PART-ONE

INTRODUCTION
1.1 AUTHORIZATION OF STUDY
The banking world has been undergoing rapid and fundamental changes. The speed of these
changes has been maintained even after the global financial turmoil experienced during the past
few years. It is well recognized that there is an urgent need for better qualified management and
better-trained staff in the dynamic global financial market. Bangladesh is no exception of this
trend. Banking Sector in Bangladesh is facing challenges from different angles though its prospect
is bright in the future. To meet up the growing needs of skilled and eligible managerial manpower
of different banks in the country, Department Of Accounting & Information Systems has
initiated the MBA Program with the recommendations and under the affiliation of University of
Dhaka The objective of the MBA Program is to equip individuals to develop the specific skills
and the breadth of judgment required of effective financial executives or bankers. Bank education
is a practice-oriented education. Hence, the practical orientation in banks has been made an
integral part of the MBA Degree requirement. For fulfilling this very requirement, I was sent to
SHAMRI Bazar Branch, OF EXIM Bank Ltd. where I worked as an intern from July 01,2008to
September 30, 2008. Report has been prepared on the basis of my practical experiences on the day-
to-day banking activities and under the close supervision of my internal Guide Teacher MD
MONZUR MORSHED.

1.2 SCOPE OF THE STUDY:

EXIM Bank Limited is one of the leading banks in Bangladesh. The scope of the study is limited
to the Principal Branch only. The report covers the organizational structure, background, functions
and the performance of the bank.

1.3 OBJECTIVES OF THE STUDY

The core objectives of the practical orientation program in banks are as follows:
(a) To apply theoretical knowledge in the practical field.
(b) To help the students in taking up professional courses in the second year.
(c) To have exposure to the functions of general banking section.
(d) To have exposure to the functions of credit section.
(e) To have exposure to the functions of foreign exchange section.
f) To observe the working environment in commercial banks.
(g) To study existing banker-customer relationship.
(h) To fulfill the partial requirement of MBA Program.
To gather knowledge about the functions and transactions of different department of bank branch
and check the compliance of practice with the theory.

1.4 METHODOLOGY OF THE STUDY

In order to make the report more meaningful and presentable, two sources of data and information
have been used widely
The Primary Sources are as follows:
1 Face-to-face conversation with the respective officers and staffs of the
Branch
2 Informal conversation with the clients
3 Practical work exposures from the different desks of the four departments
of the Branch covered
4 Relevant file study as provided by the officers concerned
The Secondary Sources are as follows:
1 Annual Report (2004) of EXIM Bank Ltd.
2 Periodicals published by Bangladesh Bank.
3 Various books, articles, complications etc. regarding general banking
function, foreign exchange operation and credit policies.

1.5 Limitations of the study:

The following limitations are apparent in the report:
1 Time is the first limitation as the duration of the program was of two and a
half months only.
2 Another limitation of this report is Banks policy of not disclosing some
data and information for obvious reason, which could be very much useful.
 PART: TWO
GENERAL STRUCTURE OF EXIM BANK
2.1 History of Bank:
The Word Bank means the island of River canal, field, treasury and pile of
anything. But now the organization that is engaged transferring money business is
called Bank. It is sure that nobody can say how the Word Bank is invented, because all
the information before twelve century is based on assumption. Even the information,
which discovered after twelve century is not clear. But many people think that from the
ancient Latin words BANCO, Bank, Bancus etc the words Bank has invented.
According to Jarman writer w, Frankace: The countries of middle Europe, the
lenghty tools or bench is called Bank, Bank.2 Again Olnthus and Forachi make
understanding tool or bench by the Banque, Bank and Bangko, the Word Bank is come
from those words.
In the twelve century a complexity was occurred in Italy and in 1150 enemy
attracted Vanish. As a result for meeting the expense of the war and remove the
financial crisis, government collect loan that is called public debt and interest provided
by the government on this loan only 5%. This loan is called collective credit or Forced
subscribed loan. Then this loan is defined as Banke Banco, Compara , monte etc, From
famous in Italy in that time. Again it is called Banke in Austria and Germany. So
money people think that Jarman Word Banke, Italian Word Banco and next time it is
called Bank in English. Bank is reknown because British were the emperors in that
time.
It is clear that there are close relationship between the Word Bank and those words.
Because now what is mean by Bank in the midle time in Europe by the word Banke,
Banco monte was the same meaning. So the word Bank is come from those words and
next time its modern revision is called bank and there is no doud about it.
2.2 HISTORY OF EXIM BANK
Export Import Bank of Bangladesh Limited was incorporated in Bangladesh on 2 June
1999 as Banking Company under the Companies Act 1994. The Bank was established
under the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long
dream of floating a commercial bank, which would contribute to the socio-economic
development of our country. He had a long experience as a good banker. A group of highly
qualified and successful entrepreneurs joined their hands with the founder chairman to
materialize his dream. Indeed, all of them proved themselves in their respective business
as most successful star with their endeavor, intelligence, hard working and talent
entrepreneurship. Among them, Mr. Md. Nazrul Islam Mazumder became the honorable
chairman after the demise of the honorable founder chairman.
Of its very beginning, EXIM Bank of Bangladesh limited was known as BEXIM Bank,
which stands for Bangladesh Export Import Bank Limited. But for some legal constraints
the bank renamed as EXIM Bank, which means Export Import Bank Of Bangladesh
Limited. This bank starts functioning from 3 August 1999 with Mr. Alamgir Kabir, FCA as
the advisor and Mr. Mohammed Lakiotullah as the Managing Director. Both of them have
long experience in the financial sector of our country. By their pragmatic decision and
management directives in the operational activities, this bank has earned a secured and
distinctive position in the banking industry in terms of performance, growth, and excellent
management. The authorized capital and paid up capital of the bank are Tk. 350.00 crore
and Tk. 214.219 crore respectively.
The Bank converted its banking operation into Islamic Banking based on Islamic Shariah
from traditional banking operation on 1 July 2004 after obtaining approval from
Bangladesh Bank. The Bank went for public issue of shares in the year 2004 and its shares
are listed with Dhaka Stock Exchange and Chittagong Stock exchange.
The commercial Banking activities of the Bank consist of services including mobilizing
deposits, providing investment facilities, discounting bills, conducting money transfer,
foreign exchange transactions and providing services i.e. issuing guarantees, safe keeping,
acceptances and letters of credit etc.
The Bank carries its banking activities through thirty branches operating as per Islamic
Shariah in the country.

2.3` Principle of the EXIM Bank

Every Business organization has to maintain some rule and regulation to lead it
operative activities. EXIM BANK is a business organization so it has to maintain some
rules and principle. Successful of any financial organization depend on the follow of
that principle.EXIM Bank is a commercial bank and it collects deposit from general
people who are not owner of that Bank. So it has greater responsibility than other
business organization. Banker has to operate it banking activities very clearly and to
do this they have followed some principle those are below:
1) Principle of Liquidity: The basic principle of EXIM Bank is the principle of
liquidity. It collect money from it client so EXIM Bank is committed to repay the
deposit money to the client when they want. As a result it must keep minimum money
as cash to fulfill the client need how much cash will be kept on hand that depend on
the experience of branch manager and effected by the size of account. If in any branch
the number of current account size is greater than the saving and fixed deposit account
then they have to keep high cash on hand or if saving account and fixed deposit is
greater than current account then they have to since SHIRAL BAZAR BRANCH has
Bank is a commercial Bank and the branch of SHIMRAILBAZAR BRANCH has the
amount of current account are greater than the saving account and fixed account. So
SHIMRAIL AR BRANCH keeps high cash on hand to meet the client demand. On an
average it keeps cash on hand 1.5 cores to 2 core for a day. I have to remember that
highly liquidate of any bank is not news of joy because extra liquidity money will
profit of Bank.
2) Principle of safety: Bank provides secretary of the client deposit and valuable and
the investment that make by the branch to earn profit. So it provide loan to its client by
guarantee. It may be person or properties.

3) Principle of investment: The investment of commercial Bank plays an important

role on the development of over all economic condition of the country. EXIM Bank
gives loan only on the productive sectors, it does not provide any loan in the none
productive sector though this sector is highly profitable.
4) Principle of profit earning: All commercial Bank is situated to earn profit and that
is it main objective. To earn profit EXIM Bank authority invests it raising capital to the
other people very awareness. But it does not destroy liquidity principle to earn high
profit because EXIM Bank authority thinks liquidity crisis will destroy the goodwill
of the Bank.
5) Principle of Economy: Every body wants to minimize it expense. If expense are
minimum then ultimately will increase.. This Bank operates any expense very
efficiently. Authority tries to omit the unnecessary expense. When any expense is
occurred then cash for this expense is not paid directly, authority paid for this expense
by the account number. Every expense has own account number and when that
particular expense is occurring than cash is disbursed through this account number. For
example account number of current bill is 02483925. When bank need to pay current
bill then transfer of money occurs through the account number (02483925).
6) Principle of Saving: EXIM Bank collects ideal money from the customers will
lower interest. Bank encourages general people to save money and provide other
facilities for savings.
7) Principle of creating confidence: Every Bank performance depend on the faith of
the public. Achieving the faith and believe of client authority provide high customer
service.
8) Principle of management: Authority lead the Bank very efficiently. All the
employee of this Bank is highly educated and efficient.
Authority provides training to employee for any new task. For promotion authority
observe the honesty and performance. Some time internal examination is held to
measure the performance of the employee.
9) Principle of development: EXIM Bank is aware about the economic development
of the country. For economic development authority emphasis to give loan on the
business sectors, their 95% loan is on the business sectors, which plays an important
role to the development of the country.
10) Principle of good will: Successful of any commercial bank depends on it
goodwill. Goodwill creates believe on the customers. Liquidity customer service,
efficient management profitable investment has the great impact on the goodwill of
any Bank. EXIM Bank performs that task very seriously and efficiently. As a result
EXIM BANK highest great in 2006 from Bangladesh Bank (CAMEL). Declaration of
highest grade (A) by Bangladesh Bank faith of generals public have increased.

2.4 Device of safeguard of EXIM Bank:

Bank receives money from the client that repayable on the demand of the client. EXIM
Bank receives deposit from customer and invests it to the other customer with higher
interest by keeping some money from the deposit money. When any Bank invests it
fund by maintaining liquidity that is called safeguard of any Bank. Bank of small
industries and commerce follow measurement to maintain its safeguard.
1) Cash in hand: Every Bank raise fund by collecting moving from the client that is
repayable when customer want. To pay clients EXIM Bank keeps cash on hand.
2) Demand loan: It invest in the sector from which they collect money when they
need for this investment EXIM Bank gets very few interest.
3) Discounting bill: EXIM Bank has lot of bill of exchange, treasury bills. Bank can
collect money from Bangladesh Bank and other Bank by transferring this bill.
4) Guaranteed transferable goods: Some time client takes loan from bank by hand
over any goods or properties that is transferable EXIM Bank collect cash from this
transferable assets.
5) Well investment: EXIM Bank invests its maximum fund in government and Semi-
government organization to reduce risk. For earn huge profit it does not invest in any
risky sectors.
Sources of fund of commercial Bank:
EXIM Bank collect fund from the following sources.
1) Authorize capital: Total authorize capital of EXIM Bank is Tk 200 core. Bank has
option to increase it share capital by following rules and regulation if needed.
2) Paid up share capital: Paid up share capital is the primary and main source of
EXIM Bank capital. Now it total paid up share capital is Tk 68.3 crore. The paid up
shareholder is the owner of EXIM Bank. All the share is belong to the Bangladesh
government. So EXIM Bank is governmental Bank.
3) General Reserve fund: EXIM Bank keep some proportion of net profit for future
period that is called general reserve found. It total reserve fund upto 2006. Tk
259672452.
4) Balance of profit and loss account: The balance of profit and loss account that are
not distribute to the owner is represent as funds for the next period. Total balance of
profit and loss account is Tk core.
5) Acceptance of loan: Some time EXIM Bank taking loan from the out side Bank or
financial institute. Bank it happen in very rare case.
6) Deposit: EXIM Bank accepts lot of money from the customer by different account.
It total deposit in the year 2005-06 current account Tk 3543069330. Saving account Tk
899516507 fixed deposit- 15899416811.

