Internship Report on Evaluation of Foreign Exchange Operations of Mercantile Bank Limited

Executive summery

In the present day the most important Financial Institutions in the whole world are bank. Bank activities are spread all over the world’s everywhere. The bank is the safest place for collection of people’s money, property documents, different kind of worthy contract papers, providing lockers system for ornaments (Platinum or Gold), safely transfer of money from one place to another place and so on.

Banks’ basic service is collection of money from the peoples of a country & giving them interest based on their deposits. Bank also provides some loan to the customer and achieves the interest from the customer of each loan.

Purpose of the depositing money into the Bank:

v  People are depositing money for making themselves solvent in uncertain future life.

v  For the higher education purpose the people will deposit the money

v  For medical purpose the people will deposit the money

v  For tour purpose the people will deposit the money

Purpose of the taking advance money from Bank:

v  To fulfill a dream.

v  A family emergency or celebration.

v  To purchase some fixed property or plot or auto for easy movements of life.

v  The businessman are taking CC loan for running their business.

v  Banks provide working capital finance for running the business.

v  Banks provide project finance for the new project business.

The Bank is an institution which also needs earnings. The earnings of a bank are the difference of interest rates or other charges. Banks are providing Western union and money-gram service to the customer for receiving or transferring money to foreign country. Banks

are taking different kinds of bills like (Telephone, Gas, Water & Electricity bills) etc. not only the bills but also earn from L/C opening for export, import business, different kind of guarantee, remittance (inward, outward charges), charging from opening Foreign currency account, & investing in a capital market for earnings purpose.

The important section of a bank is foreign trade business. Foreign trade business is related to with export & import. By using foreign currency one country exchange their resources from other country by importing or exporting business. Before running the foreign trade business banks are playing vital role between exporter & importer. Banks are to open the letter of credit by request of buyer in favor of seller. And after starting the process banks are financial help to the importer & exporter. Earning foreign remittance is also the part of foreign trade section.

And last I can say that the bank is the kind of financial institution which is working for establishing its own existence in the economy. They are also doing business by investing in a capital market or other business & also give a chance to other businessman by providing corporate finance or project finance. Bank also tries to develop our economy by contributing these performances & wants to be long lasting in the competitive market.

Introduction

Mercantile Bank Ltd. is committed to provide high quality services to its constituents through different financial products and profitable utilization of fund and contribute to the growth of GDP of the country by financing trade and commerce, helping industrialization, boosting export, creating employment opportunities for the educated youth and encouraging micro-credit leading to poverty alleviation and improving the quality of life of the people and thereby contributing to the overall socio-economic development of the country.

The whole report is divided into three parts-Introductory parts, Learning part and concluding part. The first chapter is the introduction chapter of this report. The learning part shows foreign exchange activities of Mercantile Bank Limited, which includes introduction, foreign exchange transaction, import, export and foreign remittance. The third and last chapter contains problems, recommendations and conclusion of Mercantile Bank Limited.

Foreign exchange department plays significant roles through providing different services for the customers. Letters of credit is the key player in the foreign exchange business. With the globalization of economies, international trade has become quite competitive. Timely payment for exports and quicker delivery of goods is, therefore, a pre-requisite for successful international trade operations. To ensure this purpose, Mercantile Bank Limited transmits L/C through SWIFT (Society for Worldwide Interbank Financial Telecommunication) to the advising bank. Mercantile Bank Limited is providing different sorts of L/C services like L/C opening, Lodgment, BLC (bills under letter of credit), Back to back LC etc. Foreign exchange department also provide foreign remittance i.e. traveler’s cheque, foreign demand draft, endorsement of US$ in passport etc.

History

Mercantile Bank Limited was incorporated in Bangladesh as a public limited company under the Bank Company Act, 1991, on May 20, 1999. After obtaining license from Bangladesh Bank to carry on banking business, the bank commenced its operation on June 2, 1999 with an authorized capital of Tk 800 million divided into 8 million ordinary shares of Tk 100 each. On 31 December 2001, its paid up capital was Tk 596.5 million

Mercantile Bank Limited went for public issue of shares on October 21, 2003. Mercantile Bank Limited has been incorporated on May 20th, 1999 in Dhaka, Bangladesh as a public limited company with the permission of the Bangladesh Bank; MBL commenced formal commercial banking operation from the June 02, 1999. The bank stood 50 branches all over the country up to 2009.

There are 30 sponsors involved in creating Mercantile Bank Limited; the sponsors of the bank have a long heritage of trade, commerce and industry. They are highly regarded for their entrepreneurial competence. The sponsors happen to be members of different professional groups among whom are also renowned banking professionals having vast range of banking knowledge. There are also members who are associated with other financial institutions insurance Companies, leasing companies etc.

The bank provides a broad range of financial services to its customers and corporate clients. The Board of Directors consists of eminent personalities from the realm of commerce and industries of the country.

Mission

 “Will become most caring, focused for equitable growth based on diversified deployment of resources, and nevertheless would remain healthy and gainfully profitable Bank”

Vision

“Would make finest corporate citizen”

Objectives

Strategic objectives

• To achieve positive Economic Value Added (EVA) each year.

• To be market leader in product innovation.

• To be one of the top three financial institutions in Bangladesh in terms of cost efficiency.

• To be one of the top five financial institutions in Bangladesh in terms of market share in all significant market segment they serve.

Financial objective

• To achieve 20% return on shareholders’ equity or more, on average

Core Values

• For the customer

Providing with caring services by being innovative in the development of new banking product and services

• For the shareholder

Maximizing wealth of the bank

• For the employer

Respecting worth and dignity of individual employees devoting their energies for the progress of the bank

• For the community

Strengthening the corporate values and taking environment and social risks and reward into account.

Scope of the report

This report gives a narrative overview of the Mercantile Bank Ltd. Any development of Mercantile Bank Ltd, there after is thus out of the scope of the report. This report consists of the writer’s observation and on the job experience during the internship period. Topic of the report is study on foreign operation of MBL. Finally, this report incorporates an evaluation of export import activities, and the different aspects of cost of fund and return on investment.

Methodology

Primary Sources

Major sources of Primary information have been collected through discussing with my senior colleagues, Manager Operation, Head of Branch, Credit In charge etc.

Secondary Source

Sources of secondary information are as follows:

Internal Sources:

• Bank’s Annual Report
• Group Business Principal

          External Sources:

• Foreign Exchange Manual of MBL
• Internet

Limitations

As I have completed my internship in Mercantile Bank Ltd, Moghbazar Branch, I have enjoyed a very well decorated environment and comfortable place. 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. Any mistake from me may hamper their performance and goodwill in the banking sector, for these reasons I deprive of having practical knowledge. Short time duration and lack of practical knowledge are the main limitations of the study.

