Main purpose of this report is to analysis and evaluate the Customer Service of Southeast Bank Limited. other objectives are identify the statistical performance and identify the problem facing by the Southeast Bank. This report also help SBL to compare their current remittance status using the aggregate remittance inflow throughout Bangladesh. Comparing with the proportion the lender can take necessary actions to accomplish the remittance business more efficiently and effectively.

Objective of the Report

The primary objective:

The primary objective of preparing this report is to represent the Southeast Bank Limited and to have a clear conception about all of the essential parts of the internship program.

Secondary objective:

• To evaluate the customer service of the Southeast Bank Limited
• Identify the statistical performance of Southeast Bank Ltd.
• Discussion on function and operation of each level of the organization of the Southeast Bank Ltd.
• Overview of the Southeast Bank Ltd.
• To identify the problem facing by the Southeast Bank Ltd.
• To relate theoretical knowledge with practical experience in several functions of the Southeast Bank Ltd.
• The present study will help SBL to better understand their level of performance in generating inflow of remittances.

This proposed study will also help SBL to compare their current remittance status with the aggregate remittance inflow in Bangladesh. Comparing with the proportion the bank can take necessary actions to perform the remittance business more efficiently and effectively.

From the perspective point of view, the importance and role of remittances as a major proportion of GDP, export, import and utilization of remittances as savings, investment and consumption can be better understood from this proposed study. This study will encourage further study in the area of identifying effect of foreign remittance inflow on Bangladesh economy and will provide useful guidelines for similar types of researches.

Methodology

This report has been prepared on the basis of experience gathered during the period of internship. For preparing this report, I have also get information from annual report and website of the Southeast Bank Ltd. I have presented my experience and finding by using different charts and tables, which are presented in the analysis part.

The details of the work plan are furnished below:

Data collection method

Relevant data for this report has been collected primarily by direct investigation of different records, papers, Documents, operational process and different personnel. . No structured questionnaire has been used. Information regarding office activities of the bank has been collected through consulting and discussion with bank personnel.

Data sources

Both primary and secondary source of data are used to complete this study. These two sources are explained below:

Primary sources:

• Face to face conversation with the bank officers and staffs
• Conversation with the clients
• Different manuals of Southeast Bank Ltd.
• Different circulars of Southeast Bank Ltd.

Secondary sources:

• Producer manual published by the Southeast Bank Ltd.
• Files and documents of the Branch.
• Annual report of Southeast Bank Ltd 2008.
• Different paper of Southeast Bank Ltd.
• Unpublished data.
• Different text books.

Introduction

Southeast Bank Limited (SEBL) witnessed a considerable improvement in its overall business performance during the year 1999. The Bank achieved satisfactory progress in all areas of its operation and earned an operating Profit of Tk. 360.51 million showing a growth of 63% over the previous year. The Bank, as a prudent measure, marked down the value of investment in shares and securities to market price as on 31-12-99 by complying with International Accounting Standard (IAS-30)

After making full provision, the net pre tax-Profit of the Bank for the year stood at Tk. 316.77 million compared to Tk. 17.39 million in 1998. The return on Assets (ROA) was 5.30% well above the industry average.

Capital Funds

The Authorized and Paid up Capital of the Bank are Tk. 1000.00 million and Tk. 400.00 million respectively. The Bank raised its paid up capital from Tk. 200.00 million to Tk. 400.00 million during the year through Public Issue of 2,000,000 ordinary shares at par value of Tk. 100.00. With the increase of Paid-up Capital to Tk. 400.00 million, the capital base of Southeast Bank Limited (SEBL) has become one of the strongest. The total Capital Funds of the Bank at the year end stood at Tk. 719.23 million against Tk. 293.70 million in the previous year. The Capital Adequacy Ratio is 15.14% as on 31-12-99, which is well above the stipulated 8% required for Banks in Bangladesh. The ratio of Tierl capital is 14.06%.

Deposits

Deposits of the Bank grew by 44% to Tk. 7660.02 million as at 31st December 1999 as against national average of 14.20%. The Bank introduced several deposit schemes to encourage and mobilize savings. Major savings schemes include the following :-

• Contributory Savings Scheme
• Monthly Benefit Deposit Scheme
• Special Deposit Scheme
• Education Savings Scheme
• 30 Day’s Term FDR

Our various purpose-oriented deposit schemes have been appreciated by the Public and have gained good popularity. As on 31-12-99, deposits under above schemes stood at Tk. 1005.57 million as against Tk. 812.37 million in the last year showing an increase of 24% over the preceding year.

Loans and Advances

Loans and Advances of the Bank stood at Tk. 5027.37 million as on 31-12-99 against Tk. 3127.77 million last year. During the year under review, the Bank extended loans and advances of Tk. 1899.60 million to the private sector for domestic and international trade as well as for project finance and working capital. Due to liberal Credit to Export Sector, the Bank was able to handle larger volume of Foreign Exchange Business. The Bank also extended a number of project finance and industrial loans in syndication with other Banks.

Leading in Consumer Banking

Southeast Bank Limited(SEBL) is a leading Bank for consumers and small business with a commanding presence in Consumer Credit, Hire Purchase and Lease Finance. The Consumer Credit Scheme of the Bank, which aims to help the fixed income group in raising standard of living, has been widely appreciated. Total 10618 customers have enjoyed Credit facility to the extent of Tk. 480.41 million under the Scheme. The rate of recovery of loan under the scheme is 96%. The Bank also recently introduced Credit Card both domestic and international as principal member of Master Card International.

Quality of Risk Assets

In order to maintain high quality of risk assets, utmost efforts are made by the Board of Directors and by the Management on an ongoing basis. A Credit Committee at Bank’s Head Office sits every day to monitor the quality of loans. As on 31-12-99, the Bank’s ratio of classified loans to total loans is only 1.63% as against 1.77% in the last year which is one of the lowest in Bangladesh. The Bank has made full provision against classified loans in addition to making provision of 1% against unclassified loans.

Southeast Bank Limited(SEBL) follows International Accounting Standard (IAS-30) in assessing the value of its investment in shares at the year end.

