Foreign Exchange Business of National Credit and Commerce Bank

General objective of this report is to analysis Foreign Exchange Business (L/C) of the National Credit and Commerce Bank Limited. Other objectives are to understand the Banking business in Bangladesh and how Banking transactions Take place. Report also focus on to know the background of the bank and analysis the Financial and Accounting techniques of NCCBL. Finally draw SWOT analysis   and to appraise the total achievements and success of NCCBL.

Introduction

Now a days Industries as well as the Non Resident Bangladeshi and persons working outside are the real assets of the remittance business of the country. To motivate and also to ensure increased remittance flow, NCC Bank has made a number of arrangements with various exchange companies. NCC Bank considering taking steps so that the beneficiaries here in Bangladesh can receive the money at their door steps. The total amount received by Bank in 2006 was more than US $ 52.56 million.

Most large remittance comes from foreign exchange business including Import and Export. Bank largely depends in its Foreign Exchange Business to ensure profitability. To look after the Business and also to ensure prompt service to the Import and Export, officers having exposure and expertise in Foreign Exchange Business have been posted both at Head Office & Authorized Dealer Branches. During 2006, the Bank handled Export and Import business to the tune of TK. 8557.03 million and TK. 17646.84 million respectively. Bank’s wide network of correspondence plays vital role in facilitating its international trading. At present, total number of correspondents is 335.

With a view to facilitating homebound remittance, the Bank made arrangements with a number of exchange companies during the year. This arrangement brought significant development in remittance business. NCC Bank is going to expand this network in near future.

Corporate Governance establishes specific responsibility to ensure accountability. With a view to ensuring accountability and fairness in functions of the company and also to comply with the requirements of regulatory agencies, care has been taken to improve Corporate Governance. Due to this practice the remittance department of NCC Bank has been growing to provide a good participation in the profitability of the Bank.

Objectives of the Study

Every work is done to gain some particular objectives. My Internship program also contains certain important objectives. They are given below

• To understand the Banking business in Bangladesh. How Banking transactions Take place.
• To know the background of the NCCBL.
• To know Foreign Exchange Business (L/C) of the National Credit and Commerce Bank Limited.
• To understand the Financial and Accounting techniques of NCCBL.
• To have the idea about the communication between the branch office and Head office.
• To better understand about the foreign exchange activities.
• To appraise the total achievements and success of NCCBL.

An Overview of NCC Bank Limited

History of NCCBL

National Credit and Commerce Bank limited came to reality through the “National Credit Limited”. Prior to conversion into a scheduled commercial bank, National Credit Limited (NCL) was incorporated as an investment company on 18^th November 1985. It made its journey on 25^th November 1985 at its registered office and first branch at 7-8 Motijheel Commercial Area, Dhaka-1000 with initial authorized capital of Tk. 30 crores.

It was mostly involved in collecting suitable resources and making profitable investments. But within a very short period of time this investment company turned into a scheduled commercial bank. It was turned into a bank because it faced many restrictions in both collection and disbursement of funds while it was operating as an investment company. While this turnover was going on all types of transactions were closed for about fourteen months from April 22^nd, 1992. After that, with the permission from the government and Bangladesh Bank, NCL was converted in a full fledged commercial bank and started its banking operation on 17^th May 1993, in the name of National Credit and Commerce Bank Limited. It has been registered under the company act-1913, as a private commercial bank with paid up capital of Tk. 39 crores to serve the nation along with 16 branches.

However, NCCBL runs as per company rule, free from government intervention. Year 1994 & 1995 were the full operation year of the bank. During this period gave emphasis on considering the affairs of the institution as well as expansion of business work.

During last 13 years if its operation NCCBL has acquired commendable reputation by providing sincere personalized service to its customers through a technology based environment.

Objectives of NCCBL

The main objective is to maximize profit through customer satisfaction which very much reflects the idea of marketing concept. NCCBL has been ensuring maximum profit by providing best and improved customer service along with other corporate objectives mentioned below:

• To provide excellent customer service to its clients, so that they choose NCCBL first for their banking.
• Ensure high return on investment and services with different service products.
• Making profitable investment and grow in annual profit margin.
• To remain as the market leader through diversification of business and automation of banking operations.

Vision

The purpose of the bank is to become “The Bank of Choice” in the communities we serve. We accomplish this by offering to our customers the financial services they expect while providing a return to our owners. In accomplishing this mission, the bank has now been free from all the natures of a problem bank through fulfilling all the conditions set by the central bank. We proudly say: “NCCBL is profit-making and problem-free.”

Mission

Philosophically, a bank is a financial institution, which accepts depositors’ money for safe-keeping and contracts with the depositors to lend this money at interest to individuals who are in need of its use and who can give ample security that the loans will be paid. From the profits made from lending money at interest the banker agrees to pay the legitimate depositors a fixed sum of interest besides safe-guarding the deposits. Moreover the bank follows the followings as its mission:

• Maximize the profit within the shortest possible time.
• Try the best level to satisfy customers.
• Establish NCCBL as the best performing bank in the country.
• Ensuring smooth operation in all the departments.
• Maximize profit in every branch of the bank.

Products & Services

The Bank has wide range of product line to suit the need of the strata. In addition to convention product both Asset and liabilities sides the Bank offers special credit products for its customer. These are-

• Consumer Financing
• Lease Financing
• Small loan
• Festival loan
• Housing loan
• Long-term & short term loan financing
• Syndication
• Real Estate & Civil construction
• SME & Agro based.

Ancillary Services

• Brokerage House service under the central depository with membership of bourse
• Foreign currency Remittance
• Representative service
• Consultancy

Department of Bank

• General Banking Department
• Credit Department (Loan & Advance)
• Foreign Exchange Department

Electronic Banking

It is the order of the day to deliver prompt services to the customers taking assistance of modern facilities. NCC bank has recognized this and taken all possible steps to introduce technology-based Banking service to the customers. In line with this, Bank’s IT Division has already brought 14 Branches under On-Line Banking and working hard to bring other Branches under its scope at the soonest.

NCC’s VISA brand Credit Card being sold in the market defying fierce competition in the sector. NCC bank is operating its Foreign Exchange Business with the help of SWIFT.

Foreign Remittance

NCC bank has given proper stress on foreign exchange remittance business. The garments industries as well as the Non Resident Bangladeshis and persons working outside are real assets of the remittance business of the country. To motivate and also to ensure increased remittance flow, bank has made a number of arrangements with various exchange companies.

SME-Financing and Agro-Financing

NCC Bank’ Agro-project implemented through Doel Agro products in northern part of the country still remains a profitable venture. This project helped the Bank exploring new avenue of lending as well as provided scope to these remote centers of economic activities. The Bank is considering awarding stipend to talented students of the project Area to help them in their education. Recently, The Bank has also distributed educational materials at the remote area of Dahagram and Angorpota on the occasion of Independence Day 2007. The Bank also extended credit facility to fisheries industry as part of its agrifinancing which received satisfactory response.

