Foreign Exchange Activities of Shahjalal Islami Bank Limited

Investment products, Corporate (Mode)

• Murabaha
• Bai-Muazzal
• Hire Purchase under Shirkatul Meelk
• Ijara
• Bai-Salam
• Quard-e-Hasana
• Investment against LC
• Investment against Scheme/Deposit

Investment Products (Retail)

• Household Durable Scheme
• Housing Investment Program
• Car Investment Scheme
• Investment for Self-employment
• Investment Scheme for Executives
• Investment Scheme for Doctors
• Investment Scheme for Marriage
• Investment Scheme for CNG Conversion
• Investment Scheme for Overseas Employment
• Investment Scheme for Education

Investment Products (SME)

• Small Business Investment Program
• Small Entrepreneur Investment Program
• Medium Entrepreneur Investment Program
• Rural Investment Program
• Women Entrepreneur Investment Scheme

SJIBL Card

• VISA Debit Card
• VISA Prepaid Card (Local)
• VISA Prepaid Card (International)
• VISA Prepaid Card (Dual)
• VISA Souvenir Card (Gift Card – Local)

Computer services:-

Shahjalal Islami Bank Limited introduced a few schemes, which are very popular:

1. Online services
2. Automated Accounting
3. Integrated System
4. Signature Verification
5. Any Branch Banking
6. ATM Services
7. POS Services
8. SMS Push Pull Services
9. Other Delivery Channel Services (to be implemented)

Review of Operational Performance

The volatile macroeconomic conditions which heightened due to the Capital market crash and Euro-zone debt crisis, posed a challenging year for the entire Banking industry. This resulted in a deterioration of the performance measurement indicators across the industry. During the year under review, the bank maintained the progress of business through its Seventy Three branches. The net Investment Income registered an impressive growth of 55.29 percent during the year. The operating profit before tax stood at Tk.2, 387 million which is 19.35% lower than 2010 figure. Due to capital market volatility and formation of separate subsidiary for brokerage house, income from brokerage commission and income from investment in shares decreased significantly, however, all others income increased substantially. Net profit attributable to shareholders reached to Tk.1, 168 million, return on average equity remained at 13.80 percent and Earning per Share (EPS) stood at 2.62. Non- performing investments (NPI) ratio is 1.89 percent, which is much below the industry average. Capital adequacy of the Bank is 11.40 percent, which is above the stipulated rate of 10 percent. Out of deposit of Tk. 83,350 million, the bank has deployed Tk. 80,592 million in investment as on 31.12.2011. The Bank handled total Foreign exchange business of Tk. 166,906 million in the year 2011.

Equity of the Bank

The Bank’s Equity is divided into two parts i.e. Tier-I and Tier-II capital. Tier-I includes Paid-up Capital, Statutory Reserve, and Retained Earnings. Tier-II includes General Provision on unclassified investments & Off -Balance Sheet items. The Authorized Capital of the Bank is Tk. 6,000 million and paid-up capital of the Bank is Tk. 4,453 million as on 31.12.2011. Total equity was Tk 9,183 million as on 31.12.2011. Comparative position of Equity for the year 2011 & 2010 is given below:-

Capital Adequacy:-

Total equity of the Bank as on 31.12.2011 was Tk. 9,183 million and the total equity stood to Tk. 7,747 million on 31.12.2010, which was 11.40% of the Risk weighted Assets as against the requirement of 10.00%. The core capital was 9.83% of Risk weighted Assets as on 31st December 2011 as against requirement of 5%.

 “Risk Based Capital Adequacy” for Banks (Basel-II)

Bank has established Basel-II implementation Unit and conducted some workshops with Executives and officers of the Bank both in Head office and Branch level for its successful implementation. A comparative quantitative feature of Risk Weighted Assets (RWA) and Minimum Capital Requirement (MCR) for December ended-2011 & 2010 under Bessel-II is furnished hereunder:

Liabilities:

Total liabilities (excluding equity) stood at Tk. 99,312 million at the end of year 2011, which was 37.83% more than the previous years’ figure. Increase in liability is mainly due to increase in deposit from customers.

Deposit:-

Total deposit of Shahjalal Islami Bank Limited stood at Tk. 83,350 million as on 31.12.2011 as against Tk. 62,965 million of 31.12.2010 registering an increase of Tk. 20,385 million, i.e. 32.38% growth. This was possible due to superior customer service delivery at the branch level, expansion of branch network to rural areas where foreign remittance flow is significant. Expansion of our branches at rural areas has provided the lower income group an access to modern banking system and prompt receipt of remittance. Deposit is the ‘life-blood’ of a Bank. Bank has given utmost importance in mobilization of deposits introducing a few popular and innovative schemes. The bank always tried to give the highest return on the deposits of the customers. The mobilized deposits were ploughed back in economic activities through profitable and safe investments. The Deposit-mix of the Bank as on 31.12.2011 was as bellow:-

Total Assets:-

The Bank’s total assets posted a 36.08% increase in 2011, rising from Tk.78, 800 million to Tk. 107,229 million. A major contribution to this growth was the increase in investments (loans & advances) which jumped by 31.17% or from Tk. 61,440 million to Tk. 80,592 million. Fixed assets of the Bank also increase to Tk. 1,525 million from Tk. 1,473 million having an amount of 3.58%. Bank also had to increase its cash reserve requirement (CRR) maintain with Bangladesh Bank and its agents. The earning assets grew at a rate of 37.88% to Tk. 92,569 million.

Investment:-

Total investment of the Bank stood at Tk. 80,592 million as on 31.12.2011 as against Tk. 61,440 million of 31.12.2010 registering an increase of Tk. 19,152 million, i.e. 31.17% growth. The Bank is careful in deployment of the fund. Mode wise investment portfolio as on 31.12.2011 is given below:

 Foreign Exchange Business:-

Total Foreign Exchange Business handled during the year 2011 was Tk. 166,906 million as against Tk. 115,079 million of 2010 registering an increase of Tk. 5, 1827 million, i.e. 45.04% growth. The particulars of Foreign Exchange Business are given below:-

During the year 2011 our Bank branches opened 17,344 Import Letter of Credit as against 16,326 of 2010 and handled 21,473 Export bills in 2011 against 19,612 of 2010.

Operating Result:-

a)    Income:

1. 1.      Investment Income

     Total Investment Income of the Bank as at 31st December 2011 was TK. 10,107.77 million as against TK. 6,416.78 million of the preceding year registering 57.52% growth over last year, which was 84.18% of the total income against 67.48% of 2010.

1. 2.      Non-Investment Income

     Total Non-Investment Income of the Bank as at 31st December 2011 was TK. 1,899.05 million as against TK. 3,092.10 million of the preceding year, which was 15.82% of the total income compared to 32.52% of 2010.

b)     Expenditure:

 1.      Profit Paid on Deposits

 Bank distributed Profit of TK. 7,376.42 million among the Mudaraba Depositors in the year 2011 against TK. 4,657.92 million of the year 2010 which being 72.98% of the Investment income earned from deployment of Mudaraba Fund and 81.88% of total Expenditure of 2011 against 77.89% of 2010.

