Foreign Exchange Operation of First Security Islami Bank

Main objective of this report is to analysis Foreign Exchange Operation of First Security Islami Bank Limited. Other objectives are analysis import and export sector of Bangladesh and find out the contribution in remittance of FSIBL. Report also focus on General banking, Credit Operation and Foreign Exchange of FSIBL. Finally discus financial statement and credit appraisal system of FSIBL.

Objectives of the study

The main objective of education is to acquire knowledge. To acquired knowledge ultimately we must do some practical application in addition to theoretical knowledge. Through this report, I tried my level best present my practical knowledge as well as to find out-

• Draw a general picture of foreign exchange operations in FSIBL
• The views of import & export sector of Bangladesh through FSIBL
• Find out the contribution in remittance of FSIBL

Overview of the First Security Bank

Introduction

First Security Islami Bank Limited ( FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. The Bank carries banking activities through its Fifty two(52) branches in the country. The commercial banking activities of the bank encompass a wide range of services including accepting deposits, making loans, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, acceptances and letter of credit.

Vision of the Bank

To be the unique modern Islami bank in Bangladesh and to make significant contribution to the national economy and enhance customer’s trust and wealth, quality investment, employee’s value and rapid growth in shareholder’s equity.

Mission of the Bank

The bank has chalked out the following corporate objectives in order to ensure smooth achievement of its goals:

• To be the most caring and customer friendly and service oriented bank.
• To create a technology based most efficient banking environment for its customers.
• To ensure ethics and transparency in all levels.
• To ensure sustainable growth and establish full value of the honorable shareholders and
• Above all, to add effective contribution to the national economy.

Objectives of the Bank

The objectives of the FSIBL are given below:

• To provide efficient computerized banking system.
• To enhance foreign exchange operations.
• To accept deposits on profit-loss sharing basis.
• To establish a welfare-oriented banking system.
• To play a vital role in human development and employment generation.
• To contribute towards balanced growth and development of the country through investment operations particularly in the less developed areas.
• To establish participatory banking instead of banking on debtor-creditor relationship.

Performance of FSIBL

This has been appreciable improvement in the performance of the bank in all respect. As such, there has been a noticeable rise in deposits as advanced as also in foreign exchange business. Profits of the bank witnessed a marked up trend from TK. 12.17 crore in 2002 to TK.22.12 crore in 2003 showing a rise of 74.04 percent. All these have been possible due to the pursuit of pragmatic and prudential policies in overall management of the bank under the able the guidance of the board of the directors. As a part of prudential policies provision has been made for bad and doubtful loans to the tune of  TK. 8.64 crore against lone classified during 2003.

Credit Rating Agency of Bangladesh (CRAB) has given BBB 3 (pronounced triple B three) rating in Long Term and “ST-4” rating in Short Term to First Security Islami Bank Limited. Commercial Banks rated ‘BBB’ have adequate capacity to meet their financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead the Banks into a weakened capacity to meet their financial commitments. BBB rated banks are subject to moderate credit risk. Such banks are considered medium-grade and as such may possess certain speculative characteristics. At the same time, banks rated “ST-4” in short term are considered to have below average capacity for timely repayment of obligations. Such capacity is highly susceptible to adverse changes in business, economic, or financial conditions than for obligations in higher categories.

The total deposit of the bank increased sharply by 80.56 percent from Tk. 23,504.54 million at the end of 2007 to Tk. 25,854.54 million at the end of 2008.

Financial Highlight

Source:www.fsiblbd.com

Functions of First Security Islami Bank Ltd.

The functions of FSIBL are divided into three sections these are:

1) General Banking.

3) Investment

2) Foreign Exchange.

Under these three sections FSIBL do their services. Each of this  section serves various services for satisfying  their clients.

