Foreign Exchange of Social Islami Bank Ltd

Foreign Exchange of Social Islami Bank Ltd

Foreign Exchange:

Social Islami Bank Ltd. Continued to be very active in international trade through financing export import business and mobilizing wage earners remittance. In 2008, the bank opened 21210 imports LCs worth USD 1130.96 million and handled 16234 Export documents worth USD 531.03 million. The bank has also expanded its external business by undertaking export bill negotiation, realization of export proceeds, foreign remittance, etc.


To bring in, from abroad, something in kind of goods or services (to behave lawfully) is import. Import trade finance by SIBL rose to USD 907.08 million (Tk. 6,275.91 crore) in 2007 compared with USD 606.26 million (Tk. 4,245.85 crore) in 2006. The growth in USD increased by 49.62% and in Taka by 47.81%.In reporting year 2008 the Bank opened a total number of 21210 LCs amounting USD 1130.96million in import trade with a growth of 25 percent. Large LCs were opened mainly for importing old ships, rice, wheat, edible oil, fertilizer, capital machinery, fabrics and accessories, petroleum products and other consumer products.

Import procedure of SIBL:

Import means purchasing products from other countries for further process or to sell in local market. Social Islami Bank Ltd plays a vital role in import financing system. There are some different steps in whole import process. These are as follows:

1.   LC Opening

2.   Document Negotiate

3.   Payment Clear

4.   Bill of entry

5.   File closed

LC Opening:

A letter from one banker to another authorizing the payment of a specified sum to the person named in the letter on certain specified conditions commercially. Letter of Credit are widely used in the international import and export trade as a means if payment, the exporter may require the foreign importer to open a letter of credit at the exporter may require the foreign importer to open a letter of credit at the importer’s local bank (issuing bank) for the amount of the goods. This will state that it is to be negotiable at a bank (negotiating bank) in the exporter’s country in favors of the exporter; often, the exporter will give the name of the negotiating bank. On presentation of the shipping documents (which are listed in the letter of credit) the beneficiary’s will receive payment from the negotiating bank.

The rules of LC are established by ICCI (London). The guidelines are provided by UCP 600 (Uniformed Customs & Practice for Documentary Credit). UCP 600 is the latest revision of the Uniform Customs and Practice that govern the operation of letters of Credit. LC is nothing but a guarantee from a bank in favor of a party to pay certain amount in case of transaction.

 Conditions of LC:

There are some necessary conditions and documents are required to open L/C for import goods and services from exporters as fallows:

A. The party must have current account which is treated as a business account.

B. Trade license (valid)

C. Application to the Bank by the importer.

D. TIN Certificate is compulsory.

E. VAT Certificate

F. IRC and IMP

G. Performa Invoice or Indent is needed.

H. Insurance Cover Note

I. Letter of promissory note

J. Letter of Disbursement

K. Letter of Agreement

L. Letter of guaranty

M. Letter of continuity

N. National certificate.

Opening of LC is the first requirement of import. The importer must have account in the certain bank. Some of the most essential documents of LC are described as follows:


IRC is the first essential of LC opening. The meaning of IRC is Import Registration Certificate. It is issued by the Chief Controller of Import & Export. The IRC is compulsory for the trading company.

Trading is a continuous process. It is not for own purpose rather for business purpose. The trading importer imports products, bring into our country and sells into the local market. For this reason IRC is compulsory. The IRC can be renewed by some authorized bank. The authorization is given by Bangladesh Bank. SIBL has this authority. However, in case of industrial purpose like purchasing industrial equipment, IRC is not necessary. Instead of IRC here a permission letter is issued by the Board of Investment.

B) Invoice:

Invoice, quotation, contract all these codes contain same meaning and purpose. This document is issued by the exporter. In the invoice, some important items must be presented. There are major items and additional items.

i. Major items: Quality, quantity, price, description of goods etc.

ii. Additional items: Shipment date, expiry date, code of loading etc.

C) Bank charged documents:

Bank charges some documents to the exporter on behalf of the party or importer. These documents are:

i.          LC Application form

ii.         IMP from

iii.        DP Note/ Promissory Note

iv.        Additional guarantee letter etc.

