Foreign Exchange Activities of Pubali Bank Limited

This report focus on Foreign Exchange activity of pubali Bank Limited, Kawran Bazar Corporate Branch and to make recommendation on Foreign Exchange policy. Other objectives are to know how Foreign Exchange transaction Performed/Executed and evaluate the market compatibility of the Foreign Exchange of Pubali Bank. Finally identify the problems of existing Exchange policy and give suggestions for the development of the Exchange policy.

Introduction

Banks are in the business of managing risk. If done correctly, the bank will create economic value obviously. If done incorrectly, real resources will be misallocated, and the bank may fail.

Indeed, modern banking is not inherently different from traditional banking, except that there are now many more financial products & services involved than before.

In brief, the bank of the future will generate its profits not only from offering the technology of the future, but also from using its knowledge & credit evaluation abilities to extend credit of profitable margins to customers with calculated risks.

However, The Pubali Bank Ltd. has been recognized as one of the leading private commercial banks in Bangladeshi banking sector. Due to free market economy, competition is growing rapidly along the nationalized, foreign & private Commercial Banks. Each Bank is trying to make their products & services more attractive to the customers. Pubali Bank Ltd. has launched their ‘Foreign Exchange’ to keep pace with the growing expectations with the customers. This report basically deals with the ‘Foreign Exchange’ (F.Ex.) of Pubali Bank Limited. The main purpose of this report is to evaluate the market compatibility of the Foreign Exchange of Pubali Bank Ltd.

Objective of the Study

General Objective:

To gather knowledge on Foreign Exchange activity of pubali Bank Ltd and to make recommendation on foreign Exchange policy.

Project Objective:

• To asses how Foreign Exchange transaction Performed/Executed.
• To identify the problems of existing Exchange policy
• To give suggestions for the development of the Exchange policy.

Performance of PBL in Foreign Exchange:

a) Import Business: During the year the Bank handled import import business worth taka 58,009.10 million. During the previous year the amount was taka 48,345.41 million. The amount of import business handled by the Bank increased by taka 9,663.69 million during the year which was 20.00% higher the previous year.

b) Export Business: the Bank handled export business worth taka 24,795.65 million during the year as against taka 19,907.50 million in the previous year registering an increasing of taka 4,888.15 @ 24.55% over the previous year

c) Inward foreign Remittance: Non resident Bangladesh sent foreign exchange equivalent to taka 28,196.00 million through the Bank during 2009 whereas the amount was taka 24090.00 million in 2008. The increase shows a growth of 17.04% which is a proof confidence on the Bank.

Performance of last five years at a glance is given in the following table:

Table: Performance of PBL

Kawran Bazer Corporate Branch:

Position of Branch as on 30,12,2010

Deposits: Tk.1246928811.49

Advances

Loans & Adv. Tk. 1402232914.13

Lease Asset      Tk. 24112671              Tk.1426345585.13

Total Income                                       Tk. 177525760.23

Total Expenditure                                Tk. 91590404.72

Net Profit                                             Tk. 85933355.51

Position of Branch in F. Ex. as on 30,12,2010

Import L/c opened in taka                    Tk. 1687294300

Income under Import business             Tk. 19894428

Export bills                                          Tk. 2221461303

Income under Export bills                   Tk. 9999371.87

Comparative position of profits:

Comparative position of profits in Export & Import: 2009

Import L/C opened (Core):  2009

Foreign Exchange Activity of Pubali Bank Limited

Overview the Foreign Exchange:

In this modern world no country is self sufficient, one country is to depend on other country and from this point of view there arise the question to foreign trade and foreign currency transaction.

That is the international trade involves F. EX. Transaction. Particularly for receipt and payment against existing of goods and service for the country to another. As without F. Ex. Transaction we cannot think of foreign trade. Of course various rules & regulation are to be followed in connection with the foreign trade and foreign exchange transaction.