2.5 Sources of income of EXIM Bank:

1) Interest on short-term loan: The main source of income of EXIM Bank is the
interest on short term loan. EXIM Bank invest it Majority amount of fund in this
sectors.
2) Others loan interest: EXIM Bank not only pays loan in the short-term basis but
also it provides loan to the customer for long-term period. Normally Bank invests
fixed deposit money (which is long term fixed deposit) to the client for long-term
period.
3) Receive from advances: EXIM Bank gives loan to the customer as the form of
over draft, cash loan and it receives huge amount of money from this advances as
income.
4) Purchases of financial instrument: Some time Bank purchase, share debenture
government securities from market and earn huge amount of money from this sectors.
5) Rent of Locker: Many client keep their valuable goods and ornament to the Bank
for ensure of security. EXIM Bank charge rent from the customer to taking risk of
these goods.
6) Income from foreign exchange: Some time EXIM Bank earns huge profit by
selling and purchasing of foreign currency.
7) Commission for agent: Many times this Bank acts as the agent of client in many
cases. For these types of activities Bank charge money from client.
8) Issue of evidence: EXIM Bank deal about the foreign exchange of client Basically
all the necessary evidence of client for imports and export of goods is transfer by the
Bank from this evidence transfer it gets lot of money as profit.
9) Sale of asset: Some times EXIM Bank sale many ensure assets from which it gets
profit.
10) Other Source: Except this source EXIM Bank earn huge amount of money as
income such as commission for performing any activities for central Bank fee for
working for government.
 PART: THREE
COLLECTING FUND FOR LOAN
Selling either a product or a service. A bank does not produce any tangible product
to sell but does offer a variety of financial services to its customers.
General banking is the starting point of all the banking operations. It is the
department, which provides day-to-day services to the customers. Everyday it
receives deposits from the customers and meets their demand for cash by honoring
cheques. It opens new accounts, remit funds, issue bank drafts and pay orders etc.
Since bank is confined to provide the service everyday, general banking is also
known as 'retail banking'
The following things done in this department:
1. Accepting of deposit
2. Opening of account
3. Check book issue
4. Transfer of account
5. Closing of account

3.1 ACCEPTING DEPOSITS

Accepting deposits is one of the two classic functions of commercial banks. The
relationship between a banker and his customer begins with the opening of an
account by the former in the name of the latter. Initially all the accounts are opened
with a deposit of money by the customer and hence these accounts are called
deposits accounts. Banker solicits deposits from the members of the public
belonging to different lifestyles, engaged in numerous economic activities and
having different financial status. There is one officer performing various functions
in this department.
The deposits those are accepted by EXIM Bank may be classified in to:
a. Demand Deposits
b. Time Deposits.

DEMAND DEPOSITS:
The amount in accounts are payable on demand so it is called demand deposit account
EXIM BANK accepts demand deposits through the opening of,
a) Current account
b) Savings account

CURRENT ACCOUNT
Both individuals and business open this type of account. Frequent transactions are
(deposits as well as withdrawal) allowed in this type of account. A current a/c holder
can draw cheeks on his account, any amount, and any numbers of times in a day as the
balance in his account permits.
 Criteria of current account followed by EXIM Bank:

Generally opened by businessman, government and semi-government organization;

with proper introduction.
1 No interest is provided for deposited amount;
2 Overdraft is Allowed in this account;
3 Minimum opening balanced is Tk 1000;
4 A minimum balance is Tk 25000/- has to be maintained.
Quarterly saving deposit collection of EXIM Bank SHIMRAIL Bazar Branch

301l1June 2005 301l1September 2005 20111 November 2005

124595126.38Tk. 112104429.27 Tk. 126751817.34 Tk.

SAVINGS BANK ACCOUNT

Individuals for savings purposes open this type of account. Current interest rate of
these accounts is 13% per annum. Interest on SB account is calculated and accrued
monthly and credited to the account half yearly. Interest calculation is made for each
month based on the lowest balance at credit of an account in that month. A depositor
can withdraw from his SB account not more than twice a week up to an amount not
exceeding 25% of the balance in the account.
Quarterly saving deposit collection of EXIM Bank SHAMRAL Branch

30tl1June 2005 30ll1September 2005 20tl1 November 2005

99888493.44 Tk. 67720055.17 Tk. 59050219.82 Tk.

3.2 Criteria of savings account followed by EXIM BANK:

1 An appropriate introduction is required for opening the A/C; r Frequent
withdrawal is not encouraged;
2 A depositor may withdraw money from his/her account twice in a week;
3 7 days notice is required for withdrawal of large amount;
4 Minimum amount ofTK.5000 is required as initial
deposit;
5 Depositor may withdraw his/her deposited money up to 25% of the Balance
in his/her account
6 Without notice. The bank may realize service charge in its discretion
7 Depositor will get interest on the amount deposited in his/her account
irrespective of any limit
 TIME DEPOSITS:
A deposit which is payable at a fixed date or after a period of notice is a time deposit.
EXIM BANK accepts time deposits through
a) Fixed Deposit Receipt (FDR)
b) Special Savings Scheme (SSS)
c) Short Term Deposit (STD)
d) Bearer certificate deposit (BCD)
Accepting these deposits, a contract is done between the bank and the
customer. When the banker opens an account in the name of a customer,
there arises a contract between the two. This contract will be a valid one
only when both the parties are competent to enter contracts. As account
opening initiates the fundamental relationship & since the ba nker has to deal
with different kinds of persons with different legal status, EXIM BANK Officials
remain very much careful about the competency of the customers.

FIXED DEPOSIT ACCOUNT

These are deposits, which are made with the bank for a fixed period specified in
advance. The bank needs not to maintain cash reserve against these deposits and
therefore, bank gives high rate of interest on such deposits. A FDR is issued to the
depositor acknowledging receipt of the sum of money mentioned therein. It also
contains the rate of interest and the date on which the deposit will fall due for
payment.
EXIM Bank is now opening fixed deposit account only for 3 (Three) years.

Quarterly saving deposit collection of EXIM Bank SHIMRIAL Bazar Branch

th
30 June 2005 30 th September 2005 20 th November 2005
438651240.50 Tk. 530629801.50 Tk. 578473552.50 Tk.
Source: Quarterly Balance Sheet EXIM BANKSHAMORAI Bazar. Br.
Procedure of Opening Fixed Deposit Account:
Before opening a Fixed Deposit Account a customer has to fill up an application form,
which contains the followings:
a) Amount in figures
b) Beneficiary's name and address
c) Period
d) Rate of interest
e) Date of issue
f) Date of maturity
g) How the account will be operated (singly or jointly)
h) Signature(s)
i) F.D.R. no.
j) Special instructions (if any)
After fulfilling the above information and depositing the amount, FDR account is
opened and a FDR receipt is issued and it is recorded in the FDR Register, which
contains the following information
a) FDR account no.
b) FDR (Fixed Deposit Receipt) no.
c) Name of the FDR holder with address
d) Maturity period
e) Maturity date
f) Interest rate

Payment of Interest:
In case of Fixed Deposit Account the bank does not have, to maintain a cash reserve.
So EXIM BANK offers a high interest rate in Fixed Deposit accounts.
It is usually paid on maturity of the fixed deposit. EXIM BANK calculates
interest at each maturity date and provision is made on that
"Miscellaneous creditor expenditure payable accounts" is debited for the
accrued interest

Interest Rate
Rate of Interest varies depending on the period of maturity date.
Duration Rate of Interest
3 months 10.00 - 10.25%
6 months 10.25 - 10.50%
12 months 10.75- 11.50%
24 months 11.25- 12.25%
36 months 12.75-13.50%
3.3 PRE-MATURE ENCASHMENT OF TERM DEPOSIT
No TERM PRE-MATURE RATE OF INTEREST
DEPOSIT ENCASHMENT
01 3 months 1. Before 30 days a) No Interest
2. Every completed calendar b) STD Rate
months .
02 6 months a) Before 3 months a) No
b) Before maturity but b)Interest
Interest payable at 3
completes 3 months months Rate for a
period of 3 months
03 12 months a) Before expiry of 3 months a) No Interest
b) Before expiry of 6 months b) Interest Payable at 3
c) After expiry of 6 months but Months rate for a period
Before maturity Of 3 months
c) Interest Payable at 6
Months rate for a period
of 6 months
04 24 months a) Before expiry of 6 months d) No Interest
b) After expiry of 6 months but e) Interest may be allowed
Before maturity at 6 months rate for a
c) After expiry of 12 months Period of 6 months
But before maturity d) Interest may be allowed
at 12 months rate for a
Period of 12 months

Accounting treatment for FDR:

On the encashment of FDR, the following entries are made,-
FD R A/C.......................................................Dr.
Interest on FDR A/C.......................................................Dr.
Excise Duty on FDR.......................................................Cr.
10% Income Tax on interest ..............................................Cr.
Cash A/C.......................................................Cr.

Payment of Interest:
If the depositor wants to draw the interest only, the following entries are made:
Interest on FDR............................Dr.
Cash A/C .....................................Dr.
Loss of FDR.:
In case of a lost FDR, the customer is asked to record a GD (General Diary) in the
nearest Police Station. After that, the customer has to furnish an Indemnity Bond to
EXIM duplicate FDR is then issued to the customer by the bank.
Renewal of FDR:
The FDR becomes automatically renewed for like periods and amounts, unless this
are withdrawn by the depositor or, the bank notifies the depositor in writing at least 15
days in advance of the original Or, any renewed maturity date (s) of its desire to
terminate the account or change any term and condition of the account

Quarterly saving deposit collection of EXIM BANK.

tl1
30 June 2005 301l1September 2005 20111 November 2005
438651240.50 Tk. 530629801.50 Tk. 578473552.50 Tk.

SPECIAL FIXED DEPOSIT SCHEME

It is popularly known as "Time Deposit". Because these deposits are not repayable on
demand but they are, with draw able subject to a period of notice. The prospective
fixed deposit holder is expected to fill an application form prescribed for the purpose,
stating the amount and the period of deposit. The application itself contains the rules
and regulations of the deposit including the space for specimen signature.

3.4Criteria of SPECIAL FIXED DEPOSIT SCHEME followed by EXIM BANK:

 1 Minimum Tk 1, 00,000 or multiple amounts are acceptable under this
Scheme. Deposit of Tk 50,000/- is included as an exception in this scheme;
2 The duration of the Scheme shall be 3 (Three) years after which depositors
can take back the principal amount, if not renewed;
3 The duration of time between deposit and payment of first profit must be
minimum one

5 No profit/interest shall be due for payment if the deposit is enchased before

one year;
6 No withdrawal of principle shall usually be allowed before three years.

