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Table of Contents

Executive Summary


Chapter 01: Introduction of the organization HSBC

1.0 HSBC Group World wide
1.1 HSBC Group business area
1.2 Banks under the HSBC Group
1.3 HSBC Vision Statement
1.4 Objectives of HSBC
1.5 HSBCs International Network
1.6 Country Classifications
1.7 International Brand
1.8 Corporate Character
1.9 Basic Drives
1.10 Products and Services
1.11 Private Banking
1.12 Commercial Banking
1.13 Corporate and Institutional Banking
1.14 Payments and Cash Management
1.15 Investment Banking
1.16 Group Business Principles and Value
2.0 HSBC Bangladesh
2.1 Scope of business in Bangladesh
2.2 Key information HSBC Bangladesh
2.3 Branches
2.4 Management of HSBC Bangladesh
2.4.1 Organizational Hierarchy
2.4.2 Chief Executive Committee
2.4.3 Functional Departments of HSBC
2.5 Different Activities of HSBC in Bangladesh
2.5.1 Personal Banking Services
2.5.2 Corporate Banking Services
2.5.3 Financial Institutions
2.5.4 ATM Centre
2.5.5 ATB centre
2.5.6 Payments and Cash Management
2.5.8 Amanah (Islamic Banking)
2.5.9 Information Technology (IT)
2.5.10 HSBC Universal Banking (HUB)
2.5.11 Trade Services
3.0 Network Service Centre (NSC)
3.1 Activities of NSC
3.2 Management
3.3 Clearing Department
3.4 Payment and Cash Management Department (PCM)


3.5 Remittance Department

3.6 Easy Pay Department
3.7 Treasury Department
3.8 MIS Department
4.0 SWOT Analysis
5.0 SWOT Matrix


CHAPTER 2 Introduction to the project

1.0 Origin of the report
2.0 Objectives
2.1 Broad objectives
2.2 Specific objectives
3.0 Rational of the study
4.0 Methodology
5.0 Scope
6.0 Limitation


CHAPTER 3 Objective wise discussions

1.0 Payment and Cash Management
1.1 General discussion
1.2 PCM Business Scenario
1.3 Payments and Cash Management products
1.3.1 Account management solutions
1.3.2 Transaction Management Solutions
1.4 Collection Management
1.5 Payments Management
1.6 Country Wide Collection
2.0 Remittance
2.1 Outward Remittance
2.1.1 Private Remittance
2.1.2 Official & Business Travel
2.2 Inward Remittance
2.2.1 Inward Remittance
2.2.2 Forms
2.2.3 General Principles and Precautions for purchasing
2.2.4 Foreign Currency (Bank) Notes
2.2.5 Travelers Cheques
2.2.6 Foreign Drafts and Cheques
2.2.7 Telegraphic Transfer (T.T)
3.0 Clearing
3.1 Cheques
3.1.1 Negotiability and Endorsement
3.1.2 Crossed Cheques
3.1.3 Cheque Deposited to Accounts with ASP Areas 30
3.1.4 Cheque alterations
3.1.5 Cheque as initial deposits to new accounts
3.1.6 Cheques in favor of limited company
3.1.7 Checking of Cheque
3.1.8 Cancellation of signature
3.1.9 Routine precautions

3.2 Limits of authority`

3.3 ENC risk evaluation
3.4 Certified Cheques
3.5 Cash withdrawal from accounts with Cheques
3.6 Stopped Cheques
3.7 Cheques returned unpaid
3.8 Instruction of en cashing offices
3.9 Currency of drawings
3.10 Commission and Charges
3.11 Time constraints
3.12 Letters of undertaking
3.13 Cheque return
3.13.1 Minor Technical error
3.13.2 Cheques Returned records
3.13.3 Cheques Returned in Error
3.13.4 Action to Be taken
3.14 Same Day Clearing
3.15 Normal Day Clearing
3.16 Return MIS in A Month




CHAPTER 4 Analyses on General Payment Procedures

1.0 NSC Activity volume in year of 2008
2.0 NSC Transaction volume in year of 2008
3.0 Payment and Cash Management
4.0 Remittance
5.0 Clearing


CHAPTER 5 Recommendations
1.0 Payment and Cash Management
2.0 Remittance
3.0 Clearing


CHAPTER 6 Conclusions



1.1 HSBC Group Business Area
The HSBC Group is named after its founding member, The Hongkong and Shanghai Banking
Corporation Limited, which was established in 1864 in Hong Kong and Shanghai to finance the
growing trade between China and Europe. Thomas Sutherland, a Hong Kong Superintendent of
the Peninsular and Oriental Steam Navigation Company helped to establish this bank in March
1864. Throughout the late nineteenth and the early twentieth centuries, the bank established a
network of agencies and branches based mainly in China and South East Asia but also with
representation in the Indian sub-continent, Japan, Europe and North America.
The post-war political and economic changes in the world forced the bank to analyze its strategy
for continued growth in the 1940s. The bank diversified both its business and its geographical
spread through acquisitions and alliances.
HSBC Holdings plc, the parent company of the HSBC Group, was established in 1991 with its
shares quoted on both the London and Hong Kong stock exchanges. The HSBC Group now
comprises a unique range of banks and financial service providers around the globe.

1.2 Banks under the HSBC Group

Many of the members have changed their name into HSBC, The Hongkong and Shanghai
Banking Corporation Limited to introduce the whole group under one brand name.
Midland Bank, one of the principal UK clearing banks, was acquired by HSBC Holdings in 1991.
Headquartered in London, the bank has a personal customer base of five and a half million,
business customers of over half a million, and a network of almost 1,700 branches in the United
Kingdom. Midland has offices in 18 countries and territories, principally in continental Europe,
with a number of offices in Latin America.
Hang Seng Bank, in which HongkongBank has a 61.1% equity interest, maintains a network of
146 branches in the Hong Kong SAR, where it is the second-largest locally incorporated bank
after HongkongBank. Hang Seng Bank also has a branch in Singapore and two branches and two
representative offices in China.
Marine Midland Bank, headquartered in Buffalo, New York, has 380 banking locations statewide. The bank serves over two million personal customers and 110,000 commercial and
institutional customers in New York State and, in selected businesses, throughout the United
Hongkong Bank of Canada is the largest foreign-owned bank in Canada and the countrys
seventh-largest bank. With headquarters in Vancouver, it has 116 branches across Canada and
two branches in the western United States.
Banco HSBC Bamerindus was established in Brazil in 1997. The bank has its head office in
Curitibank and a network of some 1,900 branches and sub-branches, the second largest in Brazil.
Hongkong Bank Malaysia is the largest foreign-owned bank in Malaysia and the countrys fifthlargest bank, with 36 branches. The British Bank of the Middle East (British Bank) is the largest
and most widely represented international bank in the Middle East, with 31 branches throughout
the United Arab Emirates, Oman, Bahrain, Qatar, Jordan, Lebanon and the Palestinian
Autonomous Area, including an offshore banking unit in Bahrain. The bank also has branches in
Mumbai and Trivandrum, India, and Baku, Azerbaijan, as well as private banking operations in
London and Geneva.
HSBC Banco Roberts was acquired in 1997. Based in Buenos Aires, it is one of Argentinas
largest privately owned banks, with 60 branches throughout the country.
Hongkong Bank of Australia has 16 branches across Australia. It is the flagship of the HSBC
Groups businesses there, operating under the name HSBC Australia, and providing a complete
range of financial services.
The Saudi British Bank, a 40% owned member of the HSBC Group, has 63 branches throughout
Saudi Arabia and a branch in London.
Other associated Group banks are British Arab Commercial Bank, The Cyprus Popular Bank and
Egyptian British Bank. Wells Fargo HSBC Trade Bank is a San Francisco-based joint venture
between HSBC and Wells Fargo Bank, providing trade finance and international banking services

in the United States through its offices in five western states and in conjunction with Wells
Fargos 31 regional commercial banking offices in 10 western states. In addition, the Group has a
non-equity strategic alliance with Wells Fargo Bank, which provides access to a wide range of
banking services through that banks more than 1,900 staffed outlets. The Group also has a nonequity alliance with Wachovia Corporation, one of the leading corporate banks in the United
States, with business relationships in 40 states.