2. Document Negotiate

3. Payment clearing

4. Bill of Entry

5. File closed

Document Use in Foreign Trade:

As foreign trade involves transaction in between the country, the formalities attached are complicated and multifarious. The documents used in foreign trade are following:

1. Bill of Exchange: The bill of exchange is a particular through which payment is effected in internal and international trade. The payment for the goods is received by the seller though the medium of a bill of exchange (commonly) called draft or bill drawn on the buyer for the amount depending on the contact. It is a negotiable instrument. Negotiable instrument act 1881 (section -5) define the bill of exchange as “an instrument in writing containing an unconditional order” signed by the maker, directing a certain person to pay a certain sum of money only to, or the order of a certain parson, or to the bearer of the instruments.

2. Bill of Lading: It is a document issued by the shipping company or its agent acknowledging the goods mentioned therein on board the carrying vessel in apparent good order and condition unless otherwise indicated therein, for shipment to the consignee on terms and conditions as agreed upon as to their carriage. Bill of Lading is a document of title to goods entitling the holder to receive the goods as beneficiary on endorsee and it is with help of this document on receipt from the exporter that importer takes possession of the goods from the carrying varying vessel at the port of destination.

3. Invoice/Commercial Invoice: It is seller’s bill for merchandise. It contains a description of the goods, the price per unit, total value of the goods, packing specifications, terms of sale, letter of credit, bill of lading number, etc.

4. Marine Insurance Policy: In the international trade marine insurance policy is must to cover the risk of loss on consignments while they are on seas. The marine insurance is the responsibility of the buyers (consignee) under FAS, FOB and CFR contacts and the seller (consignor/shipper) under GIF contact. The policy must be of the type as specified in the relative contact. It must be properly stamped, negotiable and be endorsed where it is payable to order.

5. Packing List: The exporter must prepared an accurate packing list showing item by item, the contents of the consignment to enable the receive of the shipment to check the contents of the gods, number and marks of the packages, quantity, per package net weight, gross weight, measurement etc.

6. Inspection certificate: Inspection certificate by an established inspection authority is needed under some contracts or by some country.

7. 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.

8. Certified Invoice: Is an invoice bearing a signed statement by someone in the importers country that has inspected the goods and found that the goods are in accordance with the specific contact of the Performa invoice and the goods are of a specific country of origin.

9. Exp Form: All exports must be declared on EXP Form. These forms will be supplied by the Authorized Dealers for use of the exporter. The Authorized Dealers should, before certifying any export form, ensure that the exporter is registered with the CCI & E under the Registration (Importers and Exporters) Order 1952. The registration number should be quoted on the relative EXP Form.

10. Trust Receive: At times, the documents of title to goods (not the bill) are delivered by the banker to the importer against trust receipt. This is done in exceptional cases to valued customers.

Import Financing:

Loan against Imported Merchandise (LIM):

Loan against Imported Merchandise (LIM) is a facility provided by the Bank to the importers who are in shortage of fund to retire the import bills and thus to clear the goods from the post authority. In other works it may be referred as an advance against merchandise.

LIM Accounts may be created in the following two cases:-

A)        LIM Account on importer’s request.
B)        Forced LIM Account.

 LIM Account on importer’s request:

After lodgment of documents, the importers concerned to be intimated for early retirement of the documents by paying outstanding bill amount including other charge. If the importer is not in a position to retire the bill out of his own sources at that moment may request the bank to clear the goods by creating LIM Account. On receipt of the importer request the official of the import bills section will prepare an office note by calculating the total landed cost of the consignment.

To ascertain the landed cost the following points to be considered.

1.         Bill amount i.e. invoice amount                                  :           Tk. …………

2.         Customers duty %                                                      :           Tk. …………

3.         VAT %                                                                        :           Tk. …………

4.         Development surcharge %                                          :           Tk. …………

5.         C & F Agent’s bill (approx)                                        :           Tk. …………

6.         Miscellaneous (approx)                                               :           Tk. …………

Total landed cost of the goods                                               :           Tk. …………

(-) Margin retained at the time of       opening L/C                :           Tk. …………

(-) Farther margin to be realized from the importer                :           Tk. …………

Banker’s Liability will be                                                        :           Tk. …………

Efforts should be taken so that at least 20% to 30% margin of the landed cost may realize from the importer. Realization of margin will depend on the banker customer relationship and also on the marketability of the goods.

