General Banking and Banking Functions of EXIM Bank Limited

Executive Summary

The aim of commercial banking is to earn profit through exchange of money & credit instruments. It is a service oriented as well as profits oriented organization. The Bank divides its operation mainly three parts- General Banking, Foreign Exchange and Loan & Advances.

The banking sector of Bangladesh is passing through a tremendous reform under the economic deregulation and opening up the economy. Currently this sector is becoming extremely competitive with the arrival of multinational banks as well as emerging and technological infrastructure, effective credit management, higher performance level and utmost customer satisfaction.

The internship report has been prepared on “General Banking Activities of EXIM Bank Limited”. Bank has a significant role in the economic development of the country. In order to developing the national economy, banks keep in mind going for lending, maintaining safety, liquidity & profitability.

EXIM Bank Limited was introduced in Bangladesh as a banking company under the Company Act 1913 & commenced operation on 2^nd June 1999. Numerically it is just another commercial Bank, one of now operating in Bangladesh, but the finders committed to make different & a little bit special qualitatively. This bank has new vision to fulfill & a new goal to achieve & try to reach new height for realizing its dream.

EXIM objective is to social commitment & for that it ensures cooperation to the people of all level, to the businessmen, industrialist-specialty who are engaged in large scale industry, agro based export oriented medium & small-scale industry by self inspiration.

I have done this report on the general banking activities. This department works about customer relationship desk. That means what types of product are they offer, which type of customer can open the A/C, How the cash section does work etc.

The 1^st chapter contains the origin, objectives, limitations etc. of the study & 2^nd chapter described Overview of EXIM Bank in Bangladesh. On the other hand the 3^rd chapter deals with Literature review; 4^th chapter is analysis & interpretation. The ^5th chapter discussed with the findings part ,recommendation & conclusion part of the report.

Introduction

In general sense we mean “Bank” as a financial institution that deals with money. There are different types of banks like Central bank, Commercial bank, saving bank, Investment bank, Merchant bank, Co operative bank etc. But when we use the term bank it generally means ‘commercial bank’ that collects the deposit from surplus unit of the society and then lends the deposits to the deficit units of the society.

The existence of banking sector is not a new matter, as its existence was long years ago. But the new thing is that how it operates and presenting its activities for the purpose of serving customer requirements to increase their well being in the sense of wealth. Banks also provide many services for clients to make easy their life in a busy environment. In this competitive environment in today’s world, the entire bank increases their facilities in favor of their customers to retain them and capture more share of the market to be leader. Interest is one of the main factors in attracting customers and also one of the significant factors in increasing extra income from providing loans besides other service income. So, it can be said that conventional banking systems are interest-based system.

Bangladesh is one of the largest Muslim countries of the world. The people of this country are deeply committed to Islamic way of Life as it is mentioned in the Quran and Sunnah. But it is not possible for the people to establish and design their economic lives in accordance with Shariah. The very objective of Shariah   is to promote the welfare of the people that lies in safeguarding their faith, their life, their posterity and their wealth. In this regard to establish a banking world that run according to Shariah, the concept of Islamic Banking Arise. Its establishment in Bangladesh on 13^th March 1983, named Islamic Bank Bangladesh Limited.

The definition of Islamic Bank, as approved by the General Secretariat of the OIC, is stated in the following manner.

      “An Islamic Bank is a Financial Institution whose statutes, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operation.”

This paper is an attempt to evaluate the Different Modes Investment of Exim Bank Bangladesh Ltd. in terms of productivity and effectiveness.

 Objective of the Report

      To have an overall idea about Islamic Banking System that is based on the Al-Quran and Sunnah.

      To know about the interest free Banking System and how it could be processed.

      To find out the difference between conventional banking system and shariah based banking system.

 Methodology and Sources of Data

In order to conduct such a study the report preparer must follows some specific methods. They are given below-

• Variables – in the report variables are used banking system. Two variables are-

a)      Islamic system

b)      Conventional system

• Analytical Method

1. Descriptive method
2. Conventional versus Islamic banking
3. Performance and Growth
4. SWOT analysis

• Ø Sources of Data:

All the relevant data regarding this study are collected from two sources:

1. 1.      Primary Sources:

• Interviewing with the bank officials of EXIM Bank Ltd., Elephant Road Branch.                 
• Official records and observing practical work.
• Practical desk work
• Face to face conversation with the officer
• Direct observations
• Face to face conversation with the client

1. 2.      Secondary Sources:

• Annual report of EXIM Bank Ltd.
• Published Booklet of the Bank.
• Website of EXIM Bank Ltd.
• Various published documents.

 Scope of the Study

This report has been prepared through extensive discussion with bank employees and with the clients. Prospectus provided by the bank also helps to prepare the report. At the time of preparing the report, I had a great opportunity to have an in depth knowledge of all the banking activities practiced by the Exim Bank Limited.

Limitations of the Study

The officers are very co-operative but they are too busy to give me time to get knowledge about practical activities. Moreover they have to deal in a very competitive environment based on money related activities. I have to prepare this report alone. Every task has some limitations. I faced some usual constraints during the course of my internship. These are as follows:

Short of time:

I had to complete this report writing within a shorter period of time. So the time constraint of the study hindering the course of vast area and time for preparing a report within the mentioned period is really difficult.