1.3 HSBC Vision Statement

We aim to satisfy our customers with high quality service that reflects our global image as
premier international bank


1.4 Objectives of HSBC

To beat mean Total Shareholder Return performance of a peer group of financial institutions over
a three-year rolling average, with a minimum objective to double shareholder return value in five
HSBCs objectives are to provide innovative products supported by quality delivery of systems
and excellence customer services, to train and motivate staffs and to exercise social responsibility.
By combining regional strengths with group network HSBCs aim is to be the one of the leading
banks in its principle markets. HSBCs goal is to achieve sustained earnings growth and to
continue to enhance shareholders value.

1.5 HSBCs International Network

The HSBC Group's international network comprises of some 10,000 offices in 83 countries.

1.6 Country Classifications

To ensure that the key resources (management time, capital, human resources and information
technology) are correctly allocated and that the exchange of best practice is accelerated between
entities, the group has classified the countries where it operates into 3 categories: the large, the
major and the international.
These classifications are a function of sustainable, attributable earnings, the number of retail
clients, balance sheet and size of operation.
A brief presentation of this classification is shown below:


United Kingdom, USA and Hong Kong SAR/Mainland China.

Argentina, Canada, India, Malaysia, kingdom of Saudi Arabia, Singapore
and United Arab Emirates.
International: The Rest of the World.

1.7 International Brand

A key part of the Groups business strategy, announced in 1998, is the creation of a global brand
featuring the HSBC name and hexagon symbol. The symbol is now a familiar sight around the
world. The Group has embarked on the next phase making the HSBC brand universally
synonymous with its core values of integrity, trust and excellent customer service.

1.8 Corporate Character

HSBC is a prudent, cost conscious, ethically grounded, conservative, trustworthy international
builder of long-term customer relationships.

1.9 Basic Drives

HSBCs basic drives are Higher Productivity, Team Orientation, and Creative Organization &
Customer Orientation.
The essence of HSBC brand is integrity, trust and excellent customer service. It gives confidence
to customers, value to investors & comfort to colleagues.

1.10 Products and Services

Personal, commercial, corporate, investment and private banking; trade services; cash
management; treasury and capital markets services; insurance; personal and business finance;
pension and investment fund management; trustee services; and securities and custody services.

1.11 Private Banking

It includes investment, fund management, asset management and protection, financial advice, tax
and trust. Private Banking is part of the Investment Banking division of the HSBC Group and
services offered will vary from country to country.

1.12 Commercial Banking

It includes finance, payments and cash management, electronic banking, merchant services, trade
services, custody, leasing, and factoring. Commercial banking services offered will vary from
country to country.

1.13 Corporate and Institutional Banking

As one of the world's largest banking and financial organizations with an extensive global
capability, the HSBC Group is a major player in the Corporate and Institutional banking market.
HSBCs clients are the major multi-nationals. To meet their needs HSBC created Global
Relationship Management teams across 79 countries and territories.

1.14 Payments and Cash Management

Effective cash management is more than a simple product or service - it is about implementing a
strategy for managing customers cash flow that is focused on their long-term goals, yet flexible
enough to adapt to change.
Through the process of listening to individuals needs and then acting in partnership to deliver the
right solutions, HSBCs is committed to helping the clients make the most of their financial
HSBC operate on a global basis, but also work on a local level to ensure the cross-border
differences are identified and any related benefits exploited. HSBC teams of specialists ensure
that whether you need solutions across the world, regionally or locally, they have the skills,
expertise and resources to deliver them. They automate as many functions as possible, whilst
ensuring clients to retain control.

1.15 Investment Banking

Investment Banking and Markets brings together the advisory, financing, equity securities, asset
management, private banking and trustee, private equity and treasury and debt capital markets
activities of the HSBC Group. Resourced by over 10,000 staff around the world, Investment
Banking and Markets operates through dedicated offices and via the Group's commercial banks'
network in 81 countries and territories. It offers a full spectrum of services for the Group's
corporate, institutional and retail clients. By drawing on local commercial market knowledge and
international product expertise, the Investment Banking and Markets business is able to provide
an excellent combination of global coverage and local market penetration.

1.16 Group Business Principles and Value

The HSBC Group is committed to Five Core Business Principles:
Outstanding customer service;
Effective and efficient operations;
Strong capital and liquidity;
Conservative lending policy;
Strict expense discipline;
HSBC Operates According to Certain Key Business Values:
The highest personal standards of integrity at all levels
Commitment to truth and fair dealing
Hand-on management at all levels
Openly esteemed commitment to quality and competence
A minimum of bureaucracy
Fast decisions and implementation

Putting the Groups interests ahead of the individuals

The appropriate delegation of authority with accountability
Fair and objective employer
A merit approach to recruitment/selection/promotion
A commitment to complying with the spirit and letter of all laws and
regulations wherever we conduct our business.
HSBCs reputation is founded on devotion to these principles and values. All actions taken by
a member of HSBC or staff member on behalf of a Group company should conform to them.


2.1 Scope of business in HSBC Bangladesh
The HSBC Asia Pacific group represents HSBC in Bangladesh. HSBC opened its first branch in
The Hongkong and Shanghai Banking Corporation Bangladesh Ltd. primarily limited its
operations to help garments industry and to commercial banking. Latter, it is extended to
pharmaceuticals, jute and consumer products. Other services include cash management, treasury,
securities, and custodial service. Realizing the huge potential and growth in personal banking
industry in Bangladesh, HSBC extended its operation to the personal banking sector in
Bangladesh and within a very short span of time it was able to build up a huge client base.
At this time HSBC Bangladesh is providing a wide range of services to both individual and
corporate level customers. HSBC in Bangladesh also specializes in self-service banking through
providing 14-hour ATM services. Currently HSBC Bangladesh is offering five off-site ATM
booths and five Branches, along with ATM booths, for better satisfying those geographic
segments, located at various geographical areas of Dhaka & Chittagong.

2.2 Key information of HSBC Bangladesh

Name of the Organization:
Year of Establishment:
Head Office:
Nature of the organization:
Number of Offices:
Number of ATMs:
Number of employees:

Service Coverage & Customers:

2.3 Branches
1. Dhaka Main Office- DAK

The Hong Kong Shanghai Banking Corporation

Bangladesh LTD
Anchor Tower, 1/1-B Sonargaon Road
Dhaka 1104, Bangladesh
Multinational Company with subsidiary group in
HSBC group shareholders
1000 (Approx.)
Savings & deposit services
Loan products
Corporate and Institutional services
Payments and Cash Management Products
Trade services
Day & Night Banking
Amanah (Islamic Banking)
Offers full online banking from branch to branch
and also from Dhaka to Chittagong and Sylhet
Serves individual and corporate customers
within Dhaka, Chittagong and Sylhet



Gulshan Office- DGU

Motijheel Office- DMO
Chittagong office- CHG
Chittagong EPZ Office (GEC)
Sylhet Office- SYZ
Uttara Office- DUT
Dhanmondi- DHA
Banani Office- BAN
Amanah Finance

2.4 Management of HSBC Bangladesh

In Bangladesh HSBC follows a 4-layer management philosophy. These are Managers, Executives,
officers & Assistant officers. The top most authority of all the levels is the CEO. All Managers
are the departmental heads who are responsible for the activities of their departments. They are
the heads of their respective department and formulate strategies for that department. The
Executives have the authority next to managers. They are ultimately responsible for certain
activities & organizational functions. Officers are the next persons to stand in the hierarchy list.
These officers are responsible for managing the operational activities and operating level
employees. Assistant Officer (AOs) fill the last layer of this hierarchy; this is the entry-level
position in HSBC Bangladesh. They perform day-to-day operational activities and maintain close
relationship with the end customers of HSBC.
2.4.1 Organizational Hierarchy
An organizational hierarchy is shown below:
2.4.2 Chief Executive Committee
The organizational structure of HSBC Bangladesh is designed according to the various service
and functional departments. The Chief Executive Officer (CEO) heads the chief executive
committee, which decides on all the strategic aspect of HSBC. The CEO is the person who
supervises the heads of all the departments & also is the ultimate authority of HSBC Bangladesh
& responsible for all kinds of activities of HSBC Bangladesh & all its consequences.
The structure of this top-most authority is shown as below:

Figure No. 4.1: Executive Committee of HSBC, Bangladesh.