Every project has some limitations. I faced some usual constraints during the coursed of my internship. The experienced problems that have, to some extent, affected the presentation of the report are presented below:

• Business of The Administration – Since the representatives of the MBL are very busy, in some case I could not communicate with them properly.
• Fears to Disclosure – The administration also feared to disclose the confidential data related to the party and various forms and documents.
• Lack of Experience – Experience makes a man efficient.  I am not experienced enough to complete the study because I am a person of new hand on such study. That is why inexperience creates obstacles to follow the systemic approach and logical research methodology.
• Shorter of Time Remaining a Loft – I had to complete this internship program designed for two months only out of three months which many days were wasted. 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.
• Banks officials, for security reasons, declined the request for providing information in some crucial issues.
• As some of the fields of banking are still not covered by our courses, there was difficulty in understanding some activities.
• Another limitation of this report is Bank’s policy of not disclosing some data and information for confidential reason, which could be very much useful.
• Because of the limitation of information, some assumptions were made. So there may be some personal mistake in the report.
• Omissions and error may be there due to lack of my prior experience in preparing a professional report like this one; nevertheless, I have tried utmost to avoid mistakes.

Organizational Overview

Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking services with a view to improving the socio-economic development of the country. The philosophy of Mercantile Bank Ltd is not to ‘carry coal to the new castle’. The main target is to make credits available to the poor people and their activities are aimed at comprehensive growth where people from all economic strata will enjoy the benefits of better living standard, dignity of labor and self worth.

The Bank determined to build a long-term customer relationship with its corporate & general clients. As a part of this, Mercantile Bank ltd. is trying to expand their business with the market leaders of each sector of business. Mercantile Bank ltd. emphasizes not only on customer satisfaction but also emphasizes general banking and credit management system. So that customer can get better service from every side of overall banking.

Mercantile Bank Ltd is always ready to maintain the highest quality services by upgrading Banking technology, well management system and applying high standard of business ethics through its established commitment and heritage and is representing itself with true concept as ‘Banglar Bank’.

My Activity

I started my journey in the bank from the very beginning part this profession. I had opportunity to gain experience working over on different departments of Mercantile Bank Limited. I was engaged on several tasks on respective departments such as- Front desk, accounts department, foreign exchange department, and cash department.

I started my work from the main and important section of the bank. First I have worked in the front desk. In this desk the main work is to open the different type of accounts. The other important work is to provide new cheque to the customers. The customers can get the signature card, solvency certificate, day start and day end cheque book list, account transfer, account close, entry of inward mail and outward mail and pay slip issue.

There are a different desk in where I have learned how to issue the demand draft, pay order and transfer by telephone. But now-a –days the telephone transfer is not used most of the time. The other important thing is to understand the code of the different type of account opening form and the rate of interest that is provided to the customers. In the front desk I have a chance to deal with customers. So I think it is not very to keep the mind peace all the time. But I also get to know how to behave with the customer properly. Because the bank will earn the maximum benefit from this section. I have an opportunity to work in the clearing section of the general banking division. In this section I have received the cheque of the mercantile bank and other banks of our country. The customers who want to pay this cheque to the other customers. Then I also work in the cash department in where I just get to know after taking the money from the customer how to keep them in a proper way. Also after closing the cash I have to count the cash and after keeping certain amount, send the rest of the amount to the head office.

The most important work is to count the voucher everyday and match with the supplementary. It has to do daily basis and doing clean cash. This work is under the accounts department. I also maintain the transfer vouchers. I also got a chance to do work in the foreign exchange division. But I only worked in the import section. I came to know how to make a letter of credit form, how to make swift and some related topic of opening of letter of credit. Lastly I worked very few days in the SME section. In this department, I have learnt that how to processing the loan, identification of problems regarding SME loan, types of loan and in which sector the bank allocate the loans.

Critical Observations Regarding My Responsibilities

While making this report, I observed some activities of Mercantile Bank Limited. Here I would like to mention all the positive and negative things. Like:

* MBL plays a great role in placing right person to the right place.

* They are very active in performing their duties and responsibilities.

* They coordinate with different departments effectively and ensure proper synchronization of different departments.

* It is very difficult for them to coordinate with different departments because they have to do some works that are not related to their duties. It hampers their routine works.

* MBL is not properly equipped with logistics and other modern facilities. As a result, they require much time to do any complicated tasks and to communicate with other areas of the organization.

* MBL’s website is not up to date; they need to be updated regularly.

       * MBL should arrange new and effective training programs for developing their employees.

Time Line of Mercantile Bank Ltd

May 20, 1999 …………………………………Incorporation of the Bank

June 02, 1999………………………………… Commencement of Business

October 29, 2000 ………………………….…Opening of 10th Branch

July 03, 2002 …………………………………Opening of 15th Branch

June 30, 2003 …………………………………Publication of Prospectus for IPO

October 21-22, 2003 ………………………….Subscription for Shares

December 24, 2003 ………………………….Opening of 20th Branch

February 16, 2004 ……………………………Listed in Dhaka Stock Exchange

February 26, 2004…………………………… Listed in Chittagong Stock Exchange

December 29, 2004………………………….. Opening of 25th Branch

December 05, 2006 …………………………..Opening of 30th Branch

December 17, 2007………………………….. Opening of 40th Branch

November 24, 2008………………………….. Opening of 42nd Branch

June 06, 2009 …………………………………Mercantile Bank Brokerage House Operation

October 22, 2009 ……………………………..Opening of 45th Branch

December 30, 2009 ……………………….….Opening of 50th Branch

August 02, 2010……………………………… Opening of 55th Branch

December 30, 2010 ……………………….….Opening of 65th Branch

September 14, 2011 ………………………….Separate Operation of Mercantile Bank Securities                  Ltd. (MBSL)

December 06, 2011 ………………………….Mercantile Exchange House (UK) Limited

December 29, 2011 ………………………….Opening of 75th Branch

Name of the division in the Mercantile Bank- (Total 28 divisions)

• Managing Director & CEO
• Deputy Managing Director
• Deputy Managing Director & CFO
• Internal Control & Compliance Division
• Information Technology Division
• General Services Division
• Credit Risk Management Division
• Board Division
• Board Audit Division
• Financial Administration Division
• Treasury Division (front office)
• Treasury Division (Back office)
• Marketing and Branches Division
• Credit Admin, Monitoring, Recovery & Compliance Division
• General Banking & Anti-Money Laundering Division
• Human Resource Division
• NRB Division
• Public Relations Division
• Risk Management Division
• SME Financing Division
• Card & Mobile Banking Division
• International Division
• Research & planning Division
• Consumer & Retail Banking Division
• Corporate Banking Division

 Organizational Hierarchy of MBL

Corporate Information

HEAD OFFICE

61, Dilkusha Commercial Area

Dhaka-1000

Phone: +88-02-9559333, 9553892, 9561140

Fax: +88-2-9561213

Swift: MBLBBDDH

E-mail: mbl@bol-online.com

Website: www.mblbd.com

Mercantile Bank’s Functional Departments

The Mercantile Bank Limited has the following departments, which includes the whole operations of

the bank. The departments are listed below with their major section in the following table.