2.      Operating Expenses

Total operating expenses as on 31.12.2011 was TK. 1,632.50 million as against TK. 1,322.25 million of 2010, which was 18.12% of the total Expenditure of the year 2011 against 22.11% of 2010.

3.      Operating Profit

During the year 2011, the Bank earned an amount of Tk. 12,006.82 million and spent an amount of Tk. 9,008.93 million, resulting a total Operating Profit of Tk. 2,997.89 million which decreased by 530.82 million over last year i, e. 31.12.2010. From the operating profit Tk. 310.00 million was kept as provision for investment, Tk. 63.00 million provisions was kept for Off -Balance Sheets, Tk. 237.50 million provision was kept for diminution in value of investment in shares, and then profit before tax stood total 2,387.39 million and deducting income taxes of Tk. 1,218.95 million, Net profit after taxation stood at Tk. 1,168.44 million. As appropriation of net profit Tk. 477.48 million was transferred to statutory reserve as per Bank Company Act. 1991 and Remaining Tk. 690.96 million was transferred to retained earnings.

A summary of operating result of the bank as on December 2011 vis-a-vis the position of December, 2010 is shown below:

 Ethical Banking

Banks and the policies they pursue have an impact on the community around them. Their impact has two dimensions: the way they operate i.e. internal operations and the types of companies they help finance. SJIBL take care of both the dimensions in its operation. Many ethical issues such as the environmental conduct of business customers are now part of standard risk assessment and prudent banking. It is becoming increasingly common practice for banks to have established guidelines for their staff on the major ethical issues covered. SJIBL has been trying to follow the Equator Principles, a set of guidelines developed by the banks for managing social and environmental issues related to the financing of development projects. Our investment is based on Islamic values as defined by the principles of Shariah (Islamic law). The Islamic Shariah attempts to maximize social welfare. Consequently Islamic investment involves the screening out of those companies whose primary business does not conform to the shariah principles.

An Introduction about SJIBL College Gate Branch:-

This branch was established in April 23, 2009. It is situated at Union Center (1st Floor), 1/5, Mohammadpur Housing Estate, College Gate (Mirpur Road), Dhaka – 1207. This bank is designed under one floor.  The entire department is situated in this floor. It has been providing Islamic banking services for the customers of College Gate residential area.

Corporate Information:

Uses and Importance of Foreign Exchange Business:-

Bangladesh earns foreign exchange mainly through export of goods and services. Remittances of Bangladesh nationals working abroad, commonly known as wage earners, are also important sources of foreign exchange. Foreign Exchange is also earned from aids, grants and credits from donors. Foreign exchange is used for settlement of international payments for import of goods, freight charges, insurance, banking, debt servicing, travel and education etc.

Foreign exchange business has been identified as one of the key areas for development of the bank’s business. The recent liberalization of exchange control as provided an ideal opportunity to break into new fields of activities including dealings in the domestic inter- bank foreign exchange market, provision of forward exchange and arbitrage operation within the parameters of Bangladesh Bank regulations. Shahjalal Islami Bank Limited would expect its officers and staff to enlarge the bank’s business by developing professional excellence and dispensation of efficient, quick and quality services to the clientele in order to lay a solid foundation for growth and development of the bank’s business.

 Exchange and Trade Controls:-

Bangladesh Bank has Foreign Exchange Departments in its offices at Dhaka, Chittagong, Khulna, Rajshahi, Rangpur, Barisal, Sylhet and Bogra. Shahjalal Islami Bank’s branches located within the jurisdiction of the relevant offices are normally required to deal with and report their foreign exchange transactions to that office.

Responsibilities of Foreign Exchange Department/Section:-

Foreign Exchange Branches, Departments and Sections shall work in close harmony with the International Division to exploit the business potentials, introduce innovative ideas and develop expertise to transform the bank as an important player in the foreign exchange market. In dealing with the clientele, it should be rigid in application of standard norms and practices to protect the interest and security of the bank. At the same time, keeping in view the highly competitive environment in Bangladesh, it should apply a flexible stance to accommodate special needs of the clients in terms of prompt dispensation of services and pricing of their services.

 Exchange Rates Quotations:-

Crucial to dealing in foreign currencies is the exchange rates that constitute the ‘bread and butter’ for the bank. Banks and dealers around the world quote the rates against US dollar except in case of pound sterling, which is quoted in terms of other currencies including US dollar.

Dealing with the Client:-

To deal with the valued client the bank official emphasizes on the following topics and deal carefully:-

1. Relationship Building.
2. Verification of Reputation and Credibility.
3. Maintenance of Records.
4. Handling of Notes, Drafts, and TCs etc.

Relationship Building:-Relationship building, personalized services and professional efficiency would key to building up a satisfied group of clientele. The staff should constantly address the special needs of the customers.

Verification of Reputation and Credibility: – The bank should carefully verify the antecedents and credibility of new customers approaching the bank for opening letters of credit, financing exports and issue of guarantees or similar obligations.

Maintenance of Records:-Branches will maintain systematic records of transactions with the customers, preferably in hard discs with backups so that these can be retrieved as and when necessary.

Handling of Notes, Drafts, and TCs etc.:-The staff should familiarize themselves with the technique for verifying genuineness of the foreign exchange instruments presented by the clients.

Three Services in Foreign Exchange Department of Shahjalal Islami Bank Limited

1. Remittance.
2. L/C Open.
3. Travel Related Services.

Remittance.

The process of sending money to remove an obligation. This is most often done through an electronic network, wire transfer or mail. The term also refers to the amount of money being sent to remove the obligation.

When a person sends a check to the government to pay for a tax bill, the check is remittance to remove the tax obligation. If you were to send money to a friend in Europe through a wire-transfer service, the sum of the payment is the remittance.

There are two types of Remittance:-

1. Private Non-commercial Remittances.
2. Commercial Remittances

Private Non-commercial Remittances:-

Remittance and Other Facilities for Foreign Nationals:

Family Remittance Facility: – Foreign nationals who are resident in Bangladesh and have income in Bangladesh are permitted to make monthly remittances to the country of their domicile out of their current savings up to 50% of their net income to cover their commitments abroad.

This remittance facility is not available to foreign born wives of Bangladesh nationals. The branch that receives the pay cheques from the employer for credit of the personal account of the foreign national shall process and approve such remittance applications.

Remittance of Sale Proceeds of Assets: – Application for remittance of sale proceeds of real assets such as household articles and real estates should be forwarded to the Bangladesh Bank with the following documents/certificates:

Statement of sale proceeds realized in respect of locally purchased articles of value tk. 500 or more mentioning:

1)      Description,

2)      Purchase price

3)      Date of purchase

4)      Date of sale, and

5)      Sale proceeds realized.

