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AN INTERNSHIP REPORT

ON

General Banking & Foreign Exchange Activities


Of IFIC Bank Limited Of
Kawran Bazar Branch

Sk. Kallol Ahmmed


ID: RMBA 090201952
Department of Business Administration
Northern University Bangladesh

NORTHERN UNIVERSITY
B

AN INTERNSHIP REPORT
ON

General Banking & Foreign Exchange Activities


Of IFIC Bank Limited Of
Kawran Bazar Branch

Supervised By
Md. Lutfor Rahman
Associate Professor & Coordinator of BBA Program
Department of Business Administration
Northern University Bangladesh

Prepared by
Sk. Kallol Ahmmed
ID: RMBA 090201952
Department of Business Administration
Northern University Bangladesh

Date: 20.09.11

NORTHERN UNIVERSITY
B

H
2

LETTER OF TRANSMITTAL
Date:
Md. Lutfor Rahman
Associate Professor & Coordinator of BBA Program
Department of Business Administration
Northern University Bangladesh
Subject: Letter of Transmittal
Dear Sir,
I am delighted to submit my internship report titled General Banking & Foreign
Exchange Activities of IFIC Bank Limited of Kawran Bazar Branch as a part of my
RMBA degree requirement. I have completed a three month internship at International
Finance Investment & Commerce Bank Limited, which was a worthwhile experience for
me as it was in such as estimated organization. Through out the completion of the report ,
I come to know about many things regarding the current world of banking and their
practices especially in the electronic banking sector. I believe that this internship program
has enriched both my knowledge and experience.
I enjoyed working on this report and if you have further queries concerning the report,
place let me know.
Sincerely yours,

Sk. Kallol Ahmmed


ID: RMBA 090201952
Department of Business Administration
Northern University Bangladesh

CERTIFICATION

With regard to this report titled

General Banking & Foreign Exchange Activities of IFIC Bank Limited


of Kawran Bazar Branch
submitted by Sk. Kallol Ahmmed for the degree of Masters of Business
Administration. It is certified that the report is accepted in quality and form and allowed
to be presented in internship viva voce.

Md. Lutfor Rahman

Internship Committee Chairman

Associate Professor & Coordinator of BBA


Program
Department of Business Administration

NORTHERN UNIVERSITY
B

STUDENT DECLARATION
4

I here by declare that the internship report titled

An Internship Report on General Banking & Foreign Exchange Activities of IFIC


Bank Limited of Kawran Bazar branch

is prepared by me from my experience during three months internship with IFIC Bank
Limited Kawran Bazar Branch. I also declare that the paper has not been presented by me
or other person any where else.

Sk. Kallol Ahmmed


ID: RMBA 090201952
Department of business Administration
Northern University Bangladesh

Acknowledgement
Firstly I would like to convey my gratefulness to the Almighty for giving me the ability
and patience to work hard successfully. I am also grateful to my honorable teachers who
encouraged me to reach the goal.
I am not have been successful in complete the report without the active support and
cooperation from many persons in the IFIC Bank Limited.
I have tried my best and also worked hard for preparing this report. I have received
whole-hearted cooperation from my Internship supervisor Mr. Kazi Obaidul Al Faruk
first vice president and manager of IFIC Bank Limited of Kawran Bazar Branch who
advice me and also guided me.
I also want to express my strong gratitude to my honorable teacher and my internship
supervisor Md. Lutfor Rahman for his enthusiastic cooperation and supervision during
the preparation of the report. I am grateful to him for his suggestions and all instance
observations to prepare the report.
I would also like to thank to the officials of IFIC Bank Limited Kawran Bazar Branch
especially Mrs. Shaila Razzaque (AVP), Mr. Shawakat Ali (SSO), Mr. Md. Alamgir Kabir
(OG-1), Mr. A. T. M. Ashiqur Rahman (OG-1), Mrs. Shazia Rikta (OG-II), Mrs. Farzana
Yeasmin (OG-II), Ms. Tahmina Begum (Computer Officer) and a very special thanks
goes to - Mr. Kazi Obaidul Al Faruk first vice president and manager of IFIC Bank
Limited of Kawran Bazar Branch for providing all the support in the organization.
Special thanks go to the respondents, who spared their time generously, and took the
trouble of answering my queries and helped me to complete my study.
This report is the outcome of my internship experiences at IFIC Bank Ltd, Kawran Bazar
Branch from 8th June to 7th September 2011

Executive Summary
Modern banking is an outcome development driven by changing financial activities and
life style. It offers the widest range of financial services especially credit, savings and
payment services and performs tile widest rang of financial functions of any business
firm in the economy. By definition banks collects deposit from the money holder and
invest in accumulated saving of the depositor in the form of credit and other financial
services to the clients. At one hand banks pay interest to the depositors and on the other
hand it gets interest at a higher rate from the borrowers to realize profit.
So we find that money works both input and output of the banking industry. The
important feature of banking operation is to develop a good image of trustworthiness to
deal with money of the depositor.
IFIC Bank is the third generation bank in the growing banking sector in Bangladesh. The
bank has been able to earn a good name in industry for its high quality service. In the
IFIC Bank Ltd I have found out the task of satisfying the depositor group and the
borrower group is the first priority and the bank does this in a way smarter than any other
in the industry. With a term of bankers that comprises of experience as well as vigor of
youth, the bank strives for a customer oriented banking culture, with a prudent leading,
helping in export import of product and attracted deposit schemes. The foreign exchange
department of IFIC Bank is plying a vital role for developing the export import business
in Bangladesh day by day. The management of IFIC Bank limited has been focusing on
these key issues for ensuring a better base for their Bank stand on.
As a pare of my internship program I got a chance to work at this bank for a period of
three month. During this period I have learned about this organization and its working
environment which inspired me to do work on the topic.

Table of Contents
Chapter

No.

Chapter
One

Title

Page No.

Introduction to the Report


1.1
1.2
1.3
1.4
1.5
1.6

Chapter
Two

Scope of the Study


General Objective
Specific objectives
Significance of the Study
Methodology of the report
Limitation of the study

12
12
12
13
13
14

Overview or Profile of IFIC


Bank Limited
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13

Chapter
Three

IFIC Bank Profile


Company vision
Company mission
Objectives
Corporate Information
Structure of the Organization
Board of directors
Division
Organ gram of IFIC Bank
Hierarchy of the Kawran Bazar
Branch Management
Officers list of IFIC Bank Kawran
Bazaar Br
Branches of IFIC Bank LTD
Location of Branches

16
17
17
17
18
19
19
20
22
23
24
26
27

Internship Position &


Duties
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9

Duties & Responsibilities as an


intern
Account Opening
Clearing section and posting
cheque (NIKASH)
Provide information any type of
customer
Pay order issue
Receiving and sending letters
Issuing cheque book
Foreign Exchange
Letter of credit L/C

31
31
31
31
32
32
32
32
32
8

Chapter

No.
3.10

Chapter
Four

Title
Opening of Back-to-Back L/C

Page No.
33

Analysis & Findings


4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19

4.2.1
4.2.2
4.2.3
4.2.4
4.2.5
4.2.6

4.3.1
4.3.2
4.3.3

Retail Banking
Consumer Finance
SME Banking
Personal Banking
Corporate Banking & institutional
Banking
Custodial Service
International Trade Management
Cash Management
Institutional Banking
Treasury
Capital Market
Electronic Banking
Foreign Exchange Business
IFIC Bank Limited NOSTRO
accounts.
Online Branch Banking
Swift
Information
Technology
in
Banking Operation
Profitability and Shareholder
Satisfaction
Product Decision

35
35
35
35
35

General Banking Practice Of


IFIC Bank Ltd
Types Of Account
Pre requisite of opening an
account
New Deposit Products
Demand Draft (DD) Issue
Pay Order
Clearing Section

41

Foreign Exchange Business of


IFIC Bank
Introduction
Definition of Foreign Exchange
Foreign Trade and Foreign
Exchange

61

36
36
36
36
36
37
37
37
37
38
38
38
38
39

42
47
50
51
52
53

62
63

Chapter

No.
4.3.4

Title
Principles of Foreign Exchange

4.3.5

Legal Basis of Foreign Exchange


Transactions
Functions of Foreign Exchange
Definition of L/C
Types of L/C
Parties to a Letter of Credit
Contents of the L/C
Procedures of Opening a L/C
Documentary Letter of Credit
(Import/Export Documentation)
Operational Processes in IFIC
Banks Foreign Exchange
Department
Findings
Industry Analysis
SWOT Analysis
Conclusion and recommendation
Recommendations
Bibliography

4.3.6
4.3.7
4.3.8
4.3.9
4.3.10
4.3.11
4.3.12
4.3.13

Page No.
64
64
65
66
66
68
70
71
72
75
94
95
95
106
107
110

10

Chapter One

Introduction To The Report

11

1.1 Introduction/Scope of the study:


The MBA internship program is a required course for the students who are post
graduating from the Business Administration Department of Northern University. It is a
3-credit course with duration of 12 weeks. Students who have completed all the required
courses (at least 48 credit hours) are eligible for this course.
In my internship program, I have attached to a host organization named IFIC Bank
Limited for 12 weeks. My internal supervisor is the head of the IFIC Bank Limited,
Kawran Bazar Branch. I am working in the foreign exchange division of the organization.
With the permission of my internal supervisor I am going to work for my report on a
topic named General Banking & Foreign Exchange Activities of IFIC Bank Limited
of Kawran Bazar Branch.
IFIC Bank Ltd has been operating in this industry since 1983 and belongs to the first
generation of private banks to be incorporated since the independence of Bangladesh.
Today it holds the No. 2 position in the CAMELS rating conducted by Bangladesh
Bank. And in this report I will try to figure out what sort of management approach
actually helped IFIC Bank to achieve this position as well as the approach related to
foreign exchange division.
2. Objective of the Report
1.2. General Objective:
To gain practical job experiences and view the application of theoretical knowledge in
the real life
1.3. Specific Objectives:
Presentation of an introduction about IFIC Bank Limited.
Products and services of IFIC Bank Limited
Banks competitive condition within the industry.
To review the strengths and weaknesses of the bank.
Current assessments and future directions.
Foreign exchange trend at IFIC Bank Limited.
To suggest ways of improving the service standard that accommodates a rapidly growing
customer volume.

12

1.4. Significance of the Study


Banking sector has emerged as the key source for the people to borrow or to save money
for last two decades. People rely heavily on different banks to save their earnings and
borrow money from the bank when they require money in emergency. There are almost
53 banks in Bangladesh. Out of that number, 32 banks are private bank, 5 banks are
government bank, 7 banks are development specialized bank and 9 banks are foreign
bank. So, we can see that there are lots of players in this industry. So, surviving in this
sector is a challenge for every bank. A little bit of mistake or casualty can put the bank
down and can throw the bank out of the sector. So, banks need to be its absolute best to
survive successfully in this sector.
My study can contribute to the organization to some extent. The inspections that I will
conduct can demonstrate an idea about how banks customers think about the bank's
services especially foreign exchange services and how satisfied they are with the existing
facilities of the bank. At the same time the bank can know that how satisfied its
employees are with the existing system of the bank.
Based on my assessment result and analysis, the company can then change according to
the need and can sustain for a longer period of time by enjoying the loyalty and
satisfaction of their customers and better performance of its employees and though a
good management team. My findings from the study will also assist the management and
the experts to come up with effective and valuable decision helping the bank to combat
more effectively with their competitors.

Expected findings
Containing service facility in the bank helps the Bank to be competitive in the Banking
sector.

1.5 Methodology of the report

Data Sources:
To carry out the proposed study, I will utilize both primary and secondary data sources.

13

Primary Data Sources: For the proposed study, I will collect primary data by taking
interviews of some bank officials in order to get the information regarding foreign
exchange services as well as the real picture of the bank.
Secondary Data Sources: I will collect the internal secondary data from the bank itself.
External secondary data will be collected from the website of the bank.

Data Collection Method:


Simple and straightforward questions will be asked to the respondents in the interview for
the purpose of my report. Data will be collected with the cooperation of the employees
and clients of IFIC Bank Limited.
Data Analysis & Data Presentation Technique:
After collecting data, I will follow a comprehensive screening process. I will sort out
incomplete and biased data and will delete from the data bank. I will use graphical
presentation with percentage.

6. Limitation of the Study


The respondent may be uninterested to answer the questions.
Time will be a major constraint in accumulating all sorts of information in an organized
way.
Confidentiality of data will be another key barrier that will be faced during the conduct of
this study. As every organization has their own secrecy that is not revealed to others, so
acquiring the absolute raw information will be a difficult and almost impossible task for
me.
Large-scale research will not be possible due to constraints and restrictions of both time
period and by the organization as well.