Departments in Mercantile Bank Limited

Technology

MBL has adopted the modern hardware and software technologies to make the services easier and quicker they have introduced on-line banking and SMS banking services for their customers. They are providing 24 hours banking services to their clients through SMS banking and ATM booth.

Financial Performances of Mercantile Bank Limited:

This table shows the upward growth of the organization year by year. The strong management and the interest of directors made the growth of the business smooth. Hence the bank has positioned itself a comparatively good position among the other local bank of the country.

The main function of the bank is to mobilize fund from the surplus unit to deposit unit and hence the two main activity of the bank is to collect deposit and disburse loan and advances. When we talk about the performance of bank we must observe the performance on these two activities and the growth and balance of these two activities confirm that how better the bank is performing. The following graphs shows in a simple way the consistent performance of MBL across the country.

Deposit Mix

The Bank mobilized deposits of BDT 102,262.02 million as at December 31, 2011 compared to BDT 75,629.14 million till 2010. Total loans and advances stood at BDT 79,999.80 million at the end of 2011, which was BDT 66,377.70 million at the end of 2010. Import business stood at BDT 95,008.70 million in 2011 compared to BDT 89,524.10 million in 2010. Export business stood at BDT 81,311.80 million in 2011 as against BDT 59,404.20Million in 2010. The Bank collected foreign remittance of BDT 7,150.00 million in 2011 compared to BDT 5,108.10 million in 2010.

Loans and advances:

 MBL made adequate provision against classified loans. Specific c provision made is significantly higher than last year. Adequate provision made the Bank stronger than before. Tier-1 Capital stood at BDT 8,906.50 million at the end of 2011 compared to that of BDT 7,100.80 million at the end of 2010. Tier-2 Capital reached to BDT 1,794.40 million at the end of December 2011 as compared to that of BDT 1,583.52 million at the end of 2010. Return on Assets (ROA) was 1.49% as on December 31, 2011 and Return on Equity (ROE) was 17.95% as on December 31, 2011. Consolidated Capital Adequacy Ratio (CAR) of the bank stood at 10.60% against minimum requirement of 10.00% as per Basel II Capital Accord in December, 2011. Net Interest Margin (NIM) stood at 2.93% at the end of 2011 suggesting a healthy growth in Net Interest Income.

Product and Service

Mercantile Bank Limited has offer a broad array of innovative financial services specially designed to match the specific requirement of the client ranging from large corporate houses, small and medium enterprises to private individuals. The team of professionals assists the clients in finding the most appropriate financing package making use of the Bank’s own resources and/or organizing loan to help the clients realize their short-term goals and long-term aspirations.

General Banking

The general banking department does the most important and basic works of the bank. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. MBL provides different types of accounts, locker facilities and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows-

• Deposit section
• Account opening section
• Cash section
• Bills and clearing section
• Remittance section
• FDR section
• Accounts section

Functions of General Banking Division

1) Account opening.

2) Cheque book issuing

3) Signature Scanning

4) Demand draft issue.

5) Pay order issue

6) Telephonic Transfer

7) Account enquiry

8) Providing Accounts Statements.

9) Solvency certificate issuing

10) Account transfer

11) Account closing

12) Dispatch

13) Return of Bangladesh Bank and Head office statements

Foreign Exchange

Foreign Exchange department facilitate the inflow and outflow of foreign currency exchange by opening export-import L/C. This department also facilitates local L/C.

Function of Foreign Exchange department:

Import

• Opening of letter of credit

• Advance bills

• Bills for collection

• Import loans and guarantees

Export

• Pre-shipment advances

• Purchase of foreign bills

• Negotiating of foreign bills

• Export guarantees

• Advising/ conforming letters of credit

• Advance for deferred payment export

• Advance against bills for collection

Remittances

• Issue of D.D, T.T & M.T.

• Payment of D.D, T.T, M.T

• Issues and encashment traveler’s Cheque

• Sale and encashment of foreign currency notes

• Non-residence accounts

SME Service

To make customers life more convenient and comfortable, Mercantile bank offer variety of lending option for their customer.

On-line banking Service

On-line service is now available for all customers of the bank. On-line banking have so far activated with 42 branches. As a result, it saves the time and efforts of the customers. They can easily deposit and withdraw money, transfer money from one place to another place by using online banking facility.

 On-line banking times:

1. Sunday to Thursday: 9am to 3pm

2. Saturday: 9 am to 12am

   Account wise Online Banking Limit (cash withdrawal, deposit and transfer):

1. Minimum deposit limit: TK 500000 per transaction cumulative deposit shall not be more than TK. 1000000 per day.

2. Maximum Withdrawal limit: TK 500000 per transaction cumulative withdrawal shall not be more than TK. 600000 per day.

• Charges for Online Banking:

SMS Banking

SMS service is one of the most modern banking services. It is convenient safe, low-cost, fast and available round the clock. MBL SMS Banking service offers the followings:

• Access to account balance

• Last 3 transaction inquiry

• Cheque leaf status inquiry

ATM Booth and SME Service Centre

The bank serves the customers by providing ATM Booth and SME Service Centre facilities. A number of ATM Booths and SME Service centers have been unlocked at different commercially significant places of the country to serve the customers, to save their time, consequently, to make them free from hassle.

Cards of MBL

• Dual Card (two in one): Single Card with double benefits. No hassle to carry two cards (local and international). A single credit card can be used both locally and internationally to withdraw cash from ATM for POS transaction. This is the special feature of MBL Visa card.