Relative sale receipts or their certified true copies should be produced…

Application and Supporting Documentation:-

Application as per pro-forma at Appendix 5/55 of BB Guidelines for Foreign Exchange Transactions, 1996 duly filled in by the applicant and his employer should be accompanied by:

¨      TM form signed by the applicant;

¨      A certificate from the employer showing:

¨      Net salary and allowances for each year,

¨      Provident Fund and leave salary paid on retirement,

¨      Bonus and other gratuitous payments for each year.

¨      Cost of passage, if any, for self and family is payable by the employer.

¨      A certified true copy of the employment contract approved by BOI/ appropriate Department of the Govt. of Bangladesh should be produced in support of the above.

Remittance of Foreign Exchange for Education Abroad:-

Foreign exchange may be released for studies abroad by Bangladesh nationals in all regular courses (subject to being consistent with the Education Policy of the Bangladesh Govt.) in recognized institutions. The branch may allow exchange facilities for this purpose according to the following drill:

Application and required papers:-

¨     Application (Appendix 5/57 of BB Guidelines for Foreign Exchange Transactions, 1996) duly filled in;

¨     Original and photocopy of admission letter issued by the educational institution in favor of the student (such as 1-20 in the case of US institutions);

¨     Original and photocopy of estimate relating to annual tuition fee, board and lodging, incidental expenses etc. issued by the concerned educational institution (1-20 in case of US institutions);

¨     Attested copies of educational certificates of the applicant; and

¨     Valid Passport.

Family Maintenance Abroad by Resident Bangladesh Nationals:-

Applications for remittance of moderate amounts of foreign exchange for maintenance of family members (dependent parents, spouses and children) living abroad may be forwarded by the branch to the Bangladesh Bank for prior approval. The application should be supported by a certificate issued by the relevant Bangladesh Embassy or High Commission regarding residency of the beneficiaries, extent of income abroad along with the mission’s recommendation as to the moderate requirement for family maintenance purpose. The certificate should also indicate the purpose for which the family member(s) went abroad, reasons for continued residence and the probable period of stay abroad.

Commercial Remittances:-

Outward Remittances:-

Outward remittances are those sent aboard in foreign exchange. These also include payment into convertible Taka account or non-resident Taka Account of foreign banks maintained with banks in Bangladesh. The branches must exercise utmost care to see that foreign exchange sold to a client is used for the declared purpose. They should also systematically maintain proper record to make these available to Bangladesh Bank as and when required.

Forms:-

For import payments, the branch will accept applications from the importers on form IMP while in other cases of outward remittances the prescribed form of applications is called TM. These Forms are also to be used for reporting to Bangladesh Bank. In case prior approval of Bangladesh Bank is required, the branch will send the TM form, along with the necessary papers to the Bangladesh Bank for approval. The TM Form or special permit, if any, or approval letter issued by Bangladesh bank should be utilized within the period, if any stipulated therein and conditions laid down by them must be carefully observed. Original copies of the IMP and TM Forms must be submitted to the Bangladesh Bank along with the specified Returns.

Freight and Passage Collections:-

The branches may receive applications from airlines and shipping companies or their agents on Form TM along with a declaration on Form FP for remittance of freight and passage fares collected in Bangladesh. Bangladesh Bank has laid down elaborate guidelines in Chapter 16 of the Guidelines for Foreign Exchange Transactions, 1996. Should a branch receive applications for these types of remittances they should dispose them of strictly as per those guidelines. Similarly, applications from Bangladesh Biman and Bangladesh Shipping Companies for remittance of operation expenses of their vessels at foreign ports and stations should be disposed of as per the instructions contained in the said Guidelines.

Remittances against Export Claims:-

The branch may remit export claims not exceeding 10% of repatriated export proceeds on the following counts:-

• Short weight claim;
• Quality claim;
• Part shipment.

Short weight claim:-

¨      Proceeds Realization Certificate (PRC);

¨      Debit note from the buyer;

¨      Weighment Certificate/Note from a recognized weighing body;

¨      LMD Certificate (for shipping weight basis shipment) in the case of raw jute.

Quality Claim:-

¨      Proceeds Realization Certificate (PRC);

¨      Debit note from the buyer;

¨      A report from a recognized test house or an arbitration certificate from an approved body of arbitrators;

Part Shipment:-

¨      Proceeds Realization Certificate (PRC);

¨      Debit note from the buyer;

¨      Contract in original;

¨      Arbitration certificate from a recognized arbitrator as referred to in the contract.

Amicable Settlement:-

 Proceeds Realization Certificate.

• Debit Note from the buyer.
• Correspondence in original exchanged between the shipper and the buyer. Original cables should be produced if cable charges are included in the Debit Note.

Commission:-

¨      Proceeds Realization Certificate.

¨      Debit Note.

¨      Agreement regarding payment of commission.

Cancellation of the Contract:-

¨      Debit Note.

¨      Contract.

¨      Correspondence in original passed between the buyer and the shipper.

¨      Arbitration Certificate or Chamber of Commerce’s certificate for claims settled amicably.

Freight against Exports:-

¨      Proceeds Realization Certificate.

¨      Debit Note.

¨      Contract.

¨      Bill of Lading.  

Moisture Claim:-

¨      Proceeds Realization Certificate.

¨      Debit Note.

¨      Original Contract.

¨      Original Arbitration Award or Test Report or Analysis Report.

Late Shipment Penalty:-

¨      Original Contract.

¨      Copy of Bill of Lading.

¨      Shipper’s explanation regarding the reasons for late shipment.

¨      BJA’s letter declining to issue Unavoidable Delay Certificate.

Difference for Immediate Payment against Sight bills:-

¨      Original Contract.

¨      Correspondence showing the party who initiated the change in the payment method.

¨      Banker’s confirmation that the proceeds were realized at sight showing the date of realization and particulars of returns in which the transaction was reported.

¨      The basis on which the difference is claimed and evidence in support thereof.

Refund against over pricing:-

¨      Original Contract.

¨      Correspondence exchanged between buyer and seller in this regard.

Submission of Documents to Bangladesh Bank:-

The branch will submit to the Bangladesh Bank all the documents under various types of export claims for post facto examination within 15 days from the date of remittance.

Policies Claim Settlement under Marine Insurance Policies:-

For remittances on account of settlement of claims arising under Marine Insurance Policies, the branch will submit the following documents to the Bangladesh Bank with Form TM along with a declaration as per Appendix 5/47 of BB Guidelines for Foreign Exchange Transactions, 1996 for approval:-

Marine Polices:-

  Shipper’s invoices relating to shipment against which claim is made?

  Proceeds Realization Certificate.

  Bill of lading.

  Claim Note.

  Original Insurance Policy/ Certificate.

  Survey Report.

  Short Contents Certificate from the Customs Authorities of the country of import in case claim is made for short delivery of goods.

For other types of export claims not covered above, the exporter’s application should be forwarded to Bangladesh Bank with full information and supporting documents.

