Internship Report on General Banking of Basic Bank

The main purpose of this report is to analyze the performance of BASIC Bank Limited with special features of General Banking activities. Other focus subjects are the bank’s major functions, analysis of Financial Highlights. Here also describe the Investment process and Foreign Trade process. Finally, discuss SWOT analysis and find out some problems related to general banking and give recommendations.

Introduction

General Banking comprises account opening, bills, remittance, clearing, cash, and computer sections. Through these, it establishes Banker Consumer relationship, collects bills for customers, remits funds of customers from one place to another, and honor Cheque drawn on this branch. The general banking department provides these services in a faster and better manner.

Bank investments are greatly emphasized and we can call all this the ‘Heart’ of the bank because they are a major source of a bank’s income. They are very important to the economy as a whole because the expansion and condition of the bank investment affect the level of business activity through their effect on the nation’s money supply. The bank extended its Investment facilities to different sectors to diversify its investment portfolio in compliance with the credit policies of the Bangladesh Bank. Investment Department plays a vital role in augmenting the bank’s growth and earnings. It provides different types of Investment facilities to its customers like Secured Over Draft, Cash Credit, House Building Loan, Trust Receipt (TR), Inland Bill Purchase (EBP), Foreign Bill Purchase, etc. To give security to the banks’ funds, the Investment section takes various documents like DP notes, Letter of Lien, Registered Mortgage of Collateral Security, etc. while sanctioning these Investments.

Objectives of the Study:

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

The main objectives of the Report: –

• Company Background.
• Company’s major functions.
• Financial Highlights.
• Types of Account.
• Paper/Documents required for opening & closing of various types of Accounts.
• Special cases in Account opening.
• Cash receive and payment.
• Procedures of T.T, D.D, P/O, I.B.C.A & O.B.C.
• Clearing House – Inward & Outward Clearing.
• Foreign Trade.

Methodology of the Study:

The following methodology will be followed for the study: –

• Primary Sources, and
• Secondary Sources.

Both primary and secondary data sources will be used to generate this report.

Primary Sources:

Primary data sources are scheduled surveys, informal discussions with professionals, and observations while working at different desks.

The primary sources of my information are as below:

• Direct observation
• Special outlook
• Questioning the concerned persons.
• Discussion with the other Bankers.

Secondary Sources:

The secondary data sources are annual reports, manuals, and brochures of BASIC Bank Limited and different publications of Bangladesh Bank.

The secondary sources of my information are as below-

• Annual report of BASIC Bank Limited
• Desk report of the related department
• Other manual information
• Different reference books of the library
• Some of my course elements as related to this report.

To identify the implementation, supervision, monitoring, and repayment practice- an interview with the employee and extensive study of the existing file was and practical case observation was done.

HISTORICAL Background:

The BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) establishes as a banking company under the Companies Act 1913 launched its operation in 1989. It was incorporated under the Act on the 2nd of August, 1988. The Bank started its operation on the 21st of January, 1989. It is governed by the Banking Companies Act 1913. The Bank was established as the policymakers of the country felt the urgency for a bank in the private sector for financing Small Scale Industries (SSIs). At the outset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCCI, the Government of Bangladesh took over 100 percent ownership of BASIC on 4th June 1992. Thus there is state-owned. However, the Bank is not nationalized; it operates like a private bank as before.

Basic Bank is unique in its objectives. It is a blend of development and commercial banks. The Memorandum and Articles of Association of the Bank stipulate that 50 percent of loan-able funds shall be invested in the small and cottage industries sector.

Steady growth in client base and their high retention rate since Bank’s inceptions testify to the immense confidence they repose on its services. Diversified products both liability and assets sides particularly a wide range of lending products related to the development of small industries and micro enterprises, and commercial and training activities attract entrepreneurs from varied economic fields. Along with the promotion of products special importance is given to individual clients through providing personalized services. In fact, individuals matter in this Bank. This motto has been followed for the development of clientele as well as human resources of the Bank.

Coping with the competitive and rapidly changing financial market of the country, BASIC Bank Limited maintains a close connection with its clients, the regulatory, the shareholders (Government of Bangladesh), other banks, and financial institutions.

Functions:

BASIC Bank Limited offers:

• Term loans to industries especially to small-scale enterprise.
• Full-fledged commercial banking services including collection of deposit, short-term trade finance, working capital finance in processing and manufacturing units and financing and facilitating international trade.
• Technical support to Small Scale Industries (SSIs) I order to enable them to run their enterprise successfully.
• Micro-credit to the urban poor linkage with Non-Government Organizations (NGOs) with view facilitating their access to the formal financial market for mobilization of funds.
• In order to perform the above tasks, BASIC works closely with the clients, the regularly authorities the shareholders Government Of Bangladesh (GOB), banks and other financial institution.

CORPORATE STRATEGY: –

• Financial establishment of small units industries and businesses and facilitate their growth.
• Steady and sustainable growth.
• Investment in a cautious way.
• Adoption of new building technology.
• Profit maximization.
• Establishing small industries.

Lending Criteria:

Entrepreneur:

• Entrepreneur/promoter has to be creditworthy and compete enough to run the proposed industry.

Viability of the Project:

• The project should be viable from organizational, technical, commercial, financial and economic points of view.

Technical Viability:

• The project should be technically sound and environment friendly.
• Building should be well planned and well constructed.

Commercial viability:

• Market prospect potential for the product has to be fully assured at competitive prices.
• Marketing channel for the product should be accessible to the entrepreneurs.

Financial Viability:

• There should be reasonable debt equity ratio as determined by the a bank on individual case basis.
• Debt service coverage ratio should be at least 2.5 times at the optimum level of production.
• IRR should preferably be not less than 20 percent.

Economic viability:

• The project should ensure benefit to the national economy and create sufficient employment opportunity.

Organizational Structure:

To achieve its organizational goals, the Bank conducts its operations in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy-making body. The management looks after the day-to-day operation of the Bank.

MANAGEMENT:

The Managing Director heads the management. The two General Managers and Departmental Heads in the Head office assist him. BASIC is different in respect to hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the Chief executive is concerned. The Branch Managers of the Bank report direct to the Managing Director and, for functional purposes, to the Heads of Departments. Consequently, quick decision-making in the disposal of assessment is ensured.

Organizational Goals:

BASIC Bank’s ambitions:

• BASIC Bank Limited dedicated their service to the nation through active financial participation in all segments of economy, small industries, trade, commerce and service sector etc.
• The Banks main manifest to progress as an institution par excellence to customer satisfaction.
• Global Banking has change rapidly and BSIC as worked hard to adapt to these changes.
• To pay a vital role in human development and employment generation.
• To undertake project promotion to identify profitable areas of investment.
• To search for newer avenues for investment and develop new products to suit such needs.
• To establish linkage with other institution which are engaged in financing micro enterprise.
• BASIC keeping pace with the changing environment.
• To corporate and collaborate with institutions entrusted with the responsibility of promoting and aiding SSI sector.
• Deep commitment to the society and growth of national economy.

Resource and Capabilities:

Basic Bank is well prepared and capable of meeting the demand for a broad range of banking services. It has got adequate resources, both human and physical, to provide the customers with the best possible services.

Physical and technological resources:

A great deal of investment for developing the physical resource base of the Bank has been made. BASIC has its presence in all the major industrial and commercial hubs of Bangladesh in order to cater to the needs of industry and trade. At present, there are twenty-seven conveniently located branches all over Bangladesh. There are ten branches in the capital city Dhaka, Twelve in Chittagong, and Six in Narayanganj, and one each in Narshingdi, Rajshahi, Saidpur, Bogra, Khulna, Jessore, Sylhet, Moulovibazhar, Barisal, Khatunganj, Chawmuhoni, and Comilla.