Rate of Interest
Amount Rate of
1 Lac to 4 Lac interest
12.00%
5 Lac to 10 Lac 12.50%
10 Lac and above 13.00%

STD ACCOUNT
In Short Term Deposit account, the deposit should be kept for at least seven days to
get interest. The interest offered for STO is less than that of savings deposit. In EXIM
BANK, various big companies, organizations, Government Departments keep money
in STD accounts. Frequent withdrawal is discouraged and requires prior notice. STD
Account opening procedure is similar to that of the saving account
Interest rate for STD account.............6.00% per annum
In EXIM BANK, usually customers give an instruction to the Bank that their current
account will be debited whenever its deposited amount crosses a certain limit and this
amount will be transferred to the STD account. So Bank follows this instruction by
giving following entries:
Customer's Current
A/C................................Dr. Customer's
STD A/C...............................Cr.

SPECIAL SAVING SCHIME (SSS)

Special saving scheme (SSS), is more familiar as Deposit Pension Scheme. EXIM
BANK offers it to its customer to deposit fixed amount of money each month for a
definite period of time, normally for 5 to 10 years.
In EXIM BANK, a Depositor can open any SSS account for deposit of TK.500/-,
TK.I000/-, TK.1500/-, TK.2000/-, and TK.2500/- in each month. The depositor will
have to deposit the fixed amount of money by the 8th day of each month. Customer
may deposit his money either in cash or in cheque. The depositor can select more
than one nominee for this account..

A Depositor can withdraw the total amount of deposit with interest at a time after a
specific period of 5 or 10 years.
 The depositor(s) will get following figure after maturity of SSS a/c.
Monthly Deposit
Or
Monthly Installment. Five years term Ten years term
500 40,000 1,12,500
1000 80,000 2,24,500
1500 1,20,000 3,00,000
2000 1,60,000 4,00,000
2500 2,00,000 5,00,000

BEARER CERTIFICATE OF DEPOSIT (BCD):

Bearer Certificate of Deposit account is almost same as Fixed Deposit account. But in
case of BCD account, no name and address are mentioned. The customer opens this
type of account as a bearer but it is negotiable. Whoever presents it to the bank has the
right to get the money. There is no prescribed interest rate on such funds but EXIM
BANK offers same interest rate of the term deposit of different maturity.

Quarterly bearer certified deposit collection of EXIM Bank SHAMORAI bazar branch
30tllJune 2005 30thSeptember 2005 20tl1November 2005
75228616.06 Tk. 82641821.58 Tk. 81649278.50 Tk.

Source: Quarterly Balance Sheet EXIM BANK SHAMORAI bazaar branch. .

The face value of the instrument is the future value. The face value is the sum of the
principal amount and the interest. It is beneficial to both EXIM BANK and the investor
because of the following reasons:
The banker is not required to en cash the deposit before the date of
maturity;
The investor is assured of ready liquidity. In case of need he can sell the
certificate in the secondary market.
As the identification of the owner is not given in the instrument, it is very
much popular.
During the encashment of the instrument, the excise duty and income tax (10%) is
deducted. In case of premature encashment, the principal amount is only paid to
the customer.
 MY OBSERVATIONS
1. The volume of operational activities of this department is very high, but
number of employees is adequate. As for example in one desk an officer in-
charged for A/e opening, DD, TT, PO operating as well as cheque receiving.
Though he is skilled enough to do those job but very often it creates bothering
situation for customer
2. The computer removes the token system. It is very much appreciable, but
the computer operator or programmer should be conversant with the system for
quick and better quality services to the customers.
3. Account opening procedures are very" much relaxed. The officer or
introducer of the account holder should follow rules and formalities for opening
the account.
4. In case of account opening, Letter of thanks is not sent to the introducer
though it is a formality to be maintained by the bank. In busy day, it sometimes
impossible for the officer to check every signature on cheque with specimen
signature card as to ensure prompt service. The officer in charge some
6. The costly Time and Saving Deposit occupy maximum portion of total
deposit.
Therefore, cost of fund is increased which decreased its profit level.
7. The bank does not have strong online computer facility, which could improve the
service quality.
8. There is a rule to deposit at least an amount of money in case of opening an
account.

However, it is not strictly followed. Sometimes more money is asked from a new
customer that who discourage him to open an account in the bank. I think the
amount should be fixed at a level that is not altered from customer to customer.

LOCAL REMITTANCE
EXIM BANK has its branches spread throughout the country and therefore, it serves
as best mediums for remittance of funds from one place to another. This service is
available to both customers and non-customers of the bank tot of cash handling from
one place to another are risky. Therefore, Bank remits funds on behalf of the
customers to save them from any awkward happening through the network of their
branches.
These services are providing in between country.
There are four (4) modes of remitting money from one place to another. These are-
1 Pay Order (PO)
 2 Demand Draft (DD)
3 Telegraphic Transfer (TT)
4 Mail Transfer (MT)
SHAMORAI Bazar Branch of EXIM BANK is practicing 3(Three) modes of
remitting funds, these are:
1 Pay order (PO).
2 Demand Draft (DD)
3 Telegraphic/Telephone Transfer (TT)
PAY ORDER
A pay order is an instrument from one branch to another of the same Bank to pay a
certain sum of money to the person thereon or to his order. Unlike cheque, there is no
possibility of dishonoring pay order because before issuing P. 0 Bank takes out
money of the pay order in advance ...
For issuing a pay order the client is to submit an Application to the Remittance
Department in the prescribed form (in triplicate) properly filled and duly signed by
the applicant. The processing of the pay order Application form, deposit of
cash/cheque at the Teller's counter and finally issuing an order etc, are similar to those
of processing of L.D. Application.
As in case of L.D, each branch should use a running control serial number of their
own for issuance of a pay order. This control serial number should be introduced at
the beginning of each year, which will continue until the end of the year. A fresh
number should be introduced at the beginning of the next calendar year and so on.
Pay Order (Issue)
Following procedure is maintained for the issuance of PO:
1 Customer collects a PO form.
2 After filling the form, the customer deposits the money in cash or by
cheque.
3 The authorized officer then issues PO on its specific block. That block has
three parts,
4 One for bank and other two for the customer.
5 A/C Payee' crossing is sealed on all Pay Orders issued by the bank
6 The officer then put number of the PO block on the PO form.
7 Two authorized officers sign the block.
8 At the end customer is provided with the two parts of the block after
signing on the back of the part of the Bank.
9 The commission is 0.15%
Entry for Pay Order
By Cash
Cash/Party A/C .................................Debit
Pay order A/C ..................................Credit
Income on commission A/C ..................Credit

Payment of Pay order

1 The payee deposited to his collecting banker.
2 The collecting bank sends the PO to the issuing bank through clearing
house for arrangement.
3 The Pay order is passed and cancelled in the deposit section
4 Payment is given and is register in incoming payment of PO book.
As the PO issued by the bank is crossed one it is not pay over the counter. On the
contrary, the mount is transfer to the payees' account. To transfer the amount the payee
must duly stamp the PO.
Refund of pay Order
The following procedure should be followed for refund of pay order by cancellation
1. The purchase should submit a written request for refund of pay order by
cancellation attaching therewith the original pay order.
2. The signature of the purchaser will have to be verified from the original
application form on record.
3. Manager/ Sub-manager's prior permission is to be obtained before
refunding the amount of pay order cancellation.
4. Prescribed cancellation charge is to be recovered from the applicant and
only the amount of the pay order less cancellation charge should be refunded.
Commission recorded for issuing the pay order should not be refunded.
5. The pay order should be affixed with a stamp "cancelled" under proper
authentication and the authorized officer's signature of the pay order should
also be cancelled with RED ink but in no case should be torn. The cancelled
pay order should be kept with the relevant Ticket.
6. The original entries are to be reversed with proper narration.
7. Cancellation of the pay Order should also be recorded in the pay order
Issue Register.
Charges:
A commission of 0.15% is charged on a pay order.

Sunday 320

Date (1) 275

Month (April) 225

Money:

For 100000 100

 For 50000 858

For 20000 234

For 5000 231

Total money = 175000

Branch Code 112

T.T number is 2356

Since this T.T number is the same with the T.T number of client so Bank marks,
transfer of money from the client account to the Kohinur chemical industries.

5.5 DEMAND DRAFT

Demand Draft is an instrument containing an order of the Issuing branch upon another
branch known as Drawer branch, for payment of a certain sum of money to the payee
or to his order on demand by the beneficiary presenting the draft itself. DD is issued in
favor of a customer who maintains an A/c with this branch. It can be issued against
Cash.
Commission
15% charge is taken and postal charge is taken.
Issuance of Demand Draft
1. Get the Application form properly filled up and signed by the applicant.
2. Complete the lower portion of the Application Form meant for Bank's use.
3. Calculate the total Taka amount payable including Bank's commission is
charges etc.
4. If a cheque is presented for the payment of the D.D officer should get the
check duly passed for payment by the competent authority and record the
particulars of L.D on the back of the cheque.
5. If the purchaser desires his account with the branch to be debited for the
amount of D.D the officer should get the A/C. holder's signature verified properly,
from signature card on record of the branch and debit client's ale for the total
amount including commission charges etc.
6. If cash deposit is desired, request the purchaser to deposit the money at the
Teller's Counter.
7. The Teller, after processing the Application Form, Cash or Cheque, will
validate the Application form.
8. The first copy of the Application form is treated as Debit Ticket while the
second copy is treated as Credit Ticket and sent to Remittance Department for
 further processing. The third copy is handed over to the Applicant as customer's
copy.
9. Each branch maintains a running control serial number of their own for
issuance of L. D. Breach Drawee branch. This control serial number
should be introduced at the beginning of each year, which will continue
until the end of the year.
Payment of Demand Draft
1. On receipt of Credit Advice (IBCA) from the Issuing branch the following
responding tries are then be passed by the Drawee branch.
EXIM Bank General A/c Branch Dr.
Remittance Awaiting Disposal L.D payable A/c Cr.
Extracts of responding entries are to be sent to HORC on the same day.
2. When a D.D is presented for payment at the paying branch its details are to be
carefully examined with references to the following points
a. Whether the draft is drawn on their branch.
b. Whether the draft is crossed or not Amount of a crossed draft is not paid in
cash to the payee but to be paid to his account with a ban1e
c. Two authorized officials of the Issuing branch must have signed draft. Their
signatures are to be verified from specimen signature book let to be sure that
the draft is genuine. The verifier should put his initials in red ink against the
authorized signatures in the draft.
d. Endorsement on the back of the draft must be regular in case the draft is
presented through clearing.
e. The amount of the draft should not exceed the amount protect graphed
/written in red ink on the top of the draft.
f. The payee is to be properly identified in case of cash payment.
g. The particulars of the draft i.e. the draft number date amount and the name
of payee, should be verified from the D.D payable Register.
3. On payment the D.D is affixed with the branches Paid stamp and signatures there on
are cancelled with red ink. The date of payment is recorded in the D.D payable
Register necessary accounting entries are also passed and recorded in the books of
Accounts.
Accounting entry
With IBCA:
Remittance Awaiting Disposal D.D payable a/c Dr.
Client's Account/Teller's Cash Dr.
Without IBCA:
A. L.D paid without Advice a/c Dr.
After receiving the Ale
 i. EXIM Bank General Ale cc Dr.
ii. Remittances Awaiting Disposal- D.D payable A/c Cr.
ii. Remittances Awaiting Disposal- D.D payable A/c Dr
D.D Paid without Advice A/c Cr.