Social Responsibility

NCCBL recognizes that Banks are not mere profit earning institutions rather they have great responsibility towards the society in which they are operating. In this respect, NCCBL is happy that its presence level. A number of seminars have been arranged under its auspices on the topics of economic & social aspects which provided a way of looking at the picture from different perspective. One of the major achievements of NCC Bank Foundation. It has plans to serve the society through the Foundation. NCCBL has recently accorded a grand reception to Language Veteran Mr. Abdul Matin at Jatiya Jadughar Auditorium. Books of different tastes have also been distributed to educational institutions situated at various remote areas of the country. Prior to that the Bank co-sponsored the reception accorded to Professor Dr. Muhammad Yunis on his receiving Nobel Prize for Peace 2006.

Also NCCBL has sponsored and participated as cosponsor in various events like National Volley-Ball Tournament-2006, NCC Bank Golf Tournament-2007, Dhaka University Convocation ceremony & publishing of souvenirs in connection with ICC World Cup Cricket-2007.

Moreover, NCCBL is considering to award scholarship to the talented but distressed students and grand assistance to the off-springs of its supportive staff.

Corporate Management

Constructive steps have been taken to buildup a progressive and positive image of the Bank. With this end in view, advertisements in both print and electronic media are being inserted on regular basis; other steps were also taken.

In order to establish specific responsibility and ensure accountability, befitting steps have been taken by the Management with the guidance of the Board. Various operational aspects are discussed regularly in Branch managers and Deputy Managers’ Conference’s to formulate proper line of action. Holding of such conferences provide scope for consolidating management and streamlining administration of Branches. Besides, with a view to easing decision making process, experienced and expert officers from other Banks are being appointed through proper evaluation. Further, to ensure qualified manpower, probationary officers are also being recruited every year on regular basis through competitive examinations and with these meritorious persons; NCCBL hopes to have a bunch of NCC cadre officers.

Present Status of the Bank (NCCBL)

The Bank

As part of its goal of maximizing profit by rendering personalized services To the customers, making good advance improving quality of assets and above all recovering Bank’s money from defaulters, the Bank has continued its efforts during 2006 with fruitful results which reflects in the operational result as enclosed with this report.

However, operational profit stood at Tk. 1,267.57 million during 2006 against Tk. 1018.34 million of 2005 recording an increase of 41.33% over the period.

Authorized, Paid‑Up, Reserve Fund & Other Reserve

The Authorized Capital of the Bank remained at Tk.2,500.00 million during the year as before but paid-up Capital raised to Tk.1,201.80 million against Tk.975.04 million against 2005.

The Reserve Fund increased to Tk.1,215.58 million during the year by registering 37.37% increase over last years’ Tk.884.90 million.

Deposit

Bank’s deposit as on 31st December 2006 stood at Tk. 28,147.34 million with an increase of 31.05% over last year’s figure of Tk. 21,478.22 million. The chart below shows the growth of deposit for last 05 years.

Credit

Under its declared credit policy the Bank operates through a number of conventional and various credit schemes including Small Business Loan, Housing Loan, and Festival Loan which help playing effectively in the market and insures steady earnings for the Bank. Bank’s leasing Unit and Syndicated Loans have also contributed to the income during the year as before. Its Agri-Credit Scheme sustained its viability by contributing to the profitability. During the year total Advance stood at Tk.24,678.36 million. Advance Deposit ratio was 0.88:1 in 2006.

Investment

Investments figure of the Bank as 31^st December, 2006 stood at Tk.3,552.08 million as against Tk. 3,010.45 million of the previous year-increase being 18% Considering the good rate of return, the Bank emphasized on making investment in Govt. Treasury Bill with a view to utilizing its liquid fund on temporary basis so that the same can be liquidate to meet urgent requirements.

Foreign Exchange Business

The Bank put due care to its Foreign Exchange Business which is one of the major sources of income and contributes notably towards its profitability. Under the purview of Bank’s Credit Policy and Government Policy, the Bank tries to cater the needs of Exporters and Importers of the country. With the expertise of the concerned officers at the Head office and Branches, Bankers business in this sector recorded notable development during 2006.

The amount of export and import business handled by the Bank in 2006 was Tk. 8, 557.00 million & Tk17,646.80 million respectively as against Tk7,776.30 million & Tk.16,296.30 million in 2005.

Total Assets

Total Assets of the Bank during 2006 was Tk.32,615.01 million as against Tk.26,114.13 million in 2005, rate of growth being 24.89%.

Credit Administration

Proper administration of credit portfolio and in case of need, appropriate recovery drive is of utmost importance for ensuring quality of assets. It is also Central Bank’s requirement under Core Risk Management. It’s Credit Administration(Risk Management) Department has shown satisfactory result in identifying potential bad loans for which it was possible to take corrective measures to safe guard interest of the Bank. The rate of classified loans during the year was 4.95% slightly higher than that of previous year’s figure of 4.82%.

Treasury

Through effective Fund Management, the Bank could earn Tk.237.79 million during the year through dealing room operation.

Capital Market Operation

The Brokerage3 House of the Bank could sustain its pace during the year under reference. Its success inspired the Bank to open a new station at Uttra R/A during 2006. The Bank has also plan to open few more stations at Banani, Dhanmondi in Dhaka and Agrabad in Chittagong in 2007.

Operational Result

The operation profit of the Bank during 2006 was Tk.1,267.57 million as against Tk.1,018.34 million in 2005, rate of growth being 24.47%. Return on Assets (ROA) was 1.63%.

Dividend

The Board of Directors has been pleased to recommend 22.50% Dividend (10% Cash, 12.50% Bonus) for its valued shareholders for the year 2006.

Foreign Exchange (National Credit and Commerce Bank Limited)

Definition of Foreign Exchange

Foreign Exchange is a process which is converted one national currency into another and transferred money from one country to other countries.

According to Mr. H. E. Evitt. Foreign Exchange is that section of economic science which deals with the means and method by which right to wealth in one country’s currency are converted into rights to wealth in terms of another country’s currency. It involved the investigation of the method by which the currency of one country is exchanged for that of another, the causes which rented such exchange necessary the forms which exchange may take and the ratio or equivalent values at which such exchanges are effected.

Foreign exchange is the rate of exchange in the both country’s currency.