General Banking

General department performs the majority functions of a bank. It is the core department of any bank. The activities of general banking  of FSIBL are mainly divided into the following categories:

• Account opening section
• Local remittance section
• Online branch banking section
• Deposit scheme section
• Clearing section
• Cash section
• Accounts section

Procedure of Account Opening

Account Opening (Normal Account):

• Collect an Account opening form from the Bank
• Fill all the requirements of the form.
• Nominee is must be specified.
• Photograph is most important for any account.
• The account holder sign of his/ her own self in front or the specific bank principle officer in the account opening form

Account Opening (Saving Account):

• Collect an Account opening form from the Bank.
• Fill all the requirements of the form (Must be introduced by introducer)
• Nominee is must be specified.
• Photograph is most important for any account.
• The account holder sign of his/her own self in front or the specific bank principle officer in the account opening form.
• To open this account the most important things is that Passport Photocopy or the National ID Card Photocopy must have to add with the account opening form.

3.2.c  Account Opening (Current Deposit Account):

• Collect an Account opening form from the Bank.
• Fill all the requirements of the form (Must be introduced by introducer)
• Nominee is must be specified.
• Photograph is most important for any account.
• To open this account the most important things is that Passport Photocopy or the National ID Card Photocopy must have to add with the account opening form.

Checklist of Documents to be obtained for various types of Accounts

Sole Proprietorship

1. Request letter
2. Photograph of signatories attested by introducer.
3. Copy of valid Trade License.
4. TIN Certificate.
5. Signature & photograph of each nominee

Partnership

1. Request letter
2. Photography of signatories attested by introducer.
3. Partnership Deed.
4. Partners letter of authority to open account and authorization for operation.
5. Copy of valid Trade License, TIN & VAT certificate.
6. Tenancy Agreement copy

Limited Liability Company

1. Request letter.
2. Photograph of signatories attested by introducer.
3. Copy of Memorandum and Articles of Association.
4. Copy of Certificate of Incorporation and commencement of business (In case of public Ltd. Co.).
5. Copy of Board Resolution to open the account and authorization for operation.
6. List of Directors and signatories along with addresses.

Association/Trust/Society

1. Request letter.
2.  Photograph of signatories attested by introducer.
3. Copy of Resolution of governing body to open the account and authorization for operation.
4. Copy of consolation / bylaws/ rules.
5. Certificate of registration.
6. List of authorized signatories and members of the governing bodies along with address.
7. Trust Deed (for Trust account only).

Cheque Book Issues

Types of Cheque Book’s:

• Savings Account – 10 Leaves
• Current Deposit Account – 10 Leaves
• Current Deposit Account – 25 Leaves (CDTF)

Meaning of Foreign Exchange

Foreign Exchange means currency & trade exchange say conversion of one to another. This is a part of economic & Science. This is a big deal divided into different currencies instrument such as Draft, Traveler Cheque, Bill of Exchange business including sell, purchasing of currency notes & TC etc. Currency Exchange means the conversion of one Currency in to another. The foreign exchange activities of FSBL are divided into three parts: The bank has established correspondent relationship with over 220 foreign correspondents all over the world viz. The Hong Kong and Shanghai Banking Corporation Ltd., USA Mashreq Bank Psc, UAE, Union De Banque Arabes Et Francaises, Franch and ICIC bank, and India to cater to the needs of the bank’s customers engaged in international trade. Our bank is maintaining adequate number of Nostro accounts in important currencies of the world to facilitate payments and transfer of funds. The Bank is providing excellent services to the clientele in foreign exchange and foreign trade operations through the above foreign correspondents. Foreign exchange is mainly combination of three parts. Those are given below:

1. Import
2. Export
3. Remittance

These three parts are most essential parts of Foreign Exchange Operations of FSIBL at Dilkusha branch. Not only FSIBL but also all banks of Bangladesh have maintained these rules for foreign exchange operations.

Foreign Exchange Market

Foreign Exchange market means the process where foreign currency is bought & sold. In this more that supply, currency value. Ultimately following are the features of foreign exchange market.

• Bank & client.
• Different Banks in the come foreign exchange market.
• Different Bank & Schedule Bank of the same country.
• Different Control Bank.

First Security Islami Bank Ltd. (FSIBL) is a Bank that follows the following two craters in respect & payment of foreign exchange.

• Local currency market value &
• Foreign currency market value.

