Report on IFIC Bank in Bangladesh

By Bidita rahman on December 23, 2010 in Business & Economy

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EXECUTIVE SUMMERY
This report “Banking Activities and asset- liabilities of IFIC Bank Ltd” is prepared to fulfill
the partial requirement of Principles of Banking of Business Administration Program of
Daffodil International University, Bangladesh. The topic of dissertation was selected upon
consultation with course instructor of respective department.

The main aim of this report is to find out the operational activities and the financial trend of
IFIC bank Ltd. From this analysis we find out the financial situation and this analysis from
the annual report issued by IFIC Bank Ltd. from the year 2005 to 2009, which was the main
source of information.

INTRODUCTION

Motivation of the Report:

We are the students of BBA program of Daffodil International University. As we are

studying the Principle of Banking in this semester, we have to gather huge amount of
knowledge about the Banking activities. To acquire practical knowledge about the banking
activities our course instructor has motivated us to do this type of assignment. That’s why we
have motivated to prepare this report.

Objective of the Report:

A study in banking activities and asset and liabilities of Prime Bank Limited to find out its
activities and performance in terms of anticipated customer’s requirements and provide them
with the service, which meet their market, quality and service need.

• To give a brief about the history and information of this bank.

• To inform about the bank mission and vision of IFIC Bank Limited.
• Setting a general idea about operation procedures and functions of AB Banking Limited.
• To explain about the services that the organization are offering to its customers.
• To have an idea about the different techniques of banking operation.

Methodology
The study is based on secondary data methodology of this final report is given below:
Data regarding the organization profile collected in the following ways:
• From the organization’s Annual report.
• Online information.
• By interviewing the organization’s officials.
• Observational method will also be used in this study.

Limitation of the study:

Any assignment paper needs high degree of involvement regarding collection of information,
creation of database, literature review and analysis of data. In this study, we have tried our
level best to collect the related information within the time constraint.

SOURCES AND USES OF FUND

Banks gets profit by investing their collected funds. Depositors provide major part of the
bank fund, as such; banks must invest reasonable efforts to attract money of the depositors.
Bank can also collect fund from different other sources. On the other hand, providing loan is
the largest head to use funds of the commercial bank.
Managing the flow of funds is the basic concern of banks. So, the management of bank
always keeps closer look on the inflow’s and outflow’s of funds.

BACKGROUND OF IFIC BANK

Portrait of the Bank

International Finance Investment and Commerce Bank Limited (IFIC Bank) is banking
company incorporated in the People’s Republic of Bangladesh with limited liability. It was
set up at the instance of the Government in 1976 as a joint venture between the Government
of Bangladesh and sponsors in the private sector with the objective of working as a finance
company within the country and setting up joint venture banks/financial institutions aboard.
In 1983 when the Government allowed banks in the private sector, IFIC was converted into a
full fledged commercial bank. The Government of the People’s Republic of Bangladesh now
holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast experience
in the field of trade and commerce own 11.42% of the share capital and the rest is held by the
general public
The Bank covers by its activities all the important trading and commercial centers of the
country. As on November 22, 2010 it had 88 branches within Bangladesh.

Bank’s Mission
? Our Mission is to provide service to our clients with the help of a skilled and dedicated
workforce whose creative talents, innovative actions and competitive edge make our position
unique in giving quality service to all institutions and individuals that we care for.

? We are committed to the welfare and economic prosperity of the people and the
community, for we drive from them our inspiration and drive for onward progress to
prosperity.
? We want to be the leader among banks in Bangladesh and make our indelible mark as an
active partner in regional banking operating beyond the national boundary.

? In an intensely competitive and complex financial and business environment, we

particularly focus on growth and profitability of all concerned.
Business Objectives
• Make sound investments.
• Customer satisfaction first
• Meet capital adequacy requirement at all the time.
• Ensure 95% recovery of all advances
• Ensure a satisfied work force.
• Focus on fee-based income.
• Adopt an appropriate management technology.
• Install a scientific MIS to monitor Bank’s activities

2.5 Capital and Reserves

The Bank started with an Authorized capital of Tk. 100 million in 1983. Paid up capital at
that time stood at Tk.71.50 million only. Over the last 19 years, the authorized and paid-up
capital has increased substantially. The paid capital stood at Tk. 406.39 million as on
December 31, 2001.
The Bank has built up a strong reserve base over the years. In last 19 years its Reserves and
Surplus have increased overly. As against Tk. 21.20 million only in 1983 Reserve and surplus
increased to Tk.622.53 million in 2001. This consistent policy of building up Reserves has
enabled the Bank to maintain a better adequacy ratio as compared to others.
With the active support and guidance from the Government, the bank has been showing a
steady and improved performance. In its fifteen years operation, the bank has earned the
status of leading in terms of both business and goodwill.
Starting modest deposit of only Tk. 863.40 million in 1983 the Bank has closed its business
with Tk. 17616.68 million of deposit as on December 31, 2001. The annual growth rate has
mostly been higher compared to both banking sector growth and individual growth rates
achieved by others.
As against a profit of Tk. 21.94 million in 1984, the Bank earned a record profit of Tk.
248.00 million for the year ended on December 2001.