Foreign Currency and Convertible Taka Account:-

Private Foreign Currency Accounts:-

Who Can Open the Accounts?

  Bangladesh nationals residing abroad,

 Foreign nationals residing abroad or Bangladesh,

 Foreign firms operating in Bangladesh or abroad, and

 Foreign missions and their expatriate employees in Bangladesh.

Bangladesh Bank may specially allow opening of foreign currency accounts not covered by this general authorization.

FC Accounts of Overseas Bangladesh Nationals:-

  Bangladesh nationals working abroad or proceeding abroad to take up employment may open foreign currency accounts.

  No initial deposit is required to open this account.

  Account holder may operate the account himself or nominate other persons in Bangladesh for this purpose.

  The account may be opened in pound sterling, US dollar, euro or Japanese yen.

  The account may be maintained as long as the account holder desires.

  These accounts should ordinarily be fed by remittances by account holder himself.

  By funds sent by other wage earners,

  Funds lying to the credit of FC accounts of Bangladesh nationals can be utilized for import of goods and commodities as per Import Policy announced by the Government from time to time.

Resident FC Deposit Account:-

Who can open the Account?

Branches may allow persons ordinarily resident in Bangladesh to open and maintain Resident Foreign Currency Deposit (RFCD) accounts with foreign exchange brought in at the time of their return from travel abroad. Any amount brought into Bangladesh with declaration to the Customs authorities in form FMJ and up to $5000 brought in without any declaration can be credited to such accounts. Proceeds of export of goods or services from Bangladesh or commission arising from business deals in Bangladesh cannot be credited to such accounts.

Non-Resident FC Deposit Accounts (NFCD):-

Who can open the Account?

All non-resident Bangladesh nationals and persons of Bangladesh origin including those with dual nationality and ordinarily residing abroad may maintain profit bearing time deposit account named Non-Resident Foreign Currency Deposit (NFCD) Account with the authorized dealers. These accounts may be opened initially with minimum amount of US$ 1000 or pound sterling 500 or equivalent.

Convertible Taka Accounts:-

Who can open the Account?

The branches may open convertible Taka Account in the names of: Foreign organizations/nationals viz., diplomatic missions, UN organizations, non-profit international bodies, foreign contractors and consultants engaged for specific projects under the Government or semi Government agencies, the expatriate employees of such missions / organizations who are residents in Bangladesh.

Operation on Convertible Taka Account:-

A convertible Taka account may be debited for payments in foreign currency abroad for local expenses, transfer to foreign currency account or other convertible account or for credits to a non-convertible account.

Nonconvertible Taka Account:-

Foreign organizations and their expatriate personnel entitled to open convertible Taka account may maintain non-convertible account with the branch without prior approval of Bangladesh Bank. This account may be debited/ credited for the following purpose:

 Joint Account of Resident and Non-Resident:-

If the account is operated solely by the resident or jointly with the non-resident it should be treated as “Resident Account” but if solely a non-resident operates it, it should be treated as Non-resident account.

All the activities are performed through the:-

¨     Western Union.

¨     Kushiara.

¨     Money Gram.

¨     SWIFT service

 L/C (Letter Of Credit)

Definition of L/C: –

On Behalf of the importer if the Bank undertakes to make payment to the foreign Bank is known as documentary credit or letter of credit. A letter of credit is an instrument issued by a bank to a customer placing at letter disposal such agreed sums in foreign currency as stipulated. An Importer is a country requests his bank to open a credit in foreign currency in favor of his exporter at a bank in the letters country. The letter of credit issued against payment of amount by the importer or against satisfactory security. The L/C authorizes the exporter to draw a draft under is terms and Sell to a specified bank in his country. He has to hand over the to the bank, will the bill of exchange, shipping documents and such other papers as may be agree upon between the exporter and the importer. The exporter is assured of his payment because of the credit while the importer is protected because documents is respect of exports of goods have to delivered by the exporter to the paying bank before the payment is made.

From of Letter of Credit:

A Letter of Credit (L/C) may be two forms. These as Below

Revocable L/C: –

If any letter of credit can be amendment or change of any clause canceled by consent of the exporter and importer is known revocable letter of credit. A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the issuing bank or correspondent has honored the document. Thus a revocable credit does not usually provide adequate security for the beneficiary.

Irrevocable L/C:-

An irrevocable L/C constitutes a definite undertaking of the issuing bank provided that the stipulated documents are presented and the terms and conditions are satisfied by the seller. An irrevocable L/C can not be amended or canceled without the agreement of all party’s opinion. An irrevocable credit can be either confirmed or unconfirmed depending on the desire of the seller. This sort of credit is always preferred to revocable letter of credit.

Types of Irrevocable Letter of credit: –

An Irrevocable Letter of Credit (L/C) mainly three types. These as Below: –

Cash letter of Credit:-

Payment made form cash foreign exchange not from export proceeds; there is not export L/.C. which backs the import LETTER OF CREDIT Payment term is at sight.

Deferred Letter of Credit:-

The only difference between cash Letter of Credit and deferred letter of Credit lied in the terms of payment .Payment under deferred Letter of Credit is made after certain days of presentation of the export bill.

Back-to-Back Letter of Credit:-

It is simply issued to the clients against an import Letter of Credit. Back-to-Back mechanism involves two separate Letter of Credits. One is master Export Letter of Credit and another is Back-to-Back Letter of Credit. On the strength of Master Export Letter of Credit bank to Bank Letter of Credit.

Types of Letter of credit: –

Eight types of letter of credit

¨      Sight payment Credit

¨      Deferred payment credit

¨      Negotiation Credit

¨      Revolving Credit

¨      Performance credit.

¨      Performance bond credit

Sight payment Credit: –

The most commonly used credits are sight payment credits. These provide for payment to be made to the beneficiary immodestly after presentation of the stipulated documents on the condition that the terms of the credit have been complied with. The Banks are allowed reasonable time to examine the documents.

Deferred payment credit: –

Under a deferred payment credit the beneficiary does not receive payment when his presents the documents but at a later specified in the credit On presenting the required documents he received the authorized banks written undertaking to make payment of maturity. In this way the importer gains possession of the documents before being debited for the amount involved.

Negotiation Credit:-

A credit available by negotiation is either payable at sight or at a since, usually at the counters of the issuing bank. The L/C may authorize negotiation by any bank or may specify a particular bank (in both cases: the nominated bank). The beneficiary utilizes the credit by presentation of a draft (most often drawn on the issuing bank) accompanied by the stipulated documents, or of the stipulated documents alone, i.e. a draft is not a prerequisite (Article 9a-iv of the UCP). The validity for presentation of the drafts/documents expires at the counters of the issuing bank or, if so prescribed in the credit terms, at the counters of the nominated bank. Nevertheless, the place of payment still remains with the issuing bank and payment (at sight or maturity) is only made by the issuing bank at the given time after it receives the documents and finds them in conformity with the credit terms. The credit may also contain a clause authorizing the nominated bank to claim reimbursement from another party (the reimbursing bank). In such a case, unless the credit stipulates otherwise, the place of payment would then be with the nominated bank.