14

Chapter Two

Overview Or Profile Of IFIC Bank Limited

15

IFIC Bank Profile


Bank is a financial institution that provides services related to money. The main motive
of a commercial bank is to earn profit by providing its clients with the best possible
services. Since bank operates in the service industry having a strong customer
relationship is of utmost importance. 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, International Finance Investment and commerce
Bank Limited was the first stage established as a private bank that time the Government
of the Peoples Republic of Bangladesh holds 49% of the share capital of the Bank and
the rest 51% of the share capital of the Bank were held by the sponsors and general
public but at now the Government of the Peoples Republic of Bangladesh holds 34% of
the share capital of the Bank and the rest 66% of the share capital of the Bank is held by
the sponsors and general public with an Authorized Capital of Tk. 5350 million and Paid
up Capital of Tk. 1744 million by a group of highly successful entrepreneurs from
various fields of economic activities such as shipping, oil, finance, garments, textiles and
insurance etc. It is a full licensed scheduled Commercial Bank set up in the private sector
in pursuance of the policy of the Government to liberalize Banking & Financial services.
Today it holds the No. 2 position in the CAMELS rating conducted by Bangladesh
Bank. In this report I will try to figure out what sort of management approach actually
helped IFIC Bank to achieve this position.
The Banking sector in Bangladesh has gone through tremendous changes over the last
few decades as the sector became more competitive with the inclusion of many new
private banks, each coming up with its own unique scheme of services. As competition
rose, IFIC Bank also had to come up with its own unique managerial approach to keep up
with the pace.
IFIC Bank Ltd. has already made significant progress within a very short period of its
existence. The bank has already occupied an enviable position among its competitors
after achieving success in all areas of business operation. The bank offers all kinds of
16

Commercial Corporate and Personal Banking services covering all segments of society
within the framework of Banking Company Act and rules and regulations laid down by
our central bank. Diversification of products and services include Corporate Banking,
Retail Banking and Consumer Banking right from industry to agriculture, and real state to
software.
2.2. Company vision:
To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital
adequacy, asset quality, sound management and profitability having strong liquidity.

2.3. Company mission:


To build IFIC Bank limited into an efficient, market driven, customer focused institution
with good corporate governance structure.
Continuous improvement in business policies, procedure and efficiency through
integration of technology at all levels.

2.4. Objectives
To have a strong customer focus and to build a relationship based on integrity superior
services and mutual benefit.
To work as a team to serve the best interest of the group.
To work for continuous business innovations and improvements.
To value and respect people and make decisions based on merits.
To provide recognition and rewards on performance.
To have sustained growth, improved and wide spectrum of products and services.

2.5. Corporate Information:

17

Name of the Company: International Finance Investment and commerce (IFIC) Bank
Ltd.
Legal Form: IFIC Bank Limited was incorporated in Bangladesh and registered with
joint stock companies and firms as a public company limited by shares.
Company Registration Number: 4967,Dated October 08,1976
October 8, 1976: Memorandum and Articles of Association signed by the Sponsors.
October 18, 1976: Incorporation of the Bank and Certificate of Commencement of
Business.
June 23, 1983: License issued by Bangladesh Bank.
June 24, 1983: Formal launching of the Bank and Commencement of business from the
Motijheel Branch.
Authorized Capital: Year: 2007 = TK 500 million, Year: 2008 = TK 1600 million, Year:
2009 = TK 5350 million.
Paid Up Capital: Year: 2007 = TK 670.72 million, Year: 2008 = TK 1341.43 million,
Year: 2009 = TK 1743.80 million.
August 29, 1986: Initial Public Offering (IPO)
March 27, 1986: Listed with Dhaka Stock Exchange Limited (DSE).
November 15, 1995: Listed with Chittagong Stock Exchange Limited (CSE).
Market Category: A category
March 14, 1986: 15% Dividend declared in the 10th AGM (First after the IPO).
1986 & 1995: Trading of Shares on DSE and CSE.
March 29, 2008: Registered & purchase License as Brokerage House from Securities
and Exchange Commission (SEC).
February 12, 2009: Start Operation.
April 15, 2011: Brokerage House separate from IFIC Bank.
March 29, 2000: Registered as depository participant of CDBL.
June 15, 2003: Trading of Shared started in Demat form in Stock Exchanges.
Tax Payer Identification Number (TIN): 210-200-0537, LTU, Dhaka.
Vat Registration Number: 9021077014
June 30, 1986: Agreement with MYSIS Company for Core Banking Software MISYS
Auditors: Narayon Chandro Roy & Company Chartered Accountants
Structure of the Organization

18

2.7. Board of directors:


Board of directors of the bank is a unique combination of both private and Government
sector experience. Currently it consists of 12 directors. Of them represent the sponsors
and general public and four senior officials in the rank and status of additional
secretary/joint secretary represent the government. Managing director is the ex-officio
director of the board.
Board of directors
Mr. Salman F Rahman

Chairman

1
2

Mr. Mohammad Lutfer Rahman

Director

Mr. Aminur Rahman

Director

Mr. Syed Anisul Huq

Director

Mr. Mohammed Nayem Syed

Director

Mr. Anwaruzzaman Chowdhury

Director

Mr. Monirul Islam

Director

Mr. Mahmudul Huq Bhuiyan

Director

Mr. Arastoo Khan

Director

10

Mr. Syed Monjurul Islam

Director

11

Mr. Mohammad Ali Khan, ndc

Director

12

Mr. Mohammad Abdullah

Managing Director

2.8. Division

19

The operations and activities at the head Office have been divided into fifteen divisions
or groups; each head by a Group Executive who reports directly to the Chief Executive.
All divisions in Head Office are required to report to the respective Group Executive. The
name of the fifteen divisions and the divisional head are mentioned below ---

02.

01.

Human Resources Division

Company Secretary's Division

Mr. Syed Zahidul Islam


SEVP

Mr. A.K.M. Mozharul Haque


SEVP

03.

04.
Finance & Accounts Division

Credit Risk Management Division

Mr. S.M. Abdul Hamid


SEVP

Mr. Wakar Hasan


EVP

05.

06.
Corporate Banking & Marketing
Division

Mr. Fariduddin Al Mahmud


EVP

07.

Treasury & International Banking


Division

Mr. Shaikh Rashid Ahmed


EVP

08.

Internal Control & Compliance Division

Mr. Narayan Chandra Roy


EVP

09.

Corporate Communication & Support


Service Division

Mr. Md. Abul Hossain


EVP

10.

Remedial Asset Management Division

Information Technology (IT) Division

Mr. A.K. M Shafiqul Alam


SVP

Mr. Gopal Chandra Guha Roy


SVP

11.

12.
Anti Money Laundering Division

Capital Market Division

Mr. S.M. Abdul Hamid


SEVP & CAMLCO

Mr. Ashim Chowdhury


SVP
20

13.

14.
Card Division

Law & Legal Affairs Division

Mr. Shahjahan Kabir


FVP

Mr. Md. Badrul Alam


SAVP

15.
M.D's Secretariat

Mr. M. Mozibar Rahman


VP

21

2.9 Organ gram of IFIC Bank:


Managing Director (MD)
Deputy Managing Director (DMP)
Senior Executive Vice President (SEVP)
Executive Vice President (EVP)
Senior Vice President (SVP)
First Vice President (FVP)
Vice President (VP)
Senior Assistant Vice President (SAVP)
First Assistant Vice President (FAVP)
Assistant Vice President (AVP)
Senior Staff Officer (SSO)
Staff Officer (SO)
Officer Grade-I (OG-I)
Probationary Officer (PO)
Officer Grade-II (OG-II)
Computer Officer (CO) / Cash Officer (CASS/OFF)
Assistant Officer (AS)

2.10 Hierarchy of the Kawran Bazar Branch Management:

First Vice-president & Relationship manager


Computer
Assistant
Probationary
Office
Senior
Officer
Officer
Security
Staff
Officer/Cash
Assistant
Vice-president
Staff
Officer
Grade-II
Grad-I
Staff
Office
Officer
Officer

22

2.11 Officers list of IFIC Bank Kawran bazaar Br:

23

Mr. Kazi Obaidul Al Faruk (F. V. P & Manager)


Mr. Mehboob Alam Chowdhury (SAVP)
Mr. Gazi Md Zulfiqur Borhan (AVP)
Mrs. Shaila Razzaque (AVP)
Mr. Shawakat Ali (SSO)
Mrs. Tahmina Begum (OG-1)
Ms. Sitara Khatun (OG-1)
Mr. A. K. M. Abul Kalam Azad (OG-1)
Mr. Abdur Rashid (OG-1)
Mr. Md. Alamgir Kabir (OG-1)
Mr. Md. Toaha (OG-1)
Mr. A. T. M. Ashiqur Rahman (OG-1)
Mr. Md. Tanvirul Islam Prodhan (OG-I)
Mr. Mostafizur Rahman (OG-II)
Mrs. Farzana Yeasmin (OG-II)
Mrs. Shazia Rikta (OG-II)
Ms. Ismat Ara (Cash Officer)
Ms. Jobaida Nusrat (Cash Officer)
Mr. Eshrak mahmud Khan (Cash Officer)
Mr. Md. Mazbha Uddin (Cash Officer)
Mr. Md. Salauddin (Cash Officer)
Ms. Tahmina Begum (Computer Officer)

Mr. Kazi Obaidul Al Faruk


(F. V. P & Manager)

Mr. Mehboob Alam Chowdhury


(SAVP)
24
Mr.
Mrs.
Ms.
Mr.
Mrs.
Abdur
Gazi
Shawakat
Eshrak
Sitara
Farzana
Shazia
Md
Rashid
Khatun
mahmud
Rikta
Zulfiqur
Yeasmin
Ali Khan
Borhan
Mr.
Ms.
Mr.Ms.
Md.
A.
Tahmina
K.
Ismat
Toaha
Alamgir
Mr.
M. Abul
Ara
Md.
Begum
Kabir
Mazbha
Kalam
Ms.
Azad
Uddin
Jobaida
Mr.
Md.
Mrs.
Salauddin
Tahmina
Rahman
Begum
Mrs.
Shaila
Razzaque
Mr. A.Nusrat
T.Mr.
M.Mostafizur
Ashiqur
Rahman
Mr.
Md.
Tanvirul
Islam
Prodhan
(OG-1)
(OG-II)
(SSO)
(Cash
(OG-II)
(AVP)
Officer)
(Computer
(Cash
(OG-1)
(OG-1)
Officer)
Officer)
(OG-1)
(Cash Officer)
(OG-II)
Officer)
(OG-1)
(AVP)(Cash Officer)
(OG-1)
(OG-I) (Cash

IFIC Bank Limited is being managed by highly skilled professionals with long
experience in banking. They constantly focus in understanding and anticipating customer
needs and as the banking scenario undergoes changes so does the banks operations, to be
in par with the market condition.

25

Now we would look into each of the four basic management activities Planning,
Organizing, Staffing and Leading & Controlling that the bank practices, in order to stay
on top of its competitors.
2.12. Branches of IFIC Bank LTD:
IFIC Bank have 99 branches, 01 SME service center, 01 head office. Branches are
divided into 6 division in Bangladesh and also have 24 branches in different country.
Dhaka division have 47 branches,01 head office. 1st branch was started from motijheel
branch (Date: 24.06.1983).
Chittagong division have 19 branches. Banking activities started from Agrabad branch
(Date: 21.07.1984).
Rajshahi division 15 branches. Banking activities started from Rajshahi branch (Date:
12.05.1985).
Khulna division have 09 branches. Banking activities started from Khulna branch (Date:
25.01.1986).
Barisal division has 01 branch. Banking activities started from Barisal branch (Date:
21.11.1991).
Syhlet division have 08 branches. Banking activities started from Sylhet branch (Date:
17.11.1984).
01 has SME service center. Add: Dholaikhal (Date: 27.12.2009)
Others country
Nepal 15 Branches
Pakistan 2 Branches and
Oman 7 Branches.
So, IFIC Bank have total 97 offices in Bangladesh
2.13 Location of Branches

26

Planning
IFIC Bank has done its planning within the purview of the corporate plan. The overall
planning approach in IFIC Bank is top-down. Management of IFIC Bank Ltd can be
categorized into two broader teams, one is the Top Management group and other one is
the Mid Level Management team. The top-level management team usually comprises of
the Board of Directors where the Banks Chairman heads the meetings.