Busy working environment:

The officials had some times been unable to provide information because of their huge routine work.

Lack of sufficient well informed officials:

Many officials of the branch are not well informed about different systems of Exim bank. They know but less. I had to face much difficulty to collect this information.

Insufficient data:

Some desired information could not be collected due to confidentially of business.

 General Banking

Some common types of works every bank should do to operate the banking business. Although the mode of performing these works differs from bank to bank but all the banks have to do the task. In the banking perspective these types of works are known as general banking. General Banking is the heart of Banking. Here money collection procedure occurs. Other services, like cherub encashment, account transfer; account closing, bills and remittance are provided here. So general banking section is the life blood in banking service. The  activities perform through some procedures .such as -Dispatch (inward-outward), Deposit, A/C opening and closing, transfer, Cheque book issue, local remittance (payment order ,DD,TT) collections- transfer delivery, IBC, OBC, Cash, Vault ,packing and handling and evening Banking.

 Banking Functions of Exim Bank

General Banking is the heart of Banking. Here money collection procedure occurs. Other services, like cherub encashment, account transfer; account closing, bills and remittance are provided here. So general banking section is the life blood in banking service. General banking activities of Exim bank includes the following:

•                   Mobilization of deposits
•                   Receipts and payment of cash
•                   Handling transfer transaction
•                   Operations of clearing house
•                   Maintenance of accounts with Bangladesh bank and other Banks.
•                   Collection of cherubs and bills
•                   Issue and payment of Demand Draft, Telegraphic transfer and Payment Order.
•                   Executing customers standing instructions.
•                   Maintenance of safe deposit lockers
•                   Maintenance of internal accounts of the bank.

While doing all the above noted work exim bank issue cherub-book, Deposit account operating form, cherub book, ledgers, cash books Deposit account ledgers, preparation statements of accounts and pass book, balance different accounts and calculates profits.

Customer Services

Customer services are one of the most talked about subject now a day. In banking, it is a major rule to earn a comparative edge. Customer service means to meet customer needs in a prompt and efficient way. In service-oriented organization like, quality means customer satisfaction. And customer satisfaction depends on the services provided by the organization. So, customer service section is the most important section in EXIM Bank Ltd. First of all customer want to collect information before taking services if he/ she satisfied with the information given by the customer-service section, then he/she come to take services. In the sense, it is very sensitive section in EXIM Bank. To satisfy the customer by giving better services all staff and officers of this section have to take responsibility, be cordial, frank and smiling appearance.

Functions of customer service section

 Accounts Opening Procedure

One who want to open an account, he has to fill up an account opening form. This form is a legal contract between the bank and prospective customers such as individual, joint, proprietorship, partnership, private limited company, public limited company, associations, clubs, societies, trusts etc. can open their various types of accounts as their requirements which are mentioned below:

 Individual Account (CD/SB):

      If individual wants to open an account than introduces must be needed to open current account and savings account, which has a current account or savings account in the bank.

      The introducer must be signed in the passport size photographs.

      Individual must be submitted his/her certificate of Word Commissioner or the photocopy of the Passport.

       Photograph of the nominee.

      Signature of the nominee.

      TIN Certificate (if cash transaction exceeds TK. 5.00 lac only.)

Joint Account

This account can be opened by 2 persons or more than 2 persons and each person should fulfill the requirements of individual account. The holders should mention the mode of operation. Here the account holders must declare how they operate their account that means “how many signatures will be needed for a check clearing.

Sole proprietorship Account:

       Two copy of color photograph attested by the introducer.

       Photocopy of Word Commissioner Certificate or passport.

       Up to date trade license & Rubber stamp.

       The form of sole proprietorship declaration of EXIM Bank must be tilled up.

       Photograph of nominee.

       Signature of nominee in the nominee declaration form.

       TIN Certificate.

Partnership Account

Partnership account is as like as joint account it needs-

       Introducer

       Two copy of color photograph attested by the introducer.

       Must be submitted a copy of partnership deed.

       Photocopy of Word Commissioner Certificate or passport.

       Up to date trade license & Rubber stamp

      The partners also fill up the partnership letter of EXIM Bank with their name and signature.

Public/Private Limited Company:

      Introducer

      Two copy of color photograph attested by the introducer

      Board of Resolution.

      Certificate of Incorporation.

      Certificate of Commencement (in case of public limited company).

      Certificate copy of memorandum of association & articles of association attested by the Chairman or Managing Director.

       Photocopy of Word Commissioner Certificate or passport.

      Up to date trade license & Rubber stamp.

      List of Directors with designation & signature.

      Certificate of registration (in case of insurance companies) obtained from Department of insurance republic of Bangladesh Government.

      TIN Certificate.

General procedure of opening account:

Step1: Bank provides account opening form to the prospective customer or applicant.

Step 2: Applicant fills up the form.

Step 3: Application submits the form dully signed by an introducer along with two copies of photograph.

Step 4: The authorized officer scrutinizes the application form.

Step 5: If they are satisfied, they will open the account.