The following charge documents have to execute by the importer:-

i)          DP Note (Demand Promissory note).
ii)         Letter of Arrangement.
iii)        Letter of Disbursement.
iv)        Letter of pledge.
v)         Any other document of necessary.

The Bank will send the documents to the port city branch by indorsing the bill of lading in favor of them with certification of invoice for clearance the goods through importers nominated as well as Bank’s approval C & F agent. In the forwarding letter clear instructions to be given for dispatching the goods either by train or by truck duly insured Branch Managers will have to take prior approval from International Division, Head Office to create LIM Account in favor of importers. Before sending the documents to the port city branch and under taking on prescribed from with special adhesive stamp of Tk. 180/- (Flexible) regarding the stipulated period sanctioned to the importer to be obtained.

The following accounting entries and vouchers are generally to be passed in the set of Retirement Vouchers on the same day at the branch:-

Customers A/C………………. Dr

LIM……………………………. Dr

IBTA / Pay Order…………….. Cr

PAD…………………………… Cr

The particulars of LIM A/C must be entered and voucher to be posted in the LIM Register.

After clearance, the goods should be stared either in Bank’s go down or in importer’s go down under bank’s lock and key and the particulars of goods to be entered in the space provided in the LIM Register. At the same time insurance of goods cover fire and other risk to be made. Go down staff salary, go down rent (if the goods stored at the Bank’s go down) and other miscellaneous charges in connection with the LIM A/C will be paid by debit to party’s LIM A/C under advice to the importer.

 Forced Lim Account:

Immediately after lodgment of documents, the branch incumbent and concerned dealing official shall vigorously peruse importers far retirement of bills. PAD should not remain outstanding fare more than 30 days from the date of lodgment on as per norms.

If the party fails to retire the documents within 30 days or within the date of arrival of ship which ever is earlier the branch should sent the documents for clearance the goods.

Other formalities in connection with the forced LIM A/C will be the same as in the case of LIM A/C created on importer’s request. No further L/C’s of the party for whom the Bank was forced to clean the consignment and the party failed to take delivery of the goods within the time specified below under the head disposal of LIM stocks should be opened without prior approval from Head Office even if the same is within the discretionary power of branch Manager.

Disposal of LIM Stocks:

a) The LIM liability should be adjusted within a maximum period of 45 days from the date of storage for commercial importer and 60 days for industrial importers. (It may very as per circular)

b) Part delivery against payment may also be allowed if so desired by the party to clear the LIM liability within the aforesaid time, after recovering 30% margin over the landed cost if possible, but such payment should be proportionate with outstanding LIM liability taking into account the interest, go down rent and other charges up to eventual date of final delivery. This should be so arranged that with the last delivery the entire LIM liability is fully adjusted. Special care should however be taken to protect bank’s interest in case where all the packets/bundles are not of equal size, quality and price.

c) Additional 30 days may be allowed to both commercial and industrial import’s, if so approached by them for final adjustment. In the event of importers failure to lift the goods on payment of bank’s dues in full even within the extended period of 30 days, the following steps shall be taken by the branch incumbent:

1) Final notice shall be issued on importers giving 15 days time for payment.

2) In case of response is received from importer, legal notice shall be served on the bay giving another 15 days time for payment.

3) In such cases branch incumbents may allow further 30 days time only provided he is satisfied that importer will be in position to repay the outstanding dues within the extended period.