Operation Abroad:
Joint Venture
? Bank of Maldives – In 1983, IFIC Bank set up a joint venture bank names Bank of
Maldives Limited (BML). It is the first bank of Maldives. In 1992, as per contract, IFIC Bank
handed over the management of BML to Maldives.
? b. Oman-Bangladesh Exchange – To facilitate remittance by Bangladeshi in Oman, IFIC
bank set up a money exchange company as a joint venture, named Oman-Bangladesh
Exchange.
Branch abroad
? Pakistan Branch – IFIC Bank opened its first overseas branch in Karachi, Pakistan. It
opened its second branch at Lahore in Pakistan.
? Nepal Bangladesh Limited – In December 1993, the Bank got permission to establish a
joint venture bank with 50% equity capital in Nepal. The Bank known as, Nepal Bangladesh
Ltd. came into operation in June 1994.
Human Resource Development
The Bank has a Human Resource Development & Research Department to develop human
resources internally. The Academy is equipped with professional library, modern training
aids professional faculty and other facility. It is now under Personnel & Human Resource
Development & Research Division. The Academy conducts regularly foundation courses,
specialized courses and seminars on different areas of banking to take care of the professional
needs.
Total manpower stood at 2237 as on September, 2010

Product Service Information

I. Finance/Loans:

? Cash Credit
? Secured Overdraft
? Bank Guarantee
? Long Term and Short Term Financing
? House Building Loan
? Car Loan

II. Foreign Exchange

? Non Resident Foreign Currency

Account (NFCD)
? Non Resident BDT Deposit
Account (NRTA)
? Resident Foreign Currency
Deposit Account (RFCD)
? Foreign Currency Deposit
Account
? Money Gram
? UAE Exchange
? Placid Express
III. Deposit Scheme
? Savings Bank Account (SB A/C)
? Current Deposit Account (CD
A/C)
? NCC Bank Special Savings
Scheme (SSS)
? Fixed Term Deposit (FDR)
? Short Term Deposit (STD)
? Money Double Deposit Programs
? Premium Term Deposit
? Interest Earning Term Deposit

Retail Banking

Retail Banking is mass-banking facility for individual customers to avail banking services
directly from their wide branch net work all over the country. IFIC provide one stop financial
services to all individual customers thorough their innovative products and services to cater
their need. With a view to provide faster and more convenient centralized online banking
services, most of IFIC branches have been brought under the real time online banking system.
IFIC Bank offers a wide variety of deposit products, loan product and value added services to
suit consumer banking requirements. Products and services for individual customer include.
Consumer finance, deposit product, card, NRB account, student File, SMS banking.
Deposit Product
IFIC bank offers a wide variety of deposit products to meet consumer financial needs from
current and savings account to fixed deposits and pension schemes each account is designed
to give Consumers the best value for their money.
Saving account

IFIC are offering the most attractive interest rate of 5% on consumer savings account.
Initial Deposit: Tk. 500.00 at rural branches & Tk. 1000/- for urban branches which should be
considered as minimum balance.
Competitive Interest Rate
No extra hidden charge
Debit Card facility
SMS Banking Facility
ATM facility
Online banking facility
Utility payment service
Transfer of fund from one branch to another
Opportunity for availing locker facility

Current Account:

Minimum required balance Tk. 2000/-.

Debit Card facility
ATM facility
Online Banking facility
SMS Banking Facility
Utility payment service
Transfer of fund from one branch to another
Opportunity for availing locker facility
No extra hidden charge

Fixed Deposit Receipt (FDR)

Fixed deposit gives you higher interest than other forms of deposits. IFIC Bank is offering
competitive interest rate in FDR:

Fixed Deposits Rate

FDR (3 Months & above)

Less than Tk. 1.00 crore 8.25%

Tk. 1.00 crore and above but less than Tk. 5.00 crore. 8.50%

Tk. 5.00 crore and above 9.25%

FDR (6 Months & above)

Less than Tk. 1.00 crore 8.25%

Tk. 1.00 crore and above but less than Tk. 5.00 crore. 8.50%

Tk. 5.00 crore and above 9.25%

FDR (1 Year)

Less than Tk. 1.00 crore 8.00%

Tk. 1.00 crore and above but less than Tk. 5.00 crore. 8.25%

Tk. 5.00 crore and above 9.50%

Pension Savings Scheme (PSS)

IFIC Bank is pleased to offer 3(three) / 5(five) Years Monthly Savings plan with higher
return and monthly pension option at maturity. Monthly Installment option and Payment after
maturity, now being offered under the scheme, are as under:
Monthly Instalment 3 years Terms 5 years Terms
Amount payable After maturity Amount payable After maturity
Tk. 500 Tk. 20,781 Tk. 38,134
Tk. 1,000 Tk. 41,562 Tk. 76,268
Tk. 2,000 Tk. 83,125 Tk. 1,52,536
Tk. 3,000 Tk. 1,24,687 Tk. 2,28,804
Tk. 5,000 Tk. 2,07,812 Tk. 3,81,340
Tk.10,000 Tk. 4,15,624 Tk. 7,62,680
Tk.15,000 Tk. 6,23,435 Tk. 11,44,020
Tk.20,000 Tk. 8,31,247 Tk. 15,25,360
Tk.25,000 Tk. 10,39,059 Tk. 19,06,699
Tk.50,000 Tk. 20,78,118 Tk. 38,13,399

Consumer can receive full payment at maturity or option for a pension on monthly basis to
meet their needs.
The scheme entitles consumer to have Income Tax Rebate to make their savings even more
valuable.
Income Tax Rebate: Monthly installments of IFIC PSS will qualify as allowable investment
in Yearly Income Tax Return. The account under this scheme will also be exempted from
deduction of tax on interest payable at source. However, If any tax or other Govt. Levy is
payable under this Scheme in future the same shall be deducted from the account.
Credit Facility: The A/c holder can avail loan / Secured Overdraft (maximum 80% of the
deposited principal amount but not less than Tk.20, 000/-) against lien of the PSS account to
meet the personal need, educational expenses of his/her children or for medical treatment.
Double Return Deposit Scheme (DSS)
Enjoy higher return on your valuable Investment
IFIC Bank is pleased to offer 8 ½ Years – Double Return Deposit Scheme (DRDS) with
special feature:
Minimum Deposit Term Benefit
Tk. 25,000 8 ½ Yrs. Double return after 8 ½Years.
(subject to deduction of Tax & Excise duty)

Special Feature: If consumer require to have their money back after completion of 1(one)
year, IFIC will not deprive consumer from interest for pre-encashment. For each completed
years and subsequent completed years you will get interest @8.50% p.a.
Credit Facility: You can avail Credit facility up to max. 90% of the deposited amount against
registering Lien on Instrument with the issuing Branch.