Step 6: They issue deposit slip and deposit must be made for first time against the new account number.

Step 7: After deposition one checkbook is issue.

Step 8: Bank preserves the specimen signature card to verify the signature of the client.

Step 9: Account is opened

 Various Types of Accounts

EXIM Bank offers following types of deposit account:

1. Operating Account
2. Non-Operating Account

Operating Accounts

This type of account is operated by the account holder of the Bank. There are mainly two types of accounts, this are-

      Mudaraba Savings account

      Al-Wadia Current account

Mudaraba Savings Account

To encourage savings habit amongst the general public, bank allows depositors to open savings account. As the name indicates, these accounts are opened for the purpose of savings. There are two types of Saving Account. One is “Single Saving Account” and another is “Joint Saving Account”.

Minimum amount of Tk. 1000/= is required for opening this type of account and it s charges yearly is Tk.250/=. A depositor shall be allowed to withdraw per week up to 25% of the balance of his account. Weightage of this account is .75.

Distribution of profit to Mudaraba Depositors:

The principles of calculation and distribution of profit to mudaraba depositors are as under:

      Mudaraba depositors share income derived from investment of fund.

      Mudaraba depositors do not share any income derived from miscellaneous banking services where the use of fund is not involved, such as commission, service charges, exchange, and other fees realized by the bank.

      Mudaraba deposits get priority in the matters of investment over bank’s equity and other cost free fund.

      The gross income derived from investments during the accounting year is, at first, allocated to mudaraba deposits and equity & cost-free fund according to their proportion in the total investment.

      The share of gross investment income of mudaraba deposits as worked out in terms of principle shown against serial no 4 is distributed as under:

• 20% is retained by the bank as management fee for managing the investment.
• 15% is transferred to a reserve fund for setting investment loss or with a view to maintaining a general level of return on mudaraba deposits
• The remaining 65% is distributed to mudaraba depositors applying weightages.

The growth rate of mudaraba savings deposits are increasing day by day. It also shows in the graph.

Al-Wadia Current Account

Current account is an account where numerous transactions can be made by the account holder within the funds available in its credits. No profit is paid on those deposits and its yearly charges is Tk.1000/=. Current account is mainly suitable for businessman though nobody is debarred from opening such an account for any purpose. Requirements to open an account are almost same to that of savings account except the initial deposit and the introducer must be the saving or current account holder.

Non-Operating Account

There are mainly two types of time deposit:

      Mudaraba Term Deposit Receipt (MTDR)

      Mudaraba Scheme Deposit (MSD)

MUDARABA TERM DEPOSITE RECEIPT(MTDR)

  Any adult person(individually or jointly) having sound mind or any institution/organization can open MTDR account with any branch of the bank by depositing at least Tk10,000/- and above but multiple of Tk. 100/-(one hundred).

  One or more account can be opened in the same name at the same branch of the bank.

Deposit of MTDR A/c will bear the following weightage:

v  Normally, deposited amount of MTDR is not encshable before maturity. If any depositor intends to encash his/her MTDR Receipt before maturity due to certain unavoidable circumstances, the following terms & condition will come into force:

A)    No of profit shall be allowed for premature encashment within 01 moth.

B)     If the account is encashable after completion of any tenure but before maturity, depositor will be entailed to received full benefit for the immediate completed tenure at the provisional rate of profit prescribed there-against. For remaining period, depositor(s) will receive benefit at the provisional rate of profit prescribed for Mudaraba Savings Account.

C)     The provisional rate of profit of Mudaraba Savings Account will treat the provisional rate of profit, which was prevailed at the time of opening the MTDR Account.

  Incase of death of account holder(s), the nominee(s) may continue the account till maturity.

  Investment against lien of such receipt may be allowed upto 90% of amount subject to application of normal terms & conditions of investment of the bank.

MUDARABA SCHEME DEPOSIT (MSD)

Different kinds of deposits are also operated in to the bank. These deposits a/c may be classified as

      STD (Short term deposit ) a/c

      MTD

      MSS (Mudaraba Saving Scheme)

      MIS (Mudaraba Investment Scheme)

      Hajj Project.

 Savings Schemes

These savings schemes are –

      Super Savings Scheme

      Multiplus Savings Scheme

      Monthly Income Scheme

      Hajj Deposit

      Monthly Savings Scheme

MUDARABA SUPER SAVINGS SCHEME(MSSS)

 Objectives of the Scheme:

Savings help to build up capital and capital is the principal source of business investment in a country. That is why savings is treated as the very foundation of development. To create more awareness and motivate people to save, EXIM Bank offers super savings scheme.

Terms and Conditions of the Scheme:

  Any individual, company, educational institution, government organization, NGO, trust, society etc. may invest their savings under this scheme.

  The deposit can be made in multiples of Tk. 5,000/-and its multiple amount.

  Any customer can open more than one account in a branch in his/her name or in joint names.

   A Deposit Receipt will be issued at the time of opening the account.

  The Deposit will approximately be double in 6 (six) years.

Highlights of the Scheme:

  Savings will be treated as projected and it will be adjusted after the declaration of profit at the end of the year. The weightage of deposit will be 1.17. .