Revolving Credit: –

Buyers often order more merchandise than they actually need in order to obtain a better price. However, the delivery of the goods is made in installments and at stipulated intervals. In such cases, the seller can request that a revolving credit be issued which guarantees each part payment.

Performance Letter of Credit: –

A performance LC guarantees performance of an obligation. In the event of failure by the account party in the performance of an obligation e.g. contractual failure, failure to forward documents, failure to ship goods, the LC may be invoked.

Performance Bond credit: –

As expressed in the “BID” situation, a performance LC (normally 10% of the entire contract value) will be issued stating that the performance will meet specified standards, If the standards are met, the credit expires, if not, the beneficiary would be reimbursed the amount of the LC. In essence this can be described as “penalty money”.

 Parties to an L/C:-

Applicant for the Credit/Importer: –

The importer or buyer on whose request and on whose behalf the letter of credit is opened is called the applicant.

Issuing Bank/Opening Bank: –

The bank that opens a letter of credit, at the request of the importer, is known as Issuing Bank. The issuing bank is the buyer’s bank and is also called opening bank.

Beneficiary/Exporter/Seller: –

The party, normally the supplier of the goods, in whose favor letter of credit is opened, is called beneficiary. The seller, after shipping the goods as per terms of the credit, presents the documents to negotiating bank/confirming bank for negotiation.

Advising Bank/Notifying Bank: –

The bank in the exporter’s country, usually the foreign correspondent of the importer’s bank, through which letter of credit is advised to the supplier is called the ‘advising bank’.

Confirming Bank: –

If the advising bank also adds its own undertaking to honor the credit while advising the same to the beneficiary, he becomes the confirming bank. The confirming bank, in addition, becomes liable to pay for documents in conformity with the LC terms and conditions.

Negotiating Bank: –

It is the bank, which negotiates the bill and pays the amount to the beneficiary. It has to carefully scrutinize the documentary credit before negotiation in order to see whether the documents apparently are in order or not. The advising bank and the negotiating bank may not be one and the same. Sometimes it can also be the confirming bank.

Contents of the Letter of credit:-

Bank normally issued letter of credit (L/C) on forms, which clearly indicate the Banks name and extent of the banks obligation under the credit. The contents of the L/C of different may be different. In general L/C contains the following information:-

Name of the buyer: Who is also known as the accounted since it is for his account that the credit has been opened?

Name of the seller: who is also known as the beneficiary of the credit?

Moment of the credit: This should be the value of the merchandise plus any shipping charge intent to be paid under the credit.

Trade terms: Such as FOB and CIF tenor of the draft, which is normally dependent upon the requirements of the buyer?

Expiration Date : which is specified the last date documents my be presented in this manner on by including additionally a latest  shipping date the buyer  may be exercise control over the time of shipment .

Documents required: Which will normally include commercial invoice consular or customers invoice insurance policies as certificate if the source is to be effected by the beneficiary and original bills or lading.

General Description of the Merchandise: Which is briefly and in a general manner duly describes the merchandise covered by a later or credit.

Imports with L/C:-

Most imports into Bangladesh are subject to opening of irrevocable documentary L/C.

Imports without L/C: –

In Import Policy Order 2003 – 2006 (currently enforced), there are some items, can be imported without opening L/C.

Time Limit for opening L/C: –

Unless otherwise stated, L/C should be issued within 150 days from the date of issue or registration of LCA. L/C must be opened within the dates specified by the import control authority for imports under loans and credits.

Opening of L/C:-

The branch should establish L/Cs against specific authorization only on behalf of their own customers maintaining accounts with them and are known to be participating in the trade. Payments in retirement of the bills drawn under L/Cs must be received by debit to the account of the customer or by means of a crossed cheque drawn on the drawer’s other bankers. An exception can be made in case of import of articles for private use as permitted in the Import Policy Order.

Documents Called for Under LC:-

In a documentary LC the following documents are normally called for –

• Signed commercial invoice in duplicate, certifying the country of origin of the goods, its description, quantity, and quality grade and unit price and containing the LCA Form number and indenter’s registration number with Bangladesh Bank.
• Bill of exchange or Draft. The draft must bear the notation “Drawn under SJIBL LC NO. . . . Dated… “And the amount thereof endorsed by the negotiation bank.
• Full set of clean” Shipped on Board” ocean B/L endorsed to the order of the bank showing freight prepaid.
• A copy of intimation to the insurance company after shipment, quoting the number and date of the relative insurance cover note. A copy of such intimation should also accompany the shipping documents.
• Compliance certificate of other terms and conditions, if any.
• Reshipments Inspection certificate in respect of quality and quantity of goods where called for.
• Packing List.

Scrutiny of Documents:-

On receipt of the import documents the branch shall immediately set itself to the task of scrutinizing the documents. What they would ensure is that the documents received from the negotiating bank are drawn strictly in conformity with the terms of the LC and respond to the requirement of the underlying letter of credit in every respect. Examination of the documents generally includes the following points:

• Completeness of the documents;
• Consistency of the documents with each other;
• Compliance with the Uniform Customs and Practices for Documentary Credits issued by the International Chamber of Commerce, Paris

Retirement of documents

On receipt of the cost memo/lodgments voucher the importer pays the required amount.

This stage of documentary credit operation is known as ‘Retirement of Import Bills’. The branch will prepare the retirement vouchers to reflect the amount of cost and other charges from the importer, adjustments of margin and PAD Account. Thereafter the documents may be handed over to the importer against proper acknowledgement after certification and endorsement.

IMP Procedure:-

All payments for imports into Bangladesh are required to be reported to Bangladesh Bank on IMP form. The importer submits the IMP form in duplicate duly filled in and signed by him or by his authorized agent.

Back to Back LCs:-

General:-The branch may open back-to-back import LCs against export LCs received by export oriented industrial units operating under the bonded warehouse system, subject to observance of domestic value addition requirement (stated in terms of permissible limit of CFR value of imported inputs as percentage of FOB export value of output) prescribed by the Ministry of Commerce from time to time.

Opening of Back-to-back Import LCs:-

• In addition to the general instructions in the foregoing sections, the following instructions should be complied with while opening back-to-back import LCs:
• Only recognized export oriented industrial units operating under bonded warehouse system will be allowed the back-to-back LC facility. The unit requesting this facility should possess valid registration with the CCI&E and valid bonded warehouse license.
• The master export LC (against which opening of back-to-back LC is requested) should have validity period adequate to cover the time needed for import of inputs, manufactures of merchandise, and shipment to the consignee.
• The back-to-back LC value shall not exceed the admissible percentage of net FOB value of the relative master export LC (as per prescribed value addition requirement). For computation of net FOB value of a master export LC, the freight charge, insurance cost and commission, if payable by the exporter, shall be deducted from the LC value. If the freight element is not shown separately, a certificate from the shipping company or the shipping agent should be asked for.