• Debit Card: Visa debit card is mainly tagged with deposit account (CD/SB/STD) that is automatically debited from the A/C having available balance. Debit card can also be used for purchasing goods, services, payment of utility bills etc as well as withdrawal of cash from ATM.                                                                    

• Pre-Paid Card: Those who have no account with MBL may avail Pre-Paid card facilities. The Pre-Paid cardholders pay first buy later. Pre-Paid card offers the convenience and security of electronic payment in situations where one might otherwise use cash, such as birthday gift or a monthly allowance for a young adult. Examples include gift cards and salary payment etc.

Categorization of Bank Account

• Current Deposit (CD)

• Savings Deposit (SD)

• Short Term Deposit (STD)

• Fixed Deposit (FDR)

• Foreign Currency Deposit (FC)

Deposit under schemes

Double Benefit Deposit Scheme

Under this scheme, one can deposit a certain amount of money for a period of seven and half year. After 7 1/2 years, the deposit amount will be doubled.

Mashik Sanchaya Prokalpa (MSK) Or Monthly Savings Scheme (MSS)

The prime objective of this scheme is to encourage the people to develop their habit of saving. Under this scheme, one can save a fixed amount of return every month and get a lucrative amount of return after five, eight or ten years.

Family Maintenance Deposit Scheme

Under this scheme, one can deposit a certain amount of money for five years and in return he/she will receive benefits on monthly basis. Benefit start right from the first month of opening an account under the scheme and continue up to five years. On maturity the principal amount will be paid back

Time Benefit Deposit Scheme

Under the ‘1.5 Times Benefit Deposit Scheme’ a deposit of minimum BDT 50,000.00 (fifty thousand) or its multiples will be received for a period of 42 months (3.5 years). On maturity after 42 months, 1.5 times of the deposited amount will be paid back to the account holder as per example given below:

Highlights on the overall activities of Mercantile Bank Limited

                                                                                                (Taka in millions)

Meaning of Foreign Exchange

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

• Import
• Export
• Remittance

I will discuss about this topics later. These three parts are most essential parts of Foreign Exchange Operations of MBL at Moghbazar Branch. Not only MBL but also all banks of Bangladesh have maintained these rules for foreign exchange operations.

Foreign Exchange Market

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

• Bank & Client
• Different Banks in the same foreign exchange market
• Different Bank & Schedule Bank of the same country
• Different Control Bank

Mercantile Bank Ltd. is a bank follows the following the two craters in respect & payment of foreign exchange:

• Local Currency market value
• Foreign Currency market value

Euro Dollar, Petro Dollar, Asian Dollar

Euro Dollar is virtually no paper dollar, but mark in dollars; it’s a new name in the currency market in the world, similarly Petro Dollar means the Dollar earn from sale of fuel. Particularly oil based middle-east countries. Thirdly Asian Dollar means the Dollar of Singapore, Hong Kong, Tokyo, Bahrain etc. Asian Dollar move or less control Euro & Petro Dollars. MBL can buy or sale foreign currency from the foreign exchange market for profit. This bank posse’s license from Bangladesh Bank to deal foreign currency business in the currency exchange market in the world. FSBL maintains overseas inter A/C, with different banks in different countries. In the world for network system for Import, Export & Remittance purpose foreign exchange currency may be created a commodity for which MBL can sell or purchase the same to the party or other bank with some profit (exchange).

Exchange is being controlled

Exchange is being controlled by the following ways:

• To stabilize the rate of exchange
• To protect implementation of plans
• For proper implementation of plans
• To increase the bargaining strength
• To check over invoicing & under invoicing
• To check the blank marketing & smuggling
• For regulating the international movement s of goods

Authorized Dealer Branch

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

Arbitrage of Foreign Exchange

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

Foreign Exchange Regulation Items

Foreign Exchange regulation items are given below:

• Bangladesh Bank Manual
• Foreign Exchange Circular
• Public Notice
• Import & Export Policy Gazette
• Ministry of Commerce Circular
• BCD Circular
• Guide lines for foreign exchange regulation
• Other authorization (i.e. NBC Dept)

Multiple Exchange Rates

Various rate quoted for one currency purchase and sale. Our country rate is multiple exchange rates. The rates of exchanges are the price of one currency in relation to others. Rates are three types:

• Currency Rate
• Pence Rate
• Cross Rate

Currency Rate: (Indirect Quotation)

Buy high sell low i.e. local currency fixed and foreign currency variable e.g. India & London quoted this rate. In case of currency rates:

• Buy high
• Sell low
• For buying in currency rate higher discount is added and lower premium is deducted.
• For selling lower discount is added and higher premium is deducted

Local currency fixed and foreign currency variable i.e. by & sell high. New York money market quoted this rate.

Pence Rate

Foreign currency fixed and local currency variable i.e. buy low & sell high. New York money market quoted this rate.

Cross Rate

Other currency rate to one another. There are two ways quotation in exchange rate i.e. (a) Buying Rate & (b) Selling Rate

Others Rate

There are also other rates. Those are given below:

TT (Telegraphic Transfer) & OD (On Demand) Rate

TT & OD rate should be applied for foreigners & Govt. people i.e. other than import. BC (Bills for Collection).

Selling Rate

This rate should be applied for Import Bills only.

IT Clean Rate

This rate should be applied for other than foreigners i.e. the A/C holders and for purchasing Cheque, Draft, TT, MT, PO and TT. Clean rate also will get foreign currency account holder and purchasing of foreign currency note.

Sight Expert

When we will purchase the export document in that case rate will apply OD sight export.

Transfer Rate

This rate should be applied for official people & foreign only. Cheque, Drafts, MT, TT, PO, and Coupons etc. will be purchased applying OD transfer rate.

Exchange Rate Rules

There are different types of exchange rate rules. Those are given below:

In case of Pense Rage

• Buying low
• Selling high

In case of currency Rate

• Buy high
• Sell low

For Buying

• In currency rate higher discount is added and lower premium is deducted
• In pence rate higher discount is deducted and lower premium is added

For Selling

In currency rate low discount is added and higher premium is deducted

In pence rate lower discount is deducted and higher premium is added

Basket of Currency in our Country

• US Dollar
• Pound Sterling
• DM
• Yen
• France Frank

Our rate quoted based on US Dollar in the year 1986 January instead of Pound Sterling. Now the rate in our country is unification from January 1992.

Methods of Effecting Payment of FSBL

Mercantile Bank Ltd. follows the following methods to make payments between countries.

Telegraphic Transfer (TT)

This is an instruction for transfer of money by Telegram, Cable or Telex from a bank in one country to another Bank in different center. This is an instruction form the Importers Bank to the exporters Bank. The TT charge is realized by us from the partly as per Bank circular.