How Foreign Exchange is Being Controlled

Foreign Exchange is being controlled by the following ways

• To stabilize the rate of exchange
• To protect domestic industries
• For proper implementation of plans
• To increase the bargaining strength
• To check over invoicing & Under invoicing
• To check the Blank marketing and smuggling
• For regulating the international movements of goods

Authorized Dealer Branch

Bangladesh Bank in exercise of the power under section 3 of Foreign Exchange regulation Act. 1947 issues a license to schedule bank where they have adequate trained officer/staff to deal in Foreign Exchange. The banks that are authorized dealers.

Arbitrage of Foreign Exchange

Arbitrage can be defined as simultaneous buying and selling of foreign currencies for the purposes of making profit Arbitrage is carried out mostly by banks, they keep constant watch over the latest development in the financial market of the world.

Foreign Exchange Regulation Items

Foreign exchange regulations items are given below:

• Bangladesh Bank Manual
• Foreign Exchange Circular
• Public notice
• Import and export policy gazette
• Ministry of commerce circular
• Guise line for foreign exchange regulation

Foreign Exchange Business of FSIBL

Import: The Bank’s foreign exchange business relating to import was tk.6605.40 million at the ends of December 2005.

Export: Bank’s foreign exchange business relating to export was tk.2856.40 million at the ends of December 2005.

Inward Remittance: During 2005the Bank handled inward remittance from Bangladeshi workers abroad to the tune of tk.62.21 million against 32.692 million in 2004.

Letter of credit Meaning

Letter of credit (L/C) can be defined as a “Credit Contract” whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. Since the agreed conditions include, amongst other things, the presentation of some specified documents, the letter of credit is called Documentary Letter of Credit. The Uniform Customs & Practices for Documentary Credit (UCPDC) published by international Chamber of Commerce (1993) Revision Publication No. 500 defines Documentary Credit:

Any arrangement however named or described whereby a bank (the “issuing bank”) acting at the request and on the instructions of a customer (the “Applicant”) or on its own behalf

1. Is to make a payment or to the order of a third party(the beneficiary) or is to accept and pay bills of exchange(Drafts)drawn by the beneficiary, or
2. Authorizes another bank to effect such payment or to accept and pay such bills of exchange (Drafts)
3. Authorizes another bank to negotiate against stipulated documents provide that terms and conditions are complied with.

Types of Documentary Credit

Documentary Credits may be either:

• Revocable credit.
• Irrevocable credit.

(a) Revocable credit:

A revocable credit is a credit that can be amended or cancelled by the issuing bank at any time without prior notice to the seller.

In case of seller (beneficiary), revocable credit involves risk, as the credit may be amended or cancelled while the goods are in transit and before the documents are presented, or although presented before payments has been made. The seller would then face the problem of obtaining payment on the other hand revocable credit gives the buyer maximum flexibility, as it can be amended or cancelled without prior notice to the seller up to the moment of payment buy the issuing bank at which the issuing bank has made the credit available. In the modern banking the use of revocable credit is not widespread.

(b) Irrevocable credit

An irrevocable credit constitutes a definite undertaking of the issuing bank (since it can not be amended or cancelled without the agreement of all parties thereto), provided that the stipulated documents are presented and the seller satisfies the terms and conditions. This sort of credit is always preferred to revocable letter of credit.

Parties To a letter of Credit:

The parties are:

• The Issuing Bank,
• The Confirming Bank, if any, and
• The Beneficiary.

Other parties that facilitate the Documentary Credit are:

• The Applicant,
• The Advising Bank,
• The Nominated Paying/ Accepting Bank, and
• The Transferring Bank, if any

1. Importer – Seller who applies for opening the L/C.
2. Issuing Bank – It is the bank which opens/issues a L/C on behalf of the importer.

• Confirming Bank – It is the bank, which adds its confirmation to the credit and it is done at the request of issuing bank. Confirming bank may or may not be advising bank.
• Advising / Notifying Bank – is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporters country. It may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit.
• Negotiating Bank – is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank.
• Paying / Accepting Bank – is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank.
• Reimbursing bank – is the bank, which would reimburse the negotiating bank after getting payment – instructions from issuing bank.