Foreign Trade and Foreign Exchange

International trade refers to trade between the residents of two different countries.
Each country functions as a sovereign State with its set of regulations and currency. The difference in the national of the exporter and the importer presents certain peculiar problems in the conduct of international trade and settlement of the transactions arising there from. Important among such problems are:

(a) Different countries have different monetary units;

(b) Restrictions imposed by countries on import and export of goods;

(c) Restrictions imposed by nations on payment from and into their countries;

(d) Differences in legal practices in different countries.

Foreign exchange means foreign currency and includes :-

(i) All deposits, credits and balances payable in any foreign currency and any drafts,
travelers cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency;
(ii) Any instrument payable, at the option of the drawee or holder thereof or any other party thereto. Either in Indian currency or in foreign currency or partly in one and partly in the other. Thus, foreign exchange includes foreign currency; balances kept abroad and instruments payable in foreign currency.

Principles of Foreign Exchange

The following principles are involved in Foreign exchange:

i) The entire system

ii) The media used

iii) The monetary unit.

Function of Foreign Exchange

The Bank actions as a media for the system of foreign exchange policy. For this reason, the employee who is related of the bank to foreign exchange, specially foreign business should have knowledge of these following functions :-

i) Rate of exchange.

ii) How the rate of exchange works.

iii) Forward and spot rate.

iv) Methods of quoting exchange rate.

v) Premium and discount.

vi) Risk of exchange rate.

vii) Causes of exchange rate.

viii) Exchange control.

ix) Convertibility.

x) Exchange position.

xi) Intervention money.

xii) Foreign exchange transaction.

xiii) Foreign exchange trading.

xiv) Export and import letter of credit.

xv) Non-commercial letter of trade.

xvi) Financing of foreign trade.

xvii) Nature and function of foreign exchange market.

xviii) Rules and Regulation used in foreign trade.

xix) Exchange Arithmetic.

Letter Of Credit (L/C) – NCC Bank Limited

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 the letters 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 is 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 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 in respect of export of goods have to be delivered by the exporter to the paying bank before the payment is made.

Form of Letter Of Credit

A letter of credit (L/C) may be two forms. These as below:

i) Revocable letter of credit.

ii) Irrevocable letter of credit.

(i) Revocable L/C: If any letter of credit can be amendment or change of any clause or canceled by consent of the exporter and importer is known as revocable letter of credit.

A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice to the beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the documents have been honored by the issuing bank or its correspondent. Thus a revocable credit does not usually provide adequate security for the beneficiary.

(ii) Irrevocable L/C: If any letter of credit can not be changed or amendment without the consent of the importer and exporter is known as irrevocable letter of credit.

Irrevocable credit constitutions a firm undertaking by the issuing bank to make payment. It therefore, gives the beneficiary a high degree of assurance that he will paid to his goods or services provide he complies with terms of the credit.

Types of Letter Of Credit

Letter of Credit is classified into various types according to the method of settlement employed. All credits must clearly indicate in major categories.

i) Sight payment credit.

ii) Deferred payment credit.

iii) Acceptance credit.

iv) Negotiation credit.

v) Red close credit.

vi) Revolving credit.

vii) Stand by credit.

viii) Transferable credit.

(i) 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.

(ii) Deferred payment credit: Under a deferred payment credit the beneficiary does not receive payment when his presents the documents but at a later date 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.

In terms of its economic effect a deterred payment credit is equivalent to an acceptance credit, except that there is no bill of exchange and therefore no
possibility of obtaining money immediately through a descant transaction. In certain circumstances, how ever, the banks payment undertaking can be used as collateral for an advance, though such as advance will normally only be available form the issuing or confirming bank. A discountable bill offers wider scope.

(iii) Acceptance Credit: With an acceptance credit payment is made in the form of a tern bill of exchange drawn on the buyer, the issuing bank or the pendent bank. Once he has fulfilled the credit requirements, the beneficiary can demand that the bill of exchange be accepted and returned to him. Thus the accepted bill takes the place of a cash payment.

The beneficiary can present the accented bill to his own bank for payment at maturity or for discounting, depending on whether or not he wants cash immediately. For simplicities sake the beneficiary usually gives on instruction that the accepted bill should be left in the safekeeping of one of the banks involved until it matures. Bill of exchange drawn under acceptances credit usually has a term of 60-180 days.

The purpose of an acceptance is to give the importer time to make payment. If he sells the goods before payments fall due, he can use the proceeds to meet the bill of Exchange in this way, he does not have to borrow money to finance the transaction.

(vi) Negotiation credit: Negotiation means the purchase and sale of bill of exchange or other marketable instruments. A negotiation credit is a commercial letter of credit opened by the issuing bank in the currency of its own country and addressed directly to the beneficiary. The letter is usually delivered to the addressee by a correspondent bank. This credit is sometimes also as Hand on credit.

The letter of credit empowers the beneficiary to draw a bill of exchange on the using bank, on any other named drawer or on the applicant for the credit. The beneficiary can they present this bill to a bank for negotiation, together with the original letter of credit and the documents stipulated therein.

Payment of the bill of exchange is guaranteed by the issuing bank on the condition that the documents presented by the beneficiary are in order. The most common form of negotiation credit permits negotiation by any bank. In rare case the choice is limited to specified banks.

(iv) Red clause credit: In the case of a red clauses credit, the seller can obtain an advance for an agreed amount from the correspondent bank, goods that are going to be delivered under the documentary credit. On receiving the advances, the beneficiary must give a receipt and provide a written undertaking to present the required documents before the credit expires.

The advance is paid by the correspondent bank, but it is the using bank that assumes liability. If the sellers does not present the required documents in time and fails to refund the advance, the correspondent bank debits the issuing bank with the amount of the advance plus interest. The issuing bank, in turn, has reveres to the applicant, who therefore bears the risk for the advance and the interest accursed.

The clause permitting the correspondent bank to make an advance used to be written on red in home the name red clause credit.

(v) Revolving Credit: Revolving credit can be used when goods are to be delivered in installment at specified intervals. The amount available at any one time is equivalent to the value of one partial delivery.

A revolving credit can be cumulative or non-cumulative means that amount from unused or incompletely used portions can be carried forward to subsequent period. If a credit is non-cumulative, portions not used in the prescribing period case to be available.

(vi) Stand by credit: Stand by credit is encountered principally in the US. Under the laws of most US states, banks are prohibited from issuing regular quarantines, so credits are used instead. In Europe, too the use of this type of credit is increasing by virtue of their documentary credit, stand-by credit are governed by the UCP. However, their function is that of a grantee.

The types of payment and performance that can be guaranteed by stand-by credits include the following:

– Payment of thorium bill of exchange
– Repayment of bank advance
– Payment of goods delivered.
– Delivery of goods in accordance wets contract and
– Execution of construction contracts, supply and install contracts.

In order to enforce payment by the bank, the beneficiary merely presents a declaration stating that the applicant for the credit has failed to meet his contractual obligation. This declaration may have to be accompanied by other documents.