Mail Transfer (MT)

This transfer is the order to pay cash to a 3rd party. This transfer is sent by mail & the charge must be realized as per Bank circular.

Drafts & Cheque

A draft is pay order issued by one bank to another bank or its branch.

Import

Import may be defined as bringing of visible item to the country from abroad through letter of credit or the Authorization form (LCAF) paying foreign Currency to that of exporting country.

To import, a person should be competent to be an importer. According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export (CCI & E) provides the registration (IRC) to the importer. In an international business environment, buyers and sellers are generally unknown to each other. So, seller of goods always seeks security for the payment of his exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Thus, the contract between importer and exporter is given a legal shape by the banker by ‘Letter of Credit’.

A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the instance of its customer (known as the applicant) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain conditions mentioned in the letter have been complied with.

Definition of Letter of Credit

A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the instance of its customer (known as the applicant) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain conditions mentioned in the letter have been complied with.

Classification of Letter of Credit

• Irrevocable Credit
• Transferable Credit
• Restricted Credit
• Red Clause Credit
• Green Clause Credit
• Confirmed Credit
• Divisible Credit
• Back to Back Credit
• LC without resource Credit
• LC with resource Credit
• Revolving Credit
• Anticipatory Credit

Parties to the Letter of Credit

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

To Open a Letter of Credit the Following Factors Should Consider

Amendment of Letter of Credit

After opening of L/C some time’s alteration to the original terms and conditions become necessary. These amendments involve changes in –

• Unit price
• Extension of validity of the L/C
• Documentary requirements etc.

Such amendments can be affected only if all the concerned parties agree i.e. the beneficiary, the importer, the issuing bank and the advising bank.

For any amendment the importer must request the issuing bank in writing duly supported by revised indent Invoice. The issuing bank then advises the required amendment to the advising bank. L/C amendment commission including postage is charged to the clients A/C.

• L/C Authorization Form
• Filled up LCA form
• Trade License
• Pro-forma Invoice
• Tax Identification Number
• Import Registration Certificate
• Value Added Tax.
• Filled up Amendment Request Form
• IMP form-Bangladesh Bank
• Insurance Cover Note and Money Receipt
• Authority to Debt Account

Shipment of Goods and Lodgment of Documents by Exporter

Then exporter ships the goods to the destination of the importer country Sends the documents to the L/C opening bank through his/her negotiating bank. Generally the following documents are sent to the Opening Banker with L/C:

• Bill of Exchange
• Bill of Lading
• Commercial Invoice
• Certification of Origin
• A certificate stating that each packet contains the description of            goods over the packet.
• Packing List
• Advice Details of Shipment
• Pre-shipment Inspection Certificate
• Vessel Particular
• Shipment Certificate

Import Financing

Payment against Documents (PAD)

Payment made by bank against lodgment of shipping documents of goods imported though Letter of credit falls under this head. It is an interim advanced with import and it is generally liquidated against payments usually made by the party for retirement of the documents for release of imported goods from the customer’s authority. It falls under the category of commercial loan.

Loan against Imported Merchandise (LIM)

Advances allowed for retirement of shipping document and release of goods imported though LIM taking effective control over the goods by pledge fall under this type of advance. When the importer failed to pay the amount payable      the exporter against import LIM, then FSBL gives loan against imported merchandise to the importer. The importer will bear all of the expenses.

Import against Trust Receipt (LTR)

Advance against a LTR obtained from the customer is allowed when the documents covering an importer shipment are given without payment. The customer holds the goods or their sale proceeds in trust for the bank until the LTR are fully paid off. LTR is a document that creates the bankers line on the goods. The period of LTR may be 30, 45, 60 or 90 days.

Payment Procedure of Import Documents

This is the most sensitive task of the Import Department. The officials have to be very much careful while making payment. This task constitutes the following:

Date of Payment

Usually payment is made within seven days after the documents have been            received. If the payment is become deferred, the negotiating bank may claim interest for making delay.

Preparing Sale Memo

A sale memo is made at BC rate to the customer. As the TT & OD rate is      paid to the ID, the difference between these two rates is exchange trading. Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID.

Requisition for the Foreign Currency

For arranging necessary fund for payment, a requisition is sent to the International Department.

Transmission of Message

Message is transmitted to the correspondent bank ensuring that payment is being made.

Kind of Import Business Related to L/C

• Food
• Chemical(Textile)
• Medical Instruments
• Electric Device( IPS, UPS cables etc)
• Computer accessories
• Others

Export

The goods and services sold by Bangladesh to foreign households, businessmen and Government are called export. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number is to be incorporated on EXP forms and other documents connected with exports.

Parties Involved in Export Letter of Credit

• Importer
• L/C Issuing Bank
• Exporter L/C Advising Bank.
• Negotiating Bank
• The paying/ Reimbursing Bank

Documents Required for Export Letter of Credit

These documents should be submitted to the bank for negotiation:

• Export L/C EXP form
• Proforma invoice
• Bill of Exchange
• Certificate of origin
• Bill of Lading
• Packing list
• Inspection certificate Insurance document
• Any other document as per L/C

Procedure for Export Letter of Credit

There are a number of formalities that require to procedure of Export Letter of Credit:

ERC (Export Registration Certificate)

For export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number is to be incorporated on EXP forms and other documents connected with exports.

Obtaining EXP

After having the registration, the exporter applies to First Security Bank Limited with the trade license, Export Registration Certificate and the Certificate from the concerned government Organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter. An EXP-From contains the following particulars:

• Name and address of Authorized Dealer
• Particulars of the commodity to be exported with code
• Country of destination
• Port of destination
• Quantity
• L/C value in foreign currency
• Terms of Sale
• Name and address of Importer / Consignee                             
• Bill of Lading/ Railway Receipt! Airway Bill/ Truck Receipt/ Post         Parcel Receipt no. and date
• Port of Shipment
• Land Custom Post
• Shipment Date
• Name of the Exporter with address CCI & EI’s Registration number       and date of the Exporter
• Sector (Public or Private) under which the Exporter falls

Securing the Order

Upon registration, the exporter may proceed to secure the export order. Contracting the buyers directly through correspondence may be done. Some buyers of goods like jute and jute goods maintain liaison office. Representative of local agents who can be contacted to secure a deal.

Signing of the Contract

The following points are to be mentioned in terms of signing of the contract:

• Quantity of the commodity
• Price of the commodity
• Shipment
• Insurance and marks. Inspection
• How can solve any kind of conflicts between the contract parties.
• The terms of the L/C are in conformity wit those of the contract

Procuring the Materials

After making the deal and on having the L.C opened in his favor, the nest step for the exporters to set about the task of procuring or manufacturing the contracted merchandise.