27

Long terms goals are usually discussed in these high profile meetings, where the bank
owners decides, for example, what should be the targeted profit for the next fiscal year.
Such meeting usually takes place at least once every month, and is a way through which
the directors are updated about the current situation of the bank. During their regular
meeting each month the directors tries to review the feedback from decisions given
earlier. Changes are made if needed and new issues are discussed. Sometimes these
meetings can take place more than once in a month, in case of an emergency. For
example in banking there are certain decisions that the Banks top management level
cannot take on their own and concerns of the shareholders are of utmost importance. For
example, before giving out large syndicated loans to clients or before imposing new
interest rate of the bank.
The Mid Level Management team on the other hand deals with Short Term goals. They
are here to see whether the short terms goals are in line with the long-term targets.
Moreover they also provide solutions to everyday challenges that can come up all the
time. Most of the employees in the mid management level are usually head of individual
branches and is entitled with the responsibility to see the smooth operation of the branch.
Some mid level managers also head individual department and I would be discussing
about in the Organizing section of the report
Organizing
The term organizing for Banks is no different form any other business, it is the way
through which the day to day activities of the bank are carried out for smooth operation.
IFIC Bank has two approaches when it comes to organizing its business, one is the
Branch Based Approach and the other is the Department Based Approach.
In the Branch Based Approach, each individual branch is treated as a separate identity
and is head by a branch manager. The branch manager is directly responsible for the
performance of that particular branch, and is liable to the top management. Profit targets,
deposit targets and others targets alike are all handed over to these individual branches
Hiring the right people for the right position is perhaps one the most important function
of any organization and it is more so for banks since it operates in the service industry.
This function of management is the responsibility of the Human Resource Department for
IFIC Bank Ltd. Staffing not only deals with recruitment but is also involved in giving
training to employees, performance appraisal and many other related activities.
Recruitment in IFIC Bank is two basic types, one is the hiring of fresh new graduates and
other is the recruitment of experienced employee. Every year new graduate students are
recruited at the entry level as Probationary Officer (PO) and as well as Computer Officer
(CO) / Cash Officer (CAS/OFF) depending on individual qualification. For each of the
this entry level post, applicants has to sit for several written assessment before moving on
to a series of interview, from where only the brightest are chosen. On the other hand
someone having previous banking experience might not have to sit for any written exam
but is directly assessed by the top or mid level management through interviews.

28

Leading and Controlling


The current success of IFIC Bank Ltd is certainly because of its expert team of
management whether it be the Branch Manager or the Department Head, each has their
equal shares in making this Bank a success. The top management level of IFIC Bank
comprises of very experienced individual who has climbed up the corporate ladder from
within the bank itself or is someone who has been working at some other banks and is
experienced.
The head of each branch belongs to the mid level management unlike the department
heads who usually belongs to the group higher in the corporate ladders. An employee
form the top management level is likely to be responsible for several small departments
of the bank, until and unless the department requires very high skills.
The executives from the mid and the top-level management is also responsible for the
well being of all the employees working under them. He or She has to make sure that all
the employees are working in accordance with the company policy and is being fairly
treated. For this appraisal function the manger of each branch has to fill out Annual
Appraisal Report (AAR) each year to evaluate the performance of individual employee,
based on which promotions, increment and bonuses are given out.

Chapter Three

29

Internship Position & Duties

3.1 Duties and Responsibilities as an intern:


As a student of MBA program the requirement of my course I was assigned IFIC Bank
Ltd Kawran Bazar branch for my internship. I was assigned to work on general banking
and foreign exchange activities. In the internship period it is very important for any one

30

where practical experience gathered. In the period of three months internship program I
have learn many things about general banking and foreign exchange activities. Every
employees helped me so much to understand the work easily. During my internship
period, I have worked in different sections like Accounts opening, Clearing, Remittance,
Dispatch, L/C opening etc. During my three months internship programs I have worked
10.00 am to 6.00 pm at every working day.
As an intern my accomplishments are as follows:
3.2 Account opening: I worked first in IFIC Bank in the account opening department.
Here I learnt the procedure for opening an account, the documents that are need for
opening an account. In IFIC Bank Limited there are various types of accounts. Here I
have worked at least 15 days. This is important section of the bank. It deals with the
different products. These products are the core sources of deposit. Here I have acquainted
with different products that the bank offers to acquire deposit. I also have acquainted with
the checklist of the account opening. I have also learned the important steps regarding
account opening and account closing.
3.3 Clearing section and posting cheque (NIKASH): Every day I received several
cheques from clients. I also initial it the deposit slip and put branch seal and endorsement
seal in the cheque. My responsibility ensures account number and accounts holder name.
In this section my last duty positioning the clearing cheque in the computer.
3.4 Provide information any type of customer: I also provide any type of information
to the customer. I tried my best to give the right information to the customer. Where any
customer does not understand any thing tried to help them. Most of the time I gave them
information about account opening.
3.5 Pay order issue: I issued more than 3 or 4 pay order every day. At first customer is
supplied with P.O. form. After filling the form the customers pay the money in cash or
cheque. The officer then issues P.O. on its specific block. The block has three parts one
for bank and other two parts for customer.

31

3.6 Receiving and sending letters: There are two type letters on the branch. The letter
come from outside or another branch those are received in inward book and a serial
number put in the letter and the other one is banks letter that sends to another bank or
branch by putting also a serial number.
3.7 Issuing cheque book: Fresh check book is issued to the account holder only against
requisition on the prescribed requisition slip attached with the cheque book issued earlier.
After proper verification of the signature of the accountholder personally or to his duly
authorized representative against proper acknowledgement. Its not so easy to issue a
cheque book. Have to find out here the demanded cheque and then have to record it. And
finally give the cheque book to the customer and customer signature in the cheque
discount file.
3.8 Foreign Exchange:

New back- to- back L/C opening and register book maintaining.

Voucher making or issuing.

Amendment of L/C and register maintaining.

Acceptance of bill while bill received and maintaining register liabilities and
voucher issuing.

Bill purchase and register maintaining.

Performance registers of export and import L/C maintaining.

3.9 Letter of credit L/C:


The duties, which I have done in foreign exchange, are as follows.

New back-to-back L/C opening and register book maintaining.

Voucher creating.

Amendment of L/C register maintaining.

Acceptance of bill while received and maintaining register liabilities and


voucher issuing.

32

PAD (payment against document) register maintaining.

3.10 Opening of Back-to-Back L/C:


Papers required at the time of opening an L/C

A bank account

Party request letter.

Importer registration certificate(IRC)

Trade license, tin number, vat registration number.

IMP form

Letter of credit authorization (LCA form)

Proforma invoice indent/ contract/ purchase order.

Credit (CIB) report of the importer.

Credit report of the seller should be collected from the correspondent bank.

In case of F.O.B, C& F, Insurance cover note.

In case of quota item, quota allocation paper.

Bank serves its L/C application form affixing stamp, which acts as the
contract between the importer and the opening bank.

Importer

submits

the L/C

application

from along

with proforma

invoice/indent, LCA form duty signed.

Bank realizes necessary margin and other charges from the importer at the
time of opening L/C.

Necessary charge document to be obtained from the imported duty signed.

Major learning points:


As I worked in the foreign exchange department I learn about total activities of foreign
exchange, how to open L/C. Each and every time I had to ask for works to the officers.
So I can say that most of the work I performed in the bank with my own initiative.
Although few works are specific for the internees as well.

33

Chapter four

Analysis & Findings

IFIC Bank Limited provides a full range of products and services to its customers, some
of which are mentioned below with a brief overview of the major business activities.

34

4.1 Retail Banking


Retail Banking is mass- banking facility for individual customers to avail banking
services directly from our wide branch net work all over the country. We provide onestop financial services to all individual customers through our innovative products &
services to cater their need. With a view to provide faster and more convenient
centralized online banking services, most of our branches have been brought under the
real time online banking system. IFIC Bank offers a wide variety of deposit products,
loan product & value added services to suit your banking requirements. Products and
services for individual customer include: Consumer Finance, Deposit Product, Card,
NRB Account, Student File, SMS Banking etc.
4.2 Consumer Finance
There are branches and finance centers under this division with a qualitative workforce of
employees. Some of the services provided by this division are unsecured personal loans,
credit cards, and vehicle related lease etc.
4.3 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. We are offering 15 different products for
selected target groups, such as - Easy Commercial Loan, Retailers Loan, Muldhan Loan,
Women Entrepreneurs Loan, 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.
4.4 Personal Banking
There are branches with highly qualified workforce provide various kinds of loans,
various types of accounts, cheques, card money etc.
4.5 Corporate Banking & institutional Banking
There are some branches under this division. The services provided by this division are
International Trade Management, Institutional Banking, Custody, and Cash Management.
IFIC Bank is providing a wide range of financial services, offering specialist advice and
products to corporate clients to meet diverse demands of changing market scenario. We
have expertise to customize products & services to meet specific requirements of our
clients. We are committed to serve our customer with extensive branch net work all over
the country to expedite our client's business growth. We facilitate your business to face

35

the challenges and realize opportunities, now and in the future. Our main focus is
relationship based banking and understanding corporate & institutional business
environments.
Our experienced Relationship Managers & their team can respond to and anticipate your
needs and give you competitive business advantages. Products and services for
commercial and business customers include: Working Capital Finance, Project Finance,
Term Finance, Trade Finance, Lease Finance, Syndication Loan etc.
4.6 Custodial Service
IFIC Bank Limited equator fulfills its strategic commitment to provide custody and
clearing services. Equators focuses are on the following:
Commitment to quality
Dedication to customer needs
Sustained investment in people and systems
4.7 International Trade Management
This division is operational throughout the group and IFIC Bank Ltds core strength is
trade finance and services. With an experience, IFIC Bank has developed knowledge of
trade finance, which is world class. Principle services to importers include imports letter
of credit, import bills for collection and back-to-back letters of credit facilities. Services
provide to exporters include export letters of credit, direct export bills, bonds, and
guarantees.
4.8 Cash Management
IFIC Bank recognizes the importance of cash management to corporate and financial
institutional customers, and offers a comprehensive range of services and liquidity
management.
4.9 Institutional Banking
IFIC Bank Limited provides a wide range of services to institutional clients, commercial,
merchant and central banks; brokers and dealers; insurance companies; funds and
managers, and others. It provides relationship managers who are close to their customers
and speak local language. This wide network of institutional banking facilities includes
transaction, introduction, problem solving and renders advice and guidelines on local
trading condition.
4.10Treasury
The Treasury Division of IFIC Bank is engaged with Cash Management, Liquidity
Planning and Liquidity Protection. It is also conscious to protect all the banks Assets and
Profits against loss due to domestic as well as global financial realities, particularly
Interest and Exchange Rate fluctuations. The Treasury Department is also regarded as a
Profit Center, which generates income by trading instruments in the Financial Market.
The Treasury is constituted with well setup Front Office, Mid Office and Back Office.

36

To manage treasury unit as profit center, along with guidance from regulatory authorities,
the bank equipped itself with clear policies, fit organization structure, deployment of
trained staff, modern infrastructure facilities and technological initiatives.
Treasury operations had been consideration as an important avenue for income
generation purpose within Head Office. In fact, in the past, income from treasury
operation was quite sizable and significant to the total income generated by the bank. The
treasury division publishes daily and weekly currency newsletters, which provide
analyses of currency trends and related issues. Seminars and workshops are conducted for
customers from time to time on foreign exchange related topics. IFIC Bank is one of the
first local banks in Bangladesh to integrate treasury dealings of local money market and
foreign currency under one Treasury umbrella. The bank has handled significant volumes
of treasury over the last several years. IFIC Bank's Dealing Room is connected with
automated Reuters Terminal facility thus enabling the bank to provide forward/future
facilities to its corporate clients at a very competitive rate.
4.11 Capital Market
IFIC Bank Limited is devoted to capital Market of the country and offers world standard
brokerage services for individual and institutional investors. The Bank is responsible for
origination of sales, buy and trading of securities of Capital markets. It aims to provide
relevant support to its customer with sophisticated and innovative financial solutions and
delivering the highest quality of services. It has a seat in Dhaka Stock Exchange Limited.
4.12 Electronic Banking
Electronic Banking provides various types of support through a wide range of operating
systems, sweeping transactions accessions with the provisions of reporting features or
other special functions.
4.13 Foreign Exchange Business
Over the years, foreign trade operations of the bank played a pivotal role in the overall
business development of the bank. The bank has established relationship with as many as
170 new foreign correspondents abroad and local correspondents 300 only at kawran
bazar branch last month April (2011). The bank has also entered into remittance
arrangements with several banks and exchange houses.

