Foreign Exchange Operation of Bank Asia Ltd: A Study on

CDA Avenue Branch, Chittagong

(THIS INTERNSHIP REPORT IS SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE BATCHELOR OF
SOCIAL SCIENCE IN ECONOMICS & BANKING)

Department of Economics and Banking

Faculty of Social Science

International Islamic University Chittagon

 EXECUTIVE SUMMARY
Today Banking Sector is much more integrated into both individual and also business
organizations. The banking sector has expanded today’s business world.

The Internship report has been prepared on “Foreign Exchange Operation of Bank Asia
Ltd: A study on CDA Avenue Branch, Chittagong” based on secondary data collected
from various sources as the requirement of the BSS program of International Islamic
University Chittagong. Nowadays, Banks and Financial Institutions are becoming very
competitive and various kinds of services and products provided by financial institutions
are increasing with rapid growth. The purpose of this report is to have an idea about the
Foreign Exchange Operation of Bank Asia.

First of all, I’ve discussed the objectives, scopes, limitations, and methodology containing
the sources of data I’ve collected from.

Secondly, in the organizational part, I have provided detailed information about the
organization with its company profile, Corporate Vision and Mission, product & service,
and resources.

Thirdly I’ve tried to explain export, import, foreign remittance and their mechanism,
procedures, types, regulatory requirements, the financial performance of these sections, and
most importantly an overall idea of the foreign exchange department of Bank Asia Limited.

Finally, based on my knowledge and experience which I have achieved during my

internship in Bank Asia CDA Avenue Branch, I tried to give some suggestions.

II
 TABLE OF CONTENTS

Letter Of Acceptence ......................................................... Error! Bookmark not defined.

Certificate ............................................................................................................................ II
Acknowledgement ............................................................. Error! Bookmark not defined.
Executive Summary ............................................................................................................ II

CHAPTER ONE: Introduction

1.1 Introduction .................................................................................................................... 2
1.2 Objective Of The Report ................................................................................................ 2
1.3 Methodology: ................................................................................................................. 2
1.4 Scope Of Learning: ........................................................................................................ 3
1.5 Limitation Of The Study: ............................................................................................... 3

CHAPTER TWO: An Overview of Bank Asia

2.1 History Of Bank Asia: ................................................................................................... 5
2.2 Mission Statement Of The Bank Asia: .......................................................................... 5
2.3 Vision Of The Bank Asia:.............................................................................................. 5
2.4 Objective Of The Bank Asia Limited: ........................................................................... 5
2.5 Slogan Of Bank Asia Ltd: .............................................................................................. 6
2.6 Swot Analysis Of Bank Asia ......................................................................................... 6
2.6.1 Strength ................................................................................................................... 6
2.6.2 Weaknesses ............................................................................................................. 7
2.6.3 Opportunities ........................................................................................................... 7
2.6.4 Threats ..................................................................................................................... 8
2.7 Corporate Information ................................................................................................... 9
2.7.1 Corporate Body: ...................................................................................................... 9
2.7.2 Hierarchy Of Bank Asia ........................................................................................ 10
........................................................................................................................................ 10
2.8 Product And Services Of Bank Asia ............................................................................ 11

CHAPTER THREE: Foreign Exchange Operation

3.1 Meaning Of Foreign Exchange .................................................................................... 14
3.2 Goals Of Foreign Exchange ......................................................................................... 14
3.3 The Activities Performed By Foreign Exchange ......................................................... 15
3.4 Letter Of Credit (L/C) .................................................................................................. 15
3.5 Classification Of L/C ................................................................................................... 15
3.6 Parties Of Letter Of Credit ........................................................................................... 16
III
3.7 Mechanisms Of Letter Of Credit .............................................................................. 17
3.8 Amendment Of Letter Of Credit (L/C) ........................................................................ 18
3.9 Some Important Documents Of L/C: ........................................................................... 18
3.10 Three Parts Of Foreign Exchange .............................................................................. 19
3.10.1 Export Section Of Bank Asia .............................................................................. 19
3.10.1.1 Export Mechanism:....................................................................................... 19
3.10.1.2 Export Financing .......................................................................................... 23
3.10.2 Import Section Of Bank Asia .............................................................................. 23
3.10.2.1 Import Mechanism:....................................................................................... 23
3.10.2.2 Pre-Shipment Inspection: ............................................................................. 26
3.10.2.3 Transmitting L/C: ......................................................................................... 26
3.10.2.4 Modes Of Payments Of Export Bills Under L/C:......................................... 26
3.10.2.5 Import Financing: ......................................................................................... 27
3.10.3 Remittance Section .............................................................................................. 28

CHAPTER FOUR: Performance Analysis

4.1 Import Operation By Bank Asia At CDA Avenue Branch ...................................... 32
4.1.1 Import Scenario ..................................................................................................... 32
4.1.2 Execution On Growth Percentage (Graph): .......................................................... 33
4.2 Export Operation By Bank Asia At CDA Avenue Branch: ......................................... 34
4.2.1 Export Scenario: .................................................................................................... 34
4.2.2 Execution On Growth Percentage (Graph): .......................................................... 35
4.3 Foreign Remittance By Bank Asia At CDA Avenue Branch: ..................................... 36
4.3.1 Foreign Remittance Scenario (Graph): ................................................................. 36

Chapter Five:Findings, Limitations & Recommendations

5.1 Findings: ...................................................................................................................... 38
5.2 Recommendations ........................................................................................................ 39
5.3 Conclusion ................................................................................................................... 40
Bibliography: ..................................................................................................................... 41

IV
CHAPTER ONE
Introduction

1
1.1 INTRODUCTION

As partial fulfillment of the BSS program, I chose the topic– “Foreign Exchange Operation
of Bank Asia.” For this, I attached with Bank Asia to do my project program for three
months. I have completed my internship at "Bank Asia". During that time, I have worked
in various sectors is a connived depiction of the three-month-long internship program at the
CDA Avenue Branch of Bank Asia. The organization attachments started on 10th October
2021 and complete the internship on 10th January 2022. The report will identify how the
banking world works and will help to apply theoretical knowledge in practical life.

1.2 OBJECTIVE OF THE REPORT

The prime objectives of the study are to evaluate the Foreign Exchange activities of Bank
Asia Ltd. Besides this, there are some other objectives which are as follows:

➢ To know an overview of Bank Asia Limited.