Shipment of Goods

The following are the documents normally involved at the stage of shipment:

• EXP Form
• Photocopy of registration certificate
• Photocopy  the contract
• Photocopy of the L/C
• Freight certificate from the bank in case of payment of the freight at       his       port of loading is involved.
• Railway Receipt, Berge Receipt or Truck Receipt.
• shipping instructions
• Insurance policy

Settlement of Local Bill to Back to Back

The settlement of local bills is done in the following ways:

• The customer submits the LIC to First Security Bank Limited along         with the documents for negotiate
• First Security Bank Limited official scrutinizes the documents to            endue the conformity with the term and conditions.
• The documents are then forwarded to the to the L/C opening bank.

Preparation of the Export Document

Substantive Document

Substantive document are those which are normally required to be furnished under almost all the contracts for sale of goods to overseas buyers and they include:

• Draft or bill exchange
• Commercial invoice
• Bill of lading or airway bill
• Marine insurance policy

Auxiliary Document

In substantive document, the exporter may be required to prepare other document, called auxiliary document. The number and type of those documents depends on the terms of the contract and /or the L/C, but they mainly include:

• Packing list
• Consular invoice
• Certificate of origin
• Inspection certificate
• Quality control certificate
• Photo- sanitary certificate
• GSP certificate

Export Financing

Export financing can be two types:

Pre- Shipment

Pre- shipment, as the name suggest, is given to finance the activities of an exporter prior to the actual shipment of goods. Pre-shipment credit is essentially a short-term credit and liquidated by negotiation or purchase of export bills covering the merchandise.

Export Cash Credit (Hypothecation)

Under this arrangement, a credit is sanction against hypothecation of the raw materials or finished goods for export. Such facility is allowed only to major exports. As the bank has no got security, in this case, except change documents and line of export L/C or contract, the bank normally insists on the exporter furnishing collateral security.

Export Cash Credit (Pledge)

This credit facility is allowed against a pledge of exporter goods or raw materials. In this case, cash credit facilities are extended against pledge of goods to be stored in the go down under banks control by signing            the letter of pledge and other documents.

Export Cash Credit against Trust Receipt

In this case, credit limit is sanctioned against Trust Receipt (TR). Here also, unlike the pledge, the exportable goods remain in the custody of the exporter.          He is required to execute a stamped export trust receipt in favor of the bank, wherein a declaration is made that goods purchased with financial assistances of bank are held by him in trust for the bank.

Packing Credit

In this case, the credit facilities are extended against security of railway receipt or steamer receipt or barge receipt or truck receipt evidencing transportation of goods to the port for shipment of the goods in addition to the usual charge document and lien of export letter of credit.

Back-To-Back Letter of Credit

Under this arrangement, the bank finances export by opening a letter of credit on behalf of the exporter who has received a letter of credit from   the overseas buyer. As the exporter (the applicant) is going to purchase        raw material, this new letter of credit is opened in favor of the supplier of raw materials within or outside the country. Since the second letter of credit is opened on the strength of, and backed by, another letter of credit it is called back-to-back letter of credit.

Cash against Red-Clause Letter of Credit

Under the Cash against red-clause Letter of Credit, the opening bank authorizes the advising bank/negotiation bank to made an advance to the beneficiary prior to shipment enable him/her to procure and store the exportable goods in anticipation of his/her effecting the shipment and         submitting a bill under the L/C.

Post-Shipment

Post shipment credit refers to the credit facilities extended to the exporter by the bank after shipment of the goods against export documents. Necessary of credit arises, as the exporter cannot afford to wait for a long time without paying manufacturers/ suppliers.

Negotiation of Documents under Letter of Credit

Under this arrangement, after the goods are shipped, the exporter submits the concerned document to the negotiating bank for negotiation. The documents should be negotiated strictly in accordance with the terms and conditions and    within the period mentioned in the letter of credit.

Purchase of DP& DA Bills

In such a case, the bank purchased/discount the DP (document against payment) and DA (document against acceptance) bills operated under the payment method of documents separately, and clear instructions have to be obtained from the drawer of the bills in regard to all important issues related to the negotiation of the bills.

Advances against Bills for Collections

Banks generally accept export bills for collection of proceeds when they are not drawn under against an L/C contain some discrepancies. The bank generally negotiates bills drawn under L/C, without any discrepancy in the documents and the exporter gets the money from the bank immediately.

The goods and services sold by Bangladesh to foreign households, businessmen and Government are called export. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The

ERC is required to be renewed every year. The ERC number is to be incorporated on EXP forms and other documents connected with exports.

Kind of Export Business Related to Letter of Credit

• Garments
• Shrimpfish
• Jute
• Plastic
• Others

Export Operation

Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through UC BANK are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers. Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.

• As Advising bank – It receives documents from the foreign importer           and hands it over to the exporter.
• As Negotiating Bank – It negotiates the bills and other shipping       documents in favor of the exporter. That is, it collects the proceeds of             the export-bill from the drawee and credits the exporter’s account for the        same.

               In our country, Export and Import operation of bank is            related with one              another because use of Back to Back and maturity of payment for Back                  to Back L/C is set in such that it can be paid out of export proceeds.

• Back-To-Back L/C – It is simply issued to the clients against an import      L/C. Back-to-Back mechanism involves two separate L/Cs. One is    master Export L/C and another is Back-to-Back L/C.

Classification of Back-to-Back Letter of Credit

Back to back L/C can be divided into four categories. These are:

• Local (04)
• EDF(05)
• EPZ foreign (12)
• Foreign (06)

Features of Back-to-Back Letter of Credit

• An Import L/C to procure goods /raw materials for further processing.
• It is opened based on Export L/C.
• It is a kind of Export Finance.
• Export L/C is at Sight but back to Back L/C is at Usance.

Payment of Back-To-Back Letter of Credit

In case back to back as 60-90-120 days of maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C issuing bank.

Negotiation of Exports Documents

The most common method of financing exporters is negotiation of documents under L/C. It is a post-shipment credit. Here the bank acts as a negotiating     bank. After the shipment of the goods, the exporter submits the relative documents to the branch for negotiation.

Presentation of Export Documents for Negotiation/Purchase

After shipment, exporter submits the following documents to First Security Bank Limited for negotiation.

• Bill of exchange
• Bill of Lading
• Invoice
• Insurance Policy/Certificate
• Certificate of Origin
• Inspection Certificate
• Consular Invoice
• Packing List
• Quality Control Certificate
• G.S.P. certificate.