  Investment against lien of such receipt may be allowed upto 90% of amount subject to application of normal terms & conditions of investment of the bank.

Premature encashment of the scheme:

  In case of premature encashment before 1 year no profit shall be paid.

  In case of premature encashment after 1 year but before 3 years profit shall be paid at Savings Rate plus 0.75%.

  In case of premature encashment after 3 years but before maturity profit shall be paid at Savings Rate plus 1.00%.

In case of any unexpected situation:

  In case of death of depositor before the term, the amount will be given to the nominee according to the rules of premature encashment. In the absence of nominee, the heirs/ successors will be paid as per succession certificate.

  In case of issuing duplicate receipt the rules of issuing a duplicate receipt of Term Deposit will be applicable.

  The nominee may, at his option continue the scheme for the full term.

Quard facility under the scheme:

  A depositor can avail quard up to 90% of the deposit under this scheme.

Additional terms and conditions:

  Bank reserves the right to change the weight age of deposit & percentage of distribution of Investment Income.

  At the time of payment, Income Tax shall be deducted upon profit.

MUDARABA MONTHLY SAVINGS SCHEME (MONEY GROWER)

Objective of the scheme:

A monthly savings scheme. Secure your future with ease. A small savings of today will provide you comfort tomorrow.

Savings Period and Monthly Installment Rate:

The savings period is for 5, 8, 10 or 12 years.

Monthly installment is Tk. 500/-, 1000/-, 2000/-, 5000/-, 10,000/-, 20,000/- 25,000/- or 50,000/-.

Deposit will bear the following weightage:

 Bank reserves the right to change the weight age of deposit & percentage of distribution of Investment Income.

Monthly Installment Deposit:

• The savings amount is to be deposited within the 10th of every month. In case of holidays the deposit amount is to be made on the following day.
• The deposits may also be made in advance.
• The depositor can have a separate account in the bank from which a standing instruction can be given to transfer the monthly deposit to the scheme account.
• If the depositor fails to make the monthly installment in time, then 5% on overdue installment amount will be charged. The charged amount to be added with the following month(s) installment and the lowest charge will be Tk. 10/- (Taka Ten).

Withdrawal:

• Generally, withdrawal is not advised before a 5 (five)-year term, but if it is withdrawn before the above term, profit will be paid at savings rate. However, no profit will be paid if the deposit is withdrawn within 1 (one) year of opening the account.
• In case the depositor wishes to withdraw between the 5, 8, 10 or 12 years period then full profit will be paid for a completed term and savings rate will be applicable for the fractional period.

Quard Advantage:

After 3 (three) years of savings in this scheme the depositor (if adult) is eligible for a quard up to 90% of his/her deposited amount. In that case, profit rates on the quard will be applicable as per prevailing rate at that time.

Reasons for disqualification from this scheme:

• If the depositor fails to pay 3 (three) installments in a row, then he/she will be disqualified from this scheme and profit will be applicable as mentioned in withdrawal clause.
• If a depositor fails to pay 5 (five) installments in a row after completion of any one of these terms, then the Bank reserves the right to close the account and profit will be paid as mentioned in withdrawal clause.
• In case of death of the depositor the scheme will cease to function. The amount will be handed over to the nominee of the deceased depositor. In case of absence of the nominee, the bank wills handover the accumulated amount to the successor of the deceased.

Achievement from the scheme:

The accumulated amount may be more or less of following table:

Rules:

• A form has to be filled at the time of opening the account. Attested photographs are advised.
• The depositor can select any of the installment amounts which cannot be subsequently changed.
• In case of minors, the guardians may open and supervise the account in his favor.
• A single person can open more than one account for saving under several installment amounts.
• The accumulated deposit with profit will be returned within one month of completion of a term.
• The depositor should notify the bank immediately on any change of address.
• The government tax will be deducted from the profit accumulated in this scheme.
• If necessary, at the request of the depositor, the scheme can be transferred to another branch.
• The Bank reserves the right to change the rules and regulations of the scheme as and when deemed necessary.
• Income Tax on profit paid shall be deducted at the time of payment.

MUDARABA MONTHLY INCOME SCHEME (MIS)

Objectives of the scheme:

• A monthly scheme that really makes good sense. A sure investment for a steady return. Actually, steady money makes your money work for you.
• Proper utilization of savings from stipend, wage earning, retirement benefit and so on.
• Higher monthly income for higher deposit.

 Formalities of opening an account:

• An account is to be opened by filling up a form.
• The Bank will provide the customer a deposit receipt after opening the account. This receipt is non-transferable.

 Highlights of the scheme:

• Minimum deposit Tk. 50,000/- and its multiple amount.
• The scheme is for a 3 (three)-year period.
• The income is estimated which may be more or less at the year end and accordingly the same shall be adjusted. The deposit will bear 1.15 weightage.
• Not less than 65% of Investment Income shall be distributed among the Mudaraba Deposit holders as per weightage.
• Bank reserves the right to change the weightage of deposit & percentage of distribution of Investment Income.