Literature Review

As Siddiqui (2003) states, Bangladesh has a long history of migration. Migration has shaped and is still shaping Bangladeshi society.  Although this report does not focus on migration, it must be acknowledged that most migratory movements happen within the country.  Some micro-level studies give an idea of the importance of migration in rural villages.  A study in sixty two (62) villages in Bangladesh by Rahman, Hossain and Sen in the early 1990s (cited in Afsar, 2003), showed that three-quarters of those migrating from rural areas migrate internally, and some twenty four per cent (24%) migrate overseas, while Hossain’s study (Hossain, 2001) in rural villages in the district of Comilla showed that internal migration accounted for sixty three per cent (63%) the total migratory movements within that area.

International remittances come mainly from three large, but distinct types of migrant. Firstly, there is an important, mainly American and British, diaspora of well-educated, high or middle income earners.  Secondly, there is a diaspora of Bangladeshi origin, in the same countries and other industrialized countries, belonging to the low-income or unemployed segments of the population.  Thirdly, there is a major group of migrant laborers, residing for a specific period in Middle Eastern, South-East Asian and some industrialized countries.  These migration movements are not unique for Bangladesh, but show similarities with other South and East Asian countries (Skeldon, 2003; Waddington, 2003; Wickramasekera, 2002).

According to the International Organization for Migration (IOM, 2004) there are about three million Bangladeshi migrants working abroad sending remittances more or less regularly to their families and friends at home.  In addition, there are about one million Bangladeshis permanently residing abroad.  They also send remittances to their families.  The temporary and permanent migrants together represent about four million families in Bangladesh.  In 2003, approximately three billion US Dollars (US$ 3 Billion) came into Bangladesh as remittance and that is only through the official channels.  It is estimated that an equal amount came in through informal channels.  At the national level, the implications of this remittance flow are enormous.  The country’s foreign currency reserve is supported by this remittance therefore remittance is playing a crucial role in supporting the balance of payment.  Remittance also accounts for thirty per cent (30%) of the national savings.  Research also shows positive impact of remittance on consumption, investment and imports.

Transfer of remittances takes place through different methods.  Forty six percent (46%) of the total volume of remittance has been channeled through official sources, around forty (40 %) through hundi, four point six one per cent (4.61%) through friends and relatives, and about eight per cent (8%) of the total was hand carried by migrant workers themselves when they visited home (Siddiqui & Abrar 2001).

Banks are the major actors in remittance transfer.  On the issue of transfer of remittance the banking services have to be made more attractive to wean clients away from hundi.  Banks have to match the level of services currently provided by the hundi operators such as cost and speed.  Different steps may be undertaken to improve the quality of services provided by the banks (Siddiqui & Abrar 2001).

According to the Guidelines for Foreign Exchange Transaction, Volume-1 (cited in BIBM reading materials), foreign remittance refers to remittance of foreign exchange that are received in and made out abroad.  Foreign remittance also includes purchase and sale of freely convertible foreign bills and currencies.  There are two types of foreign remittance:

• Foreign inward remittance: Remittance of foreign currency being received in the country from abroad is called inward foreign remittance.
• Foreign outward remittance: Foreign currency being made out abroad may be termed as foreign outward remittance.

The modes of foreign inward remittance are telegraphic transfers (T.T), demand draft (D.D), and mail transfer (M.T) and travelers cheque (T.C).  These are the common modes of foreign inward and outward remittances.

Beside these foreign inward remittances also include remittances on account of export purchase of bills, purchase of draft, purchase of T.C foreign currency notes and coins, cheques issued on foreign banks in favor of beneficiaries in Bangladesh etc.  Local currency debited to non-resident taka accounts of foreign banks or convertibles taka accounts constitute inward remittances of foreign exchange.  Local currency credited to Non Resident Taka account of foreign banks or convertible Taka accounts constitute outward foreign remittance.  Outward foreign remittance also comprises remittance on account of import and private remittance on sundry items.

Formal transfer methods

The statistics of the Bangladesh Bank only reflect the formal remittance flow. According to a study of Mahmud (cited in Puri and Ritzema, 1999), twenty per cent (20%) of the total amount of remittances are informal remittance in Bangladesh.  A study of Siddiqui and Abrar (2001) among labor migrants to the UAE revealed that forty six percent (46%) of the total volume of transactions has been channeled through official methods around forty percent (40%) through the hundi system, five per cent (5%) through friends and relatives and eight per cent was hand carried by migrants themselves.

Official channels refer to demand drafts issued by a bank or an exchange house, traveller’s cheques, telegraphic transfers, postal orders, account transfers facilities and electronic transfers.  Of these, demand drafts are most popular (Siddiqui and Abrar, 2001).  Expatriates and migrants using official channels have quite a few options.  Firstly, they can send money from a bank in the destination country to a bank in Bangladesh.  The former bank must have a correspondent relationship with the latter.  Secondly, they can send money through branches or subsidiaries of a Bangladeshi bank in the destination country.  Thirdly, money can be remitted through exchange houses or banks in the destination country with which a Bangladesh bank has a taka drawing arrangement.  Due to the direct link between the bank or exchange house in the destination country and the one in Bangladesh in the last two cases, the transaction time should be shorter.  The Bangladesh financial system consists of the

Bangladesh Bank (BB), nationalized commercial banks (NCB), and government owned specialized banks, private commercial banks (PCB), foreign banks and non-bank financial institutions.  The BB is the central bank of Bangladesh, which supervises and regulates all the other banks.  In order to deal with foreign exchange, banks need authorization from the BB.  Banks that are allowed to deal with foreign exchange either has their own exchange branches in the destination countries or link up with international banks or money exchange companies, like Western Union.  Importantly, private banks are not allowed to have branches in cities abroad here as NCB’s already have branches.  However, they can have correspondent banks.  While all four NCBs, Janata, Sonali, Pubali and Agrani Bank, have branches abroad or are linked up with other banks, only one specialized bank, i.e. Bangladesh Krishi Bank, and half of the PCBs have similar arrangements.  Krishi Bank was established to meet the credit needs of the agricultural sector.  None of the non-bank financial institutions are allowed to deal with remittances.  These include the micro-finance institutions (MFIs) such as Grameen Bank, BRAC, ASA, and Proshika.  Most of these institutions have an explicit social agenda and cater to the needs of the poorest section of the population.  Mostly they provide credit to women.  Recently, BRAC created the BRAC Bank.  Importantly, this is not an MFI, but a PCB.  However, it makes use of the vast network of the MFI BRAC.  Currently, MFIs are not allowed to make financial transactions and deal with foreign exchange, making the involvement of MFIs in remittance transfer very difficult.  BRAC Bank illustrate that the majority of official remittances is channeled through NCBs (about 58%), while PCBs dealt with thirty eight per cent(38%), foreign banks with about three per cent (3%) and specialized banks with less than one per cent (1%) of the remittance flow in 2003.  On the basis of an interview with the governor of BB, Siddiqui and Abrar (2001) come to quite different figures for 2000.  According to the governor of BB, about seventy three (73%) of the remittances were channeled through official banks, and more than twenty six per cent (26%) through PCBs.  In terms of volume of remittances, the most important commercial bank would be Islami Bank of Bangladesh Limited (IBBL).  Other noteworthy PCBs in terms of outlets abroad include Uttara Bank, Arab Bangladesh Bank and National Bank Ltd.

