Foreign Trade operation and Performance Dhaka Bank Limited

Foreign Trade operation and Performance
Trends of Dhaka Bank Limited

Bangladesh economy has experienced 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 channelize consumer investments in a profitable manner. A group of highly acclaimed businessman of the country grouped together to respond to these needs 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. 4,667,594,130 as on June 30, 2012.

The total equity (capital and reserves) of the Bank as on March 31, 2012 stood at taka 9,683,222,474. The Bank has 71 Branches, 12 SME Service Centers, 08 CMS Units, 4 offshore Banking Unit 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 state–of–the-art technology and highly motivated Professionals.

As an integral part of our commitment to Excellence in Banking, Dhaka Bank now offers the full range of real-time online banking services through its all Branches, ATMs and Internet Banking Channels.

Dhaka Bank Ltd. is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments.

Research Objectives

My primary objective behind this report is to get acquainted with the different issues of foreign trade. Without the specific objectives, any study cannot become the fruitful one. Before preparing the report, I would like to set up objective of my study as:

Primary Objective

To get acquainted with the different issues of foreign trade.

Specific Objectives

To understand the overall procedure of export & import to familiarize with the issues of international trade.
To understand & identify the functions of Foreign Trade in Dhaka Bank Limited.
To understand the legal formalities required in foreign trade.
To understand the importance of foreign trade

Methodology of the Study

The study is performed based on the information extracted from the different sources collected by using a specific methodology. The details are given below:

Data Collection

The Primary sources are:

Practical desk work
Conversation with the officers
Conversation with the clients
Appropriate file study as provided by the concerned officer.

The Secondary sources are:

Annual reports of Dhaka Bank Limited
Different “Procedure Manual” published by the Dhaka Bank Limited
Publications obtained from different libraries and from the internet.

Historical Perspective of Dhaka Bank Limited

Dhaka Bank Limited (DBL) is the leading Private Sector Bank in Bangladesh offering full range of Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market Services. Dhaka Bank Limited is the preferred choice in Banking for Friendly and Personalized Services, cutting edge Technology, tailored solutions for Business needs, Global reach in Trade and Commerce and high yield on Investments, assuring Excellence in Banking Services.

DBL is a Scheduled Bank that was incorporated as a public limited company on April 06, 1995 under the Companies Act, 1994. The Bank started its commercial operation as a Private Sector Bank on July 05, 1995 with a target to play the vital role in the socioeconomic development of the country. Aiming at offering Commercial Banking Service to the Customers’ door around the country, the DBL established 71 branches up-to this year. This organization achieved Customers’ confidence immediately after its establishment.

Within this short time the bank has been successful in positioning itself as progressive and dynamic financial institution in the country. This is now widely acclaimed by the business community, from small entrepreneur to big merchant and conglomerates, including top rated corporate and foreign investors, for modern and innovative ideas and financial solution.

The Authorized Capital of the DBL was Tk.1, 000 Million and Paid up Capital of Tk.100 million. The Paid up Capital of the Bank stood at Tk.4, 667 million as on June 30, 2012. The Total Equity (Capital and Reserves) of the Bank as on June 30, 2012 stood at Tk.9, 683 million.

Foreign Trade Operation

Foreign Trade

Foreign Trade is termed as the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights to wealth in terms of the currency of another country.

Foreign Trade means trade of foreign products, services and currency between two countries. If we consider “Foreign Trade” as a subject then it means all kind of transactions related to foreign currency. In other words foreign trade deals with foreign financial transaction.

Foreign Trade department is an international department of the bank. It deals with globally and facilitates international trade through its various modes of services. It bridges between importers and exporters. Bangladesh bank issues license to scheduled banks to deal with foreign exchange.

These banks are known as authorized dealers (AD). If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign country. This department mainly deals with foreign currency. This is why this department is called foreign exchange department. Some national and international laws regulate functions of this department. Among these Foreign Exchange Act, 1947 is for dealing in foreign exchange business, Import and Export control Act, 1950 is for documentary Credits. Government’s Import and Export policy are another important factor for import and export operation of banks.

Global Trade

Global trade can be easily defined as a business activity, which crosses national boundaries. These may be between parties or government ones. Trade among nations is a common occurrence and normally benefits both the exporter and importer. In many countries, international trade accounts for more than 20% of their national incomes.