Monthly Income scheme (MIS)

Deposit once and Enjoy Higher Return on Monthly basis
Deposit Term Gross Monthly Income
Tk. 50,000 or multiple 3 Yrs. Tk.350.00 (i.e Tk.700.00 per lac)
If consumer are 18 years of age or above , consumer are welcome to apply for keeping
deposit under this Deposit scheme. If they are not yet 18 , become so and soon.

Can be opened in Joint names or in the name of any Institutions.

Consumers will require opening / having a CD/SB Account with the Branch.

Consumers can open more than one account in your name in any branch

Credit Facility: Consumers can avail loan/overdraft facility against registering lien on the
MIS account as per the Bank’s prescribed rates and rules.
Monthly Income will be paid after deduction of Tax/Excise duty or any other levy as may be
decided by the Government of Bangladesh from time to time.
Special notice deposit (SND) Account
Special Notice deposit (SND) Account is opened for any individual form financial
institutions.
Initial Deposit for opening account Tk. 25,000/- (Min.)
SND interest Rate

Less than Tk. 1.00 crore 2.00%

Tk. 1.00 crore and above but less than Tk.25.00 crore 2.50%

Tk. 25.00 crore and above but less than Tk. 50.00 crore 4.00%

Tk. 50.00 crore and above but less than Tk. 100.00 crore 2.00%

Tk. 100.00 crore and above 2.00%

Three Years Deposit Plus (3YDP)

Enjoy higher return on your valuable Investment
IFIC Bank is pleased to offer three years deposit plus (3YDP) scheme with special feature
Deposit Amount Term Amount payable after maturity
Tk. 50,000 or its multiple 3Yrs. Tk. 64,183/- or its multiple
i.e. Tk 1,28,367/- per Lac
(subject to deduction of Tax & Excise duty)
Special Feature: If Consumers require to have your money back after completion of 6(six)
months, IFIC will not deprive Consumers from interest for pre- encashment. For each
completed 6(six) months and subsequent completion of 6(six) months Consumers will get
interest @8.50% p.a. compounded at half yearly rest.(Effective Rate 8.68% p.a.)
Eligibility: If Consumers are 18 years of age or above, he or she are welcome to apply for
keeping deposit under this deposit scheme. if they are not yet 18.become so and soon
Can be opened in joint names or in the name of any institution
Can be opened in the name of Minor under the signature of the Guardian
Credit Facility: Consumers can avail credit facility up to max 90% of the deposited amount
against registering lien on instrument with the issuing branch.
Loans and Advances:
SME Banking

The growth of Small and Medium enterprises (SMEs) in terms of size and number has
multiple effects on the national economy, specifically on employment generation, GDP
growth, and poverty alleviation in Bangladesh. At present, Small & Medium Enterprise
sector is playing a vital role in creation of new generation entrepreneurs and ‘Entrepreneurs
Culture’ in the country. Experience shows that borrowers of small enterprise sector prefers
collateral free loan since normally they cannot offer high value security to cover the
exposure.
To facilitate SME sector of the country, IFIC Bank provides collateral free credit facilities to
the small & medium entrepreneurs across the country whose access to traditional credit
facilities are very limited. IFIC are offering 15 different products for selected target groups,
such as – Easy Commercial Loan, Retailers Loan, Muldhan Loan, Women Entrepreneur’s
Loan (Protyasha), Transport Loan, Working Capital Loan, Project Loan, letter of
Contractor’s Loan, Bidder’s Loan, Working Capital Loan, Project Loan, Letter of Guarantee,
Letter of Credit Loan against Imported Merchandize (LIM), Loan against Trust Receipt etc.

Working Capital Loan:

Business Enterprises (other than public Limited company) engaged in manufacturing/trading
business are eligible to avail working capital Loan to meet day to day expenses for processing
of manufacturing and selling product.
Interest Rate: 14.00% p.a with quarterly rest or as revised from time to time
Loan processing Fess: Tk. 2000
Service Charge: 0.25% on loan amount Min; Tk 5000
Required documents
1. One copy passport size photograph of intending borrowers as well as guarantors
2. Valid trade license
3. TIN certificate
4. Bank statement for last six months
6. Financial statement
7. Original Title deed
8. Bia dessd
9. CS, SA, RS and Hal Parcha
10. Mutation with DCR
11. Up to date rent receipt
12. Site map tax receipt
13. CIB report of the borrower
Women Entrepreneur’s Loan (Protyasha)
Any business purpose loan for small and medium sized business, woned by women
entrepreneurs.
Eligibility: Woman Entrepreneurs having two years experience in the same line of business.
Monthly cash flow to support proposed loan installment
Nature of the Loan: Term Loan
Loan size: Minimum Tk 50000 and Maximum tk 3 lac
Repayment: Monthly repayment facility
Security: No collateral security
Loan Period:
Maximum 18 (Eighteen) months for loan amount of Tk. 50,000
Maximum 24 (Twenty four) months for loan upto Tk.1.00 lac.
Maximum 36 (Thirty six) months for loan upto Tk.3.00 lac.