4.14 IFIC Bank Limited have thirty (30) NOSTRO account overall the world .
ACU (Asian Clearing Union) Dollar: Currency code number is ninety eight (98).
Number of account has ten (10).
AUD (Australian Dollar): Currency code number is eleven (11). Number of account
has tow (02).
CAD (Canadian Dollar): Currency code number is tow (02). Number of account has
one (01).

37

CHF (Swiss Franc): Currency code number is thirty eight (38). Number of account has
tow (02).
EURO : Currency code number is eighty six (86). Number of account has three (03).
GBP (U.K. Pound Sterling): Currency code number is eighty ten (10). Number of
account has three (03).
JPY (Japanese Yen): Currency code number is seventy five(75). Number of account has
three (01).
USD (United State Dollar): Currency code number is one(01). Number of account has
eight (08).
and expects to handle increased volume of remittance business over the near future.
4.15 Online Branch Banking
The bank has set up a Wide Area Network (WAN) across the country to provide online
branch banking facility to its valued clients. Under this scheme, clients of any branch
shall be able to do banking transaction at other branches of the bank. Under this system a
client will be able to do following type of transactions:
Cash withdrawal from his/her account at any branch of the bank.
Cash deposit in his/her account at any branch of the bank irrespective of the location.
Cash deposit in others account at any branch of the bank irrespective of the location.
Transfer of money from his/her account with any branch of the bank.
4.16 SWIFT
IFIC Bank Limited is one of the first few Bangladeshi banks, which have become
member of SWIFT (Society for Worldwide Inter-bank Financial Telecommunication) in
1999. SWIFT is a member-owned co-operative, which provides a fast and accurate
communication network for financial transactions such as Letters of Credit, Fund
Transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for
uninterrupted connectivity with over 350 user institutions in 100 countries around the
world.
4.17 Information Technology in Banking Operation
IFIC Bank Limited adopted automation in banking operation. The main objective of this
automation is to provide efficient and prompt services to the bank's clients. At present, all
the branches of the bank are computerized. At branch level, the bank is using serverbased multi-user software operating system to provide best security of automation.
4.18 Profitability and Shareholder Satisfaction
The bank had been one of the most profitable in the banking sector. Even though the
capital market of the country has been suffering over the last few years, the good
performance of IFIC Bank made sure that the banks share price remained in a respectable
position.

4.19 Product Decision (In Bank)

38

Tight product decision in the tight time is essential for all organization. If focuses on
decision about product attributes branding, packaging, labeling and product support
services IFIC Bank Limited.
4.20 Product Attributes
Developing a product or service involves defining the benefits and design. In case of
IFIC Bank Ltd. various deposit schemes are product.

Product Attributes

Brandinge

C.S.S

Packaging

Attractive
Brochures

Labeling

Various
Deposit
Schemes

Product
Support
Service

Distinction
from others

80% Loan
Facility after 3

years

4.21 New product Planning Process


New product planning is guided by customer needs analysis:
39

Customer Needs
Analysis

Idea Generation
Screening and Evaluation

Business Analysis

Business Analysis

Screening & Evaluation

Testing

Commercialization
40

General Banking Practice Of IFIC Bank Ltd:

41

Account Opening Department

To establish a banker and customer relationship account opening is the first step.
Opening of an account binds the banker and customer into contractual relationship. But
selection of customer for opening an account if very crucial for a bank. Indeed fraud and
forgery of all kinds start by opening account. Therefore, the bank takes extremely
cautions measure in its selection of customers.

4.2.1. Types Of Account


A bank has to maintain different types of account for the different purposes. IFIC Bank
limited offer the general deposit products in the form of various accounts.

Savings Account (SB)


Current Account (CD)
Short Term Deposit Account(STD)
Fixed Deposit Account(FDR)
Special notice deposit(SND) Account(Short term deposit)
Pension savings scheme(PSS)

Saving Account
Savings banks deposit is popular account maintained in banks. The different matters
relating SB account are described in the following discussion. The summary of the rules
and regulations to open a savings account is as follows:
Any person or persons of more than 18 years having sound mind can open and operate
this account singly or jointly.
Initial Deposit: Tk. 500.00 at rural branches & Tk. 1000/- for urban branches
which should be considered as minimum balance.
Competitive Interest Rate

42

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
Clubs, societies, sole proprietorship firms, partnership firms, Limited
companies either public or private and other similar organization are eligible to
open such account.
Depositors can not withdrawal less than 100 per transaction.
Interest will be calculated on the minimum balance in a month
When a cheque is returned for want of fund for insufficient fund, a charge of TK
100.
Interest will be created to partys account on half-yearly basis
Charges imposed for issue of cheque book in the
SB A/C-TK.40.00 (TK.4.00 per leaf), CD A/C TK 4.00 per leaf.

Current Account and Short Term Deposit (STD) Account


Most businessmen maintain current deposit account in order to make their daily business
activities. This accounts funds change most frequently than any other accounts because
customers use to withdraw and deposit funds in regular basis. The summary of the rules
and regulations to open a current account & short term deposit (STD) accounts as follows
:

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
43

Opportunity for availing locker facility


A minimum deposit of TK.1000.00 is needed to open a current account.
The bank charges an incidental charge of TK. 150.00 for every six (6) months for
the maintenance of the account.
Incase of closure of any account, the bank deducts TK. 200.00 as closing charge

Fixed Deposit Account (FDR)


The bank allows people to keep their idle money secured and profitable as fixed deposit.
The interest rate that the bank offers to fixed depositors is as follows

Fixed deposit Rate


FDR (3 MONTHS & ABOVE)
Less than Tk. 100.00 crore

12.00%

Tk. 100.00 crore and above

9.75%

FDR (6 Months & above)


Less than Tk. 1.00 crore

10.50%

Tk. 1.00 crore and above

11.00%

FDR (1 Year)
Less than Tk. 1.00 crore

10.00%

Tk. 1.00 crore and above but


less than Tk.5.00 crore

10.50%

Tk.5.00 crore and above

12.00%


Special

Special Notice Deposit (SND) account (short term deposit)


Notice

Deposit

(SND)

Account

is

opened

for

any
44

individual/firm/company/Financial
Institutions/societies/clubs/Trust/
NGOs/Banks/Corporations/Autonomous bodies/ government organizations
Initial Deposit for opening account Tk. 25,000/-

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%

Pension Savings Account (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:

60
50
40
Savings
Current
SND

30
20
10
0

45
June

July

August

Account opening of IFIC Bank Kawran Bazar Branch From June to August.
We find from the graph that the savings account opening on June that was the last month
of fiscal year 2010-2011 is very high but on the other two months it is very low. On the
other side some SND(Special Notice Demand) accounts are opened in June but in the
other two months it is near to zero.

Monthly

3 years Terms

5 years Terms

Installment

Amount payable
After maturity

Amount payable After


maturity

Tk. 500
Tk. 1,000
Tk. 2,000
Tk. 3,000
Tk. 5,000
Tk.10,000
Tk.15,000
Tk.20,000
Tk.25,000
Tk.50,000

Tk. 20,781
Tk. 41,562
Tk. 83,125
Tk. 1,24,687
Tk. 2,07,812
Tk. 4,15,624
Tk. 6,23,435
Tk. 8,31,247
Tk. 10,39,059
Tk. 20,78,118

Tk. 38,134
Tk. 76,268
Tk. 1,52,536
Tk. 2,28,804
Tk. 3,81,340
Tk. 7,62,680
Tk. 11,44,020
Tk. 15,25,360
Tk. 19,06,699
Tk. 38,13,399

46

You can receive full payment at maturity or option for a pension on monthly
basis to meet your needs.
The scheme entitles you to have Income Tax Rebate to make your savings
even more valuable.
Income Tax Rebate
Monthly installments of our 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.

4.2.2. Pre requisite of opening an account:


The following documents are required to open an account.

(i) General Requirement For All Account:


1. Passport size photographs (two copies) duly attested by the introducer and
nominee duly attested by the account holder
2. Attested copy of passport /Nationality certificate from the appropriate authority
[up chairman/word commissioner etc].To be verified with originals
3. Personal information form(s)
4. Know Your Customer (KYC)
5. Transaction profile (Not applicable for Special Scheme and Fixed Deposit)
6. All applicable columns have been duly filled-in by applicant

(ii) Proprietorship Concern(Additional Requirement):


1. Attested copy of valid Trade license [to be verified with original]
47

2. Proper seal to be used in the form and signature care

(iii) Partnership Firm(Additional Requirement):


1. Attested copy of registered partnership deed(to be verified with original)
2. List of partners with their addresses.
3. Copy of Trade License.
4. Certificate of the registrar of firms in case of registered firms only (certified
photocopy to be retained by bank and original to be returned after
authentication)

(iv) Limited Company (Additional Requirement):


1.
2.
3.
4.
5.
6.
7.

True copy of the memorandum and articles of association of the


company duly certified by RJSC. 09. Attested copy of certificate of
incorporation.
Certified true copy of the certificate of incorporation of the company.
Certified true copy of resolution of the Board of Directors of
the
company for opening bank account which should be consistent with the
Articles of Association.
Certificate of commencement of business of the registrar of joint stock
company.
List of directors with address along with form 10 & 12.
Copy of trade license.
TIN certificate

(v) Private School/College/Madrasha


1. Attested or certified copy of the constitution.
2. Registration certificate.
3. List of all executive members (as per enclosed format)
4. Two copies of passport size photograph of the account operators (attested by
introducer or verified with passports)
5. Personal /nationality certificate of the account operators.

48

6. Personal profile of all members of the governing body managing committee.


7. Board resolution regarding opening and operation of the account.

(vi) Association/ Club/ Charitable institution/ Trust/ Society (additional


requirement):
1. Certified true copy of the constitution/Bylaws/Trust/Deed/
articles of association.

Memorandum and

2. Certificate of registration of the association/ Club/ Charity/ Trust/ Society


(certified photocopy to be retained by bank and original to be returned after
authentication)
3. List of members of the Governing Body/ Executive Committee of the
Association/ Club/ Charity/ Trust/ Society with their address
4. List of Directors with address
5. Certified true copy of resolution of the Governing Body/ Executive Committee of
the association/ / Club/ Society/ Trust which should be consistent with the
Articles of Association.

4.2.3. New Deposit Products:

49

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)

Double Return Deposit Scheme (DRDS)


Enjoy higher return on your valuable Investment
IFIC Bank is pleased to offer 8 Years - Double Return
Deposit Scheme (DRDS) with special feature:
Minimum
Deposit

Term

Benefit

Tk. 25,000

8
Yrs.

Double return after 8 Years.


(subject to deduction of Tax & Excise
duty)

Remittance & bills section plays a very vital role in case of Banks Customer Service
Section. Roles & Responsibilities of remittance section knows no bound. The activities of
local Remittance are
Issue and payment of Pay Order (PO), Demand Draft (DD), and Saving
Certificate Issue (Sanchaypatra issue)
Execution of Inward and Outward Telegraphic Transfer (TT)
Non client services like Telegraphic transfer and Pay Order
Follow up with clients
Internal and local collection of cheque and bills

4.2.4. Demand Draft (DD) Issue:

50

Sometimes customers use demand draft for the transfer of money from one place to
another. It is must need for sending money out side Dhaka city. For getting a demand
draft, customer has to fill up an application from. The from contains date, name and
address of the applicant, signature of the applicant, cheque number (if cheque is given for
issuing the DD), draft number, name of the payee, name of the branch on which the DD
will be drawn and the amount of the DD. The form will be duty signed by duly signed by
the applicant and by the authorized officer. IFIC Bank Limited change 15% commission
on the face value of DD as service change.

3 Month profit Based Sanchaypatra (3MPBS)


Duration of this Shanchaya patra is 3 years. Any person who purchases this Shanchaya
patra can withdraw his/her interest in every 3 month but capital can be withdrawn after
the maturity period. Any single individual can buy 03 MPB Shanchaya patra up to TK.50
lac. And jointly can buy for up to TK. 1 crore.
Interest Rate: 11.50% after 3 years
After every three (03) month 2,875/=Tk. Will be given against 1 Lac. Taka.

Pensioneers Sanchayapatra:
Duration of this Shanchaya patra is 5 years. Any person who purchases this Shanchaya
parta can withdraw his/her interest in every 3 month but capital can be withdrawn after
the maturity period. Any single individual can buy Pensioneers Sanchayapatra up to
TK.30 lac.

