

02
03
04
05

Import procedure Flow Chart
Export procedure Flow Chart
Highlights of Jamuna Bank
Capital adequacy ratio

34
43
67
68
8

06
07
08
09
10

Deposit & Deposit Mix
Import Position
Export Position
Foreign Remittance position
Acronyms

73
96
100
101
101

9

Chapterne
O

Introduction

10

1.1 Statement of the research problem
To write a report it is necessary to select a topic. A well-defined topic reflects what
is going on to be discussed throughout the report. The topic that has been assigned
by organization supervisor is “The foreign exchange operations– the ultimate way
to success”. The report has discussed how the bank can improve the foreign
exchange operations.

1.2 Objectives of the study
Primary objective:
The primary objective of this report is to familiar with the working environment of
present institutions. And also fulfill the requirement of BBA theoretical knowledge
gained from the coursework of the BBA program in a specific field.

Secondary Objective:
• To have exposure to the credit operation and other function of Jamuna Bank
Limited.
• To have a clear understanding of the business operation of Jamuna Bank Limited.
• To discuss the services offered by Jamuna Bank Limitcd.
• To assess and evaluate the growth trends of Jamuna Bank Limited.
• To evaluate the profitability of Jamuna Bank Limited.

11

• To identify the major strength and weakness of Jamuna Bank Limited in respect to
other banks.
• To recommend ways and means to solve problems regarding banking of Jamuna
Bank Limited.
• To get acquainted with the loan structure, size, profile of sector wise outstanding
position of loans and system of loan classification of Jamuna Bank Limited.

1.3 Methodology of the Study
To make the Report more meaningful and presentable, two sources of data and
information‟s have been used widely.
The “Primary Sources” are as follows:


Face-to-face conversation with the respective officers and staffs of the Branch



Informal conversation with the clients



Practical work exposures from the different desks of the four departments of the
Branch covered



Relevant file study as provided by the officers concerned
The “Secondary Sources” are as follows:



Annual Report (2009) of Jamuna Bank Ltd.



Periodicals published by Bangladesh Bank.



Various books, articles, complications etc. regarding general banking function,
foreign exchange operation and credit policies.
12

FRAMEWORK OF THE OVERALL STRUCTURE OF THE TOTAL WORK

Appointing
as an intern

Dividing the
study work

Doing work in
different
department of
ABBL
Collecting
information
from ABBL

Selecting the
topic of the
study
Analysis of
collected
data

Preparing
outline

Collecting
secondary
information

Preparation of the
Final Report

1.4 Terms used in Foreign Exchange Operations

Foreign Exchange:
Foreign exchange refers to the process or mechanism by which the currency of one
country is converted into the currency of another country. According to Foreign
Exchange Regulation Act (FERA) 1947, "Anything that conveys the right to wealth
in another country is foreign exchange. Foreign exchange means and includes all
deposits, credits and balances payable in foreign currency as well as foreign
currency instruments such as drafts, TCs. Bill of Exchange, promissory Notes and
Letters of Credit payable in any foreign currency. ".

Liquidity:

13

In terms of international trade, liquidity is the ease in which foreign currency is
converted into domestic currency. FX markets, such as the New York Jamuna
Exchange, match buyers and sellers to bring about speedy, orderly transactions.

International Trade:
Businesses rely on FX markets to buy currency that is spent to obtain overseas
goods. Corporations will also look to FX markets to convert international earnings
back into the domestic currency.

Imports and Exports:
Businesses all around the world are increasingly depending on buying and selling
from other countries. Although the international trade environment has changed
substantially over the last 100 years, the risks have essentially remained the same.
Jamuna Bank is ready to assist you with your trade documentation and adherence to
exchange control regulations.

SWIFT: Electronic payments are the most commonly used method of transferring
any currency. These payments are most commonly used for imports and exports, but
holidaymakers may also use them. They are done using SWIFT, a worldwide
electronic payment and receipts network.
Traveler’s Cheques:
If you are travelling out of the country either for business or holiday, you can buy
Traveller's Cheques directly from us.
Letter of credit (L/C):
14

Letter of credit means any arrangement whereby a Bank (the issuing Bank) is
committed (on behalf of the buyer/applicant) to pay certain amount at the seller ‟s
disposal under some agreed conditions.

Foreign remittance:
Foreign remittance means remittance of foreign currencies from one place/person to
another place/person. In broad sense, foreign remittance includes all sale and
purchase of foreign currencies on account of Import Export, Travel and other
purposes. However, especially foreign remittance means sale & purpose of foreign
currencies for the purposes other than export and import. SOUTHEAST Bank
Limited performs the remittance function with different countries. It maintains the
foreign remittance in the following form:
 Foreign Demand Draft
 Inward Remittance
 Outward Remittance

1.5 Limitation of the study
 All the time of preparing my report I tried to gather every details of process but the
major limitation is lack of adequate information,
 Lack of opportunity to visit more than one branch
 Sufficient records, publications were not available as per my requirement.
 Time constraint.
 Non-cooperative behavior of some officials of the bank.  It is my first work, and
inexperience was a problem.