Informal Transfer Method

Hundi system is the most important informal way in which money is transferred to Bangladesh.  In the hundi system the migrant gives money to an intermediary, who contacts an agent in Bangladesh.  The agent in Bangladesh is responsible for giving the equivalent of the money that the migrant has given to the intermediary to the recipient in Bangladesh.  An Informal Exchange rate is used to determine the amount of money the recipient gets.  The recipient can take the money from the agent by using a code that s/he receives from the migrant.  Because there are no official documents used in the process – although informally it is often documented – the system is clearly based on trust (Berlage, 2003, El-Qorchi, 2002).

Using the informal channel some problems have been created in the economy of the country.  These are:

• Funds that transfer illegally through banks and other financial institutions threat the integrity and stability of financial system and even weaken the government.
• Significant amount of illegal proceeds invests in the real estate.
• Informal channel of transfer money can create liquidity problem.
• Mysterious changes in demand of money and increase of volatility in the international capital flows, interest and exchange rate may occur due to use of informal channel.

Comparison and Rationale behind using formal and informal channel:

Officially recorded remittances received by developing countries are estimated to have exceeded $93 billion in 2003. They are now second only to foreign direct investment (around $133 billion) as a source of external finance for developing countries. In 36 out of 153 developing countries, remittances were larger than all capital flows, public and private. (World Bank,2005).

People use informal channel rather than formal channel because of easier means of transaction and lower cost.  The costs of receiving remittance through official and hundi channels were calculated. For official channel these included service charge, speed money, conveyance and other costs. The average cost per official transaction was found to be Tk.136.50. For hundi, at the receiving end, the costs involved phone charges, conveyance and remittance lost. For the 100 households such costs on average stood at Tk.75.53 per transaction. Under official transaction, the time required for receiving cash after depositing the draft in the bank was 12.83 days. For hundi, the average time per transaction following receipt of information was 3 days. (Siddiqui & Abrar, 2001)

Informal remittance systems are widely used because of their speed, low cost, convenience, versatility, and potential for anonymity. Effective regulations should not impede the flows of remittances nor drive remittance systems underground. Implementation of remittance regulations is likely to take some time. In cash-based and low-income countries, implementation of an effective regulatory framework will be especially difficult because access to banking and other financial services is limited, and supervisory capacity is weak. There is extensive ongoing work by the World Bank, other IFIs, and national government agencies and academia on projects to promote the use of banking channels for remittances. Other work is addressing the macroeconomic impact of remittances and their links to the trade and foreign exchange areas.

The flow of official remittances in Bangladesh between 1996 and 2002 was about US dollar 23.7 billion. This figure represents the remittances officially recorded by the central bank of Bangladesh. However, it has been variously reported in the media and in the banking channels that a significant amount of remittance is made outside the banking channel for reasons of better exchange rate, time saving, low transaction cost and ease of remittance. Some sources, estimate that the size of unofficial remittance may be around the same amount as the remittance made in the official channel. The remittances make significant contribution to the GNP and helps in offsetting the unfavorable balance of payments by providing about 30 percent of the export earnings and 20 percent of the import payments. The remittances of the migrant workers constitute about 30 percent of the national savings of the country.

Positive and negative impacts:

One school of thought suggests that remittances are beneficial at all levels including the individual, household, community and national levels. They increase disposable incomes and demand for local goods and services and play a vital role in developing local capital markets and infrastructure. Another school of thought sees remittances as contributing to dependent relations between the sending and receiving countries. Within countries, remittance increases inequality between households and cause macro-economic stability problems for countries with low GDP. A third school of thought, the emerging trans-migrant school, and links these two positions by focusing on how social networks link local and global processes. This approach does not restrict itself to looking at money flows but also considers the flow of goods and new ideas that impact on the social fabric and structures of the home communities. It focuses on how remittances are embedded within an emerging structure where many economic, social and even political transactions take place.

Literature from this perspective takes a balanced view of the impacts. Although Critical of the structure within which migrants remit, it allows that positive impacts can occur. While the overall effect on poverty can be ambiguous, empirical studies overwhelmingly support the idea that remittances contribute powerfully to reducing poverty in most households and communities. While they do increase inequality at the local level, at the international level they transfer resources from developed to developing countries and so help to reduce inequality. However, where countries have many migrants and a low GDP, remittances can decrease macroeconomic stability and cause poverty especially for those who do not receive remittances.

Economic Impact and cost benefit analysis:

The costs and benefits issues in international migration can be looked at the private, social and macro-economic levels. This phenomenon has an overall impact on economic development of migrant sending countries in terms of employment, balance of payment, commodity exports, business profits and the government revenues. The migrant remittances create avenue for optimism in terms of productive investments through multiplier effects of increased expenses for housing and current consumption, investment in land creates proceeds for other productive uses and constant flows of remittances become important source of funds for investment loans from financial institutions. On the negative side, one can raise issues of enrichment of private individuals, low dependency as a source of foreign exchange earning and turbulent nature of remittance due to uncertainty in the host country.

Traditional neoclassical economics attributes individual personal tastes or decision-making to international migration; people move to improve their income.  The fundamental basis revolves around equilibrium and the market’s natural inclination towards it.  In relation to immigration, individuals looking for a higher wage migrate out of their originating low-wage region.  It is assumed that the search for a higher wage is the prime reason for migration, with other factors playing a comparatively minor role.  At this point, neoclassicists point to a closure of the wage gap between the sending and receiving regions which should virtually put an end to migration.

