Study on NRB Remittance in Relation to General Banking in AB Bank Limited (Part-2)

What is a Bank

Bank is a financial, trusted, service oriented and profit earning institution. The primary function of a banking company consists of accepting of deposit for the purpose of lending or investment, considering the priority sectors to boost up the national economy. The deposited money should be repaid to the depositor on demand by cheque, draft or other wise but nor merely verbal order. To collect deposit and lending bank has to establish relationship with the customers and to conduct banking business some operational procedures must be followed as per guideline of supervisory authority, i.e. Bangladesh Bank.

AB Bank Limited conducts all types of commercial banking operations. The core business of the bank comprises of trade finance, term finance, working capital finance, and corporate finance. The bank is also providing personal credit, services related to local and foreign remittances and several products and services. The scheme of the bank which is designed to help the fixed income group in raising standard of living is competitively priced and has been widely appreciated by the customers.

The bank has achieved success in all sectors and the achievement has been possible because of the able leadership, dedicated and committed services provided by all levels of management and staff and all the trust and confidence that the valued client had reposed in the bank.

ABBL is the first generation private commercial bank in the country with commendable operating performance. Directed by the mission to provide prompt and efficient services to clients, ABBL has successfully celebrated its wide range of commercial banking services. The bank has achieved success among its peer group with its professional and dedicated team of management having long experience, commendable knowledge and expertise in convention with modern banking.

3.1 GENERAL BANKING ACTIVITIES

The division of general banking plays an important role in all commercial banks. It’s mainly a liability side. ABBL facilitates sections and facilities of general banking. The general banking sections and its activities are given in the followings:

Account opening department.
Account opening formalities.
Cash department.
Local remittance
Customer service officer desk.
Locker service.
Financial Control Department (FCD),
Clearing department.
ATM/Card division.
Foreign remittance
Sonchoypotro/ Investment department.

3.2 Account opening department

To know about account opening department, first it is necessary to gather knowledge about different types of accounts available in ABBL-

Current account
Savings account
Short notice deposit account
Fixed deposit account
Sole proprietorship account
Limited company account
Partnership account

Current account:

Current account can be opened by both individual and business concerns. Frequent transactions are allowed and payable on demand. No interest is allowed in current account.

Savings account:

This type of account is generally opened by individuals for savings purpose. Interest is allowed per annum as per norms and is credited on half yearly basis. There is some restrictions in operation in savings account, i.e. cannot withdraw more than one fourth of the balance subject to tk. 25,000 and minimum balance is kept. At present AB Bank Limited interest rate 7.50% and allowed on the lowest balance of the month.

Special notice deposit account:

Usually such accounts are opened by the sector corporation, companies, NGOs and financial institutions. In such account prior notice is required to transfer or withdrawal of balance and short notice may be 7/15/21/30 days as per agreement. Interest is allowed less than saving account normally on daily product.

Fixed deposit account:

Bank accepts deposit on tern basis, i.e. 3/6/12 months and 2/3 years. On maturity it is encashable or renewable. As per banking norms period wise fixed interest is allowed. In AB Bank Limited, if FDR is encashed before maturity, rate of interest is applied in savings account rate if it is covered 30 days at least.

3.3 Account opening formalities

In all accounts, account opening forms, personal information, KYC, ETC, risk grading is required. Introduction by an account holder and two photographs are required. ETP is not required for FDR. To proof of identification of the person, the followings are required-

Application of the prescribed form.
Furnishing photographs.
Introduction by an account holder.
Putting specimen signatures in the specimen card.
Mandate, if necessary.

Application form for savings & current account:

Following are the contents of the application form for opening savings or current account in ABBL-

Type of the account
Name of the applicant(S)
Father’s /husband’s name
Mother’s name
Present address
Permanent address
Number, date of issues, date of expiry & place of passport (if any)
Date of birth
Nationality
Occupation
Nominee(S)
Special instruction for operation of the account (if any)
Initial deposit
Specimen signature(s) of the applicant(s)
Introducer’s information (name, account number, specimen signature)
National ID Card

In case of partnership account:

The following formalities along with the documents are to be complete before opening an account-

Bank’s prescribed account opening application form signed by partners.
Certified copy of partnership deed/agreement
List of partners with address.
Extract of resolution of the partners meeting.
Copy of valid trade license.
Photograph of the signatories/partners.
Specimen signature card signed by signatories.
Introducer’s signature in the account opening form and at the back of the photographs of the account holder.
Identity of all partners must be verified in line with the requirements for personal customers. Where a formal partnership agreement exists, a mandate from the partnership authorizing the opening of an account and conferring authority on those who will operate it should be obtained.
Evidence of the trading address of the business or partnership should be obtained and a copy of the latest report and accounts.
An explanation of the nature of the business or partnership should be ascertained to ensure that it has a legitimate purpose.

