Foreign Exchange of Jomuna Bank Ltd

 Foreign Exchange- its meaning and definition:

Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign Trade gives rise to foreign exchange. Modern banks facilitate trade and commerce by rendering valuable services to the business community. Apart from providing appropriate mechanism for making payments arising out of trade transactions, the banks gear the machinery of commerce, specially in case of international commerce, by acting as a useful link between the buyer and the seller, who are often too far away from and too unfamiliar with each other.

According to Foreign Exchange Regulation Act (FERA) 1947, “Any thing that conveys the right to wealth in another country is foreign exchange. Foreign exchange means and includes all deposits, credits and balances payable in foreign currency as well as foreign currency instruments such as drafts, TCs. Bill of Exchange, promissory Notes and Letters of Credit payable in any foreign currency. “.

This definition implies that all business activities relating to Import, Export, Outward & Inward Remittances, buying & selling of foreign commissions, etc. come under the purview of foreign exchange business. Foreign exchange department of banks plays significant roles through providing different services for the customers.

The international trade can be illustrated by the following diagram

Types of Foreign Exchange:

There are mainly three types of transactions which lead to foreign exchange. These are:

a)  Import

b)  Export

c)  Foreign Remittance

 Importance of bank foreign exchange

The foreign market (forex, FX, or currency market) is a worldwidechange decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends.

The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import European goods and pay Euros, even though the business’s income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.[1]

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of its-

    * Huge trading volume, leading to high liquidity

    * Geographical dispersion

    * Continuous operation: 24 hours a day except weekends, ie trading from 20:15 UTC     on Sunday until 22:00 UTC Friday

    * The variety of factors that affect exchange rates

    * The low margins of relative profit compared with other markets of fixedincome

    * The use of leverage to enhance profit margins with respect to account size

As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, as of April 2007. $3.21 Trillion is accounted for in the world’s main financial markets.

The $3.21 trillion break-down is as follows:

    * $1.005 trillion in spot transactions

    * $362 billion in outright forwards

    * $1.714 trillion in foreign exchange swaps

    * $129 billion estimated gaps in reporting

Forex is an international currency trading market. In the modern world, national currencies are independently valued due to their backing in a central banking system that is specific to its nation. However, each currency, from the most valuable and influential to the weakest with little influence, are all interconnected and dependent upon each other for stabilization and value. The trade between currencies is an important part of the overall value of a single nation’s currency. This active exchange also provides a snapshot in time that tells financial industry experts what the state of the global economy is in response to a variety of external events and influences. The Forex market is the place where all of this happens. Foreign exchange trading is always happening, and its reach spans the globe. For example, as the currency markets open at the beginning of the day on European continent, the Forex markets in Asia to the east are closing for the trading day. After Europe completes its trading day, the countries in the north, central and southern Americas are opening for their turn at the Forex market. The markets in Japan, China, Australia, including all the regional markets in that part of the world, will be soon awake to a new trading day as the Americas close theirs. This cycle of trading activity continues in sequence around the world, creating an active market.

Who engages in Forex trading?

The major players in foreign exchange markets are banks, large commercial enterprises, national central banks, hedge funds, investment management firms, retail traders, and individual investors. National central banks and hedge funds are the two most influential participants in the foreign currency market. Central banks trade on the market for a variety of reasons. Two examples are to stabilize their own currencies, or to synchronize their interest rates with other national interest rates. Central banks also trade on the foreign currency market to manipulate their currency in order to manage economic influences like inflation, and to control the supply of money.

Hedge funds represent the more speculative end of the foreign exchange trading spectrum. The trading done by hedge funds in the international currency exchanges often takes advantage of the environment where regulation is scarce. Hedge funds can control significant blocks of a nation’s securities, and can actually undermine the attempts of national central banks to stabilize a currency if recent market and world events make such adjustments necessary.

The recent Asian currency crisis demonstrates how critically exchange rates impact economic developments. A key factor leading to the crisis was the maintenance of pegged exchange rate regimes which encouraged external borrowing and resulted in excessive foreign exchange risk exposure. Wide swings of the yen/dollar exchange rate also contributed to the crisis. Since the international business environment has no universal medium of exchange, exchange rates are a necessity for international trade. Presently, both translation and conversion of foreign currency involve the use of exchange rates. Therefore, in order to gain a more through understanding of foreign currency translation, it is important to examine the nature of exchange rates and the critical role they play in the international economy.

The recent Asian currency crisis demonstrates how critically exchange rates impact economic developments. Stanley Fischer, First Deputy Managing Director of the International Monetary Fund (IMF), noted that one of three key factors that led to the crisis was the maintenance of pegged exchange rate regimes for too long which encouraged external borrowing and led to excessive exposure to foreign exchange risk in both the financial and corporate sectors. Also contributing to the crisis were wide swings of the yen/dollar exchange rate over the past three years. Fischer explained that the crisis erupted during the summer in Thailand and the contagion to the regions other economies appeared relentless. As currencies continued to slide, debt service costs rose. This led domestic residents to hedge their external liabilities and intensified exchange rate pressure. One of the problems the IMF has faced in trying to help stem the crisis is that it took months to gauge the magnitude of the problem in the face of Asia’s opaque accounting and financial secrecy. This was compounded by a “crazy quilt” of currency regimes and financial systems in the region (Bremner and Engardio

1998). The key to stemming the crisis remains restoring confidence in and stabilizing the regions currencies.  The $1.5 trillion-per-day foreign exchange (FX) market surpasses stocks and bonds as the largest market in the world. Foreign exchange markets are critical for setting exchange rates between countries.

Liquidity

In terms of international trade, liquidity is the ease in which foreign currency is converted into domestic currency. FX markets, such as the New York Jamuna Exchange, match buyers and sellers to bring about speedy, orderly transactions.

Rates

Buyers and sellers set prices using the auction method in the FX market. Sellers try to earn the highest “ask” price possible, and buyers try to purchase currency at the lowest “bid.” Buyers and sellers meet at the “spot” price, the current value and exchange rate for a particular currency against others.

Reserves

International governments enter the FX market to build and manage foreign exchange reserves. They build the reserves to make official payments and influence domestic currency values.

International Trade

Businesses rely on FX markets to buy currency that is spent to obtain overseas goods. Corporations will also look to FX markets to convert international earnings back into the domestic currency.

Hedging

Traders use foreign exchange derivatives, which “derive” their valuations and costs from the spot market. Options and futures contracts effectively lock in exchange rates for a set period, to hedge against the risks of currency fluctuations.

The importance of foreign exchange is described in brief as under:-

1) Foreign exchange reserves shows the financial strength and the stage of development of the economy.

2) The acceptance of currency at a predetermined rate makes the international trade easy.

3) The foreign exchange ratio shows direct relationship between the prices of the commodities in the national and international market.

4) The foreign exchange balances of a country directly affect the rates of exchange. A hard currency nation has stability in foreign exchange rate.

