Foreign Exchange Operation of Dhaka Bank Limited

This report is to provide a general description of the initial and present status on Foreign Exchange Operation of Dhaka Bank Limited. Other objectives are analysis the remittance business policy of Dhaka Bank with other banks and analysis the foreign exchange rules and regulations provide by Bangladesh bank. Finally find out the strengths, weaknesses, opportunities and threats of the foreign exchange operations of DBL.

Scope of the Study

‘Dhaka Bank Limited (DBL) is a private commercial Bank in Bangladesh. ‘Dhaka Bank Ltd.  is one of the largest and oldest private-sector commercial bank in Bangladesh, with years of experiences. It has many branches all over the Bangladesh through which it carries out all its banking activities. This report mainly focuses on Foreign Exchange Activities of Dhaka Bank Limited. For the purpose of my Research program, I am going to the ‘Dhaka Bank Limited (DBL), Dhaka Bank provides me the way to get myself familiarized with banking environment. I have an opportunity to gather experience by going Foreign Exchange Branch of DBL.

Objective of the research

The study assign for two objectives. The objectives are:

Primary Objective:

This report is to provide a general description of the initial and present status on Foreign Exchange Operation of Dhaka Bank Ltd.

Secondary Objectives:

The following aspects can be listed as the specific objectives for this practical orientation in ‘Dhaka Bank Limited:

• To know about operation procedure of Foreign Exchange Activities of ‘Dhaka Bank Limited.

• To understand the remittance business policy of DBL with other banks.
• To find out the internal and external lacking in the operation that would help to ‘Dhaka Bank for more progress.
• To formulate alternative strategies for solving the problems.
• To know about the foreign exchange rules and regulations provide by Bangladesh bank.
• To find out the strengths, weaknesses, opportunities and threats of the foreign exchange operations of DBL.

Methodology:

For smooth and accurate study everyone have to follow some rules and regulations. The study impute were collected from two sources.

Primary data

I have collected primary information be interviewing employees, officers by the process assigned by DBL, observing various organizational procedures, structures, directly communicating with the customers. Primary data were mostly derived from the discussion with the employees and personal experience during Research period. Primary information is under consideration in the following manner:

• Face to face conversation with officer
• Direct observations
• Face to face conversation with client.

Secondary Data

I have taken the help of different types of secondary data in my report. The sources of those data can be categorized as follows:

Internal Sources

• DBL’s Annual Report
• Different wise operational manual of the bank.
• Prior research report

External Sources

• Different books and periodicals related to banking sector
• Bangladesh bank report
• Related links available in the Internet.

Problems:

DBL is providing service with its branches. All the branches are doing general banking and also doing foreign exchange operation. But most of the branches plays significant role in the international trade of DBL. Import , Export and foreign remittance are three sections of foreign exchange operation. Foreign exchange operation of DBL is not satisfactory compared with the expectation. Foreign exchange transation depends on some issues among them enough skilled manpowr , technological advancement , foreign correspondence, marketing policy and working environt is important. The entire essential sector was stable without developing due to the improper decision of management. Some branches are not achieving  Foreign exchange operation terget. Volume of import, export and foreign remittance are not equal every year. This report will mainly focus on finding out the issues that to be solved to increase the overall Foreign exchange operation of DBL.

History of ‘Dhaka Bank ltd

‘Bangladesh economy has been experiencing a rapid growth since the ’90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers’ remittance, local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to make channel consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to respond to this need and established Dhaka Bank Limited in the year 1995.

The Bank was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 100 million. The paid up capital of the Bank stood at Tk. 1934 million as on 31 December 2008. The Shareholders’ Equity (capital and reserves) of the Bank as on 31 December, 2008 stood at Tk.4808 million, including the sponsor’s capital of Tk. 338 million.

The Bank has 44 branches including two Shariah-based branches and an offshore Banking Outlet across the country and a wide network of correspondents all over the world. The Bank has plans to open more branches in the current fiscal year to expand the network. The Bank offers the full range of banking and investment services for personal and corporate customers, backed by the latest technology and a team of highly motivated officers and staff.

In its effort to provide Excellence in Banking services, the Bank has launched fully automated Phone Banking service, joined a countrywide-shared ATM network and has introduced a co-branded credit card. A process is also underway to provide e-business facility to the bank’s clientele through Online and Home Banking solutions.

