Foreign Exchange Division and Credit Card Division of EXIM Bank

The main objective of this report is to analysis overall Foreign Exchange Division of EXIM Bank Limited. Report also focus on General banking and Credit Card Division. Other objectives are to discuss on accounts opening section, deposit section, remittance section, bills and clearing section, FDR section etc. Finally find out what people think about the religion issue and EXIM’s solution and find out is they will prefer an Islamic card over a traditional one.

Company Overview

The EXIM Bank Ltd. is an Islamic Shariah based commercial Bank, which is publicly listed and committed to provide high quality financial services to contribute to the growth of G.D.P. (Gross Domestic Product) of the country through stimulating trade & commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of the limited income group and over all socio-economic development of the country.

The Bank offers full range of Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market Services. EXIM Bank Limited is the preferred choice in banking for its friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments, assuring Excellence in Banking Services.

Historical Background

The Export Import Bank of Bangladesh Limited, popularly known as EXIM Bank is a private commercial bank that operates banking operation by maintaining the Islamic Shariah and principles regarding the business transactions. The Bank was established on 2 June, 1999 as a private sector banking company under the company act, 1991 and incorporated as a public limited company under the company act, 1994. It started its operation on 3 August 1999 with an authorized capital of Tk.1 billion (1000 million) divided into 10 million ordinary shares of Tk.100 each. The initial paid up capital of the bank was Tk.225 million, fully subscribed by 28 sponsors. Initially the Bank started its operation as a private commercial Bank, but later on the Bank has taken up the challenge to start Islamic Banking Operations and migrated all of its conventional banking operation into Shariah based Islamic banking operations after obtaining approval from Bangladesh Bank on July 01, 2004. The Bank went for public issue of shares in the year 2004 and its shares are listed with Dhaka Stock Exchange (September 26, 2004) and Chittagong Stock Exchange (September 04, 2004).

Initially the bank was known as the EXIM Bank Limited, which stands for “Bangladesh Export Import Bank limited”. But for some legal constraints the bank has to change the name and according to the proposed name of the Governor of Central Bank at that time it was named as the “Export Import Bank of Bangladesh Limited” or in short EXIM Bank Limited.

Management of the bank is vested in a board of directors of 22 members headed by the chairman. The managing director is the chief executive. The bank finances export and import businesses and also conducts traditional commercial banking activities by maintaining the Islamic Shariah regarding the business. The commercial Banking activities of the Bank consist of services including mobilizing deposits, providing investment facilities, discounting bills, conducting money transfer, foreign exchange transactions and providing services.

With the pragmatic decision and management directives in the operational activities, the bank has earned a secured and distinctive position in the banking industry in terms of performance, growth, and excellent management. This organization has achieved customers’ confidence immediately after its establishment. Within this short time the bank has been successful in positioning itself as progressive and dynamic financial institution in the country. This is now widely acclaimed by the business community, from small entrepreneur to big merchant and conglomerates, including top rated corporate and foreign investors, for modern and innovative ideas and financial solution.

At first, the head office of EXIM Bank was situated in Rajuk Avenue of Motijheel. However, in mid 2009 the bank shifted its head office from Motijheel to Gulshan-1. The Bank currently has 50 branches all over the country, and employs around 2000 employees. It has an authorized capital of 3500 million and a paid up capital of 2677.80 million. Moreover, at the end of 2008 its profit after taxes amounted to 1096,627,046 BDT, and its total assets amounted to 68,446,464,000 BDT.

Mission, Vision, Objectives and Strategies

Vision

EXIM Bank’s vision is captured in the phrase ‘Together Towards Tomorrow’. The company believes in achieving close relations with its customers and working together with them, in its march on the road of growth and progress. To achieve its goal, the company -believes in pursuit of excellence at all stages and a climate of continuous improvement because the line of excellence is never ending.

Mission Statement

The bank mission spans across multiple dimensions, these are:

To be the finest bank in the banking arena of Bangladesh under the Shariah guidelines.
To maintain corporate and business ethics.
To become a trusted repository of customers’ money and their financial advisor.
To make the bank’s stock superior and rewarding to the share holders.
To have a sound capital base.
To display team spirit and professionalism.
To provide excellent quality customer service
To provide high quality financial services in export and import trade.
To fulfill its social commitment by expanding its charitable and humanitarian activities.