Global trade also can be defined as foreign trade can usually be justified on the principle of comparative advantage. According to this economic principle, it is economically profitable for the country to specialize in the production of that commodity in which the producer country has the greater comparative advantages and allow other countries to produce that commodity in which it has the lesser comparative advantages. It includes the spectrum of goods, services, investment, technology transfer etc. this trade among various countries calls for loose linkage between the parties dealing in trade. The banks, which provide such transactions, are referred to as rendering international banking operations. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller.

DBL named their global trade functions as Global Trade Services (GTS). It works mainly through Head Office. Global Trade Services (GTS) consists of two units- Financial Institutions or FI and Remittance Unit.

Financial Institutions

Trade finance has been a major area of business for Dhaka Bank Ltd. since inception in 1995. The Financial Institutions Unit is responsible for facilitating bank’s trade finance business under prevailing local and international laws. Under the capable leadership of the current management, trade business is growing for both import & export.

Letter of Credit (L/C) is a popular instrument in modern trade finance transaction and it is the most widely used instruments for trade with Bangladesh. For secure & fast issuance/receipt and payment of L/Cs, banks need to maintain Relationship Management Applications (RMA), Nostro Accounts and different correspondent banking arrangements. Dhaka Bank Ltd. mainly provides the following services:

Import Letter of credits
Export Letter of credits, negotiation & documentary collection
Re-issuance of Local guarantees against counter guarantees from international correspondents.

FI arranges correspondent banking network, credit lines and other facilities required for to handle all trade related transactions of its 15 Authorized Dealer (AD) branches and one Offshore Banking unit of the. With a vast network (320+) of correspondents throughout the globe we are capable to advise L/Cs in all continents of the globe. For confirmation of L/Cs, Dhaka Bank enjoys a significant amount of credit lines with almost all the major international banks and augmented by similar arrangements with banks in different regions . To further enhance the capacity to support trade transactions, Dhaka Bank Limited signed up with Asian Development Bank (ADB) to avail credit guarantee facility from ADB under its Trade Finance Facilitation Program (TFFP) for confirmation of the L/Cs issued by it.

Centralized Trade Operations

Dhaka Bank Ltd. is one of the leading local commercial banks in centralizing trade operations. It is called Central Processing Center (CPC). Using the branches as customer touch point CPC trade operations is providing up-to-the-minute trade solutions to the customers while fulfilling all the regulatory requirements. The operations of trade service of Dhaka Bank Lt are accomplished by CPC Trade Operations situated in both Dhaka and Chittagong. Its operation started in

December 19, 2009 with 15 Authorized Dealer Branches who are authorized to transact in foreign exchange and to trade finance business and they are now responsible for all trade related transactions. Trade Operations handle:

All import L/Cs
All Export Documents

Follow-ups for all import/export payments/receipts till respective settlements.

With the best expertise in trade of the bank under a single roof working together, it has all the new age technological support like Flexcube (i-flex), SWIFT Alliance Messenger, automated IMP software, E-Mail, High Speed Scanner and SMS Portal. Centralized Trade Operations surely is a logical step forward to achieve excellence in banking.

CPC has ensured optimum utilization of human resources, time and utility. On one hand it reduces cost and risk and on the other hand it gives better opportunity to the customers to get more attention and time of trade officer working in different customer touch point.

Key Features of CPC

Specialization: CPC segregates its operation in six functional areas to bring specialization which in turn ensures better quality.
Cutting edge technology: Maximum utilization of its state of the art technology ensures timeliness and reduces distance.
Healthy MIS: It helps management to take the effective decision and better control by understanding the present scenarios and forecast upcoming trade opportunities.
Scrutiny team: A team of experienced, knowledgeable and prudent officers are fully involved in scrutiny of documents.
Reporting team: The statement team is dedicatedly working to ensure timely submission of different reports required by the central bank.
Well equipped messenger team: A team of good number of messengers with motorbikes dedicatedly involved in delivery and collection of documents from the branches and other places.