Sole proprietorship account:

Bank’s prescribed account opening application form.
2 passport sized photograph of the proprietor attested by the introducer.
Specimen signature card.
Copy of valid trade license issued by local government authority (city corporation, union parishad, pouroshova, etc)
Permission from Bangladesh bank.
TIN issued by income tax authority.
The personal identity of the proprietor of the firm has to be established by any of the documents as mentioned in individual or joint customer category. Trade license carries the photo and signature of the proprietor is required.

Limited company account:

Bank’s prescribed account opening application form.
Certified copy of the memorandum and articles of association of the company.
Certificate of incorporation.
Certificate of commencement of business (for public limited companies only).
Extract of the board resolution sanctioning the account opening and signing authority.
List of the director with address in form-XII.
Photograph of the signatories.
Copy of valid trade license.
Introducer’s signature in the account opening form and at the back of the photograph of the applicant.
List of names with appointment letter and specimen signature of the persons authorized to operate the account.

Non-government college, school, madrasa, muktab:

Up to date list of the governing body managing committee.
Copy of resolution of the governing of the account duly certified by gazette officer.

Minor’s account:

Putting the word “MINOR” after the title of the account.
Recording special instruction of operation of the account.
The account opening form is to be filled in and signed by either of the parents or the legal guardian appointed by the court of law and not by minor.

General condition maintaining while opening an account in ABBL (savings/current/others):

Minimum balance to be maintained in current account tk. 5000 and in savings account tk.10000.
A suitable instruction by an introducer acceptable to the bank is required prior to opening an account.
Recent photographs of the account openers duly attested by the introducer must be done.
Interest rate for savings account 7.50% (half yearly compounding).
When cheque deposited are payable by other bank or outstation, they are available after collection or clearing only. Service charge will be charged @ tk.100 in current account and tk.100 in savings account yearly or as charged by the bank from time to time as and when required.

General functions of Account Opening department:

Account open
Cheque book requisition
Cheque book issuance
Cheque book delivery
Account transfer if needed
Balance settlement
Locker maintenance
Information up gradation
Registering and filing all related documents of account opening department
Daily voucher preparation and submission of daily updates to the management or assigned authority.

3.4 Cash department

The main function of cash department is to accept cash from the customer for credit into their account and pay cash through cheque payment verifying the signature of the client without negligence. Receipt and payment are made through computerized system. There is teller’s proof sheet where every teller mentioned receipt and payment separately with account number and cheque serial number duly initiated by the teller and head teller jointly. Cash received by the teller using received stamp seal with teller number and voucher passed by the head teller. The teller paid cheque within their delegation and beyond their delegation cheque is passed jointly with head teller. Head teller passed cheque beyond delegation with the operation manager jointly. After posting of debit and credit vouchers, it is checked by the officer whether posted correctly and confirm with the signature. After closing of days transactions, all the tellers transfer the cash on hand to the head teller and head teller maintain reserve cash with the previous cash in vault if any.

Cash transaction reporting:

In every month as per Bangladesh bank instruction cash deposit and cash withdrawal above tk. 7,00,000 in any account is reported to Bangladesh bank through head office through online.

Suspicious transaction:

If the head teller or any other teller detect suspicious or unusual transaction in any account is to be reported to BAMLCO

3.5 Local Remittance

Bank has branches throughout the country and therefore, they serve as best medium for remittance of funds from place to another. This service is available to both customer as well as noncustomers of the bank.

Bank draft or Demand draft (D.D)
Telephonic transfer (T.T)
Pay Order (P.O)

Bank draft or Demand draft (D.D):

A bank draft is an unconditional order issued by one branch of a bank on another branch to pay certain amount of money to the named person or order on demand. Hence, a bank draft is always payable on demand. It is always known as demand draft (D.D).

Characteristics:

It is drawn by one office of a bank upon some other office of the same bank.
It is payable on demand.
Its payment is to be made to the person whose name is mentioned therein or according to his order. In other words, it cannot be made payable to the bearer.

Telephonic transfer (T.T):

This is a mode of transfer of customer’s money from a branch of one bank to another branch of the same bank or a branch of another bank through telephonic message.

Characteristics:

Issued by one branch to other branch and message is telecommunicated.
Transfer of money is through tested tele-message.
Remittance is affected on the basis of tested message.
Test key apparatus is required.

Pay Order (P.O):

This is an instrument issued by branch of a bank for enabling the customer to pay certain amount of money to the order of a certain person or organization within the same clearing house area of the pay order issuing branch.