(vii) Transferable credit: Transferable credit is particularly well adapted to the requirements of international trade. A trader who receives payment from a buyer in the form of a transferable documentary credit can use that credit to pay his own supplier. This enables him to carry out the transaction with only a limited and lay of his own funds.

The buyer supplies for an irrecoverable credit issued in the traders favor. The issuing bank must expressly designate the credit as transferable. As soon as the trader receives the confirmation of credit he can request the bank to transfer the credit to his supplier. The bank is under no obligation to affect the transfer except in so far as it has expressly consented to do so.

The costs of the transfer are usually charged to the trader and the transferring bank is entitled to delete them in advance.

Parties to a Letter Of Credit

A letter of credit is issued by a bank at the request of an importer in  favor of an exporter from whom he has contracted to purchases some commodity or commodities. The importer, the exporter and the issuing bank are parties to the letter of credit. There are however, one or more than one banks that are involved in various capacities and at various stages to play an important role in the total operation of the credit.

i) The opening Bank.
ii) The Advising Bank.
iii) The Buyer and the Beneficiary.
iv) The paying Bank.
v) The negotiating Bank.
vi) The confirming Bank.

i) The opening Bank: The opening Bank is one that issues the letter of credit at the request of the buyer. By issuing a letter of credit it takes upon itself the liability to pay the bills drawn under the credit. If the drafts are negotiated by another bank, the opening Bank reimburses that Bank. As soon as the opening Bank, issuing a letter of credit (L/C), it express its undertaking to pay the bill or bills as and when they are drawn by the beneficiary under the credit. When the bills are presented to or when antic is received that bills have been presented to a paying or negotiating Banks its liability matures.

ii) The Advising Bank: The letter of credit is often transmitted to the beneficiary through a bank in the latter’s country. The bank may be a branch or a correspondent of the opening bank. The credit is some times advised to this bank by cable and is then transmitted by it to the beneficiary on its own special form. On the other occasions, the letter is sent to the bank by mail or telex and forwarded by it to the exporter. The bank providing this service is known as the advising bank. The advising bank undertakes the responsibility of prompt advice of credit to the beneficiary and has to be careful in communicating all its details.

iii) The Buyer and the Beneficiary: The importer at whose request a letter of credit is issued is known as the buyer. On the strength of the contract that he makes with the exporter for the purchase of some goods that the letter of credit is opened by the opening bank.

The exporter in whose favor the credit is opened and to whom the letter of credit is addressed is known as the beneficiary. As the seller of goods he is entitled to receive payment which he does by drawing bills under the letter of credit (L/C). As soon as he has shipped the goods and has collected the required documents, he draws a set of papers and presents it with the documents to the opening bank or some other bank mentioned in the L/C.

iv) The paying Bank: The paying bank only pays the drafts drawn under the credit but under takes no opening bank, by debating the latter’s accounts with it if there is such an account or by any other measured up, between the two bankers. As soon as the beneficiary has received payment for the draft, he is out of the picture and the rest of the operation concerns only the paying bank and the opening bank.

v) The Negotiating bank: The negotiating bank has to be careful in scrutinize that the drafts and the documents attached there to be in conformity with the condition laid down in the L/C. Any discrepancy may result in refused on the part of the opening bank to honour the instruments is such an eventuality the negotiating bank has to look back to the beneficiary for refund of the amounts paid to him.

vi) The Confirming Bank: Sometimes an exporter stipulates that a L/C issued in his favor be confirm by a bank in his own country. The opening this country to add its confirming to the credit the bank confirming the credit is known as the confirming bank and the credit is known as confirmed credit.

Contents of the Letter Of Credit

Banks 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 Banks may be different .In general L/C contains the following information:-

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

ii) Name of the seller: Who is also known as the beneficiary of the credit?

iii) Moment of the credit: Which should be the value of the merchandise plus any shipping charges intent to be paid under the credit?

iv) Trade terms: Such as F.O.B and CIF.

v)Tenor of the Draft: This is normally dependent upon the requirements of the buyer.

vi) Expiration date: Which is specified the latest date documents may be presented. In this manner or by including additionally a latest shipping date, the buyer may exercise control over the time of shipment.

vii) Documents required: Which will normally include proforma invoice consular or customers invoice, insurance policies as certificates, if the source is to be effected by the beneficiary and original bills of lading.

viii) General description of the merchandise:This briefly and in a general manner duly describes the merchandise covered by a letter of credit.

Procedures of Opening the L/C

The importer after receiving the proforma invoice from the exporter, by applying for the issue of a documentary credit, the importer request his bank to make a promise of payment to the supplier. Obviously, the bank will only agree to this request if it can rely on reimbursement by the applicant. As a rule accepted as the sole security for the credit particularly if they are not the short of commodity that can be traded on an organized market, such an arrangement would involve the bank in excessive risk outside its specialist field. The applicant must therefore have adequate funds in the bank account or a credit line sufficient to cover the required amount.

Banks deal in documents and not in goods. Once the bank has issued the credits its obligation to pay is conditional on the presentation of the stipulated documents with in the prescribed time limit. The applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary has not delivered goods on redder reissues as contracted.

The importer submits the following documents before opening of the L/C:

a. Tax Identification Number (TIN)
b. Valid Trade License.
c. Import Registration Certificate (IRC)

The Bank will supply the following documents before opening of the L/C:

a. LCA form.
b. Application and Agreement form.
c. IMP form
d. Necessary charge documents for documentation.

The above documents / papers must be completed duly signed and filled in by the party according to the instruction of the banker.

Documentary Letter Of Credit (Import/Export Documentation)

Documentary letter of credit is such kinds of commercial letter which a bank issue on behalf of foreign seller (exporter) according to the direction of the (importers) purchasers. The documents shown under are known as export documents form the importer’s side. These are:-

(i) Bill of exchange: The bill of exchange is that particular instrument through which payment is effected in trade deals internal and international. The payment for the goods is received by the seller through the medium of a bill of exchange drawn on the buyer for the amount depending on the contract. It is a negotiable instrument. There are five main parties involved in a bill of exchange. They are:-

(a) Drawer
(b) Drawee
(c) Payee
(d) Endorser
(e) Endorsee

(ii) Bill of lading: A bill lading is a document of title to goods entitling the holder to receive the goods as beneficiary or endorsee and it is with the help of this document on receipt from the exporter that the importer takes possession of the goods from the carrying vessel at the port of destination.

(iii) Airway bill / Railway receipt: When goods to be transported are small in bulk or requiring speedy delivery or those are perishable in nature on the deal is in between the neighboring countries then mode of transports other than shipping may be resorted to far the carriage of the goods Airways bill / Railway receipt take place of Bill of lading depending on the nature of the carrier.