Activities in Foreign Trade Department

There are three kinds of foreign exchange transactions:

Export
Import
Remittance

Concept of Export

Export means flow of goods and services produced within Bangladesh but purchase by economic agent i.e. individuals, firms, governments of other countries. The persons/Firms sales the goods & services to another country is called exporter.

An exporter of a country having a trade relation with an importer of another country may not have enough money to conclude the deal. He may as such need finance from the Bank.

Concept of Import

Import means the goods & services purchase by an economic agent located in Bangladesh from the economic agent of other countries. Financing in import business, stores the contractual obligation between buyer & the Bank. Financing of import business is a major area of investment of a Bank.

Import licenses are not required for any imported items except those on the restricted list. However, importers need to use Letter of Credit Authorization (LCA) forms to import goods.

Import/ Export Documentation

Unless otherwise specified, all imports transacted through a bank require a Letter of Credit Authorization (LCA) Form. Obtaining an LCA is not time-consuming, and many of the documents required for submission by importers can be kept on file with their banks. At present, there is no lack of foreign currency for import transactions. However, as a safety cushion against currency fluctuation, banks prefer to source foreign currency for L/Cs over $ 500,000 from the central bank. Typically, 1-2 days is required to obtain registration from the central bank. Unless otherwise specified, all imports must be made by opening an Irrevocable Letter of Credit.

Import against an LCA may be made without opening an L/C in the following areas:

Import of books, journals, magazines, and periodicals on sight draft of issuance bill basis;
Import of any permissible item for an amount not exceeding $5,000 only during each local fiscal year against remittances made from Bangladesh;
Imports under commodity aid, grant or such other loan for which there are specified procurement procedures for import of goods without an L/C;
Imports of “International Chemical References” through bank drafts by recognized pharmaceutical (allopathic) firms on the approval of the Director, Drug Administration, for the purpose of quality control of their products.

Importers must submit to their nominated banks the following documents along with the LCAF:

L/C application form duly signed by the importer;
Indents for goods issued by indenter or a pro-forma invoice obtained from the foreign supplier;
Insurance cover note.

Foreign firms are allowed to import permissible commercial items against prior permission from the Chief Controller of Import and Export and need to provide following documents:

Photocopy of the valid Import Registration Certificate;
Photocopies of invoices, bill of lading, and import permit duly certified by the bank;
Certified copy of the last income tax assessment order; and
Name and description of each item to be imported with quantity and approximate C&F value.

Public sector importers also need to provide the following documentation:

Attested photocopy of allocation letter issued by the allocating authority in favor of the concerned public sector agency specifying the source, amount, purpose, validity, and the terms and conditions;
Attested photocopy of sub-allocation letter, if any, issued in favor of the importing agency or unit;
Attested photocopy of sanction letter from the administrative ministry or authority where applicable; and
A declaration by the authorized officer of the importing agency indicating the amount of utilized/unutilized government funds and that imported raw materials will not be sold. Private sector importers need to furnish the following additional documents:
Valid membership certificate from the registered local chamber of commerce and industry or any trade association, established on an all-Bangladesh basis, representing any special trade or business;
Proof of payment of renewal fees for the Import Registration Certificate (IRC) for the concerned fiscal year;
Copy of a “TIN Certificate” issued by the tax authority. The TIN (Tax Identification No.) Certificate is a new requirement aimed at ensuring collection of income tax, VAT and other revenues from importers.
A declaration, in triplicate, that the importer has paid income tax or submitted an income tax return for the preceding year; and
Any such documents as may be required by import policy order or public notice, or instruction issued by the Chief Controller of Imports and Exports.

Prohibited Imports:

Bangladesh’s Import Policy Order 1995-97 places controls on some imports. Items banned from import include:

Maps, charts and geographical globes which indicate the territory of Bangladesh but do not do so in accordance with the maps published by the Bangladesh Government’s Department of Survey;
Horror comics, obscene and subversive literature;
Printed material, posters, video tapes, etc. containing matters likely to outrage the religious feelings and beliefs of any class of the citizens of Bangladesh;
Unless otherwise specified, old, second-hand and reconditioned goods;
Unless otherwise specified, all kinds of waste; and
Goods bearing pictures or writing which is obscene or of a religious connotation which may injure the religious feelings of any class of Bangladesh citizens.