Major features and Benefits of these Branches:

• Global banking has changed rapidly and BASIC as worked hard to adapt to these changes.
• The banks main manifest during force for the banks progress as an institution par excellence to customer satisfaction.
• Fully computerized accounts maintenance.
• Well decorated and air conditioned facilities.
• To pay a vital role in human development and employment generation.
• A fully operational computer network which is currently being implemented .The work of Local Area Network (LAN) and Wide Area Network (WAN) installation having reliable and secured communication between the branches and the Head Office is in progress to facilitate Any Branch Banking and ATM Services.
• Money counting & Money checking machine making cash transactions easy, security and prompt.
• The bank look forward with excitement and a commitment to bring greater benefits to customers.
• Eighteen out of twenty seven branches are authorized dealers of foreign exchange. This facilities speedy disposal of transaction of export and import trades.
• A group of professional bankers to render personalized services.
• BASIC dedicated their service to the nation through active financial participation in all segments of economy, small Industries, trade, commerce and service sector etc.
• BASIC keeping pace with the changing environment.
• Deep commitment to the society and the growth of national economy.

Deposit:

Deposit is the mainstay for BASIC Banks’ sources of funds. The following includes the usual types of deposits of the Bank:

• Current Deposit–

A different group of industrial customers encouraged to open current deposit account includes commercial, small scale industry, medium scale industry, and large-scale industry. Minimum requirements for current deposits worth TK 50,000 and maximum amount can be deposited up to TK 10,00,00000.

• Savings Deposit-

General clients are a targeted group of savings deposits along with industrial customers. Savings deposit has no particulars to deposit minimum, and maximum. But depositors used to get deducted facilities for drawing money from the deposited figure.

• Term Deposit-

Depositors with a minimum of TK10,000 are given term deposit facilities for at least six months by means of the highest interest rates. Fix deposit term valid up to six years, and then afterward depositor can redeposit the sum. Another form of term deposit is called short-term deposit (STD), a minimal rate of interest given to deposits whereby depositors can withdraw the after term over. Both for Fixed Deposit (FDD), and Short Term Deposit (STD), all types of commercial, and industrial customers are given preferred services to open a term deposit along with a credit & commerce account.

Deposit requirements:

In order to stop money laundering Bangladesh Bank issued new agenda for depositors that is strictly followed by BASIC Bank:

Current Account-

• Individual depositors name
• Passport size photograph
• Income statements
• Nationality
• Nominee
• Referee
• Name of the organization
• Tax identification number, and
• Source of income

Savings account-

• Depositors name
• Passport sized picture
• Income statements
• Nationality
• Nominee
• Referee
• Name of the organization
• Tax identification number, and
• Source of income

Limited companies Account-

• Limited companies rules
• Constitutional documents
• Specimen of authorized person’s signature
• Limited company accounts memorandum
• Articles of association
• Power of attorney
• Board of director’s resolution
• Certificate of incorporation
• Certificate of commencement, and
• List of directors.

Club Society Account-

• Clubs or society’s board resolution
• Membership no
• Name of board members, and
• Constitutional rules.

Borrowing:

Apart from deposit BASIC receives funds from-

• Bangladesh Bank.
• Asian Development Bank.
• Authorized agencies.
• KFW (Kreditanstalt fur Wieder-aufbau, credit institution for reconstruction), a German Bank.

Utilization of Fund:

BASIC utilizes its funds in accordance with its organizational goals and corporate strategy. The main use is for lending to industrial and trade sectors. Maintenance of cash and statutory liquidity reserve with the Bangladesh Bank covers 20 percent demands and time liabilities. Placement of funds in Nostrums Accounts to handle foreign trade and investment in the money market is also done as usual.

Activities:

BASIC Bank’s services are directed towards the promotion and development of entrepreneurs in the small industries sector. Its exposure to the small industries sector accounted for 57.21% of the total loans and advances. A small; industry, as per industrial Policy 1999 has been defined as an industrial undertaking whose total fixed investors is less than Tk. 100 million. In 2003, total outstanding industrial loans including term and working capital stood at Tk.6252.50 million, compared with 2002 Taka of 4653.55 million. It registered a growth of 34.36% over the previous year. Total outstanding term loans stood at Tk.2273.77 million as of December 31, 2003. It was compared with the previous year’s growth at 40.75%. During this year 187-term loans were sanctioned, where 74 projects were new. As of 31 December, 418 projects were in the portfolio of the bank. The textile sector including garments being one of the major contributions to the national economy dominated the loan portfolio of the bank. Other sectors financed include engineering, food, and allied industries; chemicals, pharmaceuticals, paper, board, printing, packaging, glass, ceramics, and other non-metallic goods and jute products. The recovery rate of the project loans was 88 percent.

Commercial Credit:

BASIC Bank lends support towards the development of trades, business, and other commercial activities in the country. Short other term trade finance and other non-fund services get full attention in the Bank. The Bank offers a complete range of services to the exporters and importers by extending various facilities. The Bank provides cash credit for local trade, export cash credit, packing credit, local and foreign bills purchase facilities. As of 31 December 2003, the total amount outstanding in respect of these facilities stood at Tk.3029.70 million. This includes cash credit for local trade; export cash credit including packing credit, local bills purchase and foreign bills purchase, etc.

Micro Credit:

BASIC launched a Micro Credit Scheme in 1994. Micro Credit Scheme provides support for the poor for generation of employment and income on a sustainable basis, particularly in urban and suburban areas. The Bank follows three systems of credit delivery. These are:

• Lending to the NGOs who on-lend to their members. At present there are 17 such NGOs.
• Lending direct to the target groups or ultimate borrowers under the Bank’s own management.
• Lending direct to the member-borrowers and NGOs providing non-financial services like group formation and monitoring and supervision fee. As at the end of 2003, a cumulative amount of micro credit of TK. 181.00 million was disbursed. Recovery rate during this period remained at a satisfactory rate of 98.00 percent.

Foreign Trade:

The Bank handles foreign trade in which it has a comparatively large share despite its small size. BASIC provides various facilities related to L/C and post-import finance like loans against imported merchandise (LIM) and loan against trust receipt (LTR) to the importers and back-to-back L/C and pre-shipment finance facilities like export credit, packing credit, and foreign bills purchase (FBP) to exporters. So far the Bank has established correspondence relationships with as many as 11 foreign banks in order to facilitate foreign trade. Handing of import business grew from Tk. 8930.50 million in 2003. Export business handled by the Bank also increased by Tk.6523.00 million in 2003.

The Bank became a proud member of SWIFT (Society for Worldwide Inter-bank Financial Telecommunication) that would pave the way to achieving uninterrupted connectivity in foreign exchange business and fund transfer.

Other Activities:

The Bank provides services floor remittance, underwriting, guarantee, public offering of shares, etc. The Bank also provides funds to investment and leasing companies. The Bank has recently created a venture capital fund for equity support to innovative but risky projects.

The functional division of BASIC Bank:

The bank has 28 branches, 6 Zones spread throughout the country. At the head office level, there are 12 divisions most of which have more than one functional department which is headed by DGM and Training institute by a director with the rank of CGM.

The names of the Divisions are:

• Personnel Division (PD).
• Establishment & Common Service Division.
• Human Resources Development Division.
• Secretary’s Division (Aboard Division).
• General Credit Recovery Division.
• Industrial development finance division.
• International division.
• Control development & co ordination division.
• Audits an inspection division.
• Planning and research and statistics division.
• Computer system and procedures division. And
• Law division.

These are the different divisions of the BASIC bank that is serving their services to the bank as well as to the country with great efforts according to their respective fields.

Functions of some important divisions:

• Personnel Division (PD):

This division is headed by a D.G.M. Under this division, there are five departments namely: –

1. Recruitment department,
2. Promotion department,
3. Transfer department,
4. Records department, and
5. Salaries and welfare department.

Their functions are as follows: –

• Frame personnel policies of the bank and implement these in harmony with the overall objectives and policies of the bank and the Government.
• Ensure recruitment, promotion, transfer and posting of all officers and staff of the bank in conformity with policies, rules and procedures of the bank and the government.
• Maintain personnel records the officers and staff and update those for ensuring appropriate personnel actions such as promotion, transfer training etc.
• Deal with compensation package of the employees that include such items as salaries T.A. D.A., house rent, and medical bills.
• Deal with sports cultural and welfare activities for the employees.
• Carry put overall manpower planning form the bank assess the need for recruitment, training and development and sources, methods, and media of training, maintaining and update various types of data on training and skill of the employees.
• Cater training needs of the various categories of the employees of the bank.
• Organization workshop, seminar, symposium and other programs for developing human resources of the bank.