Stop payment of Demand Draft

As the Issuing branch issues the draft, the, payee or purchaser of the draft cannot give
stop payment instructions to the Drawee branch. If a paying branch receives any
request from the payee/endorsee or the purchaser of a draft for stopping payment of
the draft, it will ask them to approach the issuing branch for the purpose. The paying
branch should however exercise necessary precaution in this regard. Only the Issuing
branch can issue instructions for stop payment of draft under special circumstances.
However, if a stop payment order is received from a court of law the same should be
carried out. If a draft on which stop payment order has been issued buys, account is
presented for payment the same should be returned unpaid with the answer court
prohibited payment quoting court order number and date.

3.6 FOREIGN REMITTANCE

These remittance services are providing for exchange foreign currency. These services
are as follows:
1 Foreign Demand Draft
2 Endorsements of US$ in passport
3 Traveler's Cheque
4 Money gram
FOREIGN DEMAND DRAFT (F.D.D)
EXIM BANK accepts the charges for TOEFL, SAT, GMAT etc. through Foreign
Demand Draft. EXIM BANK opens Student Files to issue Foreign Demand Draft
following the permission of Bangladesh Bank. Before issuance of FDD, EXIM BANK
asks the students to fill up the TM Form, which contains the following particulars----
a. Name of the student
b. Full address of the student
c. Amount of FDD in Foreign Currency
d. Purpose of Remittance
e. Address of the Institution to which the FDD will be favored
f. Country receiving payment
g. Passport no. of the student with date of issue
h. Signature of the student
Endorsements of US$ in passport:
EXIM BANK endorses US$ in passports. To endorse US Dollar, the client has to apply
in the prescribed form (TM Form). The following entries are given in this regard:
Cash or Customers' A/C--------------------------------------- Dr.
Foreign Currency on Hand < Dollar Special>------------- Cr.

TRAVELER'S CHEQUE:
Traveller's cheques are issued by banks to avoid the risk of loss or inconvenience in
having to carry large amount of cash while travelling. The salient features of T.C. are:
I. The buyer of T.C. needs not to be a customer of EXIM BANK.
II. The buyer has to deposit money with the branch of EXIM BANK
equivalent to the amount of the I.C. he wants to buy.
III. Each T.C. is signed by the buyer at place marked "when countersigned
below with this signature", before the EXIM BANK Officer.
IV. T.C. is issued in single name .It is not issued in joint names or names of
clubs, societies and companies.
V. There is no expiry period for the T.C.
Accounting treatment:
The accounting treatment for the issuance of T.C. is as follows:
Cash or Customers' AJC--m-m-----m--m------Dr
MISC. Creditor <Issuing Bank>-m.:---m--------Cr
MONEYGRAM:
It is the new concept of transferring foreign remittance to Bangladesh. Any person
residing in the abroad can remit his money through the process of Money gram. There
are more than 22,000 Moneygram agents in over 100 countries are linked worldwide.
Only EXIM BANK is authorized to do this kind of business with their 27 branches.
This kind of business is permitted by Bangladesh Bank because of foreign remittance
is coming to our country.
There are some features of MoneyGram:
Fast:
When a person transfers money with the moneygram service his money gets there fast,
usually in 10 minutes or less. Other services often take day or even weeks.
Convenient
There are more than 22000 MoneyGram agents over 100 countries. Therefore, a
person can easily transfer his fund.
Secured
People use the moneygram service thousands of time a day all over the world. It is a
trusted guaranteed and reliable thoroughly personal way to transfer money.
Easy
Just one simple form and computerized money transfer network will speed
a person's funds to destination throughout the world quickly, effortlessly
and with his peace of mind priority.
PROCESS
1) Sender goes to the MoneyGram agent location to transfer his money to
Bangladesh.
2) Sender initiates transfer by completing "Send" format at MoneyGram agent
location.
3) Sender gets receipt and notifies recipients of the transaction reference
number.
4) Recipients goes to the Moneygram agent (in Bangladesh it EXIM BANK)
location, fill out a "Receive" form to request funds and shows proper identification.
5) Receiving Agent contact the Moneygram transaction center (I-lead office of
EXIM BANK) to obtain authorization to pay recipient.
6) Recipients receive the funds.
Additional information: .
A person needn't maintain any account in the EXIM BANK. Commission is taken Tk.
0.07 per Dollar amount. This amount is very low and now EXIM BANK is trying to
impose the fixed amount limit.
LOCKER SERVICES
EXIM Bank SHAMORAI Bazar branch is providing facility of locker service for the
purpose of safe guarding the valuable property of customers.
The person or organization that has any account in bank branch can enjoy this service.
They keep their valuable assets in banker's custody. Customers have right to look after
with a key of their individual lockers provided by bank.
The service charge is yearly Tk. 1500.

Terms and Conditions:

1 The safe vault will open during ~he banking hour unless otherwise changed
by the bank.
2 All fees and other charges in respect of the lockers will be payable in
advance.
3 The banker will not incur any liability or responsibility for any loss or
destruction or damage of any article, document, securities, or valuable in or
otherwise the contents of the locker/vault.
4 Either party can terminate this agreement on giving to the other seven days
notice in writing expiring prior to the date.
5 If the hirer loses the key of the locker, the bank should be notified without
delay.
 6 It is hereby agreed that the relation of the hirer and the bank is that of a
bailor and bailee respectively and not that of a customer and bank.
E-CASH (ATM (AUTOMATED TELLER MACHINE)
Automated teller machine (A TM) is one of the modern financial services
provided by bank. This is providing customer collection of money any
time he desires. Now a day life is to fast. To consider this bank creates this
service where s/he needs not to follow the banking hour to collect money
from his deposit .It is a debit card. Customer firstly deposit money against
this a/c then gets A TM service.
EXIM BANK is introducing ATM service from October 2001 with the seven other
Banks. Those Banks are
1. Dhaka Bank,
2. National Bank Ltd. ,
3. Credit Agricole Indosuez,
4. Islami Bank Bangladesh Ltd.,
5. South-East Bank Ltd.,
6. AI-Baraka Bank, Ltd.
7. Bank Asia, Ltd.

Procedure
1 A person who desires to get an A TM card should open an A TM account in
that bank.
2 An A TM form supplied to the customer specifying the account Name of
the account,
3 Account number, address, and telephone No etc.
4 After filling the form the officer verifies the form. ~ Jointly an A TM
account can be opened.,
5 Then he is supplied a deposit slip to deposit the cash. ~ Then he gets an A
TM/Debit card.
Terms and Condition
1 At the applicant request the Bank may issue the cardholder a card and PIN
if the applicant is a depositor of the Bank and remains an account at any bank.
The cardholder will pay such charges and fees for the provision of the card and
or PIN as the Bank may prescribe from time to time.
2 Holders of Valid E-Cash A TM/Debit are eligible to enroll for the utility bill
payment service using the card and or PIN, pas or other payment terminal.
 3 All transactions including utility bill payment initiated by the use or
purported use of the card shall be debited from the cardholder.
4 A cardholder can withdraw from his a Account Tk 20,000 per day. But by
in selling a card at a time no cardholder can withdraw more than Tk 2000.
5 A cardholder can withdraw his money from anywhere in Bangladesh from
any Bank
6 Mentioned above if there is a TM Machine.
Charges
1 Tk. 1500 annual fees for each Card
2 Tk 200 for replacement of each lost, stolen or damaged card.
3 Tk. 500 annual fee per card for bill payment to the first 3 utility bills
4 Tk. 100 annual fee per card for any additional utility bill payment.

PART FOUR
DISBURSEMENT OF LOAN AND SELECTION OF BORROWER.
One of the primary functions of commercial banks is sanctioning of credit to the
potential borrowers. Bank credit is an important catalyst for bringing about
economic development in a country. Without adequate finance, there can be no
growth or maintenance of a stable economy. Bank lending is important for the
economy, because it makes possible the financing of agriculture, commercial and
industrial activities of a nation. At the same time, a bank will, therefore, distribute
its funds among various sectors in a manner as to derive sufficient incomes.
EXIM Bank, being one of the largest governmental commercial bank of the
country, has some prejudice to finance directly on priority basis to agriculture,
industry and commerce sector for strengthening the economic base of the country.
Hence, it is very clear that, EXIM BANK Bank plays an important role to move
the economic wheel of the country.
4.1 LENDING PRINCIPLES FOLLOWED BY EXIM BANK
The Principle of lending is a collection of certain accepted time tested standards,
which ensure the proper use of loan fund in a profitable way and its timely
recovery. Different authors describe different principles for sound lending.
EXIM BANK follows the following five principles in its lending activity:
1. Safety
2. Security
3. Liquidity
4. Adequate yield
5. Diversity
6. Productive purpose
7. National interest
1. Safety
Safety should get the prior importance in the time of sanctioning the loan. At the
time of maturity the borrower may not will or may unable to pay the loan amount.
Therefore, in the time of sanctioning the loan adequate securities should be taken
from the borrowers to recover the loan. Banker should not sacrifice safety for
profitability.
EXIM Bank Ltd. exercises the lending function only when it is safe and that the
risk factor is adequately mitigated and covered. Safety depends upon:
The security offered by the borrower; and
The repaying capacity and willingness of the debtor to repay the loan with interest.
2. Liquidity
Banker should consider the liquidity of the loan in time of sanctioning it. Liquidity
is necessary to meet the consumer need.

3. Security
Banker should be careful in the selection of security to maintain the safety of the
loan. Banker should properly evaluate the proper value of the security. If the
estimated value is less than or equal to loan amount, the loan should be given
against such securities. The more the cash near item the good the security. In the
time of valuing the security, the Banker should be more conservative.

4. Adequate Yield
As a commercial origination, Banker should consider the profitability. So banker
should consider the interest rate when go for lending. Always Banker should fix
such an interest rate for its lending which should be higher than its savings
deposits interest rate. To ensure this profitability Banker should consider the
prospect of the project.
5. Diversity
Banker should minimize the portfolio risk by putting its fund in the different fields.
If Bank put its entire loan able fund in one sector it will increase the risk. Banker
 should distribute its loan able fund in different sectors. So if it faces any problem
in any sector it can be covered by the profit of another sector.
6. A Productive Purpose:
EXIM Bank exercises its lending function only on productive purpose.
7. National or social interest:
EXIM BANK also considers national aspect of any project while financing. They
take utmost care so that the project cannot be detrimental to the society as well as
to the nation.

4.2 REASON FOR LOAN DEFAULT

There are many reasons for loan default. The principle reasons are:
1
Sick management 2 Sick operation

Integrity Efficient machinery's

Skilled
Cooperation
labor/supervision
Financial/Marketing knowledge Good labor relation
Utilities of raw
Technical knowledge/Experience.
materials
Endurance and Judgment 3 Sick finance
4
Sick market Working capital

Freedom Repayment period

Openness Flexible rate of interest
Assets matching to
Growth
liabilities
Stability Collateral's
5 Sick product Capital market
Quality 6 Other reasons
Competitiveness Reputation
Analysis of balance
Demand
sheet
Durability Lending risk analysis
 TYPES OF LOANS AND ADVANCES:
The different types of loans and advances that BANK offers are as follows:
1) Secured Overdraft (SOD)
2) Loan against Imported Merchandise (UM)
3) Cash Credit.
4) Working Credit.
5) House Building Loan
6) Local Documentary Bill Purchased (LDBP)
7) Term Loan.
8) Loan against Trust Receipt (L TR)
9) Loan Against Other Securities (LAOS)
10) Export Credit.
11) Over Draft.
12) Consumer Credit Scheme
13) Staff Loan
1) Secured Overdraft (SOD):
It is a continuous advance facility. By this agreement, the banker allows his
customer to overdraft his current account up to his credit limits sanctioned by the
bank. The interest is charged on the amount, which he withdraws, not on the
sanctioned amount. EXIM BANK sanctions SOD against different security.