15

2.1 The international trade can be illustrated in Bangladesh by the following
diagram

16

2.2 Scenario of Foreign exchange operations in Bangladesh

17

1. Foreign Exchange Regulation (FER) Act, 1947 (Act No. VII of 1947) enacted on
11th March, 1947 in the then British India provides the legal basis for regulating
certain payments, dealings in foreign exchange and securities and the import and
export of currency and bullion. This Act was first adapted in Pakistan and then, in
Bangladesh. The Act is reproduced at Appendix-1. Bangladesh Bank is responsible
for administration of regulations under the Act. Appendix 4 provides a list of
Bangladesh Bank's offices and their jurisdictions.

2. Basic regulations under the FER Act are issued by the Government as well as by the
Bangladesh Bank in the form of Notifications which are published in the
Bangladesh Gazette. Notifications issued by the Bangladesh Government and the
erstwhile Government of Pakistan and the Bangladesh Bank and the erstwhile State
Bank of Pakistan are reproduced at Appendices 2 and 3. Directions having general
application are issued by the Bangladesh Bank in the form of notifications, foreign
exchange circulars and circular letters.

3. Authorized Dealers (ADs) in foreign exchange are required to bring the foreign
exchange regulations to the notice of their customers in their day-to-day dealings
and to ensure compliance with the regulations by such customers. The ADs should
report to the Bangladesh Bank any attempt, direct or indirect, of evasion of the
provisions of the Act, or any rules, orders or directions issued there under.
4. Bangladesh Bank issues licenses normally to scheduled banks to deal in foreign
exchange if it is satisfied that the bank applying for this license has adequate
manpower trained in foreign exchange.

18

5. Licenses with limited scope are also issued to persons or firms to exchange foreign
currency notes, coins and travellers' cheques in places where money changing
facilities are required.

6. ADs, on their own, are free to buy and sell foreign currencies forward in accordance
with tile internationally established practices however, in all cases the ADs must
ensure that the cover is intended to neutralize the risks arising from definite and
genuine transactions.

7. All remittances from Bangladesh to a foreign country or local currency credited to
on resident Taka accounts of foreign banks or convertible Taka account constitute
outward remittances of foreign exchange

8. Lacking of experience related to foreign cxchange policy.
9. Lacking of skill manpower.
10. Lacking of proper knowledge about foreign exchange policy and related items.

19

Chapter Three

An Overview of
JamunaBank

20

3.1 Background
Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies
Act, 1994 with its head office at Printers Building (2 nd floor and 8th floor), 5, Rajuk
Avenue, Dhaka-1000. The Bank started its operation from 3rd June 2001.

21

Jamuna Bank Limited is a highly capitalized new generation Bank started its
operation with an authorized capital of Tk.1600.00 million and paid up capital of
Tk.390.00 million, as of December 2006 Paid up capital of the Bank raised to
Tk.1072.5 million and number of branches raised to 29 (Twenty nine).
JBL undertakes all type of banking transactions to support the development of trade
and commerce in the country. JBL‟s services are also available for the
entrepreneurs to set up new ventures and BMRE for industrial units. The Bank
gives special emphasis on Export, Import, Trade Finance, SME Finance, Retail
Credit and Finance to Women Entrepreneurs.
To provide clientele services in respect of International Trade it has established wide
correspondent banking relationship with local and foreign banks covering major
trade and financial centres at home and abroad.

3.2 Corporate Information of Jamuna Bank Registered
Office:
Chini Shilpa Bhaban
3, Dilkusha C/A, Dhaka-1000.
Company Registration Number:
22

C-42780 (2139)/2001
External Audior(s)
Howladar Yunus & Co
Chartered Accountants
67, Dilkusha C/A (2nd Floor), Dhaka-1000
Legal Advisor
Mr. Habibul Islam Bhuiyan
Senior Advocate
Bhuiyan Islam & Zaidi
Advocates and Barristers
H# 29, Rd# 9/A, Dhanmondi R/A, Dhaka
Number of Branches & SME/ Agri Branches / Centers
Total Branches: 52
SME/ Agri Branches: 3
SME/ Agri Centers: 1
Allied Concern
Jamuna Bank Foundation
Hadi Mansion (4th Floor), 2, Dilkusha C/A, Dhaka
Subsidiary Company
Jamuna Bank Capital Management Ltd (Proposed)
Chini shilpa Bhaban
3, Dilkusha C/A, Dhaka-1000
3.3Organization Structure of JBL:
Organization Chart
Jamuna
of Bank Limited
Chairman
Board of Directors

Chief Adviser
Managing Director
- HRD

Deputy Managing Director
GSD, CAD, A&I, GB,
D&M

23

Deputy Managing Director
ID, IT, CREDIT, R&P

Executive Vice President/

Figure: 3.3
Organization chart of

24

3.4 Branch Information
Branch: 52 & SME / Agri Branch : 4

25

3.5 Number of employees
Number of employees in the main branch of Jamuna bank is 65

26

3.6 Vision statement of the bank
To become a leading banking institution and to play a pivotal role in the development of the
country.

3.7.Mision statement of the bank
The Bank is committed to satisfying diverse needs of its customers through an array
of products at a competitive price by using appropriate technology and providing
timely service so that a sustainable growth, reasonable return and contribution to the
development of the country can be ensured with a motivated and professional workforce.
The bank has some mission to achieve the organizational goals. Some of them are
as follows as:
 Jamuna Bank Limited provides high quality financial services to strengthen the well
being and success of individual, industries and business communities.
 Its aim to ensure their competitive advantages by upgrading banking technology
and information system.
 JBL intends to play more important role in economic development of Bangladesh
and its financial relations with the rest of the world by interlining both modernistic
and international operations.
 JBL encourages investors to boost up share market.
 The bank creates wealth for the shareholders.
 The bank believes in strong capitalization.
 It maintains high standard of corporate and business ethics.