Quard facility:

A depositor can enjoy investment facility (excluding Quard) up to 80% of the deposited amount under this scheme complying investment norms of the bank. In this case, profit, will be charged against the investment facility as per Bank’s norms. During the tenure of the investment, the Monthly Income will be credited to the investment account until liquidation of the invested amount inclusive of profit.

Disbursement of monthly income:

Monthly income will be credited after one month i.e., on the due date of the next month to the depositor’s account.

Premature encashment of the account:

If the deposit is withdrawn before a 3 (three)-year term, then saving rate plus 0.75% of profit will be applicable and paid to the depositor. However, no profit will be paid if the deposit is withdrawn within 1 (one) year of opening the account and monthly income paid to the customer will be adjusted from the principal amount.

Additional terms and conditions:

• Applicant must open/have a Al-wadia CD or Mudaraba SB A/C with the branch in which monthly income will be credited automatically.

MUDARABA MULTIPLUS SAVINGS SCHEME(MMSS)

Objective of the scheme:

• To gather public’s idle money in exchange of high return within the shortest possible time.

Terms and Conditions of the Scheme:

• Any individual, company, educational institution, government organization, NGO, trust, society etc. may invest their savings under this scheme.
• The deposit can be made in multiples of Tk. 5,000/- and its multiple amount.
• Any customer can open more than one account in a branch in his/her name or in joint names. A Deposit Receipt will be issued at the time of opening the account.
• The period of deposit is 10 (ten) years.

Highlights of the Scheme:

• Some examples are given in the table below. Any amount can be deposited in multiples of Tk. 5,000.00.
• Deposited Amount
• Amount payable approximately after maturity
• 5,000.00
• 15,879.00
• 10,000.00
• 31,758.00
• 50,000.00
• 1,58,793.00
• 1,00,000.00
• 3,17,587.00
• payable amount will depend on projection and will be adjusted after the declaration of profit at the end of the year. The weightage of deposit will be 1.17.
• Not less than 65% of investment income shall be distributed among Mudaraba Depositors as per weightage.

In case of premature encashment:

• In case of premature encashment before 1 year no profit shall be paid.
• In case of premature encashment after 1 year but before 3 years profit shall be paid at Savings Rate plus 0.75%.
• In case of premature encashment after 3 years but before 5 years profit shall be paid at Savings Rate plus 1.00%.
• In case of premature encashment after 5 years but before 8 years profit shall be paid at Savings Rate plus 1.50%.
• In case of premature encashment after 8 years but before maturity profit shall be paid at Savings Rate plus 2.00%.

In case of unexpected situation:

• In case of death of depositor before the term, the deposit amount will be given to the nominee according to the rules of premature encashment. In the absence of nominee, the heirs/ successors will be paid on production of succession certificate.
• In case of issuing duplicate receipt the rules of issuing a duplicate receipt of Term Deposit will be applicable.
• The nominee may, at his option continue the scheme for the full term.

Quard facility against the scheme:

• The depositor can enjoy loan up to 80% of the deposit under this scheme.

Additional Terms and Conditions:

• Bank reserves the right to change the weightage of deposit & the portion of distribution of Investment Income.
• At the time of payment of deposit Income Tax on profit shall be deducted.

3.7 Cheque

A cheque is a very important document. Cheque is an instrument in printed form containing an unconditional order, signed by the account holder directing a certain person to pay a certain some of money only to or to the order of a certain person or to the barer of the instrument. A cheque is always supposed to be drawn against the funds in the party’s account in the bank. It may be crossed for safety.

• Issue of a Cheque Book:

The in charge of the departmental stocks of Cheque books will get to know. And allow entering the DCBIR (Departmental Cheque Books Issued Register). Separate foils in the register are allotted for CD accounts Cheque Books of 25, 50 and 100 leaves and SB account Cheque Books of 10 leaves. At the time of opening of an account, the customer is required to sign a Cheque Book Requisition Slip (No. SF-73). If the account opening form is found complete in all respects, a Cheque Book is issued to the client.

The account number is written in each leaf of the Cheque Book and in its requisition slip. The name and account number of the customer is also entered in the DCBIR against the particular Cheque Book series and it is also recorded in the computer. The requisition slip should be preserved as Vouchers.

Remittance

The word “Remittance” means sending of money from one place to another place through post and telegraph. Commercial Banks expose this facility to its customers by means of receiving money from one branch of the bank and making an easier arrangement for payment to another branch within the country. EXIM Bank sells and purchases PO, DD and TT to its customers only. It does not offer remittance service frequently to those other then its customer.

Pay order (PO)

This is an instrument issued by the branch of a bank for enabling the customer/ purchaser to pay certain amount of money to the order of a certain person/ firm/ organization/ department/office within the same clearinghouse area of the pay order-issuing branch. Pay order has different characteristics:

      The issuing branch and the paying branch are same.

      Application for payment within the clearing house area of the issuing branch.

      This may be open or can be crossed.

Procedure of P.O. issue

  a) Obtain PO application form duly filled in and signed by the applicant.

  b) Receive the amount in cash/transfer with commission amount.

  c) Issues pay order.

  d) Enter in pay order register.