Vision

To be the best private commercial bank in Bangladesh in terms of efficiency, assets competence, “At Dhaka Bank, we draw our inspiration from the distant stars. Our team is committed to assure a standard that makes every banking transaction a pleasurable experience. Our endeavor is to offer you razor sharp sparkle through accuracy, reliability, timely delivery, cutting edge Technology and tailored solution for business needs, global reach in trade and commerce and high yield on your investments.” Our people, products and processes are aligned to meet the demand of our discerning customers. Our goal is to achieve a distinction like the luminaries in the sky. Our prime objective is to deliver a quality that demonstrates a true reflection of our vision – Excellence in Banking.

Mission

The bank has some mission to achieve the organizational goals. Some of them are as follows:-

“To be the premier financial institution in the country providing high quality products and services backed by latest technology and a team of highly motivated personnel to deliver Excellence in Banking.”

Goal and Objectives of the Organization

Goal of the Organization

Dhaka Bank will be the absolute market leader in the number of loans given to small and medium sized enterprises through out Bangladesh. It will be a world-class organization in terms of service quality and establishing relationships that help its customers to develop and grow successfully. It will be the Bank of choice both for its employees and its customers, the model bank in this part of the world.

Objectives of the Organization

• Their objectives are to conduct transparent and high quality business operation based on market mechanism within the legal and social framework.
• Their greatest concerns are to provide their customers continually efficient, innovative and high quality products with excellent delivery system.
• Their motto is to generate profit with qualitative business as a sustainable ever-growing organization and enhance fair returns to the shareholders
• Establish DBL as one of the top five successful Private Commercial Banks by 2010
• Be committed to the community as a corporate citizen and contribute towards the progress of the nation
• Build a strong deposit base
• Introduce new products & services and upgrade existing products & services at comparatively low cost in order to assure quick respond to the changing demands in the market
• Promote the well being of the employees and raise their morale
• Strengthen corporate identity and values
• Fullfillment of their responsibility to the government by paying taxes and abiding by other rules
• Bring the entire system under a very advanced IT platform
• Socialize and present the bank to the community as a corporate partner
• Encouraging and motivating the new entrepreneurs to establish industries and business in line with development of national economy
• Enhancing savings tendency of the people by offering attractive and lucrative new savings scheme.
• Financing the foreign trade of the country both Export and Import.
• Enhancing the mobilization of savings both from urban and rural area.

The prime objective of DBL is to deliver a quality that demonstrates a true reflection of their vision-Excellence in Banking. Improve the quality of lone and services, and diversify the sources of revenu

• Focus on Current, Savings & Short Term Deposit Accounts to reverse the ratio (26:74) with Fixed Deposit Receipt.
• Take immediate action required to reverse the rise of Cost of Fund.
• Increase fee based income: increase volume & fee of Letter of Credit & Guarantee, increase export and exchange earnings.
• Reduce operating cost by at least 20%

Product and Service offerings by Dhaka bank Limited

Products:

Personal Banking Products:

1. Personal Loan;
2. Car Loan;
3. Vacation Loan;
4. Any Purpose Loan;
5. Different Deposit Schemes;
6. Uttaran Consumer-Credit Scheme;
7. Monthly Saving Scheme (MSS);
8. Monthly Benefit Scheme (MBS);
9. Double Growth Deposit Scheme.

Services:

As a financial service institution, DBL provides the following services to its clients:

• Personal Banking
• Corporate Banking
• Capital market services
• SME services
• Telephone and Internet Banking
• Islamic Banking
• ATM Card Services
• Credit Card Services
• Locker Services

Foreign Exchange

Foreign Exchange Department is a very important part of Dhaka Bank Ltd. Foreign Exchange mainly Deals with Import, Export, & Foreign remittance. Foreign exchange is an International Department of the bank, It facilities international trade through its various modes of service. It is a bridge between Importers and Exporters. If the branch is an Authorized Dealer in foreign Exchange Market it can remit Foreign Exchange local country to foreign country.

Bank Branch should be Authorized dealer, with due approval from Bangladesh Bank to run foreign Exchange transaction. According to Bangladesh Bank Law the payment must be receipt within 120 days.

This department is playing an important role in enhancing Export earning, which aids Economic Growth and intern it helps for the economic development. On the other hand, it also helps meet those goods and service which are more demandable and not adequate in our country.

Functions of Foreign Exchange Department DBL.

Import:

• Opening of Letter of Credit (L/C)
• Advance bills.
• Import loan and guarantees.