Remittance in Bangladesh

According to official data of the Bangladesh Bank and Bureau of Manpower Employment and Training (BMET), Bangladesh received about a total of thirty thousand four hundred million US Dollars (US$ 30,400) in remittances between 1976 and 2004.  Figure below shows that the official flow of remittances to Bangladesh has increased dramatically in the last twenty nine (29) years.  While in 1976 only twenty four million US Dollars (US$ 24 million) entered the country through official channels, this number stood at more than two thousand six hundred million US Dollars (US$ 2600 million) in 2002.  Until the early 1980s remittances increased steadily, reaching around six hundred thirty million US Dollars (US$ 630 million) in 1983.  The next year the remittance flow decreased, but from 1986 onwards the growth started again.  In the last twelve (12) years a major increase in the amount of remittances has taken place, from just under eight hundred million US Dollars (US$ 800 million) at the end of 1990s to more than two thousand million US Dollars (US$ 2000 million) in 2001 and even surpassing three billion US Dollares (US$ 3 billion) two years later.  In 2003, official remittances stood at three billion eighteen million US Dollars (US$ 3.18 billion) according to BMET figures.  In the first nine months of 2004, two billion thirty five million (US$ 2.35 billion) in official remittances entered the country.

According to Berlage (2003), who have compiled data from a number of information sources, in 1999 Bangladesh was the sixth remittance receiving country in the world in absolute figures.  Kuddus (2003) reports that the remittance flow to Bangladesh represents two per cent of the global remittance flow.

Offering an explanation for the evolution in remittances is not easy.  Of course the flow of remittances is very much linked to the migration rate.  The increase of labor migration to the Middle East in the second half of the 1970s has had its effects on the remittance flow.  However, the correlation is not a straightforward one.  There is always a time lag: the migrant needs time and money to settle him or herself in the host country.  Siddiqui (2003) argues that the emigration rate has been higher than the growth of remittances.  She identifies lower wage rates as explanatory factors: Bangladesh has recently experienced emigration of more unskilled and semi-skilled migrants, whose wages are lower in comparison with the previous wave of skilled emigrants, and simultaneously wage rates in destination countries have fallen drastically in the last decade.

Political turmoil in the countries of destination has also affected the remittance flow.  The sluggish growth in the mid-1980s may be attributed to the Iran-Iraq war of that time.  A similar correlation might exist between the slow growth rate at the beginning of the 1990s and the Gulf War (Afsar, 2002).  It is also assumed that the recent increase is a result of more people sending money through official channels, given the increased attention to anti-terrorism policies.

Puri and Ritzema (1999) list a number of other factors that influence the size of remittances, such as exchange rates, macroeconomic policies, the marital status of  the migrant, and the economic activity in the host or sending region or country. Furthermore, the figures of the Bangladesh Bank only reflect the formal remittance flow.

Remittance saw a strong boost in the just concluded 2004-05 financial year, recording a healthy 14.5% growth. According to the Bangladesh Bank (BB) statistics, non-recident Bangladeshis (NRBs) sent US$3866.63 million in the 2004-05 fiscal year, crossing the target by more than $246 million. The target for remittance income for the 2004-05 financial year was set at $3620 million. Remittance inflow maintained a substantial growth in most of the months and in March 2005 it was an all time single month high, amounting to $401 million. NRBs sent $349 million in June 2005. According to a top official of the central Bank, Remittance service through banking channel has improved significantly in the recent years. Besides, anti-money laundering act is becoming stringent in different countries, discouraging people to send money through hundi. Private and Foreign banks are also taking different measures to increase their earnings from remittance service and signing deals with the service providers who have strong networks across the globe. These banks are marketing remittance services very aggressively and providing quick and secured services for their clients, which would push remittance inflow in the coming months. Currently overseas manpower mostly unskilled labor remittances are major source of our import payments. Remittances from overseas Bangladeshi workers increased significantly from US$1088.72 million in 1993/94 to US$1705.02 million in 1998/99. During 2001/02 remittances stood at US$ 2501.13 million which was US$ 1882.10 million in 2000/01.

NRBs sent $3371.917 million in the 2003-04 financial year. The remittance inflow crossed the three billion mark, amounting to $3061.97 million in the 2002-03 fiscal year for the first time. Besides, NRBs sent $2501.13 million in the 2001-02 fiscal and $1882.10 million in the 2000-2001 fiscal. According to BB statistics remittance inflow saw a negative growth of 3.45% in the 2000-01 financial year. SM Aminur Rahman, managing director of Janata Bank, stated that Increase in the number of remitters apart, new initiatives by banks including opening exchange house abroad, signing deals with other service providers are some of the reasons for augmenting remittance inflow in the last fiscal year. The bank which linked a deal with Western Union last year, will also bring another 150 outlets under its network shortly. Its remittance service recorded over 100 percent growth in the last five months on an average.

Remittance inflow during the July-April period of the current fiscal year (2004-05) crossed $3 billion mark recording a 14.7% growth over the same period of the previous fiscal year. Statistics available with the Bangladesh Bank revealed that remittance inflow in 10 months of the current fiscal rose to $3.19 billion from $2.78 billion compared to the same period of the previous fiscal. Robust growth of Remittance is maintaining a trend required to achieve the amount programmed in the mid-term macroeconomic framework in the Poverty Reduction Strategy paper which projects $3.6 billion remittance in the current fiscal.

The overseas Bangladeshis have remitted some $373.9 million in April while in March the amount was $401 million. The vibrant remittance flow has played a contributory role in keeping the foreign exchange reserve above $3 billion mark. Over the years, remittance appeared as a significant life line of the economy lowering the pressure on balance of payment.

Country-wise remittance flow into Bangladesh:

The boom in oil revenues in the middle-eastern countries since mid-1970s created large job opportunities for the Bangladeshi workers.  According to the official data of Asian Development Bank (ADB), In terms of flows of migration by country of employment from 1976 to 2001, the share of Saudi Arabia is 47 percent, Kuwait 9 percent and UAE 11.5 percent.  Currently, nearly 50 percent of the remittances come from Saudi Arabia alone, followed by 15 percent from USA, UK, Germany taken together, 13 percent from Kuwait, and 8 percent from UAE.  The share of the middle-eastern countries increased over time accounting for 80 percent of the total remittances in FY2001.  Japan and Malaysia together accounted for 4.5 percent of the remittances in FY2000, but only a little over 2 percent of the remittances in FY2001.  Country-wise total amount of remittance flow is shown in the figure below.