First Security Islami Bank certify the CIB (credit information bureau) and all agreements are made before opening L/C as a result its goods are not sold again raising the products price or reducing the product price. It sis the single deal system, Because FSIBL deal’s with the business of selling any buying, not loaning.

Some Important Documents of L/C

(a) Forwarding:

Forwarding is the letter given by the advising bank to the issuing bank. Several copies are sent to the issuing bank. All copies including original should be kept in the bank.

(b) Bill of Exchange:

According to the section 05, Negotiable Instruments (NI) Act-1881, A “bill of exchange” is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay [on demand or at fixed or determinable future time] a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. It may be either at sight or certain day sight. At sight means making payment whenever documents will reach in the issuing bank.

(c) Invoice:

Invoice is the price list along with quantities. Several copies of invoice are given. Two copies should be given to the client and the other copies should be kept in the bank. If there is only one copy, then its photocopy should be kept in the bank and the original copy should be given to the client. If any original invoice contains the custom’s seal, then it cannot be given to the client.

(d) Packing List:

Packing list is the letter describing the number of packets and there size. If there are several copies, then two copies should be given to the client and the remaining should be kept in the bank.  But if there is only one copy, then the photocopy should be kept in the bank and the original copy should be given to the client.

(e) Bill of Lading:

Bill of Lading is the bill given by shipping company to the client. Only one copy of Bill of Lading should be given to the client and the remaining copy should be kept in the bank.

(f) Certificate of Origin:

Certificate of origin is a document describing the producing country of the goods. One copy of the certificate of origin should be given to the client and the remaining copy should be kept in the bank. But if there is only one copy, then the photocopy should be kept in the bank and the original should be given to the client.

(g) Shipment Advice:

The copy mentioning the name of the insurance company should be given to the client and the remaining copies should be kept in the bank. But if only one copy is given, then the photocopy should be kept in the bank and the original copy should be given to the bank.

Form – IMP

This form is prepared for maintaining account of the money, which goes out side the country for the purpose of payment. This form is required by Bangladesh Bank. It is an application for permission under 4/5 of the Foreign Exchange Regulation Act, 1947 to purchase foreign currency for the payment of import.

Copies of IMP – Form

IMP – FORM has four copies:

1. Original copy for Bangladesh Bank.
2. Duplicate copy for authorized dealers. It is issued for processing Exchange Control Copy of bill of entry or certified invoice.
3. Triplicate copy for authorized dealers’ record.
4. Quadruplicate copy for submission to the bank in case of imports where documents are retired.

Following documents are sent with FORM-IMP

• Letter of Credit Authorization Form,
• One copy of invoice,
• Indent copy / proforma invoice.

The following information is included in the FORM-IMP:

• Name and address of the authorized dealer,
• Amount of foreign currency in words and figures,
• Names and address of the beneficiary,
• L/C Authorization Form number and date,
• Registration number of L/C Authorization Form with Bangladesh Bank, and
• Description of the goods.

Meaning of Import

Import means lawfully carrying out of anything from one country to another country for buying. It will be occurred according to the government law. First Security Islami Bank Ltd.(FSIBL)’s foreign exchange business relating to import was Tk.6605.40 million at the ends of December 2005.Ther are different years import happened by FSIBL at Dilkusha branch. Those are given bellow:

Table: Import performance from 2006 to 2008 at Dilkusha.

Classification of Import

There are Three types of import. They are given below:

• Commercial import
• Industrial import
• Import under wage

Import Mechanism:

To import, a person should be competent to be an ‘importer’. According to Import and Export (Control) Act, 1950, the officer of Chief Controller of Import and Export provides the registration (IRC) to the importer. After obtaining this, the person has to secure a letter of credit authorization (LCA) from Bangladesh Bank. And then a person becomes a qualified importer. He requests or instructs the opening bank to open an L/C.

Import procedure of FSIBL

An importer is required to have the following to import through PBL—

• Applicant has to apply for opening L/C by a prescribed form.
• Applicant has to submit the Letter of Indent or Letter of Proforma Invoice.

Letter of Indent:

Many sellers have their agent in seller’s country. If the contract of buying is made between the buyers and the agent of the sellers then Letter of Indent is required.