Other items completely banned are: live pigs, pig and poultry fat, poppy seeds and dried posto dana, grass, opium, tendu leaves, lard, lard and tallow oil, solid or semi-solid palm oil, raw sugar, un-denatured ethyl alcohol (80% or higher) and other spirits denatured of any strength, wine, artificial mustard oil, selected petroleum products, woven fabrics of silk or silk waste, pig hair, some kinds of cloth, selected insecticides, ylon and polyethylene ropes, fishing nets (gillnets), used or new rags, vessels more than 15 years old, motorbikes more than three years old, and single phase electricity meters.

In addition, the import of goods from Israel and the import of goods of Israeli origin are prohibited, as is the shipment of goods on Israeli flag vessels. All types of imports are also banned from Serbia and Montenegro.

Membership in Free Trade Arrangements:

Bangladesh is a member of the South Asia Preferential Trade Agreement (SAPTA) under the umbrella of the South Asia Association for Regional Cooperation (SAARC).

Exchange Controls:

Importers must obtain a letter of credit authorization form to be allocated foreign exchange. Repatriation of capital, profits, benefits and assets are guaranteed. Transfers may take an extended period of time since they must be approved by the Bangladesh Bank.

Exports of Ready-made Garments (RMG)

The term export is known as the selling product from one country to another country. In the Export Policy of Bangladesh export is defined as the flow of goods and services produced within Bangladesh, but purchased by economic agents (individuals, firms, governments) of other countries. Very few commodities are occupying a major share of our export. Only five export items – Ready-made Garment (RMG), Knitwear, Jute and Jute goods, Frozen food, and Leather provide more than 90% of export earnings of Bangladesh. The periphery of our export market is very narrow. More than 80% of exports of Bangladesh made to USA and EEC countries.

RMG provides the largest portion of export earnings of Bangladesh. So the industry is large in size and produce 100% Ready Made Garments to various countries. The main countries that buy RMG from Bangladesh are:

United States
United Kingdom
EEC countries
Canada

The names of some buyers are:

The Gap Inc. – USA
GPS Consumer Direct Inc. – USA
H & M International Limited – USA
Ema Textiles Ltd. – UK
Ahlens Far East Ltd. – Hong Kong
Jaytex of Canada Ltd. – Canada
Lamda International Limited – Germany
Ahlen AB – Sweden

Documents Required for Export of RMG

For Shipment to USA

Original Signed Commercial Invoice indicating the style numbers, detailed merchandise description, quantity in units, unit price, extended and total amount, country of origin of merchandise and sales term.
Packing List referencing commercial invoice number(s), showing quantity in units and cartons, style numbers and Purchase Order numbers.
Original Inspection Certificate issued and signed by the authorized signatory of the inspection firm.

4a. Full set of clean on board ocean Bill of Lading and original Forwarder’s Cargo Receipt issued by designated forwarder or shipping company indicating Purchase Order number, marked ‘Freight Collect’ for FOB (Free on Board) L/C or marked ‘Freight Prepaid’ for CFR (Cost and Freight Receipt) L/C and consigned to the order of negotiating bank and endorsed to the order of Issuing Bank.

4b. Original Airway Bill issued by the designated Forwarder indicating purchase order number, marked ‘Freight Prepaid’ for CFR (Cost and Freight Receipt) L/C or marked ‘Freight Collect’ for FOB (Free on Board) L/C and consigned to the order of negotiating bank and endorsed to the order of Issuing Bank.

Single or Multiple Country Declaration.

For Shipment to UK

Basic documents required same as point 1 to 4b for USA shipment.
Photocopy of Certificate of Origin indicating purchase order no., L/C no. issued by relevant authority of the finished good’s country of origin.

For Shipment to Canada

Basic documents required same as point 1 to 4b for USA shipment.
Photocopy of Certificate of Origin indicating purchase order no., L/C no. issued by relevant authority of the finished product’s country of origin.
Canada Customs Invoice
Copy of VASN.
Form B255 E

Those are the basic documents required by most of the countries. Other than that some buyers seek some special type of documents such as:

Beneficiary’s Certificate confirming that the garments have been passed through a metal detector or free of metal contamination.
Beneficiary’s Certificate confirming that they do not employ under age labor, as stipulated by the legal laws of the country in which the goods are manufactured.