Interest Rate: 15.00% p.a. with quarterly rest or as revised from time to time.

Loan Processing Fees: Tk.500/- to be realized.

Service charge:.25% on Loan amount, Max Tk 500
Penal Interest: Additional 3% on the overdue over limit amount, if any
Required Requirement
1. One copy passport size photograph of borrower/ Partners as well as guarantor(s).

2. Copy of National Identity Card.

3. Copy of valid Trade License.

4. Declaration of Net Worth of the borrower.

5. Duly signed and crossed post dated cheques in favour of Bank branch for each instalment
and one undated cheque for full loan value including full interest supported by memorandum
of deposit of cheques.

6. Financial statement.

7. Up to date clean CIB report.

8. NOC from Directorate of Environment, where required.

Transport Loan
To purchase of Road/Water transport for commercial use individual, business enterprises
(other than public limited company) engaged in transport business at least two years
experience are eligible for transport loan.
Interest Rate: 14.75% to 15.50% p.a. with quarterly rest or as revised from time to time
Loan processing fees: 1.00% on loan amount maximum tk. 10000
Service Charge: .50% on loan amount
Penal Interest: Additional 2.00% p.a. on the overdue amount, if any
Required Requirement
1. One copy passport size photograph of intending borrower(s) as well as guarantor(s)

2. Valid Trade License

3. TIN certificate

4. Bank statement for last 6 (six) months

5. Submission of Financial statement

6. Quotation of vehicle accepted by the intending borrower

7. Original Title Deed of the property

8. Bia Deed

9. CA, SA, RS & Hal parcha

10. Mutation with DCR

11. Upto date rent receipt

12. Municipal Tax Receipt

13. Non-encumbrance certificate

14. No objection/permission from competent authority for mortgage of property(ies) where

required

15. CIB report on the borrower

16. Partnership deed (in case of partnership firm) registered with RJSC & Firm along with
letter of partnership on Bank’s prescribed format

17. Memorandum & Articles of Association along with certificate of incorporation duly
certified by RJSC and resolution from the Board of Directors (in case of private limited
company).

18. Copy of upto date list of directors (Form XII) certified by RJSC

Retailers Loan
To meet working capital finance for any small and retail entrepreneur with successful
business record, having a valid trade license are eligible for retailer’s loan.
Eligibility: Successful Business Record and Valid trade license
Nature of the loan: Term Loan
Repayment: Monthly Repayment facility
Security: No collateral security
Loan size: Maximum Tk 2 Lac.
Loan period: 12 To 36 Months
Interest Rate: 16%p.a with quarterly rest or as revised from time to time
Loan Processing Fees: Tk 500 up to Tk 1000 abouve 1 lac.
Service Charge: 1% on Loan Amount
Penal Interest: Additional 2% p.a on the overdue amount If any
Required Requirement
1. One copy passport size photograph.

2. Copy of Trade License

3. Declaration Net worth

4. Duly signed & crossed post dated cheque in favour of bank branch for each instalment &
one undated cheque for full loan value including full interest.

Bidder’s Loan:
Individuals, business enterprises (other than public limited company) engaged in construction
and supply business can avail Bidder’s loan for issuing Payment Order/Demand Draft etc. to
participating in tenders.
Interest Rate: 15.50% p.a with quarterly rest or as revised from time to time
Loan processing fees: Tk 2000
Service Charge: 0.25% on loan amount minimum Tk 5000
Panal Interest: Additional 2.00%p.a on the overdue amount.
Required Documents
Required Requirement
1. One copy passport size photograph of Proprietor/Partners/ Managing Director of the
company as well as guarantors(s).

2. Valid Trade License

3. TIN certificate

4. Bank statement for last 6 (six) months.

5. Financial statement.

6. An under taking from the borrower to the effect that all PO/SDR/DD (except the successful
one) issued under the limit shall be deposited to the branch for credit to the relevant loan
General Account

7. Original title deed

8. Bia deed

9. CS, SA, RS & Hal Parcha

10. Mutation with DCR

11. Upto date rent receipt

12. Site Map/Municipal tax receipt

13. Non-encumbrance certificate

14. NOC from concerned authority for creation mortgage where applicable
15. CIB report of the borrower

16. Partnership deed along with Letter of Partnership on Ban’s prescribed format

17. Memorandum & Articles of Association with certificate of incorporation duly certified by
RJSC

18. Certified copy of upto date list of directors (Form XII).

Commercial House Building Loan:

Individual, business enterprises having commercial plot are eligible for construction of
commercial building.
Interest Rate: 13.00%p.a with quarterly rest or as revised from time to time
Loan processing fees: Tk 5000 upto 25 lac Tk 10000 above 25 lac
Service Charge: 0.50% on loan amount
Penal interest: Additional 2.00%p.a the overdue amount. If any
Required documents:
1. one copy passport size photograph of Proprietor/Partner/Managing Director as well as
guarantor(s)

2. Valid Trade License

3. TIN certificate

4. Bank statement for last 6 (six) months

5. Financial statement

6. Original Deed

7. Bia deed

8. CS, SA, RS & Hal parcha

9. Mutation with DCR

10. Upto date rent paid receipt

11. Site Map

12. Non-encumbrance certificate

13. Approved plan for construction from the competent authority

14NOC from he concerned authority for creation of mortgage, where applicable

15. Estimated cost of construction by a Civil Engineer

16CIB report of the borrower

17. Registered partnership deed along with letter of partnership on Bank’s prescribed format

18. Memorandum & Articles of Association along with certificate of incorporation duly
certified by RJSC

19. Certified copy of upto date list of directors (Form XII).

Contractor Loan:
Individual, business enterprises (other than public limited company) engaged in construction
and supply business are eligible for secured over draft to execute work order awarded by
Govt./Semi Govt. & Autonomous Bodies.
Interest Rate: 15.50%p.a with quarterly rest or as revised from time to time
Loan processing fees: Tk 2000
Service Charge: 0.25% on loan amount
Penal interest: Additioanl 2.00%p.a the overdue amount. If any

Required documents:
1. Onecopy passport size photograph of intending borrower(s) as well as guarantors(s).