 Export Receipts and Finance:-

Customs and Practices:-

Familiarity with international customs and practices with regard to cross border transactions is essential for efficient handling of transactions related to exports from Bangladesh. The discussions in this section will concentrate on these practices and customs.

Contracts and Letters of Credit

Exports from Bangladesh, as indeed from anywhere else, are normally made either against firm sale contracts or irrevocable LC. Shipments are also some times made without cover of an LC on CAD, DP or consignment basis according to the terms of relevant sale contracts. The sale contracts must stipulate the requirement of the buyer about the quality, quantity, price, description of the commodity, schedule of shipment, insurance, marks, country of origin and terms of payments, i.e. whether payments to be made against bills drawn at sight, D/P, D.A. or CAD basis.

Term of Sale:-The sales contract may stipulate the price of the commodity as FOB, CFR, CIF etc. These terms are described in some details in Chapter 16.

Insurance and Marks:-Insurance is taken and marks on the crate/bale are given as mutually agreed upon by the buyer and exporter.

Inspection:-The buyers and sellers may agree to have goods inspected at the port of shipment or at the port of destination by an internationally reputed inspection agency or other entity including the buyer himself.

Arbitration:-Dispute or claim regarding short weight or short quantity, moisture, low quality etc. on receipt of the goods at the buyers end is settled by a body composed of seller’s and buyer’s representatives with Port Trust and Government officials. This arbitration is to be done in the port of destination. For goods like raw jute and jute goods the terms and conditions of the contracts are applied as per the London Jute Association standard contract form and the Bangladesh Jute Mills Association standard contract forms respectively.

Payment Terms:-The terms of payment i.e. when and how payments are to be received by the exporters are incorporated in the sales contract as per mutual agreement between the buyer and the seller. These are normally the following:

Advance Payment: This system of payment is not common in respect of exports from Bangladesh. Under this method exporter may receive value of export in advance before actual shipment of the goods. This may be done by cheque, draft, M.T. or T.T. favoring the exporter. The exporter collects the remittance and subsequently exports goods as per terms of the contract.

CAD (Cash against Document): Sometime goods are exported on CAD (Cash against Documents) basis. In this case the export documents are presented to the importer through a bank in the country of importer and if the latter is satisfied with the documents he pays the bill in cash and takes delivery of the shipping documents (B/L, Invoice, etc.) to clear the goods from the port.

Trust Receipt: Sometimes the drawer may take possession of the goods against “Trust Receipt”. In this case responsibility for repatriation of export proceeds lies with the foreign bank that allows release of the goods to the importers against Trust Receipt. In this method exporter retains the title to the goods until final payment by the importer.

Documents against acceptance (D.A. Bill): In this case documents are delivered to the importer abroad on acceptance of the bill of exchange. He pays the cost on the due date but may also pay before the maturity date and avail some discount.

Documentary against Payment (D/P): This is one of the widely used methods of payment in export trade. The exporter ships goods and draws a sight bill of exchange (draft) on the importer and the same is presented to the drawer (importer) along with the shipping documents for payment. The drawer pays the draft (bill of exchange) and takes delivery of documents. The bank in the importing country delivers the documents to the importer only against payment of the bill.

Receiving the LC and advising it to the Beneficiary

On receipt of the LC the steps to be taken are the following:-

• Ø The branch should enter full particulars of the LC in the LC Advising Register allotting separate serial number for each LC. Serial number of the Register should be recorded on the left hand top corner of the printed LC advising form or on the original LC itself as the case may be.
• Ø In case of cable LC, on receipt of mail confirmation update the record by noting the particulars in the LC Advising Register.
• Ø Particulars of all amendments (if any) are also to be recorded in the same register before advising the same to the beneficiary.
• Ø If the credit is an Air Mail LC “Hand-on-credit”, addressed to the beneficiary, dispatch the same in original to the beneficiary under cover of the Bank’s forwarding letter either by registered mail or through messenger, as may be convenient, retaining a photo copy for the bank’s record.
• Ø If the LC is addressed to the branch, reproduce the text of the LC in the Bank’s printed LC advising format and forward the same under covering letter to the beneficiary by registered mail or through messenger, as may be convenient. Retain the original LC for the bank’s record.
• Ø In case of full text cable/telex LC, make a photocopy of the LC and forward it to the beneficiary duly attested under the cover of the bank’s forwarding letter by registered mail or through messenger as might be convenient, retaining the original cable/telex for bank’s record. The text of the cable/telex may also be reproduced in the bank’s printed form.

Documents required for Shipment of Goods:-

The LC requires submission of various documents by the exporter for payment/negotiation. Detail discussions of these documents are made in Chapter 18. The following important documents should, however, be carefully collected:

• EXP form in quadruplicate duly filled in and signed by the exporter and certified by the authorized officer of the Bank under seal and signature, for submission to customs.

• Photocopies of ERC, LC, firm contract.

• Freight certificate in case of FOB contract.

• R/R (Railway Receipt), B/R (Barge Receipt), S/R (Steamer Receipt) evidencing dispatch of goods from up country to the port of shipment. If shipment involves finance from the bank these documents should be made out to the order of SJIBL and should be consigned to bank’s approved C&F agent (clearing & forwarding Agent).

• Shipping instructions containing description of the goods, the name of the bank to whose order the B/L is to be made out; full name and address of the consignee and the notifying party; marks of the goods; freight clause etc., to enable the shipping agents to prepare B/L accordingly.

Dispatch of Documents to Issuing Bank:-

Forwarding Schedule:-

A forwarding schedule should be prepared as per terms of LC and thereafter the documents should be dispatched to the LC issuing bank under cover of the forwarding schedule by Registered Airmail or courier service in two consecutive lots or as per terms of LC for realization of the proceeds of the bill, stating clearly the mode of reimbursement.

The negotiating branch should claim reimbursement from the LC opening bank or from the reimbursing bank as per the arrangement outlined in the LC. The branch should give clear instruction to the reimbursing bank to credit the proceeds of the bill to the Shahjalal Islami Bank Ltd., Head Office Nostro Account maintained with the named correspondent bank abroad under telex intimation to the branch and Head Office (ID).

If the LC stipulates reimbursement from a bank other than the bank that opened the LC, all documents should be forwarded to the LC opening bank. The copy of draft should be forwarded to the reimbursing bank along with a certificate of compliance of all the terms of LC in the unusual form for reimbursement of bill amount.

The branch should also prepare a statement of all export bills purchased/negotiated on each day in the prescribed form and send the same to Head Office (ID) for arranging necessary forward exchange cover.

Payments to Exporter:-

Negotiation/ Purchase of Documents:

            On negotiation/purchase of the export bill, the exporter may be paid the value of the bill after converting the bill amount into Bangladesh Taka at the ruling bill buying rates–OD Sight Export buying rate for sight bill and long bill buying rate for usance bill. Other approved charges of the bank may also be adjusted against the bill amount. If forward cover had been booked with the branch, the conversion should be made at the booked rate of exchange.