Interest Rate: 12.50% after 5 year


After every three (03) month 3,125/=Tk. will be given against 1 lac Taka.

4.2.5. Pay Order

51

For issuing a pay order, the client is to submit an application in the prescribed form. This
form should be properly filled up and signed. The procedure of the issuing pay order is
similar to that of the Telegraphic transfer. For issuing pay order IFICBL changes
commission on the following rate-

Pay Order (Local) issuance

No change for account holder Tk20/for non-customers/clients

Pay Order (Local) cancellation

TK. 20/- per instrument

Issuance of Duplicate Instrument

Tk. 100/- per instrument plus stamp changes


for indemnity at actual.

Note: No change for army personnel

SOURCE: From interview with the In-change of remittance department of IFIC Bank
Ltd.
Payment of pay order: The pay order is present to the bank either through clearance or for
credit to the clients account. While payment, relative entry is given in the pay order
Regis tar with the date of payment.
Incase of collecting DD, PO, following things are to be carefully checked:

Instrument of IFIC Bank Limited.

Crossing seal

Clearing seal

Branch name

Amount same in word and figure

Signature verification

Avoid the stop order PO,DD

52

Test key verification. DD over TK. 25000 must have test key.

Maintenance of PO/TT/DD issue and payable books.

Balancing at the end of the month.

4.2.6. Clearing Section

Background History and Implementation of Automated Clearing House


Project of the Bank
As a part of modernizing the countrys payment systems, Bangladesh Bank has been
working to implement the Automated Clearing House Project and has announced recently
that same will go live on 07.10.2010 i.e. Bangladesh Automated Cheque Processing
System (BACPS). Another part of the project i.e. Bangladesh Electronic Fund Transfer
Network (BEFTN) will be implemented later on. Accordingly, BACPS went live on
07.10.2010. That means BACPS systems started from 07.10.2010.
It may be noted here that, 2(two) basic components of Automated Clearing House Project
includes Bangladesh Automated Cheque Processing System (BACPS) and
Bangladesh Electronic Fund Transfer Network (BEFTN). Initial implementation
program of Bangladesh Bank was:
1. Bangladesh Automated Cheque Processing System (BACPS).
2. Bangladesh Electronic Fund Transfer Network (BEFTN).
There are 2(two) types of operational procedure for BACPS as under:
Centralized System: Where instruments are being scanned and transmitted from
single point.

53

Decentralized System: Where instruments are being scanned and transmitted from
different branches.

Different implementation stages of the project are as under:


Printing of

MICR (Magnetic Ink Character Recognition) compliment cheque

& other security instruments & its circulation.


A dedicated communication link with Bangladesh Bank.
Hardware & software solution for ACH project (BACPS & BEFTN).
PBM (Participant Bank Module) & Training of participating banks. (Provided by
Bangladesh Bank)
Go live w.e.f. 07.10.2010

Bangladesh Bank from time to time has communicated the revised time frame for
implementation of the project and advised the Scheduled Banks to complete the above
mentioned task by following the work procedure mentioned bellow:

Inward Clearing
It is required that a bank has to have the ability to receive cheque images and data
electronically. The bank must process these images and data return the DATA only of the
return items electronically. Therefore, prior to the live operation of clearing, the bank
must establish the communication link to the Bangladesh Bank for receipt of data/images.
Put in place the computer system to receive and process the inward clearing. Each bank
will be provided a piece of software by Bangladesh Bank at no charge called the
Participating Banks Module (PBM). Bank has to purchase the necessary infrastructure
(PC and access to communications) to run this software.

54

Outward Clearing
Banks are required to put in place their equipment and software to capture the cheque
images and data and transmit the same to the BACH electronically. There are many ways
of handing this operation. A bank typically has to purchase cheque scanning equipment
which could range from small desktop scanner version which reads 30-150 items per
minute. The bank also needs specialized and proven software for the preparation of
correctly balanced outward clearing batches. These batches are then transmitted
electronically to the BACH through the banks PBM . Data entry and balancing has to be
handled by operators sitting at computer terminals.

The PBM
The PBM is an electronic gateway or interface between a bank and the BACH which
does validation, encryption and digitally signs the electronic files which will be
transmitted over the proprietary, secure network. This makes the transmission secure and
conforms to international standards. It is necessary for each bank to put in place
interfaces to integrate the data received from the PBM and presented to the PBM into
their own internal systems.

Bangladesh Automated Cheque Processing System (BACPS)


55

Operating Procedure
Items and Instruments Eligible for BACPS

( i ) Savings Bank Account Cheque.

(ii) Refund Warrant

(iii) Pay Order

(iv) Govt. Cheque

(v) Credit Card Cheque

(vi) Foreign Taka Demand Draft

(vii) Fractional Dividend Warrant

(viii) Current Account Cheque

(ix) Bankers Cheque

(x) Cash Credit Account Cheque

(xi) Dividend Warrant

(xii) Demand Draft

(xiii) Gift Cheque


(xiv) Interest Warrant

56

Standardized Instruments Common Features


Paper: CBS-1 (exp: Refund & Dividend Warrant)
Size 7.5 X 3.5
Uniform Design
Personalization
Microprint
Erasable Ink
MICR Code Line
UV Light

CLASSIFICATION OF BACPS ELIIGBLE ITEMS

57

The BACPS Cheque Envelope Creation process:


01 : Normal
05 : On-Us (possible future option)
11 : High Valued Item (Collection type set by Presenting Bank only)
21 : Normal Return
31 : High Valued Return

Clearing Sessions
Clearing Window

Cut Offs
Submission

Return

Settlement

Regular Clearing

13:00 hrs

18:00 hrs

18:01 hrs

High Value Clearing

12:00 hrs

14:00 hrs

14:01 hrs

Retry, if necessary, within 12:30 pm for RV and 11:40 am for HV

BACPS Type
1. Outward Clearing: This means sending information to BACPS.
2. Inward Clearing: This means receiving information to BACPS.

Return Reason Codes

58

Code

Reason

Re-Presentable(R)
Non Re-Presentable(N)

01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19

Insufficient Fund
Amount in figure and word differs
State Cheque
Post dated Cheque
Drawers signature differs
Payment stopped by drawer
Item represented too often
Incomplete/missing endorsement
Forget endorsement
Material alteration-payee name
Material alteration-amount
Material alteration-data
Material alteration-multiple fields
Forget or unauthorized signature
Missing signature
Missing corporate stamp
Incorrect amount
Item sent to the wrong bank
Image does not meet usability standards

R
N
N
R
N
N
N
R
N
N
N
N
N
N
R
R
R
R
R

20
21
22

Piggyback image
IQA failure
Account unavailable (closed, frozen, invalid
etc.)
Present with the physical document

R
R
N

Item missing advice


Duplicate Item-previously paid
Incorrect payee
High value item presented to an ineligible
branch

R
N
N
N

23
24
25
26
27

Clearing Section of IFIC Bank Limited


This department has two main jobs. They are as under
1. Outward cheque clearing

59

2. Inward cheque clearing

Outward Cheque Clearing:


Whenever any branch of IFIC Bank limited receives a cheque to be collected from any
other bank, Bank arranges the cheques separately by the name of different bank and then
it send to the respective bank for clearance with the use of the clearinghouse.

Before clearing
IFIC Bank Ltd general A/C

Debit

Clint A/C

Credit

After the cheque is honored by the collecting Bank


IBCA A/C

Debit

IFIC Bank Ltd general A/C

Credit

If the cheque is bounce or dishonored


Clint A/C
IFIC Bank Ltd general A/C

Debit
Credit

Inward Cheque Clearing

This is opposite flow of the outward cheque clearance. When other bank sends, the
cheque to IFIC Bank Ltd. For the clearing through CEARING HOUSE the technique
followed by IFIC Bank.

Foreign Exchange Business of IFIC Bank

60

Introduction
The report is based on the current Foreign Exchange Trend for IFIC Bank Ltd. It deals
with Export, Import and Remittance services that the bank provides, giving us the current

61

trend of business in each of this areas. In addition in-depth analysis of statistical data
covering the types of commodities, amount of foreign currency that is being traded has
also been covered in this report. But first let us take a look at the role of foreign trade in
Bangladesh.
Foreign Trade plays an important role in the economic advancement of every nation. So
the government of almost all developing countries including Bangladesh focuses on the
import and export relations of foreign countries. In our

country, the foreign trade is

controlled by Bangladesh Bank under the Import and Export Control Act, 1950. Here any
importer and exporter who are not registered with CCI &E are not allowed to import the
goods in the country or export goods to other countries. While the foreign Exchange
Business was becoming more complex and bounded by more rules and regulations, the
L/C is one type of undertaking that could reduce the risk and legalize the contract
between buyer and seller. And through the L/C, the contract between the importer and
exporter is given a legal shape by the Authorized Dealer-the bank. As the banks are
included in the process, the contract becomes more reliable for both the importer and
exporter to both the parties. While through the L/C a reputed bank guarantees the
payments for imported goods on the behalf of the importer, the exporter gets the
security for payment .Therefore , the Letter of Credit constitutes one of the most
important methods of foreign trade. All documentary credits covering

imports into

Bangladesh are subjected to the provisions of UCPDC500 (Union Customs and practices
for documentary credit 1993 revision ICC Publication 500).

4.3.2. Definition of Foreign Exchange


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

62

According to Mr. H. E. Evitt. Foreign Exchange is that section of economic science


which deals with the means and method by which right to wealth in one country's
currency are converted into rights to wealth in terms of another country's currency. It
involved the investigation of the method, which exchanges the currency of one country
for that of another, the causes which rented such exchange necessary the forms which
exchange may take and the ratio or equivalent values at which such exchanges are
affected.
Foreign exchange is the rate of exchange in the both countries currency.

4.3.3. Foreign Trade and Foreign Exchange

International trade refers to trade between the residents of two different countries.
Each country functions as a sovereign State with its set of regulations and currency. The
difference in the national of the exporter and the importer presents certain peculiar
problems in the conduct of international trade and settlement of the transactions arising
there from. Important among such problems are:
(a) Different countries have different monetary units;
(b) Restrictions imposed by countries on import and export of goods;
(c) Restrictions imposed by nations on payment from and into their countries;
(d) Differences in legal practices in different countries.

4.3.4. Principles of Foreign Exchange

The following principles are involved in Foreign exchange:


i) The entire system

63

ii) The media used


iii) The monetary unit

4.3.5. Legal Basis of Foreign Exchange Transactions


Foreign exchange transactions are performed under some legal regulations, as follows:

Foreign Exchange Regulation Act 1947

Import and Export Control Act- 1950

Customs Act-1969

The uniform customs and practices for documentary Credit (UCPDC) 1993
revision & International Chamber of Commerce Publication no 500, is also an
important law for settlement of terms and conditions between exporter and
importer in international trade.

Import Policy Issued by Ministry of Commerce

Export Policy Issued By Ministry of Commerce

International Rules Issued by International Chamber of Commerce (ICC)/


Uniform Rules and Practices

Different Foreign Exchange Circulars issued by Bangladesh Bank

4.3.6. Functions of Foreign Exchange


The Bank actions as a media for the system of foreign exchange policy. For this reason,
the employee who is related of the bank to foreign exchange, specially foreign business
should have knowledge of these following functions :-

64

i) Rate of exchange
ii) How the rate of exchange works
iii) Forward and spot rate
iv) Methods of quoting exchange rate
v) Premium and discount
vi) Risk of exchange rate
vii) Causes of exchange rate
viii) Exchange control
ix) Convertibility
x) Exchange position
xi) Intervention money
xii) Foreign exchange transaction
xiii) Foreign exchange trading
xiv) Export and import letter of credit
xv) Non-commercial letter of trade
xvi) Financing of foreign trade
xvii) Nature and function of foreign exchange market
xviii) Rules and Regulation used in foreign trade
xix) Exchange Arithmetic

4.3.7. Definition of L/C


On behalf of the importer if the Bank undertakes to make payment to the foreign bank is
known

as

documentary

credit

or

letter

of

credit.

A letter of credit is an instrument issued by a bank to a customer placing at the letters


disposal such agreed sums in foreign currency as stipulated. An importer is a country

65

requests his bank to open a credit in foreign currency in favor of his exporter at a bank in
the letters country. The letter of credit is issued against payment of amount by the
importer or against satisfactory security. The L/C authorizes the exporter to draw a draft
under is terms and sell to a specified bank in his country. He has to hand over to the bank,
will the Bill of exchange, shipping documents and such other papers as may be agree
upon between the exporter and the importer. The exporter is assured of his payment
because of the credit while the importer is protected because documents in respect of
export of goods have to be delivered by the exporter to the paying bank before the
payment is made.