2. Valid Trade License

3. Copy of valid enlistment certificate

4. Bank statement for last 6 (six) months

5. Financial statement

6. TIN certificate

7. CIB report of the borrower

8. Partnership deed registered with RJSC & Firm

9. Letter of partnership in Bank’s prescribed format

10. Memorandum & Articles of Association with certificate of incorporation duly certified by
RJSC

11. Copy of work order awarded with copy of terms of agreement

12Original title deed

13. Bia deed

14. CS, SA, RS & Hal Parcha

15. Mutation with DCR

16. Upto date rent receipt

17. Site Map/Municipal tax receipt

18. Non-encumbrance certificate

19. NOC from concerned authority for creation mortgage where applicable

Easy commercial Loan:

To meet business requirement of individual business enterprises (other than public limited
company) against pledge of financial instruments i.e. FDR, ICB Unit Certificate, WEDB,
NFCD, PSS Account, MIS & Share Certificates & any other Govt. security eligible for credit
facilities.
Interest Rate
IFIC Bank FDR 2.00% above the FDR Rate but not less than 10.50% p.a. with quarterly rest
or as revised from time to time.
Other Banks FDR 2.00% above the Other FDR Rate but not less than 10.50% p.a. with
quarterly rest or as revised from time to time.
ICB Unit certificate, WEDB & and other Financial Instruments. 13.00% p.a. with quarterly
rest or as revised from time to time.
NFCD 13.00% p.a. with quarterly rest or as revised from time to time.
Pension Saving Scheme 13.00% p.a. with quarterly rest or as revised from time to time.
MIS 13.00% p.a. with quarterly rest or as revised from time to time.
Share 13.00% p.a. with quarterly rest or as revised from time to time

Loan Processing Fees: Tk 500

Penal Interest: Additional 2.00% p.a on the over due amount
Required Documents:

1. Trade License

2. CIB report of the borrower

3. Memorandum and Articles of Association along with certificate of incorporation and

resolution from Board of Directors of the company.

4. Deed of Partnership along with letter of partnership on Bank’s prescribed format (for
partnership firm).

Foreign Trade Financing:

i. Export trade financing

ii. Import trade financing

Export Trade Financing:
Export L/C operation is just reverse of the import L/C operation. For exporting goods by the
local exporter, Bank may act as advising bank and negotiating for the exporter. As a
negotiating Bank, it receives documents from the foreign importer and hand it over to the
exporter. Sometimes it adds confirmation on the L/C on request from the opening Bank. By
adding confirmation it assumes the responsibility to make payment to the exporter. As
negotiating Bank, it negotiates the bills and other shipping documents in favor of the
exporter. That is, it collects proceed of the export-bill from the drawer and credits the
exporter’s account for the same. Sometimes the banks purchase the bills at discount from the
local exporter and waits till maturity of the bill. When the bill matures, Bank presents it to the
drawer to Ancash.
In our country, export and import operations of Bank is very much related with one another
because of use on Back to Back L/C. Most of the L/C opened is Back to Back L/C and
maturity of payment for Back to Back L/C is set in such that it can be paid our of export
proceeds. So export and import sections works as one unit. These two operations can hardly
be separated from one another in the branch.

Exporters need finance in the following manner:

• Pre-shipment Finance.
• Post-shipment Finance.

1. Pre-shipment Finance:
The exporter may avail of facilities during pre-shipment stage in the following ways:
i. Back-to-Back Credit.
ii. Packing Credit.

i. Back-to-Back Credit:
Under this arrangement IFIC Bank finances an export by opening a letter of credit on behalf
of the exporter who has received a letter of credit form the overseas buyer but is not the
actual manufactures or producers of the exportable goods. The letter of credit is opened in
favor of the actual producer or supplier within or outside the country. Since the second letter
of credit is opened on the strength of, and backed by, another letter of credit it is called
“Back- to-Back Credit”. The need for a back-to-back credit arises because the beneficiary or
the original letter of credit may have to procure the goods from the actual producer who may
not supply the goods unless its payment is guaranteed by IFIC Bank in the form of a letter of
credit. The supplier is generally paid after negotiation of the documents. Since this type of
financing is somewhat risky, IFIC Bank sometimes asks for collateral security before opening
letter of credit. The back-toback letter of credit must confirm to the terms and conditions of
the original letter of credit.

Back-to-Back L/C condition:

Security
• Lien and physical possession of export L/C in favor of the Bank (affixing lien mark on it).
• Imported items will be stored in a bonded warehouse under joint and effective control of
bank and customs authority after clearing through the approval C& F agent.
Other conditions
• Drawing to draft clause
• Import of raw materials in proportion to the working capacity and convenience of the
factory
• Treatment of interest
• Undertaking must be given by the party in case of any failure to export the goods
• Time of opening L/C and negotiation within specific period
Back-to-Back L/C shall be opened only in the currency in which export L/C would be receive
to avoid loss due to exchange fluctuation

ii. Packing Credit:

Packing Credit covers the credits extended by IFIC Banks to the exporters prior to the
shipment of the goods. Such credit is granted to the exporter for procurement and processing
of raw materials, manufacturing of finished products, packing and transporting goods meant
for export to foreign countries. Such facility is allowed to an exporter just at a time when he
has the foreign buyers order by the way of confirmed export letter of credit or a firm contract.
When the order is executed, the packing credit gets paid out of the proceeds of the bill drawn
on the foreign buyer.