5) The rising foreign exchange balances of a nation increases its credit worthless in the international capital market.

Foreign Exchange planning

We offer full Foreign Exchange facilities. Whether you need Foreign Currency, Traveller’s Cheques, Letters of Credit, Forward Exchange Contracts or Drafts, we ensure that your Foreign Exchange requirements are handled quickly and efficiently.

Drafts

The following should be taken into consideration when considering Drafts:  Drafts are not drawn on the issuing bank, but on the issuing bank’s foreign correspondent.

Drafts are not a substitute for Traveller’s Cheques. Drafts are cheques and will be treated as such – some companies might want to ensure that the Draft is cleared and paid before they will release goods or perform services against it. Electronic payments are more secure and reliable and can be used in lieu of drafts.

Jamuna Bank branches will usually need advance notice to prepare a Draft and we recommend using registered mail services to send your cheque to the beneficiary.

Key Benefits:

Pre-pay your hotel.

Pre-pay your car hire.

Pre-pay your sightseeing tours.

Pay your foreign subscriptions.

Send a Draft as a gift or as a student allowance.

Exchange Control Services

Our International Banking/Group Settlement Division also offers the following products and services;

Open Account Foreign Payments (Payment Orders or Telegraphic Transfers Inward and Outward)

CFC (Customer Foreign Currency) Accounts

Currency Investment Accounts – Foreign Currency Accounts (FCAs)

Offshore Trade Finance

Visit any one of our branches for assistance with your export/import documentation.

Foreign Cash

If you intend travelling abroad you benefit from having some foreign currency available to pay for taxis, food, tips and other small items.

You can buy foreign notes from a Jamuna Bank branch.

For your convenience it is advisable to order your foreign notes at least 48 hours before your trip.

For charges, visit our Pricing Schedule.

Imports and Exports

Businesses all around the world are increasingly depending on buying and selling from other countries. Although the international trade environment has changed substantially over the last 100 years, the risks have essentially remained the same.  Jamuna Bank is ready to assist you with your trade documentation and adherence to exchange control regulations.

SWIFT

Electronic payments are the most commonly used method of transferring any currency. These payments are most commonly used for imports and exports, but holidaymakers may also use them. They are done using SWIFT, a worldwide electronic payment and receipts network.

Key Features and Benefits:

SWIFT transfers are secure and fast.

Pre-pay hotels, car hire and sightseeing tours.

Use to transfer student allowance.

Payments can be made in 25 different foreign currencies.

Due to time zones, payments should be made two days before the due date.

Traveller’s Cheques

If you are travelling out of the country either for business or holiday, you can buy Traveller’s Cheques directly from us.

Using your Traveller’s Cheques

Safeguarding your Traveller’s Cheques:

Immediately sign each Traveller’s Cheque in the top left corner to protect yourself in case of loss or theft.

Keep the serial numbers of your Traveller’s Cheques separate from the Cheques.

Safeguard your Traveller’s Cheques, as you would cash.

Spending Your Traveller’s Cheques:

Use them directly at hotels, shops, restaurants and services.

If your Traveller’s Cheques are in the local currency, they can be spent directly for goods or services – acceptors need only watch you sign your Traveller’s

Cheques, compare the signatures, and give appropriate change.

Key Features and Benefits:

Traveller’s Cheques are welcomed throughout the world as a means of payment.

A wide range of currencies and denominations are available, offering you the flexibility you need.

Safer than cash – if lost or stolen they can be replaced virtually anywhere in the world, usually within 24 hours.

No wastage – we’ll buy back your leftover Traveller’s Cheques on your return.

Foreign exchange and Bangladesh bank

INTRODUCTORY

1. Foreign Exchange Regulation (FER) Act, 1947 (Act No. VII of 1947) enacted on 11th March, 1947 in the then British India provides the legal basis for regulating certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion. This Act was first adapted in Pakistan and then, in Bangladesh. The Act is reproduced at Appendix-1. Bangladesh Bank is responsible for administration of regulations under the Act. Appendix 4 provides a list of Bangladesh Bank’s offices and their jurisdictions.

2. Basic regulations under the FER Act are issued by the Government as well as by the Bangladesh Bank in the form of Notifications which are published in the Bangladesh Gazette. Notifications issued by the Bangladesh Government and the erstwhile Government of Pakistan and the Bangladesh Bank and the erstwhile State Bank of Pakistan are reproduced at Appendices 2 and 3. Directions having general application are issued by the Bangladesh Bank in the form of notifications, foreign exchange circulars and circular letters.

3. Authorized Dealers (ADs) in foreign exchange are required to bring the foreign exchange regulations to the notice of their customers in their day-to-day dealings and to ensure compliance with the regulations by such customers. The ADs should report to the Bangladesh Bank any attempt, direct or indirect, of evasion of the provisions of the Act, or any rules, orders or directions issued there under.

4. The ADs must maintain adequate and proper records of all foreign exchange transactions and furnish such particulars in the prescribed returns for submission to the Bangladesh Bank. They should continue to preserve the records for a reasonable period for ready reference as also for inspection, if necessary, by Bangladesh Bank’s officials.

5. This publication summarizes the instructions issued under the FER Act as well as the prudential instructions issued by Bangladesh Bank (as of 30th September, 1996) to be followed by ADs in their day-to-day foreign exchange transactions.

6.Specimen forms  prescribed in this publication are given in Appendix 5.

7. Terms having a special meaning for the purpose of the FER Act are defined under Section 2 of that Act. However, for the purpose of this publication and the instructions issued by the Bangladesh Bank from time to time, the following terms as defined below shall be used in addition to those defined under Section 2 of the

FER Act:

(i) Resident and Non-Resident

A resident is a person bank or firm who/which resides in Bangladesh. A non-resident is a person, bank or firm who/which resides outside Bangladesh. Non-residents include Bangladesh nationals who go out of Bangladesh for any purpose

A person is presumed to be ordinarily resident if he maintains a home in Bangladesh or resides in the country for a substantial part of each year or pays income tax as a resident of Bangladesh. On the other hand, the fact that a person gives an address in Bangladesh does not necessarily mean that he should be regarded as a resident if he is, in fact, only a temporary visitor and is ordinarily resident elsewhere.

(ii) Bangladesh Bank

Bangladesh Bank (BB) means the Bangladesh Bank established under the Bangladesh Bank Order, 1972 (President’s Order No. 127 of 1972).

(iii)Taka

Taka means the Bangladesh Taka unless otherwise specified.

(iv) Dollar

Unless otherwise indicated the term dollar used in this publication shall mean the US dollar.

(v)Authorized Dealers

Wherever used in this publication, the term Authorized Dealer or AD would mean a bank authorized by Bangladesh Bank to deal in foreign exchange under the FER Act, 1947.