Establishment and Common Service Division:

Under this division, there are 4 departments namely: –

1. Dead stock & Equipment department,
2. General transport pool,
3. Security department, and
4. Divisional administration department.

This division performs the following functions: –

• Procure, supply and repair furniture fixture and other office equipment.
• Collect bank’s necessary articles security papers etc.
• Distribute all sorts of stationary.
• Dispatch and receive mail, telephone, telegram telex etc.
• Maintain and control vehicles and purchase spare parts tires, tubes etc. and when necessary.
• Deal with divisional staff administrative matters.

Human Resources Development Division:

The human resources development division performs the following functions: –

• Frame human resources development policies of the bank and implement these in harmony with the overall objectives and polices of the bank and government.
• Carry out overall manpower planning for the bank assesses the need for recruitment training and development and sources.
• Methods and media of training maintain and skill of the employees.
• Cater training needs of the various categories to the employees of the bank.

Board Division:

The Board division‘s functions and activities are as follows: –

• Performing ass duties relating to MD/ Review committee/Board of Directors meeting.

• Supervising all functions of MD’s secretariat including appointment with visitors, maintaining liaison with government, autonomous bodies and other financial institutional.
• Dealing with matters relating to fund management bill purchase and utilization of surplus fund, credit budgeting banks and maintenance of the records of comparative positions of all financial institutions.

General Credit Recovery Division:

It is also one of the vital divisions in the head office and is headed by a DGM.

General Credit Monitoring department are:

There are two departments namely: –

1. Advance department.
2. Recovery department.

This division performs the following functions: –

• Co- ordinate and supervise all credit policies and operation of the bank except rural credit and industrial development credit.
• Prepare, monitor and review the central credit budget of the bank.
• Supervise all classified advances other than micro credit and industrial credits.
• Exercise special control over jute advances of all branches and zones.
• Take necessary steps for effective recovery efforts.

Industrial Development & Finance Division (IDFD):

Under this division, there are 4 departments namely: –

1. Appeal & sanction department.
2. Implementation department.
3. Follow up & recovery department.
4. Accounts statistics & data feeding department & special credit department.

IDFD performs the following functions: –

• Appraisal industrial projects and process for sanction,
• Inspect, supervise and monitor implementation of projects,
• Follow up and supervised use of loans, and
• Plan and undertake recovery drives.

International Division (ID):

ID performs the following functions: –

• Preparation of the work plan program of the division and distribution of the same among different departments of the division for action or information,
• Accounts and reconciliation activities of the foreign bank account and reconciliation of account section,
• Import and export finance activities of the import financing section and export financing section, and
• Foreign aid/loan/barter/grant operation activities of the aid and barter financing section.

Control Development & co – ordination division:

This division is responsible for the issuance of operational guidance and instruction to the branches including supply of the operational manual where required. It also ensures maintenance of the existing systems and procedures in respect of general banking by the branches.

Audit & Inspection Division:

The audit & Inspection division is headed by a DGM. There are 6 sections under this division.

This division performs the following functions: –

• Plan and prepare programs for auditing branches.
• Select audit these and give audit programs to them for implementation.
• Supervise the activities of the audit team.
• Conduct special audit of branches for detection of fraud & forgeries.
• Scrutinize audit reports.
• Submit consolidated compliance report received from branches to the commercial audit department ministry of finance and Bangladesh bank.

Planning Research & Statistics Division (PRSD):

It has 4 departments namely: –

1. Business & mgmt. Planning department.
2. Research & publication department.
3. Statistics department. and
4. BASIC bank central library.

The functions of PRSD are given following: –

• Identify problem /gap areas of operation and management for the purpose of conducting research.
• Appraise system and procedures for updating.
• Evaluate the progress of the bank periodically.
• Develop new services & review existing ones for improvement.
• Prepare annual reports of the bank.

Computer System & Procedure Division (CSPD):

This division has 4 sections are as follows: –

1. Systems and programming section.
2. Computer operation section.
3. Data encoding section. And
4. Banking mechanism section & data control section.

The functions of this division are given below: –

• Identify the computerization needs of the bank.
• Co ordinate with other divisions.
• Plan oration of the bank’s computer with optimum benefit.

Law division:

The Law Division has two performing wings. They are: –

1. Follow-up and suit filling wing.
2. General and monitoring wing.

Law division performs overall supervision of following: –

• Follow- up and suit filling activities of the concerned departments.
• General and monitoring activities of the concerned departments pertaining to counseling service to the top management checking legal prints, drafting lease deeds, checking and verifying deferent forms of the bank.

General Banking

General Banking is the most important and common part of any bank. Cause majority transaction is held in this section. This section has four (4) parts as follows:

Cash:

The cash section demonstrates the liquidity strength of a bank. It is also sensitive as it deals with liquid money. Maximum concentration is given while working on this section. As far as safety is concerned special precaution is also taken. A tense situation prevails if there is an imbalance in the case account.

Cash Section:

The function of this unit is to receive and payment of cash. The vault limit cash limit of the branch is TK.15000000 and TK.1000000 respectively. The head teller is allowed to encash check-up to TK.100000 with her own signature. If additional cash is required then the second man of the branch makes arrangements on request. There are one chief officer, one senior officer, and two Banking officers in this department.

The operation of this section begins at the banking hour. The cash officer begins her/his transaction by taking money from the vault, known as the opening cash balance. Vault is kept in a very secured room. Keys to the room are kept under the control of the cash officer and branch in charge. The amount of opening cash balance is entered into registered. After whole days’ transaction, the surplus money that remains in the cash counter is put back in the vault and known as the closing balance. Money is received and paid in this section.

Cash Receipt:

• At first the depositor fill up the Deposit in the Slip. For saving account and current account same Deposit in Slip is used in this Branch.
• After filling the required deposit in slip, depositor deposits the money.
• Officers at the cash counter receives the money, count it, enter the amount of money in the register kept at the counter, seal the deposit in slip and sign on it with date and keep the bank’s part of the slip. Other part is given to the depositor.
• All deposit slip of saving; Current and STD A/C are maintained in accounts section.

Cash Payment:

Cash payment of different instruments is made in the cash section. The procedure of cash payment against a check is discussed elaborately. Cash payment of check includes few steps.

• First of the entire client comes to the counter with the check and give it to the officer in charge there. The officer checks whether there are two signatures on the back of the check and checks his balance in the computer. After that the officer will give it to the cash in charge.
• Then the cash in charge verifies the signature from the signature card and permits the officer in computer to debit the client’s account by giving posting. A posted seal with teller number is given.
• If the signature matches with the one given previously then the teller will make payment keeping the paying check with him while writing the denomination on the back of the check.
• Cash paid seal is given on the check and make entry in the payment register.

There are few things that shall be scrutinized and checked before making payments.

• Name of the drawer.
• Account number.
• Specimen signature.
• The validity of the check and make it sure that it is not post dated or undated.
• The amount in words and figures are same.

Cash Balance Calculation:

The officer in charge of the cash section does the calculation and then Sub-manager or authorized officer will check the balance and sign in the cash balance book.   The balance is maintained in the balance book. The opening balance of the current day is the closing balance of the previous day. Total receive of the current day is added with the opening balance and total payment is deducted for calculating the closing balance or cash balance.

Cash Packing And Handling:

Cash packing and handling need a lot of care as any mistake may lead to disaster. Packing after banking hour when the counter is closed, cash is packed according to denomination. Notes are counted several times and packed in bundles, stetted, and stumped with initial.

Teller Customer Relationship:

In a bank a person who delivers and receives cash from the cash counter is known as a teller, a customer meets most of the time in a bank with a teller on the counter. So the teller should hold certain quality.

• Should be friendly.
• Provide prompt service.
• Be accurate in his task.
• Be carefully.
• To have endless patience.
• Be smart.
• In short, a teller should be efficient otherwise he has to pay.

Types of Account:

keeping an eye on the needs of the customers and to ensure their full satisfaction BASIC Bank has a full range of deposit products.