(iv)Proforma invoice: It is the seller’s bill for the merchandise. It contains a description of goods, the price per unit at a particular location, total value of the goods, packing specifications, terms of sale, letter of credit, bill of lading number etc. There is no standard form far a commercial invoice. Each exporter designs his own commercial invoice form. The invoice is made out by the seller under his signature in the name of the buyer and must be submitted in a set of at least 3 copies. Its main purpose is to check whether the appropriate goods have been shipped and also that their unit price, total value, marking on the package etc. are consistent with those given in other documents.

(v) Insurance policy: In the international trade insurance policy is a must to cover the risk of loss on consignments while they are on seas, roads, airways. The insurance is the responsibility of the buyers (consignee) under FAS, FOB and C&F contracts and of the seller (consignor) under CIF contract. The policy must be of the type as specified in the relative contract / credit. The policy would be for the value of CIF price plus 10 (ten) percent to cover the expenses and that is required to be obtained in the same currency as that of the credit and dated not later than the date of shipment with claims* being payable at the destination. It must be properly stamped. Like a bill lading it must be negotiable and be endorsed where it is payable to order.

(vi) Certificate of origin: This is a certificate issued by a recognized authority in exporting country certifying the country of origin of the goods. It is usually by the Chambers of commerce. Some times, it is certified by local consul or Trade Representative of the importing country as per terms of the credit.

(vii) Packing list : The exporter must prepare an accurate packing list showing item by item, the contents of the consignment to enable the receiver of the shipment to check the contents of the goods, number and marks of the package, quality, per package net weight, gross weight, measurement etc.

(viii) Weightment and Measurement: Issued by recognized authority (like chambers of commerce and industry) in exporting country certifying correct weightment and measurement of the goods exported.

(ix) Bill of entry: A bill of entry is a document which contains the particulars of the imported goods as well as the amount of customs duty payable.

The exporter submits the following papers/documents to the Negotiating bank:

i) Bill of exchange / Draft.

ii) Bill of lading.

iii) Airway bill / Railway receipt.

iv) Proforma invoice.

v) Insurance policy.

vi) Certificate of origin.

vii) Packing list.

viii) Weightment & measurement list etc.

The negotiating bank after received the above documents / papers then this bank scrutiny the documents. The negotiating bank sends the original shipping documents to the L/C opening bank and keeping the second copy with the negotiating bank.

Payment against Documents (PAD)

Banks deal in documents and not in goods. If the shipping document against the L/C is in order then the L/C opening bank must have to payment to the foreign bank within 3 days or 72 hours according as Uniform Customs and Practice for Documentary Credit (UCPDC) 500 of revision of ICC.

If the shipping documents have any discrepancy, then the L/C opening bank informed to the negotiating bank within 7 days. Otherwise, the shipping documents have not discrepancy. If the importer have not adequate founds in the bank account then the bank payment to the foreign bank against the shipping documents.

L/C Operation of National Credit and Commerce Bank Ltd

L/C Operation of NCCBL

Today NCCBL is one of the leading and most successful Banking enterprises in the country. If pay a great role in the economy of the country. By export-import business the bank play a great role to the economy of Bangladesh. NCCBL is one of the greatest banks in export-import business.

Foreign trade plays a vital role in the economic advancement process of a nation. So the trend of country’s foreign trade, i.e. import & export is a great concern to the government of a country. Fluctuation in the parameters of foreign trade immediately brings about some impact on the total economy. As such the nature, trend and the volume of foreign trade are required to keep peace with the national economic needs and objective. There may be some areas where emphasis is to be given while there may be others which deserve restrictions or discouragement. Moreover the items of import & export value and volume of the same, the corresponding time period, sources of fund far payment and receipt, all these factors are to be considered very carefully for making necessary adjustment to match with the national economic policies as well as achieve balanced economic growth through the Interpol icy and Interpol icy co-ordination.

International trade policy relates to commercial policy which has two main components of Import policy relates to commercial policy which has two main components of Import policy and Export policy. With a view to achieving favorable balance of payment position as well as to encouraging or well to encouraging or well regulated and need based foreign trade of the country, the government formulates the national commercial policy i.e. import and export policy for a certain period considering all the favorable & unfavorable aspects of the nation’s previous trade performance as well as the future requirement and prospects.

As the policy matter and the operational of import & export trade are quite different, two separate policies for import & export trade are formulated by the government. Import policy refers to government policies account for a particular fiscal period envisaging the allocation of fund available from various sources for import of certain quantity of certain goods. The main purpose of the policy is to conserve scare foreign exchange & to ensure its utilization for the import of goods and services which have national priority. The selected persons on institutions those who have got valid Import Registration Certificate (IRC) form the Chief Controller of Import and Export (CCI & E) can import and they are known as importers.

These importers can import goods as entitled in each year as per import policy by opening letter of credit (L/C) through bank i.e. Authorized Dealer (A.D). Authorized Dealer means the branches of commercial banks, those who are authorized / licensed by the Bangladesh Bank to deal in foreign Exchange. Letter of Credit may be defined as the letter as the letter of undertaking or letter of guarantee issued by the L/C opening bank on behalf of the importer submits all the documents as mentioned in the L/C submits all the documents as mentioned in the L/C within the time schedule to his bank i.e. exporters bank.

Before opening L/C in favor of the exporter the entitlement of the importer (total amount in taka he can import as per import policy) to be registered with Bangladesh Bank. For this purpose the importer is to apply through L/C. Authorization form (LCA form). This is a set in quintuplicate and the authorized dealer will issue LCA form to the individual importer at their request. After filled up and signed up the appropriate column of the LCA form, the importer will submit it to Authorized Dealer who intern forward the same to Bangladesh Bank for registration where fund is purchased from Bangladesh Bank. After registration Bangladesh Bank forward the 1st and 2nd copy of LCA form to the Authorized Dealer, 3rd and 4th copy to CCI & E and keep the 5th copy as their office copy. 1st copy of LCA is known as Exchange Control copy against which Authorized Dealer can open L/C at the request of the importer. 2nd Copy is known as custom purpose copy which will be handed over to the importer who will clear the goods from the port on its arrival through this custom purpose copy of LCA along with other shipping documents.

Open an L/C by the Importer

Now the importer will come to his bank with a request to open an L/C along with the following documents / papers:-

1) L/C application and agreement Form (Bank’s prescribed application form) with adhesive stamp of Tk. 200 (Flexible)

2) Indent / Proforma Invoice / Contract – 3 copies.

3) Insurance cover note with premium paid receipt.

4) IMP form one set duly signed by the importer.

5) Any other documents if necessary.