Export:

• Pre-shipment advances
• Purchase of foreign bills
• Negotiating of foreign bills
• Export guarantees
• Advising/confirming letters-letter of credit
• Advance for deferred payments exports
• Advance against bill for collection.

Remittance:

• Issue of DD, MT, TT etc.
• Payment of DD, MT, TT etc.
• Issue and enhancement of traveler’s cheque.
• Sale and enhancement of foreign currency notes.

Documentary Credit/ Letter of Credit (L/C)

Documentary Credit or Letter of Credit is nothing but a letter of assurance of payment. This assurance of payment is made by the bank. It is an arrangement under which the bank the request of the buyer undertakes to make payment to the seller provided specified documents are submitted. Documentary Credit is an arrangement whereby a bank (issuing bank) acting at the request and on the instruction of a customer (the applicant) or on its own behalf undertakes to make payment to or to the order of a third party (the beneficiary) or to accept and pay bills of exchange (draft) drawn by the beneficiary, or authorize another bank to negotiate against stipulated documents provided the terms and conditions to the credit are compiled. Thus, Documentary Credits are similar to bank guarantees. In popular language, they are known as Letters of credit (L/Cs). Bank guarantees are however, issued to cover situation of non-performance whereas documentary credits are issued on behalf of the buyer to cover situation of performance, i.e., the issuing bank agrees to make payment to the beneficiary once he surrenders the requisite complying documents. Thus, Documentary Credit offers a unique and universally used method of achieving a commercially acceptable arrangement by providing for payment to be made against complying documents that represent the goods and making possible the transfer of those goods. The Uniform Customs and Practices for Documentary Credit (UCPDC) published by International Chamber of Commerce (1993) revision, publication no. 500 define Documentary Credit.

Legal Framework

Foreign Exchange Business is a crucial and complex business all over the world. Fraud and forgery may arise in every sphere of this business. To overcome those misshapenning and to settle international disputes, a legal framework is a must. An apex body is doing these functions named International Chambers of Commerce (ICC). The publication made by the ICC is treated as compulsory law for each and every country. Among many publications, publications no. 500 is related to L/C opening and such other purposes.

Forms of Documentary Credit

1) Revocable Credit

A revocable credit is one where the issuing banks at liberty to revoke i.e. cancels the credit at any time. According to UCPDC, a revocable credit may amend or cancelled by the issuing bank at any moment and without prior notice to the beneficiary before shipment of consignment against the L/C.

2) Irrevocable Credit

An irrevocable L/C is one, which cannot be revoked, amended or modified by the bank with the concurrence of the interested parties.

Documents Used in L/C Operation

The most commonly used documents in foreign exchange are –

• Bill of Exchange
• Bill of Lading
• Commercial invoice
• Certificate of origin
• Inspection certificate
• Packing list
• Insurance document
• Pro Forma Invoice (PI)/Indent.

Parties Involved in the Process of Letter of Credit

• 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

Import Documents need in credit operation:

Wide-ranging changes and expansion in the world trade owing to the process of evaluation in the globalization and free market economy have facilitated free flow of goods, which result in world wide trade competition. Import is foreign goods and services purchased by consumers, firms and Govt. in Bangladesh.

Import Procedure:

Import in to Bangladesh made by two ways.

1. Opening L/C
2. Without opening L/C

Opening L/C

Import by way of opening L/C requires fulfilling the following criteria in case of private sector Importers:

• Must be a customer account holder
• Importer having valid IRC (Issued by CCI & E)
• Valid Trade License
• Valid Membership Certificate of Local Chamber of Commerce or related Association.
• Income Tax clearance Certificate/Declaration of submission of Returns & TIC Certificate.
• VAT Registration Certificate.
• L/C Application
• Valid Indent/ Proforma Invoice/ Contract etc.
• Insurance Cover Note.
• LCAF duly sealed & signed.

Without opening L/C

Import in to without opening L/C made in the following case against LCAF.

• Books, Journal, Magazines, Periodicals against sight Draft Bills.
• Any important item by making payment from Bangladesh to the tune of maximum $25000 in a year.
• The item allowed by the Aid/ Loan/ Grant.
• Import of early perishable food items valuing $10,000 to $15,000 per consignment through Teknaf land port and $5000 to $7500 per consignment for import through other land ports. Capital Machineries and industrial raw materials without any value limit. In these cases LCAF must be registered with Bangladesh Bank.