AUTHORIZED DEALERS AND MONEY CHANGERS

1. Bangladesh Bank issues licenses normally to scheduled banks to deal in foreign exchange if it is satisfied that the bank applying for this license has adequate manpower trained in foreign exchange, there is prospect to attract reasonable volume of foreign exchange business in the desired location and the applicant bank meticulously complies with the instructions of the Bangladesh Bank especially with regard to submission of periodical returns. Bangladesh Bank may issue general licenses or licenses with authority to perform limited functions only.

2. Licenses with limited scope are also issued to persons or firms to exchange foreign currency notes, coins and travellers’ cheques in places where money changing facilities are required. The authorizations are granted to persons or firms of adequate means and status who, in the opinion of the Bangladesh Bank, will be able to conduct their dealings strictly in accordance with the Foreign Exchange Regulations.

3. Applications for the grant of AD licenses should be made to the General Manager, Foreign Exchange Policy Department, Bangladesh Bank, Head Office, Dhaka. The applications should contain information on availability of trained staff.

4. Applications for the grant of licenses to act as Authorized Money Changers should be made to the Foreign Exchange Policy Department of the area where the applicant’s business is located. The applications should contain full particulars as regards the main business conducted by the applicant, the location of the business premises, the names and addresses of the applicant’s bankers. The application should be routed through the applicant’s banker who should furnish a report on the financial status of the applicant.

FORWARD DEALINGS IN FOREIGN EXCHANGE

1. ADs, on their own, are free to buy and sell foreign currencies forward in accordance with tile internationally established practices however, in all cases the ADs must ensure that the cover is intended to neutralize the risks arising from definite and genuine transactions.

2. Be it forward sale or purchase, ADs must cover their own risk within die shortest possible time.

3. All forward contracts should be treated as firm and should be closed out on expiry. In such cases the ADs should charge the difference between the contracted (booked) rate and the TT clean spot buying or TT spot selling rate, as the case may be, ruling on the date the contract is closed out. The forward contract should be closed without charging any difference if the rate moves in favour of the customer on the date of the closure. In other words, in case of a forward purchase by Authorized Dealer no difference will be charged if the TT spot selling rate on the date of closure is at par or lower (i.e., inferior from the point of view of tile customer) than the booked rate. Similarly, no difference should be charged for closing out a forward sale contract if the TT clean spot buying rate on the date of closure is at par or higher (i.e., costlier than the booked rate from the point of view of the customer) than the booked rate. No forward contract should be renewed at the old rate. All cases of renewal should be treated as new contracts and the rates as applicable for purchase-sale of forward contracts on the date of renewal should be applied.

4.The ADs may undertake swap transactions to cover their risks arising from forward transactions. However, they are advised to refrain from taking speculative positions through swap transactions.

5.All documents (copy of LC, contracts etc.) relating to forward contracts and Swap transactions must be, preserved for subsequent inspection by the Bangladesh Bank.

OUTWARD REMITTANCES

1. Most outward remittances are approved by the ADs, on behalf of the Bangladesh Bank following declaration of Taka as convertible for current accounts payments from March, 1994. Only a few remittances of special nature require Bangladesh Bank’s prior approval.

2. All remittances from Bangladesh to a foreign country or local currency credited to on resident Taka accounts of foreign banks or convertible Taka account constitute outward remittances of foreign exchange. ADs must exercise utmost caution to ensure that foreign currencies remitted or released by them are used only for the purposes for which they are released, they should also maintain proper records for submission of returns to Bangladesh Bank as also for the latters inspection from time to time.

3. In all cases of purchase of foreign currency an application must be made to an AD and, wherever necessary to Bangladesh Bank. For payments against imports into Bangladesh, the prescribed application form is form IMP (Appendix 5/13) and for other types of remittances form TM .TM form must be used for reporting by the ADs even when remittance is approved by Bangladesh Bank in any other manner, for instance by issuing a special permit. On receipt of the application in the prescribed form, the ADs may effect the sale of foreign exchange if they are empowered to approve the application. If the transaction requires prior approval of the Bangladesh Bank, the form should be forwarded by the AD to the Bangladesh Bank for consideration.

4. Applications for Bangladesh Bank’s prior approval for outward remittances, wherever required, should be submitted to Bangladesh Bank only through the Ads and not by their customers directly; all such applications should be forwarded by the ADs to Bangladesh Bank by their own messengers or by post.

5. In respect of the forms or permits etc. approved from the Bangladesh Bank, the ADs should see that these have been approved by duly authorized officers and that they bear the Bangladesh Bank’s embossing sea. In case the authorization is signed by an official of Bangladesh Bank whose specimen signature may not be available with them such authorization should be resented to the nearest office of the Foreign Exchange Policy Department and the signatures authenticated. It is most important that, once forms have been approved by or on behalf of the Bangladesh Bank, the ADs carry out the transactions only on behalf of the original applicants for whom the forms were approved.

6. Permits issued (where applicable) by the Bangladesh Bank must be utilized within the period of its validity indicated in the permits. The amount released must not exceed the authorized limit. Also, the instructions, if any, given in the permits with regard to the amounts to be released periodically e.g. monthly or quarterly must be strictly adhered to.

7. When the permit is exhausted or no longer required, it should be returned to the Bangladesh Bank by the AD alongwith the TM form on which the last remittance is reported.

8. All authorisations excepting TM forms approved by the Bangladesh Bank or by the ADs on behalf of the Bangladesh Bank remain valid for a period not exceeding 30 days from the date of approval unless they are expressly stated as valid for a specified longer period or unless they have been revalidated for a further period. TM form approved by the Bangladesh Bank will, however, remain valid for a period of three calendar months from the date of approval by the Bangladesh Bank. Permits issued by the Bangladesh Bank are also valid for specified periods as stated on the permits. The ADs should not effect any remittance against approved Forms or Permits which have lapsed unless they have been duly revalidated.

9. Original copies of all IMP forms, TM forms covering remittances effected by the ADs must be submitted to the Bangladesh Bank alongwith the appropriate Returns as laid down.

10. In the event of any remittance which has already been reported to the Bangladesh Bank on the prescribed return being subsequently cancelled either in full or in part, the ADs must report the cancellation of the outward remittance as an inward remittance. The return in which the reversal of the transaction is reported should be supported by a letter giving the following particulars:

a) The date of the return in which the outward remittance was reported.

b) The name and address of the applicant.

c) The amount of the sale effected originally.

d) The amount cancelled.

e) Reasons for cancellation.

 Tools for foreign exchange

• Importer (Buyer)/Applicant
• The Issuing Bank (Opening Bank)
• The Advising Bank/Notifying Bank
• Exporter/Seller (Beneficiary)
• Confirming Bank
• Negotiating Bank
• The Paying/Reimbursing/Accepting/Remitting Bank.

a) Applicant

The person/body (customer of the bank) who requests the bank (opening bank) to issue letter of credit. As per instruction and on behalf of the applicant, bank open L/C in line with the terms and conditions of the sales contract between the buyer and seller.

b) Opening bank/Issuing Bank

The bank which open/issue L/C on behalf of the applicant/importer. Issuing bank’s obligation is to make payment against presentation of documents drawn strictly as per terms of the L/C.

c) Advising/Notifying Bank

The bank through which the L/C is advised/forwarded to the beneficiary (exporter). The responsibility of advising bank is to communicate the L/C to the beneficiary after checking the authenticity of the credit. The advising bank acts only as agent of the issuing bank without having any engagement on their part.

d) Beneficiary

Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are the seller or exporter.

e) Confirming Bank

The Bank, which under instruction in the letter of credit, adds confirmation of making payment in addition to the issuing bank. It is done at the request of the issuing bank having arrangement with them. This confirmation constitutes a definite undertaking on the part of confirming bank in addition to that of issuing bank.

f) Negotiating Bank

The Bank, which negotiate documents and pays the amount to the beneficiary when presented complying credit terms. If the negotiation of documents is not restricted to a particular bank in the L/C, normally negotiating bank is the banker of the beneficiary.

g) Reimbursing/Paying Bank

The Bank nominated in the credit by the issuing bank to make payment stipulated in the document, complying with the reimbursing bank.

 General foreign exchange policy of the Jamuna Bank LTD.

Import trade in Bangladesh is controlled under the Import and Export control Act 1950. Authorized Dealer Banks will import the goods into Bangladesh following the import policy, public notice, F.E. circular and other instructions from competent authorities from time to time. The import functions of the branch as far I have understood are discussed bellow:

Documentary Requirements for Opening L/C

Importer shall submit following documents for opening L/C:

(a)  Valid Import Registration Certificate (IRC) (commercial/industrial)

The following persons/purposes are exempted from Registration:

i)  Govt. Departments

ii) Local Authorities & Statutory Bodies

iii) Recognized Educational Institutions

iv) Hospitals

v) Import of Capital Machinery for own use

(b) Tax Identification Number Certificate

(c) VAT Registration Certificate

(d) Membership Certificate of a recognized Trade Association as per IPO

(e) A declaration, in triplicate, that the importer has paid income-tax or submitted income lax return for the preceding year

(f)   Pro forma Invoice or Indent duly accepted by the importer

(g)  Insurance Cover Note with Money Paid Receipt covering value of goods to be imported plus 10 (Ten) percent above

h) L/C application Form (MF-fx l3) duly signed by the importer

i) Letter of Credit Authorization Form (LCAF), commercial or industrial as the case may be, duly signed ‘by the importer and incorporating New ITC number of at least 6(six) digits under the Harmonized System as given in the Import Trade Control Schedule 1988.

j) IMP Form duly signed by the importer

Precautionary Steps:

a)      The Branch must ensure that they deal only with known customers having a place of business in Bangladesh and can be traced easily, should any occasion arise for this purpose.

b)      The Branch shall all assess the financial standings & credibility of the customers with a view to ensure satisfactory arrangement for retirement of the documents.

c)      The Branch should also obtain confidential report on the exporter in all cases where the amount of the L/C exceeds Tk.2, 00,000.00 against P/invoice and

      Tk.5, 00,000.00 against indents.

d)     The Branch shall verify prices so as to ascertain competitiveness of the commodities to be imported.

e)      The Branch shall also see the marketability of the commodities to be imported.

f)       The Branch shall verify signature of the Importer on L/C Application Forms, LCAF & IMP Form.

g)      The Branch will not open L/Cs for import of goods through the customs stations/routes like Sonamasjid, hili, Burimary. Birol etc. unless the importers pay 100% margin or prior Head Office approval is obtained.

Sanctioning; Documentation & Legal Formalities

Approval of Head Office and/or Branch Manger (where L/Cs are to be opened under his delegation) is to be obtained before opening L/C(s).

Security documentation is to be completed as per sanction/approval terms prior to opening of L.C. Charge Forms such as Demand Promissory Note, Letter of Undertaking, Letter of Debit Authority & Letter of Guarantee (where applicable) to be obtained with due stamps as per prevailing Stamp Act rate.

Opening L/C

With the little understanding of L/Cs and after completing necessary formalities, the branch may now proceed for opening the credit on behalf of their own customers who maintain accounts with them, except government organizations. Necessary entries to be given in the L/C opening Register (MB/FX-03) by allocating an L/C number and following vouchers are to be passed for completion of opening transactions at Bill Clean (BC) Selling rate (Spot):

(a) Creation of L/C liability: (Register MBFx-12)

Dr. Customers Liability on L/C Cash

Cr. Bankers (Liability on L/C Cash

(Amount to be rounded off to the nearest thousand Taka)

(b) Margin/Commission & Charges:

Dr. Customers A/c: Margin + Commission + F.C.C + Postal/Telex + Stamp + Misc.

Cr. Sundry Deposit A/c: Margin on L/C (Cash)

Cr. Income A/c: Commission on L/C Foreign

Cr. Income A/c: Postal/Telex Recoveries

Cr. Income A/c: Miscellaneous Earnings (Handling charges, stationery charges, etc.)

Cr. Sundry Deposit A/c.: F.C.C

Cr. Other Assets A/c: Stamps in Hand

Time Limit for Opening of L/C:

L/Cs shall be opened within 150 days from the date of issuance of LCAF.

Terms of L/C S

All description of the goods along with quantity and unit price is to be incorporated in the L/C and shall take all precautions to quote the correct H.S. Codes of the goods. Prices to be quoted on CFR or FOB basis according to P/Invoice or indent. No import shall be made on CIF basis without prior approval from the Ministry of Commerce.

L/Cs should provide for payment to be made against full sets of On Board (shipped) transport documents drawn or endorsed to the order of Jamuna Bank Limited showing despatch of goods covered the credit to a destination in Bangladesh. All LCs must specify submission of signed invoices, certificates of origin & pre-shipment Inspection certificate. L/Cs shall also incorporate any other documents which are mandatorily specified for that Commodity in the IPO/Public Notices/Bangladesh Bank Circulars.

It is not permissible to open import L/Cs in favor of beneficiaries or to use shipping carriers of the countries from which import into Bangladesh are banned by the competent authority. Is also not permissible to open clean or revolving or packing credits.

Various Charges for L/C:

 Shipment Validity & Expiry

All L/Cs must specify shipment validity as per terms of the P/Invoice or indent or L/C application. However, shipment validity under any circumstances shall not exceed 9(nine) months from the date of issuance of LCAF or registration of LCAF with Bangladesh Bank, except capital machinery and spare parts, shipment of which shall be made within 17 (seventeen) months. All LCs must stipulate an expiry date and a place for presentation of documents for payment/acceptance.

Additional Confirmation to the L/Cs

By the request of the  importer,  the  branch  may  request  a  third  correspondent  bank  (having  prior arrangement of credit line) to add their confirmation to the L/Cs. The branch shall send a request letter to the International Division, Head Office for their record and necessary instructions to be advised to the concerned confirming bank for this

purpose. Confirmation charges are to be recovered from the importer as per schedule of charges of the bank unless it is waived or directed otherwise as per agreement between the supplier and the importer.