Authorized Dealer will scrutinize the documents and open the L/C in favor of the exporter by converting the Bangladesh Taka into foreign currency at the existing B.C selling rate of exchange. Care must be taken so that the limit of Bangladesh Taka is not exceeded in any way. The foreign currency value of the L/C must correspond the equivalent amount of Bangladesh Taka if LCA registered with Bangladesh Bank.

The Authorized Official of the Authorized Dealer will check the L/C very carefully and signed the same jointly and forward the 1st and 2nd copy to their foreign correspondent situated at the nearest place of the exporter. Thus Bank is known as Advising Bank. On receipt of the L/C the Advising Bank after verification of the duplicate copy at their end.

On getting the L/C the exporter prepares the goods and ship the same as per instruction of the L/C and obtain a Bill or Lading from the shipping Authority. The exporter will prepare bill of exchange, Invoice and other documents as specified in the L/C and submits the same along with the original copy L/C to his bank within the time mentioned in the L/C. The Bank with whom the exporter submits the documents is known as Negotiating Bank as this negotiates the documents i.e. make payment to the exporters.

The negotiating bank will scrutinize the documents with terms and conditions of the L/C very carefully. If every thing is in order the bank will make payment of the amount of L/C to exporter in their local currency by debiting to their own account. Subsequently the negotiating bank will claim the L/C with whom the Head Office of L/C opening bank maintained foreign currency amount.

This is known as Reimbursing Bank. Reimbursing Bank will make payment to the negotiating bank by debit to L/C opening Bank’s Head Office A/C. Simultaneously the negotiating bank will forward all the documents submitted by the exporter to the L/C opening bank as per instruction of the L/C. The date of forwarding letter of negotiating bank should be date of negotiation of documents.

On receipt of the shipping documents from the negotiating bank, the L/C opening bank will carefully scrutinize the documents with terms and conditions of the relative L/C. If there is no discrepancy, the documents will be lodged. Lodgment of documents means the entry of the particulars of the documents in the Register and preparation of vouchers by converting the foreign currency amount into Bangladesh Taka as the exchange rate prevailing on that date. This amount is due to the importer. The importer will be asked to take delivery documents by making payment of the bill amount excluding the margin deposited at the time of opening L/C. Payment of bill amount and to take delivery of documents by the importers is known as Retirement of Import Bills.

After taking delivery of documents from the L/C opening bank, the importer will clear the goods which has already been arrived or due to arrive from the customs authority on submission of these documents along with the custom purpose copy of LCA From.

Motivation

Introduction:

Motivation can be described as the driving force within individuals that impels them to action. This driving force is produced by a state of tension, which exists as the result of an unfulfilled need. Individuals strive – both consciously and subconsciously – to reduce this tension through behavior that they anticipate will fulfill their needs and thus relieve them of the stress they feel. The specific goals they select and the patterns of action they undertake to achieve their goals are the results of individual thinking and learning. It portrays motivation as a state of need -induced tension that exerts a “push” on the individual to engage in behavior that he or she expects will gratify a need and thus reduce the tension. Whether gratification is actually achieved depends on the course of action being pursued. (If a high school girl expects to become a great tennis player by wearing the same brand of sneakers that Jennifer Capriati wears, she is likely to be disappointed; if she is likely to be disappointed; if she takes tennis lessons and practices diligently, she may succeed.)

The specific courses of action that consumers pursue and their special goals are selected on the basis of their thinking processes (i.e., cognition) and previous learning. For that reason, marketers who understand motivational theory attempt to influence the consumer’s cognitive processes.

Motivation & Organizational Growth

Various groups provide specific challenges in terms of motivation. In this section we want to focus on how to apply motivation concepts in this chapter, which is the related with organizational growth.

(I) Motivating Professionals

In contrast to a generation ago, the typical employee today is more likely to be a highly trained professional with a college degree than a blue-collar factory worker. These professionals receive a great deal of intrinsic satisfaction from their work. They tend to be well paid. So what, if any, special concerns should you be aware of when trying to motivate a team of engineers at Intel, a software designer at Microsoft, or a group of CPAs at Waterhouse?

Professionals are typically different from nonprofessionals. They have a strong and long- term commitment to their field of expertise. Their loyalty is more often to their profession than to their employer. To keep current in their field, they need to regularly update their knowledge, and their commitment to their profession means they rarely define their work week in terms of 8 to 5 and five days a week.

What motivates professionals? Money and promotions typically are low on their priority list. Why? They tend to be ranked high. They like to tackle problems and find solutions. Their chief reward in their job is the work itself. Professionals also value support. They want others to think what they’re working on its important. Although this may be true for all employees, because professionals tend to be more focused on their work as their central life interest, nonprofessionals typically have other interests outside of work that can compensate for needs not met on the job.

The foregoing description implies a few guidelines to keep in mind if you’re trying to motivate professionals. Provide them with ongoing challenging projects. Give them autonomy to follow their interests and allow them to structure their work in ways that they find productive. Reward them with educational opportunities – training, workshop, attending conferences – that allow them to keep current in their field. Also reward them with recognition, and ask questions and engage in other actions that demonstrate to them you’re sincerely interested in what they’re doing.
An increasing number of companies are creating alternative career paths for their professional / technical people, allowing employee to earn more money and status, without assuming managerial responsibilities. At Merck & Co. IBM, and AT&T, the best scientists, and researchers gain titles such as fellow and senior scientist. Their pay and prestige are comparable to those of managers but without the corresponding authority or responsibility.

(2)  Motivating Workers

i) Motivating Contingent Workers

We noted that one of the more comprehensive changes taking place in or organizations is the addition of temporary or contingent employees As downsizing has eliminated of “permanent” jobs, an increasing number of new openings are for part-time, contract, and other forms of temporary workers. For instance, in 1995, approximately 6 million Americans, or the contingent workforce. These contingent employees don’t have the security or stability that permanent employees have. As such, they don’t identify with the organization or display the commitment that other employees do. Temporary workers also are typically provided with little or no health care, pensions, or similar benefits.

There is no simple solution for motivating temporary employees. For that small set of temps who prefer the freedom of their temporary status – some students, working mothers, seniors – the lack of stability may not be an issue. Additionally, temporariness might be preferred by those highly compensated doctors, engineers, accountants, and financial planners who don’t want the demands of a stable job. But these are the exceptions. For the most part, temporary employees are so involuntarily.