27

 Jamuna Bank Limited extend highest quality of services, which attracts the
customers to choose them first.
 The bank creates wealth for the shareholders.
 The bank maintains congenial atmosphere for which people are proud and eager to
word with Jamuna Bank Limited.

3.8 Product Scheme
The products and services can be classifying in two ways & those arc.


The deposit products & services



The lending products & services
Deposits products & services

Lending/Investment products & services

Corporate Banking

Hi-her Purchase

Personal Banking

Lease Finance

Online Banking

Personal loan for woman

Monthly Savings Scheme

Project Finance

i Monthly Benefit Scheme

i Loan Syndication

Double/Triple Benefit Scheme

Consumer Credit

Marriage Scheme

Import and Export. Handling Financing

Education Scheme
Lakhpati Deposit Scheme
Q-Cash ATM

3.9 Principal activities of Jamuna bank Ltd.
28

The principal activities of the bank are to provide all kind of commercial bank
activities encompass a wide range of services including excepting deposits, making
loans, discounting bills, conducting money transfer and foreign exchange
transactions and performing other related services such as safe keeping, collections,
issuing guarantees, acceptances and letters of credit to its customers through its
branches in Bangladesh.

3.10 SWOT ANALYSIS OF JBL
In the competitive area of marketing are SWOT analysis is based on product, price,
place and promotion of a financial institution like private Bank. By doing the
SWOT analysis it is possible to find out the strengths, Weaknesses, opportunities,
and threats of the JBL. From the SWOT analysis we can figure out on going
scenario of the Bank.

29

SWOT Analysis

External Factors

InternalFactors

Strength

Weakness

Opportunity

Threats

SWOT analysis two factors act as prime movers
 Internal factors which are prevailing inside the concern which include Strength and
Weakness.
 On the other hand another factor is external factors which act as opportunity and threat.

3.10.1 Identification of Strengths, Weaknesses, Opportunities and
Threats of the JBL
Strength:
1. The bank provides quality service to the clients compared to it other contemporary
competitors.
30

2. Experienced bankers and corporate personnel have formed the management.
3. The bank recently introduce on line banking which enable it to automate all of its
operations. At present, several banking functions are performed by computers. The
bank is also a member of SWIFT (Society for Worldwide Inter bank Financial
Telecommunication) alliance Access which enables the bank to exchange critical
financial messages swiftly and cost effective.

Weaknesses:
1. Delegation of authority is centralized which makes the employee to realize less
responsibility. Thus, the employee morale is deteriorated.
2. The credit proposal evaluation process is lengthy. Therefore, sometimes valuable
clients are lost and the bank becomes unable to meet targets.
3. No substantive use of Annual Confidential Report (performance evaluation form of
the employee) to reward or to punish the employee. Hence the employee becomes
ineffective.
4. The bank lacks aggressive advertising and promotional activities to get a broad
geographical coverage.
5. Computer facility for all the officers is not available. Moreover, all the officers have
no computer knowledge.
6. The bank has no any research and development division.
Opportunities:
1. The bank can introduce more innovative and modern products and services for then
customers.
2. It can diversity its portfolio by taking new sector.
31

3. Many branches can be opened to reach the bank‟s services to the remote areas.
4. It can recruit more efficient and experienced persons to give fast and efficient
service to the customers Threats:
1. The common attitude of Bangladeshi clients is default.
2. Multinational as well as the fast growing local banks with modern products and
services are capturing huge market within short period a resulting to switch over the
existing customers of the bank.
3. Bangladesh Bank Sometimes requires Private Commercial Banks to be abides by
such rules and regulations which are not suitable for every commercial Bank

3.10.2 Draw conclusion
The bank provides quality service to the clients compared to its other contemporary
competitors. The bank can introduce more innovative and modern products and
services for then customers.
The common attitude of Bangladeshi clients is default. Delegation of authority is
centralized and the bank has no any research and development division.
Conclusions concerning the company‟s overall business situation:
• Where on the scale from “alarmingly week” to “exceptionally strong” does the
attractiveness of the company‟s situation rank?
• What are the attractive or unattractive aspects of the company‟s situation?

3.10.3 Prepare action plan
• Use company strengths and capabilities as cornerstones for strategy.
32

• Pursue those market opportunities best suited to company strengths and
opportunities.
• Correct weaknesses and deficiencies that impair pursuit of important market opportunities or
heighten vulnerability to external threats.

• Use company strengths to lessen the impact of important external threats.

33

Chapter Fou
r

Foreign
Exchange:

Theoretical Backgr
ound
&

34

4.1 Objective of Jamuna Bank


To earn and maintain CAMEL Rating 'Strong'
To establish relationship banking and improve service quality through



development of Strategic Marketing Plans.
To remain one of the best banks in Bangladesh in terms of profitability


and assets quality.
To introduce fully automated systems through integration of information


technology.
• To ensure an adequate rate of return on investment.
To keep risk position at an acceptable range (including any off balance


sheet risk).
To maintain adequate liquidity to meet maturing obligations and


commitments.
• To maintain a healthy growth of business with desired image.
• To maintain adequate control systems and transparency in procedures. To
develop and retain a quality work-force through an effective human


Resources Management System.
• To ensure optimum utilization of all available resources.
To pursue an effective system of management by ensuring compliance


to ethical norms, transparency and accountability at all levels.