Types of Secured Over Draft

a) SOD
Advance is granted to a client against financial obligations. The security of
advance is granted to the person to whom the instrument belongs. The discharged
instrument is surrendered to the bank along with a letter signed by holder holders
authorizing the bank to appropriate the proceeds of the instrument on due date
towards the repayment of the advance. The Bank's lien is prominently noted on the
face of the instrument under the signature of an authorized bank official. The
instrument is issued by another branch of EXIM BANK or any branch of some
other bank, and then the concerned branch is intimated to lien mark the instrument.

b) SOD (General)
Advance is granted to a client against the work order of government departments,
corporations, autonomous bodies and reputed multinational private organization.
The client's managerial capability, equity strength, nature of the scheduled work is
judged to arrive at a logical decision. Disbursement is made after completion of
documentation formalities. Besides usual charge, documents like a notarized
irrevocable power of attorney to collect the bills from the concerned authority and
a letter from the concerned authority confirming direct payment to the bank is also
obtained. The work is strictly monitored to review the progress at each interval.
Advance allowed to purchasing foreign currency for payment against L/Cs (Back-
to Back) where the exporter cannot materialize before the date of import payment.
The processes of extending 800 are as follows:
i) The party must have a current AIC with the branch.
ii) If the ownership of the firm is proprietorship, then a trade license must be
submitted and in case of a limited company, all the documents required to
open a current AIC should be submitted. The financial statements of the
concerned firm should also be submitted.
iii) The party must maintain a good transaction with the branch and have a
good turnover rate.
iv) The party will apply to the officer in charge of credit department of the
branch for SOD arrangement.
v) The concerned officer of the branch will give him a Credit Application Form
and the party will have to fill this form. In this form he discloses all the
information about his concern, purpose of the loan, description of security,
etc.
vi) The concerned officer will prepare a "Credit Line Proposal", where he
writes about the business concern, details of proprietors/directors of the
concern, management structure, the existing credit facilities, the particulars
about the facilities that asked for - such as margin limit, date of expiry,
details of security, and any other relevant information. Then the proposal is
sent to the Head Office.
vii) The responsible Department of the General Advances Division will appraise
the proposal and if it seems to a viable then the loan will be sanctioned.
viii) After the loan is sanctioned, the branch will issue two copies of a sanction
advice, where all the terms and conditions set by the bank is mentioned. The
borrower is advised to write, "accepted" on the original copy if he is
satisfied with the terms and conditions of the bank and retain the duplicate
one as record.
2) L I M (Loan against Imported Merchandise):
Advances allowed for retirement of shipping documents and release of goods
imported through L/C taking effective control over the goods by pledge fall under
this type of advance. When the importer failed to pay the amount payable to the
exporter against import L/C, then EXIM BANK gives loan against imported
merchandise to the importer. The importer will bear all the expenses i.e. the
warehouse charge, insurance fees, etc. and the ownership of the goods is retain to
the bank. This is also a temporary advance cemented with import, which is known
as post import finance.

3) Cash credit:
Cash Credit (CC) is an arrangement by which a banker allows his
customer to borrow money up to a certain limit. CC is a favorite mode
 of borrowing by traders, industrialists etc. for meeting their working
capital requirements. It is operated like overdraft account. Depending
on the needs of the business, the borrower can draw on his cash credit
account at different time and when he gets money can adjust the
liability. EXIM BANK charges interest on the daily balance in the
account.

Quarterly Total Cash credit of EXIM Bank SHIMRAIL Bazar Branch

30lhJune 2005 301hSeptember 2005 20lh November 2005
100821662.40 Tic 116704608.22 Tic 136245922.94 Tk.
Source: Quarterly Balance Sheet of BASIC BANK Mol. Br.
Depending on charging security there are two (02) forms of cash credit:

a) Cash Credit (Hypothecation)

The mortgage of movable property for securing loan is called hypothecation.
Hypothecation is a legal transaction whereby goods are made available to the lending
banker as security for a debt without transferring either the property in the goods or
either possession. The banker has only equitable charge on stocks, which practically
means nothing. Since the goods always remain in the physical possession of the
borrower, there is much risk to the bank. So, it is granted to parties of undoubted
means with the highest integrity.

b) Cash Credit (Pledge):

Bailer in this case is called the "Pawnor" and the bailee is called the
"Pawnee". In a contract of pledge, Pawnor must deliver the goods pledged
to the Pawnee either actually or constructively. Transfer of possession in
the judicial sense is essential in the valid pledge. In case of pledge, the
bank acquire the possession of the goods or a right to hold goods until the
repayment for credit with a special right to sell after due notice to the
borrower in the event of non-repayment.

After getting the cash credit arrangement, the banker will issue a checkbook for
withdrawing cash from the account. Whenever the CC account holder wants to withdraw
cash from the account, the cash officer will scrutinize the amount of cheque in order to
make sure that the total drawings does not exceed the sanctioned limit.
The charge documents required for opening a CC account are as follows:
1 Demand Promissory Note (DP Note)
2 Letter of Agreement
3 Revival Letter
4 Letter of Continuity
5 Letter of Hypothecation/Pledge
6 Letter of Guarantee
7 Memorandum of Deposit of Title Deed (in case of CC hypothecation
arrangement)
8 Stock Report
9 Letter of Disclaimer
4) Working Capital:
Loans allowed to the manufacturing units to meet their working capital requirement,
irrespective of their size big, medium or large, fall under the category.

5) Export credit:
Credit facilities allowed facilitating export against L/C fall under this category. It
includes Loan against Packing Credit (LAPC), Foreign Documentary Bills Purchased
(FDBP) etc.
6) L T R (Loan against Trust Receipts):
Advance against a TR obtained from the customer is allowed when the documents
covering an import shipment are given without payment. The customer holds the
goods or their sale proceeds in trust for the bank until the LTR is fully paid off. TR is a
document, which creates the banker's lien on the goods. The period of TR may be 30-
4560 or 90 days. The sale proceeds of goods held in trust must be deposited to the
bank by the borrower irrespective of period of TR.

7) Local Bills Purchased Documentary (LBPD):

Payment made against documents representing sell of goods to local export oriented
industries which are deemed as exports and which are denominated in Local currency!
Foreign currency falls under this head. The bill of exchange is held as the primary
security. The client submits the nuisance bill and the bank discounts it. This temporary
liability is adjustable from the proceeds of the bills.
8) Loan against Other Securities (LAOS):
Loan against Other Securities is a 100% secured advance, which requires no sanction
from the I-lead Office. Marking lien on FDR, ICB Unit Certificate etc, sanctions it.
9) Term Loan:
EXIM BANK considers the loans, which are sanctioned for more than one year as
term loan. Under this facility, an enterprise is financed from the starting to its
finishing, i.e. from installation to its production. EXIM BANK offers this facility only
to big industries.
10) Overdraft:
A customer having current account is accommodated by overdraft facility against
security. Permission is given to overdue current account up to sanctioned limit is
continuous revolving credit and the borrower may operate any number of times within
sanctioned limit up to validity period of limit interest is charged on debit balance of
daily products, A short-term credit arrangement and renewable.
11) Consumer Credit Scheme:
This scheme is aimed to attract consumers from the middle & upper middle class
population with limited income. The borrower should have an account (SB or CD)
with the bank Minimum 25% of the purchase cost of the product is to be deposited by
the borrower with the bank as equity before the disbursement of the loan. The rest 75%
is to be kept as cash collateral (FDR, sanchay patra etc.) with the bank. The purchased
items are hypothecated with the bank. The disbursement of the loan is effected by
debiting time loan I term loan account to be opened in the name of the borrower. Loan
amount is disbursed through AIC payee pay order I Demand Draft directly to the seller
after submission of the indent, deposit of client equity & completion of documentation
formalities. The bank obtains post dated AIC payee checks drawn in favor of the bank
for the monthly installments covering the lending period from the borrower & the loan

Quarterly Consumer Finance Scheme disbursement by EXIM BANK Dil. Br.

30th June 2005 30th September 2005 20th November 2005

1448337.63 Tic 16358932.13Tk. 16985093.13 Tic

Source: Quarterly Balance Sheet of EXIM BANK

12) Staff Loan:

Bank official from senior officer and above is eligible for this loan. The maximum
amount disbursed is Taka.50, 0001- for. a period of 2 years. The rate of interest is 8%
per annum.
13) House Building Loan:
This loan is provided against 100% cash collateral. Besides, the land & building are
also mortgaged with the bank. Rate of interest is 15.5%. (Old rate 16.5%)
4.3 SELECTION OF THE BORROWER:
Selection of borrower is vitally important step for sanction loan. Due to lack of
information and moral hazard, banks have to suffer a lot due to the classified loans and
advances. If the selection of borrower is correct, that is, the borrower is of good
character, capital and capacity or of reliability, resourceful and responsible the bank
can easily get the return from the lending. Consequently, monitoring is making much
easier for the banker. From this point of view, EXIM BANK follows the following
procedures:

A Studying past track record:

After getting an application for a loan, an EXIM BANK Official studies the past track
record of the applicant. Generally the study includes:
1. Account balances and the past transactions;
2. Credit report from other banks;
3. Information of the Industry by studying market feasibility;
4. Financial statements (balance sheet, cash flow statement, and income
statement). If the borrower is a sole- proprietor, then the single entry accounting
treatment is converted to double entry system.
B. Report from Bangladesh bank
Report from Credit Information Bureau of Bangladesh Bank if the amount is more
than TK.10 Lac.
C. Borrower analysis:
Borrower analysis is done from the angle of 3-C (character, capital, capacity) or 3-R
(reliability, resourcefulness, responsibility). It follows that the bank forms a rational
judgment about the integrity of the borrower, which should be undoubted. The human
skill, conceptual skill, operational skill is qualitatively analyzed.
D. Business analysis:
Business analysis is done from two angles-terms, conditions, and collateral securities.
5.5 Interest rate on Loans and Advance

Types of Advances New Interest rate Old Interest Rate

Secured Overdraft (SOD) 15.5% 16.5%

Cash Credit (Pledge) 15.5% 16.5%

Cash Credit (Hypothecation) 15.5% 16.5%

Loan (General) 15.5% 16.5%

House Building Loan (Staff) 8% 8.00%

House Building Loan

15.5% 16.5%
(General)
Transport Loan (Staff) 7%-8% 8.00%

Transport Loan 15.5% 16.5%

Demand Loan 15.5% 16.5%

Industrial Credit 15.5% 16.5%

Loan against Trust Receipt

15.5% 16.5%
(LTR)

Loan against 15.5% 16.5%

Imported Merchandize (UM)

4.4 PROCEDURE FOR GIVING ADVANCE:

The General Advances Department of EXIM BANK usually follows the bellow
mentioned procedures and steps for sanctioning any kind of advances as available with
the branch:

First, step
The prospective borrower has to apply to Branch for loan by filling up of a specific
Application form. The Application form (Request for Credit Limit) contains following
particulars -
a) Name of the Applicant-
Firm/company......
b) Address:
i) Present
ii) Permanent---
iii) Factory/Show Room ---
c) Nature of A/C and No---
d) Telephone/Fax No
i) Office---
ii) Resident ---
iii) Factory / Show Room
e) Particular of Proprietor's/partners'/directors' name, Father's/ Husband's/ Mother's
 Name, permanent Address, age, Designation.
f) Nature of Business/Industry.
g) Date of Establishment/ Incorporation
h) Nature and Amount of Limit---
i) Purpose---
j) Period ---
k) Mode of Repayment---
j) Trade license number, date and expiry date (Photocopy of trade license enc1osed

Securities
Primary
i) Value of Stock of Pledge/Hypo--- Tk.
ii) Value of Work Order --- Tk.
iii) Value of Construction/Purchase (For HBL /Transport loan)
iv) Financial Obligation (FO) in the form of FDR/ Sanchay Patra)
v) Margin
Collateral
Area of land
i) Name and address of the owner of the property with father/husband's and mother's
name.
iii) Valuation of the property by any professional value.
Name and address of the guarantor with father's/husband's/mother's name:
i) Present address
ii) Permanent address
iii) Telephone number
Signature of the Applicant---
Second, step
After receiving the loan application form, branch sends a letter to Bangladesh Bank for
obtaining a report from there. This report is called CIB (Credit Information Bureau)
Report. This report is essential if the loan amount exceeds Tk.50 Lac. But
SHAMORAI Bazar. Br. usually collects this report if the loan amount exceeds Tk.10
Lac. The purpose of this report is to being informed that whether the borrower has
taken loan from any other bank or not if 'yes', then whether these loans are classified or
not.

CIB report contains the following contents:

1 Name of the Borrower
2 Fathers name
 3 Permanent address
4 City
5 Sector code
6 Nature of ownership
Third. step
After receiving cm report if the Bank thinks that the prospective borrower will be a
good borrower, then the bank will scrutinize the documents. In this stage, the branch
will look whether the documents are properly filled up and signed.
Fourth step
Then comes processing stage. In this stage, the Bank will prepare a proposal. A
proposal contains following relevant information:
Name of the Borrower Margin---
Nature of Limit--- Rate of Interest---
Purpose of Limit--- Repayment ---
Extent of Limit--- Validity---
Security---
Branch incumbent (CIP) has the discretionary power to sanction loan (SOD) up to
Tk.50 Lac against financial obligations by informing Head Office. But in that case, the
Branch Manager has to give attention to the following matters:
1 The interest rate of the loan must not be less than 15.5% and
2 The borrower must maintain 20% margin based on banker's customer's
relationship.

Except this case, the branch has to send the proposal to the Head Office.
Head Office will prepare a minute and submit it before the Executive
Committee (EC). The minute has to be passed by EC.

Fifth, step
After getting the approval of Bangladesh Bank, it will again come to the I-lead Office.
After the sanction advice, Bank will collect necessary documents (Charge documents).
These documents are:
1 Joint Promissory Note
2 Single Promissory Note
3 Letter of Undertaking
4 Loan Disbursement Letter
5 Debit Figure Confirmation Sheet
6 Letter of Continuity
7 Letter of Authority
8 Letter of Revival
9 Right of Recall the Loan
10 Letter of Guarantee
11 Letter of Indemnity
12 Trust Receipt
13 Hypothecation of Goods
14 Hypothecation of Vehicles
15 Counter Guarantee
16 Letter of Lien
17 Letter of Lien in case of advance against FDR
18 Letter of Lien And Authority for advances to third parties against Fixed
Deposit/ Call
19 Deposit! Special Deposit or margin or margin deposits
20 Letter of Authority to encase FDR
21 Letter of Agreement for Packing Credit
22 Letter of Guarantee for opening L/C
23 Charges over Bonds or certificates or Shares etc. by third person, firm or
company to secure specific and general liability
24 Memorandum of Deposit of Title Deeds
25 Hypothecation of goods to secure a Demand Cash Credit or Overdraft/
Loan amount
26 Guarantee by Third party.

Sixth, step
4.5 DOCUMENTS AND DOCUMENTATION
DOCUMENTATION:
Documentation is a very important aspect of loans and advances. It may be described
as the process or technique of obtaining the relevant documents/papers for securing
advances. A banker must obtain proper documents to be executed by the borrower to
protect the Bank's interest. Moreover, when money is lent against security of some
assets, the document must be got executed in order to give to the banker a legal and
binding charge against those assets. The documents for loans and advances can be
classified into the two categories namely charge documents and security documents.
Charge Documents are a set of printed and prescribed forms, which are executed by
the borrowers to protect Bank's interest while bank is providing loan/advances.
Different types of advances are allowed to the customers against different types of
securities.
Charge documents as required by the different types of advances are mentioned
bellow:

A) LOAN (General):
Quarterly Loan (General) disbursement of EXIM Bank SHIMRAIL Bazar Br..

30thJune 2005 30thSeptember 2005 20th November 2005

131680097.82 Tk. 132221735.72 Tk. 234521778.40 Tk.

Source: Quarterly Balance Sheet

D P NOTE signed on revenue stamp;
Letter of arrangement;
Letter of disbursement;
Letter of partnership (partnership farm) or Board of resolution (limited
companies)
Letter of pledge;
Letter of hypothecation;
Letter offline and ownership / share transfer form (in case of advance
against share);
Letter of lien for packing credit;
Letter of lien (in case of advance against F DR);
Letter of lien and transfer authority. (In case of advance against FDR, B S
P);
Legal documents for mortgage of property (As draft by legal adviser);
Copy of sanction letter mentioning details of terms and condition duly
acknowledge by the borrower;
Trust receipt;
B) OVERDRAFTS:
D P Note.
Letter of partnership
Letter of arrangement.
Letter of continuity
Letter of lien
Letter of lien and ownership /share transfer form (in case of advance
against share)
Letter of lien and transfer authority
Legal documents for mortgage of property

C) CASH CREDIT (Pledge):

1 Letter of pledge;
2 Letter of authority empowering the bank to deduct/realize go down, staff
salary and other incidental expenses for inspection, maintenance of the goods
etc;
3 Letter of declaration handing over the possession of goods stored/ to be
stored in the go down against the facility;
4 Letter of Disclaimer in case of Hired go down signed by the owner of the
go down; Sufficient insurance cover inserting the name of the Bank as
mortgage with bank mortgage clause.
5 Invoice /cost memo of the goods pledged; Stock report duly signed by the
borrower;
D) Cash credit (Hypothecation)
1 Letter of hypothecation;
2 Letter of authority empowering the bank to inspect the goods and take
possession of the goods in case of duly drafted by the lawyer of the bank.;
3 Stock report duly signed by the borrower on fortnightly basis or after every
deposit in the loan account or before realizing fund against limit;
4 Letter of declaration duly signed by the party clearly stating that the goods
hypothecated arc not in any case encumbered elsewhere.;
5 Sufficient insurance cover inserting the name of the Bank as mortgage with
bank mortgage clause;
 6 Letter of Disclaimer signed by owner of the godown in case of 3 rd party
godown. Third party Guarantee if required as per sanction advice;.
7 Statements of other immovable property of the borrower stating those are
not encumbered;
Mortgage
Equitable mortgage
1 Certificate from pourosava authority that the concerned property is situated
within pourasava area;
2 Original title deed of property;
3 Memorandum of title deed of property;
4 Registered irrevocable power of attorney duly drafted by bank's lawyer and
executed by the owner of the property;
5 Latest CS, RS, SA, parcha togetherwith latest receipt showing payment of
land, tax WASA, gass, electric, bills etc;.
6 Bia-deeds/parcha showing chain of transfer of tltle
7 Non-encumbrance certificate by Engineer and branch manager. Forced sale
value is acceptable;
8 Lawyer's certificate regarding genuineness of title on the property of the
mortgage and stating in clear term weather the property can be accepted as
security against advances to be allowed;
9 Letter of guarantee of the owner of the owner of the property in case of
third party property;
Legal mortgage
Mortgage deed duly drafted by bank's legal advisor and registered with competent
authority duly stamped.
1 Original title deed of property;
2 Letter of guaranty in case of 3 rd party's property;
3 Latest CS, RS, SA, parcha land revenue tax payment, gass WASA electric
bill payment;
4 Receipt, bia /chain deeds site map duly approved plan in case of building;
5 Non encumbrance certificate for last 12 years;
6 Valuation certificate (by engineer and branch manager forced sale value to
be considered;
7 Lawyer's certificate regarding valid title of the property and acceptability of
the property as security in clear terms .No vague opinion should be accepted.
8 Letter stating relation of the owner of the property with the borrower (in
case of 3rd party property ) (in case of rural property HOMESTEAD up to one
standard bigha not acceptable) .
Against transport
Hire-purchase agreement for hypothecation of the vehicle (STAMPED and
 duly NOT ARISED);
Purchased documents;
Registration of the vehicle in the joint name of bank and borrower (copy of
the blue book to be retained in the branch);
Road permits jointly in the name of bank and borrower;
Insurance cover against all possible perils inserting name of bank as
Mortgage with bank mortgage clause;
Certificate signed by the borrower that he has received the vehicle in good
condition and that he will exercise due care for maintenance of the vehicle;
Letter of installment;
Undertaking by the party that he will keep the vehicle always ready for
inspection by bank officials;
Bank's name must be written in the body of the vehicle in BOLD
LETTERS;

BILLS PURCHASED:
1 DP Note;
2 Letter of partnership.(in case of partnership farm) or Board of resolution( In
case OL limited company)'
3 Letter of arrangement;
4 Letter of acceptance, where it calls for acceptance by the drawee.
5 Letter of hypothecation of bill;
Seventh step
For withdrawing the loan amount, the customer creates a CD account and the loan 1S
transferred to the CD AIC. Afterwards, the 'customer can withdraw the money.

Eighth step
CREDIT DISBURSEMENT:

After verifying all the documents, the branch disburses the loan to the borrower. The
loan officer disburses the loan to the borrower's loan account .A "Loan Repayment
Schedule" is also prepared by the branch and is given to borrower.
Ninth step
After the disbursement of the loan the bank follows the borrower in the following
manner
1 Constant supervision.
2 Working Capital assessment.
 3 Stock report.
4 Break Even analysis
5 Rescheduling of repayment.
Tenth step
The loans are repaid in installment. This installment is according to bank directives.
Some loans are repaid all at a time. If any loan is not repaid then notices are served to
the customer. Sometimes legal actions are also taken for recover the loan.

PART FIVE
LENDING RISK ANALYSIS (LRA) AND MORTGAGE FOR SAFTY OF LOAN
Lending Risk Analysis (LRA) is a technique by which the risk of the loan is
calculated. Experienced people of General Advance Department do this analysis. It is a
ranking whose total score are 140. Among this score, 120 is for Total Business Risk
and 20 for Total Security Risk.
It is a four-scale rating.
In case of business risk, if the score falls:
Between 13-19, then--- Poor risk
Between 20-26, then----Acceptable risk
Between 27-34, then------- Marginal risk
Over 34, then-------------- Good risk.
In case of security risk, if the score fail:
Between -20 to -15, then-- Poor risk
Between -14 to 0, then-------- Acceptable risk
Between 0 to 10, then-------Marginal risk
Over 10, then------------------------- Good risk.
In LRA, following aspects are analyzed -
1. Supplies risk
2. Sales risk
3. Performance risk
4. Resilience risk
5. Management ability
6. Level of Managerial teamwork
7. Management competent risk
 8. Management integrity risk
9. Security control risk
10) Security covers risk.