Vouching Procedure:

Dr: Customer’s A/c.

Cr: Income A/c: Commission on L/C (confirmed)

Manipulation of Reimbursement terms and issuance of Reimbursement Authorization

The branch shall stipulate reimbursement term in the L/Cs mentioning name of the Reimbursing Bank and Nostro Account Number (preferably in the country of the currency denominated in the L/Cs so as to avoid possible loss due to conversion of’ differential currencies). The branch shall issue and send Reimbursement Authorization to the Reimbursing Bank immediately after opening of the L/Cs.

Amendments

The Branch may allow amendments to the L/Cs only upon requests of the L/C applicants that do not violate foreign exchange regulations and import control regulations. Necessary charges and/or margin (where L/C value is increased by subsequent Amendments) arc also to be realized /recovered from the customer before amending the L/Cs.

Vouching Procedure

Dr. Party Account (for margin and/or commission + Postage/Telex + F.C.C)

Cr: S/D A/c: Margin on L/C (Cash) (if the L/C value is increased)

Cr. Income A/c: Commission on L/C Foreign

Cr. Income A/c: Postal/Telex Recoveries

Cr. Sundry Deposit A/c: F.C.C

Contra liability if the L/C value is increased:

Dr. Customer’s liability on L/C cash (for increased amount)

Cr. Backer’s liability on L/C cash

Cancellation of L/Cs:

An Irrevocable L/C can not be cancelled without the agreement of the beneficiary and the confirming bank, if any. The branch, at the request of the importer, may approach the L/C advising bank for cancellation of the L/C and such cancellation will only be effective upon consent of the beneficiary advised to the branch through the L/C advising bank. However, the branch may cancel the L/C without the consent of the beneficiary, advising bank and confirming bank, if any, if the L/C expires and the brand”, receives no shipping documents within 15 days” of expiry of the L/C. The branch should send a message to the concerned bank advising; such cancellation and closure of L/C file due to expiry of the same. The branch will then cancel the Reimbursement Authorisation which has been provided to the Reimbursing Bank while opening the L/C. The branch will reverse L/C contra liabilities, refund margin and recover charges from the L/C applicant as per schedule of charges.

Scrutiny/Examination of Documents:

Upon receipt of the documents the branch shall examine the documents with the LCs and determine whether (to take up or refuse the documents and to inform the negotiating bank from which it received the documents within seven banking days following the day of receipt of the documents.

If the documents appear on their face not to be in compliance with the terms and conditions of the credit, branch must refuse the documents by sending Notice to that effect by telecommunication or by other expeditious means to the negotiating bank without delay but not later than the close of the seventh banking day following the day of receipt of the documents.

Such Notice must state all discrepancies in respect of which the bank refuses the documents and must also state whether it is holding the documents at the disposal of or is returning them to the presenter.

The branch may then approach the L/C applicant for a waiver of the discrepancy(ies).

Import Bill Scrutiny Checklist:

(a)Forwarding schedule of the negotiating bank

Whether there is any discrepancy mentioned in it

Whether there is any ‘special instruction that cannot be complied with

Whether there is any commission/charge payable/realized beyond L/C terms

(b)General

Late shipment

Late Presentation

Early shipment

L/C expired

L/C over-drawn

Partial shipment or transshipment beyond L/C terms

Bill of exchange

Amount of B/E differ with Invoice

 Not drawn on L/C issuing Bank

Not signed

Tenor of B/E not identical with L/C

Full set not submitted

Invoice:

Not issued by the beneficiary

Not signed by the beneficiary

Not made out of the name of the applicant

Description, price, quantity, sale terms of the goods not correspond to the credit

Not marked one fold as original

Shipping marks differ with B/L & packing list

Packing list:

Gross weight, net weight, measurement, number of cartoons/ packages differ with B/L.

Not marked one fold as original

Not signed by the beneficiary

Shipping marks differ with B/L

Bill of Lading/ Airway bill, etc:

Full set of B/L is not submitted

B/L is not drawn or endorsed to the order of Jamuna Bank Limited

“Shipped on Board”, “Freight Prepaid” etc notations are not marked on the B/L

Name address of the notify parties are not mentioned or differ with L/C

B/L does not indicate the name and capacity of the party

“Shipped on Board” notation not showing the name of pre-carriage vessel/intended vessel

“Shipped on Board” notation not showing the port of loading and vessel name

Short form of B/L

Charter party B/L

Description of goods in B/L not agreed with that of invoice. B/E, P/L

Alteration of B/L not authenticated

Loaded on Deck

Stale B/L

PSI Certificate:

CIF value not shown

Description, quantity, quality, H.S. code and price of goods differ with L/C and invoice. Etc

Others:

Inadequate number of Invoice, Packing list, B/L, and others submitted

Certificate of origin differ with L/C terms

Shipping Company Certificate regarding ownership of vessel not submitted

LCA Form, IRC, HS Code, and L/C Number are not mentioned in all the documents, etc.

Disposal of Discrepant Documents:

If the importer refuses to accept the documents because of discrepancies advised to him, the branch should immediately advise the same to the negotiating bank by telex/cable and dishonored documents will then be handled, according to the instruction of the negotiating bank. If no reply is received regarding disposal of the document, the bank will return the full sets of documents to the presenter by courier service/Registered postal Mail. The branch should cancel the Reimbursement Authorization provided to the Reimbursing Bank while the opening branch of the L/C and/or claim refund of reimbursement with interest from the remitting bank, of any reimbursement which has been made to the negotiating bank. The branch shall reverse the contra liability which has been passed at the time of opening and recover/realize postal and other charges incurred by the bank on his behalf.

Lodgment of Documents:

If the documents are found in order or the discrepancies in the document, if any, are subsequently accepted by the applicant, the branch will record the particulars of the documents in the PAD Register (MB fx-05) and the following vouchers are to be passed for completion of lodgment transactions:

i)          Reversal of L/C 1iability to the extent of documents:

Dr.  Banker’s liability on L/C Cash\

Cr. Customer’s liability on L/C Cash

ii)         PAD Vouchers:

Dr. PAD A/c for Bill value including interest @ B.C selling rate prevailing on the date of lodgment less Margin amount

Cr. Sundry Deposit A/c: Margin on L/C Cash

Dr. JBL General A/c: CAD ID on respective Nostro A/c. for bill value at Ready Selling Rate in case of USD & ACU Dollar or TT OD rate for all other currencies.

Cr. Income A/c: Interest on PAD

Cr. Income A/c: Exchange Gain on F.C.

Retirement of Documents:

Importer is to be advised on the date of lodgement of documents with full particulars of shipment to retire the documents against payment or to dispose the import documents as per pre-arrangement, if any. Subsequent reminders are also to be issued every week till retirement of the bill. Such bills will be considered and be reported as overdue if the importer fails to retire the documents within 21 days of arrival of the relative import consignments at the port of destination.