• Import from Myanmar to $5000 per single consignment, here the condition of one    year is not applicable.
• International Chemical reference by the Registered Allopathic Industrial Unit with the approval of Director, Drug Administration.

Export Documents need in credit operation:

In order to creation of wealth, any country depends on the expansion of production and increasing participation in international trade. By increasing production in the export sector we can improve the employment level of such highly populated country like Bangladesh. Readymade textile garments (both knitted and woven), jute, jute made products, frozen shrimps, tea are the main goods that Bangladeshi exporters export to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to U.S.A. and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. most of the exporters who export through DBL are readymade garments. They open export L/C here to export their goods, which they open against the import L/Cs opened by their foreign importers.

Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter. UBL also has the capacity to support the exporters of businessman’s in Bangladesh.

Export Procedure:

The imports and exports trade in our country is regulated by the Imports and Exports control Act, 1950. If any importer or exporter contravenes any of the Act or any order made under this Act is punishable with imprisonment for a term, which may extend to one year or with fine or both. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. These formalities or procedures are enumerated as follows:

Obtaining exporter Registrations Certificate (ERC):

No exporter is allowed to any commodity permissible for export from Bangladesh unless he is registered with Chief Controller of Imports And Exports (CC I & E) and holds valid Export Registration Certificate (ERC). After applying to the CC I & E in the prescribed from along with the necessary papers, concerned offices of the CC I & E issues ERC. Once registered, exporters are to make renewal of ERC every year.

Securing the Order:

After getting the ERC the exporter may proceed to secure the export order. He/ She can do this by containing the buyers directly or through agent.

Obtaining EXP:

After having the registration, the exporter applies to DBL with the trade license, ERC & the certificate from the concerned government organization to get EXP. If the bank is satisfied, then EXP is issued to the exporter.

Signing of the contract:

After communicating with buyer the exporter has to get contracted for exporting exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and mark, inspection, arbitration etc.

Receiving the Letter of credit:

After getting contract for sale, exporter should ask the buyer for L/C clearly stating terms and conditions of export and payment. After receiving L/C, the following points are to be looked for:

• The terms of the L/C are in conformity with those of the contract.
• The L/C is an irrevocable one, preferably confirmed by the advising bank.
• The L/C allows sufficient time for shipment and a reasonable time for registration.
• If the exporter wants the L/C to be transferable, divisible and advisable, he should ensure those stipulations which are specially mentioned in the L/C.

Procuring the materials:

After making the deal and on having the L/C opened in his favor the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise.

Endorsements on EXP:

Before the export forms are lodged by the exporters with the customers, they should get all the copies endorsed by UBL. Before shipment, exporter submits EXP. From with commercial invoice. Then DBL officer check it properly, if satisfied certified the EXP. Without it exporter cannot make shipment. The customer must declare all exports good on the EXP issued by the authorized dealers.

Shipment of Goods:

Exporter makes shipment according to terms and condition of L/C.

• EXP (It must be certified by the bank then by the custom authority).
• Photocopy of the registration Certificate.
• Photocopy of Contract
• Photocopy of L/C
• Railway Receipt, Barge Receipt or Truck Receipt.
• Shipping Instruction.
• Insurance Policy.

Presentation of Export document for negotiation:

After shipment, exporter submits the documents to DBL for negotiation are bill of exchange or draft, Bill of lading, Invoice, Insurance Policy, Certificate of origin, Inspection Certificate, Consular Invoice, Packing List, Quality Control Certificate etc.

Examination of Document:

As the negotiating bank is giving the value before repatriation of the export proceeds it is advisable to analyze and examine each and every document with great care whether any discrepancy is observed in the documents. The bankers are to ascertain that the documents are strictly as per the terms of L/C before negotiation of the export bill. Bank officers assigned for examining the export documents may use a checklist for their convenience.

Negotiation of export documents:

Negotiation of stands for payment of value to the exporter against the documents stipulated in the L/C. If documents are in order, DBL purchase the same of the basis of banker customer relationship. This is known as Foreign Documentary Bill Purchase. If the bank is not satisfied with the documents submitted to DBL, gives the exporter reasonable time to remove the discrepancies or sends the documents of L/C opening bank for collection. This is known as Foreign Documentary Bill for Collection.

Foreign Remittance

Dhaka Bank is the Authorized Dealer (AD) to deal in foreign exchange business, as an authorized dealer. Bank must provide some services to their clients regarding foreign exchange and this department provides the service of remitting foreign currency from one country to another country. In the process of providing this remittance service it sells and buys foreign currency, the conversation of one currency into another takes place at an agreed rate of exchange.