2 Post Shipment Finance:

Post shipment credit is given to the exporters by banks after the actual shipment of the goods.
The necessity for post shipment credit arises because the exporters who have shipped goods
have to wait for a long time for receiving payment from the overseas buyers; the period of
waiting depends on the terms of payment. The exporters need funds to carry on his normal
export activities. IFICBL are the natural source to seek the finance for these activities.
IFICBL generally finance the exporters at post shipment stage on verification of the credit
worthiness and financial soundness of both the buyers and the sellers.
Import Finance Trade:
International trade takes place between sellers and buyers located in different countries. The
parties to a trade transaction are not always known to each other. Even if they are known to
each other the seller may not have full confidence in the credit worthiness of the buyer or the
buyer may not like to pay before he actually receives the goods. In Letter of Credit
worthiness is substitute for the credit worthiness of the importer. Under a banker’s Letter of
Credit, the issuing bank (IFICBL) gives a written undertaking on behalf of the buyer that the
bank will honor the obligation of payment or acceptance as the case may be, on presentation
of stipulated documents. Importer bank issue the Letter of Credit at a margin prescribed by
the Government. This margin varies to commodities to commodities. According to the Govt.
instruction bank does not generally issue the Letter of Credit less than at 50% margin.
IFICBL follows this margin prescribed by Government strictly. These are:

• The L/C should irrecoverable, unrestricted valid and preferably confirmed.

• The credit worthiness of the importer and his import performance are to be invariably
ascertained. Similarly, credit worthiness and solvency of the buyer and seller also be enquired
through foreign correspondence.
• In case of pledge “Banks affective Control’ should maintained.
• The exporter documents should be carefully scrutinized at the time of negotiation to
ensure with the terms of the L/C.

Procedure for sanction of Post-shipment credit under document

Negotiation:
The usual method of providing finance at the post-shipment stage is negotiation under Letter
of Credit. In this regard before scanting credit of undertaking IFICBL, carefully verified
following points for negotiation documents:
• The documents should present for negotiation before expiry of the credit. In the period of
negotiation before is specially mention in the documents should not be negotiated beyond
that period.
• The amount of the bill should not exceed the amount authorized in the L/C.
• All the documents asked for in the L/C have been submitted and those are prima-facie in
order.
Operation Activities for Import Section: Officer in L/C opening desk process L/C application.
Proposal for opining L/C (Cash) being prepared by the officers:
For Internal Approval: It is made for those importers who are enjoying L/C limit
facility for a period of 12 months approval by the Head Office.

For Head Office Approval: Proposal made on case to case basis in a detail format for, those
importers during their initial 3 to 6 months period. Satisfactory performance in the account
during the period upgrade them to avail full fledge credit line on 12 months basis.

Obtain charge documents:

• Negotiating with the importer margin fixation.
• Negotiate with the importer for fixation for made of retirement of bills/PAD.
• Obtain information about the market ability and gathering local price level of the
Commodity to be imported.
Next Steps are to open the letter of credit:
• An L/C number is provided.
• Opening charge or commission recovered.
• Charge and Liability vouchers are passed.
• Preparation and checking of L/C body in accordance with pro-forma invoice (PI) or indent.
Sanctioning L/C by two authorized officers and giving go ahead for the transmission of the
terms.
Prepare credit line proposals for importers:
• Lodge the documents in P.A.D.
• Notify the importer to release the original documents.
• Arrange the retirement of the original documents after recovery of dues in cash against
related P.A.D.
• Issue shipping guarantee against non-negotiable copy documents.
Retirements of P.A.D are also made through LIM:
• If arrangement was made while opening L/C.
• When importers fail cash retirement commitment and bank considered his or their request.
• When situation compels so due to total non-cooperation of the importer. This situation
usually doesn’t occur but at the same time can not be totally rules out when importer remain
at total detachment with IFICBL.
Some products of Import Section are:
• LTR (Loan Against Trust Receipt)
• Lim (Loan Against Imported Merchandise)
• L/C opening

Remittance
Remittance is another important sector of the IFICBL from where it earns a lot of foreign
exchange every year. Remittance means to send or transfer money or money worth from one
place to another. In case the bank as the media to transfer or remit the money. Against the
service it charges some commission from the client.
Types of Remittance:
Generally the process of remittance can be divided into major categories:
• Inward Remittance
• Outward Remittance
Inward Remittance
Inward Remittance deals with funds from overseas. The remittance can be performed in two
ways:
• Cash remittance through TT (Telegraphic Transfer)/ DD (Demand Draft)
• Remittance due to export.
Functions of Foreign Remittance Section
Selling
• Selling of traveler’s cheques to Bangladesh travelers.
• Selling cash foreign currency in the form of draft and ties to Bangladeshi students for
education abroad.
• Selling of foreign currency to Bangladeshi for medical expenses.
• Selling of foreign exchange to non resident stock investor.
Buying
• Buying of International currency from foreigner and Bangladeshi.
• Buying cash foreign currency from foreigner and Bangladesh.
• Buying of draft from Bangladeshi.
• Buying of International currency from FC account of Bangladeshis individual as well as
from exporters.
• Buying of International currency from non resident investing in shares and stocks of
Bangladesh.