When the importer intends to retire the documents, the branch will prepare the following retirement vouchers or adjustments of PAD liabilities there against:

Dr. PAD A/c for the interest amount accrued from the date of lodgement to the date of retirement.

Cr. Income A/c: Interest on PAD

Dr. Party A/c for PAD amount with accrued interest

Cr. PAD A/c

There after the documents may be handed over to importer after certification and endorsement.

The certification should be as follows:

1. On the Invoice                                            Certified   that the invoice has been drawn   under   L/C

no……….:……

For USD…………..

Jamuna Bank Limited

Authorized Signature

2. On the Bill of Exchange                 Received Payment

Jamuna Bank Limited

Authorized Signature

3. On the Transport Document                       Please Deliver to the order of

M/s…………………….

Jamuna Bank Limited

Authorized Signature        Authorized Signature

Sometimes importer may not come forward to retire the documents, and for safe-guarding bank’s interest the branch; should arrange clearance of the consignment under forced circumstances with prior approval of Head Office since consignment are liable to be auctioned by the custom authority within 45 days from the date of arrival of the vessel.

However, in case of perishable goods or seasonal items, Branch must take immediate action for retirement of documents or clearance of goods to safeguard Bank’s interest.

Documents must not be handed over to the importer without payment or without making any arrangement for disposal. Branch shall keep in mind that the Bank does not have any policy to allow LIM facility under any Circumstance.

L/C on Deferred Payment basis

L/Cs may be opened on deferred payment (DA) basis in the following cases subject to approval of’ Head Office:

(i)                 Capital machinery imports on up to 360 days usance basis,

(ii)               Industrial raw material imports for own use of industrial importers on up to 180 days usance basis,

(iii)             Import of coastal vessels including oil tankers and ocean going vessels including those procured for scrapping on up to 360 days usance basis,

(iv)             Import of agricultural implements and chemical fertilizer on up to 180 days basis, (v) Import of life saving drugs on up to 90 days usance basis.

For such deferred payment imports, the prices must be internationally competitive and since interest, if any, should not be at rate higher than the LIBOR for the relative period or the equivalent rate prevailing in the currency of the country of the supplier.

Import against Supplier’s Credit:

The industrial enterprises in the private sector may open L/Cs on longer usance terms against supplier’s credit as per general or specific BOI approval.

Vouching Procedure:

(i) Creation of L/C liability

Dr. Customer’s liability on L/C (Deferred)

Cr. Banker’s liability on L/C (Deferred)

(Rate applicable BC Selling)

(ii) Margin/Commission & Charges

Dr. Customer’s A/c: Margin + Commission + FCC + Postal/ Telex + Stamp-f Misc.

Cr. Sundry Deposit A/c: Margin on L/C (Deferred)

Cr. Income A/c: Commission on L/C Foreign

Cr. Income A/c: Postal/Telex recoveries

Cr. Income A/c: Miscellaneous earnings (Handling charges, stationery charges, etc.)

Cr. Sundry Deposit A/c: FCC

Cr. Other Asset A/c: Stamps in Hand

Acceptance & Lodgment of Deferred Bill

On receipt of import documents against the L/C, the documents should be subjected to usual scrutiny. If found in order, the customer should be asked to accept the usance bill of exchange. When the bill of exchange is returned by the drawee (i.e. importer) after duly accepted by him, the maturity date of the bill is worked out and noted in the PAD register and also in the Due Date Diary (MBFx-16). The date of maturity of the bill of exchange is communicated to the negotiating or collecting bank by telex/ fax. Simultaneously the documents are lodged under ABP (Accepted Bills for Payment).

(iii) Vouchers for charges, such as Telex/ Postal charges for advising maturity date and others

Dr. Party’s Account

Cr. Income A/c: Postal/ Telex Recoveries

Payment of Deferred Bill:

The branch, on maturity or at the instruction of the drawee before maturity, will make payment of the deferred bill.

Vouchers to be passed:

(i)                 Reversal of Acceptance liability

Dr. Banker’s liability on PAD (Deferred)

Cr. Customers liability on PAD (Deferred)

     (ii) Dr. Sundry Deposit A/c. Margin on L/C (Deferred)

Dr. Party’s Account: Balance Amount

Cr. JBL General A/c: CAD, ID on respective Nostro A/c for bill value with interest (if any) at Ready selling rate in case of USD & ACUD or TTOD rate for all other currencies. Cr. Income A/c: Exchange Gain on FC

The branch will issue payment Instructions to the Reimbursing Bank under intimation to the Beneficiary Bank or advise the Beneficiary Bank to claim reimbursement, if an R/A was advised earlier at the time of opening \JC or advising maturity date of accepted bill.

BACK TO BACK L/Cs:

The branch may open back to back import L/C against export L/C received by export oriented industrial unit operating under the bonded warehouse system, subject to observance of domestic value addition requirement prescribed by the NBR/Ministry of Commerce from time to time.

The following instructions should be complied with while opening Back to Back Import L/C:

(i)                 The unit requesting for this facility should possess valid IRC, ERC and valid bonded warehouse licence,.

(ii)               The branch shall hold the Master Export L/C affixing Bank’s lien stamp thereon and keep in safe for security purpose.

(iii)             The Master Export L/C should have validity period adequate to cover the time needed for importing inputs, manufacture of merchandise and shipment to consignee.

(iv)             The Back to Back L/C value shall not exceed the admissible percentage of net FOB value of the relative Master Export L/C (as per prescribed value addition requirement). For computation of net FOB value of a master export L/C, the freight charge, insurance cost and commission if payable by the exporter shall be deducted from the L/C value. If the freight element is not shown separately, freight certificate from the shipping company or agent should be asked for,

(v)               The Back to Back import L/C shall be opened on up to 180 days usance (DA) basis, except in case of those opened against Export Development Fund, administered by Bangladesh Bank, in which case the back to back L/C will be opened on sight (DP) basis,

(vi)             Interest for the usance period shall not exceed LIBOR or the equivalent interest rate in the currency of settlement,

(vii)           All amendments of the master export L/C should be noted down carefully to rule out chances of excess obligation under the back to back import L/C.

(viii) Back to Back L/C can either be local or foreign. Inland BTB L/C denominated in foreign exchange may be opened in favour of local supplier/ manufacturer of inputs against master export L/C and BTB L/C may, in turn, be opened for import of inputs against inland BTB L/C in favour of local

(ix) supplier/manufacturer under bonded warehouse system up to value limits applicable as per prescribed value addition requirement.

Vouching Procedure

(a) Creation of L/C liability

Dr. Customer’s liability on BTB L/C

Cr. Banker’s liability on BTB L/C (Applicable rate: B.C Selling rate)

(b) Commission & others charges

Dr. Customers A/c: Commission for 180 days + FCC + Postal/ Telex Recoveries + Misc. Cr. Income A/c: Commission on L/C foreign.