 Loan against Trust Receipt (LTR):

By executing the standard letter of trust (or trust receipt) the customer acknowledges receipt of the documents of title to the goods, as the case may be and agrees to hold them and the relative goods, when delivery thereof is taken by him, in trust as agents for the bank until the goods are sold or used for the express purpose for which they were released to him. The customer also undertakes to keep the transaction separate and assign and deposit with the bank the sale proceeds immediately realization but in any case not later than time period stipulated in the letter. Further, the customer undertakes to keep the goods insured and in the event the goods or may part thereof cannot be used by him for the declared purpose or on demand being made by the bank for the return of the documents to the bank’s custody. The trust receipt, thus, enables the importer customer to take re-delivery of the documents pledged to the pledge bank.


SIBL successfully handled export documents of USD 465.78 million (Tk. 3,182.37 crore) during the year 2007 compared to USD 405.33 million (Tk. 2,801.92 crore) in the year 2006. The growth rate was US Dollar in 14.91% and in Taka 13.58%. In 2008 it  handled 16234 export documents valuing USD 531.03 million (Tk. 3690.65 crore) during the reporting year with a growth of 14.01% over the last year. Readymade garments, Knitwear, foreign food, fish, tanned lather, handicraft, tea etc were the major export finance sectors.

 Export Procedure:

After receiving the original letter of credit, The Advising/Confirming Bank sends the original letter of credit, under their own letter of advice or confirmation, to the sellers (Beneficiary).  The next steps are as follows:

  1. The seller ships the goods, obtains the relevant shipping documents and collates all the documents required by the letter of credit.
  2. The seller presents the documents, together with the letter of credit itself, to the Advising/Confirming Bank or any other Bank.
  3. The Advising/Confirming Bank checks the documents against the requirements of the letter of credit and, if the documents comply strictly with the terms therein, will pay, undertake to pay at an agreed future date or, if the credit is not confirmed, apply to the Issuing Bank for reimbursement to pay the seller, which it will do on receipt of funds.
  4. The Advising/Confirming Bank sends the documents presented to the Issuing Bank.

Documents Required under Letter of Credit:

Typically, the documents required for presentation by the exporter under a documentary credit are the documents issued in respect of the export of the goods:

  1. A commercial invoice to represent the goods and the agreement.
  2. A transport document to evidence shipment of goods.
  3. A certificate of origin to verify the origin or place of manufacture of goods.
  4. An insurance certificate to evidence that the goods have been insured against loss or damage during transport.

 Export Financing:

Export of services and goods constitute an important part for long-term development prospect of a country. Exports are, therefore, listed in priority sector and government always provides different sorts of incentive or subsidies for growth of export. The Government and Banks give the financing support to the exporters through the following channels:

I)       Pre-shipment Financing,

II)    Post-shipment financing,

 Pre-shipment Financing:

          In order to assist the exporters to ship the goods to foreign buyers, the Banks make pre-shipment finance to the exporters in the following ways:

  1. A.    Export Cash Credit (ECC): Export Cash Credit is allowed to the exporters to procure/produce exportable goods and raw materials from the local market. This credit is given in local currency with reduced rate of interest, which is again re-financed by Govt. through Bangladesh Bank with certain terms and conditions. Tanneries mainly use these sorts of financing for purchasing raw hides. At present allowing ECC by the Banks are very rare as the repayment of loan is not satisfactory.
  1. B.     Packing Credit (PC): Packing Credit is a short-term loan allowed by the Banks to the exporters. This credit is given to the exporters for the purpose of processing, manufacturing, payment of salaries, packing of finished goods, payment of electricity bills etc. This credit is given when the exporters have the confirmed export order by way of firm contract and irrevocable L/C issued by a first class foreign bank. This credit is adjusted from the export bill received from the said export of commodity. Bangladesh Bank by way of circular has instructed to realize interest @7% only as an incentive to the exporters. As per SIBL guidelines, the PC limit will be 10% of the valid export L/C (On FOB basis) and allowed when the exportable goods are under process/after acceptance of the export bill. In case of export made on C&F basis FOB value of the exportable bill will be arrived at by deducting freight charges by obtaining a certificate from the shipping agent. PC Entitlement = [{(ABP+EDF)-S/D} x 75%] 10%.

Post-shipment finance:

 The advance given to an exporter after the shipment is made is post-shipment finance. They are given in the following manners.