Foreign Currency Remitting Procedures:

There are two types of remittance. These are:

1. Inward Remittance.
2. Outward Remittance.

Inward Remittance:

Inward remittance covers purchase of foreign currency in the form of foreign Telegraphic Transfer (T.T), Demand Draft (DD) and Bills & Travelers Cheque, Export Bill etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange Control Department of Bangladesh Bank from Letter of Credit (L/C). These are the formal channel of receiving inward remittance. A local Bank also receives indenting commission of local firm also comes under purview of inward remittance.

Outward Remittance:

Outward remittance covers sales of foreign currency by Authorized Dealer (AD) or formal channel through issuing foreign telegraphic Transfer (T.T), Demand Drafts (D.D), Traveler’s Cheque etc. as well as sell of foreign exchange under L/C and against Import Bills retired. The demonstrate utmost caution to ensure that foreign currencies remitted or released by them are used only for the purpose for which they are released. Most outward remittance is approved by the authorized dealer on behalf of Bangladesh Bank.

Findings & Analysis

Import

Import Position is(2October – 29 December 2011)) here we see May 2011 Month Import is $65,000, and June-2011 is decrease in $62,000, and July-2011 is again Increase is more then $120,000 those are given below:

Table: Last three months Incoming Remittance on Import

 Here we see the Upward is last three months, so we can say that this situation is better for the Dhaka Bank Ltd,

Export

Export position is last three months (2October – 29 December 2011) here we see October 2011 Export is $15,500, and November-2011 is increase in $23,500, and December -2011 is again Increase is more then $24,000 those are given below:

Table: Last three months Incoming Remittance on Export

Here we see the Upward is last three months, so we can say that this situation is better for the Dhaka Bank Ltd,

Foreign Remittance 

From (2October – 29 December 2011) here Head Office Mail is Maximum Remittance is come to our country and it is 95 Remittance, and X-press money is 17, Money Gram- 48, IME is 6, Placid is 15, Trans fast 5, ARY speed Remit 1.

Trend analysis of Import business in DBL.

The important value of import stood at Tk.29614.5 million in 2010 compared with the volume of Tk.29129.3 million in 2009.Tk 31146.9 in 2008, Tk 25407.9 in 2007, Tk 22603.7 in the year of 2006.

Table: Last Five years Import Business

The analysis of import business in Dhaka Bank Ltd. in last five years we see the above graph, the total import business is gradually increased in year 2010 at Tk. 29614.5 million comparisons with the pervious year 2009 at Tk. 29129.3 million. Where 2009 the export business was decreased then the 2008. In 2008 carry on the highest performance of import business in last five years at Tk. 31146.9 million.

Trend analysis of Export business in DBL.

Export however, Tk.12986.7 million in the year 2010. Tk. 15096.9 million in 2009. Tk. 15030.6 million in 2008, Tk. 14784.5 million in 2007, Tk 18133.9 million  in the year of 2006.

Table: Last Five years Export Business

The analysis of export business in DBL, in last five years we see the above graph, the total export business is declined in year 2010 at Tk. 12,986.7 million comparisons with the pervious year 2009 at Tk. 15,096.9 million. Where 2009 the export business was increased then the 2007 and 2008. In last five years the highest level of export business was Tk. 18,133.9 million in 2006.

Trend analysis of Foreign Remittance Business in DBL.

In foreign Remittance in DBL has last 5 years 2006 to 2010 year is. Tk 28728.1 in 2010, Tk 29575.3 in 2009, Tk 36073.2 in 2008, Tk 44635.30 in 2007, Tk. 43200.7 in 2006.

Table: Last five years Foreign Remittance Business

Dhaka Bank ltd. has been able to remit foreign currency in 2010 through its foreign correspondents and exchange houses. The volume of foreign remittance in the year 2010 stood at Tk. 28,728 million as compared to Tk.29, 575 million in the pervious year 2009. Hear we can see the total earning foreign remittance in 2010 is decrease then the year 2009.

Composition of Foreign Exchange Business of 2010

Here we can see that the huge percentage of import business is related to the Foreign Exchange operation of UBL Local office Dhaka. The above graph shows that the total foreign exchange business import business is covered the 50%, export covers 31% and foreign remittance covers 19% out of 100% foreign exchange business.

SWOT Analysis

SWOT analysis is an important tool for evaluating the company’s Strengths, Weaknesses, Opportunities and Threats. It helps the organization to identify how to evaluate its performance and scan the macro environment, which in turn would help organization to navigate in the turbulent ocean of competition.

Strengths:

• Strong corporate identity

According to the customers, DBL is the leading provider of financial services identity Worldwide. With its strong corporate image and identity, it has better positioned itself in the minds of the customers. This image has helped DBL grab the personal banking sector of Bangladesh very rapidly.

• Strong employee bonding and belongings

DBL employees are one of the major assets of the company. The employees of DBL have a strong sense of commitment towards organization and also feel proud and a sense of belonging towards DBL. The strong organizational culture of DBL is the main reason behind its strength.

Efficient Performance

It has been seen from customers’ opinion that DBL provides hassle-free customer Services to its client comparing to other financial institutions of Bangladesh. Personalized Approach to the needs of customers is its motto.

• Empowered Work force

The human resource of DBL is extremely well thought & perfectly managed. As from the very first, the top management believed in empowering employees, where they refused to put their finger in every part of the pie. This empowered environment makes DBL a better place for the employees. The employees are not suffocated with authority but are able to grow as the organization matures.

• Hospitable Working Environment

All office walls in DBL are only shoulder high partitions & there is no executive dining room. Any of the executives is likely to plop down at a table in its cafeteria & join in a Lunch, chat with whoever is there. One of the employees has said,

• Strong Financial Position

It has been seen that the net profit has been gradually rising over the years. Furthermore, DBL is not just sitting on its previous year’s success, but also taking initiatives to improve.

Weaknesses

• High charges of L/C

Presently DBL charges same rates for all types of import L/C. But for import L/C of exports-oriented industry, DBL should reduce the charge of L/C. As a result, exporter will be benefited and the country will earn more foreign exchange. The commission often even rises up to 30%.

• Discouraging small entrepreneurs

DBL provides clean Import Loan to most of its solvent clients. But they usually do not want to finance small entrepreneurs whose financial standing is not clean to them.

• Absence of strong marketing activities

DBL currently don’t have any strong marketing activities through mass media e.g. Television. TV ads play vital role in awareness building. DBL has no such TV ad campaign. Although they do a lot of CSR activities compared to other banks.

• Not enough innovative products

In order to be more competitive in the market, DBL should come up with more new attractive and innovative products. This is one of the weaknesses that DBL is currently passing through but plans to get rid of by 2010.

• Diversification

DBL can pursue a diversification strategy in expanding its current line of business. The management can consider options of starting merchant banking or diversify it to leasing and insurance. As DBL is one of the leading providers of all financial services, in Bangladesh it can also offer these services.

• Lack of Proper Motivation

The salary at DBL is very decent, but it lacks other sorts of motivation. Incentives such as bonuses are given for acquiring a particular figure, but all in all these are the only motivational factors.

• High Cost for maintaining account

The account maintenance cost for DBL is comparatively high. Other banks very often highlight this. In the long run, this might turn out to be a negative issue for DBL.

• Outdated Software and Hardware at DBL

Some of the PCs in this branch have very outdated hardware which is very slow and affects the customers and hence the performance of the bank as a whole. The softwares themselves are pretty old – Flexcube is from 2003, Microsoft Office XP is used. All of these prevent smooth operations.

Opportunities

• Distinct operating procedures

Repayment capacity as assessed by DBL of individual client helps to decide how much one can borrow. As the whole lending process is based on a client’s repayment capacity, the recovery rate of DBL is close to 100%. This provides DBL financial stability & gears up DBL to be remaining in the business for the long run.

• Country wide network

The ultimate goal of DBL is to expand its operations to whole Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase DBL’s profitability but also will secure its existence in the log run.

• Experienced Managers

One of the key opportunities for DBL is its efficient managers. DBL has employed experienced managers to facilitate its operation. These managers have already triggered the business for DBL as being new in the market.

• Huge Population

Bangladesh is a developing country to satisfy the needs of the huge population, a large amount of investment is required. On the other hand, building EPZ areas and some Govt. policies easing foreign investment in our country made it attractive to the foreigners to invest in our country. So, DBL has a large opportunity here.

• El Dorado Program

It is software which enables customers to deposit and withdraw money from any bank with the cheque or deposit of any other bank. Although a select few has implemented this program, this poses as an opportunity for DBL as the number of transactions would drastically increase.