Others
Other foreign exchange operation of IFICBL includes FC A/C Such as Non resident foreign
currency Deposits (NFCD), Non Resident Bangladeshi’s in initial Public offer etc. These
schemes are only for the non resident Bangladeshi. These are maintained by the foreign
currency. These schemes are very much profitable both for IFICBL and non Resident
Bangladeshi.

Additional Services

Foreign exchange for travel, medical treatment, education abroad

When anyone travel abroad for business, holiday or any other purpose they can obtain their
foreign currency and travelers cheques permissible under Government regulation without any
hassle from any branches.

Student File- Foreign Exchange Remittance for education abroad

The Bangladesh Government allows remittance of tuition fees and living expenses for
Bangladeshi students undertaking studies abroad. Outgoing student intending to avail this
facility require opening a file with the authorized dealers. Branches have dedicated personnel
to assist students in this regard. For efficient handing of the periodic remittance under the
schemes customer can fully rely.
Money Gram Business of IFIC Bank Ltd
Money Gram, one of the innovative products of IFIC bank, has been functioning satisfactory
and rendering prompt and efficient services to the wage earners. Money Gram payment
System Inc is a non back provider of electronic money transfer service. Money Gram is
providing its customers a service of an unsurpassed quality and superior value. Money Gram
has over 25000 Agent locations throughout the world. Persons anywhere require transferring
cash quickly, reliably, conveniently and at attractive prices to more than 115 countries can
depends Money Gram agents for the service.

IFIC bank makers and inquiry on the Money Gram computer network to obtain authorization
to pay recipient & recipient receives the fund. At IFICBL they provided the recipients
immediate attention and due care. They have made it a point to pay for the IFICBL branches
at his convenience for payment recipient within minutes. The recipients need not require
having a bank account. We do not levy extra charge. We give a better exchange rate to the
recipient.
Money Gram Policies & Producers:
• Record keeping Requirements
• Money Transfer Send transaction
• Money Transfer Receive transaction
• Verification of customer’s identity
• Send & Receive form
Assets and Liabilities of IFIC Bank:
Liabilities: claim on the assets of a Bank or individual-excluding ownership equity.
Characteristics: (1) It represents a transfer of assets or services at a specified or determinable
date. (2) The firm or individual has little or no discretion to avoid the transfer. (3) The event
causing the obligation has already occurred.
Paid up capital: The total amount of shareholder capital that has been paid in full by
shareholders. Paid-up capital is essentially the portion of authorized stock that the company
has issued and received payment for. Paid up capital is the actual amount of capital in money
that bank and other directors have contributed towards the company as opposed to the
authorized capital of the company.

Year Amount in Taka

2005 406386000
2006 406386000
2007 1670715700
2008 1341431400
2009 1743860800

The Paid-up Capital is that the amount of money that going to be contributed to setup a new
company. When Bank increases their paid up capital, capital asset also increase. in this graph
we can see IFIC Bank increase their paid up capital in 2007,2008 and 2009.

Reserve: Bank Companies Act, 1991 requires the bank to transfer from its current year’s
profit before tax to reserve until such reserve together with share premium account equals to
its paid up capital. IFIC Bank transferred 18% of its current year’s Profit before Tax (PBT) to
this reserve.

Year Amount In Tk.

2005 656632529
2006 798348147
2007 1105105243
2008 1294201621
2009 1725316081

Deposits Account increases day by day in IFIC Bank Ltd.so they need to reserve more fund
against this type of deposits. In this graph we can see that their reserve constantly increases
2005 to 2009.in 2009 they need more Reserve fund compared other years.

Borrowed Fund: Borrowed funds include call borrowing, term borrowings and re-finance
from different commercial banks and central bank.
Year Amount In Tk
2005 1197380691
2006 291294330
2007 1105237195
2008 203530016
2009 1250000000

In This Graph we can see that IFIC Bank Borrowed more in 2005, 2007 and 2009 that’s
means IFIC Bank investment opportunities is high in this three years. In this three year also
increase their Financial Leverage.
Deposits and Other Account: Deposits are recognized when the Bank enters into contractual
provisions of the arrangements with the counterparties, which is generally on trade date and
initially measured at the consideration received.

Year Amount in Tk.

2005 22505172064
2006 28620913537
2007 29900052990
2008 36092169540
2009 50017960808

In this graph we can see that the IFIC Bank Deposits increase day by day. That’s means IFIC
Bank increase their Interest rate, so the people Deposits more and more money. From the
political view in our country investment opportunities is not enough. So the people don’t
have more investment opportunities and they deposit their money which bank gives more
interest.

Other Liabilities: Exporters F.C account, accrued expenses provision for classified loans and
advance dividend payable, provision for taxation, bonus payable, Loan pool , Oman
international Exchange, Export development fund and many more liabilities for IFIC bank
are include here.

Year Amount In Tk
2005 5137405111
2006 5533186610
2007 6295077124
2008 6237046589
2009 7436447934

the amount of income taxes, interest on nondeposit liabilities and other expenses accrued
through charges to expense during the current or prior periods, but not yet paid, Dividends
declared but not yet payable — Include the amount of cash dividends declared on limited-life
preferred, perpetual preferred, and common stock on or before the report date but not
payable. We can see the IFIC Bank other liabilities are much, so they need this type of
liabilities.
Assets of IFIC Bank LTd: Most of the assets of banks can be grouped into 4 categories: cash,
securities, loans, and other assets, which includes real property, such as equipment, buildings,
land, and repossessed collateral from borrowers who have defaulted. IFIC Bank assets are in
the form of loans with a large portion in securities, since these are the main sources of income
for IFIC bank.
Cash: Cash is obviously an asset to a bank. A bank must maintain a certain level of cash
compared to its liabilities to maintain solvency. A bank must hold some cash as reserves they
have to keep some cash to conduct business which includes being able to meet withdrawal
requests and to meet reserve requirements that are set by the Bangladesh Bank to help
prevent insolvency.
Year Amount in Tk.
2005 2146612028
2006 2646787635
2007 3593513841
2008 3340418678
2009 4633980079

Cash is an expensive asset in terms of opportunity cost because it earns no interest—

therefore; banks try to minimize the amount of cash that they hold. In this graph we can see
the IFIC Bank create opportunity cost in 2009 compare in other years, because they keep
more cash in 2009.