 A) Negotiation of documents under L/C:  After shipment of goods against L/C, the exporter presents the shipping documents as per condition (Of L/C) to his bank for negotiation. If the documents are all in order/clean, bank purchase the bill and make payment to the exporter. But if the export L/C calls for submission of the documents to a particular bank, only that bank can negotiate the document. If otherwise it is freely negotiable, any bank can negotiate the bill. In order to negotiate a shipping document, a banker must confirm that,

i)          The documents must be presented for negotiation before expiry date of the credit

ii)         The amount of bill must not exceed the amount available in the export L/C.

iii)        All the documents called for in the L/C are submitted and these are prima facie in order.

When the bank is satisfied that the documents submitted are in order, they may negotiate and the bill amount is paid to the exporter on the rate quoted (Export bill buying rate) in the exchange rate circular.

B) Negotiation under reserve or guarantee: If the customer presents a discrepant document but the customer has high ranking in the bank and bank is sure that in the event of discrepant document is non accepted by the L/C opening bank, they may recover the overdraft with full interest from the exporter, Bank may purchase the export bill under reserve. If the customer has a high ranking in the bank but the bank has little doubt about recovery of the purchased bill value, they go for more realistic method by obtaining an indemnity from the exporter. Under this method, the exporter execute an indemnity bond in favor of the bank under which he promises to reimburse the bank for any loss that the bank may be put to on account of negotiation of the document with discrepancy.

C) Purchase of D/A, D/P Export bill. Some times the export L/C or firm contract contains the clause that the bill has to be drawn on D.A or D.P basis, say for 30, or 60 or 90 days from the date of B/L. For such type of bill bank may allow purchase of the bill after careful scrutiny of the export document, credit worthiness, business experience and integrity of the exporter. The bank for such kind of facility considers the customer of undoubted integrity and creditworthiness. For the safety of the bank advance, it is very common in our country that such type of bills are purchased by the banks after obtaining of acceptance of the shipping document by L/C opening bank and confirmation of due date of the bill. While purchasing such bill, appropriate exchange rate is applied as per exchange rate circular.

Advance against bill under collection:

It sometime happens that the exporter has sufficient financial support of his own and presented the document against exports L/C to bank for collection. But all on a sudden he may require fund for meeting emergency need. In such a situation the exporter may approach bank for finance against bill sent for collection awaiting remittance. In such a situation, bank may allow overdraft up to a certain percentage (Say maximum 80%) of the value of the bill under collection. In addition to the export bill as security, bank may ask for collateral security by way of third party guarantee or mortgage of property.

In the event of export failure of exporter for rejection of the   manufactured goods for late shipment or inferior quality of the goods, or any other reason, payment of the BTB L/C commitment is made by creating forced loan in the name of exporter, which is known as SOD (Export) in SIBL. This loan is adjusted by deduction from the future export bills and export of stock lot. Creation of forced SOD export loan is very common in the RMGI and special care is taken for early adjustment of the loan as it carries normal interest rate prevailing in the market. A detail instruction in connection with creation of SOD (Export) is given in our ID Circular No. 139 dated March 05, 1994 and all officials are advised for meticulous compliance of the above circular.

 Export Procedure:

The general framework for control of exports is similar to that of imports but the objectives of import and export control are quite different. While import control is aimed at curbing imports to the extent possible, export control mainly aims at regulating the flow of foreign exchange into the country. The objective of the government is to encourage exports t the extent possible so as to earn valuable foreign exchange for the country. All efforts have to be made to boost up exports of the country. Therefore, export control is exercised over for less a number of items as compared to import control. The control on such items which are essentially needed in the country whose indiscriminate exports may affect the domestic economy.

For obtain export registration certificate (ERC) form CCI & E, the following documents are required:

  1. 1.                  Application form.
  2. 2.                  National certificate.
  3. 3.                  Partnership deed (Registered).
  4. 4.                  Memorandum & Articles of Association & Incorporation Certificate.
  5. 5.                  Bank Certificate.
  6. 6.                  Income Tax Certificate.
  7. 7.                  Valid Trade License.
  8. 8.                  Copy of Rent Receipt of the business firm.
  9. 9.                  Free paid as treasury challans.