Characteristics:

The issuing branch and the paying branch are same. In online banking, it is payable to all branches of ABBL.
Application for payment within the clearing house area of the issuing branch.
This may be open or can be crossed.

Though ABBL has the online banking service, D.D & T.T is not so much popular in remittance and not widely used in now a day, while pay order is widely used and very popular remittance service to transfer funds to different branches of the bank.

Fixed Deposit Received (FDR):

Characteristics:

Interest should be charged on only interest earned.
Excise duly should be charged on only in a year.
Charge range.

Documents required for issuing FDR:

Bank account is not necessary in this case.
2 copy photo both FDR holder and nominees.
Documents required for proper identification.
Declaration of sources of fund.
If any account maintained then the payment will be transferred to the client’s account.
Debit advice is issued for this purpose.

3.6 Customer service officer desk

To match customer’s needs, bank introduced customers’ service officer desk in the branches in 2008, which aimed at taking the customer care to a new level. The concept of CSO desk is initially been introduced at 14 branches of the bank, Dhanmondi branch is one of them.

Customer Services activities are-

New Cheque Book
Lost Cheque Book
Lost Credit / Debit Card
Account Opening
Address Change
Signature Change
Account Closing
Account Transfer

3.7 Locker Service

Safe Deposit Locker Services are extended by the bank to the clients of selected branches as decided by head office from time to time. These branches are equipped with the required safe deposit lockers for hiring out to the clients.

The facility is extended only to the valued clients maintaining account in the branch of the bank, who agree to abide by the set rules and regulations governing the use and operations of the locker. Following general guidelines should be complied by the branch:

No information about the renting of lockers, mode of operation or visits made by lease/renters must be divulged except with the clear consent of the lease/renters and or when compelled by the law.
The specimen signature cards and all other books and records in the vault should be kept under the lock and key outside business hours.
A torch/ electric charger/candles should be kept ready for use in the vault in case of electricity failure unless an alternative generator IPS is already installed in the branch.
It is desirable that staff posted to the locker are adequately senior to understand the responsibility attached to the work involved and that they are rotated periodically.
Branch staff should not rent a locker jointly with persons other than the members of his/her family. When a locker is let out to the manager with or without his family members he should report to this to head office, other offices should report to the branch manager.
There must always be adequate arrangements for guarding the vault. The branch must ensure the security alarm is properly operated and serviced.
Whenever legal issues are involved, e.g. in the event of death of the lessee/renter, issuance of prohibitory orders etc. legal requirements and practice must be followed. Branches are advised to obtain specific advice from legal advisors and take appropriate action as per head office guidelines.
The bank may also forcibly open any locker with prior approval of head office after giving due notice to the lessee, if the locker rent/any other charges due to the bank remains unpaid for a period of 2 years or if the bank terminates the lease and the key is not surrendered to the bank, after the expiry of 6 months from the date of mailing the notice of termination. Such forcible opening of a locker should be done in the presence of a magistrate and an inventory of the contents therein shall be made in his presence which should be signed by the authorized officer of the branch and duly counter signed by the magistrate with date. In case of forcible opening due to default in payment of annual rental, the matter should be referred to head office prior to forcible opening.

3.8 Financial Control Department (FCD)

Financial control department is called as the center of the bank. In banking business transaction are done every day is their transaction are to be recorded properly and systematically as the banks deal with the depositors money. Any deviation in proper recording many hamper public confidence and bank has to suffer a lot otherwise. Improper recording of transaction will lead to the mismatch in the debit side and the credit side. To avoid these mishaps, the bank provides a separate department, whose function is to check the mistake in passing voucher in wrong entries or fraud or forgery. This department is called Financial Control Department (FCD).

Main functions of FCD are-

Daily position
Weekly position
Daily extract
Salary
Budget
All work related human resources department
All work related general service and security procurement
Leave, personal file update
All voucher related expense
Provision
Depreciation
Amortization
Solvency certificate
Bank statements
Deposit held by sector corporation
Monthly statement of adjustment and unadjustments
VAT statements
Utility statements
Statement instructions
Store management

3.9 Clearing department

This is an arrangement by the central bank where everyday the representatives of the member banks gather to clear the cheque. The place where the banks meet and settle their dues is called the clearing house, sits for 2 times a working day.

2 types of cheques occurs in clearing department-

Bank receipt cheques or instruments of other banks from the customer for collection for credit into their account are called outward clearing cheques.
Bank also received cheques or instruments presented by the other bank drawn on the branch for payment is called inward clearing cheques.

Functions:

Pass outward instruments to the clearing house.
Pass inward instruments to respective departments.
Return instruments in case of dishonor.

Clearing procedure is maintained through head office by the bank.