4.3.8. Types of L/C


Revocable L/C
Irrevocable L/C
Confirmed L/C
Transferred L/C
Revolving L/C
Freely negotiating vs. Restricted L/C
Red clause L/C
Green clause L/C
Back to back L/C
Anticipatory L/C
Revocable L/C: A revocable credit may be amended or cancelled by the issuing bank at
any moment and without prior notice to the beneficiary. This type of letter of credit can
be revoked or cancelled at any time without consent of, or notice to the beneficiary.
Irrevocable L/C: An irrevocable credit constitutes a define undertaking of the issuing
bank (since it can not be cancelled without the agreement of all parties thereto.) Provide
that the stipulated documents are presented and the terms and conditions are satisfied by

66

the seller. An irrevocable credit can be either confirmed or unconfirmed depending on the
desire of the seller. Thus sort of credit is always performed to revocable letter of credit.
Sometimes, letter of credits are marked as either with recourse to drawer or without
recourse to drawer.
Transferred L/C: A transferable credit is one that can be transferred by the original
beneficiary in full or in part to one or more subsequent beneficiaries. Such credit can be
transferred once only. Fractions of a transferable credit can be transferred separately,
provided partial shipments are not prohibited.
Revolving L/C: The revolving credit is one, which provides for resorting the credit to the
original amount after it has been utilized. How much time it will be taking place must be
specially mentioned in the credit? The revolving credit may be either cumulative or noncumulative.
Red Clause L/C: When the clause of the credit authorizing the negotiating bank to
provide pre-shipment advance to the beneficiary is printed typed in red, the credit is
called Red clause letter of credit.
Back to Back L/C: The back to back credit is a new credit opened on the basis of an
original credit in favor or another beneficiary. Under back-to-back concept, the seller as
the beneficiary of the first credit offers it as security to the advising bank for the issuance
of the second credit. The beneficiary of the back-to-back credit may be located inside or
the outside the original beneficiarys country.
Anticipatory L/C: The anticipatory credits make provision for pre-shipment payment to
the beneficiary in anticipation of his effecting the shipment as per L/C condition.

6.9. Parties to a Letter of Credit

67

A letter of credit is issued by a Bank at the request of an importer in favour of an


exporter from whom he has contracted to purchases some commodity or commodities.
The importer, the exporter and the issuing bank are parties to the letter of credit. There
are however, one or more than one banks that are involved in various capacities and at
various stages to play an important role in the total operation of the credit.
i) The opening Bank.
ii) The Advising Bank.
iii) The Buyer and the Beneficiary.
iv) The paying Bank.
v) The negotiating Bank.
vi) The confirming Bank.
i) The opening Bank: The opening Bank is one that issues the letter of credit at the
request of the buyer. By issuing a letter of credit it takes upon itself the liability to pay the
bills drawn under the credit. If the drafts are negotiated by another bank, the opening
Bank reimburses that Bank. As soon as the opening Bank, issuing a letter of credit (L/C),
it express its undertaking to pay the bill or bills as and when they are drawn by the
beneficiary under the credit. When the bills are presented to or when antic is received that
bills have been presented to a paying or negotiating Banks its liability matures.
ii) The Advising Bank: The letter of credit is often transmitted to the beneficiary through
a bank in the letters country. The bank may be a branch or a correspondent of the opening
bank. The credit is some times advised to this bank by cable and is then transmitted by it
to the beneficiary on its own special form. On the other occasions, the letter is sent to the
bank by mail or telex and forwarded by it to the exporter. The bank providing these
services is known as the advising bank. The advising bank undertakes the responsibility
of prompt advice of credit to the beneficiary and has to be careful in communicating all
its details.
iii) The Buyer and the Beneficiary: The importer at whose request a letter of credit is
issued is known as the buyer. On the strength of the contract that he makes with the

68

exporter for the purchase of some goods that the letter of credit is opened by the opening
bank.
The exporter in whose favour the credit is opened and to whom the letter of credit is
addressed is known as the beneficiary. As the seller of goods he is entitled to receive
payment which he does by drawing bills under the letter of credit (L/C). As soon as he
has shipped the goods and has collected the required documents, he draws a set of papers
and presents it with the documents to the opening bank or some other bank mentioned in
the L/C.
iv) The paying Bank : The paying bank only pays the drafts drawn under the credit but
under takes no opening bank, by debating the latter accounts with it if there is such an
account or by any other measured up, between the two bankers. As soon as the
beneficiary has received payment for the draft, he is out of the picture and the rest of the
operation concerns only the paying bank and the opening bank.
v) The Negotiating bank: The negotiating bank has to be careful in scrutinize that the
drafts and the documents attached there to be in conformity with the condition laid down
in the L/C. Any discrepancy may result in refused on the part of the opening bank to
honor the instruments is such an eventuality the negotiating bank has to look back to the
beneficiary for refund of the amounts paid to him.
vi) The Confirming Bank: Sometimes an exporter stipulates that a L/C issued in his
favor be confirm by a bank in his own country. The opening this country to add its
confirming to the credit the bank confirming the credit is known as the confirming bank
and the credit is known as confirmed credit.

4.3.10. Contents of the L/C

69

Banks normally issued letter of credit (L/C) on forms which clearly indicate the banks
name and extent of the banks obligation under the credit. The contents of the L/C of
different Banks may be different .In general L/C contains the following information:i) Name of the buyer: who is also known as the accounted since it is for his account that
the credit has been opened.
ii) Name of the seller: Who is also known as the beneficiary of the credit.
iii) Moment of the credit: This should be the value of the merchandise plus any shipping
charges intent to be paid under the credit.
iv) Trade terms: Such as F.O.B and CIFv) Tenor of the Draft which is normally dependent upon the requirements of the buyer.
vi) Expiration date: Which is specified the latest date documents may be presented. In
this manner or by including additionally a latest shipping date, the buyer may exercise
control over the time of shipment.
vii) Documents required: Which will normally include commercial invoice consular or
customers invoice, insurance policies as certificates, if the source is to be effected by the
beneficiary and original bills of lading.

viii) General description of the merchandise: Which briefly and in a general manner
duly describes the merchandise covered by a letter of credit.

4.3.11. Procedures of Opening a L/C


The importer after receiving the proforma invoice from the exporter, by applying for the
issue of a documentary credit, the importer request his Bank to make a promise of
70

payment to the supplier. Obviously, the bank will only agree to this request if it can rely
on reimbursement by the applicant. As a rule accepted as the sole security for the credit
particularly if they are not the short of commodity that can be traded on an organized
market, such an arrangement would involve the bank in excessive risk outside its
specialist field. The applicant must therefore have adequate funds in the bank account or
a credit line sufficient to cover the required amount.
Banks deal in documents and not in goods. Once the bank has issued the credits its
obligation to pay is conditional on the presentation of the stipulated documents with in
the prescribed time limit. The applicant cannot prevent a bank from honoring the
documents on the grounds that the beneficiary has not delivered goods on redder reissues
as contracted.
The importer submit the following documents before opening of the L/C:
a. Tax Identification Number (TIN)
b. Valid Trade License.
c. Import Registration Certificate (IRC)
The Bank will supply the following documents before opening of the L/C:
a. LCA form.
b. Application and Agreement form.
c. IMP form
d. Necessary charge documents for documentation.
The above documents / papers must be completed duly signed and filled in by the party
according to the instruction of the banker.

4.3.12. Documentary Letter of Credit (Import/Export Documentation)

Documentary letter of credit is such kinds of commercial letter which a Bank issue on
behalf of foreign seller (exporter) according to the direction of the (importers) purchasers.

71

The documents shown under are known as export documents form the importer's side.
These are :(i) Bill of Exchange: The bill of exchange is that particular instrument through which
payment is effected in trade deals internal and international. The payment for the goods is
received by the seller through the medium of a bill of exchange drawn on the buyer for
the amount depending on the contract. It is a negotiable instrument. There are five main
parties involved in a bill of exchange. They are :(a) Drawer
(b) Drawee
(c) Payee
(d) Endorser
(e) Endorsee
(ii) Bill of lading: A bill lading is a document of title to goods entitling the holder to
receive the goods as beneficiary or endorsee and it is with the help of this document on
receipt from the exporter that the importer takes possession of the goods from the
carrying vessel at the port of destination.
(iii) Airway bill / Railway receipt: When goods to be transported are small in bulk or
requiring speedy delivery or those are perishable in nature on the deal is in between the
neighboring countries then mode of transports other than shipping may be resorted to far
the carriage of the goods Airways bill / Railway receipt take place of Bill of lading
depending on the nature of the carrier.
(iv) Commercial invoice: It is the seller's bill for the merchandise. It contains a
description of goods, the price per unit at a particular location, total value of the goods,
packing specifications, terms of sale, letter of credit, bill of lading number etc. There is
no standard form far a commercial invoice. Each exporter designs his own commercial
invoice form. The invoice is made out by the seller under his signature in the name of the
buyer and must be submitted in a set of at least 3 copies. Its main purpose is to check

72

whether the appropriate goods have been shipped and also that their unit price, total
value, marking on the package etc. are consistent with those given in other documents.
(v) Insurance policy: In the international trade insurance policy is a must to cover the
risk of loss on consignments while they are on seas, roads, and airways. The insurance is
the responsibility of the buyers (consignee) under FAS, FOB and C&F contracts and of
the seller (consignor) under CIF contract. The policy must be of the type as specified in
the relative contract / credit. The policy would be for the value of CIF price plus 10 (ten)
percent to cover the expenses and that is required to be obtained in the same currency as
that of the credit and dated not later than the date of shipment with claims* being payable
at the destination. It must be properly stamped. Like a bill of lading it must be negotiable
and be endorsed where it is payable to order.
(vi) Certificate of origin: This is a certificate issued by a recognized authority in
exporting country certifying the country of origin of the goods. It is usually by the
Chambers of commerce. Some times, it is certified by local consul or Trade
Representative of the importing country as per terms of the credit.
(vii) Packing list: The exporter must prepare an accurate packing list showing item by
item, the contents of the consignment to enable the receiver of the shipment to check the
contents of the goods, number and marks of the package, quality, per package net weight,
gross weight, measurement etc.
(viii) Weightment and Measurement: Issued by recognized authority (like chambers of
commerce and industry) in exporting country certifying correct weightment and
measurement of the goods exported.
(ix) Bill of entry: A bill of entry is a document which contains the particulars of the
imported goods as well as the amount of customs duty payable.

The exporters submit the following papers/documents to the Negotiating


bank:

73

i) Bill of exchange / Draft.


ii) Bill of lading.
iii) Airway bill / Railway receipt.
iv) Commercial invoice.
v) Insurance policy.
vi) Certificate of origin.
vii) Packing list.
viii) Weightment & measurement list.
ix) Other etc.
The negotiating bank after received the above documents / papers then this bank scrutiny
the documents. The negotiating bank sends the original shipping documents to the L/C
opening bank and keeping the second copy with the negotiating bank.

Payment Against Documents (PAD)


Banks deal in documents and not in goods. If the shipping document against the L/C is in
order then the L/C opening bank must have to payment to the foreign bank within 3 days
or 72 hours according as Uniform Customs and Practice for Documentary Credit
(UCPDC) 500 of revision of ICC.
If the shipping documents have any discrepancy, then the L/C opening bank informed to
the negotiating bank within 7 days. Otherwise, the shipping documents have not
discrepancy. If the importer have not adequate founds in the bank account then the bank
payment to the foreign bank against the shipping documents.

4.3.13. Operational Processes in IFIC Banks Foreign Exchange


Department
The International Division placed at the IFIC Banks head office at Motijheel is the
backbone of all international transaction that is conducted through the various branches
74

of the bank. A total of 22 branches of IFIC Bank have the license to carry out
international trade functions. Each of these AD branches have foreign exchange
department whose sole purpose is to carry out cross border transaction demanded by the
customers.
The functions of such Foreign Exchange Department can be divided into three
sections:
(a) Import Section
(b) Export Section, and
(c) The Foreign Remittance Section
The following is a brief description of each of these sections.

Import Section
This section deals with the import of foreign commodities into Bangladesh. It starts with
the opening of an L/C till the payments are made to the foreign exporters. The import
section is in turn is divided into two divisions. One division looks after Sight L/C and
another one looks after Back to Back L/C. The Basic difference between these two types
of L/C is that, sight L/C requires at sight payment for the imported items, the buyer
should pay within three days of documents arrival. And on the other hand, the issuance
period for Back to Back credit can range from two months to even a year depending on
the L/C terms.