➢ To identify the procedure of foreign exchange activities of Bank Asia Limited.
➢ To evaluate the performance of foreign exchange activities of Bank Asia Limited,
CDA Avenue branch.
➢ To suggest necessary steps regarding foreign exchange activities of Bank Asia.

1.3 METHODOLOGY:
This report has been prepared based on experience gathered during the period of internship
and my own learning and understanding. The entire process has been made by collecting
primary data which played a vital role and easy to write down the report and secondary data
was needed for the supportive structured buildup to the report.

Primary Data:

➢ Direct conversation with the bank officers.

➢ Daily activity conducted by me at the bank.

Secondary data:

➢ Annual report of Bank Asia

➢ Web browsing
➢ Journals and Books

2
1.4 SCOPE OF LEARNING:
With the whole internship period, it was a splendid experience to know and get a chance to
work in the foreign exchange department. It’s a great achievement for me to learn and
implement Practically the entire procedure of export and import trade. To be trained about
the L/C opening, required document checking, payment moods register entry, and also got
to know regarding Bangladesh Bank reporting. One of the most crucial parts is foreign
remittance it is also a part of a better understanding of inward and outward remittance. All
of these opportunities I had captured in that practical field and also to expand my
knowledge.

1.5 LIMITATION OF THE STUDY:

The study was thorough & systematic but some problems can be the limiting factors of
the significance of the study:

• The main constraint of the study was the shortage of time.

• The constraint of the study was the insufficiency of information, which is highly
required for the study.
• Unwillingness to give information.
• Since the Bank personnel were very busy, they failed to give me enough time to
complete the report.
• I carried out such a study for the first time. So, inexperience is one of the main
factors that constituted the limitation of the study.

With all of these limitations, I tried my best to make this report as best as possible. So,
readers are requested to consider these limitations while reading and justifying any part of
my study.

3
 CHAPTER TWO
An Overview of Bank Asia

4
2.1 HISTORY OF BANK ASIA:
Bank Asia Ltd. Is third generation bank and scheduled commercial Bank in the private
sector which was established on 27th November in 1999 under the banking company act
1991 and incorporated in Bangladesh as a public limited company under the company act
1994 to carry out banking business in Bangladesh. Bank Asia has been launched by a group
of successful entrepreneurs. The management of the Bank consists of a team led by senior
bankers with vast experience in the national and international markets. Within a short time,
Bank Asia can disclose its self-existence and establish its position in the market as one of
the first growing local private banks at present it has 128 branches all over Bangladesh.
Since its inception in 1999, it set a milestone by acquiring the Bangladesh operations of the
Bank of Nova Scotia of Canada, the first in the banking history of Bangladesh. Again in
2002, the bank acquired the Bangladesh operations of Muslim Commercial Bank Ltd.
(MCB). In the year 2003, the bank went public by offering shares to the general investor,
and in 2004 the list itself with the stock exchange.

2.2 MISSION STATEMENT OF THE BANK ASIA:

• To assist in bringing high-quality service to the customers and to participate in
the growth and expansion of the national economy.
• To set high standers of integrity and bring total satisfaction to the clients,
shareholders, and employees.
• To become the most sought-after bank in the country, rendering technology-
driven innovative service by the dedicated team of professionals.

2.3 VISION OF THE BANK ASIA:

• To have a poverty-free Bangladesh in course of a generation in the new
millennium, reflecting the national dream.
• To build a society where human dignity and human right receive the highest
consideration along with reduction of poverty.

2.4 OBJECTIVE OF THE BANK ASIA LIMITED:

• Giving full attention to the customer
• Identifying customer actual needs
• Improving customer service quality

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 • Creating a happy relationship with the customer
• Giving importance even to the smallest query
• Attracting new worth through higher sales and profit
• Creating image through serve the best service & product
• Achieving corporate objectives through a joint effort.

2.5 SLOGAN OF BANK ASIA LTD:

“For a better tomorrow” is the slogan of Bank Asia Limited.

2.6 SWOT ANALYSIS OF BANK ASIA

Every organization is composed of some internal strengths and weaknesses and also has
some external opportunities and threats in its whole life cycle. The following will briefly
introduce the customer to Bank Asia’s internal strengths and weaknesses, and external
opportunities and threats as I have explored in the past ten weeks.

2.6.1 Strength

• Superior Quality: Bank Asia provides its customers with excellent quality of
service. It gives the priority to customer satisfaction.

• Dynamism: Bank Asia draws its strength from the adaptability and dynamism it
possesses. It has quickly adapted to world-class standards in terms of banking
services. Bank Asia has also adapted state-of-the-art technology to connect with the
world for better communication to integrate facilities.

• Financial Strength: Bank Asia is a finally sound company backed by the enormous
resource base of the mother concern Rangs Group. As result customers feel
comfortable in dealing with the company.

• Efficient Management: All the levels of the management of Bank Asia are solely
directed to maintain a culture of the betterment of the quality of the service and
development of a corporate brand image in the market through an organization-
wide term approach and open communication system.

• State of the Art Technology: Bank Asia utilizes state-of-the-art technology to

ensure consistent quality and operation. The corporate office is equipped with

6
 SWIFT (SWIFT is a banking software, used by Bank Asia). All other branches are
also equipped with the SWIFT system.

• Experts: The key contributing factor behind the success of Bank Asia is its
employee, who are highly trained and most competent in their field. Bank Asia
provides their employees' training both in-house and outside jobs.

• In-House Utility: Bank Asia is free from dependence on the ever disruptive power
supply of our public sources. The company generates the required power through a
generator fed on diesel. Water generation is done by deep tube wells on-site and in
abundance.

• Excellent Working Environment: Bank Asia provides its workforce an excellent

place to work in. The total complex has been centrally air-conditioned. The interior
decoration was done exquisitely with a choice of soothing colors and a blend of art
that is comparable to any overseas bank.
2.6.2 Weaknesses

• Limited Workforce: Bank Asia has limited human resources compared to its
financial activities. There are not many people to perform most of the tasks. As a
result, many of the employees are burdened with extra workloads and work late
hours without any overtime facilities. This might cause high employee turnover that
will prove to be too costly to avoid.

• The problem in Delivery: Few of Bank Asia’s products offered to its clients like
“Personal Credit (PC)” is lying idle due to proper marketing initiative from the
management. These products can easily be made available in attractive ways to
increase their client base as well as their deposit status.

2.6.3 Opportunities

• Government Support: The government of Bangladesh has rendered its full

support to the banking sector for a sound financial status of the country, as it has
become one of the vital sources of employment in the country now. Such
government concern will facilitate and support the long-term vision of Bank Asia.

• Evaluation of E-Banking: The emergence of e-banking will open more scope for
Bank Asia to reach the clients not only in Bangladesh but also in the global banking

7
 arena. Although the bank has already entered the world of e-banking but yet to
provide full electronic banking facilities to its customer. A proper blend of Banking
and information technology might give the bank leverage over its competitors.
Nevertheless, there are ample opportunities for Bank Asia to go for product
innovation in line with the modern-day need. The bank has yet to develop a credit
card facility, lease financing, and merchant banking.

2.6.4 Threats

• Merger and Acquisition: The worldwide trend of merging and acquisition in

financial institutions is causing concentration. The industry and competitors are
increasing in power in their respective areas.

• Poor Telecommunication Infrastructure: As previously mentioned, the world is

advancing e-technology very rapidly. Though Bank Asia has taken an effort to join
the stream of information technology, it is not possible to complete the mission due
to the poor technology and infrastructure of our country.

• Frequent Currency Devaluation: Frequent devaluation of Taka exchange rate

fluctuations and particularly South-East Asian currency crisis adversely affects the
business globally.

• The emergence of Competitors: Due to high customer demand, more and more
financial institutions are being introduced in the country. There are already 52 banks
of various types are operating in the country. Many banks are entering the market
with new and lucrative products. The market for the banking industry is now a
buyer-dominated market. Unless Bank Asia can come up with attractive financial
products in the market, it will have to face steep competition in the days to come.

8
2.7 CORPORATE INFORMATION
2.7.1 Corporate Body:
1. Date of incorporation 27 November 1999

2. Branch of the Bank Asia Limited: 128

3. Authorized Capital: 15,000 Million

4. Paid-up Capital: 11,103.90 Million

5. Chairman: Mr. A. Rouf Chowdhury

Mr. Mohd. Safwan Choudhury

7. Vice-Chairman:
Mr. Md. Nazrul Huda
8. Managing Director of the Bank: Md. Arfan Ali

Mr. Rumee A Hossain

Mr. Mashiur Rahman
Mr. M. Shahjahan Bhuiyan
Mr. Faheemul Huq
Ms. Romana Rouf Chowdhury
Ms. Hosneara Sinha
9. Directors: Ms. Naheed Akhter Sinha
Maj. Gen. Matiur Rahman (Rtd.)
Mr. Dilwar H Choudhury
Ms. Farhana Haq
Ms. Mahrina Chowdhury
Mr. Ashraful Haq Chowdhury
Mr. Enam Chowdhury

9
2.7.2 Hierarchy of Bank Asia

Managing Director (MD)

Deputy Managing Director (DMD)

Senior Executive Vice President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

First Vice-President (FVP)

Assistant Vice President (AVP)

First Assistant Vice President (FAVP)

Senior Executive Officer (SEO)

Senior Executive Officer (SEO)

Executive Officer (EO)

Senior Officer (SO)

Management Trainee Officer (MTO)

MTO/Officer

10
2.8 PRODUCT AND SERVICES OF BANK ASIA
Business Banking
• Overdraft • Time Loan
• Secured Overdraft • Transport Loan
• Secured OD (Earnest Money) • House Building Loan(Commercial)
• Working Capital finance • Term loan
• Loan against Trust Receipt • Lease Finance
• Loan against Cash Incentives • Letter of Guarantee
• Bill discounting • Letter of Credit (Sight/Deferred/UPAS)
• Loan Syndication and Structured • Back to Back Letter of Credit (Local &
Finance Foreign)
• Packing Credit • Agriculture Financing
• Demand Loan • Staff Loan ( Car Loan, House Building
• Demand Loan (work order) Loan, Provident Fund Loan)

Small and Medium Enterprise (SME):

• Term Loan • Over Draft
• Subidha -Unsecured Trading • Somadhan – Secured
• Sondhi -Secured Trading
• Sristi – Unsecured Manufacturing • Special Products
• Shombridhi- Secured Manufacturing • Utshob- Seasonal Business
• Shofol – Unsecured Service • Subarno- Women Entrepreneur
• Sheba- Secured Service
Consumer Finance
• Auto Loan • House Finance
• Consumer Durable Loan • Loan for Professionals
• Unsecured Personal Loan • Senior Citizen Support
Credit Card
• VISA Platinum Card (with Priority Pass) • Hajj Card
• VISA Classic Local Card • Travel Card (prepaid card)
• VISA Classic Dual Card • Virtual Card
• VISA Butterfly Card • Master Silver Card
• VISA Gold Local Card • Master Gold Card
• VISA Gold Dual Card • SME Credit Card
Deposit Products
• Saving Account • Monthly Benefit Scheme
• Current Account • Double Benefit Scheme
• Short Notice Deposit • Triple Benefit Scheme
• Fixed Deposit • Bank Asia Sanchoy Plus
• Foreign Currency Account • Shonchoy E Koti Poti
• Deposit Pension Scheme (SKP)

11
Treasury
Money Market Foreign Exchange Market
• Overnight Lending and Borrowing • Spot
• Repo and Reverse Repo • Forward
• Swap • Currency Swap
• Sale and Purchase of Treasury Bill & Bond
• Placement of Fund
• Term Borrowing
• Investment

Islamic Banking

Deposit Products Investment Products

• Al-Wadiah Current Account (AWCA) • Bai Murabaha Muajjal
• Mudaraba Savings Account (MSA) • Hire Purchase Shirkatul
• Mudaraba Special Notice Deposit Account (MSNDA) Melk (HPSM)
• Mudaraba Term Deposit Account (MTDA) of • Musharaka
different tenure • Quard against Accepted
• Mudaraba Hajj Savings Scheme (MHSS) Bills
• Mudaraba Deposit Pension Scheme (MDPS)
• Mudaraba Monthly Profit Paying Deposit
• Scheme (MMPPDS)
• Smart Junior Saver (SJS)
• Cash Waqf