Letter of Proforma Invoice:

If the contract is made directly between the buyers and the sellers then     Letter of Proforma Invoice is needed.

• Applicant has to submit IRC (Indentors Registration Certificate). It is a certificate being renewed every year. This certificate is necessary if the contract is made between the buyers and the agents of the sellers. IRC is of two types – COM and IND. COM is given for commerce purpose and IND is given for industrial purpose.
• Applicant has to submit LCAF (Letter of Credit Authorization Form).
• Applicant has to submit insurance document.
• Applicant has to prepare FORM-IMP.
• Recently, there has been made a provision to give a certificate named TIN (Tax Payers Identification Number). Taxation department issues this certificate.
• Then after proper scrutiny bank will open an L/C.

While opening L/C, importer must keep certain percentage of the document value in the bank as margin

Restriction regarding source of procurement of goods

Goods from south Africa and Israel or goods orienting from these two countries shall not be importable goods shall not be importable in the flag vessel of those two countries.

Import at Competitive Rate:

Import shall be made at the most competitive rate and the importers may be required, at any time, to submit documents regarding the price paid or to be paid by them. This order shall be exempted up to TK.1.00 lac for opening L/C.

Pre-shipment Inspection:

Unless otherwise specified per-shipment inspection of imported goods shall not be obligatory in case of import by the private sector importers.

Import on CER basis:

All imports by sea air and land route shall be made on cost and freight basis, Import on free on board basis may be made strictly observing Bangladesh Bank’s circular, before opening L/C necessary insurance cover note should have to be purchased form the insure co. no import shall be allowed on CIF basis without prior approval from the ministry of commerce.

Import Authorization

Import License not required: No import license will be necessary import of any item.

Import against LCA form: Unless otherwise specified no import irrespective of the source of finance, shall be allowed exchange through submission LCA form, duly filled in, to the concerned nominated Bank.

Import against LCA form but without opening: Import against LCA form may be allowed without opening of letter of credit in the e following cases:

• Import of books, Journals, Magazines and periodicals on sight draft or essentials bill basis.
• Import of any permissible item for an amount not exceeding US$ 2500/-only during calendar year against remittance made from Bangladesh at WES rate.

Deferred Payment

 L/C may be open under deferred payment basis:

Direct Payment in Abroad: Only for Bangladeshi National who live in abroad for service. Those who are entitled to purchases the importable goods for direct payment to the beneficiary from his own service without opening any L/C, The goods must be sent to the Bangladesh.

Time limit opening L/C: Letter of credit shall be opened by all importers within 120 days from the sate of registration of LCAF with the Bangladesh Bank unless otherwise notified.

Document required to be submitted along with LCA from:

• L/C application form duly signed by the importer.
• Indent for goods issued by indenture or pro-forma invoice obtained from the foreign supplier, as the case may be end
• Insurance cover note.

Import L/C (Letter of Credit)

A letter of credit is a conditional bank undertaking of payment. In other orders letters of credit is a letter form the importer Bankers to the exporter that the bills if drawn as per terms and conditions complied with will be honored on presentation.

Classification of L/C:

1. Revocable L/C
2. Irrevocable L/C
3. Transferable L/C
4. Revolving L/C
5. Red clause L/C
6. Green clause L/C
7. Back to Back L/C

Documents submitted by the importer before opening of the L/C:

• Trade license (Valid)
• Import registration Certificate (Must kept in the bank custody )
• Passbook import
• Income tax declaration
• Membership certificate
• Memorandum of articles (in case of Ltd. Co.)
• Register deed (in case of partnership firm)

Bank will supply the following papers /document before opening L/C

• L/C application from
• IMP from
• Charge documents paper

The above paper must be completed dully filled and signed by the party and verified signature.