Export Section
All Export departments of IFIC Banks branches are equipped with facilities that would
help an exporter ship their good beyond the nations boundary, thus earning foreign
currency for the country and majority of such customers for IFIC Bank Ltd are involved

75

in the Ready Made Garments sector with only a few exporting other different
commodities.

Foreign Remittance Section


Foreign remittance can be stated as the purchase and sale of freely convertible foreign
currency as admissible under Exchange Control Regulations of the country. Inward
remittance is the purchase and out ward remittance is the sale of foreign currency.
For purchase of foreign currency through IFIC Bank Limited, an application must be
made to a specific AD branch and Bangladesh Bank. The application form is called IMP
form if the purpose is import payments or for other purposes, the TM Form is used
such as request for foreign currency in case of dollar, T.C (Traveler Cheque) Foreign
Demand Draft(F.D.D),Telegraphic Transfer(T.T),etc. If the bank is empowered to
approve the application, it affects the sale of foreign exchange and if the transaction
requires prior Approval from Bangladesh Bank, the T.M form is forwarded to Bangladesh
bank. In IFIC Bank, the mode of remittances are

bank draft, mail transfer and taka

remittances.

Results and Implication


Every year the foreign transaction of IFIC Bank ltd has been on the rise contributing
more and more to the countrys economic growth. And the last few years were no
different with significant rise in remittance during the first four months of 2011. However
the import and export didnt show any signs of restrains and neither did it show any
changes in terms of commodities being traded, as the volume of trade kept on increasing.
Given below is a graph showing the foreign exchange trade of IFIC Bank during the past
few years:

76

Source: Annual report 2006


We see that there is a sharp rise in Foreign Trade business between 2005 and 2006
sources from annual report which had continued into 2011 as we will see in the upcoming
portion of this report.

(a) Export
Export is perhaps the most import form of international trade, because it is a way through
which a country can bring in foreign currency to increase its foreign reserve and gain a
favorable balance of payment. IFIC Bank Limited is as efficient at conducting Export
operation like any other services that they provide. They now have 22 AD branches,
which has the authority to carry out export operations. Various sorts of commodities are
exported abroad through IFIC Banks but Ready Made Garment consists of most of the
exports, earning huge amount of foreign reserve every year. Given below is the monthly
break down of export for the year 2009, 2010 and the first four months of 2011.

77

Value of Export (Amount in Lac USD)


Year
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Average

2009

2010

2011

791.35
735.06
804.18
708.78
684.97
661.27
631.74
647.00
630.85
496.81
627.31
565.08
7984.40
665.3666667

563.30
599.62
681.59
595.60
2586.19
1369.22
627.12
834.04
575.53
629.51
665.77
934.24
10661.73
888.4775

893.27
142.09
1001.71
884.97

2922.04
730.51

Value of Export for the Year 2009, 2010 and 2011 (January to April)
Source: Annul Report 2009, 2010,
Before we go in to any details regarding the chart, it is important that we have a clear
concept about the two modes of export payments that is practiced in international trade
worldwide. One is the Sight bill, where the exporter are paid at sight for the products
they just exported and the other one is the Usance Bill, where the exporter gets their
payment after a certain period of time depending on the L/C terms and condition. Usance
bills or Deferred Bills are usually for raw materials or semi finished products that are
exported from Bangladesh, and once they reach their final destination they undergo
further processing.
As we take a closer look at average column of the chart we will see that the average value
is increasing every year, and more importantly the average value of export for the first
four months of 2011 by itself has surpassed the average value of both the year 2009 and

78

2010. This gives us hope that 2011 could be a very promising year for Bangladesh in
terms of export. Given below is a bar graph of the same chart displayed above, and form
here I can draw some more conclusion about export at IFIC Bank Ltd.

Value of Export in terms of USD $


Source: Annul Report 2009, 2010

By looking at the bar graph above we can again emphasize on the fact that the first four
months export of 2011 by itself looks very promising and we can only wait and see how
much export is done in this year. From here, we can also conclude that Sight Bills are
more common than Usance Bills in Bangladesh, which simply means that finish products
are mostly exported from Bangladesh.

79

The Table Shown Below Growth of Export L/C Open in IFIC Bank
Limited:
Year
Month

L/C Opened in

L/C Opened in

L/C Opened in

2009

2010

2011(January to
April)

January
February
March
April
May
June
July
August
September
October
November
December
Total
Average

2327
2062
2592
2191
2207
2328
2166
1962
1977
1591
2370
2301
26038
2169.8333333

2212
2219
2633
2295
2577
2439
2154
2628
1937
1804
2213
2438
27549
2295.75

2253
2241
2836
2332

9662
2415.50

Source: Annul Report 2009, 2010

Number of Export L/C Open

80

Graph Shown Monthly Export L/C Open of 2009, 2010 & 2011 (1 st Four
Month)
Source: Annul Report 2009, 2010

Total Export L/C Opened at IFIC Bank Ltd


Year 2009 Year 2010
Percentage Growth
26038

27549

6%

Growth in Export L/C open during 2009-2010


Even though we have seen some changes in the type and amount of Commodities being
exported from Bangladesh, the value of total goods being exported from the country has
surprisingly experienced a growth of almost 6%.

(b)Import

81

Import is another primary form of foreign trade, where foreign commodities are brought
into the country for consumption. IFIC Banks has been providing this services to its
client since it began operation in 1986. Various sorts of commodities are imported in to
Bangladesh from Fast Moving Consumer Goods to Capital Machinery. The table shown
below growth of Import L/C open in IFIC Bank Limited:

Year
Month

L/C Opened in

L/C Opened in

L/C Opened in

2009

2010

2011(January to
April)

January
February
March
April
May
June
July
August
September
October
November
December
Total
Average

1441
1382
1948
1575
1590
1481
3128
1296
1534
1374
1646
3012
21407
1783.916667

1675
1204
2063
1641
1652
1523
1741
1922
1776
1831
1745
1595
20368
1697.333333

1911
1551
1995
1642

7099
1774.75

Source: Annul Report 2009, 2010

Number of Import L/C Open

82

Graph Shown Monthly Import L/C Open of 2009, 2010 & 2011 (1 st Four
Month)
Source: Annul Report 2009, 2010
Above we shown L/C open are increases month to month, reason behind such consumer
behavior is the fact that foreign products are thought to have higher quality than local
ones by our local people. The Second reason could be China, who is gaining market all
over the world by introducing all sorts of goods at a very cheap price.
The pie chart shown in the next page will give us clearer graphical presentation on the
matter.

Total Import L/C Opened at IFIC Bank Ltd


Year 2009
Year 2010 Year 2011(Jan-April)
21407
20368
7099
AV: 1783.916667 1697.333333
1774.75
Growth in Import L/C open during 2009-2010-2011

83

Import
Export
Remitance

June

July

August

Import Export and Remittance L/C Amount (USD) of IFIC Bank Kawran Bazar Branch
From June to August
Export is very high in the month of June because it is the last month of fiscal year and
new budget will effect the tax rate. So importers import their product early. Remittance
supply is improving in August before the Eid festival
Number of L/C

80

75
46

60
40
13

20
0

June

July

August

Number of import L/C of IFIC Bank Kawran Bazar Branch From June to August
Inconsistency of opening number of L/C between three months. In the month of June the
number of L/C opening is highest and the next month July is lowest.
Source: Kawran Bazar Branch

84

Even though we have seen some changes in the type and amount of Commodities being
imported into Bangladesh.
The pie chart below will provide us with further insight and comparison between the
commodities that has been imported during 2009 and 2010.

LC Opened in 2009

MACHINERY FOR MISC.


INDUSTRIES
7
CAPITAL MACHINERY
%
10
%
PETROLEUM
&PETROLEUM
PRODUCTS
0
%

CONSUMER
GOODS 11
%

OTHERS
12
%

INTERMEDIATE
GOODS 8
%

INDUSTRIAL
RAW
MATERIALS
52
%

LC Opened in 2010

MACHINERY FOR
MISC.
INDUSTRIES
7
%
CAPITAL MACHINERY
9
%
PETROLEUM
&PETROLEUM
PRODUCTS
0
%

OTHERS
12
%

CONSUMER
GOODS 15
%

INTERMEDIATE
GOOD
S 7
%

INDUSTRIAL
RAW
MATERIALS
50
%

Percentage of different Commodities being Imported during 2009 & 2010


Source: Annul Report 2009, 2010
85

Now if we want to compare the volume of different genre of goods being imported we
would see that most of the imports in Bangladesh are industrial raw materials and it
represents almost 50% of the total imports. Then we have Consumer Goods contributing
to 15% of the total import.

Growth in Export & Import L/C open during 2009,2010 & 2011(1st Four Months)
Source: Annul Report 2009, 2010

(c) Remittance
IFIC Bank has been providing its customer remittance services since its early operation.
Most of the remittance that comes into Bangladesh is from the Middle East. Until
recently, IFIC Banks remittance service didnt gain popularity as they didnt have proper
network with exchange houses aboard. However things have changed now, most of the
banks branches now have a separate desk for Western Union. They also have networks
with Spot Cash, which has networks all around the globe just like Western Union.
Given below is a chart showing the monthly inward of Foreign Currency in terms of USD
at IFIC Bank Limited

86

Year

Remittance Inward (Amount in Lac USD)


2009
2010

2011

Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Average

74.71
67.81
81.07
72.80
74.17
101.50
111.63
119.98
119.90
82.99
99.18
102.67
1108.41
92.3675

145.26
57.09
92.30
85.13
87.24
83.07
80.86
177.07
10.39
144.60
90.41
89.23
1142.65
95.22083333

62.55
69.34
76.24
62.39

270.52
67.63

Monthly Inward of Foreign Currency in Terms of USD $


Source: Annul Report 2009, 2010

Amount in Lac USD


2009
2010
Growth
Inflow of
USD

1108.41

1142.65

3.107%

Percentage Growth in inflow of Foreign Remittance

From the above two tables we can conclude that the inward of foreign currency is
increasing every year at IFIC Bank. The growth between 2009 and 2010 was about
87

3.107%. The inflow of foreign currency has taken a leap. If we look at the first four
month of 2011, we will see that the figures during those months are much higher than the
same months of the previous year. As I have told you earlier, the main reason behind this
is the new network that IFIC Bank has set up with different exchanges houses around the
globe. Moreover, such high figure could also be due to the regular increase in foreign
remittance over the years, as more and more people are option to work outside
Bangladesh. The bar graph below gives us a much clearer view about the inflow of
remittance.

88

Inflow of USD $

1,142.65
1160

1,108.41

870
580
290
Inflow of USD

2009

2010

1,108.41

1,142.65

Yearly Inflow of Foreign Currency 2009 and 2010 (Amount in Lac USD)
Source: Annul Report 2009, 2010

Monthly Inflow of Foreign Currency (USD)


Over 3 Year Period

Monthly Inflow of Foreign Currency from 2009 till 2011 (1st Four Months)
Source: Annul Report 2009, 2010,
89

Now if we look for some trend in terms of Remittance from the line graph below, we
would see that there is no specific patterns in-between the years, only that the Remittance
amount increase each year. But, the most interesting finding is that the inflow of foreign
Remittance increases sharply as the year begins to come to an end, starting from
September. This leads us to conclude, that Non Resident Bangladeshis (NRB) prefers to
send more amount of money at the end of every year, maybe because of the bonuses or
other year end monetary benefits that they might get during those periods.