There are mainly five types of Accounts are as follows: –

• Savings Deposit (sb)
• Current Deposit (CD)
• Short Notice Term Deposit (STD)
• Fixed Term Deposit (FTD)
• Bearer Certificate of Deposit (BCD)

Savings Bank Deposit Accounts (S.B):

• Savings Bank Deposit account may be opened in the name of adult individual or jointly in the names of two or more persons payable either or both or all them or to the    survivor with total satisfaction of Bank.
• These are interest bearing deposit accounts. (Present interest rate 5.00% in BASIC Bank Ltd.
• Savings Bank Account shall not be allowed to be overdrawn.
• Saving Bank Account must not be allowed to be conducted as Current Account.
• The drawings are restricted in respect of both the amount of withdrawal and the frequency thereof so that the payment of interest does not become non-compensating for the banker.
• No interest will be paid in a Savings Bank Account for the month in which withdrawals have been made more than twice a week or over 25% of the balance of his/her accounts without notice. For withdrawal of sum exceeding 25% of the balance, 7 days notice in writing should be given to the bank.
• Interest shall be calculated on the minimum balance at the credit of an account between the close of the 5^th day and the last day of the month.
• Interest will be applied half yearly on 30^th June & 31st December at the prescribed rates as advised by Head Office
• These accounts intended for individual savings and are not suitable for business concerns that require frequent withdrawals.
• Bank may however refuse without assigning any reasons to open savings account by any body.
• The Bank reserves the right to close any Savings Bank Deposit account with prior

Current Deposit Account (C.D):

• A Current Deposit Account may be opened in the name of person(s) having contractual capacities. Any individuals, firm, company, club, association, and corporate body may open a Current Account.
• Drawings are allowed on demand from such an account without any restriction within the funds available in its credits.
• No interest is payable on the balance of current accounts.
• Bank may however refuse without assigning any reasons to open current account by any body.
• The Bank reserves the right to close any current account with prior notice.

Short Term Deposit Accounts (STD):

• Short Term Deposit Account (STD) are opened usually by Corporations, Banks and Financial Institutes etc.
• These deposits are withdrawn able on 7 days’ notice by the account holder(s). Withdrawal is allowed after the expiry of notice period.
• Interest on such deposits are payable at the rate determined by Head Office from time to time. (Present interest rate on STD A/C is 3.00% in BASIC Bank Ltd.)
• Interest shall be calculated on daily product basis and applied half yearly at end of June and December or when an account is closed.

Fixed TERM Deposits (FTD):

• Fixed Deposits may be opened by one adult individual singly or by more than one adult individual jointly or by any Government/Private /Autonomous or other organization.
• These deposits shall be opened for a fixed period ranging from three months to two years.
• Interest on FDR shall be payable only after maturity of the FDR along with the principal.

Papers /Documents required for opening of INDIVIDUAL/JOINT, PROPRIETORSHIP, & PARTNERSHIP Accounts:

 Individual /Joint:

• Two copies of passport size photograph of the Account holder(s) or Person(s) who will operate the Account duly attested by acceptable introducer,

• Passport,
• Introductory Certificate from Employer,
• Introductory Certificate from renowned person of the society acceptable to Bank/Financial Institutions, and
• TIN Number (If applicable).

Cautions:

• In Account opening form Name, Present & Permanent address, Date of birth, Age of account holder, Father’s Name, Mother’s Name, Husband’s Name in case of married lady   must be filled up properly in Account      opening form.
• The Introducer of the proposed new account must be maintained an account with the branch for at least one year and the account must have   good transactions over the last year.

• The details of the identity, address and business of the new account holder must be verified and the branch In Charge should be satisfied about the person/firm/company’s credibility.
• A letter of thanks shall be sent to the introducer and to the account holder on Bank’s Standard Form.

Proprietorship Firm:

• Two copies of passport size photograph of the Account holder(s) or person(s) who will operate the Account duly attested by the introducer.
• Certified copy of valid Trade License from the Municipality/ City Corporation/Union Parishad.
• Passport/ Introductory Certificate from Employer /Introductory Certificate from renowned person of the society acceptable to Bank/Financial Institutions.
• TIN Number (If applicable).

Cautions: Same as Joint/Individual Account.

Partnership Firm:

• Two copies of passport size photograph of the Account holder(s) or person(s) who will operate the Account duly attested by the introducer.
• Certified copy of valid Trade License from the Municipality/ City Corporation/Union Parishad.
• Certified copy of the Registration Certificate of Partnership Deed duly attested by Notary Public in case of registered firm.
• Partnership Account Agreement.
• Resolution signed by all partners to open the A/C.
• Passport/ Introductory Certificate from Employer /Introductory Certificate from renowned person of the society acceptable to Bank/Financial Institutions.
• TIN Number (If applicable).

Cautions: Same as Joint/Individual Account.

Papers /Documents required for opening of  LIMITED COMPANIES Accounts:

Limited Company:

• Two copies of passport size photograph of the Account holder(s) / person(s) who will operate the Account duly attested by the introducer.
• Certified copy of Memorandum & Articles of Association by RJSC.
• Certified copy of Certificate of Incorporation by RJSC.
• Certified copy of Certificate of Commencement of Business (in case of Public Limited Company).
• Up to date list of Directors.
• Certified copy of Resolution of the Board of Directors for opening & operation of the Account.
• Passport/ Introductory Certificate from Employer /Introductory Certificate from renowned person of the society acceptable to Bank/Financial Institutions.
• TIN Number (If applicable).

Cautions: Same as Joint/Individual Account.

LIMITED COMPANY:

• A company registered under Companies Act, 1994 has a legal entity apart from its shareholders.
• A Company has been defined as ‘an artificial person created by law with a perpetual succession and a common seal”.
• A Company may, therefore, be defined as a separate legal person brought into existence by registration or incorporation under The Company Act, 1994 in pursuance of several individuals agreeing to form themselves in to a Company.

Private Limited Company:

• Private Limited Company means a company, which by its articles restricts the right to transfer the shares.
• Minimum number of its members is 02 and maximum number may be 50 not including persons who are in the employment of the company.
• Prohibits any invitation to the public to subscribe for the shares, if any, or debentures of the company can launch the business after getting Certificate of Incorporation.
• Certificate of Commencement of Business is not required here.

PUBLIC LIMITED COMPANY:

• Public Limited Company means a company incorporated under this Act, which is not a Private Limited Company.
• In Public Limited Company has the following specialties by its articles –
• Minimum number of its members is 07 and maximum number may be equal to    number of shares.
• Shares are transferable.
• May invite to the public to subscribe for the shares, if any, or Debentures of the company.
• Certificate of Commencement of Business is required to launch the business after getting Certificate of Incorporation.

Trust:

• Two copies of passport size photograph of the Account holder(s) / person(s) who will operate the Account duly attested by the introducer.
• Up to date list of Members of the Trustee Board.

• Certified copy of Deed of Trust certified by the Chairman/Secretary of Trustee Board.
• Certified cop of Resolution of the Trustee Board for opening & operation of the Account.

Cautions: Same as Joint/Individual Account.

Papers /Documents required for opening of EXECUTORSHIPS ACCOUNTS:

• Executor:

An executor is a person appointed by a testator for the execution of the last will leave by him. Upon production of probate of the will the executor should be allowed to close the deceased’s account and deal with the credit balance as per terms and conditions of the will, affecting the account.

In the case of the credit balance of the deceased’s account, it is preferable for the banker that the executor opens the required account as an executorships account instead of an account in the personal name of the executor.

If there is more than one executor the account should desirably be opened under the joint signatures of all the executors through they have powers individually and a definite arrangement made whether operations on the account will be done by one executor singly or jointly by all, by two or more of them.

Where there is a debit balance in the account arrangement should be made with the executor for adjustment thereof as soon as the executor is able to realize sufficient of the deceased ‘s assets.

The banker should not allow any transfer of the deceased’s assets. The banker should not allow any transfer of the deceased’s funds to the personal account of the executor nor he should allow the executor to raise any personal loan against the security of the deceased’s property. Otherwise, he will be held liable for the misuse.

The executor is the legal representative of the testator for all purposes and all property of the deceased vest in him. The executor has the power to sue and recover debts as the deceased had when living as well as to dispose of property and incur expenses as he may think fit and necessary for the administration of the estate subject to restrictions if any, as laid down in the will and the probate.