Procedures of pay order payments

Demand Draft (DD):

Demand Draft is many popular instruments for remitting money from one corner of country another. The instrument is basically used for transfer and payment. Difference between pay order and demand draft is in terms of place only. PO is used for remittance money with in the city where as DD is used for within the country DD too, constitutes current liability on the part of a bank. At EXIM DD is not sold to people other than its customer.

Its may be paid in cash to the payee on proper identification or the amount may be credited to his account. EXIM Bank charges commission for DD is 0.15% of the principal. The VAT is 15% of the total amount.

Issuing procedure of D.D

     a) Obtain demand draft application form duly filled in and signed by the purchaser /applicant.

     b) Receive the amount in case/ transfer with prescribed commission and postage amount.

     c) Insert test number.

     d) Enter in the D.D. register.

     e) Issue advice to the payee branch.

Payment procedure of D.D

     a) Examine generally of the D.D. viz. Amount, verify signature, test, series, etc.

     b) Enter in the DD payable register.

     c) Verify with the IBCA (Inter Bank Credit Advice)

     d) Pass necessary vouchers.

 Telephonic transfer (TT):

This is a mode of transfer / remittance of customer money from a branch of one bank to another branch of the same bank or to a branch of another bank with prior arrangement between the banks, with the TT issuing branch through telephonic message. The charge of TT is same as DD and here telephone charge is 50 taka and vat is 15% over the amount not the telephone charge. Characteristics of TT are:

      Issued by one branch to other branch and message is tale- communicated.

      Remittance / transfer of money are done through tested tale-messages.

      Remittance is affected on the basis of tested message.

      Test key apparatus required.

 TT issuing procedure

    a) Obtain TT application form duly filled in and signed by the purchaser/ applicant with full account particulars of the beneficiary.

   b)  Receive the amount in cash/ transfer with prescribed commission, postage, telephone/telex etc.

   c)  Prepare TT message inserting code number.

   d)  Enter in TT issue register.

   e)  Issue advice to the payee branch.

TT payments procedure

   a) Note the TT message and verify the test number and confirm if TT serial no. Etc. is OK.

  b) If ok, enter into TT payable register.

  c) Pass necessary voucher for payment.

Clearing:

 As far safety is concerned customers get crossed Cheque for the transaction. As we know crossed Cheque cannot be encased from the counter rather it has though been collected through banking channel i.e. clearing. A client of Exim Bank received a Cheque of another bank, which is located with in the clearing range deposit, the Cheque in account at Exim Bank New Exim Bank wills not the money until the Cheque is honored.

Transfer Delivery:

Transfer delivery is a cheque collection procedure among internal branches within the Clearing House. When a cheque is of a Branch Office is deposited to another Branch Office, then collecting branch on that date sends that cheque to their, Local Office, sends that cheque to that respective branch and takes necessary action for honoring cheque.

If the cheque is dishonored then authorized branch send the cheque to the local office and Local Office send that cheque to the collecting branch on the collecting date. Here Clearinghouse function is not required because transactions occur among the same branch of same Bank within the Clearing House.

Outward Bills for Collection (OBC):

Customers deposit Cheque draft etc for collection attaching with their deposit sleep. Instrument within the range of clearing arc collected through local clearing house but the other which are outside the clearing range are collected through OBC mechanism. A customer of EXIM bank principal branch local office Dhaka is depositing a Cheque of Sonali bank Cox’s‑Bazar. New as a collecting bank EXIM Bank principal branch will perform the following task.

1.      Received seal on deposit slip.

2.      EXIM Bank local office principal branch crossing indicating them as collecting bank.

3.      Endorsement give payees A/C will be credited on realization.

4.      Entry on register from where a controlling number is given.

Collecting bank can collect it either by its branches of by the drawer’s bank they will forward the bill then to that articulate branch. OBC number will be given on the forwarding letter.

Inward Bills for Collection (IBC):

In this case bank will work as an agent of the collection bank branch receives a forwarding letter and the bill. Next steps are:

1.      Entry in the IBC register, IBC number given.

2.      Endorsement given‑ “our branch endorsement confirmed”.

3.      The instrument is sent to clearing for collection.

4.      Miscellaneous creditor A/C.

Now following procedures will take place in case of the following two cases.

 Debit Transaction:

When some cheques or any sort of financial instrument of another branch are deposited in a branch and this branch pays those instruments on behalf of authorized branch, issues an IBDA to that branch and these transactions are recorded in the Debit side of IBG A/C.

Responding Branch: When a branch responds against an IBCA or an IBDA that branch is called Responding Branch.

Credit Transaction:

 Cheques are deposited for payment in a branch that branch sends those cheques or other financial instrument to Clearing House for clearing. After clearing those cheques or financial instruments collecting branch makes payment against those financial instruments, before paying this branch as Originating Branch sends an IBDA to the Authorized Branch/Responding Branch.

If those financial instruments are dishonored then respective parties are not paid and authorized Branch/Responding Branch again sends an IBDA to the Originating Branch. These returned financial instruments advice are recorded in the Credit side of the IBG A/C.