4.2 Strategies of JBL
To manage and operate the Bank in the most efficient manner to

enhance financial performance and to control cost of fund
To strive for customer satisfaction through quality control and delivery

35

of timely services
To identify customers' credit and other banking needs and monitor their

perception towards our performance in meeting those requirements.
To review and update policies, procedures and practices to enhance the

ability to extend better service to customers.
To train and develop all employees and provide them adequate resources

so that customers' needs can be reasonably addressed.
To promote organizational effectiveness by openly communicating

company plans, policies, practices and procedures to employees in a
timely fashion
To cultivate a working environment that fosters positive motivation for

improved performance
• To diversify portfolio both in the retail and wholesale market
To increase direct contact with customers in order to cultivate a closer
relationship between the bank and its customers.

4.3 Foreign Exchange- its meaning and definition:

Foreign exchange refers to the process or mechanism by which the currency of one
country is converted into the currency of another country. Foreign exchange is the
means and methods by which rights to wealth in a country's currency are converted
into rights to wealth in another country's currency. In banks when we talk of foreign
exchange, we refer to the general mechanism by which a bank converts currency of
one country into that of another. Foreign Trade gives rise to foreign exchange.
According to Foreign Exchange Regulation Act (FERA) 1947, "Any thing that
conveys the right to wealth in another country is foreign exchange. Foreign
36

exchange means and includes all deposits, credits and balances payable in foreign
currency as well as foreign currency instruments such as drafts, TCs. Bill of
Exchange, promissory Notes and Letters of Credit payable in any foreign currency.
".
This definition implies that all business activities relating to Import, Export,
Outward & Inward Remittances, buying & selling of foreign commissions, etc.
come under the purview of foreign exchange business. Foreign exchange
department of banks plays significant roles through providing different services for
the customers.

4.4 Types of Foreign Exchange:
There are mainly three types of transactions which lead to foreign exchange. These are: a)
Import
b) Export
c) Foreign Remittance

37

Foreign Exchange Department

L/C

Import

Export

Foreign
Remittance

Foreign
Currency A/C

Inward
Remittance

Outward
Remittance

4.5 Tools for foreign exchange
• Importer (Buyer)/Applicant
• The Issuing Bank (Opening Bank)
• The Advising Bank/Notifying Bank
• Exporter/Seller (Beneficiary)
• Confirming Bank
• Negotiating Bank
• The Paying/Reimbursing/Accepting/Remitting Bank.
a) Applicant
The person/body (customer of the bank) who requests the bank (opening bank) to
issue letter of credit. As per instruction and on behalf of the applicant, bank open
L/C in line with the terms and conditions of the sales contract between the buyer
and seller.

38

b) Opening bank/Issuing Bank
The bank which open/issue L/C on behalf of the applicant/importer. Issuing bank ‟s
obligation is to make payment against presentation of documents drawn strictly as
per terms of the L/C.
c) Advising/Notifying Bank
The bank through which the L/C is advised/forwarded to the beneficiary (exporter).
The responsibility of advising bank is to communicate the L/C to the beneficiary
after checking the authenticity of the credit. The advising bank acts only as agent of
the issuing bank without having any engagement on their part.

d) Beneficiary
Beneficiary of the L/C is the party in whose favor the letter of credit is issued.
Usually they are the seller or exporter.
e) Confirming Bank
The Bank, which under instruction in the letter of credit, adds confirmation of
making payment in addition to the issuing bank. It is done at the request of the
issuing bank having arrangement with them. This confirmation constitutes a definite
undertaking on the part of confirming bank in addition to that of issuing bank.

f) Negotiating Bank
The Bank, which negotiate documents and pays the amount to the beneficiary when
presented complying credit terms. If the negotiation of documents is not restricted
to a particular bank in the L/C, normally negotiating bank is the banker of the
beneficiary.

39

g) Reimbursing/Paying Bank
The Bank nominated in the credit by the issuing bank to make payment stipulated in
the document, complying with the reimbursing bank.
4.6 General foreign exchange policy of the Jamuna Bank LTD.
Import procedure in Flow Chart:
Registration with CCI&E, Import Registration Certificate
Purchase contract with foreign supplier directly or through agent

Registration of Letter of Credit Authorization Form(LCAF)
Opening/Issuance of L/C by the

Importer‟s Bank

Dispatch/Transmit the L/C to the beneficiary through issuing Bank ‟s correspondent in the beneficiary‟s
country

Receipt of import Documents from Negotiating/collecting bank

Yes

Scrutiny if import Document

Inform Negotiating Bank about

Discrepancies

Inform Opener about Discrepancies
Are the

Yes

documents

Do they agree to

accept document

Lodgment of import Bill

despite
Dr. PAD (Payment against

Document)

No

Cr. H.O A/C Foreign Bank (Negotiating Bank)

Ask Negotiating Bank for
disposal Instruction
40

Do they accept

goods

Deliver the documents to the
Yes Importer for release of

documents on

Ask the opener to

take delivery of
Import documents
for

collection basis?
release of

No

Collect Proceeds from ImporterDr. S.D A/C Margin on L/C

Dr. Importers A/C
Send back documentsDr. S.D A/C Margin on L/C Cr. H.O Foreign Bank Export process
Flow ChartCr. Importers A/C (Collecting Bank)

Foreign Buyer directly or through agent

in

Securing Export Order from

Receiving L/C from buyer‟s bank through an advising bank in Banglades h
Certification of EXP from by Authorized Dealer(Bank)
Will the Exporter be allowed any preshipment Credit Facility?