Balance with other bank and financial institution: Balance with other bank is another asset of
a bank.IFIC Bank Ltd includes Balance with other bank in Bangladesh and balance with
other banks outside Bangladesh.

Year Amount in Tk.

2005 1001052348
2006 1943654935
2007 2359077889
2008 1919068652
2009 8155648754

In this graph we can see in 2009 Balance with other bank is more compared with other years.
in 2009 85% Balance with other bank in Bangladesh and rest of the percentage in Balance
with other bank outside Bangladesh.

Money at call on short notice: One of the assets that appears in the balance sheet of a bank. It
includes funds lent to discount houses, money brokers, the stock exchange, bullion brokers,
corporate customers, and increasingly to other banks. ‘At call’ money is repayable on
demand, whereas ‘short notice’ money implies that notice of repayment of up to 14 days will
be given. After cash,

Year Amount in Tk
2005 990000000
2006 1150000000
2007 0
2008 70000000
2009 200000000

Money at call and short notice are the banks’ most liquid assets. They are usually interest-
earning secured loans IFIC Bank provided more in 2005 and 2006 but their importance lies in
providing the banks with an opportunity to use their surplus funds and to adjust their cash and
liquidity requirements IFIC not provided Money at call and short notice in 2007.in 2008 and
2009 they provided very small amount Money at call on short notice.

Investment: Investments are initially recognized at cost, including acquisition charges

associated with the investment. Premiums are amortized and discount accredited, using the
effective or historical yield method. Accounting treatment of government treasury securities
and bonds (categorized as HFT or/and HTM) is made following Bangladesh Bank DOS
Circular Letter No. 05, dated 26 May 2008.

Year Amount in Tk
2005 2971466388
2006 3545155700
2007 3855691124
2008 5229884252
2009 9082951144

Banks don’t like putting their assets into fixed-income securities, because the yield isn’t that
great. IFIC Bank invests more in 2009 compare in other years. In 2009 IFIC Bank Ltd
investment 86.40% in Government securities which is more than compare in other years.
However, investment-grade securities are liquid, and they have higher yields than cash, so it’s
always prudent for a bank to keep securities on hand in case they need to free up some
liquidity.
Loans and Advances: Loans represent the majority of a bank’s assets. A bank can typically
earn a higher interest rate on loans than on securities, roughly 6%-8%.

Year Amount
2005 21694895612
2006 25490660668
2007 28361456225
2008 33018385382
2009 37793886723

IFIC Bank Ltd gives correspondingly more Loans and advances. So they earn more interest
in constantly. This is very good for IFIC bank. Loans, however, come with risk. If the bank
makes bad loans to consumers or businesses, the bank will take a hit when those loans aren’t
repaid.
Fixed Assets: A long-term, tangible asset held for business use and not expected to be
converted to cash in the current or upcoming fiscal year, such as manufacturing equipment,
real estate, and furniture. Also called plant.

year Amount
2005 192758868
2006 317439052
2007 383075972
2008 511452828
2009 616262074

IFIC Bank fixed assets comparatively increase. In 2009 they buy more fixed assets compared
in other years. Percentage change in fixed cost sometimes percentage change for EBIT. If
useful lives of assets do not differ significantly as it was previously estimated, bank
management does not consider revaluing its assets by the meantime.

Other Assets: Other assets, including property and equipment, represent only a small fraction
of assets. A bank can generate large revenues with very few hard assets. Compare this to
some other companies, where plant, property, and equipment (PP&E) is a major asset.
Year Amount
2005 1194269731
2006 986779144
2007 1361334367
2008 1640263398
2009 2419136205

Other assets include stationery and stamps, suspense account, Revaluation A/C FDBP,
Revaluation A/C IDBP and Accounts receivable others. We can see that in this graph 2009
and 2008 other assets are very good for IFIC Bank Ltd.

Recommendation

The overall scene says that The IFIC bank has the strong efficient management in loan
management. Although there a chance to default loan and some non performing loan the bank
always prefer to utilize their deposit fund in the loan sector than in investment sector. The
IFIC bank always takes necessary steps by analyzing the credit approaches thus the bank does
not need to face the loan default problem. But the efficiency also affected by economic
condition of the country beside the political situation. The IFIC Bank is always promising
satisfied its customer.

Conclusion
Today’s business is very competitive and complex. To survive in the related sector the
organization need competitive people and has to take some effective policy. Every country
must given a plan for important role in economic activities Bangladesh is no exception of
that. Commercial Bank’s financial development and economic development are closely
related. That’s why the private commercial banks are playing significant role in this regard.
The Bank should have to up a new standard in financing in the industrial, Trade and foreign
exchange business. Its various deposit and credit products should have also attracted the
clients- both corporate and individuals who feel comfort in doing business with the Bank.
The bank should take initiative effort to accelerate the non interest income performance for
avoiding negative non net interest income.

Reference
www.ificbankbd.com
Annual Report 2006
Annual Report 2008
Annual Report 2009