Cr. Income A/c: Postal/ Telex Recoveries.

Cr. Income A/c: Miscellaneous earnings (Handling charges, stationery, etc.)

Cr. Sundry Deposit A/c: FCC

Cr. Other Assets A/c: Stamps in Hand

c) Amendment charges

i) If the L/C value is increased

Dr. Customer’s liability on BTB L/C (for increased amount)

Cr. Banker’s liability on BTB L/C

Dr. Customers A/c: Commission for increased amount + other charges

Cr. Income A/c: Postal /Telex Recoveries

Cr. Income A/c: Miscellaneous earnings (Handling charges if any)

Cr. Sundry Deposit A/c: FCC

ii) If L/C expiry time is extended beyond 180 days

Dr. Customers A/c: Commission for further one quarter

Cr. Income A/c: Commission on L/C (Foreign) & other vouchers

Acceptance & Lodgment of BTB Import Bill:

On receipt of import documents against the L/C, the documents should be subjected to usual scrutiny. If found in order, the customer should be asked to accept the usance bill of exchange. When the bill of exchange is returned by the drawee (i.e. importer) after duly accepted by him, the maturity date of the bill is to be worked out and noted in the PAD

register and also in Due Date Diary (MBFx-16). The date of maturity of the Bill of Exchange is communicated to the negotiating or collecting bank by telex/ fax.

Simultaneously the documents are lodged under ABP (Accepted Bills for Payment).

Vouchers to be passed:

i) Reversal of L/C liability

Dr. Banker’s liability on BTB L/C

Cr. Customer’s liability on BTB L/C

ii) Creation of Acceptance liability

Dr. Customer’s liability on BTB Bills

From: Jamuna Bank Limited

Cr. Banker’s liability on BTB Bills (Applicable rate: B.C Selling rate)

(iii) Vouchers for charges such as Telex/ Postal charges for advising maturity date and others

Dr. Party’s Account

Cr. Income A/c: Postal/ Telex Recoveries of Back to Back L/C

Payment of BTB L/C shall be made at maturity, out of export proceeds. The required foreign exchange, out of repatriated export proceeds, will be set aside in a separate foreign currency account called FC held for BTB L/C. The branch will pay BTB bills according to their maturity within 3 working days from the date of realization of export proceeds. If export proceeds are not available, the ABP liability should be liquidated by grant of SOD (Export).

Voucher to be passed:

(i) Reversal of acceptance liability

Dr. Banker’s liability on BTB bills

Cr. Customer’s liability on BTB bills

(ii) Out of export proceeds settlement in FC

Dr. Exporters F.C held A/c: Bill value with usance interest @ prevailing O.D sight (export)

Cr. JBL General A/c: On Nostro A/c @ prevailing OD sight (export)

(iii) Out of Export Proceeds settlement in B.D Taka

Dr. Experts F.C held A/c

Cr. JBL General A/c: On Nostro A/c

Dr. JBL General A/c: F.C amount on Nostro Account

Cr. Income A/c: Exchange gain on FC

Cr. Bills payable A/c: Payment Order

Dr. Income A/c: Commission on Pay Order

Cr. Income A/c: Postage recoveries

(iv) If export proceeds arc not available – settlement in FC

Dr. SOD (export) A/c

Cr. JBL General A/cCr. Income A/c: Exchange gain on FC

(v) If export proceeds are not available – settlement in BD Taka

Dr. SOD (export) A/c:

Cr. Bills Payable A/c

Cr. Income A/c: Exchange gain on FC

Cr. Income; A/c: Commission on Pay Order

Cr. Income A/c: Postage recoveries

(vi) If export proceeds are not adequate to cover BTB Bill – settlement in FC

Dr. Exporters FC held A/c

Cr. JBL General A/c

Dr. SOD (export) A/c

Cr. JBL General A/c

Cr. Income A/c: Exchange gain on FC

(vii) If export proceeds are not adequate to cover BTB bill – settlement of BD Taka

Dr. Exporters F.C held A/c

Cr. JBL General A/c

Dr. JBL General A/c

Dr. SOD (export) A/c:

Cr. Income A/c: Exchange gain on FC

Cr. Bills payable A/c (export) less PO commission & Postal charges

Cr. Income A/c: Commission on Pay Order

Cr. Income A/c: Postage recoveries

FOREIGN REMITTANCE

Two types of foreign remittance-

      Foreign Inward Remittance

      Foreign Outward Remittance

Opening and Operation of Different Types of Foreign Currency Accounts:

Convertibility of Taka in current account transactions symbolised a turning point in the country’s exchange arrangement and exchange rate system. Now the operation of foreign currency accounts have been more liberalized. Funds from this A/Cs are freely remittable to any country according to the needs of A/c holders.

Types of FC Account

(a)    Resident Foreign Currency Deposit (RFCD) Account:

Persons ordinarily resident in Bangladesh may maintain foreign currency accounts with foreign currency brought in at the time of their return in Bangladesh from visits abroad. These accounts are termed as RFCD accounts.

(b)   Non-resident Foreign Currency Deposit (NFCD) Account:

Non resident Foreign Currency accounts may now be maintained as long as the account holder desire. Amount brought in by non-resident Bangladeshi can be deposited in FC account any time after to Bangladesh.

Who can Open FC Accounts:

The Branch with Authorized Dealership Licence may, without prior approval of Bangladesh Bank, open foreign currency A/Cs in their books in the name of:

(a)Bangladeshi nationals residing abroad

(b) Foreign nationals residing abroad or in Bangladesh

(c) Foreign firms and companies registered abroad and operating in Bangladesh or abroad

(d) Foreign missions/Embassies/UN organizations and their expatriate employees

(e) Diplomatic bonded warehouses (duty free shops)

(f) Local and Joint venture contracting firms employed to execute projects financed by foreign donors/international donor agencies.

(g) Bangladeshi nationals working as employees/consultants in international bodies in Bangladesh and drawing pay and allowances/consultancy fees/honorarium in foreign currency.

(h) Merchandise and service exporters

(i) Bangladeshi Nationals who are ordinarily resident in Bangladesh may open foreign currency accounts with foreign exchange brought in at the time of their return to Bangladesh from visits abroad.

(j) Industrial enterprises in EPZ.

Currency in which FC A/C can be Opened:

FC Accounts can be opened either in

(a) Pound Sterling

(b) USD

(c) EURO

(d) Japanese Yen

Documents required for Opening FC A/Cs:

(a)  For Bangladeshi Wage Earners:

  Photocopy of first 7 (seven) pages of valid passport and visa page/arrival page

  Photocopy of employment contract/appointment letter/work permit

  Two copies of passport size photograph of each account holder and nominee duly attested.