Objectives

The objectives of EXIM bank encompasses of many critical aspects as defined by the following:

To receive, borrow or raise money through deposits, loans or otherwise
To give guarantees and indemnities in respect of all debts and contracts.
To play a vital role in human resources development and employment generation.
To carry on business of buying and selling currency, gold and other valuable
To extend counseling and advisory services to entrepreneurs in utilizing credit facilities of the bank.
To earn a normal profit for meeting operational expenses, building of reserves, and expansion of activities to cover wider geographical area.

Current Strategy

The main focus of EXIM bank’s strategy is distinguishing itself as a bank following Islamic Shariah. As a matter of policy, the bank conducts it businesses on the principles of Mudraba, Murabaha, Bai-Muazzal and “hire-purchase” transactions, as approved by Bangladesh Bank. The bank is an interest free, Shariah based bank and its mode of operations therefore is substantially different from that of other commercial banks.

Furthermore, as its name suggests, the bank’s strategy puts major emphasis on the export and import activities of the Bangladeshi business community, or in other words, on the operations of its Foreign Exchange department. They provide financial services of high quality for export-import trade, and this has been one of its major strengths, and has proved to be the driving factor behind the bank’s continuing success. Currently, the bank has also focused on the card sector. The bank also pioneered the concept of the Islamic card.

Major Functions & Description of Its Business

EXIM Bank Ltd’s major functions can be divided into general banking, foreign exchange and investment. And secondary activities such as marketing, human resource management, internal audit etc.

The fundamental function of EXIM bank is to provide customers with a variety of banking products which are personalized to their specific needs through deliverance of efficient service. The starting point of ail the banking operations is General Banking; this is one of the most basic functions of any commercial bank. This department provides day to day services to customers with regards to opening of new accounts, handling cash deposits and cash withdrawals, remittance of funds, issuance of check books, bank drafts, pay orders, telephone transfers (TT) and credit cards. In Islamic Banking, collecting deposits from customers is regarded from a different standpoint then in conventional banking. Therefore, EXIM bank takes deposits from customers, utilizes it through investment, and gives the depositors a dividend of the ‘profit’ made from its operations; rather than an interest on deposits. Next, the Investment department provides loans or credits to individuals, firms or industries. However, since this is an Islamic bank so credit here is viewed as ‘investment’ rather than loan. The philosophy is that, the bank is not providing credit; rather it is making an investment and becoming an owner in the business through paying for the purchase of equipment, or expansion of business, or building of facilities. Therefore it is getting a share of the profits on the investment made, rather than charging an interest on loan.

Finally, the most important function of Exim Bank deals with the facilitation of export, import and Foreign Exchange trading. This is the heart of Exim Bank, the most crucial of all activities. With the advent of globalization, internal trade has become a necessity for all countries and their business communities; this is where the bank plays a major role by providing a wide range services in order to ensure smooth and credible international trade between importers-exporters, timely delivery of goods, and timely payment and receipts on imports and exports. For this purpose, Exim Bank Ltd carries out different functions such as LC opening, lodgment, bill collection or payment, extension of credit on LCs, and finally retirement of documents. In addition, the foreign exchange section of EXIM is also engaged in such activities as the endorsement of US dollars in passports of clients traveling abroad, issuance of travelers cheque, foreign demand draft etc.

The General Banking Department

The general banking department plays the most basic and vital role in the bank with regards to deposit mobilization through several types of accounts and schemes. It is also engaged in providing services to customers with relation to opening of accounts, cash deposits and cash withdrawals, remittance of funds, issuance of check books, telephone transfers (TT), bank drafts, pay orders, etc. they also pioneered the concept of the Islamic card.

Sections under General Banking

The department is divided up in several sections for the proper functioning and customer convenience. These sections under general banking department at EXIM Bank are:

Accounts opening section
Deposit section
Remittance section
Bills and clearing section
FDR section
Credit card division

The Credit Card Division

EXIM bank has a separate credit card division that is headquartered in the Printer’s Building, Dainik Bangla, Motijheel, separate from the other divisions. The major card product is the Visa Islamic card. The cards are available both as classic and gold and in local and dual currencies. EXIM has pioneered the concept of Islamic card.