L/C application and procedure for opening L/C:

For opening L/C the client is to submit to the bank an application in the printed format of the designed bank. This is called L/C application form, which is also an agreement between the import and the bank. The form is to be stamped under stamp act.  I n force in Bangladesh, The importer must be submit the L/C and IMP and indent or contract. Purchase order/ pro-forma invoice along with L/C application must be completed in and signed by the authorized person of the importer giving the following particulars:

• Full name and address of the supplier of beneficiary and importer
• Brief description of the goods
• L/C value for US$ etc which must not exceed the ALCA value
• The unit price quantity, quality of the goods
• Origin of the goods, port of loading and port of destination must be mentioned
• Model of shipment (Sea Air, Road etc.)
• List date of shipment and negotiation time
• Tenor of draft
• Mode of advising L/C
• Instrument to add confirmation if required.
• LCA number

Examination of L/C application

On receipt of L/C application it must be checked by an officer of L/C section very carefully in the following manner:

• That all the information mentioned in above column has been furnished.
• That the terms to be Imported are eligible according to importers entitlement
• Thee goods are not being imported or originated from Sou8th Africa or Israel
• If the goods are imported from any member countries of ACU
• That all the cutting /permit etc are endorsed
• That the validity of the L/C must not exceed the validity of LCA.
• L/C ids opened within the validity period permitted in the license

Retirement procedure for Deferred payment of issuance Bills:

When the draft is returned by the draw (importer) after duly accepted by him the following procedure to be maintained,

• The maturity date is to be worked out and noted in the bill register and also in due date diary. The due date dairy may be maintained by the dealing officer and the manager in charge of foreign exchange department.
• The foreign corresponding should be advised the due date maturity and the authorized to debit the NOSTRO account or to claim reimbursement on due date as per L/C terms.
• All the documents delivered to the importer except accepted bill of exchange or draft.

Charges for L/C opening

L/C commission:

L/C commission 50% within 90 days , first quarter and subsequently increase 30% and upon on 15% vat.

FCE-(Foreign Correspondent Charge):

Below $25 up to $2500, If applicant want to bear the application charge then addition $75 will be charged.

Telex per telex 300 taka .But if amendment is consider then per amendment 500 taka and of courier telex ,then it will be 1500  taka

1. Handing charge tk200 fixed.
2. Stamp charge-per L/C 360 taka

L/C margin- that means cash security ordered by Bangladesh Bank for industrial items it is liberal and for luxuries items it is highly cost.

Essential things contain of L/C form              

• L/C Number
• Shipping Period
• Importer name and address
• IRC (Import Registration Certificate)
• Years of renewal
• L/C value
• Source of financing
• Description of goods
• HSC (Harmonious system code.)

Processing and opening of Back to Back L/C procedure

An exporter serious to have an Import L/C limit under back to back arrangement. Must have applied to the designed bank in prescribed forms for sanction for opening of back to back L/C. In that case the following information is to be furnished by the applicant:

1. Full particulars of bank account
2. Types of business (Proprietorship, Partnership, Ltd .co.) In case of Ltd. Co. Balance sheet of last 3 years and the name of directors.
3. Historical Background
4. Amount of limit required
5. Goods to be imported Security to be offered
6. Repayment schedule and source of fund
7. Other liabilities of the customer with the bank
8. Statement of assets and liabilities
9. Trade license
10. Valid bonded warehouse license
11. Membership certificate

Other Documents  Necessary For Import

• L/C Terms
• Draft
• Invoice
• Recording in the Register

Export Financing

To meet up the cost of goods to be exported, the exporter may require Bank finance. Besides, he may require finance for go down rent, freight etc. Even after shipment of the goods, exporter may require Bank finance to meet-up his expenditure up o repatriation of the export proceeds. There are two type of export finance:

• Pre-shipment finance
• Post -shipment finance

Pre-shipment finance:

Per-shipment investment is finance, allowed by a Bank to    an exporter, to meet the cost up to shipment of the goods to overseas buyer. The purpose of the investment is to purchase raw materials or finished goods or manufacturing processing, packing and transporting the goods.

Post-shipment finance:

 There is time gape between exports of the goods and realization of the proceeds. So exporter may require finance in that period to continue his business. So Bank may finance against export document ensuring the following:

• Export document comply the credit terms.
• Buyer is Bona-fide.
• Parties past performance is satisfactory.
• Any other security in case of export under contract.