2.4.3 Functional Departments of HSBC

2.5 Different Activities of HSBC in Bangladesh

As one of the largest international banks in Bangladesh, HSBC has a long-term commitment to its
customers and provides a comprehensive range of financial services: personal, commercial and
corporate banking; trade services; cash management; treasury; consumer & business finance; and
securities and custody services.
2.5.1 Personal Banking Services
The Hongkong and Shanghai Banking Corporation Limited offers a full range of personal
banking products and services designed to take care of its customers growing needs and
requirements. HSBC in Bangladesh has launched a number of unsecured loan and service
products. These are mentioned briefly as under :
My Loan :
Car loan, Home loan, Travel Loan, Lifestyle Loan, Professional Loan, Motorbike Loan
Student Loan, Furnitue Loan, Wedding Loan, CNG Conversion Loan
My Future :
Children Savings Plan, Education Savings Plan, Holiday Savings Plan, Peace of Mind Savings
Plan, Retirement Savings Plan.
Personal Financial Services :
Travellers Cheque, Savings Plus, Current Account, Savings Account, Daily Money Management,
Phone banking, ATM Cards, Bangladesh International, a Deposit product for non resident
Bangladeshis, Corporate Employees Scheme, Power Vantage, Personal Secured Loan, Personal
Secured Credit, Credit Card.
Savings & Investments
Monthly interest bearing time deposit, Term deposits, Investment Watch.
2.5.2 Corporate Banking Services
The Hongkong and Shanghai Banking Corporation Limited offers a wide range of cash financing,
working capital, short and medium-term loans and guarantee facilities from its Head Office and
Chittagong branch. The Offshore Banking Unit (OBU) provides US Dollar denominated working
capital as well as short-term finance for capital imports to eligible businesses. Using high-speed
communication links, HSBC connects customers to international payment systems.
The Corporate Banking products launched by HSBC Bangladesh are briefly mentioned below:
Business Banking, Corporate Credit.
Trade Services :
Export Services, Import Services, Trade Services, Electronic Banking
2.5.3 Financial Institutions
HSBC provides global trade services and cash management services to local banks. HSBCs
worldwide network strength, with over 10,400 offices in 81 countries and territories, coupled with
a world class reputation in Trade Finance (Best Trade Documentation Bank Euro money) and
an unparalleled presence in Asia (Best Bank in Asia Euro money), places HSBC in an ideal
position to render unmatched correspondent banking services.
HSBCs commanding presence in the USA (4th largest USD clearing bank globally), UK (largest
GBP clearing bank globally), and the Euroland (largest Euro clearing bank in the UK) both in
terms of network strength and clearing ability allows the Bank to also provide first class cash
management solutions in 2 major global currencies; the US dollar, Pound sterling and the Euro.
2.5.4 ATM Centre
The ATM center ensures smooth operation of the ATM machines that are located at Dhaka and
Chittagong. The ATM center is responsible for regular replenishment of the off-site ATMs and

servicing of all the ATMs. Currently a total 11 ATMs are in operation. The ATM center also
deals with issuance, termination and servicing of the ATM cards. On a whole, the ATM center is
the department that is solely responsible for all the activities related to ATM and is the facilitating
department that enables customers 14 hour banking support.
2.5.5 ATB centre
ATB refers to Automated Tele Banking. This department deals with the back office servicing of
the HSBC phone banking services provided to customers. This department is basically
responsible for the activation of ATB, ATB pin generation, and ATB security management, ATB
blocking and troubleshooting of all ATB problems. This department is fairly new and was
constructed on January1001. Currently this department is staffed with one executive and one
2.5.6 Payments and Cash Management
HSBC Bangladesh has introduced a number of Payments and Cash Management Products These
Accounts Management Service
Payments & Collection
Hexagon Cheque Writer
Electronic Banking
HSBC was the pioneer in introducing electronic cash management solutions in Bangladesh, by
introducing its state-of-the-art proprietary software, Hexagon, back in 1997. This was initially
made available to corporate clients only but has since been expanded to include banks and retail
With Hexagon, the Banks proprietary cash management system, corporate customers can access
banking services from anywhere in the world to view account balances and statements, make
transfers and international payments, and to open documentary credits, by using only a PC, a
modem and a telephone line.
HSBCs Electronic Banking Platform
HSBC maintains one of the worlds largest private data
communications networks and one of their most successful customer
service driven technological innovations is Hexagon. Hexagon
provides corporate and institutional customers with PC access to
cash management services, trade services, securities services and other information through a
single-platform using a fully integrated proprietary system. There are about 60,000 Hexagon
users worldwide, with more than 120 corporate customers in Bangladesh.
Hexagon provides powerful tools to the customers to monitor their accounts from anywhere, at
any time of the day or night: Balance and transaction information is available 14 hours day, 264
days a year. Balances can be reviewed and reported in a variety of ways by account, bank,
currency and location.
Transaction Capabilities of Hexagon:
Full payment capabilities (third party/inter-company) in over 40 currencies globally.
Paper-based and electronic payments may be generated.
Automatic routing via the most effective means using HSBC s links to all its branches.
Repetitive payment/transfer instructions can be stored in secure templates.
Payments can be initiated in offline mode and stored for later amendment and/or
Payment instructions can be imported from the customers back office system.
Hexagon can support future value dated transactions up to 44 days.
Time Deposits:
Hexagon may also be used to make Time Deposits in a variety of currencies and
Deposit details may be sorted in different categories to simplify portfolio management.

Instructions may also be given for the settlement of deposits on maturity.

Hexagon Cheque Writer :
Hexagon Cheque Writer product is the latest addition in the Payments and Cash Management of
HSBC. It is a cheque-writer product built-in module of Hexagon that will facilitate the customers
to prepare, print and update the PC ledger (ledger maintained in Cheque Writer). The cheques
printed through Hexagon Cheque Writer will continue to update the PC Ledger and thus help the
reconciliation of the cheque presented with the account statement.
System Security of Hexagon :
HSBC has full contingency arrangements for all operating systems and maintains a mirror
computer site in Hong Kong, which will provide back up in the rare event of a central system
failure. This site supports the entire Asia Pacific. Specific recovery plans are also in place in
In summary, Hexagon can meet customers all payment needs, streamlining administration,
improving productivity and offering a single platform from which to initiate all payment types,
including payroll, local operating expenses and third party invoices.
The HSBC Group handles over 100 transactions every second, 14 hours a day, 264 days a year.
In 1999/00, they spent more than USD1.1 billion on developing and running computer systems
and a further USD400 million on hardware and software purchases. Globally, the HSBC Group
employs over 6,000 I.T. professionals and is one of the largest originators of SWIFT traffic in the
HSBC is continually making enhancements of the Hexagon system to keep pace with advances in
technology and to meet their customers ongoing requirements. Technology is vital to their future
success and their overriding aim is to deliver faster, user-friendlier and more attractive services
with enhanced functionality.
2.5.8 Amanah (Islamic Banking)
HSBC Bangladesh have opened a separate branch at Gulshan to provide Full Service Islamic
Banking with an Amanah ATM. Through this branch HSBC Bangladesh have launched the
following products:
Amanah Current Account
Amanah Import Finance
HSBC Shariah Supervisory Committee
Amanah Day & Night Banking
2.5.9 Information Technology (IT)
HSBC has a department which gives the software and hardware supports to different departments
of the bank. As HSBC is engaged in online banking, the role of IT is very crucial for the bank.
This department is the most active department of HSBC where employees always stand by to
solve any problems in the system. The managers and executives of IT division work continuously
to develop the total IT system of HSBC so that it can be operated with ease, accuracy and speed.
2.5.10 HSBC Universal Banking (HUB)
This department can be described as the Power House of HSBC Bangladesh. The HSBC
banking system is called HUB. HSBC does the online banking and it is HUB, which sets up the
parameter for that. This HUB is linked with the HSBC group via satellite and each and every
transaction made by HSBC within Bangladesh is being recorded at the HSBC Asia-pacific
headquarters at Hong Kong via HUB. Thus the HUB is the most powerful and important
equipment of HSBC Bangladesh that monitors and tracks any fraud and faults made with HSBC
2.5.11 Trade Services
As the leading provider of trade finance and related services to importers and exporters in Asia,
HSBC in Bangladesh operates a highly automated trade-processing network and offer an
Electronic Data Interchange (EDI) capability through Hexagon. The Bank also uses SWIFT, an
efficient and secure mechanism for bank-to-bank global communications used for all trade related
activities including fund transfers and issuance of DCs (Documentary Credit).
The trade service department has two separate subsidiaries: Credit Administration & Foreign
Exchange Division.