If

Yes

Mark Bank‟s Lien on the page of the original L/C

If No
Obtain necessary securities Shipment of goods by Exporter
Arrange shipment of goods through Bank‟s
approved C&F agent and instruct them to send the
original Bill of Lading etc. to the Bank Directly
Preparation of Export Documents for submission
to Negotiating Bank

to remove discrepancies

Scrutinizing Export documents by Negotiating Bank
Are the document in order?
No

Ask the exporter

41

Yes

opening Bank about

Are the discrepancies removed?

discrepancies

Yes

Negotiate documents

No Inform
Do they allow negotiation?

Despatch documents with reimbursement
instruction

No

Check whether you‟re A/C with foreign bank
has been credited

Send the documents for collection
with reimbursement instruction

Has it been
credited? No

Send reminder to paying bank

Import trade in Bangladesh is controlled under the Import and Export control Act
Lodgment /Retire FDBP

1950. Authorized 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 import functions of the branch as far I have
understood are discussed below:

Documentary Requirements for Opening L/C
Importer shall submit following documents for opening L/C:
(a) Valid Import Registration Certificate (IRC) (commercial/industrial)
(b) Tax Identification Number Certificate
(c) VAT Registration Certificate
(d) Membership Certificate of a recognized Trade Association as per IPO
42

(e) A declaration, in triplicate, that the importer has paid income-tax or submitted
income lax return for the preceding year
(f) Pro forma Invoice or Indent duly accepted by the importer
(g) Insurance Cover Note with Money Paid Receipt covering value of goods to be
imported plus 10 (Ten) percent above
h) L/C application Form (MF-fx l3) duly signed by the importer
i) Letter of Credit Authorization Form (LCAF), commercial or industrial as the case
may be, duly signed 'by the importer and incorporating New ITC number of at least
6(six) digits under the Harmonized System as given in the Import Trade Control
Schedule 1988.
j) IMP Form duly signed by the importer
Time Limit for Opening of L/C:
L/Cs shall be opened within 150 days from the date of issuance of LCAF.

43

Chapter
-5

Data Analysis
& Findings

44

5.1 Findings
While working at Jamuna Bank, I have attained to the newer kind of experience.
After the collecting and analyzing of data I have got some findings. These findings
are completely from my personal point of view. Those are given below.
 Based on my experience, I can be said that Jamuna Bank should reconsider its
services that better satisfy customer needs and requirements Bank should be more
tactful in dealing with the customers and launch new products that fully meet
customer expectations.
 Jamuna Bank Limited has already established a favorable reputation in the banking
industry of the country. It is one of the leading private sector commercial banks in
Bangladesh. The bank has already shown a tremendous growth the profits and
deposits sectors.
 The bank follow the online banking system to provide the customer better services;
but all the branches of Jamuna bank are not follow the online banking system
 During the last 6 years (2004-2010) the average growth of deposits and advance
were 33% and 37% respectively, which was 20% in the case of import business.
72% in export business and 36% in guarantee business during the period,
shareholders equity grew at the rate of 40%. The bank always fulfills Die
provisioning requirements as set by Bangladesh Bank reflecting sound financial
health and discipline
 The consistent and increasing growth trend of the above mentioned performance
indicators has increased depositors' confidence as well as good will/reputation of
the bank to a great extent and these have contributed to increase the shareholders
value.
 The Bank‟s Human resources Development strategy is to build up quality
manpower

with

conceptual/managerial

Knowledge,

skills

through

designing/arranging of continuous in-house and outside training programs
45

 The bank focuses on customer-friendly marketing approaches by offering various
efficient delivery of personalized banking services at the clients door steps and
caters to the ever-growing financing needs of clientele at a competitive price
 The company philosophy to workout best solutions for customers and clients as a
business and customer friendly Bank
 Jamuna bank has an interactive corporate culture & friendly working environment.

46

5.2 Performance of the
bank:
The incessant fall-out
of international credit market due to world economic meltdown resulting sluggish
growth has put significant pressure on financial performance of banks and financial
institutions worldwide. Jamuna Bank Ltd has achieved continuous growth in almost
all arenas of its business arenas despite this economic crisis, facing intensified
competition of the industry. The bank remained in financial strong position with its
continued focus on the vision of becoming country‟s finest corporate citizen ,
providing excellent and need-based customer service.
The bank mobilized deposits of BDT 42356 million as at December 31, 2010
compared to BDT 27307million, till 2009. Total loans and advances stood at BDT
32287million at the end of 2010 that was BDT 21036million at the end of 2009.
Import business stood at BDT 46685 million in 2010 compared to BDT 30312
million in 2009. Export business stood at BDT 21407 million in 2010 as against
BDT 18617 million in 2009. The bank collected foreign remittance of BDT 5.06
billion in 2010 compared to BDT 4.72 billion in 2009.
47