Remittance Outward (Amount in Lac USD)


Year
2009
2010

2011

Month
January
88.52
February
67.01
March
52.91
April
73.21
May
54.56
June
65.10
July
64.04
August
57.63
September
62.79
October
67.32
November
83.81
December
67.48
Total
804.38
Average
67.03166667
Source: Annul Report 2009, 2010

71.52
65.78
68.60
71.48
63.14
79.87
80.23
74.11
37.59
73.75
68.92
61.07
816.06
68.005

76.73
77.52
77.33
75.58

307.16
76.79

Amount in Lac USD


2009
2010
Growth
Outflow
of USD

804.38

816.06

1.452%

Percentage Growth in outward of Foreign Remittance

90

Outflow of USD $

1160
816.06

870

804.38

580
290
Outflow of USD

2009
804.38

2010
816.06

Yearly Outward of Foreign Currency 2009 and 2010 (Amount in Lac USD)
Source: Annul Report 2009, 2010

Monthly Outward of Foreign Currency (USD)


Over 3 Year Period

91

Monthly Inflow of Foreign Currency from 2009 till 2011 (1st Four Months)
Source: Annul Report 2009, 2010

Amount in Lac USD

Yearly Inward and outward of Foreign Currency from 2009 till 2011 (1st Four
Months
Source: Annul Report 2009, 2010

Foreign Remittance Trend

92

Month Wise Trend of Foreign Remittance

Given below is a country wise breakdown of inflow of Foreign Remittance at IFIC


Bank Limited.
Source: Annul Report 2009, 2010

93

Findings

The datas used in this report are of the last few years only; it ranges form 2009 till the
first four months of 2011. Hence the statistical analysis that I get from this small base of
numerical datas might not be viable in the long run. Moreover, these datas themselves
are thought to have some discrepancies, hence may not provide us with the right
conclusion.
My aim in doing this project was to figure out the current trend of Foreign Exchange at
IFIC Bank Ltd, so that it could be used as an example for the overall foreign exchange
transaction of our economy. But however, IFIC Bank only represents a tiny fraction of the
foreign transaction that takes place in Bangladesh, and hence is not a strong indicator of
the overall economy.
While analyzing the import datas I have used numerical values from L/C opening
segments only and not the L/C payment datas. But in realty not all L/Cs opened are
fully carried out, some L/Cs may get cancelled, as a result my analysis is exposed to
such discrepancies.
No matter whatever the challenges are in the area of Foreign Trade, IFIC Bank is fully
equipped to face any obstacle. For the last 5 Years they have hold the Number 2 position
in the Bangladesh Banks CAMELS rating.
As the economy of Bangladesh is increasing so is the country foreign trade and IFIC
Banks like always have played its role in making sure that things go smoothly. However,
since sky is the limit, the bank is still evolving every day striving to provide its Foreign
Exchange customer and others with the best possible service.
Export, Import and Remittance are all showing positive trends even after the global
challenges that we are facing today. Hyped fuel and rice price all over the world along

94

with the countrys own political instability couldnt bring down the nations economy and
2011 still seems to be another promising year for us.

Industry Analysis
In our country, the banking sector today is undergoing significant changes with respect to
regulations, business risks, modus operandi, and level of services. There has been
increasing pressure on the commercial banks today to reduce lending rates. Banks are
also being challenged by requiring to create provision at the rate of 1 % (one percent) on
no funded credit portfolio. Furthermore, retail banking and small enterprise segment of
credit portfolio require a loan loss provision reserve to the tune of 2% (two percent).
Above all, the Bank Management is faced with the most important goal to ensure an
acceptable level of return on shareholders' investment.

SWOT Analysis
The Banks strength and competitive capabilities can be shown by the SWOT analysis.
The SWOT analysis is grounded in the basic principle that strategy making efforts must
aim at producing a good fir between a companys resource capability and its external
situation.

95

SWOT Analysis of International Finance Investment and Commerce


(IFIC) Bank Ltd at a Glance
Potential Resource Strength

Potential Resource Weaknesses

Goodwill

Work Manually

Strong Board of Directors

Limited Online banking facility

Skilled Employee

Lack of ATM facility

Better Service

Lack of internet banking facility

Less Employee Turnover


Huge Authorized Fund
Huge Reserve Fund

96

Huge geographic coverage


Strong Promotional activity

Potential Company Opportunities

Good chance of expanding

Potential External Threats

merchant bank etc.

geographically within Bangladesh.

Opportunity to take market share

Entry of new commercial banks &

Competitors are offering more

away from rivals by offering new

innovative products and services

innovative product or services.

regularly.

Bargaining power of customer is


increasing.

Continuous devaluation of money.

Potential Resource Strength in Details:

97

Potential Resource

Details

Strength
Goodwill

With Its high quality financial service IFIC Bank has now
established itself as one of the leading and strongest of
private sector Bangladeshi banks

Strong Board of
Directors

The sponsors of IFIC bank are reputed personalities in the


field of trade and commerce and their stake ranges from
shipping to textile and finance to energy etc.

Skilled Employee

IFIC Bank Limited follows a strict screening system during


appointing their employees followed by a very rigid
training period. Each and very employee of IFIC Bank
Limited has to go through on the job training for time to
time basis.

Better Service

IFIC Banks continuous firm commitment to excellent


customer service helped the bank to attain the remarkable
growth in many lines of business. IFIC Bank Ltd. Offers all
kinds of Commercial Corporate and Personal Banking
services covering all segments of society within the
framework of Banking Company Act and rules and
regulations laid down by central bank. Diversification of
products and services include Corporate Banking, Retail
Banking and Consumer Banking right from industry to
agriculture, and real state to software.

Less Employee

IFIC Bank firmly believes that consistently strong

98

Turnover

performance of the bank is the result of the team of


committed knowledgeable team of employees thus human
resource most valuable asset of the bank. IFIC bank
provide the employees right amount of motivation which
helps IFIC bank to achieve less employee turnover.

Huge Reserve Fund

According to the Annual report of the year 2009 authorized


capital of IFIC Bank Limited is 5350 Million Tk.

Huge geographic

fund of IFIC Bank Limited is Huge.

coverage

Strong Promotional
activity

According to the Annual report of the year 2010 reserve

Currently IFIC bank has more then 95 branches all over


Bangladesh.
IFIC Bank always tries to promote their products through
TVC, News Paper advertisements, Direct Sales Executive
etc.

Potential Resource Weaknesses in Details

99

Potential Resource Weaknesses

Details

Most of works of General Banking is done

Work Manually

manually. Like issuance of Cheque book or


any other instrument, which is, time
consuming and has high chances of
mistakes.

Not all branches of IFIC Bank Ltd have

Limited Online banking facility

online facilities, which detain them from


better serving their customers.

Lack of ATM facility

Lack of ATM facility is another weakness


New
New
of IFIC Bank Ltd. This makes IFIC Bank
comers
comersisis
Ltd less competitive then other PVT Banks
on
onbanking
banking
those who have ATM facilities.

Employee
Employee
turnover
turnover
tendency
tendency
Lack high
of
internet banking facility
high

Lack
Lackof
of
ATM
IFIC Bank Ltd dont
Provide
internet
ATM
banking facilities to its customers.

Weakness
Weakness
Most
Mostof
ofthe
the
employees
employees
are
arenot
not
adapted
adaptedinin
online
online
banking
banking

Marketing
Marketing
policy
policy

Insufficient
Insufficient
of
ofpaid
paidup
up
capital
capital

100

Potential Company Opportunities in Details:

101

Potential Company Opportunities

Good chance of expanding


geographically within Bangladesh.

Details

Although IFIC Bank Ltd has more than 95


branches all over Bangladesh it still have
scope

of

increasing

its

business

by

extending geographically.

Opportunity to take market share IFIC Bank Ltd can introduce new product
away from rivals by offering new
innovative product or services.

and services like internet banking, any time


banking, insurance service in order to
increase its market share.

102

Opportunity
Opportunity

Big
Bignetwork
networkthrough
throughbranches
branches

Aggressive
Aggressiveproduct
product

Market
Marketcapture
capturethrough
throughbranch
branch

Potential External Threats in Details:

Potential External Threats

Details

Entry of new commercial banks,

New

Commercial

banks

and

leasing

leasing companies and merchant

companies like Dutch Bangla, Citi NA,

bank etc.

HSBC, SCB, IDLC etc could became a


threat in the way of IFIC Bank Ltds
growth

Competitors

are

offering

more Like Dutch Bangla have their ATM booth

103

innovative products and services around every corner, All the accounts of

regularly.

HSBC, SCB, Citi NA have online facilities.

Bargaining power of customer is

Numbers of private banks are increasing

increasing.

day-by-day thus the choices of customers


are increasing day by day.

Continuous devaluation of money.

Continuous

devaluation

of

money

is

another threat for banking business.

104

Violence
Violence

Global
Global
Recessio
Recessio
nn

Govt.
Govt.
Interferenc
Interferenc
ee

Threat
Threat

Political
Political
System
System

Raising
Raisingof
of
New
New
Generation
Generation
Bank
Bank

Conclusion And Recommendation


105

Amidst all these changes during 2010, IFIC Banks business grew across all areas of our
operations, despite high commodity and energy prices, intensified competition in the
financial service sector and changing socio-economic conditions. The Bank did well as
compared to the market in terms of profit and turnover. Superior performance in each
operational area was achieved. Gross revenue of the Bank grew by 45 percent to reach
Tk. 10,083 million while operating profit increased by 53 percent to arrive at Tk. 3,257
million.
IFIC Bank Ltd is 'a bank with a difference', and during year 2010, the mission was once
again very well reflected both in terms of quantitative as well as qualitative measures by
securing superior performance in terms of operational growth, profitability, moving
towards implementation of the state-of the- art banking software solution, and expanding
the network by opening a handful of new branches at potential locations. During the
immediate past year, The bank has been consistently rated as the best local commercial
bank in the country.
The Bank has devised appropriate strategies and listed priorities that would be
implemented during year 2010 so that the Bank continues to perform better. The Bank
now has a network of 95 branches in Bangladesh, other country: Nepal 15 Branches,
Pakistan 2 Branches and Oman 7 Branches.

Recommendations

106

We all know that there is always room for improvement and sky is the limit. Even
thought the Foreign Exchange services that IFIC Bank Ltd is providing is top notch, there
is more they can do in order to make their services even better and of international
standards. Given below are some recommendations that the Bank may benefit from,

Increase the number of Nostro Accounts:


Nostro Accounts are Foreign Currency accounts that the banks hold with foreign Banks
operating in different courtiers. If they increase the number of such account then,
payments for L/C could be easily made through those accounts rather than forwarding the
foreign currency through other foreign banks, which results in higher expenses.

Automation
IFIC Bank has already brought software called MISYS, famous banking software which
is now being implemented to all of its branches. But however the employees are still
struggling to conduct foreign exchange services through this software because of its
complexity. And as a result valuable time and energy is being wasted while conduction
such foreign exchange services. Some further simplification and modification to the
software might actually help the bank gain momentum in providing international trade
services like Export, Import and Remittance.

Increase Limit on L/C Value


Every LC has limits on its total value, imposed on them according to the Bangladesh
Banks regulations, and based on the risk factors. However the Banks stills has the
authority to make some changes to the limit within a certain specified range. Hence, if
107

IFIC Bank is more flexible than it can open more L/Cs with higher values thus
increasing their profitability; however in this case they would be taking more risk.

Rate of interest on LTR


Payments for L/Cs could also made through pre arranged credit facilities that the
customer may have with the Bank. Usually, the rates of interest on these credits are
excessively high which actually discourages the customers. Reducing interest on such
credit facilities would actually induce the clients to do more global trade thus increasing
the banks profit as well as the well being of the countrys Economy.

LC margin BB
Before opening an L/C a customer is required to pay the bank a certain percentage of the
total L/C value in advance, called the margin. If IFIC Banks reduces the rate of margin
then perhaps they can attract more customers. At the moment, Companies with good
relationship with the banks only benefits with lower margin level over others.

Reduce Charges
In order to do any kind of foreign trade whether be it remittance, Export or even Import
charges are applicable everywhere. Charges includes, SWIFT charges (Charge for
sending the L/C electronically), Document Handling Charges, Stamps Charges as well as
VAT. If such charges could be reduced IFIC Bank will definitely attract more customers.

Relax restriction on certain products

108

IFIC Bank has put some restriction on the import of certain products due to bad
experience form the past. If they could ward of their fear and start importing such
products again they would definitely be adding few more figures to the banks profit.

References

109

Jacson, S. & Schuler R.(2006). Overall Banking Operation: A Partnership Perspective,


South- Western Publishing.
Smigel, L. M. (2005). Basic General Banking & Foreign Exchange Business, Delhi:
Replika Press Pvt ltd. Noe, R. A. (2005). Foreign Exchange Business, New york:
McGraw- Hill.

Bank Publications:
IFIC Bank Ltd (2010) Academic calendar IFIC, Dhaka
IFIC Bank Ltd (2006), Annual Report, IFIC, Dhaka.
IFIC Bank Ltd (2007), Annual Report, IFIC, Dhaka.
IFIC Bank Ltd (2008), Annual Report, IFIC, Dhaka.
IFIC Bank Ltd (2009), Annual Report, IFIC, Dhaka.
IFIC Bank Ltd (20010), Annual Report, IFIC, Dhaka.
.
IFIC General Banking Policy Book.

Web site:
www.ificbank.com 18 (Accessed on 15/09/11, 10.25 pm)
www.bangladeshbank.com (Accessed on 16/09/11, 9.11 pm)
www.wikipedia.com (Accessed on 18/09/11, 8.25 pm)

110