 Checking and Advising of Export L/C:

On receipt of Export L/C is to be recorded in the Banks inward Register and then the signature o the Export L/C or test number for telex L/C is to be verified by an authorized officer of a bank and finally it is to be forwarded to the beneficiary under forwarding schedule.

 Processing and Opening of BB L/C:

An exporter desired to have an import L/C limit under Back to Back arrangement. In that case the following papers and documents are required:

  1. Full particulars if Bank account
  2. Balance sheet
  3. Statement of Assets & Liabilities
  4. Trade License
  5. Valid Bonded were House License
  6. Membership certificate
  7. Income tax declaration
  8. Memorandum & Articles of Association
  9. Partnership deed
  10. Resolution
  11. Photographs (All Directors)

On receipt of above documents and papers the back to back L/C opening section will prepare a credit repot. Branch must obtain sanction from Head Office for opening of BB L/C.

 Predation of Export Documents:

  1. Bill of exchange or Draft.
  2. Commercial invoice.
  3. Bill of Lading.
  4. Inspection certificate.
  5. Packing List.
  6. Export License.
  7. Shipment advice.
  8. Certificate of Origin.
  9. Weight certificate.
  10. Phytosanitary certificate.
  11. Quality certificate.
  12. EXP form.

 Disposal of Documents:

Before dispatch:

  • Rubber stamp must be affixed on all the documents.
  • Endorse the draft, B/L, Insurance policy in favor of Foreign correspondent as per L/C terms.

Steps for Export:

There are some steps for export is as follows:

  1. 1.                  Goods ready for shipment.
  2. 2.                  Inspection of the goods from the competent authority as per L/C.
  3. 3.                  Prepared invoice and packing list and vessel booking particulars.
  4. 4.                  Papers to be sent to C & F agent for shipment.
  5. 5.                  C & F agent will do the custom formalities.
  6. 6.                  C & F agent will take permission for shipment/handover the goods to shipping co.
  7. 7.                  After completing of all customs finalities, the nominating shipping co. received the goods for sail/load in the ship and issues a receipt which is known as mate’s receipt.
  8. 8.                  C & F Agent handover the shipping receipts to the exporter or they can take the original B/L in payment of freight and other expenditure etc.
  9. 9.                  Export may dispatch the shipment advice to the importer directly as par L/C terms.
  10. 10.              C & F Agent receive the original B/L form the relative shipping co. and dispatches the same to the bank for negotiation or receives the (exporter) from the shipping co. directly.
  11. 11.              Exporter submits the original and duplicate sets of document to the bank for negotiation.
  12. 12.              After negotiation bank should dispatch the documents to the opening bank for delivery of the goods from the port.
  13. 13.              Opening bank lodges the documents and makes payment to the negotiation bank as per L/C terms.

Foreign Remittance:

Social Islami Bank Ltd has remittance arrangement with different banks and exchange homes in various countries through out the world. The bank has earned the confidence and reputation as a reliable organization of paying hard-earned money of the expatriate Bangladeshis to their beneficiaries in the country safely and quickly.

The bank handled USD 582.47 million remittances in 2008 showing an increase of USD 179.90 million the previous year 2007which registered an attractive growth of 45%.

Introduction of products like Home Delivery Scheme, Electronic Fund Transfer (EFT) and different instant payment system and modern technologies like SWIFT and inline services have strengthened the position of the bank in channeling remittance proceeds. The remittance cell at the Head Office is working for smooth and speedy delivery of remittances to all the branches through online system. Beneficiaries are also informed through SMS regarding their remittances.

All these efforts have propelled our bank to a higher position with the support of 106 branches at home, 38 Exchange Companies/Banks abroad and a vast network of Western Union all over the world.

SWOT Analysis

SWOT analysis is a tool for auditing an organization and its environment. It can provide information that is helpful in matching organizations resources and capabilities to the competitive environment in which it operates. The following SWOT analysis of Social Islami Bank Ltd is done to have a better understanding of its position. This SWOT analysis will provide an insight of what they can do in future to improve its standing and also how they can compete with their existing competitors.