On the death of the executor, his duties devolve on his executor, and where there is more than one executor the deceased’s power vests in his survivor co-executor unless otherwise provided for in the will. An executor cannot normally delegate his power except to one of them where there is more than one.

Required Paper for an executorships account: –

• Two copies of passport size photograph of the executor / person(s) who will operate the Account duly attested by appointed by the testator for execution of the last will leave by him.
• Will deed executed by a testator for execution of the last will leave by him in the front of 02 male or 01 male & 02 female to operate the account.
• Will probate accepted by Court.
• Power of Attorney executed by a testator for execution of the last will leave by him favoring the executor in the front of 02 male or 01 male & 02 female to operate the account.
• Passport/ Introductory Certificate from Employer /Introductory Certificate from renowned person of the society acceptable to Bank/Financial Institutions.
• TIN Number (If applicable).

Cautions:

• Same as Joint/Individual Account.
• The banker should not allow any transfer of the deceased’s assets. The banker should not allow any transfer of the deceased’s funds to the personal account of the executor nor he should allow the executor to raise any personal loan against security of the deceased’s property.

Otherwise, he will be held liable for the misuse.

Papers /Documents required for opening of  ADMINISTRATOR & CLUB/SOCIETY/SCHOOL/COLLEGE Accounts:

Administrator:

An administrator is appointed under the authority of a court of competent jurisdiction where the deceased appointing an executor leaves no will. The administrator has substantially the same duties and powers as those of the executor; they differ mainly in the manner of their appointment. While the executor derives his authority from the will immediately after the testator’s death, the administrator derives his authority from the letters of administration, which he produces to the banker for inspection as an executor produces probate of the will for the purpose of a bank account. The administrator is also the legal representative of the deceased with powers to sue, recover debts and incur expenses. But he may not mortgage, charge or transfer any property without prior permission of the court granting the letters of administration. On the death of an administrator the surviving administrator, if any, acts, but on the death of the last administrator fresh letter of administrator is necessary.

Club/ Society/School/College etc:

• Two copies of passport size photograph of the Account holder(s) or person(s) who will operate the Account duly attested by the introducer.
• Memorandum & Articles of Association duly certified by the Chairman/Secretary.
• Bye Laws & Regulation/ constitution duly certified by the Chairman or Secretary.
• In case of cooperative society Bye Laws & Regulation/ constitution.
• Duly certified by Cooperative Officer.
• Resolution of Management Committee/ Executive Committee for opening & operation of the Account.
• Up to date list of Office Bearers/ Governing Body/ Managing Committee duly certified by the Chairman/ Secretary.
• Government approval in case of registered Club/society.

Cautions: Same as Joint/Individual Account.

Papers /Documents required for opening of NGO, JOINT VENTURE, & AIRLINES Accounts:

NGO:

• Two copies of passport size photograph of the Account holder(s) / person(s) who will operate the Account duly attested by the
• Certified copy of Bye Laws & Regulation/ constitution duly certified by the Chairman/ Secretary.
• Certified copy of Resolution of Management Committee/ Executive Committee for opening & operation of the Account.
• Up to date list of Office Bearers/ Governing Body/ Managing Committee duly certified by the Chairman/ Secretary.
• Permission from NGO Bureau.
• Permission from Head Office. (Circular no. BASIC/HO/Gen/2000/14, Dated 18-10-2000)

Cautions: Same as Joint/Individual Account.

Joint Venture Company (Bangladeshi + Foreigner):

• Two copies of passport size photograph of the Account holder(s) or person(s) who will operate the Account duly attested by the
• Copies of passports of A/C operators (1^st 6 pages + visa pages for foreigners).
• List of Directors
• Resolution of the Board of directors for opening & operation of the
• Account
• Permission from Board of Investment.
• Joint Venture agreement attested by Notary public
• Certified copies of the Memorandum and Articles of Association
• Certified copies of incorporation.

Cautions: Same as Joint/Individual Account.

Air Lines:

• Two copies of passport size photograph of the Account holder(s) / person(s) who will operate the Account duly attested by the
• Certified copy of Memorandum & Articles of Association.
• Certified copy of Certificate of Incorporation.
• Certified copy of Certificate of Commencement of Business (in case of Public Limited Company).
• List of Directors.
• Resolution of the Board of Directors for opening & operation of the Account
• Copy of Agreement/Contract with Local GSA. (Attested as above)
• Permission from Civil Aviation Authority of Bangladesh.
• Permission from Board of Investment of Bangladesh
• Permission from Bangladesh Bank

Cautions: Same as Joint/Individual Account.

Accounts of Municipal Corporations, Local Authorities, District Councils, Other Public Bodies:

Before opening the account of any Government or Semi-Government Organization or a Local Body, a certified copy of the Statute or any other law by which the body is created and governed shall be obtained.

• Two copies of passport size photograph of the Account holder(s) or person(s) who will operate the Account duly attested.
• Resolution of the Board of Directors for opening & operation of the Account.
• The Name, Address, Signature and Power of the account operator should be mentioned in mandate.
• If the account operator is transferred then posting order and joining report of newly posted employee are required and the previous person verified the newly posted employee’s signature.

Special cases in Account opening:

• Minor Account:

Who is Minor?

A person who has not completed his 18^th year of age is considered to be a   minor.

But in those cases where the court appoints a guardian to a person or property of a minor or the property of the minor is put under the charge of a Court of Wards during the period of his minority, the person shall become major on completion of 21 years.

According to the Contract Act minor has no right to sign a contract. So minor cannot open an account. But a Guardian of a minor can open and operate an account by the minor’s name.

Guardian of minor can open two types of the account by signing on the stamp by any of the following declarations.

Minor is not the owner of deposited money in a minor account but he/she has the right to withdraw money.

Minor is the owner of the deposit in the minor account.

Minor is not the owner of deposited money in the minor account

Cautions:

• Banker has to take special care so that no overdraft can be made on minor account. Minor cannot be liable for any loan as minor has no right to sign a contract.
• Minor should not provide chequebooks. But she/he can use cheque leaf. Minor will sign an only a loose cheque leaf in front of Branch In Charge so that he/she cannot draw excess amount of money. In any case, when there is the least doubt, proper identification must be obtained & banker should inform the Guardian of minor.
• No cheque, bill should not receive in minor account. If any dispute arises minor cannot be liable for any contract.

Minor is the owner of deposited money in minor account:

In that case, the minor cannot withdraw money from this account before being an adult.

 Cautions:

• Date of birth of minor and the date of attaining majority should be noted at the top of the Account Opening Form and in the computer. So that he/she can withdraw money after being major.
• The Guardian who opened the account in the minor’s name will introduce the minor after becoming adult to bank. In this introduction a renowned person should be present as a witness.

However, the minor’s account can be opened in his own name and the minor himself can operate the account in the following way:

Accounts of Pardanshil Ladies:

• Minor who is 12 years or above may be allowed to maintain deposit account with us.
• Normal procedure of introduction and other formalities shall be observed.
• The account shall be non-borrowing in nature. Under no circumstances there shall be any overdraft in this account.
• Minor can draw a cheque. If there is wrongful dishonor of such cheque minor can sue Bank for damage and for wrongful dishonor. If there is a wrongful    payment to the minor, Bank will not be able to recover such payment. So Branch should be very cautious for any payment to the minor.
• In case of death of the minor, his legal heirs would be the beneficiaries of the Account.

Accounts of Pardanshil ladies shall not be opened unless a respectable party known has introduced them and acceptable to the Bank provides that they can read and write English/ Bengali.

The banker should open the account in name of a pardanshil woman only after getting full information of her social status, education, and proper introduction. Because it is very difficult to prove in court that a pardanshil woman willingly opened a bank account.

Cautions:

• The introduction of the pardanshil woman should be taken satisfactorily.
• Accepted responsible person and signature to be made in front of Authorized Officer/Manager should verify the signature of pardanshil woman.
• If the lady is married, her husband’s name, address, occupation should be written carefully. If her husband is service holder then information about his employer, place of posting should be written carefully.
• No advance should allow in favors of a pardanshil lady.
• Accounts of illiterate Pardanshil ladies shall not be opened under any circumstances.