Security of Pre-Shipment Investment

Security of pre-shipment investment is given bellow:

• FSIBL will mark on the related export L/C.
• FSIBL will finance against having sufficient time to procure the goods for export.
• Finance to be after arrival of the imported raw materials under Back to Back L/C.
• FSIBL will supervise the production from time to time ensure export of the goods in time.
• FSIBL will adjust the liability proportionately from related export documents.

Foreign Remittance

The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance services; it sells and buys foreign currency. The conversion of one currency into another takes place at an agreed rate of exchange in where the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender

Function of the Remittance Section

• Handling of all incoming and outgoing foreign and local remittance is the major
• Function for this department.
• Handling of incoming and outgoing T.T.
• Outstation Cheque Collection.
• Outstation Cheque Purchase.
• Demand Draft Handling.
• Other assorted work

Remittance of Fund

Remittance of fund is to be collected in two ways. First of all, it comes from inward basis and then, it happens outward.

Inward remittance

Any person can remit funds to another through Inland remittance by using the following means of remitting funds with charges­

• Pay Order (PO).
• Demand Draft (DD).
• Telegraphic Transfer (T.T).
• Mail Transfers

 Pay Order (PO)

A pay order is a written under, issued by a branch of the Bank, to pay a certain sum of money to a specific person or a bank. It may be said as to be a banker’s cheque as it is issued by a bank and payable by itself.

Demand Draft (DD)

This is an instrument through which customers money is remitted to another person/Firm/organization in outstation (outside the clearing house area) form a branch of one Bank to an outstation branch of the same Bank or to a branch of another Bank (with prior arrangement between that Bank with the issuing branch).

Telegraphic Transfer (TT)

A Telegraphic Transfer is a method of remittance, which is effected by the banker through a coded telegram attested by secret cheek signal, on receipt of which, the paying office pay the amount to the payee by crediting his account.

Foreign Remittance

Foreign remittance is the transfer of foreign currency from one country to another country. In another word, foreign remittance means, remittance in foreign currency that are received in and made out abroad. Actually, foreign remittance is purchase and sale of freely convertible foreign currencies as permissible under exchange control regulations of the country. Foreign remittance is very important for the country as valuable foreign exchange is involved in the transfer mechanism. Foreign remittance takes place in two ways-

 Inward Remittance

Remittance comes from foreign countries to our country is called inward remittance. To the bankers or ADs inward remittance means purchase of foreign currency by authorized dealers. Generally, inward remittances are received by draft, mail transfer, TT, purchase of foreign bills & travelers Cheque, export bills. Basically, these are the formal channels of receiving inward remittance. A local bank also receives indenting commission of local firm also comes under purview of inward remittance.

Outward Remittance

Remittance from our country to foreign countries is called outward foreign remittance. On the other word, sales of foreign currency by the authorized dealer or formal channels may be addressed as outward remittance. The authorized dealers must utmost caution to ensure that foreign currencies remitted or released by them are used only for the purposes for which they are released. Out ward remittance may be made by appropriate method to the country to which remittance is authorized. Most outward remittance is approved by the authorized dealer on behalf of Bangladesh Bank. Outward remittance may be made for following purposes­ –

• Travel
• Medical treatment
• Educational purpose
• Attending seminar etc.
• Balance amount of F.C account.
• Profit of foreign companies.
• Technical assistance
• New exporters up to USD 6,000/- for business promotion
• C. remittance can be made for fare, exhibition from export retention quota.

SWOT Analysis

Every organization is composed of some internal strengths and weaknesses and also has some external opportunities and threats in its whole life cycle. The following will briefly introduce the First Security Islami Bank Ltd. internal strengths and weaknesses, and external opportunities and threats.  

STRENGTHS

• Superior Quality: First Security Islami Bank Ltd.. provides its customers excellent and consistent quality in every service. It is of priority that customer is totally satisfied.
• Dynamism: First Security Islami Bank Ltd.. draws its strength from the adaptability and dynamism it possesses. It has quickly adapted to world class standard in terms of banking services. It has also adapted state of the art technology to connect with the world for better communication to integrate facilities.
• Efficient Management: All the levels of the management of FSIBL are solely directed to maintain a culture for the betterment of the quality of the service and development of a corporate brand image in the market through organization wide team approach and open communication system.
• Experts: The key contributing factor behind the success First Security Islami Bank Ltd of is its employees, who are highly trained and most competent in their own field. FSIBL provides their employees training both in-house and out side job.