Advance against export bill:

When shipment is not covered by an LC or the documents are found discrepant even though shipment is made against LC, the export bill is sent to the correspondents for collection. In that case, the bank may give advance to a trust worthy exporter against the security of the export bills ranging from 50% to 80% of the value of the bill, depending upon the merit of each case. In such cases, bank may also insist on collateral securities, like guarantee from third party or equitable/legal mortgage of property.

As any LC does not cover the shipment, the Bank should obtain clear instructions from the drawer (exporter) of the bill particularly on the following points:

• DA/DP/Sight Bills:-In case of nuisance bills whether shipping documents are to be delivered to the buyer against payment of the bill (D.P.) or against acceptance of the bill (D.A.). In case of sight bills documents are to be delivered only against payment.
• Noting/Protesting: – In case of dishonor of the bill either by non-payment or by non-acceptance, whether the dishonor should be noted and protested or protesting should be waived in case of dishonor.
• Advising fate of the bill: – Whether the fate of the bill, notice of dishonor should be advised by cable or by air mail, so that the exporter may arrange for extension of the Insurance Cover and resale or return of the unaccepted goods.
• Realization of Collection charges, interest etc.:- Whether the collection charges and interest should be realized from the buyer.
• Case in need:- Whether the bill should be presented to the ‘case in need’ in case of dishonor.
• Clearance, storage, insurance etc. at destination: – Instructions should also be obtained from the drawer regarding clearance, storage and insurance etc. of the goods on arrival at the destination, if the bill is dishonored.
• Mode of Presentation of the bill: – Clear instructions from the drawer must also be obtained regarding the mode of presentation for payment/acceptance of the bill i.e. whether immediately on receipt of documents or on arrival of the vessel at the destination.

Red Clause LC and Green Clause LC

Red Clause LC:-

This clause in the LC authorizing the negotiating bank to make advance to the beneficiary of the LC, is written or typed in red ink. It gives the name Red Clause LC. This advance is made at the risk of LC opening bank and is restricted to the amount authorized under the red clause.

Before disbursement of the advance all necessary documents including an undertaking, must be obtained from the beneficiary of the LC (exporter) in conformity with the terms and conditions of the LC and Red Clause.

 Green Clause LC:-

Under this type of Letter of Credit, which also is not commonly used in Bangladesh, a clause printed or written in green ink is included in the LC, authorizing the negotiating bank not only to make Pre-shipment advance to the exporter but also to provide the facility for storage of the goods to be exported under the LC, in the name of the LC opening bank till the goods are actually shipped.

 Travel Related Services.

General Principles:-

There would be a large number of customers– regular as well as casual– coming to the bank to buy foreign exchange for travel abroad on various purposes. The branches would attend to these customers with special care. Bangladesh Bank has delegated authority to the Authorized Dealers in Foreign Exchange to release foreign currency for travel abroad. In certain cases, especially where the applicants require more than the prescribed foreign exchange quota, Bangladesh Bank’s special approvals would be necessary.

Travel Quota:-

Up to US$ 1000 or equivalent per person may be issued during a calendar year to Bangladesh nationals proceeding by air to destinations in SAARC member countries and Myanmar. Within this annual limit, up to $ 500 or equivalent may be issued per person for overland travels to these countries. For visits to destinations in other countries foreign exchange up to $ 3,000 per person may be issued during a calendar year.

In all cases, visa of the respective country must be produced if release of foreign currency of more than $500 is required. Besides, an amount of only up to $1500 may be released in the form of bank notes i.e. foreign currency notes. The balance or the entire amount may be issued in the form of TC or other forms of instruments.

Minors aged less than 12 years are entitled to have half of the adult quota. If a customer requires a higher amount of foreign exchange his application may be forwarded to the Bangladesh Bank along with documents, if any, produced by the client to support his claim for a higher quota.

The travel entitlement for private as also for other types of visits may be utilized also by way of international credit cards issued in the names of the persons concerned.

Medical Treatment Abroad:-

All applications for release of foreign exchange for travel abroad on health ground should be submitted in the form at Appendix 5/58 of BB Guidelines for Foreign Exchange Transactions, 1996, in duplicate. Up to $10,000 or equivalent may be released by the branch on the basis of a recommendation of the Medical Board set up by the Health Directorate; foreign exchange may be released as per the cost estimate given by the foreign medical institution. Applications for release of exchange exceeding $10,000 should be forwarded along with supporting documents to Bangladesh Bank for prior approval.

 Travels by Government/Semi-Government Officials:-

For official or semi-official visits abroad by the officials of Government and autonomous/semi-autonomous institutions etc, the branch may release foreign exchange as per entitlement of various categories of officials fixed by the Ministry of Finance from time to time. In such cases, the applicant for foreign exchange shall be required to submit the sanction letter and the competent authority’s Order/Notification/Circular authorizing the travel.

 Foreign Exchange Quota for New Exporters and Importers:-

Up to $ 6,000 equivalent may be sold to a new exporter for business travel abroad against recommendation letter from Export Promotion Bureau (EPB). Genuine requirement for higher amounts may be forwarded to Bangladesh Bank with supporting documents for consideration.

Importers are entitled to a business travel quota @ 1% of their imports settled during the previous financial year. Non-exporting producers for the local market are entitled to such business travel quota @ 1% of their turnover during the preceding financial year as declared in their tax return subject, in both cases, to annual upper ceiling of $ 5,000. A business organization engaged in imports as well as production shall be entitled to this travel quota entitlement only on one count.

 Release of Foreign Exchange for Hajj:-

The Government of Bangladesh announces each year the scale at which foreign exchange may be issued to intending pilgrims for performing Hajj. Release of foreign exchange for this purpose should be made as per instructions issued for this purpose by Bangladesh Bank at the beginning of Hajj season.

Duties and Responsibilities:-

Fore the requirements of partial fulfillment of BBA degree I had to work at SJIBL to know about the practical field of knowledge. As an internee I always entered at the office at 10.00-10.10am and leaved from the office at 5.00pm. At the internee period I was work with the various types of activities. The main activities are discus below:-

 Account opening:-

At the bank, Account opening is the first and important for the bank authorities and the Clint. Most of the customers how came first time to open an account are not aware about the procedures; in that cases them I helped theme to open the Account smoothly. In this section I was careful about the following:

• Mode of operation of different type of Account,
• KYC and their formalities for opening.

General banking: –

It is the vital part for any internee even employee to know about the banking activities. I was mainly related to the bellows;

• Issuance of check book,
• Issuance of Demand Draft,
• Posting in register/Computer,
• Posting of Voucher,

 Accounts Department:-

All the transaction is the parts of accounting department. Regularly I did the work related to:

• Sorting of daily vouchers.
• Stitching of vouchers,
• Daily affairs,
• Reconciliation with Head office and other branches.