It is well known fact that the money is a medium of exchange for all transaction that takes place inside the country as well as outside the country. So there more currency has to be converted into currency of other currency meet the obligation that arises out import of goods & services.

From other countries that part of the economic service that deals with the conversion of home currency into foreign currency for the purpose of setting international obligation is called Foreign Exchange.

Definition of Foreign Exchange:

Foreign Exchange means foreign currency and includes all deposit credit & balance of payable. In Foreign currency as well as draft, travelers cheques, Letter of Credit, Bill of Credit, Bill of Exchange drawn in local currency but payable in foreign currency.

Foreign Exchange Act 47, sec 2(a)

Foreign Exchange means foreign currency and includes any instruments drawn accepted made are issued under clause 13 of section 16 of Bangladesh Bank under 1972 all deposits and credit and Letter of Credit, Bill of Credit, Bill of Exchange, expressed on drawn in Bangladesh currency but payable any foreign currency.

Bangladesh Bank 1972

Whole world has become a global village due to the dynamic change taken place in the field of finance. Foreign trade involves more than one country. It occurs between two countries or between the organizations of two different countries. Such trade normally benefits both the importer and the exporter. PBL provides Letter of Credit (L/C) facility for smooth functioning of foreign trade. There are some branches of Pubali bank, which are authorized to deal with foreign exchange transactions. These branches are called Authorized Dealer (A/D). Pubali Bank Limited Foreign Exchange corporate Branch is also an A/D branch. This Bank started was Foreign Exchange business from the very beginning of its establishment.

Objectives of the Foreign Exchange:

i) Prime objective:

• To execute all Import, Export business.
• To participate in the socio economic development of the country.

ii) Other Objectives:

• To provide investment facility to the depositor of the bank.
• Increase relationship network of the bank.
• To popularize bank’s product among the mass Country.

Banks play a very important role in foreign exchange transaction of a country. Mainly transactions with overseas counties are respect of imports, exports and foreign remittance come under this. Banks are the vital sectors of Foreign exchange transactions. Central Bank record all sorts of Foreign Exchange transaction which is to be reported regularly (e.g. daily, fortnightly, monthly quarterly, yearly etc.) to Bangladesh Bank. This part of the report consists of the following areas

• International Trade : Import & Export
• Foreign Exchange rate & foreign Remittance.

Foreign exchange transaction is classified according to there activities.

Function of Foreign Exchange Department

1. L/C Opening
2. L/C Amendment
3. Sanctioning PAD, LIM, LATR.
4. C issuing
5. Foreign Bill Purchase(FBP)
6. Local Bill Purchase(LBP)
7. Foreign Remittance
8. FC A/C maintaining
9. Foreign Currency remitting

Foreign Exchange Mechanism

• L/C Opening
• Issue the L/C by issuing Bank and send to advising bank
• Advised and or confirm the L/C by Advising and Add confirming Bank
• Submit the documents to Negotiating Bank by exporter
• The Negotiating Bank forward/sends documents to issuing bank
• Issuing Bank makes payment to negotiating bank
• A issuing bank instructs to pay or reimburse the paying bank and paying bank makes payment or reimburse to the negotiating bank
• Issuing bank sends documents to the importer
• The importer makes payment

Types of L/C Offered:

Letter of Credit (L/C) can be defined as a ‘Credit Contract’ whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. It is also known as documentary letter of credit. It may be either:

• Revocable: A revocable credit is a credit which can be amended or cancelled by the issuing bank at any time without prior notice to the seller.
• Irrevocable: It constitutes a definite undertaking of the issuing bank (since it can’t be cancelled or amended without the agreement of all parties thereto), provided that the stipulated documents are presented & the terms and conditions are satisfied by the seller.

Special documentary Credit:

• Revolving Credit: It is the credit which provides for restoring the credit to the original amount after it has been utilized.
• Transferable Credit: It can be transferred by the original beneficiary in full or in part to one or more subsequent beneficiaries.
• Back to Back Credit: It is a new credit opened on the basis of an original credit in favor of another beneficiary.