5.1 CREDIT SCORING SYSTEM

The main purpose of credit scoring system as follows:
A credit scoring system uses a combination of financial ratios to produce a rating,
which is an indication of a company's management ability and financial strength.
Under credit scoring system two scores are calculated namely 'Y' score and 'Z' score.
A) 'Y' score should be applied to all companies.
B) 'Z' score should be applied to the large manufacturing companies;
Public companies quoted on the Dhaka stock exchange
Government owned or Quasi government companies
Other companies with a sale of over Tk. 30 cores.
The bank branches are required to report the scores in the mentioned spaces in
segment4 of CIB-O 1 FORM.
RISC GRADING
The bank branches are required to pick up the grading from the scoring Matrix such as
1A, 1B, 2B, etc. and put the grading' in the space provided in segment-4 of CIB -01
Form. They should not use tick mark

Scoring Matrix
Business risk

1 2 3 4

A GOOD Acceptable Marginal Poor

B GOOD Acceptable Marginal Poor

C GOOD Acceptable Poor Poor

Source: Credit manual o EXIM Bank

SECURITIES:
 EXIM BANK charges the following two types of security:
1. Primary security
2. Collateral security.

5.2 MODES OF CHARGING SECURITY:

EXIM BANK exercises following modes of charging security:
1. Pledge
2. Hypothecation
3. Lien
4. Mortgage.
There are different modes of charging security is exercised by the bank:
PLEDGE:
Pledge is the bailment of goods as security for payment of a debt or performance
or promise. Here, title and ownership are not transferred. Pledge goods may be
sold out and proceeds thereof may be appropriated towards adjustment of
Liability in case of failure of the borrower to repay or fulfill the terms and
conditions.
HYPOTHECATION:
This is mortgage of movables by an agreement and here neither possession nor
ownership is transferred. Hypothecated goods cannot be sold out/disposed off
without notice and court's order. However, if a special power of attorney is taken
in that case can be disposed off without going to the court.
LIEN:.
Lien is the right to retain possession and not right of ownership. Bank's lien is
general lien over its own financial obligation to clients. Property under lien
cannot be realized/sold and proceeds thereof cannot be appropriated without
notice to the owner and sometimes without the order of court.

MORTGAGE
Mortgage is the transfer of interest in immovable property to secure the
repayment of money advanced. Ownership remains with the mortgagor. In case
of equitable mortgage, Court Order is necessary and in case of registered
mortgage, the order of court is not necessary for sale/disposal of the mortgaged
property for adjustment of advance.
CIB
Bangladesh Bank has established within itself a Credit Information Bureau
(CIB), which collects credit information from the banks. Banks are required to
furnish such information in respect of credit limit of Tk.50000 and over. They
mention the Name of facility, security and charge along with outstanding
balance. After consolidating such information in respect of each customer, the
central bank supplies to the total limits sanctioned to and the number of banks
 dealing with a party. Thus the banks can find out if any of their customers is
having excessive borrowings from the banking system at any particular time.
5.3 LOAN CLASSIFICATION:
Loan classification is a process by which the risk or loss potential associated
with the loan accounts of a bank on a particular date is identified and quantified
to measure accurately the level of reserves to be maintained by the bank to
provide for the probable loss on account those risky loan.
Like other banks, all types of loans of EXIM BANK fall into following four scales:
Unclassified:
Repayment is stopped or irregular but has reasonable prospect of improvement
Doubtful debt:
Unlikely to be repaid but special collection efforts may result in partial recovery
Bad/ Loss:
Very little, chance of recovery.
 Loan classification:
Classificatio
15t phase 2nd phase 3rd phase 4th phase 5th phase
n

status Length of Length of Length of Length of Length of

overdue overdue overdue overdue overdue

Less than Less than Less than Less than Less than
Unclassified
12 9 9 6 3

Months Months Months Months Months

12 9 months 9 months 6 months 3 months

Substandard
months or or or or

Or more
More but More but More but More but
but

Less than Less than Less than Less than Less than
36 24 24 12 6

Months Months Months Months Months

36 24 24 12 6 months
Doubtful
months months months months or

Or more Or more Or more Or more

More but
but but but but

Less than Less than Less than Less than Less than
48 36 36 24 12

Months Months Months Months Months

48 month 36 month 36 month 24 month 12 month

Bad/loss
or or or or or

More More More More More

Sources: CIB report and personal observation.

 4th
2nd 3rd
Classification 1 phase
5t
phas 5th phase
phase phase
e

Unclassified 1% 1% 1% 1% 1%

Substandard 10% 10% 10% 15% 20%

Doubtful 50% 50% 50% 50% 50%

Bad/loss 100% 100% 100% 100% 100%

Frequency of Half Half

Annual Annual quarterly
classification yearly yearly

Sources: CIB report and personal observation.

CLASSIFICATION PROCEDURE:
The classification procedure is done as per the Central Bank's instructions in BCD
circular No.34 of 1989, BCD circular NO. 20 of 1994. The loans are classified based
on following criteria.

5.4 CLASSIFICATION CRITERIA:

Overdue criteria (OD):
Term loans become overdue wherever an installment is not received within 3 months
of the normal date of repayment for private sector loans and 6 months in case of public
sector loans. Continuous type of loans, if not renewed, becomes overdue on the date of
expiration of the loan. Classification status of a loan account is determined based on
the length of overdue period as under:
Qualitative criteria:
In addition to the above mentioned objective criteria loans can also be classified on the
basis of qualitative judgment taking into consideration the factors such as borrowers
performance, available securities etc.

Special conditions:
There are certain special conditions set out in this circular which require classification
even though a loan my not be overdue.

Inspecting department instruction:

Regardless of the above Bangladesh Bank's inspecting department may change the
bank's classification of any loan.
5.5 STATEMENTS PREPARED BY THE CREDIT DEPARTMENT:
Monthly statement prepared by the Credit Department for Bangladesh bank.
Quarterly statement prepared by the Credit Department for Bangladesh bank. Monthly
statement prepared by the Credit Department for Head office.
Showing monthly statements prepared by credit Department for Bangladesh bank

Monthly statements for Bangladesh bank Due Date

Monthly Credit (Rescheduled/ Increased/ Newly Sanctioned) Within 10th lath of

Schedule of Tk.1 Core and above The next month
Statement Of Post-Import Finance Against Commercially Do
Imported goods
Monthly statement of advance Of Inland Do
Discounted for month ended (Last Thursday)
Agriculture Loan (Sub-Sector wise) Do
Loans and advances for Govt./ Autonomous organization Do
Overdue and Classified Loan Within 5th of the
Next month
 Quarterly statements for Bangladesh Bank Due Date
Statement of Loans given to Directors of the Within 7th of the next month
Bank or to the Institutions in which the Directors
Have interest
Statement of Loans given to Directors of other Do
Bank or to the Institutions in which the Directors
Have interest
Statement of Industrial Loans Within 15th of the next month
Statement of Loan Outstanding Tk.1 Core and Do
Above
Statement regarding sector-wise Outstanding of Do
Loan and Advances
Statement of Advances (SBS-3) Within 15th of the next month
Statement Regarding Outstanding & Overdue Do
Position (Up to Tk1l Lac, Above Tk.1 Lac to
Tk.l0 Lac
Cm Statement Do

Showing monthly statement prepared by Credit department for Head office

Monthly Statements for Head Office Due Date

Overdrafts cash Credit Within 15t week of the next month

Term Loan, Demand Loan, House Building Loan Do

FBP, FDBP Do
I Packing Credit, Bank Guarantee, Statement of Do
L/C opened and Outstanding commitment
5.6 LEGAL FRAMEWORK FOR LOAN RECOVERY:
After being classified, if the borrower is unable to adjust the loan then the bank can take the
following legal actions by filing suit:
1. Filing certificate cases under Public Demand Recovery Act -1913;
2. Filing money suit cases under Aretha Rin Adalat-1990;
3. Filing Bankruptcy cases under Bankruptcy Act- 1997;
4. Filing cases under Negotiable. Instrument Act-1881 section 138 to
141 for insufficient fund (In case of term loan).
 PART SIX

PERFORMANCE OF EXIM BANK

For measuring the performance of EXIM Bank of this branch I wanted the financial
statement of the SHAMORAI Bazar branch. But SHAMORAI Bazar branch authority
is disagree to provide me it financial statement of their SHAMORAI Bazar branch.
They provide me the annual report and financial statement all over the branch of the
country (Aggregate branch financial statement). So I analysis financial statement of
EXIM Bank, not only the BRANCH.
It is new of enjoy that last year (2005-06) EXIM Bank earn net profit by Tk 118 core
Financial statement of EXIM Bank represent below:
 6.1 Balance sheet as at December 31, 2007

2007 2006
Property and assets Notes Amount (Tk.) Amount (Tk.)
Cash:
Cash in hand (including foreign 4.00 152,207,097 113798477
currency)
Balance with Bangladesh Bank 5.00 659,108,935 274037264
and its agent banks (including
foreign currency)
Balance with other banks and 6.00 2,442,781,141 3043025156
financial institutions
In Bangladesh 2371218673 2929629737
Outside Bangladesh 71562468 113395419
Money at call on short notice 7.00 60000000 1632000000
Investments: 8.00 2037835354 1163703654
Government 1505698800 950302500
Others 532136554 213401154
Loans and Advances: 9.00 11011834555 6722804334
Loans, Cash Credit, Overdrafts, 9304777235 5405427302
etc
Bills Purchased & discounted 1707057320 1317377032
Fixed assets including 10.00 106464136 97988266
premises, furniture and
fixtures
Others assets 11.00 393533997 444166685
Not-banking assets - -
Total Assets: 16863765215 13491523836
 Balance sheet as at December 31, 2007

2007 2006
Liabilities and capital Notes Amount (Tk.) Amount (Tk.)
Liabilities:
Borrowings from Bangladesh Bank, 12.00 867800000 20485000000
other Bank, financial institutions
and agents
Deposits and other accounts: 13.00 14454129315 10450160991
Current Accounts and other 1543069330 905888757
Accounts
Bills Payable 109286849 78479501
Savings Bank Deposits 749516507 614956477
Fixed Deposits 10899416811 8023257967
Bearer Certificates of Deposit - -
Short Term Deposits 384028052 238793721
Deposit Under Special Scheme 731073005 581391394
Foreign Currency Deposits 37738761 7393174
Other liabilities 14.00 734695291 385542317
Total Liabilities 16056624606 12884203308
Capital/Shareholders Equity
Paid up Capital:
4290000 Ordinary shares of Tk 100 15.00 429000000 429000000
each)
Proposed Bonus Share -
Statutory Reserve 16.00 149672451
Surplus in Profit and Loss A/C 17.00 228468158
Total shareholders Equity 807140609 607320528
Total Liabilities and Shareholders 16863765215 13491523836
Equity

The accompanying notes form an integral part of this financial statement.

 6.2 Off-Balance sheet as at December 31, 2007
2007 2006
Contingent liabilities Note: A Amount (Tk.) Amount (Tk.)
Acceptances & Endorsements 923784515 450376435
Letters of Guarantee 817729059 453580215
Irrevocable Letters of Credit 3450276650 1537177000
Bills of Collection 253887285 462822740
Other Contingent Liabilities - -
Total : 5445677509 2903956390
Other commitments:
Documentary credit short term trade related - -
transactions
Forward assets purchased and forward deposits - -
placed
Uncrown note issuance and revolving - -
underwriting facilities
Uncrown formal stand by facilities, credit lines - -
and other commitments
Total: - -
Total off-balance sheet items including contingent 5445677609 2903956390
liabilities
Note: A Letters of guarantee

Money for which the Bank is contingently liable in respect of

guarantee given favoring
2007 2006
Taka Taka
Directors - -
Government - -
Bank and other financial institutions - -
Others 817729059 453580215
817729059 453580215

The complying notes form an integral part of this financial statement.