Special cases in Account SURVIVOR:

• Joint Account:

In case of accounts to be opened in two or more names, “Either or Survivor” containing clear and specific instructions regarding operations of the accounts. These instructions shall be obtained under the signatures of all of them.

y “Either or Survivor”

If in the account opening form contains the Instruction “Either or Survivor”, in case of death of any joint account holders the balance will be payable to the survivor with total satisfaction of the Bank.

In absences of the instruction “Either or Survivor”

In the absence of specific instructions in the Form “ Either or Survivor” the balance of the joint account will be payable to the survivors and the legal representatives of the deceased joint account holder.

Cautions:

In the event of death of any account holders, the survivor shall be requested to close the old account and open a new account in the name of the surviving account holder

No overdraft shall be allowed in a Joint Account unless all the parties to the account operate it jointly, and charge documents in respect of the advance are also signed by all of them.

Account opening OF ILLITERATE PERSON:

• Accounts of Illiterate Person:

An illiterate person can be identified only by his thumb impression & photograph. Illiterate persons desirous to open an account may be allowed to open and operate on an account under their thumb impression. So bankers should take special cautions to open and operate this account.

Required paper/documents:

1. The introduction of an illiterate person should be taken
2. The thumb impression (left hand) of the depositor must be obtained in the Account Opening Form and Specimen signature card in the presence of an authorized Officer / Manager.
3. Two copies of recent passport size photograph duly attested by acceptable introducer. One should be pasted on the specimen
4. Passport/ Introductory Certificate from Employer /Introductory Certificate from renowned person of the society acceptable to Bank/Financial Institutions.
5. A letter of undertaking shall be obtained from him to the effect that he will not operate on the account unless he personally come to the Bank and put his thumb impressions on the cheque in the presence of the Manager/Authorized Officer.
6. Wherever possible, brief details of one or two identification marks of the depositor should be noted on the Account Opening Form and specimen signature card under authentication of authorized officer/Manager.

Cautions:

1. Only saving account may be open favoring an illiterate person.
2. “Account of Illiterate Person” this seal should be marked on Account Opening Form, specimen signature and ledger.
3. No chequebook should issue in favor of this account holder.

For withdrawal of money, the account holder should become to the bank premises and he will fill up the loose cheque. He will put his thumb impression on the cheque in front of the Manager. After being satisfied on verification of the thumb impression and photograph of the specimen signature card the authorized officer will allow him to withdraw the money.

Special cases in Account DECEASED / STOP PAYMENT:

• Deceased account:

In case of death of an individual accountholder, all operations in his account shall be stopped for with. A “Caution mark: Deceased account” shall be drawn just below the balance of the account.

As soon as the information is received either through the newspaper or some reliable source about the death of a constituent, the date of death and source of information shall be noted in the Computer against the relevant account. Interest on the account of the Deceased shall not be paid as death terminates the contract with the Bank.

• Cautions:

i) The credit balance of the deceased customer shall not be paid to any person unless probate or letter of administration or succession certificate issued by a competent court is produced to the Bank and the Bank is satisfied with the bona fides of the beneficiary.

ii) In special circumstances, Head Office may waive the above requirement where the Bank is satisfied with the bona fides of the successors subject to their submitting an indemnity duly executed on a non-judicial stamp paper along with two sureties acceptable to the Bank.

iii) The account of a deceased shall not be allowed to be operated on or transferred under the instructions of any Executor or Administrator or any claimant under Indemnity letter or otherwise.

Stop Payment Order:

• Instructions of stopping payment of any Cheque shall be obtained from the account holders in writing.
• If such instructions are received on telephone or by telegram, a provisional note in respect thereof shall be made in the Computer pending receipt of written instructions from the account holder. Should the Cheque be presented in the meantime, the same should be returned with the objection “Drawer’s Confirmation Required”
• The date and time on which those instructions are received shall be marked on the letter and initiated by an Authorized Officer.
• The signature of the account holder shall be verified on the letter.
• The instruction shall be passed on the Computer Officer to check the respective account to ascertain whether that particular Cheque has already been paid or not.
• The Stop Payment instruction should be recorded in the Computer instantly.
• The Stop Payment letters received from the parties shall be kept in the “Stop Payment File”.

Telegraphic Transfer:

These are two types. One is inward T.T & another is outward T.T. In this procedure, one can transfer money from one place to another place. For this reason, the money-carrying risk is reduced. As well as time also save.

This procedure is only applicable to this bank & its other branches. No one can do T.T. from in this bank to another bank. Cause for any T.T. clients must have accounts in this bank.

The procedure of inward T.T:

This means any client of our branch want to does T.T. then he inform his branch and from that branch inform to the main branch through telephone.

In this case, the bank must see some important things as follows: –

• T. control number.
• Payee name and account number.
• By order.
• Test number. [For any amount of money this number must be needed]
• Amount in ward.
• Amount in figure.

After getting this T.T. bank check that T.T. and register it in the register book according to that branch. In this case, the most important thing is the test number. Cause it maintained for client’s security. If the test number doesn’t match with the register book then the bank informs that branch and the bank does not pay that money. But usually, this type of mistake does not happen

After register, T.T. banks make advice, which has four parts. Bank indicates clearly the date, the amount of T.T. inward, and in amount. In this advice, the bank does customer accounts debit and head office account credit and write test number. Two copies send to that branch, one to the head office account, and one is attached with a voucher.

The procedure of outward T.T:

• This is like reverse of inward T.T. In this case if any client wants to transfer money or account, he informs bank. Bank informs that branch where the client wants to transfer his amount. In this case, bank communicates with that branch through telephone.
• Bank must inform the payee name, by order, amount of money, advice number.
• Same as inward T.T. procedure that branch makes advice against this branch.
• For an example if any client of our branch wants to T.T. to Chittagong then he must fill up the form of T.T. where he writes all information as per T.T. form. Then bank check all information and charge commission, vat and telex charge.
• For any amount of T.T. test number is needed.

Pay Order:

Pay orders are the safest way of making payments, as they are drawn on the bank issuing them. So there is no scope for fraud or cheque bouncing. A pay order is issued only within the members of the Bangladesh Bank clearing house (Dhaka Metro). It can be issued in favor of a customer holding an account, by debiting his account and crediting bills payable account. In the case of a non-customer, the cash equivalent of the payment plus order charges is received in cash and held in the daily suspense account until the payment is made through clearing.

It is another facility for the client to transfer his money to another place. In this, he must have an account in this bank. If he has no account in this bank, he can deposit money in this bank and does Pay Order. But in this case, he must need a person how knows him. He can deposit the check, which is confirmed, by Bangladesh bank’s clearinghouse. If it is correct then the bank does this Pay Order.

The application must fill up the Pay Order form. Where Pay Order number, Payee name, Amount in figure and inwards.

Refund of Pay Order:

The following procedure should be followed for a refund of pay order by cancellation: –

1. The purchase should submit a written request for refund of pay order by cancellation attaching therewith the original pay order.
2. The signature of the purchaser will have to be verified from the original application form on record.
3. Manager/ sub-manager’s prior permission is to be obtained before refunding the amount of pay order cancellation.
4. Prescribed cancellation charge is to be recovered from the applicant and only the amount of the pay order less cancellation charge should be refunded. Commission recorded for issuing the pay order should not be refunded.
5. The pay order should be affixed with a stamp ”Cancelled” under proper authentication and the authorized officer’s signature of the pay order should also be cancelled with red ink but in no case should be torn. The cancelled pay order should be kept with the relevant ticket.
6. The original entries are to be reversed with proper narration.
7. Cancellation of the pay order should also be recorded in the pay order issue register.

 Clearing House:

Origin of Banks’ Clearing House:

Before the introduction of the present concept of Clearing House, the representatives of the banks had to collect the proceeds of the instruments in Cash from the drawee banks, which involve risk, time and money. Mr., Arbin first thought about Clearing House to solve those problems and on the basis of his revolutionary thought Banks’ Clearing House was initially established in 1775 in London as “London Clearing”.

Clearing House:

Clearing House is the mechanism for expeditious settlement of interbank claims arising out of their constituent’s negotiable instruments in presence of representatives of all member banks. In Bangladesh, Clearing arrangements exist in the office of the Bangladesh Bank, at other places in the office of Sonali Bank where Bangladesh Bank has no Office.