  • Social Islami Bank Ltd is considered as a very reliable for its long presence in the region. Their continuous and sound profitability track record created a good brand image among at all level. In their history they never faced any big disaster which effected customer interest.
  • One of the largest Islamic Banks inBangladesh
    • Social Islami Bank Ltd has the large pool of loyal customer who very much constant at availing service forms the bank.
    • Social Islami Bank Ltd human resource comprises of expert qualified and committed employees.
    • Dedicated and professional staff.
    • Social Islami Bank Ltd always comes up with innovative products which are designed to provide more quality service.
    • Healthy working environment
      • Social Islami Bank Ltd is the only one which has been able to capture a wide customer base at a very short time through its extensive marketing efforts.
      • Social Islami Bank Ltd owns the best banking and information technology equipments in Bangladesh. It ultra modern banking systems starting from terminal pc’s to HUB’s are based on the international Banking group standards and are the latest. The Hexagon product is one of the best examples in this context.
      • Effective MSO department create Social Islami Bank Ltd product effective in market.
      • Social Islami Bank Ltd has the global electronic banking system Hexagon which woks globally.


  • Social Islami Bank Ltd has more and high fees and charges compared to its rivals. Such as minimum balance fee, ledger fee etc. As a result BASIC Bank is loosing its customers.
  • Social Islam Bank Ltd has rigorous credit screening policy and it is over conservative. This approach may lead it to lose opportunist business ventures.
  • Procedure of availing service from Social Islam Bank Ltd is quit lengthy and costly other then the competitors. It restricts the flexibility of the service at some extent and hampers customer satisfaction.
  • Weak marketing strategy, Target market not identified
  • Some branches of Social Islam Bank Ltd situated in commercial area do not have adequate facility to serve the rush and thus creating dissatisfaction among a major portion of the customer group.
  • Promotional strategies of Social Islam Bank Ltd are rather reactive and defensive. And as most of them are designed globally, those fail to attract consumers entirely.
  • Social Islam Bank Ltd weaker distribution channels then that of other competitors. Where as other national private bank like The City Bank have branches in most of the district cities.
  • The high charges and bound facility discourage the mid level businessman.
  • Customer service has some dissatisfaction to the client.


  • Regularity environment favoring private sector.
  • Increased broad money supply in the Bangladesh market, which in turn increase the investment.
  • Growth in export, import and remittance will definitely increase the business opportunity for Social Islam Bank Ltd.
  • Newly targeted market for Social Islam Bank Ltd is the upper middle class sector, which is growing recently? Again this sector more aware about financial services and understand the significance better.
  • The population of Bangladesh is continuously increasing at a rate of 7.3% per annum. The country’s growing population is gradually and increasingly learning to adaptation of consumer finance. As the bulk of our population is middle class, different types of products have very large and easily pregnable market.
  • The activity in the secondary financial market has direct impact on the primary financial market. Investment is a national socio- economic activity and such activity in the national economy controls the bank.
  • Bangladesh has a huge consumer base for maintaining several accounts. So Social Islam Bank Ltd has the opportunity to keep these customers by reducing its current fees and charges and positioning attractively in middle class segment.
    • More Branches around Dhaka and all over Bangladesh will enable Social Islam Bank Ltd to capture more market share, hold a stronger competition against local banks.


  • Increased competition for market share in the common banking area and other financial institution and quasi-banking services, followed by the emerging trend of leasing companies.
  • Competitive rivalry within industry.
  • Increased provisioning requirement and increased paid up capital maintenance requirement.
  • Price-cutting due to the unfair and hostile competition, i.e., market pressure for lowering of lending rate.
  • Deep and frequent exchange rate fluctuation negatively impacting on import and export business of all the clients.
  • Political acrimony and frequent strike and pervasive nature of corruption.
  • Inefficient and unstructured legal system.
  • Social Islam Bank Ltd should continuously improve its customer service strategies and the overall service quality needs to win the customer satisfaction undoubtedly.
  • Multinational banks may merge with local banks to provide good services.
  • Large network of the established local banks.