Outward Clearing Procedure

02. Checking of instrument & paying in slip.

03. Affixing of seal

04. Special Crossing seal.

05. Clearing Seal (Instrument & Paying in slip)

06. Endorsement Seal with signature.

07. Singing of counterfoil and returning it with seal to the depositor.

08. Separation of instrument from paying in slip.

09.  Sorting of instrument bank wise and branch wise.10. Preparation of schedule- branch wise.

11. Preparation Bank wise schedule.

12. Preparation of clearing House sheet.

13 Tallying of totals of paying in slips with the totals of Clearing House sheet.

14. Making of entries in Clearing Register (Outward)

15. Preparation of vouchers.

16. Sending of instruments to main branch with schedule.

17. Collection of credit advice from Main Branch.

Inward Clearing Procedure

01. Receipt of instruments with schedule.

02. Checking of instruments.

03. Sending of instruments to different Departments/Sections for posting

04. Preparation of Vouchers and sending of credit advice to main branch.

Clearing Return Procedures

02. Preparation of return memo.

03. Making of entry in clearing return Register.

04. Preparation of schedule.

05. Sending of instruments to main branch before second clearing06. Inward Clearing Return

07. Receipt of instrument with return memo.

08. Preparation of Party debit Voucher.

09. Making of entry in cheque return Register.

10. sending of instrument with return memo and party debit advice to party by post or through peon.

 Cash and Others

Procedure of cash receipts

      While receiving cash the receiving cashier should see that the paying in slip has properly filled in.

      The paying in slip does not bear the name of another branch or the customer has not mentioned the name of another branch.

      The title and number of account have been mentioned on the paying in slip and the counterfoil.

      The amount in words and figures are the same.

      The particulars and amount on the pay-in slip and the counterfoil are same.

      The Cashier should receive money, count it and mention the denomination of notes on the back of the paying in slip and see that the total tallies with the amount of the paying in slip.

      He should count the notes again and verify the amount from that mentioned on the paying in slip.

      He should enter the particulars as to the name of the party, account number and amount in the Receipt Register.

      He should sign on both the parts of the paying in slip i.e. voucher and the counterfoil.

      He should then hand over the paying in slip and the Receipt Register to the authorized person, Officer in Charge/Head Cashier.

      Particulars of which are to be noted in the register, sign the vouchers and hand over the same to the authorized person for affixing the “CASH RECEIVED” stamp and obtain counter signature from the officer.

      After the close of business hours, he should balance the cash receipts from the register, and should keep the cash ready for checking by the authorized person.

Procedure of Cash Payments

  For Payment of Cheques

      Payment Cashier should see that the cheque is in order i.e. the amount in words and figures are same. The cheque is neither post dated nor state.

      He should then request the presenter of the cheque to sign on the back of the cheque.

      The paying cashier sees that the signature of the ledger keeper and in case of big amount cheques, the signature of the officer and the Manager are there on the cheque as a token of having posted and supervised the cheque.

      He should see that officer/authorized person holding power of Attorney has canceled the cheque.

      If the cheque is payable to the order of payee, the payee or the endorsee (if endorsed) has been properly identified.

      Then he should take out cash and call out the name of the party and ask him about the amount of the cheque and his token number. If the amount stated by the party differs from the amount of the cheque, he should tally the token number, if the token number is the same and the amount differs, he should report the matter to the Officer in charge/ Manager.

      He should obtain another signature of the party on the back of the cheque. He should now see that the second signature tallies with the first one already on it.

      In case the signatures do not tally, he should not make the payment and report to the Officer in charge

      Before making the payment he should obtain the token from the party and see that the amount and token number are the same.

      He should, once again, ask the party about the amount of his cheque and count the cash for the second time before making payment. When satisfied in all respects he should make payment.

      He should affix the “CASH PAID” stamp bearing the date of payment.

      He should put his full signature under the cash paid stamp.

      He should enter the particulars of the cash payment in his payment Register.

      He should keep the cheques so paid in his safe custody till the Officer in Charge/Manager checks his payment register.

For Cash Payment of other instruments

      In case of cash payment of Drafts, Pay Orders and Pay Slips, he should see that the payee has been properly identified, and in case of Pay Slips, the beneficiary has signed on proper revenue stamp.

      The Officer/ Officers has/ have signed under the stamp “PAY CASH”

      In other respects, so far as applicable, the same procedure is to be followed as in payment of cheques.

For Payment on Cash Debit Vouchers

      For payment on cash debit voucher he should see that the voucher has been signed by two persons holding “Power of Attorney”.

      The Manager has singed on the cash debit voucher giving his assent.

      The proper Account has been charged.

      The recipient has signed on the back of the voucher

      If the amount is TK. 20/= (twenty) and above the recipient has signed on proper revenue stamp.

      If the payment is being made to a person other than a staff member, the “payee” must have been properly identified.

      In other respects so far as applicable, the same procedure is to be followed as in payment of cheques.

      After the business hours and at the close of the counter hours, the paying cashier should strike out the total of payment in his register, balance his cash. He should hand over the payment register along with the cheques, vouchers etc. to the Officer in charge or Head Cashier for checking and authentication his work.