What will motivate involuntarily temporary employees? An obvious answer is the opportunity for permanent status. In those cases where permanent employees are selected from the pool of temporaries, temporaries will often work hard in hopes of becoming permanent. A less obvious answer is the opportunity for training. The ability of a temporary employee to find a new job is largely dependent on his or her skills. If the employee sees that the job he or she is doing for you can help develop salable skills, then motivation is increased. From an equity standpoint, you should also consider the repercussions of mixing permanent and temporary workers where pay differentials are significant. When temps work alongside permanent employees who earn more, and get benefits too, for doing the same job, the performance of temps is likely to suffer. Separating such employees or converting all employees to a variable-pay or skill-based pay plan might help lessen this problem.

ii) Motivating the Diversified Workforce

Not everyone is motivated by money. Not everyone wants a challenging job. The needs of women, singles, immigrants, the physically disabled, senior citizens, and others from diverse groups are not the same as a white American male with three dependents. A couple of examples can make this point clearer. Employees who are attending college typically place a high value on flexible work schedules. Such individuals may be attracted to organizations that offer flexible work hours, job sharing, or temporary assignments. A father may prefer to work the midnight to 8 A.M. shift in order to spend time with his children during the day when his wife is at work.

If you’re going to maximize your employees’ motivation, you’ve got to understand and respond to this diversity. How? The key word to guide you should be flexibility. Be ready to design work schedules, compensation plans, benefits, physical work settings, and the like to reflect your employees’ varied needs. This might include offering child and elder care, flexible work hours, and job sharing for employees with family responsibilities. It also might include offering flexible leave policies for immigrants who want occasionally to make extensive return trips to their homelands, or creating work teams for employees who come from countries with a string collectivist orientation, or allowing employees who are going to school to vary their work schedules from semester to semester.

iii) Motivating Low-Skilled Service Workers

One of the most challenging motivation problems in industries such as retailing and fast food is: How do you motivate individuals who are making very low wages and who have little opportunity to significantly increase their pay in either their current jobs or through promotions ? These jobs are typically skilled with people who have limited education and skills, and pay levels are little above minimum wage.

Traditional approaches for motivating these people have focused on providing more flexible work schedules and filling these jobs with teenagers and retirees whose financial needs are less. This has met with less than enthusiastic results. For instance, turnover rates of 200 percent or more are not uncommon for businesses like McDonald’s. Taco Bell, PepsiCo’s Mexican fast-food chain, has tried to make some of its service jobs more interesting and challenging but with limited results. It has experimented with incentive pay and stock options for cashiers and cooks. These employees also have been given broader responsibility for inventory, scheduling, and hiring. But over a four year period, this experiment has only reduced annual turnover from 223 percent to 160 percent.

What choices are left? Unless pay and benefits are significantly increased, high turnover probably has to be expected in these jobs. This can be somewhat offset by widening the recruiting net, making these jobs more appealing, and raising pay levels. You might also try some nontraditional approaches as well. To illustrate, Judy Wicks has found that celebrating employees outside interests has dramatically cut turnover among waiters at her White Dog Cafe in Philadelphia. For instance, to help create a close and family-like work climate, Wicks sets aside one night a year where employees exhibit their art, read their poetry, explain their volunteer work, and introduce their new babies.

iv) Motivating People Doing Highly Repetitive Tasks

Our final category considers employees who do standardized and repetitive jobs. For instance, working on an assembly line or transcribing court reports are jobs that workers often find boring and even stressful.

Motivating individuals in these jobs can be made easier through careful selection. People vary in their tolerance for ambiguity. Many individuals prefer jobs that have a minimal amount of discretion and variety. Such individuals are obviously a better match to standardized jobs than individuals with strong needs for growth and autonomy. Standardized jobs should also be the first considered for automation.

Many standardized jobs, especially in the manufacturing sector, pay well. This makes it relatively easy to fill vacancies. While high pay can ease recruitment problems and reduce turnover, it doesn’t necessarily lead to highly motivated workers. And realistically, there are jobs that don’t readily lend themselves to being made more

Challenging and interesting or to being redesigned. Some tasks, for instance, are just far more efficiently done on assembly lines than in teams. This leaves limited options. You may not be able to do much more than try to make a bad situation tolerable by creating a pleasant work climate. This might include providing clean and attractive work surroundings these breaks, and empathetic supervisors.

• Motivation for Letter of Credit Operation Specially NCCBL

NCC Bank Ltd. has committed to Boost up the export position and diminishes the import position, rising of Gross Domestic Product (GDP) maximizing the national growth & abolishing the unemployment percent of an educated sector of the nation.

All the brunches of National Credit And Commerce Bank Limited are authorized dealer of Foreign Exchange Business. The authorized dealer motivates the importer to import Raw materials, Fabrics, Accessories, Chemicals, Vegetable Fat etc.

The import or export is motivated by the NCC Bank Limited to the foreign exchange business, particularly to open the letter of credit. A letter of credit offer advantages both to the importer and exporter. The advantages accruing to either of the parties differ depending upon the nature of credit opened their Certain Common benefit accruing from the use of credit as under.

Advantages to the Importers:

i) Ability: The letter of credit enables the importer of purchase materials (particularly in sellers market) without making full advance payment.

ii) Assurance: If the importer task certain safe guards, like calling for packing list, invoice etc, the quality and quantity of the goods consigned is assured.

iii) Without Payment: Prided the buyer has buying credit with the NCC Bank he may get goods released by the Bank under trust (ex.’s. LTR, LIM etc), i.e. without payment and pay for then on sale.

Advantages of the Exporters:

i) Undertaking: A superior undertaking of the bank under the letter of credit assures the importer that when the documents are tendered as per the turns of the credit payment would be made to him.

ii) Controlling: The exporter is absolved of the botheration of knowing in details the exchange control regulations of the importer country and is also increased to some extent against charges in such regulations.

Import Section:

Import section of any bank deals with L/C opening and post import financing i.e. LIM & LTR. Now the procedure from opening L/C to disbursement against L/C is given below.

Application for Opening L/C:

At first, an importer will request banker to open L/C along with the following documents.

1. An application

2. Indent or Proforma Invoice

3. Import Registration Certificate (IRC)

4. Taxpayer Identification Number (TIN)

5. Insurance cover note with money receipt

6. A bank account.

7. Membership of chamber of commerce

Indent or Proforma Invoice:

Indent or Proforma invoice is the sale contract between seller and buyer in import-export business. There is slight difference between indent and Proforma invoice. The sales contract, which is direct correspondence between importer and exporter, is called Proforma invoice. There is no intermediary between them. On the other hand, there may be an agent of exporter in importer’s country. In this regard, if the sale contract is occurred between the agent of exporter and importer then it is called indent.

Delivered Forms By Banker To Importer:

After scrutinizing above-mentioned documents carefully, officer delivers the following forms to be filled up by importer and banker should check:

Whether the goods to be imported are permissible or not.
Whether the goods to be imported are demandable or not.

The forms are:

• Import Mercendised Permit Form (IMP).

• L/C Application Form (L/CAF).

• L/C Authorization Form (L/CAF).