Concept of Remittance

Foreign remittance means remittance of foreign currencies from one place/ persons to another place/person. In a broad sense, foreign remittance includes all sales and purchase of foreign currencies on account of Import, Export, Travel and other purposes. However, specific foreign remittance means sale & purchase of foreign currencies for the purposes other than export and import. As such, this chapter will not cover purchase & sale of foreign currencies on account of Import & Export of goods.

All foreign remittance transactions are grouped into two broad categories- Outward remittance & Inward remittance.

Dhaka Bank Limited started its remittance services in 2005 and has become one of the major players in the market. DBL is continuously trying to modernize its remittance disbursement process and as part of the effort DBL not only uses its own 60 branches for remittance disbursement but has formed strategic alliance with few commercial banks having a total of 2373 branches and 02 local NOG’s having 250 locations for fast and hassle free disbursement of remittance received from around the world namely North America, UK, Europe, UAE, Oman & Australia. As part of its vision to provide safe transfer of money to beneficiaries DBL is working with one of the largest money transfer network in the world Western Union Money Transfer.

New Product Development

Keeping in line with its vision DBL is also the first bank in Bangladesh to introduce an innovative & revolutionary remittance service Mobile remittance disbursement partnering with Orascom Telecom (Banglalink) one of the leading telecom operator in Bangladesh. Under this arrangement DBL will be able to disburse remittance either by instant cash payments or by opening M Wallet (a virtual account) of beneficiaries through 2222 Banglalink outlets situated all over the country.

To achieve Excellency in exposure to the immigrant Bangladeshis. DBL has introduced a dedicated NRB service. From money transfer to investment, this one stop service will be devoted to satisfy the banking needs of the NRB’s abroad.

Trade Finance department

This department deals with all processing of Export and Import. Moreover, it also deals with the foreign remittance. Under this the export department, deals with only the export and the back-to back L/C. The total export value of 2009 was 300 Crore local BD currency. And most of the export goods were different types of garments products.

Letter of credit (L/C)

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 condition.

Since the agreed conditions include, among other things, the presentation of some specified documents, the letter of credit is called the Documentary Letter of Credit.

The Uniform Custom & Practice for Documentary Credit (UCPDC) published by International Chamber of Commerce (1993) Revision, Publication No. 500 defines Documentary Credit: any agreement, 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, is to make a payment to 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 authorizes another bank to effect such payment, or to accept and pay such bills of exchange (Draft), authorizes another bank to negotiate, against stipulated documents, provided that the terms and conditions are complied with.

Types of LC

Documentary Credits may be either:

Revocable
Irrevocable

Revocable

When a revocable credit can be amended or cancelled without any prior notice then it is known as revocable credit.

Irrevocable Credit

An irrevocable letter of credit is one, which cannot be revoked, amended or modified by the issuing bank without the concurrence of the beneficiary or any other interested party including the confirming bank. It is a definite undertaking of the issuing bank and constitutes the engagement of the bank to the beneficiary or any bona fide holders of the drafts drawn under the credit, provided the terms and conditions of the credit are complied with.

Special Documentary Credit

Revolving Credit

The revolving credit is credit, which provides for restoring the credit to the original amount after it has been utilized. How many times it will be taking place must be specifically mentioned in the credit. The revolving credit may be either cumulative or non-cumulative.

Transferable Credit

In terms of transferable credit, the original beneficiary can transfer the credit to one or more beneficiaries for once.

Back-to-Back Credit

It is a secondary credit opened by a bank on behalf of the beneficiary of an original credit, in favor of a domestic/foreign supplier. The amount of back-to-back credit must not exceed the amount of original credit and the items/goods must be relevant to the original credit. It facilitates the beneficiary of the original credit to purchase raw and packing materials.

Red Clause

This type of credit authorizes the negotiating bank to make advances to the beneficiary for purchasing goods / raw materials from the local suppliers. In this case, a clause in the letter of credit is inserted indicating clear instruction about such advances. The ‘Red clause’ or Green clause’ is called because the clause is generally printed in Red or Green to distinguish it from the text of the credit.

Deferred payment L/C

The issuing bank undertakes to make payment against type of L/C at a future date (e.g. 60/90/180/270/360 days after receipt of order documents). Mainly Capital machinery and emergency medicine are imported through this type of L/C.

Parties to a letter of credit

There are a number of parties involved in a L/C and the rights & obligations of the different involved parties also differ from each other. The involved parties can be named below:

Importer/Buyer
Opening/Issuing bank
Exporter/Seller/Beneficiary
Advising/Notifying Bank
Confirming Bank
Negotiating bank
Paying/Reimbursing Bank

Importer/Buyer is the people who request/instructs the opening bank to open a L/C. He is also called opener or applicant of the credit.

Opening/Issuing Bank is the bank which opens/issues a L/C on behalf of the importer. It is also called the importer’s/buyer’s bank.

Exporter/Seller/Beneficiary is the party in whose favor the L/C is established Advising/Notifying Bank is that bank through which the L/C is advised to the exporter. It is a bank situated in the exporting country and it may be a branch of the opening bank or a correspondent bank. It may also assume the role of confirming and/or negotiating bank depending upon the conditions of the credit.

Confirming Bank is a bank, which adds its confirmation to the credit, and it is done at the request of the issuing bank. The confirming bank may or may not be the advising bank.

Negotiating bank is the bank, which negotiates the bill and pays the amount to the beneficiary.

It has to carefully scrutinize the documentary credit before negotiation in order to see whether the documents are apparently is in order or not. The advising bank and the negotiating bank may or may not be one and the same. Sometimes it can also be the confirming bank.

Paying/Reimbursing bank is the bank as whom be bill will be drawn (as per conditions of the credit). It is nominated in the credit to make payments against stipulated documents complying with the terms of the credit. It may or may not be the issuing bank.

Summary of Procedure: Letter of Credit

The buyer and seller conclude a sales contract providing for payment by a Documentary Credit.
The buyer instructs his bank-the “Issuing Bank”-to issue a Documentary Credit in favor of the seller (Beneficiary).
The Issuing Bank issues the Documentary Credit and asks another bank (the Advising Bank), usually in the country of the seller, to advise or confirm the Documentary Credit.
The Advising Bank informs the seller that the Documentary Credit has been issued.
As soon as the seller receives the Documentary Credit and is satisfied that it meets the terms of the sales contract and that he can meet the Documentary Credit terms and conditions, he is in a position to effect shipment.
Seller then sends the required documents to the bank where the Documentary Credit is made available (the Nominated Bank).
The bank examines the documents against the Documentary Credit. If they meet the requirements of the Documentary Credit, the bank will pay, accept or negotiate; according to the terms of the Documentary Credit.
The bank, which takes up the documents, sends the documents to the Issuing Bank.
The issuing bank scrutinizes the documents and if the documents meet the Documentary Credit requirements, reimburses in the re-agreed manner the Confirming bank or any other Nominated Bank that has paid, accepted, or negotiated under the Documentary Credit.
When the documents have been scrutinized by the Issuing Bank and are found to meet the Documentary Credit requirements, they are released to the buyer.
The Issuing Bank obtains reimbursement from the Buyer in the pre-agreed manner.
The buyer forwards the transport document to the local office or agent of the carrier who will then affect delivery of the goods to him.

L/C Advising

Advising through a bank is a proof of apparent authenticity of the credit to the seller. The typical process of advising a credit consists of

Forwarding the original Credit to the beneficiary to whom it is addressed.
Before forwarding, the advising bank has to verify the signature (s) of the officer (s) of the opening bank and ensure that the terms and conditions of the credit are not in violation of the existing exchange control regulations and other regulations relating to export.
Entry made in the L/C advising register.
L/C advised to the beneficiary (exporter) promptly and advising charge recovered.

There are two types of L/C Advising

Foreign L/C Advising
Local L/C Advising

Foreign L/C Advising

In terms of foreign L/C Advising the swift proves the authenticity of the letter of credit. Under swift code 700 (01-08) the entire fields is required for the necessity of the foreign letter of credit. Most importantly the L/C Number (Documentary Credit No), L/C value, Date of Issue, Date of

Advising is being written while advising of FLC. Normally the charge for advising is TK.1500 as bank takes the responsibility of the authenticity of the L/C.

Local L/C Advising

Local L/C is needed mainly for the back to back L/C. In terms of LLC the same procedure is followed mentioned earlier only the L/C No. is given by the bank.

Foreign L/C Amendment

After opening of L/C sometimes alteration/amendments to the original terms and conditions become necessary. These amendments may involve changes in Unit price

Extension of validity of the L/C
Documentary requirements etc.

The amendments can be effected only if all the parties concerned i.e. the beneficiary, the importer, the issuing bank and the advising bank have agreed to the amendments. For any amendment, the importer (applicant for the credit) must request the opening bank in writing duly supported by revised indent/pro-forma invoice etc. where necessary. The opening bank will then advise the required amendment to the advising bank by mail/swift, as instructed by the importer.

The typical process of amendment involves:

All amendments should be noted in the L/C file and L/C opening register.
L/C amendment commission including postage/swift should be charged to the clients Account
In case of increase in L/C value, it should be ensured that the balance available in the

LCA form is sufficient to cover the increased L/C amount. If not additional valid LCA form should be obtained to cover the enhanced amount of L/C. Insurance cover should also be obtained for enhanced amount.

Foreign L/C Transfer

As mentioned earlier the only the first beneficiary can transfer the L/C to other and only for once. The require documents for transfer are:

The original copy of L/C
The original copy of amendment
The forwarding letter provided by the bank.

Now to transfer the first beneficiary brings the application form and where bank need to verify the signature and bank check the value of transfer. This because after all the amendment (increase or decrease) if the present value is not sufficient than the bank will not give the permission to transfer.

Issuing of Export Authorization

To export form other parties the seller need to go through some procedure. To register export the seller takes four Exp. Form these are original, Duplicate, Qua-duplicate and Triplicate. The negotiating bank has to certify all these four Exp. Form to register.

In the record keeping register the following things need to register.

Ad’s Code
Export amount
Type of product
Name of the Exporter.

The typical Exp. Form consists of the following information. These are:

All of this information is being checked and signed by the dealer and authorized official of the bank after checking the required documents that the exporter need to submit.

Original Exp –Before shipment the original exp. form needs to submit to the Customs. If the customs officer finds any short of goods then they provide a short shipment certificate to the seller. And the sellers with the other three Exp. provide the short shipment certificate to the bank.

Duplicate Exp- after the shipment customs send the original Exp. to the Bangladesh Bank. As negotiating bank get all the Exp. form from the exporter, they have to submit the duplicate to the Bangladesh Bank within 14 days of shipment. Duplicate has to submit in every 15days on the month.

Triplicate Exp- Triplicate is another form of Exp. that has to be submitted to the Bangladesh Bank after all the charges and the negotiating bank is realizing export value. Triplicate has to submit monthly to the Bangladesh Bank.

Qua-duplicate- this is to keep the banking record for future reference. Mainly, all these four document processing starts before the shipment of the products.

SWOT Analysis of Dhaka Bank Limited

Strength

The employees of the Dhaka Bank Limited think that Dhaka banks Strengths are

Dynamic and vibrant Board of Directors
Strong and resilient team of management professionals
Forward looking strategies and management policies
Cutting-edge tools and technologies to support real time on-line banking
Well-diversified line of business
A good risk management and compliance culture
Deep focus on quality control
And a dedicated line of human resources.

A good amount of salary is given to the employee of the Dhaka Bank Limited. For example Management Trainee officer (MTO) of Dhaka Bank Limited get the highest salary (48,000 taka) from the other bank’s post of MTO.

Dhaka Bank has lower amount of Bad debts
To create sustainable shareholder DBL has solid business growth
Employee turnover rate is very low

Weakness

Junior employees get the less amount of concentration though their ideas are distinctive. It creates demoralization in them
Technology used by the bank are not sufficient
Dhaka Bank focuses on the small sectors like- SME loan, Microcredit. This might be the reason of loosing sufficient profit in the future.

Opportunity

Now a day, SME is an emergent sector and government is giving priority to this sector. It would be a beneficial to DBL to be the focused in this sector.
Strong compliance of the laws and regulations of the state and regularity bodies which will change the activity of this bank.
Government favoring the private banks development.