Comparison of remittance flow to Bangladesh and it’s contribution of SEBL:

SEBL is involved with both the form transactions of inward and outward remittance processing service. SEBL started its remittance business in Bangladesh since December, 1996. SEBL tries their level best to increase the flow of remittance through banking channel. Information provided in (Table-1) shows that remittances from migrant Bangladeshi workers increased significantly from US Dollars 3,061.97 million in FY 2002-03 to US Dollars 3,866.63 million in FY 2004-05. Moreover, the inflow of remittances coming through SEBL also increased appreciably from US Dollars 53.95 million in FY 2002-03 to US Dollars 96.93 million in FY 2004-05. In FY 2002-03 the contribution of remittances coming through SEBL was 1.76% of total inflow, where as it stood 2.51% of total inflow in the recent FY 2004-05. During 2003-04 remitting amount was US Dollars 3,371.97 million, where as remittance inflow from SEBL stood at US Dollar 66.34 million which was 1.97% of total inflow. The following statistics shows that remittance flow to Bangladesh has increased through years as well as the inflow coming through SEBL has increased than the past years. Therefore, the percentage of remittance inflow through SEBL also shows a gradual increase.

Table-1:

Comparison of SEBL’s remittance inflow with total foreign remittance inflow in Bangladesh

Source: Bangladesh Bank and Remittance Department of SEBL

Note: Calculation:

Remittance % of SEBL with total remittance inflow in Bangladesh

Foreign Remittance Inflow through SEBL (US$ million)= Foreign Remittance Inflow in Bangladesh (US$ million)  *  100

Comparison of Remittance Inflow through Foreign, Private and Public Banks:

Public banks are more active and aggressive in remittance business comparing with foreign and private banks operating in Bangladesh. Sonali Bank, Agrani Bank and Pubali bank is major player in this field. According to the Bangladesh Bank statistical data, the leading bank in the remittance business is Sonali Bank. In 2001, remittance collected by Sonali Bank was about 42.25% of total inflow. Data presented in (Table-4) revealed that in 2002, remittances came through Sonali Bank stood at US Dollars 740,862.06 thousand which was US Dollars 741,551.72 thousand in 2003. Branches of the public banks are spreading over the urban and remote rural areas of Bangladesh. Sonali Bank has 1,294 local branches throughout Bangladesh. Public banks are promoted with their excellent remitting services and wide network to facilitate homebound remittance. Public banks have their subsidiary company, representative and agency offices in most of the middle-eastern countries and in UK and United States.

Table-4:

Comparison of Remittance Inflow of Foreign, Private and Public Banks:

Source: Foreign Remittance Section of authorized banks.

Remittances coming through foreign banks are higher than the amount comes from private banks. Among the private banks Islami bank limited is the major player in handling remittance. BRAC Bank limited has already installed online system in 300 outlets of total 1,400 outlets across the country and extended it’s remittance service to rural areas. Remittance inflow from Southeast bank was US Dollars 7,859.17 thousand in 2001 and US Dollars 10,273.28 in 2002. Where as, remittances came through SEBL was US Dollars 53,948.16 thousand in FY (2002-03) and US$ Dollars 66,344.70 thousand in FY (2003-04). Public banks have their outlets in urban as well as in remote rural areas that foreign banks does not have. To place the remitting amount to rural areas transactions are drawn on the third bank and most of the time on public banks.

Remittance Process at SEBL:

Transfer of funds from one country to another country goes through a process which is known as remitting process. The bank has corresponding relationship with the group banks and maintaining ‘Nostro Account’ with other foreign banks in US Dollars. Bangladeshi expatriates are sending foreign remittances to their local beneficiaries through that account. Therefore, when the Bangladeshi expatriates through other banks of different countries or through the group banks of SEBL remit the fund to their ‘Nostro Account’ then the remittance department of SEBL receives online messages. These messages are hold into the pending files according to different currency. After verifying signature, checking the account number, reference number, and name of the beneficiary, the remittance section transfers the amount to the account of the beneficiary. SEBL has four branches in Dhaka and one in Chittagong and does not have any branch in other urban and as well as in the remote rural areas. Therefore, the complexity arises, if the beneficiary does not maintain his/her account  with any of the branches of SEBL. In these cases SEBL has to take help from a third bank, which has branch over there, where the beneficiaries maintain their accounts.

Foreign inward remittance transactions are held through TT (Telegraphic Transfer), DD (Demand Draft), (M.T) Mail Transfer and CO (Cashier’s Order). Besides these, inward remittances transactions also constitute purchases of bills, purchases of drafts under Travellers’ Letters of Credit (L/C) and purchases of Travellers’ Cheques (T.C).

SEBL as a foreign bank divide their daily transactions into two parts through sorting. Remittances comes through their group banks which indicates from other country’s SEBL bank are keep separated and Remittances comes through non group bank which means from other foreign banks are separated to check the cover; where amount, reference numbers, date are checked. In case of non group bank payments are given upto this date. During the time of sorting foreign currency to foreign currency and foreign to local currency transactions are keep separated and processed separately. Other things being considered in the time of sorting are whether these transactions are held between person to person, person to company, company to company, or company to person. In case of person to person payment will be given directly. If the amount is equivalent to $2000 and above, then the bank will issue Proceed Realization Certificate (PRC).  If transactions are held between person to company then bank will ask for ‘Form C’ to know the purpose. For company account if the transactions are held equivalent to $2000 or above then the company should provide ‘Form C’ to declare the purpose. SEBL group banks and some other foreign banks maintains ‘Vostro account’ in Bangladeshi local currency (Taka) with SEBL Bangladesh for the  smooth transaction of foreign to local currency amounts. On the other hand, SEBL Bangladesh also maintains ‘Nostro account’ in foreign currencies with other foreign banks and with their group banks. SEBL tries to provide better remitting service to their customers by offering attractive exchange rate. They consider some special corporate customers to whom they provide special consideration by offering higher exchange rate than normal. SEBL as a foreign bank operating in Bangladesh looking forward and trying to generate more remittance inflow by providing smooth remitting facilities.

Introduction:

GDP equals the sum of the four types of expenditure algebraically as:

Y= C+I+G+NX, where Y=gross domestic product or output.

C= consumption expenditure.

I= private sector Investment

G= government purchases

NX= net exports.