Parties Involved in L/C:

There are number of parties involved in a letter of credit and the right and obligation of the different involved parties will differ from each other. The involved parties to a letter of credit are named below:

• The applicant/The importer/The buyer
• Opening bank/Issuing bank
• The beneficiary/The Exporter/The seller
• The Advising Bank/The transmitting Bank/The notifying bank
• The Confirming Bank
• The Negotiating Bank
• The Reimbursing Bank/Paying Bank

Characteristics of the importer who wants to open a letter of credit

• Must have an A/C in the branch
• Must be a member of the Chamber of Commerce
• Must be a TIN holder
• Must have IRC(Import Registration Certificate)
• VAT(Value Added Tax certificate

Import Section:

Import: Import means bringing merchandise to country from any place rest of the world. When a Bank open Import L/C against their client must pay commission, SWIFT charged, Printing and stationary charged to the Bank that will impact Bank earning.

The L/C Application:

Pubali Bank Limited provides a printed form for opening of L/C to the importer. This form is known as letter of Credit Application form. A special adhesive stamp is affixed on the form. While opening the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin in percentage.

• Full named and address of the importer.
• Full named and address of the beneficiary.
• Draft amount
• Availability of credit by sight payment acceptance/negotiation/deferred payment.
• Time bar within which the documents should be presented
• Sales type (CIF/FOB/C&F)
• Brief specification of commodities, price, and quantity, indent no etc.
• Country of origin
• Bangladesh bank registration no
• Import license/LCAF No
• IRC(Import Registration Certificate) no
• Account No.
• Documents required
• Insurance cover note/Policy no, date amount
• Name and address of insurance Company
• Whether the partial shipment is allowed or not
• Whether the transshipment is allowed or not
• Last date of shipment
• Last date of negotiation
• Other terms and conditions if any
• Whether the confirmation of the credit is requested by the beneficiary or not.

This before information are given along with the following documents:

• Pro-forma invoice stating description of the goods including quantity, unit price etc.
• The insurance cover notes, issuing company and insurance number.
• Four set of IMP form.

The Letter Of Credit Authorization (LCA) Form contains the following:

• Name and address of the importer
• IRC no. and year of renewal

• Amount of L/C applied for (Both in figure and in word)
• Description of item(s) to be imported
• ITC Number/HS code
• Stamp and Signature of the importer with seal

IMP-Form:

The IMP form contains the following

• Name and address of the authorized dealer
• Amount of remittance to be permitted (i.e. L/C amount)
• LCA form number, date, and value in Tk.
• Description of goods, quantity
• Invoice value in Foreign Currency (i.e. L/C amount)
• Country of origin
• Port of Shipment
• Name of steamer/airline (i.e. by road/by ship/by Air)
• Port of Importation
• Indentor’s name and address
• Indentor’s Registration number with CCI & E and Bangladesh bank
• Full name and address of the Applicant
• Registration number of the Applicant with CCI & E
• Type of LCAF

Scrutiny of L/C Application:

The dealing Officer scrutinizes the application in the following manner-

• The terms and conditions of the L/C must be complied with UCPDC 600
• Exchange Control & Import Trade Regulation
• Eligibility of the goods to be imported
• The L/C must not be opened in favor of the importer
• Radioactivity report in case of goods item
• Survey reports in certificate in case of old machinery
• Carrying vessel is not of Israel or of Serbia-Montenegro
• Certificate declaring that the item is in operation not more than 5 years in case of car.

Precautions for issuing L/C:

After submission of documentary letter of credit application form, the concerned officer scrutinizes the terms and conditions that mentioned in application. He must check the following things:

• Whether the terms and conditions of L/C application are consistent with Exchange control and import Trade regulation UCPDC-600.
• L/C must not be opened in favor of the importer of his agent.
• L/C must be signed by the importer agreeing all terms and conditions mentioned in the application.
• Indenting registration number.
• Whether IMP form dully filled and signed.
• Validity of IRC
• Insurance cover note with date of shipment.
• The HS code of the goods
• The balance of the accounts of the importer
• The goods are not from Israel and vessels to be used is not of Israel
• The issuing officer will try to keep as much margin as possible.