In 2010, the bank was able to make profit before tax BDT 1.66 billion as compared
to 1.28 billion indicating 29.73% growth. Net profit attributable to shareholders
stood at BDT 807.52 million. The return on equity remained 18.80% during 2010
and earnings per share (EPS) stood at BDT at 56.92. Non performing loan (NPL)
ratio reduced to 2.54% in 2009 as compared to 2.86% in 2008.
JBL made adequate provision against classified loans which is significantly higher
than last year. Adequate provision made the bank stronger than before. Tier-1
capital stood at BDT 3054.14 million at the end of 2010 compared to that of BDT
2131.02 at the end of 2009. Tier-2 capital reached to BDT 943.52 million at the end
of December 2010 as compared to that of BDT 313.32million at the end of 2009.
Return of assets (ROA) increased to 1.89% in 2009 from 1.51% in 2009 and return
on equity (ROE) also increased significantly to 18.80% from 17.75% in 2009. The
capital adequacy ratio (CAR) increased to 10.48% in 2009 as against that of 10.17%
in 2009. Net interest margin (NIM) stood at 3.58% at the end of 2010, suggesting a
healthy growth in net interest income.

48

HIGHLIGHTS OF JAMUNA BANK LIMITED

Amount in Taka ( Except Ratio)
Sl.No.

P

2010

2009

a

49

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Paid up Capital
Total Capital
Capital surplus/(deficit)
Total Assets ( excluding off balance sheet items)
Total Deposits
Total Loans & Advances
Total Contingent Liabilities & Commitments
Advance Deposit Ratio
% of classified loans against Total Loans
Profit after taxation & provisions
Amount of classified loans
Provision kept against Classified loan
Provision surplus / deficit
Cost of Fund ( Deposit cost & overhead cost)
Interest Earning Assets
Non-interest earning Assets
Return on Assets (ROA)
Return on Investment (ROI)
Income from Investment
Earning per Share (Taka)
Net income per share (Taka)
Net asset value per share
Price Earning Ratio

1,621,882,500
3,997,664,705
880,659,405
48,730,951,557
42,356,203,563
32,287,661,155
14,718,947,868
76.23%
2.20%
923,123,207
710,858,000
465,638,000
11.93%
34,961,013,269
13,769,938,289
1.89%
16%
1,361,492,698
56.92
56.92
245.45

1,313,265,200
2,444,338,501
392,695,301
31,646,629,499
27,307,936,141
21,036,861,012
9,169,471,638
77.04%
2.84%
479,437,923
598,309,000
296,285,000
12.49%
27,668,329,466
3,978,300,033
1.51%
16%
666,152,122
29.56
29.56
133.22

9.20

9.02

5.3 Key Financial Indicator:

Profit scenario of Jamuna Bank:

50

In 2009Jamuna Bank Limited posted an operating profit of Tk.1914.25 million as
against Tk.1040.20 million in 2008 with a spectacular growth of 84.03 percent over
the preceding year. After having made necessary provisions for loans and advances
of Tk.351.05 million in accordance with the instruction of Bangladesh Bank Net
Income Before Tax (NIBT) stood at Tk.1536.20 million in the year under review
against Tk.865.82 million in the preceding year. An amount of Tk.632.26 million
has been kept as provision for payment of Tax. Thus Net Income after Tax and
provision stood at Tk.923.12 million in 2009 which was Tk.479.44 million in 2008.

Operating Profit
Year

Tk.(Million)

2005

419.94

2006

701.32

2007

824.20

2008

1040.20

2009

1914.25

2000
1800
1600
1400
1200
1000
800
600
400
200
0

2005

2006

2007

2008

2009

Capital Structure:
Jamuna Bank Limited has a conviction of maintaining a strong capital base in carrying on opereat
operation on June 03, 2001 with a paid-up capital of Tk.390.00 million divided into 3.90 million
ordinary shares of Tk.100 each. The authorized capital of the Bank is Tk.1600 million divided into
16.00 million of Tk.100 each. The Bank's paid-up capital as at 31st December 2009 stood at
Tk.1621.88 million. Tk429.00 million was raised through initial public issue of 4.29 million
51

ordinary shares of TkA 00 each with a premiu- each while Tk.214.50 million was raised by issue
of Bonus Shares in the ratio of 1:4, i.e. one bonus _s-holding of 8.58 million ordinary shares as on
31.12.2005, for every 4 shares out of profits upto the Thus, as on 31st December 2009, the total
shareholder's equity and reserve stood at Tk.3997.66 million!"
Capital Tire-I

Capital Tire-II

3500

2010

3000

2009

2500

2008

2000

2007

1500

2006

1000

2005

500

2004

0

2003
2005

2006

2007

2008 2009

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Total capital Tire-I & II
4000
3500
3000
2500
2000
1500
1000
500
0

2005 2006 2007 2008 2009

CAPITAL ADEQUACY RATIO
The Bank adopted BIS risk adjusted capital standards to measure the capital adequacy in line with
set by Bangladesh Bank. According to the instructions contained in Bangladesh Bank's BRPD
Circ dated May 14, 2007 relating to Capital Adequacy every commercial bank operating in the
required to maintain at minimum 9 percent of its risk-weighted assets as capital. Jamuna Bank Limaintain Capital Adequacy ratio of 12.83 percent as at 31.12.2009 which was higher than the
require Adequacy Ratio. The amount of capital with break-up is given below:
52

"Fig in BDT Million" Particulars
2009
Tier I Capital
Paid up Capital
Non-repayable Share Premium Account