Mode of Payment of Export Bill under Letter of Credit

As per UCPDC 500, 1993 revision there are four types of credit. These are as follows:

• Sight Payment Credit
• Deferred payment Credit
• Acceptance credit
• Negotiation Credit

Exp Form Register

Full particulars of the EXP Form should be entered in the Export Register B-77 maintained for the purpose, assigning a number for each set of EXP form and inserting the same along with code numbers in box of the EXP form in the manner as prescribed by Bangladesh Bank in Para 7(a) of Chapter 22 of             Guidelines for Foreign Exchange Transaction Volume-1, 1996 Edition and then certify the EXP form as required. All exports require declaration on EXP form, which are supplied by the authorized dealers for use of exports.

Remittance

Foreign Remittance

The basic functions of this department are outward and inboard remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes places at an agreed rate of exchange, in where the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchases, the cost being paid by the buyer in home currency, the legal tender.

Working of this Department

• Overall supervision of foreign remit. Dept
• Foreign TT payment & purchase of F. Drafts, preparations of FBP (Foreign   Bill Purchase)
• Issuance of outward TT & FDD
• Issuance of proceed responding certificate (PRC)
• Foreign collection, Bangladesh Bank Clearing Check Collection, that comes                   from all branch of FSBL
• Withdrawal from F.C. A/C
• Encashment of T.C & Cash Dollar and Sterling Pound
• Deduction of Tax and VAT. On behalf of Bangladesh Bank
• Preparation of related statements including convertible Take Accounts
• Preparation of IBCA & IBDA and balancing of collection and other special          assignment as desired by department in charge
• Balancing of account statement
• Compliance of audit & inspection
• Statement of all related works submitted to Bangladesh Bank

Inward Foreign Remittance

Inward Foreign Remittance covers purchase of foreign currency in the form of foreign TT, DD, MT, Bills etc. sent from aboard favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to exchange control department of Bangladesh Bank prescribing two forms:

• EXP from: Remittances received against export of goods from Bangladesh are done by this.
• From C: Inward remittances equivalent to US$ 2000/- and above are done by this.

Outward Foreign Remittance

Outward Foreign Remittance covers sales of foreign currency though issuing foreign T.T, Drafts, Travelers Check etc. as well as sell of foreign exchange          under L/C and against import bills retired. Two forms are used for outward    remittance of foreign currency are:

• IMP Form: All Outward Remittance on account of imports
• TM: For all other Outward Remittances

Remittance Facilities

Private Remittances

• Family remittances facilities
• Remittances of membership fees
• Education
• Remittances of consular fees
• Remittances of evaluation fees
• Travel
• Health & medical
• Seminars & workshops
• Foreign nationals
• Remittances for Hajj
• Other private Remittances

Official and Business Travel

• Official visit
• Business travel quota for new exporter
• Business travel quota for importer
• Exporter retention quota

Commercial Remittances

• Opening of branches or subsidiary companies abroad.
• Remittances by shipping, airlines and courier services.
• Remittance for royalty and technical fees.
• Remittance on account of training & consultancy.
• Remittance of dividends.
• Subscription of foreign media services.
• Fees for return monitors.
• Adv. of Bang. Products in mass media abroad.
• Bank charges.
• Sundries.

SW0T Analysis

Strength:

• MBL has a vast line of services, which can attract people of different segment of the society.

Weakness:

• Mercantile Bank Limited (MBL) currently don’t have any strong Marketing Activities through mass media e.g. Television.

• They even don’t have any sales people who can sell their SME loan product.

Opportunities:

• The focal opportunity of Mercantile Bank Limited (MBL) should be its competitors ‘vulnerabilities.

• To propagate the line of customers the bank will have to introduce tempting features embedded with the product.

• Major contract with big corporate houses as well as middle class people might be a good market to exploit.

Threat:

• The main threat for Mercantile Bank Limited (MBL) is a wide range of competitors. About ten of them are multinational. The multinational banks came to our country with vast resources, like financial and marketing skill. Also new invented business tools and techniques are channeled to them from their parent organization. So, it is a threat for the MBL.

Conclusion

As an internee of Mercantile Bank Ltd., I have truly enjoyed my internship from the learning and experience viewpoint. I am confident that this three months internship program at Mercantile Bank Ltd. will definitely help me to realize my further carrier in the job market.

Mercantile Bank Ltd. is a new generation bank in Bangladesh. It is committed to provide high quality financial services/products to contribute to the growth of GDP of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited income group and overall sustainable socio-economic development of the country. Though it is a new bank, Mercantile Bank Ltd. makes a strong position through its various activities. Its number of clients, amount of deposit and investment money increases day by day. This bank already has shown impressive performance in investment. The bank now should think to start new services and take different types of marketing strategy to get more customers in this competition market of banking.

As there are lots of local and foreign banks in Bangladesh the Mercantile Bank Ltd. is promising commercial Bank among them. In this competitive market Bank has to compete not only the others commercial banks but also with the public Bank. Mercantile Bank Ltd. is more capable to contributing towards economic development as compared with other bank. MBL invested more funds in export and import business. It is obviously that the right thinking of this bank including establishing a successful network over the country and increasing resources will be able to play a considerable role in the portfolio of development. Success in the banking business largely depends on effective lending. Less the amount of loan losses, the more the income will be from Credit operations the more will be the profit of the MBL and here lays the success of Credit Financing.

I do believe that all these will assist me in my career build-up.

Positive Findings

• It is newly generation bank and short history of operation but it has             created a brand value among the customers.
• A lot of savings and credit schemes have been introduced for different        market segmentation.
• It has a lot of customers and they are loyal very to the Moghbazar    branch.
• This bank comparatively charge very low service charge due to        providing various services even than the government banks.
• The Foreign Exchange department now performs comparatively better        than previous as they have very bitter but valuable knowledge about     this.
• Foreign Exchange department is also fluent in processing the necessary      foreign exchange documents and in servicing to the customers.
• This branch has much space for performing banking activities and for         relaxation of the customers.

Negative Findings

• The relationship among employees is not up to the mark.
• Online banking facilities are not available in every branch.
• Employees are not satisfied their salary.
• Advertisements about various products and services and comparative         advantages of doing business with this bank neither are nor properly             managed.                                                                                                         
• Job rotation is not performed timely as the officers demand it.
• Some employees are not well motivated in doing their routine jobs.
• Computer efficiency of the officers is not observed suitable enough in        all cases.
• Computer hardware and software have not been updated timely. Even all    computers are not well equipped.
• Banking law and banking practice are found sometimes inverse.