Amendment of L/C:

Parties involved in a L/C particularly the seller and the buyer cannot always satisfy the terms and conditions in full as expected due to some obvious ad genuine reasons. In such a situated, the credit should be amended. Issuing Bank transmits the amendment by tested telex to the advising bank. In case of revocable credit, it can be amended or cancelled by the using bank at any moment and without prior notice to the beneficiary. But in case of agreement of the issuing bank, the confirming bank (if any) and the beneficiary. If the L/C is amended, service charge telex charge is debited from the party account accordingly.

Credit Report on Beneficiary:

Before opening of letter of credit, the A/D branch must obtain a confidential report on the supplier/beneficiary through its correspondent bank/ recognized credit agencies.

Accounting and voucher to be passed 

Vouchers for Margin Deposit

At the time of opening the L/C the importer is to deposit cash margin as per sanction terms. After deposit of the cash margin the A/D or non-A/D branch shall credit the same in their Margin Deposit Account. The following vouchers are to be passed:

Dr. Customers Current A/C

Cr. Other Deposit-Margin Deposit L/C(Foreign)

The following liability vouchers for L/C are to be passed

Dr. Customers Liability under Foreign L/C

Cr. Acceptance Liability under Foreign L/C

 Showing Accounting Treatment at The Time Of L/C Opening:

Source: Kawran Bazer Corporate Branch, Pubali Bank Ltd.

Presentation of the Documents:

The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the required goods to the buyer and after that have to present the documents evidencing dispatch of goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order then the bank will pay, accept, or negotiate to issuing bank checks the documents. The usual documents are

• Commercial Invoice
• Bill of lading
• Certificate of origin
• Packing list
• Shipping advice
• Non negotiable copy of bill of lading
• Bill of exchange
• Pre-shipment Inspection report
• Shipment certificate

Examination of Documents:

Import documents include a lot of forms and certificates. Proper checking or inspection can only ensure the correct and smooth foreign exchange or trade. While checking those documents following things need to be ensured.

The Documentary Credit:

Following points have to consider

• Correct referenced documentary credit.
• Still valid (not expired/cancelled).
• Balance in the Documentary Credit is sufficient to cover the value of the drawing.

Draft/Bill of Exchange:

Following points have to consider

• Draft bears the correct L/C number;
• Correctly dated;
• Name of the Drawer corresponds with the name of the beneficiary;
• Drawn on the correct drawer indicated in the L/C;
• Amount in words agrees with the amount in figures;
• Beneficiary has duly signed the draft;
• Tenor is as required by the credit;
• No restricted endorsement;
• Value of the draft and the value of invoice are identical.

Commercial Invoice: 

Following points have to consider

• Beneficiary as stated in the documentary credit issues that.
• Issued in the name of the applicant (the buyer) named in the documentary credit.
• Description of goods correspondent exactly to that stated in the credit.
• Description of goods, value and unit price matches that of the documentary credit as regards to the amount and currency.
• Currency of the invoice is the same as stipulated in the credit.
• Value of invoice does not exceed the available balance of the credit.
• Invoice is signed as required in the credit.
• Correct numbers of original is presented.
• Terms of shipment, the invoice amounts correspond proportionally to the dispatched quantity.