(b) For Foreign National/Company/Firm

  Two copies of photograph of account holder for individual and operators of other account holder

  Copies of relevant pages of passport for individual and operators of other account holder

  Copy of service contract/appointment letter/work permit, if any for individual

  Copies of registration in Bangladesh with Board of Investment / Bangladesh   Bank   for Foreign Joint Venture Firm.

  Copies of the Memorandum and Articles of Association/Laws/Bye Laws, etc. or Joint Venture Agreement for Joint Venture Company

 Mode of Operation:

  Foreign currency accounts opened in the name of Bangladesh nationals working abroad or self employed abroad can now be maintained as long as the account holder desires.

  Such accounts may also be opened by the eligible persons within six months of their return to Bangladesh.

 Deposits:

  Credit to a foreign currency account may be made against inward remittance of foreign exchange in any form or transfer from another FC account or Non-Resident Taka Accounts of bankers abroad.

  ADs may also raise credits to such accounts with the proceeds of convertible foreign exchange viz. currency note, travelers’ cheques, drafts, etc. brought into Bangladesh by the account holders while on temporary visit to Bangladesh, provided such foreign exchange in excess of US$ 5000 or its equivalent has been duly declared by them to the customs at the time of their arrival.

  Portion of repatriated export proceeds of Merchandise/service exporters are allowed to credit to the exporters retention quota account.

  Foreign exchange earned through business done or services rendered in Bangladesh cannot be put into F.C account.

 Withdrawals:

  Payments may be made freely abroad from these FC accounts to the extent of balance lying therein.

  Local disbursements may also be made freely in Taka from such foreign currency accounts.

  Funds lying in FC Accounts can be utilized for import of goods and commodities as per instructions issued by the CC1&E and Bangladesh Bank.

  No payment in foreign exchange may be made to or on behalf of any resident in Bangladesh out of the

  FC accounts except foreign diplomats or privileged persons who have specific authority from Bangladesh Bank to accept such payment.

OUTWARD REMITTANCE:

The term “Outward Remittance” include not only remittance i.e. sale of foreign currency by TT, MT, Drafts, Travelers cheque but also payment against imports into Bangladesh & Local currency credited to Non-Resident Taka Accounts of Foreign banks or convertible Taka account.

Two forms are used for Outward Remittance of Foreign Currency, such as –

(a)IMP Form: All outward remittances on account of imports are done by form IMP.

(b)T.M. Form: For all other outward remittances form TM is used.

1. Private Remittance:

For the following private purposes, outward remittances are permitted:

1. Family remittance facility:

2. Remittance of Membership Fees/Registration Fees etc.:
3. Education:

4. Remittance of Consular Fees:

5. Remittance of Evaluation Fees:

6. Travel

7. Health & Medical:

8. Seminars and workshops:

9. Foreign Nationals:

10. Remittance for Hajj:

11. Other Private Remittances

1. Official & Business Travel:

For the following official and business purposes, outward remittance is permitted:

1. Official Visit:
2. Business Travel quota for New Exporters:
3. Business Travel Quota for Importers and Non-exporting producers:
4. Exporters’ Retention Quota:

1. Commercial Remittance:

For the following commercial purposes, outward remittances are permitted:

1. Opening of branches or subsidiary companies abroad:
2. Remittance by shipping companies, Airlines & Courier Service:
3. Remittance of Royalty and Technical Fees:
4. Remittance on account of Training & Consultancy:
5. Remittance of Profits of Foreign Firms/Branches:
6. Remittance of Dividend:
7. Subscriptions to Foreign Media Services:
8. Costs/Fees for Reuters Monitors:
9. Advertisement of Bangladeshi Products in mass media abroad:
10. Bank Changes:

INWARD REMITTANCE:

The term inward remittance includes not only the purchase of foreign currencies y TT, MT, Draft etc., but also purchase of TC.

Utmost care to be taken wile purchasing notes, TC, DD and similar instruments for protecting the Bank from probable loss as well as safety of the bank officials concerned.

Conclusion and Recommendations

Recommendations

 In view of the facts, the following recommendations are made to the respective concerned for the consideration and implementation.

► The bank should have standardized system of measuring customer satisfaction.

► Need for integrity of the officials within reasonable limits.

► The officials should have a through knowledge of the product.

► The officials should be trained up for their efficiency.

► Reasonable interest rate for all kinds of loan.

► Increasing number of staffs and cash terminals.

► Officials should be more cooperative with the clients.

► Officials should be trained up for self-management.

► Customized new financial product development.

► Officials should be faster during transaction.

► Bank can accept new ideas from the customers for regarding improvement the quality of their service.

►They need to maintain an upgraded guideline for the employees to avoid any kind of confusion.

►They should enhance their savings facilities by introducing many other saving schemes, because customers really look for various savings programs.

►Special increment should be given to middle and junior level managers and executives also to increase their motivation level.

 Conclusion

From the beginning of greater change in the world economic structure, banking activities has becoming an important thing. Now a day the idea of banking is also developed and a huge number of private commercial banks are just on waiting for business. So it is  a matter of think that how to establish an idea with different techniques, In Bangladesh, Commercial banks are playing vital role in the development of our economy and financial system. Standard Charted Bank Limited has a strong position in the today’s competitive market. The JBL, Malibagh Branch, Dhaka also contributing a better proportion of profit in JBL’s total earning. Total analysis of the bank has the greater opportunity to do better in the future.

Day by day JBL’s area of service is increased all over the country through setting up new branches at new places. The reliability of the customer on JBL‘s increasing day by day for its better services. But they may introduce online and ATM services comparing with other commercial bank to improve their services and to make efficient and easy customer services. They also may follow the given recommendations in order to improve day by day. Jamuna Bank Limited may contribute a vital role in the socio-economic prospective and in the development of our economy.

The JBL has been trying to operate its business successfully in Bangladesh since 1999. JBL has already developed an image of goodwill among its clientele by offering its excellent services. This success has resulted from dedication, commitment and dynamic

Leadership of its management over the periods. During the short span of time of its operation, the bank bas successfully grabbed a position as a progressive and dynamic financial institution in the country. If the bank goes this way. It is expected that in the near future JBL may become one of the top performers in the banking sector.

Here I observed its deposit figure is strong. The bank should take necessary action for maintaining .JBL has been able to maintain its recovery position in sector wise credit financing is up to the satisfactory level. At last it should give more emphasis in this sector to acquire more profit.

Bibliography

1.Annual Report of Jamuna Bank Limited, 2005, 2006,2007

2.  Chowdhury, L.R; A Textbook on Foreign Exchange, Fair Corporation,139, Azimpur, Dhaka, 1205

3.   Foreign Exchange Manual, Jamuna Bank Limited., 1^st November,2009

4.   Collyer Gary, ICC Uniform Customs And Practice For Documentary Credits ,3rdEdition, International Chamber Of Commerce, ICC Publication No.600

5.  Bangladesh Bank Foreign Exchange Guidelines, Volume-1

6. www.jamunabankbd.com