GDP and as well as the components of GDP as exports, imports, consumption and investment is greatly affected by the foreign remittance inflow of a country. Considering Bangladesh economy, remittance is a major contribution of GDP, export and import. In 1999, remittance inflow was 4.21% of GDP, 28.10% of export and 19.88% of import.  In FY-2001 Remittances into Bangladesh were equivalent to 29% of merchandise exports and was 4.2% of GDP.  In Bangladesh, 4.8% of remittances are used for investment in business and 3.1% is used for savings (Afsar, 2001). The trend, contribution and effect of remittance on GDP, exports, imports, consumption, savings and investment is discussed in the paper considering the Bangladesh economy.

Remittance and it’s contribution to GDP:

Puri and Retzema (1999) revealed that the role of remittance is frequently understood by calculation of remittances as a percentage of the macroeconomic indicators such as gross national product (GNP), gross domestic product (GDP) or government expenditures. The most meaningful comparison is with exports and imports, a comparison which stresses the relative contribution of remittances to foreign exchange earnings, the importance of the ‘labour export industry’ and the role of remittances in the consumption, savings and investment scheme. Remittances are above 5% of GDP for 19 countries in the sample studied.

Bangladesh’s overseas workers contribute immensely to the economy with strong positive impact on economic growth, employment, and balance of payments. Since 1976, about 3.3 million workers went abroad and cumulative remittances since then amounted to around $21 billion. (ADB, 2001). Contribution of remittance on GDP is gradually increasing. Comparing the data from 1975 to recent data it is found that the contribution of remittance on GDP is higher and increasing gradually from the past years. From (Fig-1) and according to the information available in (Appendix-C); it is found that in 1975 total amount of remittance was US$ 8.5 million, which was 0.01% of GDP. While in 1980, remittances became US$197.4 million or 0.38% of GDP and the real GDP stands for US$ 52,010.05 million. In the year of 1985, the amount of remittance though slightly reduced to US$ 363.7 million than the previous year amount of US$ 526.6 million in 1984. The contribution of remittance inflow on GDP was 0.90%. After 1985, the inflow of remittance was again increased gradually.

The amount of real GDP is declining than the past years. In 1970, the amount was in the peak and stands for US$ 144,345.43 million, which is the ever highest total so far. Since 1965 to 1975 the total amount of real GDP was comparatively higher, which was US$ 122,544.40 million and US$ 74,030.15 million respectively. After that the real GDP fluctuates in a constant manner. From 1976 to 1999 Real GDP holds on US$ 46,126.08 and 40,469.65 respectively.

The contribution of remittance in the economy is higher than the past. Regarding the foreign Remittance inflow on GDP, the percentage was 0.90, 1.98, 3.03 and 4.21 in the year 1985, 1990, 1995 and 1999 respectively. The impact of remittance in the economy provides a positive indicator. According to ADB, the remittances rose to $ 2.0 billion or 4.2% of GDP in 2001, implying an average annual growth rate of 8.6%.

The amount of real GDP fluctuates in a constant manner. On the other hand, the amount of remittance is increasing gradually. So, the remittance percentage of GDP is higher than the past years and gradually increasing.

Remittance and it’s contribution to Exports:

Remittance can be considered as a form of export. Every year Bangladesh earns a huge amount of foreign earnings through exporting manpower to other countries. In the recent financial year (2004-05) the amount stands for US$3,866.63 million.

Through Exporting manpower from Bangladesh to many countries, the country earns a huge amount of foreign earnings. Haque (2004) connoted that remittance from the Bangladesh National working abroad is now the highest source of foreign exchange earning of the country as the earnings from the major exporting sector of readymade Garment (RMG) has already decreased in the recent period. On the other hand, earning from RMG is not net. But the earning from remittance is net. The importance of remittance for the national economy has become more pronounced in the wake of pre quota-free period of readymade garment sector.

Athukorala (1993), Swamy (1981), and Brown (1995) suggest that, for a number of countries, the level of remittances is very significant in proportion to the country’s merchandise exports. In Bangladesh, remittances were equivalent to about 44 percent of total merchandise exports in 1993.  The contribution of remittance in Bangladesh is much higher than other Asian and South Asian countries. In India, remittances were equivalent to about 13 per cent in 1990; in the Philippines, about 22 per cent in 1993; and in Pakistan, about 24 per cent in 1993.

Russell 1986, Keely and Tran 1989, Massey 1992, Taylor and Irma (1996) revealed that at a macroeconomic level, remittances often provide a significant source of foreign currency, increase national income, finance imports and contribute to the balance of payments.

The amount of remittance grew in the recent years. It has a major contribution to the total export earnings of the developing country Bangladesh. Export earnings from goods & services are also increasing than the past years. From (Fig-2) and according to the information available in (Appendix-D); it can be stated that in the year of 1975, remittance receipts was $8.5 million, export earnings stands for $ 412.66 million and the inflow of remittance was 2.06% of Export. In 1980 this percentage increased to 26.99% of export. At the same time, remittance inflow is rising and this resulted in a gradual increase in the share of contribution with export. Regarding the contribution of foreign remittance inflow with export earnings, the percentage was 31.24, 40.44, 28.91 and 28.10 in the year 1985, 1990, 1995 and 1999 respectively. In average remittances are equivalent to 32.75% of the total exports. In the year of 1983, the rate of percentage was ever time peak, which was 64.17% of export so far.

Export earnings from goods and has increased than past years and gradually increasing. The amount of total earnings from export were US$ 731.41 million, US$ 1164.26 million, US$ 1881.68 million, US$ 4,143.90 million, US$ 6,063.80 million in the year 1980, 1985, 1990, 1995 and 1999 respectively. Export earnings are increasing and remittance as a part of export earnings is also gradually increasing in the same manner. According to the ADB report the current level of remittances is able to offset 65 percent of the trade deficit of the country. Remittances into Bangladesh were equivalent to 29 percent of merchandise exports and 144 percent of official reserves in FY2001.

Remittance and it’s contribution to Imports:

Moreover, these researchers view remittances as unpredictable and as a cause of increasing inequality. Also remittances are frequently spent on imported consumer goods, rather than locally produced ones, decreasing the potential multiplier effect of the money and increasing import demand and inflation (Russell, 1986 & Martin, 1990). The availability of foreign exchange, together with growing demand for consumer goods not available in the domestic market, has been linked with a rising demand for imported goods.

The availability of foreign exchange, together with growing demand for consumer goods not available in the domestic market, has been linked with a rising demand for imported goods. (Puri & Retzema 1999).

According to the ADB report, Bangladesh’s current ratio of import to GDP is around 20 percent and debt service payments are equivalent to 7.5 of foreign exchange earnings. Remittances financed 20 percent of the imports in FY2001.