Threat

Private Banks are increasing day by day so, the deposits competition is also increasing.
Dhaka Bank does not have diversified products
Technological changes may become the threat for the bank.
Dhaka bank has 71 branches all over the country but mainly in the urban areas .In rural area they have very few branches whereas other banks have created muscular network in the rural area like Dutch-Bangla Bank and BRAC bank.

Findings

In recent years, severe competition arises among banks and that is the reason behind the banks reformulation and revision to its current strategies not only to become more competitive in the industry. And that is why we are seeing entrance of considerable number of banks and financial institutions with new technology-based products and services in the money market. To take the opportunity of new business environment BASIC is also rethinking its strategies not only to become more competitive but also for the future existence of the institution. On the basis of the study, the summary of the findings are:

Dhaka Bank Limited provides its customers a full range of services to help them to grow their assets and net worth.
The bank gives importance to small and medium enterprises, which is composed of quality assets and steady and sustainable growth. It also provides banking services including term loan, short-term finance, working capital finance and financing and facilitating international trade.
Officers always show respects to their customers.
The officers help businessmen in different ways to understand the procedure of L/C.
The monitoring system of the foreign exchange department of Dhaka Bank is very excellent.

The chain of command is strictly maintained here Dhaka bank do lots of promotional activities like sponsoring Bangladesh cricket team for Sri Lanka tour, organizing Master Class in BRAC University etc.

No major changes are apparent in its dealing with latest and technology-based products and services.

It has growth in the Foreign Exchange Business.
Although Dhaka bank has initiated its on-line banking many years ago, still it cannot offer its client full pledge on-line services. Its’ growth and development in other areas are also less significant.
Though the Dhaka Bank has only 55 branches all over the Bangladesh Compare to other bank it’s small. So if they want to do a gigantic business then they have to increase the number of branches

Recommendation

Dhaka Bank should focus to influence its strengths like low-cost leadership, skilled human resource, low rate of classified loan and unique products by minimizing and addressing its weaknesses like traditional products and services and weak IT infrastructure
It must formulate and adopt new and revised strategy to take the opportunity of new business environment like offering latest technology-based products and services and expanding its balanced network in rural and urban areas.
It also should tackle the threats of the industry like severe competition among banks, technological changes and changing world wide business environment.
In its short-term strategy formulation Dhaka Bank should focus to eliminate its internal weaknesses so that it can pursue market opportunity more effectively and in this regard it should employ a turn-around oriented strategy.
Then it would seek the opportunity to use its strong resources and competencies to build long-term opportunities in more opportunistic product markets and at this stage it should focus on diversification strategy.
Dhaka Bank Limited has a well-known and well-reputed web-site. They should develop their web-site regularly.
To maintain the growth in Foreign Trade Business Dhaka Bank should continue current services
To convey standard level of service the relationship between customer and employee should be improved
Adequate measures are to be taken to reduce System failure.
Officials may be motivated by the higher authorities who will help to remove their mental pressure.

Conclusion

Banks and financial institutions play an important role in the process of economic growth of a country. Bank s and financial institutions have a prospective impact on the development and welfare process of the surrounding societies.

In a developing country like Bangladesh, banking business is very much competitive. Almost fifty banks are operating at this moment and competing to hold maximum market share. Banks are the core of the Economy. It is financial intermediary, whose principle operation is concerned with the accumulation of the temporarily idle money of the general public. The banking sector plays an important role in modern society and private banks made more competitive, diversified and dynamic compare to traditional banking system. Every day new competitors appear into the industry with better innovative ideas, products and services. In banking sector Dhaka Bank Limited is a name of trust.

During the practical in Dhaka Bank Ltd, Banani branch ,it has been appear to me that the branch comprises with various positive and negative corners in the banking arena including management pattern, banking operation and performance. After collecting and analyzing the required data information, the report has come to some conclusions and recommendations, which are completely personal views while conducting the Study.

Banking operations, online services and customer dealings of Dhaka bank, Banani branch till now is very good. They have some prominent clients. Their lending interest rate and Customer dealing is really competitive and nice also by which they earned for their quality services. So it has a vivid future. Finally, I wish continuous success of this bank and healthy business portfolio of the branch and I also wish overall success of Dhaka Batik Limited.