Foreign Exchange Department:–

My main focuses were the Foreign Exchange Department .In this part I was looking after the Foreign Exchange related work. Always I tried to keep me busy with Mrs. Bilkis khanom senior Officer and Mr. Abdus Salam, Officer of Foreign Exchange Department and tried to look carefully what hew is doing and how. Basically I followed the dealing related to the points below:-

• Letter of Credit,
• Formalities,
• Handling of export document,
• Passing of different entries,
• Posting of Voucher.

I mainly tried to cover the above activities at the internee period, BUT I was also trying together knowledge about all the operation of the bank. I had to communicate with the client after entering into the bank. I also offer them help. Actually as an internee I had to do most of the activities of the bank.

SOWT Analysis:-

A SWOT analysis is a modern analytical tool that can help analyze a business to examine the interaction between the particular characteristics of your business and the external marketplace in which you compete. The internal portion of a SWOT analysis looks at the individual strengths and weaknesses of SJIBL.  Similarly, the external analysis looks at the opportunities presented by the marketplace and the threats that SJIBL face in market.

 1.  The Strength of this Branch:-

• Full-functioning computerized accounts maintenance.
• SWIFT is being used for foreign trade related operations like letter of credit, fund transfer, guarantee, etc with optimum security.
• Easy and prompt cash transaction by introducing Money counting machine
• Healthy working facility
• SJIBL provide ATM debit card and nonstop banking facilities.

 2. The Weakness of this Branch:-

• Excessive reliance on fixed deposits.
• Very Limited number of branch network
• Some officials dealing with retail products have not been as a professional as a private bank does require.
• Charges of statement or certificates are very high.
• High  ATM transaction cost

 3. The Opportunity of this Branch:-

• It has real time online banking.
• New Product Innovation
• More focus on SME and Agro based business to extend Loan facilities
• Technical support to Small Industries to help them to run their business successfully.
• Credit card in dual currency
• Establishment of new branches to enlarge the market
• provide full range of commercial banking services

 4. The Threats of this Branch:-

• Increasing market competitors day by day
• Restless political condition in Bangladesh
• Competitive deposit market
• Market pressure for narrow down spread
• Unexpected fluctuation of stock market       

Findings:-

• I observed that unskilled persons are available here. There are lacks of good, efficient and knowledgeable person in the Shariah Council.
• There are also limitations regarding memory and knowledge of responding.
• Limited space for customers demand. It has to refer to the head office. This is one of the reasons for delay of customer service.
• Customer service of Shahjalal Islami Bank Ltd. is not satisfied. Employees of the SJIBL are not well trained.
• A very much little manpower against the huge advance portfolio of College Gate branch.
• Due to day operational activities there is a little scope for proper monitoring.
• Sometimes it has become burden for the officers to maintain the rules and regulations Imposed by the central bank.
• Insufficient Internet connection.
• Clients are not in favor of introducing system.
• Some officers would not like to spread out some information’s because these    were so much confidential for the bank.
• According to some client’s opinion, introducer is one of the problems to open an Account If a person who is new in the city wants to open an account it is a problem for him/her to arrange for an introducer. Modern technical equipment such as Fax machine is not sufficient in foreign Exchange department. As a result the exchange process makes a delay and it is also complicated.

 Recommendations

Actually there are no major Difference between Islamic banking system and Conventional banking system. I have the practical experience in SJIBL for only three months, with my little experience in the bank with vast and complex banking system, it is very difficult for me to recommend. I have observed some shortcomings regarding operational activities of the bank. On the basis of my observation I would like to recommend the following suggestions:

• Shahjalal Islamic bank ltd is now an established bank of Bangladesh so Bangladesh Bank should formulate a separate policy for the Bank.
• Though the performance of general customer services is good, but their employees are not well trained. The department needs to recruit expert human resources to provide good customer service, which will bring effectiveness of the bank’s operation.
• The employees are given deposit target, which creates extra pressure to them for that reason they cannot freely provide customer service. They had to spend most of their time to marketing to fill up their target. If the bank can reduce the pressure then they could be able to provide good service.
• In many cases, the foreign banks choose for a confirmation from other foreign banks, which is dishonor for the local bank. It proves the poor financial condition of our country. Bank should try to improve this situation.
• Shairah council should be more educative and adaptive with the present situation. So the shairah council should be consisted of taking both Islamic knowledgeable persons as well as modern educated persons.
• Shahjalal Islamic Bank ltd should be organized various seminars and symposium so that both national and international people can be more familiar.
• To provide quality service to the customer it is necessary to have a trained team of an organization or an institution. For this reason the bank should recruit fresher, bright energetic persons such as BBA MBA, and MBM etc.
• One of the business strategies is promotion. Successful business depends on how they can promote their products or services to the customer. In this connection to improve the business status bank should introduce more promotional programs.
• As the clients are not in favor of introducing system, if possible the rule of introducing to open an account should be changed.  Because many face in problem to arrange an introducer at the time of opening accounts.
• Letter of credit opening procedures and Margin requirement may be relaxed for SJIBL customer, otherwise new and competitive bank will take the clients away by giving special facilities.
• In case of Export L/C, sometimes customers insist to give their payments through their document, are found discrepant. In some cases, Bank has to give payment to these customers for deferent reasons. But it credibility of the bank. I think should be as stricter as possible about giving payments against discrepant document without hurting the customers.
• Sometimes I found that a new customer that comes first time to open L/C, they found it difficult to do so. I think this customer should be given some advantage to open L/C. If they treated well, they may gradually become prime customer for SJIBL.

Conclusion:-

The performance of a Banks today competitive business is important. Jus five years ago the number of bank was very small. So the competition was not a strong as it is today. Things have changed with the emergence of many new banks now the Customers have option to take the one that the best so the current banking business scenario is simply highly competitive. The performance of Shahjalal Islami Bank Limited during the Last five years has proved that with strong desire and will power one achieve whatever target he may have. Almost all the leading banks in our country have various Extra facilities in offer for the customers in comparison with other Banks but SJIBL has succeed in achieving more customer than other competitors. This has been possible only because of strong customer relation and excellent customer service.

For Banks credit is the main source of profit and on the other hand the wrong use of credit would bring disaster not only for the Bank but also for the economy as a whole. The less the amount of loan losses, the more the income from credit operations of the Banks and here lays the success of credit Financing. The objective of credit management is to maximize the performing assets and the minimizing of the none performing assets as well as ensuring the optimal point of loans and advance and their efficient management.

Though there are some drawbacks in implementing credit facilities in Shahjalal Islami Bank Limited As per manual it can be improved though involvement of more financial expert in the decision making process and utilizing the tools to judge integrity of the customers Finally, it can be urged that though the results achieved so far not satisfactory credit financing is a modern scientific technique for enhancing Shahjalal Islami Bank Limited strength and there lies the opportunities to make it more effective in the future for their benefit .