Marine/Ocean Bill of Lading:

Following points have to consider

• Issued by a shipping company.
• Full set of originals issued and presented.
• Consignees name and address and correct as stated in the credit;
• Bill of lading bears a date of issue, duly signed by the issuer and the name of the ship appears;
• Port of departure and post of destination are correct.
• Bill of landing bears an “on board shipped” notation
• Name of notify parts name and address are correct.
• Goods have been loaded on board, or shipped on a named vessel (indicates the name of the carrier and it is signed or authenticated by the master or a named agent for or on behalf of the master.
• Correctly marked Freight prepaid or Freight collect.
• Issuer has properly authenticated the alteration on the bill of lading.
• Goods are consigned as stipulated in the credit (to order of a named consignee i.e. to the order of the L/C issuing bank.
• Bill of lading has been properly endorsed;
• Bill of lading is issued to be correct order party as required by the documentary credit.

Air way Bill

Following points have to consider

• Consignees name and address and the airports of departure and destination are stated in the Airway bill are consistent and in agreement with the terms of credit. An air transport document is evidence of contract of carriage between the carrier and the sender. It is not a document of title of goods;
• Document indicates the name of the carrier;
• Issuer is the carrier (identifiable as the carrier) or a named agent of the named carrier;
• Airway bill indicates the actual flight date and flight numbers;
• Carrier signs that document;
• Consignees name and address and notify party’s name and address are correct.
• Issuer authenticates any alternations;
• Correctly marked “Freight Prepaid “or” Freight collect” etc;
• Shippers’ (consignors) copy being presented.

Certificate of Origin:  

Following points have to consider

• Country of origin of the goods as stated as in the certificate agrees with the terms of the credit;
• Certificate has been signed as required by the credit;
• Stipulated authorities have authenticated the certificate.

Packing List:

Following points have to consider

• A unique document and not combined with any other documents;
• List contains all the necessary information especially concerning the packing units;
• Data on it is consistent with that of the other documents.

Handling of Discrepant Import Document:

While making scrutiny & examination of the documents, the A/D branches shall ensure that-

1. Full set of documents as stipulated in the credit has been received.
2. The documents have been drawn strictly as per L/C terms.

The dealing officer checks whether these documents have any discrepancy or not. Here discrepancy means the dissimilarity of any of the documents with the terms and conditions of L/C.

Receiving Documents:

If the beneficiary is being satisfied with the term and conditions of the L/C then dispatch the goods to the buyer. After that dispatch the documents evidence dispatching of goods to the negotiating bank on or before the stipulated expiry date of the L/C. After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will send it to the issuing bank.

Lodgment & Retirement:

While lodgment of the import bills under cash L/C, A/D branch shall reverse the liability vouchers passed at the time of opening L/Cs.

• Reversal of the liability vouchers:-

Dr. Acceptance liability under Foreign L/C

Cr. Customer liability under Foreign L/C

• Lodgement vouchers to be passed:-

Dr. PAD(Payment against document) Account

Cr. Head Office ID through PB General A/C

Cr. Interest Account

Cr. Commission Account- L/C Misc. Handling Comm. A/C

• Transfer of Margin to PAD Account:-

Dr. Other deposit-Margin deposit L/C (Foreign)

Cr. PAD Account

Lodgment means retirement of funds. If the documents receiving from the negotiating bank issuing bank also carefully scrutinize all the documents.

Payment against document (PAD)

This is most sensitive task of the import department. The officials have to be very much careful while making payment. This task constitutes the following.

Date of Payments:

Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.

Preparing Sale memo:

A sale memo is made at B.C rate to the customer. As the T.T & D.D rate is paid to the ID, the difference between these two rates is exchange trading. Finally an inter branch exchange trading credit Advice is sent to ID.

Requisition for the foreign currency:

For arrangement necessary fund for payment, a requisition is sent to the international Department.

Transmission of telex:

For arranging necessary fund for payment bank ensure that payment is being made.