(i) Credit Administration

Credit Administration department basically deals with all the documentation, processing,
administration and disbursement of the import-export services provided to corporate clients. This
department is known to be the heart of HSBC trade services that administers and manages all the
trade tools and facilities provided by HSBC Corporate Banking. Some important aspects of this
department are LC advising, documentation, OD facilities, guarantees, etc.
(ii) Foreign Exchange Division
The For-ex division of trade services is solely concerned with the management of Foreign
exchange inflow and outflow. The For-ex division of trade service in relation with NSC and FCD
manages the foreign currency traffic of HSBC that originates from Corporate Banking and trade


3.1 Activities of NSC
Network Service Centre (NSC) can be described as the Power House of HSBC Bangladesh. It
does the back office job for the bank. The main jobs that are performed by NSC are shown as
under :
Scanning of signature cards
Issuing checkbooks
Sending & receiving Remittances
Payment & Cash Management (PCM)
Easy Pay
Institutional Banking
Network Service Centre (NSC) of HSBC, Bangladesh is situated on a corner of a busy road at
Motijheel Commercial Area. It is very near to Bangladesh Bank and as such it has the
convenience to do all Bangladesh Bank related jobs. It serves a wide geographical area consisting
of Motijheel, Paltan, Old Dhaka, Fakirapool, Shahjahanpur, Khilgaon, Shantinagar and other
adjoining areas.
Office Timing :
The Centre opens for the individual customers from 9:00 am to 2:00 pm and for the corporate
client from 9.00 am to 4.00 pm Sunday through Thursday. In Network service centre we have a
ATM machine for the customers which allowing customers to have access to their accounts 14
hours a day.

3.2 Management
The Branch Manager heads all the departments and is the topmost authority of the branch. The
Manager generally monitors smooth functioning of all the departments and ensures that all the
departments are operating according to rules and regulations. He is assisted by two Assistant
Managers and other officers. An Organogram
presented below:

Assistant Manager

Assistant Manager
Easy Pay





3.3 Clearing Department

This Clearing Department of NSC looks after the clearing process of HSBC and makes necessary
contact with the central bank for maintaining account flows. All branches of HSBC in Dhaka City
send cheques & other instruments to NSC for clearing. In this Clearing Department receives those
cheques, attends Clearing House at Bangladesh Bank and ensures receipt of payment against
those cheques. Similarly, while attending Clearing House, it receives cheques and other
instruments from other banks and ensures their payment.

3.4 Payment and Cash Management Department (PCM):

Payments and Cash Management is a core business for the HSBC group. The objective of
Payments & Cash Management is to be the premier payments & cash management service
provider in Bangladesh by delivering responsive and integrated solutions to customers.
HSBC's Payments and Cash Management services are designed to help its clients to operate
efficiently, profitably and with comprehensive support. The aim is to provide a service that takes
full account of the customers' local needs using the expertise and the unrivalled resources of the
HSBC. Through the process of listening the customer's needs, HSBC then acts in partnership to
deliver the right solutions.
HSBC operates on a global basis, but also works on a local level to ensure the cross-border
differences are identified and any related benefits exploited. The bank's teams of specialists
ensure that whether customer needs solutions across the world, regionally or locally, they have
the skills, expertise and resources to deliver them.
Payments & Cash Management Department (PCM) at NSC delivers the following products to
their customers:
Accounts Management Services
Payments & Collection
Hexagon Cheque Writer
Electronic Banking

3.5 Remittance Department

Remittance is a banking term, which means Transfer of funds through banks. When a bank
remits on behalf of its customers, it is termed as outward remittance. On the other hand, when the
bank receives the remittance on behalf of the customer, it is inward remittance. The following are
the methods that NSC use to remit money for customers: Telegraphic Transfer (TT), Demand
Draft (DD) & Cashiers Order.
There are two types of Remittance: (1) Inland Remittance (within the country) and (1) Foreign
Remittance (To and from foreign countries).
The Remittance Department of NSC performs the following jobs :
Inland Remittance
Foreign remittance
Receives information on Foreign Remittance from all HSBC branches.
Compiles data on the basis of information received.
Submits Returns to Bangladesh Bank.

3.6 Easy Pay Department

Easy Pay is a product innovated by HSBC Bangladesh providing service to their customers for
making payment of their Utility Bills (WASA, DESA, Gas & Phone Bills) very easily and
The Easy Pay Department at NSC has a booth where customers come and drop their Utility Bills
along with payment in form of cash or cheque or Credit Card etc. HSBC acknowledges receipt
and later arranges to make payment to the relevant Utility authorities.

3.7 Treasury Department

The main job of this Department is to take decisions regarding purchase and sell of foreign
Currency. The purpose of Treasury's operations is to utilize the funds effectively and arrange

funds at a lowest possible rate of interest, through maintaining effective relationship with other
banks and following the Government rules and foreign exchange regulations

3.8 MIS Department

This Department at NSC maintains and upgrades Database and provides MIS updates on different
issues to Management / Branches / Sales Teams on a routine basis. The Department also
generates different Management Information reports regarding business development,
delinquencies, income & cost, recovery & funding, profit & loss etc. Thus this Department plays
an important role in maintaining efficiency of HSBC Bangladesh.


At the corporate level, the strategic management of an organization involves in environments
scanning for performance evaluation. The management examines both the external environment
for opportunities and threats and the internal environment for strengths and weaknesses. Internal
factors that affect the activities, influencing the way an organization develops are known as
strengths as well as weaknesses of that organization. On the contrary the external factors which
have an impact on organizational activities are the opportunities and threats towards it. The
factors are referred to as strategic factors and will be summarized over here acronym SWOT
standing for S-Strengths, W-Weakness, O-Opportunity, T-Threats. Once these strategic factors
are identified from bottom to top-level management, they will evaluate the factors and determine
the corporate mission. Finally their performance is evaluated and information is initiated in to the
system and a program so that adequate control of organizational activities is required.
A SWOT matrix was developed for HSBCs Bangladesh on the basis of the general payment
procedures due to effective management system and the weakness it is going through due to its
internal limitations. The SWOT matrix was developed by relating the opportunities and threats
HSBC is foreseeing at the present time the management of HSBC can scrutinize both the external
environment for opportunities and threats and the internal environment for strengths and
weaknesses. Internal factors that affect the activities, influencing the way HSBC develops are
considered as strengths as well as weakness of that organization. The first step in the strategy
formulation is the corporate mission that leads to the determination of corporate objectives,
strategies and policies which can be implemented through programs, budgets and procedures.
Finally their performance is evaluated and information is clarified into the system and a program
so that adequate control of organizational activities is required.


Strengths: (S)
Weakness: (W)
HSBC has the largest network
HSBC has limited number of cash
banking around the world. Therefore,
management clients.
it can come up with its successful
High cost of fund.
Cash Management products in
Higher tariff charges than local
Strong global brand image.
They dont have many types of Cash
HSBC has the global electronic
Management Products.
banking system Hexagon which
Less reputation and recognition
woks globally.
among the corporate clients.
Opportunities: (O)
Threats: (T)

HSBC can come up with new

Multinational banks may merge with
Cash Management products like Web
local banks to provide good services.
Bank, payments plus.
The local banks may provide this

Scope of new PCM products in

Cash Management service with free
the market.
of cost.

Engage in different social
welfare activities.

Implement the inter branch

clearing system.

Fear of losing market share of

existing PCM market.
Price war.
Large network of the established
local banks.


Banking has become one of the most essential sectors of a persons business as well as integral
life. These days we cannot think a single day without banks. Payment of bills, big medium or
small business as well as every single aspect of an individuals financial attribute is interlinked
with banking.
For this particular reason I decided to do my internship on one of the leading financial institution
of the world, namely The Hongkong Shanghai Banking Corporation. The brand HSBC with
its Hexagon symbol is known and renowned all over the world. The bank is considerably new in
Bangladesh with respect to its past history of over 100 years from its inception in British ruled
Hong Kong and its own culture. I consider myself fortunate to obtain an opportunity to work in
this esteemed organization as an intern from the Department of Business Administration,
Jahangirnagar University.
During my internship, I am appointed in HSBCs Network Service Centre in Clearing
Department. Clearing department manages encashment and transfer of all cheque and remitted
money of different forms through customers from all over the country and abroad. Throughout
this internship period I had to work with different personnels of Clearing department. I got the
opportunity to observe the operations that are performed in the Clearing department and also in
the PCM (Payment and Cash Management) and Remittance departments. This process has given
me the opportunity to observe and monitor numerous operational banking disciplines which were
being performed of by the officers in Clearing Department.
After working with the department for three months, I decided to choose my internship report
topic on General Banking Payment Procedures in HSBC Bangladesh.

According to the topic my objectives have been set below. To make it more specific the topic
parts have been divided in to 1.Broad objective and 2.Specific objectives.

2.1 Broad objectives

Understanding the entire general banking payment procedures.

Understanding the activity of Payment and Cash management, Clearing and Remittance

2.2 Specific objectives

To know the payments & cash management procedures HSBC Bangladesh

To understand the method of Countrywide & World wide cheque collection process

To explain the meaning and concept of Cash Management System of Foreign Bank.
To be aware of the need and objective of Cash Management
To see the payment process with outward remittance
To learn the payment process through inward remittance
To be familiar with the payment process through outward & inward clearing
To recognize the same day clearing.


To complete my graduation program from the Department of Business Administration,
Jahangirnagar University, I joined in HSBC as an Intern. For fulfill my internship my report will
be on General Banking Payment Procedures in HSBC Bangladesh. I have been
recommended by the manager of the HSBC for work in the Clearing department.
HSBC is the world largest local bank. To reach a high volume of financial profit HSBC looking
for different procedures of customer payments. Through which they can provide the customer best
service and also transfer or pay the money as quick as possible. They use lots of technology and a
world wide system for making the transaction and keeping of data.
However it can be said that this report is also important for HSBC because, by this report it will
create awareness among the employees and customers about the present payment procedures. It
will also help them to improve there services and also find flaws in order to remove this flaws.

The method I have employed to do my study on HSBC is by observation; I also took the help of
the officials of the Payment and Cash Management, Remittance and Clearing department to
clarify my quarries and used secondary data like DIB the official books of each departments,
HSBC web site and some graphical data to come up with writing on the topic. I also had one to
one discussion one topic with the people responsible of managing this section in HSBC.

5.0 SCOPE:
This report will include the payment to and from account that arise from clearing,
collection and remittance cheques, demand drafts and pay orders or other instruments.
This report will not include the payment of cash or bearer cheques, thats payments are
made over the counter.

As I took the initiative to write a detail procedure of how HSBC works in managing the payment
procedures, I came across a lot of difficulties, which slowed me down and in some case changed
my way to writing. As I gradually came to understand that the departments are payment
departments in HSBC Bangladesh, so deriving data from the departments are any sort is a severe
breach of law within the HSBC code of conduct. As a result, my project part could not be backedup by data of any sort and also I might not present the current picture of HSBC BD with its
payment procedures process that they follow in operation. Some other limitations are given in
Large-scale research was not possible due to constraints and restrictions posed by the
In many cases, up to date information is not published.
Getting Relevant papers and documents were strictly prohibited.
Many procedural matters were conducted directly in the operations by the top
management level, which may also have some sort of restrictions.
To protect the organizational loss in regard of maintaining confidentiality, some parts
of the report are not in depth.


1.1 General discussion
HSBC's Payments and Cash Management services are designed to help its clients to operate
efficiently, profitably and with comprehensive support the aim is to provide a service that takes
full account of the customers' local needs using the expertise and the unrivalled resources of the
HSBC. Payments and Cash Management is a core business for the HSBC group. The objective of
Payments & Cash Management is to be the premier cash management service provider in
Bangladesh by delivering responsive and integrated solutions to customer. The board's aim for a
multinational is pursuing effective cash management is to:
Reconcile Bank Transaction
Accelerate Receivables
Maximize Returns on surplus fund
Decrease internal administration
Reduce exchange and tax risk
Minimize borrowing and associated costs
Through the process of listening the customer's needs and then acting in partnership to deliver the
right solutions, HSBC is committed to helping people make the most effective use of their
financial assets. HSBC not only operates on a global basis, but also works on a local level to
ensure the cross-border differences are identified and any related benefits exploited. The bank's
teams of specialists ensure that whether customers need solutions across the world, regionally or
locally, as they have the skills, expertise and resources to deliver them.
HSBC is the banking institution to talk to if people want the following: Global cash flow co-ordination
Enhanced risk management
Improved security and audit controls
Minimized costs and reduced operating expenses
Maximized liquidity, returns and interest benefits
Payments and Cash Management (PCM) is a suite of products and services, which enables a
treasurer to manage cash and liquidity on a local, regional and global level.
So the PCM department gives solution through four ways and they are as below:
Account Management.
Transaction Management.

Payments to Collections
Liquidity Management.
Delivery Management.
The objective of payments and cash management is to manage receivables and payables and
deploy the surplus fund through structured one stop solution. It wants to minimize cost and
maximize return and also ensure effective planning, management and monitoring of cash and cash
equivalent resources.
The Key success factors for PCM:
Extensive core bank network.
Efficient processing set up.
Reliable courier service.
Integrated system.

1.2 PCM Business Scenario

PCM is presently a part of CIB with two officers reporting to the CIB Manager. So far HSBC was
not in a position to offer comprehensive PCM solution to the corporate due to lack of
correspondent banking relationship and a structured system in place. The PCM primary focus was
on electronic banking, remittance dept., which as per the group norms a part of PCM dept. is still
under supervision of customer service dept. With the growing market demand and competition in
PCM it is the ideal time for HSBC to penetrate the market.

1.3 Payments and Cash Management Products

Effective cash management is more than a simple product or service -it is about implementing a
strategy for managing customers cash flow that is focused on their long-term goals, yet flexible
enough to adapt to change. Solutions for this region HSBC provides corporations and financial
institutions with a comprehensive and practical analysis of the various cash management and
outsourcing techniques available in Asia. This includes the features and benefits of automating
manual processes and outsourcing "non-core" activities, such as account management, payments
and collections management and liquidity management, as well as recommendations and advice
on the establishment of shared service centers and regional treasury centers.
1.3.1 Account Management Solutions:
Managing liquidity is a complex risky business. HSBC provides a flexible range of account
management solutions, which can be structured to the customer's requirements. HSBC's end-toend service enables customers to establish a single banking relationship, operated through one
multi-channel global network. The result is lower costs, as well as streamlined communications
and administration. To maximize the relationship between customers ' liquidity, investments and
the bottom line, the bank automates as many "housekeeping" functions as possible and offers upto-the-minute information and control over all their local and foreign exchange positions.
1.3.2 Transaction Management Solutions:
In Global Cash Management the basic principles still apply to both payments and receipts, but the
way these techniques are used may differ significantly. HSBC has the technology to put the
customer in control of their collections and payments through transaction management solutions.
The payments are done in two ways:
Domestic payments

Cross border payments.

In Domestic payments the tasks are demand draft, telegraphic transfer, cashiers order/pay order.
These are done on the basis of customer requirements. On the other hand, in Cross border
payments the issuers are also same are demand draft, telegraphic transfer and SWIFT. The most
important features of any payment are Timing, Quality of information, Cost and the irrevocable
nature of payment. HSBCs flexible collections management solutions enable the once timeconsuming and routine task of collections to be handled automatically, reducing manual
intervention, improving cash flow and preserving the integrity of collections management
information. The customer will receive timely and accurate information facilitating the decisionmaking process.

1.4 Collection Management

Cash Management Collections is the family of products and services provided by the bank that
help the customers manage their sales collection & account reconciliation. Smart collect means
collection of cheques and cash deposited at HSBC branches that is being handled very
systematically around the country.
The benefits are as follows:
Funds will be in one single account that is deposited in any branch.
Consolidated Deposit and credit details will be provided to the customers on a daily basis.
Collection of Cash/ Cash Equivalent Instruments (Cheque/ Pay Order/ Draft) deposited at
HSBC Branches (presently at Dhaka/ Chittagong).
Same day credit for cash and day 1 credit for local cheques (day 0 being the day of deposit).
Intra day information available and easy automated reconciliation through Hexagon.
In addition to the branches Cash may also be deposited in partner bank branches in Dhaka
city at free of charge to their central account with HSBC.
Pricing: Free
Advantages of Collections:
Deposit details Available on day 1 for all areas.
Cheque level information is available.
Centralize control of receivables.
Transit time is reduced.
Their reports will be also available through e-mail.