Remittance increased the demand of import goods and creates inflation can be considered as the negative impact in the economy. Though the export earnings are increasing gradually but at the same time the import amount is also increasing. Import is always exceeded the amount of export. The import amount was US$ 1,346.65 million, US$ 2,776.50 million, US$ 3,346.27 million, US$ 4,108.87 million, US$ 6,448.70 million, US$ 8,572.38 million in the year of 1975, 1980, 1985, 1990, 1995 and 1999 respectively. Where as export amount stands for US$ 412.66 million, US$ 731.41 million, US$ 1,164.26 million, US$ 1,181.68 million, US$ 4,143.90 million, US$ 6,063.80 million in the year of 1975, 1980, 1985, 1990, 1995 and 1999 respectively.

Without the remittances, either the country’s imports would have to be drastically cut down or its current account deficit risen to highly unsustainable levels. Currently, remittances are higher than the combined flows of foreign aid disbursements and foreign direct investments. Overall, remittances are supporting economic development of the country in a significant way. (ADB report, 2001).

ANALYSIS AND FINDINGS

SWOT ANALYSIS

Not surprisingly, in the competitive arena of marketing era SWOT analysis is a must based on Product, Price, Place and Promotion of a financial institution like private bank. SWOT analysis helps the bank reconstruct different sorts of shortcomings of the bank. From the SWOT analysis we can figure out ongoing scenario of the bank. So to have a better view of the present banking practices of SEBL, I did the SWOT analysis.

In 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 factor, which act as opportunity and threat.

Strength related to Credit operation: Huge Capital Fund: Southeast Bank Limited has a authorized Capital of Tk. 3000 million and the Paid -up Capital of Tk. 1199.12 millions. Practically this is the second largest bank in the private sector in terms of capital fund and is next to Islamic Bank Bangladesh Limited. This huge capital fund has increased the business power of the company as the maximum amount of loan that can be disbursed to a single customer or group depends on the capital fund. This is because no bank can give funded facility more than 15% of its capital fund to a single customer as per central bank directive which was done to avoid concentration of credit and risk exposure.

Delegation of Credit sanctioning authority: Unlike many other banks Southeast Bank Limited believes in the authority delegation among the executives of the bank depending on the hierarchy. The bank has authorized its executives and branch managers to sanction and disburse loans depending upon the security offered by the customer. This has improved the processing of loans and accelerated credit approval. Customers do not have to wait for long time indecisively. This faster service has been successful to address the immediate fund requirement of the customers.

Segregation of Corporate division from the credit risk management and credit Administration unit: The Bank in line with the Bangladesh Bank directive has segregated credit risk management unit from credit administration and sanctioning unit. Corporate division functions as the credit marketing unit and sends the potential lending proposals to the credit risk management unit where the lending proposals are meticulously scrutinized to judge the financial feasibility and repayment capacity of the customer. Credit administration unit monitors the repayment of the loans and supervises documentation. This has helped to improve asset quality of the bank and reduce default loans.

Involvement of high caliber young personnel: Southeast Bank believes in the power, speed and capacity of younger generation. The bank has thus involved very young and promising young in its credit operation. These people with great analytical ability and speed have significantly bettered the credit processing.

Sectoral Allocation of Credit: The Board of Directors of the bank has put the ceiling on the amount of loan that can be sanctioned in a single industry. This has great significance as the bank loan is diversified among different industries. So the possibility of failure due to down turn in any industry is low.

Efficient Fund Management: The treasury department of the bank is very skilled in fund raising in terms of matching the maturity of its deposit and loans. The bank takes deposits with the minimum interest rate to maintain the spread.

Emphasis on Small and Medium Enterprises: Small and Medium Enterprises are expected to be the growth engine of the economy of all developing countries in the near future. This is because these countries suffer from lack of sufficient investment capital and technology to compete with the developed countries. Southeast Bank Limited eyeing the opportunities for growth in the sector has formed a special small and medium enterprise unit. This unit takes care of all investment proposals under the head of SME finance. These customers are highly remunerative as they not tough bargainers and stay loyal to the bank. And the possibility of bank’s failure due to default is less.

Augmented focus of Retail Credit: Since all the big customers are highly price sensitive they are not highly remunerative to the bank. Southeast Bank has formed a retail credit unit to look after the retail credit aimed at increasing the living standard of the people. The bank is trying to inflate the retail credit portfolio. Although the possibility of default is to some extent higher retail credit is remunerative. Again the possibility of bank’s failure is low.

Weaknesses

Non-availability of high technology: Southeast Bank has not yet installed any state-of-the art software and ATM machines. This has created some difficulties for the marketing as the customers now want all services under one roof. Southeast Bank is dealing with some foreign companies to install its high technology software.

Reliance on Sufficient Collateral: Southeast Bank Limited is reluctant to sanction loan in favor of business firms with insufficient collateral security. This is practically important for small customers who are new to the bank. The requirement of collateral security in many cases keeps firms away from bank’s credit which has reduced profitability.

Absence of Recovery agent: There is no external firm for recovery of stuck up loans. Thus many officers of the branch are engaged in recovery which retards service to customers and productivity.

Opportunities

Government Support: Government of Bangladesh has rendered its full support to the banking sector for a sound financial status of the country, as it has become one of the vital sources of employment in the country now. Such government concern will facilitate and support the long-term vision of Southeast Bank Limited.

Evolution of E-Banking: Emergence of e-banking will open more scope for the bank to reach the clients not only in Bangladesh but also in the global banking arena. Although the bank has already taken step to enter the world of e-banking but yet to provide full electronic banking facilities to its customer.

Banking and information technology: Banking and information technology might give the bank leverage to its competitors. Nevertheless there are ample opportunities for Southeast Bank to go for product innovation in line with the modern day need.

Threats

Mergers and Acquisition: The worldwide trend of merging and acquisition in financial institutions is causing concentration. The industry and competitors are increasing power in their respective areas.

Poor Telecommunication Infrastructure: As previously mentioned, the world is advancing e-technology very rapidly. Though Southeast Bank Limited has taken step to join the stream of information technology, it is not possible to complete the mission due to the poor technological infrastructure of our country.