If the instruments are dishonored then the instruments are returned to the concerned branch. The reasons for dishonoring cheques are-

Account closed.
Insufficient fund.
Non-arranged stopped.
Refer to drawer.
Effects not cleared may be presented again.
Amount in words and figures are different.
Drawer’s signature is different, etc.

Receiving cheques for collection:

In ABBL, cheques of customers are received for collection from other banks. In case of receiving cheques, following points should be checked very carefully-

The cheque should not carry an older date then the receiving date for more than 6 months. In that case, it will be stale cheque, and will not be allowed for collection. Again the date of the cheque should not be more than 1 day forwards than the receiving date.
The amount in figure and words in both sides of the pay-in-slip should be same.
The cheque must be crossed.
The endorsement is done by putting signature of the drawer on the back of the negotiable instrument for the purpose of the negotiation by bearer.

3.10 ATM/Card department

Q-Cash:

ABBL is the first private bank which introduced ATM card to its honorable customers. Our ATM card is smart card based solution and it can independently used in ATM network to give 24 hours service to the customers and considering their expenses. This ATM network is prepared by different banks-

AB Bank Limited,
The City Bank,
Janata Bank,
IFIC Bank,
Jamuna Bank,
Mercantile Bank, are among this network.

ATM customers can use any of these bank booths. ABBL is working as the settlement bank of this network. At present, customers are getting service from 40 ATM locations of Dhaka, Khulna, Sylhet, Rajshahi, Rangpur and Chittagong.

Benefits:

24 hours service
Cash withdrawal advantage
Shopping
Payment of various bills
Balance information
Current transaction information
Money deposit facility

3.11 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 place at an agreed rate of exchange where the banker quotes for buying and 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.

Functions of this department:

Overall supervision of foreign remittance.
Foreign TT payment and purchase of foreign drafts.
Preparation of foreign bill purchase (FBP).
Issuance of outward TT and FDD.
Issuance of proceed responding certificate (PRC).
Foreign collection, Bangladesh bank clearing cheque collection that comes from all the branches of ABBL.
Withdrawal from FCA account.
Encashment of TC and cash dollar and sterling pound.
Deduction of tax and VAT on behalf of Bangladesh bank.
Preparation of related statements including convertible taka accounts.
Balancing of account statement.
Compliance of audit and inspection.
Preparation of IBCA and IBDA and balancing of collection and other special assignment as desired by department in charge.

Inward foreign remittance:

Inward foreign remittance covers purchase of foreign currency in the form of foreign TT, DD, MT, Bills etc sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to exchange control department of Bangladesh bank prescribing 2 forms-

EXP form: Remittances received against export of goods from Bangladesh are done by this.
Form C: Inward remittances equivalent to US$ 2000 and above are done by this. Here, the remittance recipient declares the purpose of fund.

Outward foreign remittance:

Outward foreign remittance covers sales of foreign currency through issuing foreign TT, Drafts, Travelers’ Cheque, etc as well as sell of foreign exchange under L/C and against import bill retired. 2 forms area 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	Official & Business travel	Commercial remittances
Family remittance facilities	Official visit	Opening of branches or subsidiary companies abroad
Remittances of membership fees	Business travel quota for new exporters	Remittances by shipping, airlines and courier services
Education	Business travel quota for importers	Remittances for royalty and technical fees
Remittances of consular fees	Exporter retention quota	Remittance on account of training and consultancy
Remittances of evaluation fees		Remittances of dividends
Travel		Subscription of foreign media services
Health and medical purpose		Fees for return monitors
Seminar and workshops		Advertisement of Bangladeshi products in mass media in abroad
Foreign nationals		Bank charges
Remittances for Hajj		Sundries
Other private remittances

3.12 Sonchoypotro/ Investment department

The National Savings Bureau (Jatiyo Sonchaya Bureau), Government of Peoples Republic of Bangladesh issues different types of interest bearing sonchoypotros (savings certificates & bonds) to the individuals and organizations. These are available from Bangladesh bank, scheduled banks, post-office and national savings bureau office. As a scheduled bank and part of ancillary business, ABBL sells sonchoypotras.

Different types of sonchoypotras and bonds are issued by The National Savings Bureau (Jatiyo Sonchaya Bureau), Government of Peoples Republic of Bangladesh, they are:

Protirakhkha Sonchoypotros (Defence Savings Certificate)
5 years Bangladesh Sonchoypotras
Family Sonchoypotros
3 monthly interest based Sonchoypotros
6 monthly interest based Sonchoypotros
Jamanat Sonchoypotros
3 years national investment bond
Wage earner’s development bond

The rate of interest and deduction of income tax/levy etc may be determined by the concerned authority from time to time, which shall be followed meticulously.

Documents required for opening a Sonchoypotro: