1. FDBC: If the export document is not purchase by ABL it is called Foreign Documentary Bill Collection. At the maturation data of export bill ABL collect the payment for party. The collection process is same as LDBC. Only the postage charge is high. The postage charge is Tk. 800 within SAARC countries within Asia Tk.1500 and outside Asia is Tk. 2000.
2. FDBP: If the exporter need money before that the maturation of export document. He/ She can sale it to ABL. It is called Foreign Documentary Bill Purchase. The steps of FDBP are discussed with an example. Let, Tanzim Enterprise is a party of ABL who export shirt to China at $20000/-. In AAA Ventures Ltd. buys it and their bank is Bank of China. The Steps are as follows:

a.      ABL is receiving a L/C of $ 20000 from Bank of China.

b.      ABL inform Tanzim Enterprise about L/C

c.       Tanzim Enterprise what the money right now. So they sale to ABL and get 90% of payment. ABL gives an FDBP No.

d.      When bill is purchased, ABL creates a FDBP $20000×90%=18,000 will be given to Tanzim Enterprise right now.

e.       When ABL receive payment from Bank of China, ABL charge Tanzim Enterprise the following cost-

f.       After these cost is deducted from rest of 10% L/C amount. Tanzim Enterprise get the payment.

Back to Back L/C       

Back to back L/C is very popular in Bangladesh. What is back to back L/C? To define we can say Back to Back is the situation where the end user opens a L/C in favor of the importers, the importers than asks his / her bank for a companion L/C to be issued to the supplier. Therefore, the original L/C acts as the financial basis for the second L/C. Many banks do not look favorable upon this type of financing of other options are available.

Kinds of Back to Back L/C

Back to Back L/C can be divided into two types: Foreign and local.

Foreign Back to Back L/C:

ABL issue or advice this kind of L/C. It is opened against a master L/C to do business aboard. Payment is given in other country.

2. Local L/C:

Local back to back L/C is opened against a master L/C to pay the local businessman. Business within Bangladesh. Local L/C can be divided into two types-

a) Cash L/C:

It is the L/C normally open for a bank acceptance. No master L/C is needed. Sometime people want a bank guarantee. It is one of them. It can be at sight and may be defer.

b) Local back to back:

It is used to do business in Bangladesh. It is opened against a master L/C. ABL receive a big amount of profit from back to back L/C. ABL is not a mysterious entity. They are business people just like the importers & exporter. They are in the business of lending money for the purpose of financing attractive proposals. The suggestions they make can save considerable expense and Tim of international businessman. ABL can work as advising bank or issuing bank.

Service Provide by Bank against Back To Back L/C:

• LDBC
• LDBP

Is opened in favor of national’s party:

In back to back L/C following limit of loan facilities is given-

• 90% loan against master L/C is given
• 75%  can be received opening back to back L/C
• Rest 15% is given when bank receive export document.

For example against $ 2,00,000 master L/C, $ 1,80,000 loan facilities is given. $1,50,000 is given when L/C is opened $ 30,000 is given after receiving documents.

LDBC:

Local documentary bill collection is a service of ABL to collect the bill of their party for payment. When ABL is advising bank they can collect payment against the document. When in back to back L/C ABL is advising bank. After the maturation period ABL collect they payment by LDBC.

Steps in LDBC:

The procedure is as following:

1. Exporter presents the documents to ABL for collection from importer within 3 days of shipment. The document contains-

a)      Track receipt.

b)      Commercial invoice.

c)      Packing list.

d)     Delivery receipt.

e)      Country of origin.

f)        Bill of exchange.

2. ABL sends the documents to issuing bank for collection.
3. ABL use a controlling no or LDBC No.
4. If back to back L/C is not on sight the issuing bank will not give the payment to ABL on receiving day. So an acceptance is sent to ABL, saying that the payment will be made after maturation period. It may be 90 days, 120 days etc.
5. After that they ABL get payment by pay order.
6. ABL will send the pay order for clearing.
7. After payment is received by ABL through clearing ABL will collect change and give the money to party.

LDBP:

Local documentary bill purchase is a great source of profit for ABL. Here when the export documents comes the party want to get payment without waiting for the maturation date. So ABL, finance for that day and charge interest.

For example- Cat Textile Mills Ltd. Exports finished shirt to Sweden and buy clothes from M/S Sushi chemicals of Bangladesh. Here Cat Textile Mills Ltd’s bank is AB bank and M/S Sushi chemicals bank is ABL. So in this case the parties involved is as following:

Now if Sushi chemicals want to get payment before the bill maturation, ABL can purchase the bill. It is called LDBP.

Steps in LDBP:

At first a party brings a document of back to back L/C to ABL. The officer cheeks the documents. He/she emphasize on.

• Name of two parties.
• USD $ or other currency
• L/C No.
• Opening data.

Than a number is given (LDBP No) and as advice is sent to issuing bank.

Issuing bank sends an ‘advice of acceptance’ to ABL

Party makes following documents.

a)      Bill of exchange.

b)      Track receipt.

c)      Commercial invoice.

d)     Packing list.

e)      Delivery challan.

f)       Delivery receipt.

g)      Country of origin.

5. Next party comes for selling the bill to ABL, with all documents.
6. The party collect the voucher and receive payment, rest of the amount which was not purchased by ABL. ABL cut the cost of party from it.

Remittance:

The word Remittance comes from the word “remit” which means to transmit money/ fund. In banking terminology, the work remittance means transfer of fund one place to another. When money transferred from one country to another country is called Foreign Remittance.

(Tk. In millions)

Source: Annual Report of ABL 2011

Foreign Remittance:

Foreign remittance means the foreign currency coming into the country and going outside the country. Inward foreign remittance increase the country’s image and outward foreign remittance is not very good for country’s economy. The purpose of foreign remittance is to transfer foreign money. ABL plays an important role in foreign remittance transfer. It is the first bank which has contract with WESTERN UNION MONEY TRANSFER. ABL transfers foreign remittance to serve following purpose-

• Family maintenance
• Indenting commission
• Realization of export process
• Donation
• Gift
• Travel
• Medical treatment
• Educational purpose

Kinds of Remittance:

All kind of remittance comes to the head office server of ABL SWIFT is used to transfer money. When remittance comes to the head office it is sent to different branches for final payment. Remittance can become & go in following ways.

• Foreign T/T
• Mail Transfer (MT)
• Foreign demand draft (FDD)
• Import payment
• Traveler’s cheque
• Export cheque
• Cash dollars
• Credit card (International)

Money Transfer by Remittance Company:

ABL has contact with online money transfer companies. They have 50:50 profit sharing contracts.  The receiver need not to any give change to bank. The online company’s are-

• Western Union
• Samba
• Moneygram
• Xpress money payment
• ABL quick pay etc.
• Cash express
• Express money.
• Porobhu Express

Western Union money transfer is very popular in Bangladesh. ABL is first to contract with Western Union. As a result inward remittance can come to Bangladesh in a minuet from anywhere of the world. People can collect from any branch of ABL from Bangladesh. For it the receiver don’t need any bank account with ABL and they don’t need to pay money. With any branch of ASA the people can collect money which is very helpful for village people.

Steps for money collection:

People can send money from any Western Union agent of the world. They deposit the money and take a receipt and Money Transfer Controlling Number (MTCN)

The sender inform the receiver the follows:

•       Amount of money
•       Sender’s name
•       Receivers name
•       Country name
•       MTCN

Receiver goes to any branch of ABL with national ID Card and take the money by filling a from.

Money Transfer by Exchange House:

In abroad Agrani Bank Ltd. owned exchange houses are:-

• Bolaka Exchange Pvt. Ltd. Singapore.
• Golf oversea’s Exchange Co. LLC. Oman.
• ABL Money Transfer SDN,BHD Malaysia

Other bank and exchange house of ABL are as following:-

Agrani Bank has remittance arrangements with different bank and exchange houses in various countries throughout the world. The bank has earned the confidence and reputation as a reliable organization of paying hard- earned money of the expertly Bangladesh to their beneficiaries in the country safely and quickly. With the passage of time, ABL earned the confidence and trust of the wage earners and successfully handling a sizeable volume of remittances, which is depicting a gradual increasing trend. In 2009, foreign remittance brought through BL was USD 2452.33 million showing an increase of USD 1023.85 million over the previous year, which registered an attractive growth of 11 percent.

Reporting & Monitoring of Bangladesh Bank:

To full control of foreign Exchange Bangladesh Bank, has many controlling form and information system for all commercial bank. ABL also has to follow it. ABL has many type of reporting form and one IT system to inform Bangladesh Bank about dollar transaction.

Declaration Form:

IMP form:

When import L/C is issued by a bank or ABL, IMP form is needed to keep a record and inform Bangladesh Bank.

LCA form:

It is 6 copy from 1^st copy is used to report Bangladesh Bank. Second copy is to get the delivery of product. Third and fourth copy is for CCI. Now this record kept by Bangladesh Bank. Fifth and Sixth copy is kept in foreign exchange L/C file of ABL.

EXP Form:

Exp form is used in export like IMP form is used in import. To get Exp for party have to show L/C and contract like preformed invoice commercial invoice etc. Exp form has to be verified by customs and then exporter ships the goods.

MT Form:

TM form is used to sell cash dollar. When cash dollar is going out Bangladesh Bank need a reporting MT form?

C Form:

When remittance is coming in Bangladesh a C form given by ABL to Bangladesh Bank.

Reporting by Internet:

Foreign currency transaction system:

At the month end how much import, export, foreign remittance comes and goes out is reported by this software program. At first the officer will give the posting, then make schedule, checked by foreign exchange head that statement is created and sent to Bangladesh Bank with different colored pages. The month end statements should be submitted within date 5 of a month, wrong posting is punishable worth Tk. 5,00,000 for the Branch and Tk. 10,00,000 for the officer.

L/C Monitoring System:

It is a every day program governed by Bangladesh Bank. When L /C is opened foreign exchange officer give the posting in a 3 step L/C monitoring system by internet.

All the monitoring, reporting is governed by Bangladesh Bank because foreign has the precise impact on the economy.

SWOT Analysis/Finding

SWOT Analysis is the detailed strategy of an organization’s exposure and potential in perspective of its strength, weakness, opportunity and threat. This analysis used the organization to make their existing line of performance also foresee the future to improve their performance in comparison to their competitors.

By SWOT Analysis, an organization can also observe their current position. It can also be considered as an important tool for making changes in the strategic management of the organization.

The acronym SWOT stands for:

SWOT is an acronym for the internal strength and weakness of a firm and the environmental Opportunity and Threat facing that firm. So if we consider Sonali Bank as a business firm and analyze its strength, weakness, opportunity and threat the scenario will be as follows:

Strength:  

• Energetic as well as smart team work
• Good Management
• Lending rate is relatively competitive
• Cooperation with each other
• Membership with SWIFT
• Good banker-customer relationship
• Strong Financial Position
• Strong position in CAMEL rating
• Huge business area
• Service charges are comparatively reasonable.
• Strong corporate identity
• Young enthusiastic workforce

Empowered Work force

Weakness:  

• Lack of proper motivation, training and job rotation
• Lack of experienced employees in junior level management
• Lack of own ATM services
• Tendency to leave the bank in quest of flexible environment
• Lack of proficient manpower in some department
• Limited advertising and publicity of bank’s products and activities
• Absence of strong marketing activities
• Outdated Software and Hardware at ABL Shyamoli.
• Office environment is not good as private bank environment

Diversification

High charges of L/C

Opportunity:  

Growth of sales volume

• Change in political environment
• Launching own ATM card services
• Expansion of banking services into other different services
• Expansion branches of online
•  Experienced Managers
• Different services of FCB’S (Phone Banking/Home Ban king)
• Existing card services of Standard Chartered Bank  or other private Bank
• Daily basis interest on deposit offered by HSBC
• Entrance of new PCB’s
• Government has been controlling industrial credit
• Recession of global economy
• Intensification of competition in the industry

Threats:  

·         Upcoming Banks/Branches

·         Similar products are offered by other banks

·         Default Loans

Recommendation:By identifying the above mentioned problems during my internship, I would like to recommend some way to overcome these problems. These are as follows:

On clearing & local remittance sections:

• ABL should make a database to maintain their registry records in to the Computer. So by only giving a ‘search’ command they may find out their required clearing information.

• ABL should open their branches in the business area like near EPZ, port etc to provide prompt services to importer and exporter.
• Local L/C is not introduced in our society very much. ABL can give attention to attract local businessman for convincing them about local L/C.

• Where computer leads every sphere of lives including banking activities most of the ABL’s employees are still not expert on computer literacy. So for it, the management should give computer training to their employees.
• They may make a database or search for other solution to prepare their debit and credit voucher. As by adopting a better solution will make their work easier.
• Prompt attention should be given to the FDR customers if the bank does not want to lose new customers.

Conclusion:

Many new commercial banks have been established in the last few years and these banks have made the banking sector very competitive. So, now the banks have to organize their operation and do their operations according to the need of the market. The major task for banks, to survive in this competitive environment is by managing its assets and liabilities in an efficient way.

As an internee student of Agrani Bank Ltd at Shyamoli Branch, I have truly enjoyed my internship from the side of learning to the side of experiences viewpoint. I am confident that three month internship program in ABL will definitely help me to realize career in the job market. But during my internee it was not much possible for me to go to the depth of branches’ sections thoroughly because of the time limitations.

Agrani Bank Limited (ABL) is one of the widely expanded Banks in Bangladesh. Due to the threat of deposit shortage, this Bank may minimize its different types of unnecessary expenditure and should maximize profit through launching new schemes and obtain different people’s belief.