For PAD the following voucher will be passed:

Dr. PAD (Payment against Document)

Dr. Margin on L/C

Cr . Income A/C on PAD

Cr.  Income A/C interests on PAD

Cr.  Commission on PAD

Reverse entry is given:

Dr. Acceptance liability under Foreign L/C

Cr. Customer liability under Foreign L/C

Loan against Imported Merchandise (LIM)

Loan against import merchandise through the bank may be allowed retaining margin prescribed on their landed cost, depending on the categories and credit restrictions imposed by the Bangladesh bank/head office from time to time. Branches shall also obtain letter of undertaking and indemnity from the clients, before getting goods cleared through LIM account clearance of the goods should be taken through Approved Clearing Agent of the Bank.

The following point must be taken to consideration while allowing advance against the security of imported goods.

Storage of imported goods under Lim facility may be allowed for specified time as prescribed by Bangladesh Bank/head office of the bank which period importer should take delivery of the goods against payment, generally part delivery is not allowed from LIM Account. This may however; it must be ensure that the landed cost the merchandise is properly worked out before the goods are delivered to the customers against proportionate payment. Landed cost of valuable and less valuable items should not be average together. LIM A/C should properly maintain by the bank, Vouchers will be

Dr. LIM A/C

Cr. PAD A/C

Loan against Trust Receipt (LATR):

If the documents are required to delivered against LATR (Loan against Trust Receipt), prior approval is required from Head Office. Documents to be delivered to the Importer through approved C&F agent for clearance of good for a certain period on the merit of goods & nature of business. For LATR the following vouchers are to be passed:

Dr. LATR A/C

Cr PAD A/C

Export Section

Export: Export means carrying of anything from one country to another for sale with the stipulated period for to earn foreign Exchange. When Bank open Export L/C against their client then Bank must cut some charged from the client account. So these charges must impact on Bank earning.

In the export section two types of L/Cs are opened

• Export LC
• Back to Back L/C

Export L/C:

The other type of L/C facility offered by Pubali Bank Limited is Export L/C. Bangladesh export a large quantity of goods and services to foreign households. Ready made textile garments (both knitted and woven), jute, Jute made products frozen shrimps, tea are the main goods that Bangladesh exporters exports to foreign countries.

Back to Back L/C:

A back to back mechanism involves two separate L/Cs. One is master export L/C and another is back to back L/C. On the strength of Master L/C Bank issues Back to Back L/C. Back to Back L/C is commonly known as Buying L/C. On the contrary, Master Export L/C is known as Selling.

Features of Back to Back L/C:

• Is an import L/C procedure goods/raw materials further processing
• Is opened based on Export L/C
• Is a kind of Export Finance
• Export L/C is at sight but back to back L/C
• No margin is required to open Back to Back L/C

Checklist to open Back to Back L/C:

• Application is registered with CCI & E and has bonded warehouse License.
• The Master L/C has adequate period and has no defective clause
• L/C value shall not exceed the admissible percentage of net FOB value of relative Master LC
• Usance period will be up to 180 days
• Papers required opening back to back L/C
• Import registration certificate & Export Registration certificate
• L/C Application & LCA form.
• Proforma Invoice/Indent
• Insurance Policy
• IMP form
• In addition to above following papers are required for read made garments industry
• Bonded warehouse license
• Quota allocation letter from EPB (where applicable)
• Letter of disclaimer from Landing if rented premises.

Steps to issue Back to Back L/C:

Obtain all required papers

• Check the credit limit
• Prepare offering sheet if regular credit line is not available
• Mark lien on the master L/C
• Issue the L/C

Payment under back to back L/C:

• Payment at maturity out of exports proceeds
• In case of export failure or non-realization/Short realization of export proceeds forced loan i.e. Pad has to be created in order settle the back to back L/C payment.

Precautionary measures:

• Including the clause for pre-shipments inspection certificate
• Shipping guarantee under no circumstances
• Discrepant documents shall not be accepted
• Proper care regarding amendments of Master L/C

Qualitative Analysis (SWOT Analysis):

Strength

• Pubali Bank Ltd has already reputed Bank in banking industry in Bangladesh. Within 51 years, PBL doing business in banking sector with tremendous growth rate in profits in deposits and foreign exchange.

• In Foreign Exchange PBL provides their service successfully and have achieved goodwill.

• In this section the Bank is working with its effectively and integrity.

• PBL has specialist Banker, to provide service in Export, Import section.

• PBL foreign Exchange department communicate with foreign Bank frequently & quickly.

• PBL has a very competent & experienced top management. The Bank has already shown a tremendous growth in the Foreign Exchange department.
• PBL has a world special and expensive software PIBS.

Weakness

• PBL has not introduced online Banking system which has and a public demand now a day, in foreign exchange department is very essential to communicate with clients.
• There has no separate customer care department which can work solely with customer care & for continuous improvement of service.
• Shortage manpower in foreign exchange section, so during the working hour the employees can’t proper attention to the customers, which makes customers dissatisfaction.
• Shortage branches to operate foreign exchange.
• PBL has no advertising and promotional activity for foreign exchange, which can increase the customers.
• Lack of knowledge about foreign exchange transaction, technology and equipment.

Opportunities

• PBL has a lot of growth opportunities in foreign exchange transaction because many industries grow day by day.
• PBL has a chance to increase investment in Remittance business.
• PBL have big opportunity if they provide Online Banking in foreign exchange section.

Threats

• The emergence of several private & foreign Bank within the past few years offering similar or more service in foreign exchange with less of free charge for the facilities can be major threat.
• WTO imposes unjust rules on the transaction system.
• Legal & Political Barriers.
• Industry crisis.
• Threat from the other rival.

Quantitative Analysis

Pubali Bank Ltd.

Pubali Bank Import Business:

PBL Import Business  Annual report 2009

Interpretation: Pubali Bank Import trend line is good. They are able to stay the growth consistently. In 2005 the import business earning was 18,024.30 and 2006 was 26,033.80(in million of taka). In 2007-37,316.50, in 2008-48,345.41 and 2009 was 58,009.10 million of taka

Pubali Bank Export Business:

PBL Export Business  Annual report 2009

Interpretation: Pubali Bank Export trend line rising year to year. They are able to stay the growth consistently. In 2005 the export business earning was 13,670.50 and 2006 was 15,721.10(in million of taka). In 2007-17,701.80, in 2008-19,907.50 and 2009 was 24,795.65 million of taka.

L/C opening Income:

Pubali bank L/C income    Annual Report 2009

Interpretation: From this above figure the growth of income from L/C opening 2009 (11,408.14 in million of taka) which is high rather than in 2008(12,616.32 in million of taka).

Comparative Analysis:

Comparative analysis means the compare the activities of an organization with same type of other organizations. This type of comparison is done to find out the organization that is performing better than the compared organizations.

Here the information that is used for comparative analysis on foreign exchange of Pubali Bank with Exim Bank & AB Bank Limited. I compare these two banks with Pubali Bank cause these two banks are largest & very well reputed bank in Bangladesh for the foreign business sector. Though, Exim Bank & AB Bank are operating commercially & Pubali Bank also operates fully commercially I can easily compare Pubali Bank with these two bank.

Comparison PBL with Two Banks (AB Bank Ltd. & Exim Bank Ltd.)

Import Business Compression:

Annual Report 2009 AB Bamk, Pubali Bank, Exim Bank

Interpretation: Pubali Bank import business earning in 2005 was 18,024.30 and 2006 was 26,033.80(in million of taka). In 2007-37,316.50, in 2008-48,345.41 and 2009 was 58,009.10 million of taka. But AB Bank growth is comparatively better than pubali Bank. Also this comparison Exim Bank is higher than other two Banks.

Export Business comparison:

Annual Report 2009 AB Bamk, Pubali Bank, Exim Bank

Interpretation: Pubali Bank export business earning in 2005 was 13,670.50 and 2006 was 15,721.10(in million of taka). In 2007-17,701.80, in 2008-19,907.50 and 2009 was 24,795.65 million of taka. But AB Bank growth (in 2009) is comparatively better than pubali Bank. Also this comparison Exim Bank is higher than other two Banks.