Service Products

• ATM Services • Student File

• Remittance Service • Travellers’ Cheque
• Locker Service • E-Commerce
• Online Banking • E-Procurement
• Internet Banking • Debit Card
• Phone Banking • Call Centre
• Mobile Banking • Remote Banking (EBEK)
• SWIFT • Agent Banking
• Centralized Trade Services

12
CHAPTER THREE
Foreign Exchange
Operation

13
3.1 Meaning of foreign Exchange
The foreign exchange department is the international department of the Bank. It deals
globally and facilitates international trade through its various modes of services. It bridges
between importers and exporters. These Banks are known as authorized Dealers. If the
branch is an authorized dealer in the foreign exchange market, it can remit foreign exchange
from the local country to a foreign country. This department mainly deals with foreign
currency. This is why this department is called the foreign exchange department.

Some national and international laws regulate the functions of this department. Among
these, the Foreign exchange Act, 1947 is for dealing in the foreign exchange business, and
the import and export control Act, 1950 is for documentary credits. Governments' import
& export policy is another important factor for import and export operation of Banks. Also,
UCPDC 600 and URC 522 of them are very important guidelines.

In exercise of the powers conferred by the Foreign Exchange Regulation Act, 1947 certain
schedule banks are authorized by Bangladesh Bank to deal in foreign exchange; the selected
branches of the bank can transact such businesses. They are known as "Authorized
Dealers". These Authorized Dealers have generally been delegated powers to-Buy foreign
exchange from the customers without limits, Sell foreign exchange against imports
authorized under the Import Policy of the country.

3.2 Goals of foreign exchange

• To settle the transaction related to export and import.
• To help the own people abroad to send their money.
• Encourage foreign investment in the home country.
• To enhance the foreign investment.
• To help the own people to go in abroad.
• To facilitate the foreigner to visit in our country.
• To help the people to remit money who are working in abroad or the foreigner
who is working in the home country.
• To maintain international trade.

14
3.3 The activities performed by foreign exchange
1. L/C opening & L/C amendment
2. Sanctioning PAD, LIM, LTR, Packing Credit
2. Foreign Bill Purchase
3. Local Bill Purchase
4. Foreign Currency Account Maintaining
5. Foreign Currency Remitting

3.4 Letter of Credit (L/C)

The most important of the payments methods used universally is a Letter of credit, which
serves as a bridge between buyers and sellers around the world in the exchange of goods
and commodities. A letter of credit is an instrument issued by the bank on behalf of the
importer in favor of the foreign supplier or his banker. L/C is the only reliable source for
the exporter to get back the money. The L/C is established by the overseas buyer through a
bank in his country in favor of the seller and is usually advised to the exporter by an
authorized dealer in Bangladesh. In banking parlance, the importer is known as the
applicant or opener. The bank opening the credit is the L/C opening bank. The bank
advising the credit is known advising bank and the exporter is the beneficiary.

3.5 Classification of L/C

➢ Generally, L/C has two types these are
➢ Clean letter of credit
➢ Documentary letter of credit

Documentary letters of credit also contain two types

➢ Revocable credit
➢ Irrevocable credit

Revocable credit: A revocable letter of credit may be canceled or modified after its date
of issue, by the issuing bank.

Irrevocable credit: An irrevocable letter of credit includes a guarantee by the issuing bank
that if all of the terms and conditions outlined in the letter are satisfied by the beneficiary,
the letter of credit will be honored.

15
There are four types of L/C offered by the Bank Asia CDA Avenue Branch these are:

Sight L/C: Payment must be made within five working days after the document has been
received from the exporter.

Deferred L/C: Payment must be made on or after the due date i.e. Shipment date or Bill
of lading date. It is usually open for 60 days, 90 days, and 120 days this depends on the
party's demand.

Back to Back L/C: Usually this type of L/C is opened by the exporter. If an exporter needs
to import goods or equipment to manufacture the ordered goods, then he may import those
goods or equipment by opening an L/C against mother L/C. the value of the back-to-back
L/C can be 80% of the mother L/C.

Local L/C: Local L/C is an issue for two general local parties. Because sometimes both
the parties could not trust each other to get back the payment for that reason they have
seeking out these reliable sources to making sure their payment.

3.6 Parties of Letter of Credit

• Importer: Buyers who apply for opening the L/C.
• Issuing Bank: It is the Bank that opens/issues an L/C on behalf of the importer.
• Confirming Bank: It is the Bank, which adds its confirmation to the credit and it i
s done at the request of issuing Bank. Confirming Bank may or may not be advisi
ng Bank.
• Beneficiary/Exporter: Seller who will agree to export the goods and receive the p
ayment.
• Advising / Notifying Bank: This is the Bank through which the L/C is advised to
the exporters. This Bank is situated in exporter's country. It may also assume to p
lay the role of confirming or negotiating Bank depending upon the condition of the
credit
• Negotiating Bank: This is the Bank, which negotiates the bill and pays the amoun
t of the beneficiary. The advising bank and the negotiating Bank may or may not b
e the same. Sometimes it can also be confirming Bank.
• Paying / Accepting Bank: This is the Bank on which the bill will be drawn (as pe
r the condition of the credit). Usually, it is the issuing Bank.

16
 • Reimbursing Bank: This is the Bank, which would reimburse the negotiating Ban
k after getting payment instructions from issuing Bank.

3.7 Mechanisms of Letter of Credit

Contract to Sale
(1)

Ships Goods to Importer

Exporter
(5) (Applicant)
(Beneficiary)

Present Recovers Applies

Forwards Obtain
Docs & Amount for
L/C to Reimbursement
Obtain from Opening
(4) bank From
Payments issuing of L/C
From (7) Bank (2)
(6) (8)

Advising
&/or
Negotiating Bank Issuing Bank

Opens L/C &

Sends it to
(3)

The following five major steps are involved in the operation of a documentary letter of
credit:
1. Issuing
2. Advising
3. Amendment (if necessary)

17
 4. Presentation
5. Settlement.

3.8 Amendment of Letter of Credit (L/C)

Parties involved in an L/C, particularly the seller and the buyer cannot always satisfy the
terms and conditions in full as expected due to some obvious and genuine reasons. In such
a situation, the credit should be amended.

In case of revocable credit, it can be amended or canceled by the issuing bank at any
moment and without prior notice to the beneficiary. But in the case of irrevocable credit, it
can neither be amended nor canceled without the agreement of the issuing bank, the
confirming bank (if any), and the beneficiary.

3.9 Some Important Documents of L/C:

Forwarding: Forwarding is the letter given by the advising bank to the Issuing Bank.
Several copies are sent to the issuing Bank. All copies including the original should be
kept in the Bank.

Bill of Exchange: According to section 05, Negotiable Instruments (NI) Act-1881, A "bill
of exchange" is an instrument in writing containing an unconditional order signed by the
maker, directing a certain person to pay [on demand or at the fixed or determinable future
time] a certain sum of money only to or to the order of a certain person or the bearer of the
instrument. It may be either at sight or a certain day sight. At sight means making payment
whenever documents will reach the issuing Bank.

Invoice: Invoice is the price list along with quantities. Several copies of the invoice are
given. Two copies should be given to the client and the other copies should be kept in the
Bank. If there is only one copy, then its photocopy should be kept in the Bank and the
original copy should be given to the client. If any original invoice contains the custom's
seal, then it cannot be given to the client.

Packing List: A packing list is a letter describing the number of packets and their size. If
there are several copies, then two copies should be given to the client and the remaining
should be kept in the Bank. But if there is only one copy, then the photocopy should be
kept in the Bank and the original copy should be given to the client.

18
Bill of Lading: Bill of Lading is the bill given by the shipping company to the client. Only
one copy of the Bill of Lading should be given to the client and the remaining copy should
be kept in the Bank.

Certificate of Origin: A certificate of origin is a document describing the producing

country of the goods. One copy of the certificate of origin should be given to the client and
the remaining copy should be kept in the Bank. But if there is only one copy, then the
photocopy should be kept in the Bank and the original should be given to the client.

Shipment Advice: The copy mentioning the name of the insurance company should be
given to the client and the remaining copies should be kept in the Bank. But if only one
copy is given, then the photocopy should be kept in the Bank and the original copy should
be given to the Bank.

Nostro Account: The foreign currency account maintained by the authorized dealers in
foreign exchange with the foreign banks/ correspondents are called Nostro Accounts. All
foreign exchange transactions are routed through Nostro accounts. Nostro Account means
'our account with you.

Vostro Account: Current Accounts of foreign banks with their correspondents in the
latter's currency are called Vostro Accounts. Vostro account means 'your account with us'.

Loro Account: Loro Accounts are current accounts which the banks maintain with banks
abroad on behalf of their clients. Loro Accounts means 'their account with you.

3.10 Three Parts of foreign exchange

Foreign exchange operations include three parts, which are as follows:

1. Export Section
2. Import Section
3. Remittance Section

3.10.1 Export Section of Bank Asia

3.10.1.1 Export Mechanism:

When a country sells the product to the other country after fulfilling the self-demand then
it is called export. Export trade can be an enormous contribution to the national economy.
The export trade of the country is regulated by the Import and Export Control Act, 1950.

19
There are several formalities, which an exporter has to fulfill before and after the shipment
of goods. These procedures are enumerated as follows:

Step -3
Step-1 Step -2
Collection of
Advising L/C Issuing EXP
Document

Step-4
Step -5 Realization Of Export
Step-6 Reports Process
Issuing Proceeds
Realization
Certificates(PRC)

Figure: Export Procedure of Bank Asia Limited

Registration of the Exporter

The primary requirement is to engage in the business of import and export s registration
with the Chief Controller of Imports and Exports (CCI&E). For this purpose an applicant
ion in the prescribed, form is required to be submitted to that office along with the following
documents:

1. Trade license issued by the municipal authority.

2. Nationality certificate from the local authority.
3. Bank certificate.
4. Income Tax clearing certificate.
5. Payment of registration and renewal fees in a Treasury Chalan.
6. Copies of Contract or L/C (if any).

Export Registration Certificate (ERC)

The exports from Bangladesh are subject to export trade control exercised by the Ministry
of Commerce through the Chief Controller of Imports and Exports (CCI&E). This
certificate is a very important issue for an exporter to accomplish the export trade to the
foreign buyer. No exporter is allowed to export any commodity permissible for export from

20
Bangladesh unless he is registered with CCI & E and holds a valid Export Registration
Certificate (ERC). The ERC is to be renewed every year.

Export Permit Form (EXP)

After having the registration, the exporter applies to TBL with the trade license ERC, and
the certificate from the concerned Government organization to get EXP. the bank is
satisfied, an EXP is issued to the exporter. An EXP contains the following particulars:

1. Name & address of the authorized dealer.

2. Particulars of the commodity to be exported with code.
3. Country of destination.
4. Port of destination
5. L/C value in foreign currency.
6. Terms of sales.
7. Name and address of the importer.
8. Name of caring vessel.
9. Bill of lading.
10. No. & date.
11. Port of shipment.
12. Land custom post.
13. Shipment date.
14. Name and address of the exporter.
15. Sector (Public or Private) under which the exporter falls.

Securing the order

Upon registration, the exporter may proceed to secure the export order. Contracting the
buyers directly through correspondence can do this. The signing of the contract,
Description of the goods, quantity of the commodity, Price of the commodity, Shipment,
Insurances, Inspection.

Receiving Letter of credit

Obtaining the sales contract, the exporter should ask the buyer for the letter of credit staying
terms and conditions of export and payment. The followings are the main points to be
looked into for receiving the exports proceeds through documentary credit.

➢ The terms of the L/C conform with those of the contract.

21
 ➢ The L/C is an irrevocable one, preferably confirmed by the advising bank.
➢ L/C allows sufficient time for the shipment and a response time for registration. If
the exporter wants the L/C to transferable, divisible, and advisable, he should ensure
stipulations are specially mentioned in L/C.

Advising L/C

When export L/C is transmitted to the bank for advising, the bank sends an advising letter
to the beneficiary showing that, L/C has been issued.

Add confirmation of export L/C

The bank may add additional confirmation to export L/C where there are specific
instructions from the L/C issuing bank to do so. Additional confirmation of L/C gives the
seller a double assurance of payment. Bank’s requiring of adding confirmation:

➢ Issuing Bank should be a reputed bank.

➢ Credit line /Arrangement with the L/C issuing bank.
➢ L/C clause is to be acceptable to confirming bank
➢ Approval from the competent authority for adding a confirmation of exports L/C.
➢ Confirmation charges are to be recovered as per rules.

Shipment of Goods
The exporter make and shipment of goods as per the agreement.

Documents collection
Exporter prepares the required documents mentioned in L/C are as such:

1. Bill of exchange: The way of collecting export payment to the importer.

2. 2. Bill of Lading: A bill of lading is a document issued by the shipping company
or its agent, acknowledging the receipts of goods.
4. Insurance policy: In case of an accident to the product since the conveying
period, according to the insurance policy the insurance company will be bound
to compensate the damaged product.
5. Certificate of origin: A certificate of origin declares the place of actual
manufacturer or growth of the goods.
6. Inspection certificate: These certificates ensure product accuracy according to
L/C.
7. Commercial invoice: A list, in which contain the total description of the product.

22
 8. Packing list: The list would contain the details of goods contained in individual
packages. This helps in identifying the contents of specified packages and thus
may facilitate assessment by the custom.
9. Full set of shipping documents: The documents to be collected from or endorsed
by the customs house.

3.10.1.2 Export Financing

➢ Pre-Shipment Credit: The purpose of such credit is to meet working capital needs
starting from the point of purchasing raw materials to the final shipment of goods
for export to a foreign country. Before allowing such credit to exporters the bank
takes into consideration the creditworthiness, export performance of the exporters,
together with all other necessary information required for sanctioning the credit by
the existing rules and regulations.
➢ Packing Credit: Packing credit is essentially a short-term advance granted by a
bank to an exporter for assigning him to buy, process, manufacture, and pack the
goods. This sort of credit is sanctioned for the transactional period which starts from
the dispatch of goods till the negotiation of the export documents.
➢ Post Shipment credit: This type of credit refers to the credit facilities, extended to
the exporters by the banks after shipment of the goods against export documents.

3.10.2 Import Section of Bank Asia

3.10.2.1 Import mechanism:

When a country orders to purchase goods from another country to the scarcity then it is
called import. According to the import and export control act, 1950 the office of chief
controller of import and export provides the import registration certificate (IRC) to the
importer. After obtaining this, a person has to secure a letter of credit authorization (LCA).
And then a person becomes a qualified importer. He is the person who requests or instructs
the opening bank to open an L/C. He is also called an applicant of the credit.

The things are done in Import Mechanism

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 Step-2 Step -3
Step-1 Transmitting L/C, Document
L/C issuing Amendment Checking

Step -5
Step -4
Retirements &Reports
Lodgement

Figure: Import Procedure of Bank Asia Limited

L/C issuing:

This is the first term to import issuing the L/C. Letter of credit is the reliable source of both
the parties importer and exporter to get paid properly at the right time. The transaction
originates when the exporter in London and the importer in Dhaka enter into a contract of
sale. The contract covers all important particulars like value and quantity of goods, the due
date for shipment, method of payment, etc. on stipulations is that a letter of credit should
be opened in favor of the exporter.

For opening L/C is contain required documents which are given below:

1. L/C application form which contains the details about the applicant and beneficiary.
Total L/C amount, country of origin means the products manufacturing areas, types of
payment moods. i.e. ( At sight, DAF, CFR, FOB, Negotiation, Acceptance, etc.). Port
of shipment, and date of shipment. The insurance cover note policy has also been
mentioned. Draft amount, rate of the dollar, equivalent TK. of BD, margin, charges,
commission, and other charges.
2. IMP form is containing H.S code (Harmonize system code), it implies categories of
product. Quantity of goods, Invoice value, Registration no. of L/C authorization form
with Bangladesh Bank Registration unit. And the carrier name like air or boat and other
terms and conditions.
3. LCA form (Letter of credit authorization) includes different rules and regulations about
the imported items and imports.

24
4. Agreement form that includes details contract between the parties.
5. Charge Document: After completing all above mentioned appropriately then have to
fulfill other papers and documents with verify of the self-signature and after that submit
it to a bank.

Other paper and documents:

1. Trade License.
2. Import Registration Certificate.
3. Income Tax Declaration of TIN no.
4. Membership Certificate.
6. Memorandum of Association ( Only for Limited companies).
7. Registered Deed ( Only for Partnership firms).
8. Photograph.
5. Insurance cover note copy and money receipt.
6. Pro-forma Invoice copy.

Document Checking:

Usually, Bank Asia Ltd.'s corporate branch issues import L/C for both the regular and the
new importers. For new importers they send a request for approval to open L/C. after the
approval bank will open L/C with a 100% margin but for their regular importers, they open
L/C with a 10% margin. The rate of margin is decided by the head office. Followings are
the important documents to be obtained by the issuing bank before opening an import L/C:

1. Head office approval. (For new importer)

2. Pro-forma invoice
3. L/C application form duly filled in and applicant’s signature verified thereof.
4. Guarantor’s signature in the L/C application form, if required.
5. Insurance cover note with money receipt along with the proof of payment of
insurance premium.
6. Insurance checked for value (Insured amount must be indent/ PI value plus 10%)
validity, goods, mode of transportation, shipment from and to, etc.
7. IMP form duly signed
8. LCA (Letter of Credit Authorization form) properly fill up and duly signed.
9. Valid IRC held.
10. Membership Certificate from the chamber of commerce / Business association.

25
 11. VAT registration certificate
12. Up to date income tax certificate.
13. Check the goods that are not banned or restricted items as per import policy
14. Check the country of origin for the particular goods.
15. Margin including all L/C-related charges realized.
16. Update suppliers' or beneficiaries ’ credit reports.

3.10.2.2 Pre-shipment Inspection:

To check all the imported items have comprised in each box according to L/C. There are
appointed inspection agencies whose responsibility is to observe and examine the entire
product quality, accurate quantity, packing, net weight of the product, and scanning the
durability before shifting on the board. Usually, this agent works on behalf of the importer
by a certain amount of charges.

3.10.2.3 Transmitting L/C:

After examining the L/C application and L/C authorization is transmitted to the advising
bank. Letter of credit can be transmitted to the advising bank in three moods. These are
Telex, Courier, and SWIFT (Society for world-wide inter telecommunication network) The
Bank Asia Ltd. uses SWIFT when L/C is disposed of in the following manner:

1. First two copies were sent to the advising bank original for the beneficiary and the
second copy for the advising bank.
2. One copy to Head office.
3. One copy is sent to the importer
4. One copy is sent to the Bangladesh Bank
5. One copy is sent to the C.C.I.&E ( Chief Controller of Imports and Exports)
6. One copy is retained as an office copy.
Exporter receives the L/C through the advising bank. Receiving L/C, the exporter produces
the goods as per the requirements and ships them before the due date. If any amendment is
required, then the exporter contacts importer. If the importer agrees to do so, the issuing
bank then amendment the L/C.

3.10.2.4 Modes of payments of export Bills under L/C:

Sight payment: When the importer will get back the imported commodities perfectly then
the Payment is being cleared instantly.

26
Deferred Payment: Which payment will be clear after a certain period fixed by the
negotiation between the importer and exporter the payment tenure can be 60 days, 90 days,
and 120 days. Which tenure will be selected depends on negotiations.

Acceptance Payment: In acceptance credit, the exporter presents a bill of exchange

payable to him and drawn at the agreed tenor (that is, on a specified future date or event)
on the bank that is to accept it. The bank signs its acceptance on the bill and returns it to
the exporter. The exporter can then represent it for payment on maturity. Alternatively, he
can discount it to obtain immediate payment.

3.10.2.5 Import financing:

LIM (Loan against imported merchandise):

When importers get informed that the imported commodities have arrived, but at that
moment importer has not had adequate money to release the goods. Then the bank will pay
the amount and maintain the goods with their responsibilities. After that, the importer will
get release the products from the bank by several payments.

LTR (Loan against trust receipt):

Sporadically bank grants the importer to pay back the money after sealing the products.
The goods are handed over to the importer under trust with the arrangement that sale
proceeds should be deposited to liquidate the advances within a given period. The borrower
agrees to take delivery of the merchandise as the bank's agents and the bank remains the
owner of the goods and they will hold goods on behalf of the bank as trustees until complete
repayment of the debts to the bank. Usually, the loan is granted based on trust and is allowed
60-90 days to make payment.

BLC (Bills under the letter of credit):

When the importer failed to pay the amount payable to the exporter against import L/C,
then Bank Asia gives Bills under Letter of Credit (BLC) to the importer. The importer will
bear all the expenses i.e. go down charges, insurance fees, etc. and the ownership of the
goods is retained to the bank and the outstanding Bills of Exchange are transferred to Bills
under the Letter of Credit (BLC) account. Usually, the loan is granted and allowed 21 days
to make payment.

27
3.10.3 Remittance Section

Foreign remittance is the transfer of foreign currency from one country to another country.
In another word, foreign remittance means, remittance in foreign currency that is received
in and made out abroad. Foreign remittance is the purchase and sale of freely convertible
foreign currencies as permissible under exchange control regulations of the country.
Foreign remittance is very important for the country as valuable foreign exchange is
involved in the transfer mechanism. Foreign remittance takes place in two ways-

Inward Remittance:

Remittance that comes from foreign countries to our country is called inward remittance.
To the bankers or ADs, inward remittance means a purchase of foreign currency by
authorized dealers. Generally, inward remittances are received by draft, mail transfer, TT,
purchase of foreign bills & travelers' Cheque, export bills. These are the formal channels
of receiving inward remittance. A local bank also receives an indenting commission of a
local firm also comes under the purview of inward remittance.

Outward Remittance:

Remittance from our country to foreign countries is called outward foreign remittance. In
other word, sales of foreign currency by the authorized dealer or formal channels may be
addressed as an outward remittance. The authorized dealers must utmost caution to ensure
that foreign currencies remitted or released by them are used only for the purposes for
which they are released. Outward remittance may be made by appropriate method to the
country to which remittance is authorized. Most outward remittance is approved by the
authorized dealer on behalf of Bangladesh Bank. Outward remittance may be made for the
following purposes

• Travel
• Medical treatment
• Educational purpose
• Attending seminars etc.
• Balance amount of F.C account.
• Profit of foreign companies.
• Technical assistance
• New exporters up to USD 6,000/- for business promotion

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 • C. remittance can be made for fare, exhibition from export retention quota.

The function of the Remittance Section

• Handling of all incoming and outgoing foreign and local remittance is the major
• Function for this department.
• Handling of incoming and outgoing T.T.
• Outstation Cheque Collection.
• Outstation Cheque Purchase.
• Demand Draft Handling.
• Other assorted work

Remittance of Fund:

The remittance of the fund is to be collected in two ways. First of all, it comes from an
inward basis, and then, it happens outward.

Inward remittance:

Any person can remit funds to another through Inland remittance by using the following
means of remitting funds with charges

• Pay Order (PO).

• Demand Draft (DD).
• Telegraphic Transfer (T.T).
• Mail Transfers

Pay Order (PO) A pay order is a written under, issued by a branch of the Bank, to pay a
certain sum of money to a specific person or a bank. It may be said to be a banker‟s cheque
as it is issued by a bank and payable by itself.

Demand Draft (DD) This is an instrument through which customers money is remitted to
another person/firm/organization in outstation (outside the clearing house area) from a
branch of one Bank to an outstation branch of the same bank or to a branch of another Bank
(with the prior arrangement between that Banks with the issuing branch).

Telegraphic Transfer (TT) A Telegraphic Transfer is a method of remittance, which is

affected by the banker through a coded telegram attested by a secret cheek signal, on receipt
of which, the paying office pay the amount to the payee by crediting his account.

29
Foreign Currency Rates (Bank to Bank may be deferred)

Table: selling and buying rates for foreign currencies (merchant)

Currency BC(Bills of Collections) TT Clean (Telegraphic Transfer)

USD 84.4000 83.4000
GBP 111.6383 106.5196
EUR 98.6546 92.6997
JPY 0.7877 0.7378
Last updated on November-2021

30
 CHAPTER FOUR
Performance Analysis

31
4.1 Import Operation by Bank Asia at CDA Avenue Branch
4.1.1 Import Scenario

Import
Year Growth Rate
(In Million Taka)
2016 29.09 -
2017 34.35 18%
2018 31.29 -9%
2019 33.92 8%
2020 37.75 11%

Source: Branch Data.