WEAKNESS

• Limited Workforce: FSIBL has limited human resources compared to its financial activities. As a result many of the employees are burdened with extra workloads and work late hours without any overtime facilities. This might cause high employee turnover that will prove to be too costly to avoid.
• Poor Technology Infrastructure: As previously mentioned, the world is advancing e-technology very rapidly. Though FSIBL has taken effort to join the stream of information technology, it is not possible to complete the mission due to the poor technological infrastructure of the country.

OPPORTUNITIES

• Government Support: Government of Bangladesh has rendered its full support to the banking sector for a sound financial status of the country, as it has become one of the vital sources of employment in the country now. Such government concern will facilitate and support the long-term vision of FSIBL.
• Evolution of E-Banking: Emergence of e-banking will open more scope for the Bank to reach the clients not only in Bangladesh but also in the global banking arena. Although the bank has already entered the world of e-banking but yet to provide full electronic banking facilities to its customer.
• Information Technology: Banking and information technology might give the bank leverage to its competitors. Nevertheless there are ample opportunities for FSIBL to go for product innovation in line with the modern day need.

THREATS

• Mergers and Acquisition: The worldwide trend of merging and acquisition in financial institutions is causing concentration. The industry and competitors are increasing in power in their respective areas.
• Frequent Currency Devaluation: Frequent devaluation of Taka and exchange rate fluctuations and particularly South-East Asian currency crisis adversely affects the business globally.
• Emergence of Competitors: Due to high customer demand, more and more financial institutions are being introduced in the country. Many banks are entering the market with new and lucrative products.

Recommendation

• Giving better customer service, full computerized of all activities, supply of new PC’s in place of old one, sufficient numbers of PC needed for proper
• Interior decoration should be introduced for client’s comfort. The management should give more emphasis on the advertisement of the bank about their operations.
• The spread out mechanism of the bank should be faster and progressive as
• Online banking should be introduced fluently in all branches to compete with multinational banks.
• More products of varied interests should be introduced for the diversified client group.
• The Bank should request the to take necessary steps to reduce fluctuation of domestic currency worth against us dollar, to improve economic and political conditions and to increase port or harbor facilities.
• It should take proper stapes to recover the shortage of foreign currency.
• The bank should take new marketing strategy which will responds and take effective steps to increase faith on them.
• To enhance the image of the bank and to assume social responsibility, the bank should engage itself to various social programs like scholarship to poor but meritorious students, Campaign against dowry and other social evil etc
• Bank can introduce more advanced MIS system to mobilize its day to day activities. It will help the employee to do their works more quickly and at the same time maintaining their quality of work.
• The bank should try to arrange more training programs for their officials. Quality training will help the officials to enrich them with more recent knowledge of International Trade Financing.
• The entire employee should be assigned with proper and specific assignment.

Conclusion

First Security Islami Bank limited is one of the most potential Banks in the banking sector. It has a large portfolio with huge assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and managers in all level of management. So it is not an easy job to find out the drawbacks of this branch. I would rather feel like producing my personal opinion about the ongoing practices in Dilkusha Branch.

From the beginning, the prime objective of the FSIBL was to increase capitalization, to maintain disciplined growth and high corporate ethics standard and enhance the health of the share holders. Its customer service is very much impressive than of other financial institutions. Their effective strategy, time demand offerings, up to date rules and regulations to cope with international market and their friendship customer services easily impress the clients. So, now The FSIBL is in leading position in financial Institutional sectors in Bangladesh. The financial performance of the bank in recent years is pretty well. Moreover, any laxity in operational ground can considerably be compensated through the cordial services provided by a staff of talented officers or employees.

Overall, the bank must make a positive attempt to be more outward looking in their goals and aware of what is happening. They must also emphasize on the domestic scenario more closely and analyze any certain trends and strategies of their competitors. The bank must accept any failures and think of them as an objective to pursue future goals instead of blaming such failures on other factors.