• Bigger Market

Although the GDP per head decreased a bit in 2009 from 2008, there is a huge untapped market that requires loans and intends to deposit also.

Threats

• Upcoming Banks/Branches

The upcoming private, local, & multinational banks posse’s serious threats to the existing banking network of DBL: it is expected that in the next few years more commercial banks will emerge. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against and win the battle of banks.

• Similar products are offered by other banks

Now-a-days different foreign and private banks are also offering similar type of products with an almost similar profit margin. So, if all competitors fight with the same weapon, the natural result is declining profit.

• Default Loans

The problem of non-performing loans or default loans is very minimum or insignificant. However, this problem may rise in the future thus; DBL has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem.

• Industrial Downturn

Bangladesh is economically and political unstable country. Flood, draught, cyclone, and newly added terrorism have become an identity of our country. Along with inflation, unemployment also creates industry wide recession. These caused downward pressure on the capital demand for investment.

• Financial Crisis

Although people have recovered a bit from the shock, it may still pose as a threat. People are still hesitant to take loans or even deposit them.

Findings

After the collection and analysis of data I have got some findings. This findings are completely from my personal point of view. Those are given below:

• Toward the growth and economic development of DBL is playing an important role.
• Foreign remittance department are very strong and they provide remittance service very quickly and shortest possible time.
• The bank has no bad debt in foreign exchange branch. Because the credit analysts have a strong background in accounting financial statement analysis, business law and economics along with good negotiating skils.
• As the bank uses some modern technolohy. So their service is better than most of the bank.
• The controlling officers are effective in providing necessary guidance and support to the branch.
• The strategy and policy making is effective of branch manager . So in spite of intensity of banks , the bank has possessed its place in the competition.
• Employees are loyal to the organization but they need training for providing better service.
• The software used by the DBL-“Pc bank 2000” is not updated. It is easy to handle but contains some flaws.
• Volume of import, export and foreign remittance are not equal every year.
• The liquidity & profitability condition of the foreign exchange corporate branch is standard.

Recommendations

Dhaka Bank Limited is one of the oldest and leading privet commercial Bank in Bangladesh,. DBL passed long time for their banking life, in those years they struggle with the economic environment, social and political environment. The performance of a Banks today competitive business is important. Just few years ago the number of bank was very small. So the competition was not a strong as its today. Things have changed with the emergence of many new banks now the Customers have option to take the one that the best so the current banking business situation is simply highly competitive.The author had the practical exposure in DBL for last five years, it is not so easy to recommend. Some suggestion to enhance the performance level of the organization. He has ovserved some shortcomings regarding operational and other aspects of their banking. On the basis of his observation , he would like to present the following recomandations-

• The number of customer is increasing. To keep the commetment DBL must increase its manpower so that customer gets their result without wasting time.
• DBL should take necessary action to motivate its officers to encourage them to work hard to make them believe that they are also a part of the team and the bank does think about them.
• DBL should attract new corporate clients to operate its foreign exchange operation effectively.
• Foreign exchange operation should be more organized. The export and import divisions should be separated.
• The bank should be more service orieented as society oriented.
• DBL should properly concentrate on its financial leverage, because it fluctuates year by year.
• DBL must keep pace with their growing customer needs in the ever changing world.Customers now demand not only a high interest but also faster and better service.

Conclusion

Dhaka Bank Ltd.  is one of the largest and oldest private-sector commercial bank in Bangladesh, with years of experiences. It has 52 branches all over the Bangladesh through which it carries out all its banking activities. Many customers are not aware of all sort facilities provided by DBL. But they need to immediately focus on their problematic areas.

DBL has some problems but it is encouraging that they are trying to overcome these obstacles. To keep pace with the current demand DBL should be more responsive. It should take necessary steps & spread over their products all over the country.

In the other words, foreign remittance inflow of a developing country like bangladesh has greater impact on the economy of the country. The trend of remittance inflow shows that the remitting amount is gradually increasing through years, which is a positive sign for the country.

DBL is involved with both the form transations of inward and outward remittence processing service. DBL is trying their level best to increase the flow of remittance through banking channel although the major threats of DBL such as competitive environment, entrance of new commearcial banks, high standard customer service provided by the foreign bank, politicsl instability in the country etc may hinder to reach the goal.

Thus it is expected that the foreign exchange banking activities and performance of DBL will be increased day by day and it will achieve more popularity among the people in future.