Comparison L/C opening Income:

Annual Report 2009 AB Bank, Pubali Bank, Exim Bank

Interpretation: Pubali Bank L/C opening income in 2008 was 11,408.14 and 2009 was 12,616.32(in million of taka). This is comparatively better than other two Banks.

Major Findings of the Study

The study mainly focuses on “Foreign Exchange operation of PBL”. While working in the foreign exchange department, in my three months observations I have find out some benefit & drawbacks of this section. All the findings that are organized from my analysis are enumerated bellow –

1. PBL operates Foreign Exchange business only 30 branches, which are not sufficient to capture competitive position in the market.

2. In foreign Exchange transaction needs Importer and Exporter but in PBL has not enough.

3. They are engaged qualified & experienced personnel but PBL not offering attractive incentive like standard salary, car facility for its existing employees for the betterment.
4. Kawran Bazar Corporate Branch has lack of employee to serve the transaction. As a result it may delay to co-operate with customers.

5. In this branch has not sufficient modern technology to operate the foreign exchange.

6. Kawran Bazar Corporate Branch in Foreign Exchange transaction of process like-Book Keeping, L/C numbering, Delivery report record in manually and it is too lengthy. That’s why they can not provide service to the customers in proper time.

7. In this branch import and export income rising up-ward which I discuss previously.

8. Foreign Exchange section works aureate and quickly in their transaction. So clients are not dissatisfied. Any massage send in foreign country by SWIFT within 5 minutes. Also payments are paid very short time of period.

9. Kawran Bazar Corporate Branch directly control by Head Office, so they can easily contact with Head Office in a days.

10. There is no time limit for delivery documents to the exporter and importer.

11. Kawran Bazar Corporate Branch has no marketing officer for advertising and promotional activities.

12. The supportive service provider (PSI, Currier) sometimes creates delay in delivery which produces customer dissatisfaction, Kawran Bazar foreign exchange do work with Bureau Variations and FedEx.

13. L/C Opening involves a lots of paper its also time consuming.

Recommendations:

Considering all the findings and analysis all the data the following recommendations are made that can create benefits. These are given below-

1. The bank should strictly restrict all the fraudulent activities in foreign exchange trade.
2. Number of branches should be increase to operate the foreign exchange.
3. Should make proper planning for the foreign exchange department.
4. Officers and employees are not well conversant with the rules and policies of foreign exchange. They need to be trained on these and the whole system has to be made computerized so that it takes less time to open an L/C and all transaction.
5. PBL should provide attractive salary, car facility for employee motivation.
6. Due to non-availability of affiliation, negotiation becomes difficult with some of the foreign banks. For this some prospective exporter and importer are discouraged to do their business with all those particular countries. To expand the business activities, Pubali bank should make an endeavor to increase the affiliation with more number of foreign banks.
7. Foreign Exchange department main part is to handle Export, Import and they should make a direct relationship between Exporter and Importer.
8. It is too essential update Management Information System (MIS) for proper documentation and keeping the record.
9. Purchase new technology and equipment for foreign exchange operation.

Conclusion:

Banking is become more and more vital for economic development of Bangladesh on mobilizing capital and other recourses. PBL also extending such contribution as to advancement of the socio economic condition of the country.

My main objective of doing internship in a Bank was to know about the Banking procedures. My topics is Foreign Exchange activities of Pubali Bank Limited. So I have spend most of the time in this section. My experience in PBL foreign exchange department has provide me how they operates foreign exchange transaction. In this time Kawran Bazar Corporate Branch I have found it foreign exchange department is very efficient. Therefore this department plays major rule of overall efficiency & reputation of the Bank as a whole.

The bank is arranging a number of training for the officers and employees and also sending them to Bangladesh Institute of Bank Management (BIBM) to improve the quality of banking service through development of human resources.