Procedure of Cash Handling

      The Cashier should know to differentiate defective, Mutilated, Burnt, Torn etc. notes from good notes. As a matter of rule such notes should not be accepted over the counter as deposits or in exchange of good notes. These notes, under special circumstances, may be accepted only on “collection basis”. These notes should immediately be sent to Bangladesh Bank/ Sonali Bank for receiving payment of exchange value.

      Soiled notes should be sorted out and kept separate from those notes fit for reissue i.e. the cashier should separate ‘no issuable notes’ from ‘issuable notes’. Soiled/non issuable notes should be deposited to Bangladesh Bank/ Sonali Bank and receive the Exchange value as per practice in vogue.

FINDINGS

  EXIM Bank Limited presently has 44 branches to operate its business. But it is quite hard for EXIM bank to cover the whole Bangladesh with this small number of branches.

  Though the customer base is quite large but the customer service is not yet up to mark.

  The account opening process is not easier.

  The working procedure and office setup are in medium standard.

  EXIM bank provides only Credit cards. It needs to also introduce ATM, Debit Card etc.

  Foreign exchange department could offer better services through the automation at all its operations.

  Efficient work force along with proper division of work is vital for the success of any bank. EXIM bank has the scope to consider this factor to enhance and sustain it growth.

  Since the work  is done frequently manually, the entire department takes long time for processing.

  EXIM bank is sponsoring some cultural and beatification events but not regularly.

  Though EXIM bank provides the online banking facility but not in usual mode.

  The recruitment process in EXIM bank is quite fair. The training process is also quite accurate

  The number of exchange house through which EXIM Bank remitted money is only 5. EXIM is known as one of the leading local bank of Bangladesh but they don’t have enough exchange houses to remit money.

  During the festival time EXIM Bank Ltd has to face manpower shortages which hamper the managing process of the remittance department.

  According to the modern technology it is necessary to know about the new one to compete with other banks. In order to stay in the market every part of the organization has to be updated but SBL sometimes unable to cope with this.

  EXIM bank Ltd has to give more emphasize in their remittance process. It needs 2-3 days for reaching the remitted amount to the customer account. But customer may need the amount in one day but at that time EXIM bank Ltd can not provide the service to this particular customer. As a result the customer has to suffer.

  As one of the leading bank of Bangladesh EXIM Bank has to increase their distribution channel to satisfy the increasing no of customer in Wage Earners’ Remittance.

Recommendation

Exim Bank Bangladesh Limited has some problems in General banking, investment and foreign exchange activities. I would like to offer some suggestions and recommendations to overcome the problems relating the aforementioned topic of exim bank and also to improve the performance of exim bank regarding general banking, Investment and foreign exchange activities:

• Branch should develop its smooth function of customer dealings.
• G.B. facilities should be improved rather than conventional banking system.
• Increase the volume of supervision by the high officials to the above mentioned program.
• Setup sophisticated technology and formulate appropriate programs to develop the captioned activities.
• The staff and officers should be aware regarding the modern customer service.
• The bank should consider the customer complain when they raise any problem.
• The Bank should provide quick customer service to avoid haphazardness.
• The bank should develop its decoration system in such a way so that the customer can get their information easily.
• Bank should increase their staff according to customer demand.
• The Bank should persuade the government to introduce a separate Islamic Banking law with a view to operating their activities more smoothly.
• To develop awareness about Islamic Banking among the clients more effective efforts, like seminars, symposia and get-togethers along with different motivational programs should be taken and implemented.
• Efforts should be made to increase Bank’s investment under Mudaraba & Musharaka modes.
• To appoint manpower having sufficient knowledge on Islamic Shari’ah at all the branches to ensure proper buying & selling in the investment operations of the Bank.

• As soon as possible the bank should launch more branches in Dhaka city as well as in other cities of the country.

 CONCLUSION:  

In the financial world banking sector is the heart of a developing country. In order to develop a country’s economy, a good banking plays a very important role through their modern products and services. Among a large number of services, remittance management is one of the most important factors that directly hit a country’s economy. The remittance market is expanded all over the world as an important source of fee revenue for the commercial banking sector. EXIM Bank Limited is one of the leading banks in Bangladesh, which works for customer satisfaction through quality services. EXIM Bank Limited remits a huge amount of money outside of Bangladesh. For this remitted amount they do not claim any service charge and try to provide this service with in a very short time, where the international banks claim a higher charge for their services. It can be seen that EXIM Bank Limited is not much different from other commercial banks in Bangladesh. Most of the time it follows the same practice and procedure is followed by its competitors. But with in a very short time the satisfaction level of the customers are much higher than any other local commercial banks in Bangladesh.

BIBLIOGRAPHY

•       Prospectus of EXIM Bank Ltd.
•       Rights share offer document.
•       Annual Report on 2009 of EXIM Bank Ltd.
•       Several Booklets of EXIM bank Ltd.
•       EXIM Bank Website.
•       Investment manual and guidelines of EXIM Bank.
•       Several news letters from EXIM Bank Ltd.
•       Branch Manager Conference of EXIM Bank Ltd.
•       Islamic Banking- By Abdur Rakib and Shekh Muhammad.
•       Interest and Islamic Banking- By Moulana Muhammad Fuzlur Rahman Saharawi.