2008
3054.14
1621.88
-

2131.02
1313.27
503.84

Statutory Reserve
Retained Earnings
Proposed Bonus Share
Tier II capital
1 % Provision against Unclassified Loans
Exchange Equalization Fund

816.48
615.78
943.52

313.91
313.32

332.64
0.33
3997.66

213.80
0.33
2444.34

Total Capital (Tier I +Tier 11)

DEPOSITS AND DEPOSIT MIX

In commercial banks operation starts with mobilization of resources i.e. tapping of deposits and
then the said resources are deployed as loans, advances and investments for the purpose of
maximizing wealth which -sans deposits have dominance in commercial bank's operations. That is
why; there is a common saying that deposit is the lifeblood of a bank. The comparative position of
deposit mix of the Bank as on 31.12.2009 and 31.12.2008 is depicted below:

53

Type of Deposit

As on
31.12.2009

As on
31.12.2008

Changes
(+)/(-)

Changes in
% over the
year

Current A/C & other

4715.31

3283.21

+1432.10

43.62

Bills Payable

516.31

412.03

+57.59

25.30

Savings Deposit

2891.25

1679.40

+1211.85

72.15

Short term Deposit

25201.52

16360.18

+8841.34

54.04

Fixed Deposit

2762.49

1335.16

+1427.33

93.54

Scheme Deposits

6118.32

4131.80

+1986.52

48.07

Foreign Currency Deposit

151.00

106.16

+44.84

42.24

Total Deposits

151.00

27307.94

+15048.26

55.10

45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2005

2006

2007

2008

2009

Import, Export & Remittance Position
Import Trade
The total import business handled by the bank in 2009 was Tk.46684.73 million compared to
Tk.30311.71 million in the preceding year registering a growth of Tk.16373.02 million being
54.02 percent. A sizable L/C‟s were also opened by the bank in the year under review. The import
items included industrial raw materials, machinery, consumer goods, fabrics, accessories, food
item etc.

54

50000
40000
30000
20000

Year
2005
2006
2007
2008
2009

Import
Tk. (Million)
12152
15458
22192
30312
46685

10000
0
2005

2006

2007

2008

2009

Export Trade

The Bank handled export business worth Tk.21406.94 million in the
year under report. In 2008 export business handled by the Bank was Tk.1861.43 million. Thus there was
an increases of Tk.2789.51 million in export business handled by the Bank, being 14.98 percent over the
preceding year. The major export item was Readymade Garments.

25000
20000
15000
10000
5000

Export
Year
2005
2006
2007
2008
2009

Tk. (Million)
6522
11584
13990
18617
21407

0
2005

2006

2007

2008

2009

Foreign Remittance

Total foreign remittance in a single year,i.e. in 2009 made a record high to the tune of BDT
5061.30 million compared to that of BDT 4722.90 million in 2008. The Bank has deepened its
step on the foreign soils further by establishing more and more remittance arrangements with
overseas exchange companies where Bangladeshi expatriates are working. These Include U.K,
U.A.E, Kuwait, Baharain, Canada, Italy, France etc. Moreover, for prompt and safe distribution of
this hard earned money to their near and dear ones in every corner of the country, the Bank has
made an arrangement with Bangladesh Post Office, Western Union and some other agencies.

55

Particulars

a. L/C (Cash)
b. L/C (BTB
Local)
Import
c. L/C (BTB
Foeign)
Sub Total BTB
L/C
Total
a)Export Bill
(Gen)
b) Export Bill
(RMGF
Export
c) Export Bill
(RMGL)
Total
Inward
Outward
ttanc
Remi
Total

Upto Last Date on
23/06/2010

As on 23/06/2010

Total
Amount is Crore Tk.

No
741
2389

Amount
447.35
397.23

No.
15
17

Amount
5.29
2.82

No.
756
2406

Amount
452.64
400.05

890

290.80

3

4.15

893

294.95

3279

688.03

20

6.97

3299

695.00

3992
374

1135.38
107.16

35
1

12.26
0.67

4027
375

1147.64
107.83

2350

711.01

19

5.33

2369

716.33

1626

229.87

12

1.88

1638

231.75

4350
0
0

1048.03
51.57
5.30
56.87

32
0.00
0.00
-

7.88

4382
0
0

1055.91
51.57
5.30
56.87

Banking industry has entered into the new Risk Based Capital Adequacy Framework (Basel II )
arena from 2010. JBL has already taken necessary steps to comply with this accord properly. The
bank will also continue strengthen its position by expanding the core business activities.

5.4 Identified Problems for the Jamuna Bank

56

 The main constraint of the study was insufficiency of information that was highly
required for the study. Since the bank officials are very busy with their activities, as
a result it was though to have proper knowledge as was required for the study.
 The duration was not enough to cover all aspects of banking.
 Lack of depth knowledge and analytical ability for writing import.
 The data and information related with the topic was not easily available because of
confidentiality of the concern.
 Foreign Exchange dealing is a technical job and has a great prospect in our country.
Floating Exchange Rate has been introduced and it has put the banking sector into
a new era. Bangladesh Bank‟s total control is not there but there is some risk factor
involved in it. Jamuna Bank Ltd wanted to find whether the process of their foreign
exchange operation is good enough to avoid any unwanted risk and the prospect in
foreign exchange dealing in their present standing,
 The office of JBL, Malibagh Branch, and Dhaka is not sufficient enough.
 In JBL, Malibagh Branch, Dhaka maximum officers are working in a specific desk
for a long time and for this reason they may feel monotony and certainly they are
not be able to know the overall banking activities through they have enough
eagerness to know.
 Foreign Exchange Section is one of the busiest sections in Bank. Sometimes it is
found that all works are not performed efficiently due to insufficiency to
Officer/Staffs.
 Training facility isn‟t sufficient especially for the lower level officers.
 Still now, like most of the branches of JBL, Malibagh Branch, Dhaka, follows the
traditional banking system.
57

 JBL, Malibagh Branch, Dhaka, has no reception section and has no receptionist that
may receive phone calls and complains from customer and supply the enough
information.
 In this branch there is lack of modern equipments.