Preparation of L/C by Banker:

Bank’s  officer  prepares  L/C when  above  mentioned forms  are to be  submitted  by customer or importer. Before preparing L/C SIBL officer scrutinizes the application in the following manner.

• The terms and conditions of the L/C must be complied with UCPDC 500 and 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 food item.

Survey reports or certificate in case of old machinery is required. Bank of the importer is called ‘L/C Issuing Bank’. Then issuing bank inform it’s corresponding bank, called “Advising Bank’ or ‘Confirming Bank” located in exporter’s country to advice and the credit forward to the exporter and simultaneously officer makes L/C opening vouchers.

Desk Work:

One debit voucher to be passed.

Corresponding credit voucher to be passed (Margin, commission, postage, stamp, F.F.C. and others).
Liability voucher to be passed.

Accounting treatment:

Performance of NCC Bank in Foreign Exchange:

Commission on Letter of Credit:

The amount of Commission on Letter of Credit handled by the Bank in 2002, 2003, 2004 were nearly same. But later on 2005 was increased huge amount from 2004, rate of growth being 13.53%. 2005 and 2006 is nearly same. The chart below shows the growth of Commission on Letter of Credit for last 05 years.

Commission on Payment against document:

The amount of Commission on Payment against document handled by the Bank in 2002 and 2003 was nearly same. But after 2003, this has decreased huge amount and 2004, 2005 and 2006 is nearly same. The difference between 2003 and 2004 is-55.74%. The chart below shows the growth of Commission on Payment against document for last 05 years.

Additional Confirmation Commission on Letter of Credit:

The amount of Additional Confirmation Commission on Letter of Credit handled by the Bank in 2002 and 2003 was nearly same but in 2004, this amount was increased huge amount. Later on 2005, this amount was decreased huge amount and the difference between 2004 and 2005 was -55.96%. But 2005 and 2006 is nearly same. The chart below shows the growth of Additional Confirmation Commission on Letter of Credit for last 05 years.

Commission on Back to Back L/C:

The amount of Commission on Back to Back L/C handled by the Bank in 2002, 2003, 2004 was nearly same. But later on 2005 and 2006 was nearly increased. The difference between 2005 and 2006 was 51.04%. The chart below shows the growth of Commission on Back to Back L/C for last 05 years.

Letter of Credit Advising Commission & handling charge:     

The amount of Letter of Credit Advising Commission & handling charge handled by the Bank in 2002, 2003, and 2004 was nearly same. But later on 2005, this amount was increased and growth rate was 407.55% against 2005. 2005 and 2006 was nearly same. The chart below shows the growth of Letter of Credit Advising Commission & handling charge for last 05 years

Commission on Letter of Credit amendment:

The amount of Commission on Letter of Credit amendment handled by the Bank in 2003 was increased from 2002 and growth rate was 93.22%. But later on  2004 was decreased from 2003. 2004, 2005 and 2006 was nearly decreased. The chart below shows the growth of Commission on Letter of Credit amendment for last 05 years

SWOT Analysis of NCCBL

SWOT analysis is an important matter to know the present status of Strength, Weakness, Opportunities and Threats of NCCBL. The analysis also helps the company management to take relevant measure to make up its weaknesses and to face the external threats of the competitors. The term SWOT includes the following:

• S ‑ STRENGTHS
• W‑WEAKNESSES
• 0 ‑ OPPORTUNITIES
• T ‑ THREATS

Now we shall discuss the strengths, Weakness, Opportunities and Threats in the following paragraphs.

Strengths

NCCBL enjoys the following strengths

• The banking service is easily accessible and feasible.
• Banks are the only media through which international trade and commerce emanate and entire credit transaction, both national and industry.
• The authorized capital of the bank stood at Tk.2500.00m in 2005.
• Paid up capital of the bank is tk 975.04 m in2005.
• The Reserve fund of the bank increased to tk 562.74 m in 2005 as against tk 425.22 m of previous year, increase being 32.34%.
• Deposit of the bank at the end of the year 2005 was tk 21478.22 m registering an increase of 33.66% over previous year’s figure.
• The advances growth of the Bank in increasing rapidly.
• The bank is a member of ATM network along with other Banks which enabled the bank to extend modem banking facility to the customer.
• The bank has been pleased to recommend 10% cash and 10% Bonus share for the shareholder.
• The bank has already obtained principal membership of MasterCard and VISA credit card.

 Weaknesses

• Lack of clearly defined marketing objectives
• Lack of ‑promotional objectives and strategies.
• Lack of implementing IT technology
• Number of branch is. Lower then other competitor.
• Absence of attractive remuneration package and motivation for the employees.

Opportunities

In developing countries like Bangladesh banking sector would be the only sources of financing.

• They can diversify their portfolio by introducing new sectors like Leasing, Introducing ATM machines of there own, one point service, Tele banking, Debit card, etc.

• The banking sector of Bangladesh is growing very fast.
• The banking can also start micro‑credit business for individuals and small business like Grameen Bank.
• Going for Islamic banking system, as Bangladesh a Muslim nation.

Threats

• The most of the threats for the company are coming from the competitors. Bank has a chance to lose its market share to the competitors if it does not take necessary actions.
• Opening of the recently permitted new banks, without implementation of the needed reforms, could lead to unethical competition and house trading in the country’s troubled banking sector.
• The size of the market and the present state of economic activity did not provide adequate scope for business for a large number of banks with poor management and backdated operating system.
• The customer service of the Bank is not too good like other banks. In the Foreign Banks, there are customer service department. But in this bank there is no Customer service department.
• Online Banks are providing more threats on the banks which are not yet on lined like this bank.
• Political imbalance system of Bangladesh

Recommendation

As per earnest observation some suggestions for the improvement of the situation are given below:

• To attract more clients, NCCBL has to create a new marketing strategy, Which will increase the total export Import business.
• Effective and efficient initiatives are necessary to recover the default loans.
• Attractive incentive package for the exporter will help to increase the Export and accordingly it will diminish the balance of payment gap of NCCBL.
• To decrease margin rate for all clients. This is very risk for the Bank but if the Bank wants to target many clients, this is very important.
• Different types of training very much required for the bank officials.
• Computerized banking system and latest communication device are the most important elements for this century. So, for the sound and stable Banking operation, NCCBL has no alternative but the modernization.
• Foreign exchange operations of other banks are more dynamic and less time consuming. NCCBL should take some initiative to compete with those Banks.
• To decrease commission and other charge from other banks.
• Bank can provide foreign market report, which will enable the exporter to evaluate the demand for their products in foreign countries.
• The Bank must be to introduce On Line Banking between all  branch.
• Number of branches is very limited of this Bank. They have to increase the number of branches at various key points of the country.

Conclusion

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

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