1.5 Payments Management

By using Hexagon, payment instructions for staff salaries as well as supplier invoices can be
delivered to the bank electronically. Payment instructions received from clients will be executed
at those 198 branch locations globally. If they receive an instruction within 12:00 p.m. to credit
any account in those branches that will be executed on the same day and client will be able to see
the debit details through Hexagon. Smart Cheque means customers can have cheque printing
facility at their office premises.
The benefits are as follows:
Smart cheque will save the time that might be needed for manual cheque writing.
It can store the templates of repetitive payments.
It can print all the cheques in a bulk.
Database of printed cheques are available.
Quick and faster salary or other disbursements can be done.
Customers will get debit confirmation through Hexagon.
Advantages of payments:
Credit advises available at beneficiary end.
Debit confirmation through Hexagon.
It reduces the burden for outside salary payments.
Reduced payment time for all their country wide payments.
In addition to payments in partner bank branches client may also instruct bank to
issue drafts, which can be collected from the branch or client may instruct bank to
mail through courier directly.

1.6 Country Wide Collection

As receivable management is crucial to financial cycle, HSBC has developed products for
customers to efficiently manage clients requirements and reduce cost. The services and benefits
include such as Cost reduction through efficient fund management, Detailed MIS on cash
collection, resulting in better management, centralization of control of all clients cash and
instruments, quicker cash collection into a central account, resulting in greater earnings.


2.1 Outward Remittance

The term Outward Remittances" include not only remittance i.e. sale of foreign currency by TT.
MT, Drafts, Travelers cheque but also includes payment against imports into Bangladesh &
Local currency credited to Non-resident Taka Accounts of Foreign Banks or Convertible Taka
Two forms are used for Outward Remittance of foreign Currency such as: IMP Form :
All outward remittance on account of Imports is done by this form
T.M Form :
For all other outward remittances form T.M is used.
2.1.1 Private Remittance
1. Family remittance facility:
a) Foreign Nationals working in Bangladesh with approval of the Government may remit
through an Authorized Dealer 50% of Salary and 100% of leave salary as also actual savings and
admissible person benefits. No prior approval of Bank is necessary for such remittance,
b) Remittance of moderate amounts of foreign exchange for maintenance abroad of family
members (spouse, children, parents) of Bangladesh Nationals are allowed by Bangladesh Bank on
written request supported by certificate from the Bangladesh Mission in the concerned country.
2. Remittance of Membership fees/registration fees etc.
Authorized Dealer may remit without prior approval of Bangladesh Bank, membership fees of
Foreign professional and scientific institutions and fees for application registration, admission,
examination TOEFL, SAT etc.) in connection with admission into foreign educational institutions
on the basis of written application supported by demand notice/letter of the concerned institution.
3. Education:
Prior permission of Bangladesh Bank is not required for releasing foreign exchange in favor/on
behalf of Bangladesh students studying abroad or willing to proceeds abroad for studies.
Authorized Dealers shall allow exchange facilities for this purpose according to the following
Application duly filled in by the student as per prescribed format of Bangladesh Bank. Original
latter and photocopy of admission letter issued by the concerned institution in favor of the
The original and photocopy of estimate relating to annual tuition fee, board and lodging,
incidental expenses etc. issued by the concerned institutions, Attested copies of educational
certificates of the applicant and Valid passport must be submitted by the student.
4. Remittance of Consular Fees:
Consular fees collected by foreign embassies in Bangladesh Taka and deposited in a Taka
Account maintained with an AD solely for this purpose may be remitted abroad without prior
approval of Bangladesh Bank.
5. Remittance of evaluation fee:
Authorized Dealer's without prior approval of Bangladesh Bank may remit evaluation fee on
behalf of Bangladeshis desiring immigration to foreign countries for getting educational
certificates of the person concerned evaluated by a foreign institution. A demand note of the
foreign immigration authority is required for this purpose.
6. Travel:
Private travel quota entitlement of Bangladesh Nationals is set at US$3000/- per year for visit to
countries other than SAARC member countries and Myanmar, Quota for SAARC member
countries and Myanmar is US$1000/- for travel by air and US$500/-for travel by overland route.
Authorized Dealers may release this travel quota in the form of foreign currency notes up to
US$500/- or equivalent and balance exchange in the form of TCs or total quota in the form of TCs
The annual quotas mentioned above are for adult passengers. Fore minors (Below 12 year in age)
the applicable quota will be half the amount allowable to adults.
Authorized Dealers may release above travel quota without prior approval of Bangladesh Bank
subject to observation and satisfaction of following points:

The intending traveler is a customer of the AD bank or is sufficiently well known to the AD Bank
or the intending traveler has paid relevant Travel Tax. The intending traveler has a valid passport.
7. Foreign Nationals:
The Authorized Dealers may issue foreign currency TCs to foreign nationals without any limit
and foreign currency notes up to US$300/- or equivalent per person against surrender of
equivalents amounts in foreign currencies. The TCs and foreign currency notes should however,
be delivered only on production of ticket for a destination outside Bangladesh and the amount
issued should be endorsed on the relative passports.
Authorized Dealers may allow recon version of unspent Taka funds of foreign tourists into
foreign exchange on production of the encashment certificate of foreign currency. Recon version
shall be allowed by the same AD with which the foreign currency was encashed earlier. AD
should retain the original encashment certificate and relative forms where re conversion exceeds
10. Remittance for Haji:
Authorized Dealers may release foreign exchange to the intending pilgrims for performing Hajj as
per instructions/circulars to be issued by the Bangladesh Bank each year.
11. Other Private remittance:
Applications for remittances by private individuals for purposes other than those mentioned above
should be forwarded to Bangladesh Bank for consideration & approval after assessing the
bonafide of the purpose of remittance on the basis of documentary evidence submitted by the
2.1.2 Official & Business Travel
1. Official Visit:
For official or semi officials visits abroad by the officials of govt., Autonomous/ Semiautonomous
institutions etc., Authorized Dealers may release foreign exchange as per entitlements fixed by the
Ministry of Finance from time to time, In such cases, the applicant for foreign exchange shall be
required to submit the sanction letter and the competent authority's Order/Notification/Circular
authorizing the travel.
2. Business Travel Quota for Now Exporters:
Up to US $6,000/- or equivalent may be issued by an AD without prior approval of Bangladesh
Bank to a new exporter for business travel abroad, against recommendation letter from Export
Promotion Bureau, Bonafide requirement beyond US$6000/- is accommodated by Bangladesh
Bank upon written request through an AD with supporting documents.
3. Business Travel Quota for Importers and Non-exporting producers:
Subject to annual upper limit of US$5000/- importers are entitled to a business travel quota @ 1
% of their imports settled during the previous financial year.
4. Exporters' Retention Quota:
i) Merchandise exporters may retain up to 40% of realized FOB value of their exports in foreign
currency accounts. However, for exports of goods having high import content (such as readymade
garments, POL products including furnace oil bitumen, electronic goods etc.,) the retention quota
is 7.5% of the repatriated FOB value.
Exporters may at their option, retain the foreign currency in interest bearing renewable term
deposit accounts with Authorized Dealers in US Dollar, Pound Sterling DM or Japanese Yen with
a minimum account of US$2000 or Pound 1500.
ii) Service exporters (excluding indenting commission or agency commission of indenting house
of buying house respectively) may retain 5% of their repatriated income in foreign currency
accounts or as renewable time deposits with Authorized Dealers, Funds from these accounts can
be used to meet expenses for bonafide business travel abroad.

2.2 Inward Remittance

2.2.1 Inward Remittance
The term inward remittance includes not only purchase of foreign currency by TT, MT, Drafts
etc. but also purchase of bills, purchase of travelers cheques.
2.2.2 Forms

Two forms are prescribed by Bangladesh Bank are used for purchase of foreign currencies such
EXP Form: Remittances received against exports of goods from Bangladesh are
done by form EXP.
Form C: Inward remittances equivalent to US$ 2000/- and are above are done by
Form C. However, declaration in Form C is not required in case of remittances by
Bangladesh Nationals working abroad.
2.2.3 General Principles and Precautions for purchasing instruments
Utmost care should be taken while purchasing Currency Notes, Travelers cheque, Demand Draft
& similar instrument for protecting the bank from probable loss as well as safety of the Bank
officials concerned.
2.2.4 Foreign Currency (Bank) Notes
Branches may freely buy foreign currency notes from Bangladesh as well as foreign nationals.
Currency notes, especially notes of higher denominations, i.e. US $ notes of 50 and 100
denominations, should be checked carefully to ascertain their genuineness.
Foreign Exchange Department shall maintain currency wise F.C. in hand Control Ledger to
record each days transactions.
On the last working day of each month the branch shall calculate the exchange gain or loss and
carry out necessary adjustment in the control ledger.
Foreign currencies shall be purchased at the rates instructed by the Head Office.
2.2.5 Travelers Cheques
Payment against TCs
The customer tendering the Travelers Cheques should be asked to sign the TCs at the designated
places in front of the concerned bank official who would satisfy himself about its genuineness
with reference to the customers signature already appearing on the TCs and his passport. Should
there be any doubt; purchase contracts of the TCs may be asked for.
Collection of Proceeds of Encashed TCs
Encashed TCs should be sent to the relevant foreign correspondent for collection.
2.2.6 Foreign Drafts and Cheques
The branch should exercise due care and ordinary prudence for purchase of foreign currency
denominated drafts, cheques and similar kinds of instruments. The instrument should not be
purchased unless the customer is well known to the branch as a regular trustworthy client. An
Indemnity Bond should be obtained for refund of the money along with interest in the event of
dishonors of the instruments.
2.2.7 Telegraphic Transfer (T.T)
Test number appearing on the TT must be checked and authenticated by the concerned official.
Confirmation from the Head Office should be received about the proceeds having been credited.
The usual formalities including declaration on Form C should be observed.

3.1 Cheques
3.1.1 Negotiability and Endorsement
Cheques are negotiable instruments which are negotiated when they are transferred from one
person to another in such a manner as to make the transferee the holder of the cheque.
Bearer cheques are negotiated by simple delivery, whereas order cheques are negotiated by the
endorsement of the holder followed by delivery.
3.1.2 Crossed Cheques
Various types of crossing affect the legal obligations of bankers and the legal rights of holders. In
Areas where an image of the cheque is used for clearing and payment, crossing of cheques is not

required provided that there are sufficient controls in place to ensure that the same effects of
crossing are applied appropriately.
3.1.3 Cheque Deposited to Accounts with ASP Areas
Department instructions and practices must ensure that customers have title to cheques credited to
their accounts. Counter staff must scrutinize cheques paid in to ensure that:
Cheques are bearer
Cheques are drawn in favor of account holders
Cheques are endorsed to account holders and that endorsement appear to be regular
There are no technical irregularities such as errors in date and amount.
Any irregularities on the cheques should be brought to the attention of the customer before further
Departmental instructions must stipulate that executives or staff officers must approve the deposit
of cheques which are not made payable to bearer or account holders, or which exceed pre-set
transaction limits.
3.1.4 Cheque alterations
Cheque alterations must always be signed in full by drawers, in order to minimize the risk of
fraudulent alterations.
3.1.5 Cheque as initial deposits to new accounts
ASP Areas must not accept cheques drawn in favors of third parties as initial deposits for new
accounts, irrespective of whether or not such cheques contain what appear to be valid
3.1.6 Cheques in favor of limited company
ASP Areas must exercise caution whenever customers Endeavour to pay in cheques drawn or
endorsed by limited companies or firms known to be the employers of the customer concerned.
Particular care must be taken when such cheques have been signed by customers on behalf of
Enquiries need not be made when cheques can reasonably be assumed to represent salary,
commissions, severance, or other similar payments.
3.1.7 Checking of Cheque
Operations Managers must ensure that, subject to any quick cashing services and, within
delegated limits of authority, all inward cheques above designated thresholds are examined to
Words and figures agree
Cheques are neither post-dated nor out-of-date
Signatures have been verified
Any alterations have been signed in full
3.1.8 Cancellation of signature
Area Managers, or their delegates, must establish specific limits of authority for staff within
which the signatures on customer cheques must be cancelled, i.e. scored through in red ball pen
and initialed by executives or staff officers, as appropriate. The limits must be in accordance with
all applicable regulatory requirements and common practices in the local market.
In Areas where an image of the cheque is used for clearing and payment, cancellation of
signatures is not required provided that there are sufficient controls in place to ensure that the
signatures have been verified.
3.1.9 Routine precautions
Executives must ensure that the following situations are involved:
Drawings against non cleared cheques.
Deposits where the cheques are signed by a party to the account or by a known associate.
Deposits where cheques are repeatedly drawn on a particular bank in another area.
Cash withdrawals or outward ITs against non cleared cheques.

Account positions where the level of outstanding of non cleared cheques remains
constant, or is on the increase.

Accounts where the daily turnover is out of proportion to the over night balance.

3.2 Limits of authority

All 'Effects Not Cleared' (ENC) drawings must be approved by designated executives in
accordance with written limits of authority.
Area Managers, or their delegates, must ensure that, limits of authority granted for the approval of
ENC transactions are incorporated in the text of letters to Credit executives detailing their lending

3.3 ENC risk evaluation

Executives must consider the following matters when evaluating the approval or rejection of ENC
Accounts must be well conducted with no history of persistent excess drawings, outward
returned cheques, or inward returned cheques
The nature/origin of the non cleared effects must be checked to ensure that they are on
the face of it regular and in line with the customer's normal pattern of activity
Withdrawal cheques must be regular in all respects
Current operations of accounts must be checked to ensure that there is no indication of
kite flying.

3.4 Certified cheques

The certification of customers' cheques as 'good for payment' involves a direct liability on the part
of ASP Areas in that such cheques must be paid on due presentation.
As a general rule ASP Areas should issue cashier's orders instead of certifying cheques. Where
this is not possible customers' accounts must be debited with the full amount of cheques to' be

3.5 Cash withdrawal from accounts with cheques

Customers who maintain accounts on which drawings can be made by cheque may, exceptionally,
and subject to formal identification, be permitted to draw cash at our counters, by means of
normal cash withdrawal vouchers.

3.6 Stopped Cheques

Where local law permits ASP Areas must accept customers' instructions to stop payment of
cheques provided that customers generate such instructions by the following means:
Writing letters giving cheque details
Completing group standard 'stop payment' forms
Sending appropriate authenticated telex or facsimile instruction
Telephoning an ASP Area and confirming telephone instructions immediately in writing
as and when necessary.
All' Stop Cheque' maintenance must be raised immediately on receipt of stop notices, and must be
approved by an executive or a staff officer.
'Stop Cheque' daily update and weekly full reports must be scrutinized by designated executives
or officers in charge of customer services operations.
Area Managers must obtain, and retain on file, advice regarding local legal requirements for the
stopping of cheques. Appropriate instructions should be maintained by executives in their
Departmental Instruction Books.

3.7 Cheques returned unpaid

ASP areas must return customers cheque normally unpaid when:
They contain technical inaccuracies or inconsistencies (e.g. words and figures differ,
signature missing)
Offices have been notified that the customer has died, been declared bankrupt or mentally
Receivers have been appointed (small businesses)

Contractual relationships between ASP Areas and their customers have been suspended
for any reason
Customers' accounts contain insufficient funds to meet cheques and no arrangements exist
for their settlement
Cheques are drawn against non cleared effects
Drawings would exceed agreed facilities
There exist any legal bars to payment (e.g. garnishee orders)
ASP Areas are aware that payment of cheques, would constitute a breach of trust.

3.8 Instruction of Encashing offices

ASP Areas establishing cash cheque facilities at other banks or other Group offices on behalf of
their customers must:
Provide offices at which facilities will be available with specimen signatures, or indicate
where specimen signatures are readily available
Advise the total amount which may be drawn under facilities
Advise the exact period during which facilities are to be available
Ensure that such arrangements do not contravene exchange control regulations, if any, in
either territory.

3.9 Currency of drawings

As a general rule, cash cheque facilities should be expressed in the currency of countries where
cheques arc to be cashed. If this is not feasible, facilities must be expressed in internationally
recognized currencies.

3.10 Commission and Charges

Drawings or facility amount commission must normally be charged on cash cheque facilities
established abroad at the same rate as for documentary credits. All cable charges must be
recovered in full.

3.11 Time constraints

ASP Areas must allow sufficient time for cash cheque facilities to be established overseas,
preferably well before customers travel abroad.
Last minute funding requests must, wherever possible, be met by the issue of travelers cheques,
demand drafts, or telegraphic transfers.

3.12 Letters of undertaking

Letters of Undertaking must be obtained from customers whenever approval is given for them to
use specially printed cheques, irrespective of whether the inside covers of such books contain the
Group standard printed ten TIS and conditions of use.
An example of a Letter of Undertaking appears in Appendix 14.5.2 - Letter of Undertaking for
Specially Printed Cheques.
Principal Offices may modify or extend the text of this fund in accordance with local legal
opinion to take account of any specific local regulatory requirements.

3.13 Cheque return

3.13.1 Minor technical error
ASP Areas are recommended to evaluate the adverse customer service impact and the poor cost
effectiveness of returning low value cheques for technical reasons such as words and figures
differ. In general, ASP Areas may be better advised to pay such cheques, under simple advice to
customers. The nominal cost of advices will be more than offset by the goodwill generated.
Executives or staff officers given discretion to waive returning cheques with minor technical
errors should be issued with the appropriate written authority to do so by Area Managers, or their
3.13.2 Cheques Returned Records
ASP areas must maintain records of all cheques returned:
Drawn by there own customers.
Paid into their customers' accounts and returned by other banks or financial institutions.
Payee's name

Name of the party to whom the cheque was returned or returned by

Reason for return
Initial of the supervising executive or officer.
The record should be held under the control of an executive or a designated officer.
3.13.3 Cheques Returned in Error
ASP Areas must exercise the greatest care when returning their customers' cheques unpaid for
lack off funds, to avoid becoming involved in legal action on the basis of negligence. Incidents
have arisen where cheques were returned unpaid for lack of funds, despite the fact that funds had
been paid in for customers' accounts, or deposits had erroneously been credited to other accounts.
3.13.4 Action to be taken
Principal Offices must obtain and retain on file local legal advice on the action to be taken when
their customers' cheques are returned in error. The recommended course may include:
Sending a letter of apology to the customer.
Sending a letter of explanation expressed in general terms to the payee, the presenting
bank or financial institution, and any other party whose impression of the customer may
have been adversely affected by the ASP Area error.
In particularly sensitive cases it may be appropriate for Area Managers, or their delegates,
to call on the parties involved to deliver letters of explanation and/or apologies
If the above steps fail to ward off litigation, the fact that an ASP Area will have been seen to have
taken all reasonable steps to repair any damage to the account holder's reputation may influence
ultimate legal settlement.

3.14 Same Day Clearing

Same day clearing is a term of clearing department where all the cheques are cleared and paid to
the customer account within the deposited day of the cheque. There is some condition for being a
same day cheque.
The cheque must be amount of BDT 500,000 or above.
The branch of the committed Bank must be within 2.5 kilometer of Bangladesh Bank.
(Enlisted branches by the Bangladesh Bank)
If the Bank is maintaining online banking system than the same day procedures depend
on the amount of the cheque.

3.15 Normal day Clearing

All the cheque except same day cheque counted as normal day clearing. In normal day clearing all
the cheques payment done within 3 working days from the deposited day of the cheques and the
major requirement for the normal day clearing is the branches of Bank must be listed of
Bangladesh Bank and in the area of Dhaka city. Otherwise the cheque will transfer to the Payment
and Cash Management department for collection.

3.16 Return MIS in A Month

If any cheque return by the committed Bank or Bangladesh Bank HSBC will cut a charge from
customer account. For that purpose in clearing department they maintain a daily and monthly
basis MIS return charges report for both inward and outward cheques.


From the year of 2007 we got a yield average and add the activity volume up to June 2008. As per
we know that the Banking year count from June to June. In this graph we can see the total activity
volume of Network service centre of HSBC in year of 2008. Here the graph showing month wise
activity volume of total NSC of HSBC Bangladesh.


NSC Activity Volume 2008





12 5
12 0



JUN 08

MAY 08

APR 08

MAR 08

JAN 08

Avg. YTD 07

FEB 08

N S C T r a n s a c tio n V o lu m e 2 0 0 8


Account Services










10 5
10 0

1.1 NSC Transaction volume in year of 2008



In this graph the total successful transactions of the year of 2008 is shown. Here we can see the
month wise transaction volume of total NSC of HSBC Bangladesh.




JUN 08

MAY 08

APR 08

MAR 08

FEB 08

JAN 08

Avg. YTD 07

M onth


A c c o u n t S e r v ic e s

Cle a r in g

Ea s y Pa y






A TM /B O ND s /C A RD S


In this activity trend graph we can see the average activity of Payment and Cash Management
department in year of 2008. The percentage change in previous month and increased percentage
based on average volume of activity in year 2008 are showing in this graph.


In the below graph the transactions of Payment and Cash Management department in year 2008
are showing in monthly basis.

In the below graph the volume of activity in year 2008 are showing in monthly basis.



In the below graph the activity and transactions of Remittance department in year 2008 are
showing in month wise and the percentage change in activity and transaction from previous
month and the increased percentage based on average activity volume and transaction of year

In the below graph the total activity volume and transaction volume of Remittance department in
year 2008 are showing in monthly basis.




In the below graph the activity volume trend of Clearing department in year 2008 are showing in
month wise and the percentage change in activity and transaction from previous month and the
increased percentage based on average activity volume and transaction of year 2008.


In the below the graphs are showing the total activity volume and transaction volume of Clearing
department in the year of 2008 on monthly basis.



All the above graphs are showing the payment procedures through activity volume and
transaction in HSBC Bangladesh. In the general Banking payment procedures the above 3
department is the back bone of HSBC.


At present to open an account at Payment & Cash Management department, the rules and
regulations are rigid. The official procedure should be flexible to open an account. The
minimum balance to open an account should be reduced.



At present due to inadequate and inefficient manpower, payments and collections are
delaying. Sometimes they delays in transfer payment of salary of other organization. If
they want to get the customers satisfaction, they need to recruit manpower, train them up
and turn them into efficient and effective manpower.
PCM should increase the total number of products they have. They need to introduce
more innovative products like payment plus, web bank etc.
They should avoid nepotism and favoritism.


HSBC should widen their clients base to invite more out ward remittance transaction in
other currencies.
The Remittance Department of HSBC becomes very busy in January as much more
outward remittance transactions takes place in this month. So, HSBC Management
should arrange more manpower for Remittance Department in this month. One of the
means of arranging this additional manpower might be to accept more internees in this
HSBC should intensify personal banking in order to attract travelers and students in
making outward remittance through HSBC.
HSBC should undertake promotional activities in November & December for providing
personal banking services to travelers and students.
HSBC should undertake promotional activities in November & December for providing
personal banking services to travelers.
HSBC should undertake promotional activities in November & December for providing
personal banking services to students.
HSBC should explore the possibility of widening its personal banking network in other
countries to tap the inward remittance coming from those countries especially in Middle
East countries wherefrom inward remittances come to Bangladesh in plenty.
HSBC should intensify personal banking in order to attract foreign wage earners making
inward remittance through HSBC.
The number of human resources in the Remittance Department is really insufficient to
give services to huge volume of work. So, number of staff should be increased in this
Human resource is another sector for the Remittance department to be developed
urgently. Human resources, in the department, need to be equipped with adequate
computer knowledge so that they can work faster and efficiency can be optimized. Bank
can arrange training program for them.


Cheques are coming from different branches to NCS (Motijheel branch). After
processing, cheques are going to Bangladesh Bank for clearing. As a result, it takes more
time for clearing the cheques. The customers arent getting quicker service & they are
unsatisfied. If the cheques are process in the individual branch and directly go to
Bangladesh Bank, then the clearing processes are quicker than present time & they should
improve good relationship with Bangladesh Bank.
The transportation system has to be develop more and sending mail/currier should faster.
HSBC must look over the time of payment to the customer regarding of normal clearing
HSBC have to develop their collection process faster for the collection cheques.
If HSBC cut the return charges as low as possible than may be the personnel account
holder will be motivate more and might gain lots of customers.

Consumer banking industry has been treated as a prospective financial sector in Bangladesh.
More and more banks and non-bank financial companies are entering the industry. The industry
became so attractive that multinational bank like HSBC has entered the market and wants to lead
the market. However, the entrance of banks like HSBC has brought revolutionary changes in
banking services. People get better service than ever before. It becomes lot easier for people to get
loans and investing money into diversified portfolios. Sophisticated services like ATM, Phone
banking, Online transaction etc. has been brought by this new generation banking.
As the services improved workflow of the banks has been changed dynamically as well. Banks
use more sophisticated ways to assess payments. Quick assessment process pressurizes the
Clearing officers to use sophisticated ways of payment assessment. Though HSBC use its own
investigation along with third party investigation for payment assessment the whole procedure
may be developed furthermore. Central bank may become more helpful by providing helps like
hosting database (about customers) on the net.
Thus by providing these various services through different department in the HSBC is playing a
vital role in the banking system as well as the economy of Bangladesh. This study may at least be
able to be recognized as a significant one, the study have been able to figure out the customers
knowledge about payment procedures of HSBC. This report may give a bit of enlightenment to
the readers about the scenario of General Payment Procedures in Bangladesh.