The Salient Features of the card are-

First Shariah Based Islamic Card by any Islamic Bank in Bangladesh.
Lowest Profit Rate in the Card Market
Simple Profit Rate
No Hidden Charge
Dual Currency Facility in One Card
Free Supplementary Card
24 Hours Customer Service
Auto Debit Payment Facility
Worldwide Acceptance
Instant card message service in mobile

Future Direction of EXIM Bank

EXIM Bank currently uses branch-based banking software named PcBank 2000 in all of its branches which is commonly used by most of the private and public banks. In order to replace this software with centralized Shariah Based Islami Banking software, the bank management has made an agreement with TEMENOS Switzerland to implement its world renowned Core Banking Software T24. This centralized software will be capable of providing all sorts of electronic banking service to the customers through various electronic delivery channels. The bank is expected to complete the migration to this software in all of its branches by the year 2010.

SWOT Analysis of EXIM Bank

SWOT Analysis is the detailed study of an organization’s exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of its activities.

Strengths:

EXM Bank has already established a favorable reputation in the banking industry in the country, as well as among customers and regulators. It is one of the leading private commercial bank in Bangladesh.
In Export Business EXIM Bank provides their services successfully and have achieved goodwill among the Shariah based banks. In this sector the Bank is working with its efficiency and integrity. As an expertise and Shariah based banking it is publicly reliable for their service.
EXIM Bank foreign exchange department communicate with foreign banks frequently and quickly.
EXIM Bank has a very competent and experienced top Management. The bank has already shown a tremendous growth in the profits and deposits sector.
EXIM Bank has an interactive corporate culture. The working environment in all of its branches is informal, friendly and interactive. There are no hidden barriers in communication between superior and subordinates. The corporate culture serves as a big motivation factor for the employees.
Service charges of EXIM Bank are comparatively reasonable then many other private banks in the industry.
EXIM Bank has low Cost of Fund and its currently provides online banking service to customers for a minimal fee.

Weaknesses:

In term of promotion and advertisement, EXIM Bank is totally negligent. There is very limited advertising and publicity of the banks products and activities.
The bank has not any long term strategies of whether it wants to focus on retail banking or corporate banking. It is crucial to determine its future direction with a strong and feasible strategic plan.
There is no separate customer care department, which can work solely with customer care and for continuous improvement of services.
Compare to other competitors, such as multinational banks, the service quality of EXIM Bank is rather poor.
There is a lack of sufficient manpower in most of its departments. This results into more workload for existing employees and creates severe problem when any employee is absent, or when some employees are sent for training by the company.

Opportunities:

Export Import Bank of Bangladesh Limited has a lot of growth opportunities in the consumer banking, money market operations & also export-based industries due to global economic recovery.
EXIM Bank can introduce ATM facilities as well as different types of debit cards and credit cards. Similar actions from its competitors have tremendous, positive response from consumers. So this is an opportunity for EXIM Bank.
Retail banking and small & medium enterprise (SME) banking can provide huge opportunity for the company. Opportunity derived from retail banking lies in the fact that the country’s increased population is learning to adopt consumer finance. So a wide variety of retail products has an easily penetrable and large market.
It does not foresee exciting any of its business lines since it maintains balanced portfolio & it is well-positioned to increase out-thrust into diversified interests.
EXIM has a chance to increase invest in remittance business.

Threats:

The major challenge of EXIM Bank is that there are already many financial institutions sharing the same size of the pie. As a result there is intense competition for generating business. Furthermore, due to the dual effect of competition & reduced rates (to the benefit of the borrower) they will find it challenging to bring their cost of fund to an acceptable level & yet maintain our high level of quality assets in our books & ensure our NPA(Non Performing Assets) is at an acceptable level.
The emergence of several private & foreign banks within the post few years offering similar or more services with less or free charge for the facilities can be a major threat for the bank.
Recession of global economy and its impact on Bangladesh’s foreign trade is big threat, because foreign exchange operations constitute a major portion of banks activities and revenues.
Higher employee compensation packages offered by other private banks also pose a considerable threat. This can result into many qualified and competent employees leaving EXIM Bank for other competitor bank, which impact the organization as a whole.
Strict Government control of industrial credit is a threat.

Introduction to Project

Credit card is a fast growing banking product in the country. The widespread use of internet and increase in the network of the credit card brands in the country has brought the convenience of the credit card within the reach of the general people. It is no longer the domain of an elite few. However, here remains a glitch. Bangladesh is a country where the majority of the people are Muslim. Many people embrace the concept of credit card, but stay away, due to the interest involved. The EXIM bank has pioneered the concept of an Islamic card – a card that conforms to the ethos of Islam.