Types of Clearing House:

There are two types of Clearing systems in Bangladesh. They are: –

• Inter-Branch Clearing, and
• Inter-Bank Clearing.

Under the system of Inter-Branch Clearing, inter-branch claims of a particular bank within the City or town area are settled through their Main Office or Local Office.

But under the system of Inter Bank Clearing, the claims among the members of the clearinghouse of different Banks within the area of clearinghouse are settled under the direct supervision and control of Bangladesh Bank, and each member bank of the Clearing House has to maintain their account with Bangladesh Bank

The usefulness of Clearing House:

Clearing House is essential for the adjustment of a developed Banking System. It makes easy settlement of inter-bank claims and it saves huge cash transactions and the consequent danger of loss in transit and the necessity of holding by every bank of huge cash balances for the purpose. The Clearing House is of incalculable benefit as a time, labor, risk, and currency saver.

The function of Clearing House:

The entire function of Clearing House may be divided into 3 parts:

• Operational procedure at Branch Level,
• Internal or Inter-Branch Clearing procedure, and
• Main Clearing House or Inter-Bank procedure.

Operational procedure at Branch Level:

There are two types of clearing activities at the Branch Level:

• Outward Clearing,
• Inward Clearing.

Outward Clearing:

Under this system, negotiable instruments drawn on other banks are presented in the respective bank through Clearing House for receiving payment and after receiving the proceeds of the cheque/instruments the accounts of the respective clients are credited.

Inward Clearing:

Under this system, negotiable instruments of different banks presented in the Clearing House are received by the representative of the respective bank and bring the instruments of their branches for making payment.

Procedural activities of Outward Clearing System:

Outward Clearing System includes the following activities:

• Scrutinizing the correctness of the instruments that received for clearing.
• Affixing the branch crossing seal on the face of the instrument.
• Affixing branch clearing seal on the deposit slips and on the face of the instruments.
• Making necessary endorsement on the back of the instruments.
• Encoding the necessary information of the instruments in the diskette.

Definition of Foreign Exchange:

Foreign exchange is a process, which is converted one national currency into another and transferred money from one country to another country.

According To MR H. E, EVUTT. Foreign exchange is that section of economic science that deals with the means and method by which the right to wealth in one country’s currency is covered into rights to wealth in terms of another country’s currency. It involved the investigation of the method, which exchanges the currency of one country for that of another, the causes which rented such exchange necessary the forms, which exchange may take and the foreign exchanges are affected.

Foreign Trade and Foreign Exchange:

International trade refers to trade between the residents of two different countries. Each country functions as a sovereign state with its set of regulations and currency. The difference between the National Exporters and Importers presence certain peculiar problems in their conduct of international trade and settlement of the transaction arising therefrom. Important among such problems is-

• Different countries have different monetary units.
• Restrictions imposed by countries on import and export of goods.
• Restrictions imposed by nations on payment form and into their countries, and
• Differences in legal practices in different countries.

Foreign exchange means foreign currency and includes: –

• All deposits, credits and balances payable in may foreign currency and any drafts, traveler’s checkups, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency.
• Any instrument payable, at the option of the draw or holder thereof or any other party there to, Either in Indian currency or in foreign currency or partly in one and partly in the other. Thus, foreign exchange includes foreign currency, balances kept abroad and instruments payable in foreign currency.

Necessities of Foreign Trade:

Diversity in Natural Resources:

• Trade may take place because of the diversity in productive possibilities among countries. For example one country may be blessed with a supply of petroleum, while another may have a large amount of fertile land.

Differences in Tastes:

• A second reason for trade lies in preference, Even if the conditions of production were identical in all regions, countries might engage in trade if their tastes for goods were different.

Differences in Costs:

• The most important reason for trade is differences some counties in production costs. For example, manufacturing processes enjoys economies of scale; that is they tend to have lower average costs of productions as the volume of output expands.

PRINCIPLES OF FOREIGN EXCHANGE:

The following principles are involved in foreign exchange:

• The entire system
• The media used
• The monetary unit

The principle of Comparative Advantage:

It is only common sense that countries will produce and export goods for which they are uniquely qualified. But there is a deeper principle underlying all trade. The principle of comparative holds that a country can benefit from trade even if it is absolutely more efficient (or absolutely less efficient) than other countries in the production of every good.

COMPARATIVE ADVANTAGE:

The Principle of comparative advantage holds that each country will benefit if it specializes in the production and export of those goods that it can produce at a relatively low cost. Conversely, each country will benefit if it imports those goods that it produces at a relatively high cost. This simple principle provides the unshakable basis for international trade.

No country is self-sufficient. One country has to depend on other countries for various reasons. One country may have a sound structure in one sector while its other sectors are not so well structured. As a result, naturally, it has to depend on another country to minimize these lacking of those sectors. On the other hand, according to Ricardo’s comparative analysis theory. If a country is good at various sectors then it will continue its operations in its best sector, while for the other sectors it will depend on others. When countries concentrate on their areas of comparative advantage under free trade, each country is better off. The underlying assumption here is that countries can concentrate properly in a specified area, as a result, efficiency in production will increase, product quality will increase while the price is lower. Countries will be able to market their products at a lower price. The surplus production will be sold outside of the country which is known as export. By doing so countries will earn foreign currency. Again by spending those currencies they will buy the required goods from other countries for them that are known as imports. The whole transaction is known as Foreign Trade and through the exchange of foreign currency the transaction ends up. Foreign trade is divided into import, export, and remittance

L/C (Letter of Credit):

DEFINITION OF L/C:

On behalf of the importer if the bank undertakes to make payment to the foreign bank is known as documentary credit or letter of credit.

A letter of credit is an instrument issued by a bank to a customer placing at the letter’s disposal such agreed sums in foreign currency as stipulated. An importer is a country request his bank to open a credit in foreign currency in favor of his exporter at a bank in the letters country, the letter of credit is issued against payment of the amount by the importer or against satisfactory security. The L/C authorized the exporter to draw a draft under his terms and sell to a specified bank in his country. He has to hand over to the bank, will the bill of exchange, shipping documents, and such other papers as may be agreed upon between the exporter and the importer, the exporter is assured of his payment because of the credit while the importer is protected because documents in respect of export of goods have to be delivered by the exporter to the paying bank before the payment is made.

FORM OF LETTER CREDIT:

A letter of credit may be two forms. These as below:

1. Revocable letter of credit.
2. Irrevocable letter of credit.

• Revocable L/C:

If any letter of credit can be amended or change of any clause on canceled by consent of the exporter and importer is known as a revocable letter of credit.

A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice to the bank to make payment. Revocation is possible only until the issuing bank or its correspondent has honored the documents. Thus a revocable credit does not usually provide adequate security for the beneficiary.

• Irrevocable L/C:

If any letter of credit cannot be changed or amended without the consent of the importer and expediter is known as an Irrevocable letter of credit.

An irrevocable credit constitution is a firm undertaking by the issuing bank to make payment. It the fore, gives the beneficiary a high degree of assurance he will pay for his goods or services provided he complies with terms of the credit.

BACK-TO-BACK L/C s:

The branch may open back-to-back import L/C s against export L/C s received by export-oriented industrial units opening under the bonded warehouse systems, subject to observance of domestic value addition requirement prescribed by the NBR/Ministry of Commerce from time to time.

The following instructions should be complied with while opening back import L/C s:

• The unit requesting for the facility should possess valid IRC, ERC and Valid bonded warehouse license
• The branch shall hold the Muster Export L/C affixing banks line stamp thereon and be kept in safe for security purpose.
• The master export L/C should have validity period adequate to cover the time needed for importation of inputs, manufacture of merchandise, and shipment to consignee.
• The back-to-back L/C value shall not exceed the admissible percentage of net FOB value of the relative mater export L/C (as per prescribed value addition requirement). For computation of net FOB value of a master exports L/C, the freight charge, insurance cost and commission if payable by the exporter shall be deducted from the L/C value. If the freight element is shown separately a freight certificate from the shipping company or agent should be asked for.
• The back to back import L/C shall be opened on up the 180 days issuance (DA) basis except in cases of those opened against export development fund administered by Bangladesh bank in which case the back to back L/C will be opened on sight (DP) basis.
• Interest for the issuance period shall not exceed LIBOR or the equivalent interest rate in the currency of settlement.
• All amendments of the master export L/C should be noted down carefully to rule out chances of excess obligation under the back-to-back import L/C.
• Back to back L/C can either be local or foreign. Inland BTB L/C s denominated in foreign exchange may be opened in favor of local supplier manufacturer of inputs against master export l/c and BTB L/CS may in turn be opened for import of inputs against inland BTB L/C in favor of local supplier/manufacturer under bonded warehouse system up to value limits applicable as per prescribed value addition requirement.