58

Chapter
- Six

Conclusion and
Recommendations

59

6.1 Recommendations
In view of the facts, the following recommendations are made to the respective concerned for the
consideration and implementation.

► The bank should have standardized system of measuring customer satisfaction.
► Need for integrity of the officials within reasonable limits.
► The officials should have a through knowledge of the product. ►
The officials should be trained up for their efficiency.
► Reasonable interest rate for all kinds of loan.
► Increasing number of staffs and cash terminals.
► Officials should be more cooperative with the clients.
► Officials should be trained up for self-management. ►
Customized new financial product development.
► Officials should be faster during transaction.
► Bank can accept new ideas from the customers for regarding improvement the quality
of their service.
►They need to maintain an upgraded guideline for the employees to avoid any kind of
confusion.
►They should enhance their savings facilities by introducing many other saving schemes,
because customers really look for various savings programs.
►Special increment should be given to middle and junior level managers and executives
also to increase their motivation level.

60

6.2 Conclusion
From the beginning of greater change in the world economic structure, banking activities has
becoming an important thing. Now a day the idea of banking is also developed and a huge number
of private commercial banks are just on waiting for business. So it is a matter of think that how to
establish an idea with different techniques, In Bangladesh, Commercial banks are playing vital
role in the development of our economy and financial system. Standard Charted
Bank Limited has a strong position in the today‟s competitive market. The JBL, Malibagh Branch,
Dhaka also contributing a better proportion of profit in JBL‟s total earning. Total analysis of the
bank has the greater opportunity to do better in the future.
Day by day JBL‟s area of service is increased all over the country through setting up new
branches at new places. The reliability of the customer on JBL„s increasing day by day for its
better services. But they may introduce online and ATM services comparing with other
commercial bank to improve their services and to make efficient and easy customer services. They
also may follow the given recommendations in order to improve day by day. Jamuna Bank
Limited may contribute a vital role in the socio-economic prospective and in the development of
our economy.
The JBL has been trying to operate its business successfully in Bangladesh since 1999. JBL has
already developed an image of goodwill among its clientele by offering its excellent services. This
success has resulted from dedication, commitment and dynamic
Leadership of its management over the periods. During the short span of time of its operation, the
bank bas successfully grabbed a position as a progressive and dynamic financial institution in the
country. If the bank goes this way. It is expected that in the near future JBL may become one of
the top performers in the banking sector.

61

Here I observed its deposit figure is strong. The bank should take necessary action for maintaining
.JBL has been able to maintain its recovery position in sector wise credit financing is up to the
satisfactory level. At last it should give more emphasis in this sector to acquire more profit.

References
1.Annual Report of Jamuna Bank Limited, 2005, 2006,2007
2. Chowdhury, L.R; A Textbook on Foreign Exchange, Fair Corporation,139, Azimpur,
Dhaka, 1205
3. Foreign Exchange Manual, Jamuna Bank Limited., 1st November,2009
4. Collyer Gary, ICC Uniform Customs And Practice For Documentary Credits ,3rdEdition,
International Chamber Of Commerce, ICC Publication No.600
5. Bangladesh Bank Foreign Exchange Guidelines, Volume-1
6. www.jamunabankbd.com

Acronyms
62

A/C
AD
B/L
BB
BOE
C&F
C&F

Account
Authorized Dealer
Bill of Lading
Bangladesh Bank
Bill of exchange
Clearing & Forwarding
Cost & Freight
CC Cash Credit
CCI
&E
Chief Controller of
Import & Export
CIB
Credit Information Bureau
CIF
Cost Insurance & Freight
CRF
Clean Report Findings
DD
Demand Draft
DP Note
Demand Promissory Note
EPB
Export Promotion Bureau
ERC
Export Registration Certificate
EXP
Export Form
FC
Foreign Currency
FDD
Foreign Demand Draft
FDR
Fixed deposit receipt
HS Code
Harmonized system of coding
IBC
Inward Bills for Collection
IBCA
Inter Branch Credit Advice
IBCT
Inter branch Credit Transaction
IBDA
Inter Branch Debit Advice
IMP
Import Form
IRC
Import Registration Certificate
L/C
Letter of Credit
LCAF
Letter of Credit Authorization Form LIM
Loan
against Imported Merchandise
LTR
Loan against Trust Receipt
OBC
Outward Bills for Collection
PAD
Payment against Document
PO
Payment Order
PSI
Pre Shipment Inspection
STD
Short Term Deposit
SWIFT
Society for Worldwide Inter bank Financial
TC
Travelers Cheque
TIN
Tax Identification Number
TT
Telegraphic Transfer

63

64

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