Suggestions to Overcome the Identified Problems

• The bank should try to arrange more training programs for their officials.      Quality training will help the officials to enrich them with more recent             knowledge of International Trade Financing
• Install require technology
• Sucking license for doing foreign trade business from Bangladesh Bank
• Reduce commission and other charge for expand foreign trade business        and help to gear up countries economy
• In many cases, the foreign banks want confirmations from other foreign        banks with which this bank has correspondence. This proves the poor     financial condition of our country. Bank should try to improve this situation
• The Bank should go aggressive advertising and promotional activities to       get a broad geographic coverage.
• The authority of Mercantile Bank Ltd should introduce more innovative and modern customer service.
• Practice amount of doubtful income declined substantially during the year as compared to the past few years, indicating more carefulness of the Management. As a result, idle money will be invested to increase potential profit of this Bank.
• Arrangement of monthly/quarterly training courses/workshops for the           clients selected by the Branches in order to promote Investment clients of the desired level.
• Mercantile Bank Ltd should initiates different investment modes           according to changing/diverse needs of clients by conducting huge             research and study.
• Mercantile Bank Ltd should utilize “Internship Program” as one             kind of promotion policy to encourage its present and potential investment clients. Because, young generation plays a vital role in our economy. To do so this Bank should provides facilities to the internees through proper placement and practical operations as well as job certainty to those who brings introduce themselves the best performers in doing their particulars.
• Mercantile Bank Ltd should appoint a sufficient number of women employees to deal women entrepreneurs and professionals and understand their needs and thus create demand for investment.
• To fulfill the vision of “mass banking” this Bank should grants            investment portfolio to new entrepreneurs/new businessmen new           companies etc.

Mercantile Bank Ltd is a progressive commercial bank in bank in banking sector. Its foreign exchange branch is a very busy branch. Therefore it is not fully computerized as yet. So, it is very difficult to find any thing within a very short period for quick customer service. To improve their customer service and to improve the overall-banking sector, the following recommendation can be suggested.

• Computer facility in all sectors: Nowadays, to survive in the competitive      market, bank has to provide various facilities to satisfy the customer, the           service should be swiftly, timely, accurately and good behavior pattern.     And to provide these facilities to the customer, computer is a must.
• Immediately start online banking: online banking facilities make the customers life more easy and safe. Many private commercial banks and      foreign banks provide online banking facilities to the customer.

Higher Rate of Interest for Credit

Clients generally complain that rate of interest for various types of credit are quite high. In many cases productivity from loaned investment is inadequate that borrower become incapable in repaying loan.

Irregularity in Providing Loan

Usually banks are responsible to provide loan to those who are eligible for the loan. But in reality, small investors do not get the loan easily. They have to fulfill more terms & conditions than those who have greater influence in the business community. That irregularity in providing loan is not ethical, banks all rules and regulations are equal for every one or every parties.

Diversify the Loan Facility

Bank can provide long term loan, loans fir highway and high rise constructions of to provide different small business sectors or agriculture sectors, which can also help the economy as well.

Involve Modern Technology in the Service System

Without using modern technology no bank can even think of remaining in the business in near future. So the bank must decide right now how it can equip its branch with modern technology. Use of modern technology in one sense can increase cost but another sense it increase productivity highly and it attract big clients.

Advertisement

The management should impart more imphasis on the advertisement of the bank in different electronic and printing media. The Basic goal of the advertisement should be firstly to make people know and understand that the bank is universal one and permits anyone’s access.

ATM Card Facilities

Mercantile Bank Ltd is now providing the ATM Card Service that is also a very important phenomenon of a financial institution. All the third generation banks have taken this facility to the door-step of the people. MBL has to give more emphasize in this regard. In the first phase, the ATM card service will be available in DhakaCity, which will gradually be made available in other major cities.

Up Gradation of Computer Hardware and Software

Computer hardware and software are not updated as necessary. Some computers lack of required accessories and the some are not well performing.

Use of Bangla in Documentation

All the necessary charged documents are written in English which are quite understandable to all kinds of parties. Most of them agree with the terms and conditions without reading the conditionality. So, I hope use of Bengali language along with English may be helpful for the parties.

More Motivational Activities

Some officers are not well motivated in doing their routine tasks. They should be motivated by applying various motivational tools. They should be motivated in such way that they would feel proud to be a part of MBL.

Direct Social Involvement

To enhance the image of the bank and to assume social responsibility, the bank should engage itself to various social programs like Scholarship to poor but meritorious students, Empowerment of the children in abject poverty, sponsor ship in various sports and job fair, Compaign against dowry and other social evil etc.

Cost Accounting Cell

It should maintain a separate cost accounting cell at the head office of this Bank furnished by professional cost accounts for implementation of appropriate costing system.

Research Cell

The research cell of this Bank should be strengthening with the efficient manpower by studying the feasibility of introduction of new products, analysis of manpower productivity and similar other research works.

Analyze the Competitors

MBL should observe competitors closely to analyze any new action taken by them and react competitively to that action. It can be accomplished by the following ways:

• MBL can get information about a certain competitor’s Business policies by recruiting that company’s employees.
• It can get information from people who do Business with rivals.
• It can get information about other Banks from published materials and published document.

Reengineering Its Core Business 

MBL should reengineer its core Business process in order to eliminate duplicate work and reduce overhead cost.

Analyzing the current competitive situation in terms of opportunity and threats and its strengths and weaknesses, several strategies are recommended for MBL. It should start credit card services by forming strategic alliance with other banks. It should also introduce new innovative services, increase its area of coverage and train its new employees in professional institutions like Bangladesh Institute of Bank Management (BIBM). But most importantly the bank should go for Asset-driven marketing instead of buying liabilities, because deposit is liability for the bank. On the other hand, if they can invest this deposit through giving investment, and then it will become their asset. There is no point in increasing the deposit unless it can be invested profitably. So they should try to maintain a balance between deposits and investment. In addition

to that, it should also improve its services through launching its own website, and promote its services through it. If MBL always keeps itself up to date with the current trend and development in the outside world, it can reap the benefit of new opportunities, and thus become an ideal bank for the generations to come.

Customers’ View

• Most of the clients are satisfied with the management philosophy of the Bank.
• They diverse modern technology in banking service.
• Most of the client treats the bank as their friend so they were not hesitating to say about the bad side of the service while they were interviewing by me.
• Clients especially the corporate clients are required to be trained through workshop and training season for the clients.
• The bank can achieve success if they can handle the situation efficiency