Checking of Back to Back L/C documents:

The relevant documents of Back-to-Back L/C send by negotiating bank will have to be properly checked.

• 1 Bills of Register:

After the arrival of documents related to Back to Back L/C, an entry should have to be given in the Bills of Registers are listed below:

• Date received
• B/E no.
• L/C no.
• L/A no.
• Received from
• Drawn on
• Amount (Foreign currency / Rate)
• Taka equivalent
• Draft (Tenor- due date)
• Of documents (Draft-invoice-B/Ls–Others)
• Steamer
• Date goods cleared
• Special instruction from sender
• Remarks-further recoveries etc.
• Date realized
• Remarks- Disposal
• Initials
• Remarks

Acceptance of Back to Back L/C:

After receiving the documents from the negotiating the issuing Bank sends an acceptance of B/B L/C specifying the date when they will pay the amount of the related L/C.

• Negotiation of Export Documents:

If the documents are found strictly as per the terms of L/C. i.e. if the documents are free from discrepancy or if the discrepancies are covered by indemnity of the part, Bank may negotiate the export documents.

• Either purchase or sending for collection Export documents:

If the documents are discrepant, then the Bank will not purchase them; they will send them for collection. On the other hand, documents are as per the terms of the L/C, and if the importer is not interested to wait a long period for the fund, then the issuing bank makes arrangements for purchasing the documents at a discount.

SWOT analysis.

The Bank’s strength and competitive capabilities can be shown by the SWOT analysis. The SWOT analysis is grounded in the basic principle that strategy-making efforts must aim at producing a good fit between a company’s resource capability and its external situation. The SWOT analysis of BASIC Bank Limited is as follows:

S- Strength

• Reputation of the Bank: Since the inauguration the bank has managed their activity with their own images to serve their customers. They have provided services successfully and have achieved goodwill among the Shariah Based Banks. The Bank is opening with its efficiency and integrity.
• Sponsor: BASIC bank has sponsors from various sectors of Bangladesh. The most successful entrepreneurs from various sectors started this company. As a result there was a combination of different thoughts and skills in the management of the bank, which is very much essential for success in today’s competitive market.
• Top Management: BASIC bank has a very competent and experienced top Management. The current Managing Director Mr. A.H. Iqbal Hossain has banking experience for a long time period. He had the experience of marketing and customer relationship management in his long career. This has helped the bank to achieve its goal.

• Shariah Based Banking: BASIC Bank is operating based on Islamic Shariah. As Bangladesh is a Muslim country, the Shariah banking has been able to attract customers and achieved a great success in the private banking sector.
• Branches: BASIC bank is operating their business all over the country with 30 branches and still planning to expand their business by opening new branches in the country. It has strengthened the distribution of the bank’s services.
• Government Bank: The 100% Share of BASIC Bank is Government. So it is a very Good Strength for any Company.

W- Weakness:

• Promotion: The bank does not any formal promotional activity. They do not give any sort of advertisement or do not have any marketing activity. They do not even too many billboards. This is why they are far behind the competitive in the private banking. Even some people do not know that BASIC Bank is operated according to Shariah.
• Remuneration: The remuneration of the officers of BASIC bank is lower compared to other private banks. Even the internship students are paid nothing. This is why high skilled human resources are discouraged to join here.
• Online Banking: At Present Every bank try to converted them to the Online banking. BASIC bank has no Online Banking System. So it is a great weakness for the Bank. I hope that BASIC Bank also introduce the Online banking System & serve his Client very Smoothly.
• Centralization Decision Making: The decision making of the bank is too many centralized. No decision is made without the authorization of the head office. Sometime some quick decision is needed to be taken, but from the branch, no one can make decision. It is one of the major draws back of the bank.
• Lacings of some officer: Some of the officer of the BASIC Bank LTD are not sincere their work. They do not come regularly; if they come they do not work properly. They just talk & pass the time. Some of the officers are not suitable for his position.

O- Opportunity:

• Consumer Banking: BASIC bank is operating corporate banking. In our country there is a huge opportunity of consumer banking. So BASIC bank can reposition their branding and introduce consumer banking with cororate banking.
• ATM: The banking sector of the country is becoming modernized in the country. People like to draw money any time from anywhere. So ATM card is getting popularized in the country. BASIC bank can introduce ATM system in their bank. More Over, Shariah Based banks are not providing ATM cards. So those who want ATM card but do not like interest, they can be attracted by ATM card issued by a Shariah Based Bank.
• Shariah Based Banking: In our country people are religious. Most of the people are Muslim. They are becoming educated and know the bad impact of interest. So they are moving towards Shariah based banking. BASIC bank takes this opportunity.
• More Branches: The economy of the country is expanding. The business outside Dhaka is also expanding. As a result, the demand for banking service is increasing day by day. So BASIC bank can open more banks in the country and can expand their business.
• Government Bank: BASIC Bank is Govt. Bank. So it has a great opportunity to expand itself.

 T- Threat

• Competitions: In Bangladesh, after economic reform, more private bank has started their operation in the country. They are coming with different types of attracting products. This has increased the completion among the private banks.
• Devaluation of local Currency: The value of local currency is decreasing. So investment in local banking is decreasing. More over the inflation is increasing in the country. So people want to save money but in many cases they cannot. As a result, the banks are getting less deposit.
• Bank Default: There is a tendency of the people of the country to become bankrupt. Few days ago Oriental bank has a great suffering. In our country, the receivable from top 20 bankrupt companies stood 88.36 billion. This is discouraging banks to make new investment.

Basic Bank is one of the top-class banks in our country. When I was placed at Motijheel Brach I didn’t have serious problems regarding the operation, customer service, management, human resource department, or anything else.

In spite of this I found few problems as follows:

• The time to reach Permanent Position from probation period takes almost two years, which is a very long time process as I considered and it should be less than two year.
• Some Officers of the bank are not self-motivated. They should be self-motivated by training.
• Basic Bank has only 27 branches, which are not so satisfactory to serve the country widely. It requires more branches throughout the country.
• Some banking operations are still operated in manual basis rather than computer system that take more time. Computer should be used in all their activities.
• DD, TT takes more time to operate. It should minimize time.
• We require some valuable information for the purpose of making Internship report but these kinds of information is not available. We strongly suggest helping us in this matter.

The BASIC Bank Limited has been trying to operate its business successfully in Bangladesh since 1994. Basic Bank has already developed goodwill among its clientele by offering its excellent services through General banking, Credit division, and Foreign Exchange divisions. This success has resulted from the dedication, commitment, and dynamic leadership among its management over the period. The working atmosphere of BASIC Bank Limited is very simulating. During the short span of time of its operation, the bank has been successful the position itself as a progressive and dynamic financial institution in the country due to the following reasons:

• Although there was huge loss in the establishment period of the bank due to huge sunk cost and operating cost, from the second year the bank was gradually able to reduce cost proportionately through an effective management.
• Interest expanses of the bank are reducing proportionately compared to interest income due to huge accumulation deposits as a result of increasing number of depositors. The number of depositors and the amount of deposits lie in the upward trend due to offering attractive services to the customers.
• Other income of the bank is also going up every year due to the increase of commission, exchange and brokerage fees in the foreign exchange section. Foreign exchange of the bank is operating effectively.
• Operating expenses of the bank increasing every year compared to the growth in deposits.

All this together with its adoption of the modern trend of the Banking system has enabled it to turn out as a potential profiteering Financial Institution. My course of internship in this Bank has been very valuable.