I am here to carry out a market research on the future prospect of the Visa Islamic card of EXIM. The idea is to carry out a survey among ten different categories of people (the major target market of the Visa Islamic card) to find out the future prospect of their novel concept. I came up with ten separate hypotheses for each category and used the data collected from each category to carry out an analysis and determine the results for each category. I used a multitude of statistical tests to reach the goal. Finally, I summed up the results to provide the bank with some constructive recommendation on the subject.

Objectives of the Study

The purposes of this report cognates the internship purpose. The internship objective was to gather practical knowledge and experiencing the corporate working environment with the close approximation to the business firms and the experts who are leading and making strategic decisions to enhance the growth of a financial institution. To this regard this report will contemplate the knowledge and experience accumulated from internship program.

The objectives of preparing the report cover the following area –

To find out what people think about credit cards in general
To find out what people want from credit cards
To find out what people think about the religion issue and EXIM’s solution
To find out is they will prefer an Islamic card over a traditional one

Significance of the Study

Bangladesh is a country where majority of the population is Muslim. Since Islam forbids interest, many Muslims keep away from the credit cards on religion issue. The concept of Visa Islamic Card will allow EXIM to tap into that market. Moreover, since, the card has all the traditional features of credit cards, EXIM will also be able to tap on the traditional market.

Recommendation

With my little experience in bank, I observed and found out some aspects of their banking. On the basis of my observation I would like to recommend the following recommendations:

EXIM Bank can pursue to Government high officials and can make a better relationship with them to get government fund in order to keep cost of fund low.
EXIM Bank can open some more branches in strategically important place, especially where the card usage occurs more frequently. In this way that they can enhance their business volume.
EXIM Bank can recruit some marketing officers and Executives in marketing Division who has some experience regarding credit card marketing.
Quality of customer service also has am impact on business. The customer service at EXIM Bank is at acceptable level. However it is still far behind that of other multinational banks. If quality of customer service is improved, the customer base of the bank will increase a lot more.
The Bank can diversify its loan portfolio. EXIM Bank has no investment in transport sector. They can go for this highly potential sector in our country.
Proper communication regarding the products and services of the bank should be enforced. As a result confusions will be minimized and customer satisfaction will enhance.

The bank should give more attention on promotion and campaign activities.
The organogram of the bank is rigidly vertical. It should be flexible enough to cope with untoward situation.
The HRD should look into the matter that the branches are well staffed with the right people in the right position.
The bank should adopt more technological devices to provide better services and all the staff should be more helpful at the time of providing services to the customer.
The bank should try to arrange more training programs for their officials. Quality training will help the official to enrich them with more up to date knowledge.
Finally, EXIM Bank need to ensure that all the bank charges such as handling charges, courier charges, and amount of interest charged on package credit/ export cash credit/ machinery loans etc. against foreign trade, are as responsible as possible to provide a high perceived value to clients for the service its providing.

Limitations of the Study

An Internee has to complete the internship and prepare an internship report within a semester. In briefly, I faced following limitations during the time of preparing this report.

As per Bank’s compliance, as an intern I was unable to obtain indispensable experiences of different departments.
Due to time shortage, details of many aspects of the services of EXIM Bank may have to be skipped in this report.
One of the main barriers in writing this report would be the confidentiality of data. Though, I saw their internal procedure that is being used in processing and evaluating any documentary credit, but I was told strictly not to disclose that even in my internship report.
Time is an important issue in report writing. As a specific deadline for gathering all the necessary information, submission and observation was too short, it would be really tough to cope up with the time constraints.

Conclusion

Banking sector of Bangladesh has undergone dramatic change since the independence in 1971 and it is now considered to be one of the highly focused and compared to other sectors, more regular sector in the country. EXIM Bank is private sector bank having a small market share in the industry. Although it is a third generation bank facing govt. deposit restrictions, it has all the potentials to penetrate the market. If the weaknesses are addressed appropriately and opportunities are explored keeping in view the threats behind with a stable and adroit management having regard to appropriate corporate governance and modern automatic technology, it is expected from EXIM Bank to advance up in the ladder of success in the coming years.

The main purpose of this report is to study “The future prospect of the Visa Islamic card of the EXIM bank.” Considering all the attributes which influence profit should be more effective. Due to the significant importance of those factors they can compete in the market in the near future.