Import

37.75
34.35 33.92
31.29
29.09

2016 2017 2018 2019 2020

Figure-4.1.1: Import Scenario

From this chart, we can see that import of 29.09 million Taka was taken through bank Asia-
CDA Avenue Branch. It increased in the next year but it again decreased in 2018. Bank
Asia retained in the next consecutive years.
So, we can say that the import scenario of bank Asia, Foreign Exchange department is
inconsistent

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4.1.2 Execution on Growth Percentage (Graph):

Growth Rate
0.2

0.15

0.1

0.05

-0.05

-0.1

-0.15
2016 2017 2018 2019 2020
Growth Rate 0 18% -9% 8% 11%

Figure-4.1.2: Import Growth Rate

We see that in 2017 the import growth of bank Asia- CDA Avenue Branch was 18 percent
and in 2018 it decreased by 9 percent. But in 2019 they recovered it with 8 percent. In 2020
their growth rate was 11% that was an upward trend than their previous year’s growth rate.

33
4.2 Export Operation by Bank Asia at CDA Avenue Branch:

Export Amount
Year Growth Rate
(in Million Taka)
2016 22.42 0
2017 25.11 12%
2018 29.31 17%
2019 27.19 -7%
2020 29.81 10%

Source: Branch Data.

4.2.1 Export Scenario:

Export

29.31 29.81
27.19
25.11
22.42

2016 2017 2018 2019 2020

Figure-4.2.1: Export Scenario of CDA Avenue Branch

From this chart, we can see that the export of Bank Asia- CDA Avenue Branch was 22.42
million taka which continued to increase in the consecutive three years. Though it
decreased in 2019 it was recovered immediately in the next year by having a 29.81million
taka export amount.

34
4.2.2 Execution on Growth Percentage (Graph):

Growth Rate
0.2

0.15

0.1

0.05

-0.05

-0.1
2016 2017 2018 2019 2020
Growth Rate 0 12% 17% -7% 10%

Figure-4.2.2: Export Growth Rate

From the chart, we see that in 2017, the growth rate of export was 12 percent which increase
in 2018 which was 17 percent. But in the very next year, the growth rate decreased
dramatically by 7 percent. The growth rate was retained in 2020 by 10 percent.

35
4.3 Foreign Remittance by Bank Asia at CDA Avenue Branch:

Remittance Amount
Year Growth Rate
(in Million Taka)
2016 24.63 -
2017 27.91 13%
2018 30.65 10%
2019 33.43 9%
2020 36.77 10%

Source: Branch Data.

4.3.1 Foreign Remittance Scenario (Graph):

Ramittance

36.77
33.43
30.65
27.91
24.63

2016 2017 2018 2019 2020

Figure-4.3.1: Foreign Remittance Growth Rate

Remittance is a big issue to develop a country’s economy. This graph contains the foreign
remittance through the Bank Asia CDA Avenue Branch. We can observe that the
remittance increases every year from 2016 to 2020 overtime. This leads the better
performance by Bank Asia- CDA Avenue Branch in this sector.

36
 Chapter Five
Findings, Limitations &
Recommendations

37
5.1 Findings:
To do the internship in the Bank Asia Ltd., CDA Avenue Branch, I work with the officers
and I observe many things. And with those observations, descriptions as well as analysis
of the topic, I find some factors that are particularly applicable for the Bank Asia Ltd., CDA
Avenue Branch.

Those are given below:

➢ Import performance of Bank Asia Ltd., CDA Avenue Branch is an upward pattern
in last year, which is 37.75 million taka.

➢ The export figure of Bank Asia Ltd., CDA Avenue Branch has been shown are
fluctuating several times. Last year (2020) recover its value by the. 29.81 million.
Which is the second-highest figure amount studies year.

➢ As foreign exchange department is one of the biggest sections of the bank. The
remittance figure of Bank Asia is upward as well as CDA Avenue Branch. It has a
good sign for the Bank.

➢ Excess import over export during the years (2016-2020) means that increasing
outflow than inflow of foreign currency for the country. This results in a negative
balance of payment for Bangladesh.

➢ Foreign remittance has also increased over the years (2016-2020) for the bank but
it is much lower than the increase in import. Thus, this low inflow of foreign
currency into the country cannot cover up the balance of payment deficit.

➢ The bank does not emphasize marketing activities. As a result, new customers are
not attracted and the bank has to rely on the existing few customers for export and
import.

38
5.2 Recommendations
Based on my study on foreign exchange I have some suggestions which I think the bank
can follow in its practical operation and improve its performance and do better than others,
which are as follows:

➢ The bank can try to encourage the exporters by demanding low charges and rates
on export financing.

➢ A necessary undertaking may be obtained from the importer to cover the

fluctuations.

➢ In the remittance section may be undertaking may be obtained to improve the

performance of foreign exchange operations.

➢ The bank should emphasize their marketing activities and policies to attract new
customers as well as for satisfy the existing customers.

➢ The ICE & SWIFT may frame some common guidelines to nationalize the charges
at the international level so that no single country becomes the victim of a willful
increase in charges.

➢ A re-shipment inspection certificate can be obtained from the exporter of back-to-

back L/C because it reduces fraud and falsification in case of import against master
L/C.

39
5.3 Conclusion
After the end of the report, I got to learn so many things about foreign exchange-related
activities such as import, export, procedure foreign remittance, and performance analysis
which gave me a vast knowledge about money market, capital market, inflation, deflation,
weak currency, and strong currency, measuring a percentage of growth year on year. In the
retirement of the report, I would like to give thank to my academic supervisor whose
support me to proceed and finish the report successfully.

40
 Bibliography:

Document

• Annual Reports: Bank Asia Ltd (2016-2020)

• Foreign Exchange Division Manual of Bank Asia Ltd.
• Several Booklets from Bank Asia Ltd.

Websites:

• Bangladesh Bank: www.Bangladeshbank.org.bd

• Bank Asia Ltd: https://www.bankasia-bd.com/

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