Frequent Currency Devaluation: Frequent devaluation of Taka and exchange rate fluctuations and particularly South-East Asian currency crisis adversely affects the business globally

Emergence of Competitors: Due to high customer demand, more and more financial institutions are being introduced in the country. There are already 52 banks of various types are operating in the country. Many banks are entering the market with new and lucrative products. The market for banking industry is now a buyer dominated market. Unless Southeast Bank Limited can come up with attractive financial products in the market, it will have to face steep competition in the days to come.

Highlights

For the year 2006 and 2005

(BDT in Million)

Source: Annual Report 2006, SEBL

Findings

Southeast Bank is an authorized dealer branch. Though customer are satisfy there not highly satisfy with there services. All kinds of transaction are occurred here. But they have to face different kinds of problems in this Branch, Like in General Division, Advance Division, Foreign Exchange Division all of three division finding some problems are as below :

• Delay in transaction and over the counter for this reason the customer very finds that there is long queue in the counter. The reason of such queues due to the lack of initiative of the concern officers.
• Absence of modern technology so works delay and it does not compete with other Bank.
• In Foreign remittance previously customer need only nationality certificate. But now change of the rules they need passport and ICDC Number. So sometime people face problem for this new rules.
• Discourteous Behavior by staff and officers very often it is found that customer and a member including branch manager on some occasion are found in heated discussion.
• Lack of Team work is a major problem in general section. It is one of the most important criteria for development of customer service in this branch.
• In Advance Division they face the various problems to recovery the loan installment. The loan installment does not realize in the proper time for that reason this branch may be assign as a problem bank.
• IBP (Inland Bill Purchase) is a risky business it is one of the main business in this branch. There are many IBP party in this branch but there not big party. IBP limit is very small so many times then face some problem. For that reason advance is not increase. Big L/C amount and the bank Purchase the big amount.
• The limit of UHRL (Uttara House Repairing Loan) only 15 lacs.
• Sometimes the valuation of properties are does not calculate properly for that reason customer is sufferer. It does not offer various loan projects than other Bank.
• In Foreign Exchange Division there main problems is lack of manpower for that reason the employee does not complete the job in time.
• In the Foreign Exchange document systems are not moderns so employee wastes their time for looking document for in time.
• Decisions are centralized.
• As an authorized dealer branch, they always need to correspondent with others.
• In credit and foreign exchange section has to proper different types of loans and L/C proposal. But they have only three computers in the whole branch.
• Broad Band line is suitable instead of on line care systems. Lack of on line banking the work is slow.
• In general banking system they follow the traditional banking system. The entire general banking procedure is not fully computerized.
• Lack of verity of services is also a drawback of the general banking area of the Southeast Bank. The bank provided only some traditional limited services to its clients. As a result the bank is falling behind in competition.
• They are not using Data Base Networking in IT department. So they have to transfer data form branch to branch and branch to Head Office by using floppy disk and it is not a good system.
• In cash of online banking service Mercantile Bank charge is Tk.1000.00 yearly, which is high compare with the other bank.
• According to some clients, opinion introducer is one of the problems to open an account. If a person who is new of the city wants to open account, it is a problem) or him/her to arrange an introducer of SB or CD accounts holder.
• The loans and advance department takes a long time to process a loan because the process of sanctioning loan is done manually.
• Bankers face enormous problem to fill up loan related paper like parties loan application, stock report, Net worth valuation report etc.
• CIB inquiry form does not provide information about new client of the bank.
• CIB report is not readily available from Bangladesh Bank.
• Political influence is one of the major problems in Bangladesh. Due to political intervention, the bank becomes obliged to provide loans in most of the cases, which are rarely recovered. Bank has to face this in convenience situation almost every year.
• There is no central generator. So due to load shading every day employees can’ not work.
• Space shortage is another major problem in Foreign Exchange Department.
• Modem technical equipment such as computer is not sufficient in each department. As a result, the process makes delay and it is also complicated.
• In foreign exchange department it is required to communicate with foreign banks frequently and quickly. To make the process easy modem communication media for example e-mil, Fax and win fax, Internet etc. Should be used. But the bank doesn’t have mass use of this medium of communication.
• In some cases the number of employee engaged in rendering specific services is insufficient.
• Employees are exposed to customer excessively which is an obstacle in systematic and prompt service.
• The location of this branch is main constraint to give its customer proper and full service. There is no easy way to go to the branch. People who want service from this branch don’t feel interest because of location.

The findings of the study suggest that, the trend of the foreign remittance inflow shows a gradual increase in remitting amount through years, which is a major contribution of country’s GDP. In 2001, remittance inflow was 4.2% of GDP. Through exporting manpower from Bangladesh to other countries, the country earns a huge amount of foreign earnings. In the recent financial year (2004-05) the remittance amount stands for US$3,866.63 million. On the other hand, it is of no doubt that the remittance inflow generated by migrants helps to stabilize the foreign currency reserve of the country, which is important for import based country like Bangladesh. Remittances into Bangladesh were equivalent to 29% of merchandise exports and 144% of official reserves in FY-2001. The proportion of the remittances can be used for savings, investments and consumption. In Bangladesh, 4.8% of remittances are used for investment in business and 3.1% is used for savings (Afsar, 2001).

A huge amount of unrecorded remittance inflow transaction occurs through informal channel.  In Bangladesh, in the period of 1981-86 the unrecorded remittance was 20% of total remittances (Mahmud, 1989). Remittance contribution of GDP, export and import will be much higher if this unrecorded amount will be added. To motivate migrants to use formal channel, the complexity of remitting process through formal channel need to reduce. On the other hand, government should take necessary steps to encourage remitters, foreign investors and beneficiaries to use formal channel which will generate more revenue, increase foreign currency reservation and even export, import and GDP contribution of the country.

CONCLUSION

Modern Commercial Banking is exacting business. The reward are modest, the penalties for bad looking are enormous. And Commercial bank’s are great monetary institutions, important to the general welfare of the economy more than any other financial institution. It has a vastly sobering and exacting responsibility.

Southeast Bank Limited (SEBL) playing a vital role in financing import and exports of the country. Without Bank’s co-operation, it is not possible to run any business or production activity in this age. Exports and import need finance in various stages of their activities. Export and import financing are letter of credit (L/C), payment against documents (PAD), loan against imported merchandise (LIM) etc. All these facilities are provided by SEBL. For this purpose Bank’s consider the borrower’s business standing, integrity, liability with the bank term and conditions of the L/C. There are lot of risks involved in foreign business. So, the Southeast Bank Limited (SEBL) have to clearly justify the customers from a neutral point and gather the current information about the market.