The total picture of mobilizing and recovering loans and advances are very poor for the NCBs in our country. But Social Islam Bank Ltd, state owned bank has changed the scenario remarkably. The amount of classified loans is reducing year after year. Now it is little over 4.5% that are within the world standard. Foreign Exchange Branch has also a noted picture for the same. Only one (1) loan is defaulted (Outstanding amount is about 14 Lac.) out of Tk. 26 crore loan outstanding. The percentage is 0.53%. Even after there are some loop holes in disbursing and monitoring loans and advances. These are as follows –

1.     Interest rates for different types of loans and advances vary to different customers. A prospective customer is allowed to take credit facilities at a lower interest rate. Again, the interest rate is charged at a higher rate to a customer who is not so prospective. So, the bank officials to create positive attitude to the clients should ban discriminatory attitude.
2.     Lending Risk Analysis (LRA) is done in the Head office, it is not given due weight in case of loan disbursement. They think it is not such a helpful method to judge the client because of its subjectivity. But it is not true. Actually this comes from ignorance to some extent. So, LRA should be done in appropriate considering the importance of the same.
3.     Sensitivity analysis is an effective method in appraising the project. HO does so by considering lowering capacity utilization as well as sales price. Market is very sensitive. At any time product price may increase due to increasing cost of raw materials, unavailability of supplies, and so on. So, it should do the same by increasing the sales price.

4.     Loan monitoring & follow-up is a continuous process. But it is not followed in due manner. Monitoring the loans by on-site as well as off-site supervision helps the banker to build banker-customer relationship. So, it should give importance on the same.

During the three months practical orientation program at Foreign Exchange Branch, almost all the desks have been observed more or less. This Practical orientation program, in first, has been arranged for gaining knowledge of practical banking and to compare this practical knowledge with theoretical knowledge. Comparing practical knowledge with theoretical involves identification of weakness in the branch activities and making recommendations for solving the weakness identified. Though all departments and sections are covered in the internship program, it is not possible to go to the depth of each activities of branch because of time limitation. However, highest effort has been given to achieve the objectives the internship program. After evaluating the whole company thoroughly and by considering the overall industry and competitors I would like to conclude that Social Islami Bank Ltd has been successfully created a brand image in the market and is maintaining a strong position in the market. I had the opportunity to work for this banking giant during my internship program. I was placed at the Foreign Exchange Department of Social Islam Bank Ltd Foreign Exchange branch Office, Mothijil, Dhaka. During this time I got an opportunity to observe the overall service process of Social Islam Bank Ltd corporate banking division. I also got the scope to interact with customers and reveal their expectations and perceptions about the bank’s services.

Being the current market leader of local commercial bank Social Islam Bank Ltd has much more potential to explore the existing market and utilizing intelligent promotional campaigns they can come over the obstacle of limited loyal customer base and can increase growth of the profit successfully. So to be the number one forever they have to be very perfect in their business and not allow the customers to find any weakness in their service. So they should always be competitive, technologically advanced and be creative in the business to maintain this position or to do even better then this Finally, I would say that this internship at Social Islam Bank Ltd has increased my practical knowledge of Business Administration and made my BBA education more complete and applied. In this report I got the opportunity to apply various tools and concepts I learned in my BBA courses. Some such courses were Strategic Marketing, Strategic Management, Services Marketing, Consumer Behavior, etc. I look forward to work as a permanent employee of the local banking giant.

Annual Report of Social Islami Bank Limited, 2007.

Social Islami Bank Limited working manual for Foreign Exchange Departments.



 Theory and Practice of Banking (B-101), BangladeshInstitute of Bank Management, Dhaka, 2000.

 Andley, K. K & Mattoo, V. J., Foreign Exchange Principles and Practices, Sultan Chand & Sons, New Delhi, 1996.

 Balchandran, P., Foreign Exchange: A Mannual for Managers, Skylark Publications, New Delhi, 1991.

 Chakraborty, P., The Negotiable Instrument Act, 1881, Swarna Prokashani, Dhaka.

 Choudhury, T. A., An Overview of Banks and Their Services, Reading Materials on Banking Service.

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