6.3Profit & Loss account for the year ended December 31, 2007
 2007 2006
Contingent liabilities Note : Amount (Tk.) Amount (Tk.)
Interest income 18.00 1374379710 1004359239
Interest paid on deposit and 19.00 1045462115 726064552
borrowings, etc
Net interest income 328917595 278294687
Investment income 20.00 126303992 80439298
Commission, exchange and 21.00 211337861 133703617
brokerage
Other operating income 22.00 38249889 20036441
Total operating income 704809337 512474043
Salary and allowances 23.00 110139273 94493095
Rent, taxes, insurance, electricity, 24.00 32883242 26775150
etc
Legal expenses 354101 272257
Postage, stamps, 25.00 20035922 9452847
telecommunication etc
Stationery, Printings, 26.00 16238084 11459959
Advertisement, etc
Directors fees & other expenses 27.00 2098485 2174953
Auditors fees 60000 60000
Managing Directors Salary & 3297581 4197096
allowances
Depreciation and repairs 28.00 17492129 13913940
maintenance of banks assets
Other expenses 29.00 82296758 40837161
Total operating expenses 284868575 203642094
Profit before provisions 30.00 419940762 308831949
Provision for loans, advances and 31.00 56631523 35127923
others
Total profit before taxes 363309239 273704026
Provision for taxation for the year 163489158 117751036
Net profit after taxation 199820081 155925990
Retained surplus brought forward 101309925 97740
from previous year
Retained surplus before 30113006 156050730
appropriation
Appropriations:
Statutory Reserve (20% on pre-tax 72661848 54740805
profit)
Proposed dividend as Bonus share 32.00 - 9945000
Retained surplus 228468158 1859925
Earnings per share (EPS) 33.00 46.58 36.35
The complying notes form an integral part of this financial statement.

6.4 Cash flow statement for the year ended December 31, 2007
2007 2006
Contingent liabilities Notes Amount (Tk.) Amount (Tk.)
A) Cash flows from operating
activities
Interest receipts 1374379710 1163089970
Interest payments 1045462115 884795283
Fee and commission receipts 211337861 133703617
Payments to employees 113436746 98690191
Payments to suppliers 43234746 20682279
Income taxes paid 203633106 67064898
Receipts from other operating 38249889 20036441
activities
Payments to other operating 112763946 72086268
activities
Operating profit before changes in 105436693 173511109
operating assets and liabilities
(Note-A)(i)
Increase Decrease in operating
assets & liabilities
Treasury bill/bond 555000000 220000000
Loans and advances to the 4289665328 3483285269
customers
Other assets 206539884 48957802
Deposit from other banks 163452096 740674208
Deposit from customers 4066131167 2909794895
Interest payable to the customer 101289253 59641663
Other current liabilities 177393310 12294170
Cash received from operating 456763810 29838135
assets and liabilities (Note-A) (ii)
Net cash from operating activities 351327117 143672974
(A=ixia)
B Cash flow from investing
activities
Income received from investment 121433765 67587844
Proceeds from sale of securities 4870227 12851454
Payments for purchase of 318735400 8246154
securities
Purchase of property, plant & 25055605 47013641
equipment
Adjustment for property, plant & 1146706 3444951
equipment
Net cash from investing activities 216340307 28624454
C) Cash flows from financing
activities
Payments in borrowings 1180700000 306500000
Net cash from financing activities 1180700000 306500000
D) Net increase/decrease in cash 1748367424 134202572
and cash equivalent (A+B+C)
E) Cash ands cash equivalents at 5063163397 5197365969
beginning year
F) Cash and cash equivalent at 3314795973 5063163397
end to the period (D+E) Note-B

6.5 Reconciliation

NOTE: A 363309239 273704026

Profit before tax 126303992 80439298
Less: Investment income 237005247 193264728
Add: Depreciation 15433029 12183356
Provision for loans and advances 56631523 35127923
Less: Advance income tax 203633106 67064898
105436693 173511109
NOTE: B
Closing cash & cash equivalent
Cash in had (including foreign currency) 152207097 113798477
Balance with Bangladesh Bank and its agent banks 659108935 274037264
Balance with other banks and financial institutions 2442781141 3043025156
Money at call on short notice 60000000 1632000000
Prize bond in hand 698800 302500
3314795973 5063163397

The complying notes form an integral part of this financial statement.

 6.6 Statement of changes in Equity for the year ended December 31, 2007
Particular as Paid up Statutory Proposed Profit & Total
capital reserve Bonus Loss Amount in
Share Taka
Balance as at January 4290000 77010603 99450000 1859952 907320528
01, 2005 00 5
Changes in accounting - - - - -
policy
Surplus/deficit on - - - - -
account of revaluation
of properties
Surplus/deficit on - - - - -
account of
reevaluation of
investments
Currency translation - - - - -
differences
Net profit for the - - - 19982008 199820081
period 1
Addition/Transfer - 72661848 - 7266184 -
8
Balance as at
December, 31 2005

The complying notes form an integral part of this financial statement.

 Liquidity statement as at December 31, 2007
Particulars Up to 1 1-3 months 3-12 1-5 months More than Total
months months 5 years
Assets:
Cash in hand 152207097 - - - - 152207097
Balance with other bank & financial 831890076 400000000 1770000000 100000000 - 3101890076
institutions
Money at call on short notice 60000000 - - - - 60000000
Investment 400702954 - - 812132400 8253000000 2037835354
Loans & Advances 882819891 1318603201 7543604379 1128749971 138057113 11011834555
Fixed assets including premises, - - - 337409 106126727 106464136
furniture and fixtures
Other assets 7034860 94021417 6115870 286361850 - 393533997
Non-banking assets - - - - - -
Total Assets 2334654878 1812624618 9319720249 2327581630 1069183840 16863765215
Liabilities:
Borrowings from Bangladesh Bank, 430000000 - - 437800000 - 867800000
other banks, financial institutions and
agents
Deposits and other accounts 1052227954 6978402132 2140448216 3973456533 309594480 14454129315
Other liabilities 13196447 94850021 15695526 486590651 124362646 734695291
Total liabilities 1495424401 7073252153 2156143742 4897847184 433957126 16056624606
Net Liquidity Gap 839230477 5260627535 7163576507 2570265554 635226714 807140609
The complying notes form an integral part of this financial statement.
6.7 Studies by Bangladesh Bank:

Bangladesh Bank evaluates performance and economic condition of any Bank all over the
country by the formula and this is CAMEL.
Here,
C= Capital
A= Asset
M= Management
E= Earning power
L= Liability
The bank that scores is higher that gets grade A.
In the last year (2005-2006) EXIM Bank gets the highest grade than other Banks if our
country both in public and private sector and gets highest grade according to CAMEL. In the
year 21005-2006 is Tk 118 core. Good performance is very essential of any bank for profit
making and strong survival. When any customers want to open any account in any bank than
they observe the Banks performance and financial condition. When any customers want to
deposit money to any Bank than they observe Banks financial position. Bank has the ability to
repayment of customer deposit. Customers want to ensure that Bank have ability to return
deposit money when customer need. Customer think that Bank have the ability to provide loan
when need with easy condition. CAMEL acts positively for EXIM Bank to increase its
reliability. To become first or achieving highest score increase its goodwill to the customer.
Existing customer are delighted and proved to know this message and many customers are
created after publishing that EXIM Bank gets highest grade by Bangladesh Bank. All
customers believe that EXIM Bank will not forfeit in near future; it will achieve highest
profit as like as the year 2005-06.

Strength of EXIM Bank:

1. Strong position in CAMEL rating
2. Efficient administration
3. Co-operation with each other
4. Uses of swift technology
5. Good banker customer relationship
6. Strong financial position

Weakness of EXIM Bank:

1. Reluctance to marketing campaign
2. Existing of manual system in very sectors
3. Every rare practice of consumer credit scheme
4. All the employee are not efficient
5. Lack of computer skilled manpower.
 PART SEVEN
ANALYSIS OF FINANCIAL POSSISSION OF EXIM BANK

It is very needed to analysis financial information of my organization to taken any

decision when necessary. We can measure the institution have ability to repay my
investment or fall when any customer want to open any account in any bank then they
want to know what is the financial condition of Bank it is able to return their deposits and
interest when they need. Basically customers want to know that Bank will not Bankrupt is
near future. Client can get idea about Bank by ratio analysis. Ration analysis means
comparable relationship between others that express in number. Another ways the term
ratio refers to the numerical or quantitative relationship between two items or variable.

We can justify the actual financial condition of Bank by ratio analysis. I scrutinize
of EXIM Bank financial position by using the data that is collected from the annual report
of that Bank.

7.1. Analysis of liquidity of EXIM Bank

Current Assets
Current Ratio
i) Current liability
Current asset:

Cash in hand 152207097

Balance with BD 659108935

Balance with other Bank 2442781141

Money at call on short notice 60000000

Total 3314097173

Current liabilities:

Borrowing from other Banks 867800000

 Deposit in current account 1543069330

Bills payable 109286849

Total 2520156179

3314097173
Current Ratio
2520156179
= 1.32 : 1
Current ratio of EXIM Bank is 1.32:1 it means BASIC Bank has 1.32 taka to meet
the current liability of 1 taka. High current ratio is not well for Bank because it will reduce
the profit. For this reason EXIM Bank authority does not keep excess current asset.

Quick assets
Acid test ratio
2. Quick liabilities

Cash in hand 152207097

Money at call on short notice 60000000

Total 212207097

Quick liability

Current account 1543069330

Bill payable 109286849

Total 1652356179

212207097
Acid test ratio
1652356179
= 0.13:1
It acid test ratio is 0.13:1 that means EXIM Bank has available money of Tk. 0.13
for quick demand of Tk. 1. Though we think that it is very poor ratio but in respect of
Bank it is better because current account holder may not withdraw money within 6 month
or more and available money will be collected by daily from customer.
wroking capital
Working capital ratio
3. current liabilities
Working capital = Current assets
Minas current liabilities = 3314097173 2520156179
= 793940994
 793940994
Working capital ratio
2520156179
= 0.32:1
Working capital ratio is 0.32:1 it means contribution in current asset is Tk. 0.32 is
that comes from owner fund then Tk. 1 will come from outsides fund. There is no and that
if owner contribution is higher than it is better for the Bank.

7.2. Capital structure ratio:

Liabilities
Debt equity ratio
Owner fund
External Liabilities:

Current liabilities = 2520156479

Saving bank deposit = 749516507

Fixed deposit = 10899416811

Short term deposit = 384028052

Deposit under special Scheme = 731073005

Foreign currency deposit = 37738761

Other liabilities = 734695291

Total = 16056624606

7.3. Shareholder equity:

Paid up capital = 429000000

Proposed bonus share = --

Statutory Reserve = 149672451

Surplus in profit and loss account = 228468158

Total = 807140609
 16056624606
So, Debt ratio
807140609
= 198.93:1

EXIM Bank external liabilities are very high. When owner contribute Tk. 1 then
external liabilities insure by Tk. 198.93. We know Bank doing business by using other
people fund. So successful of Bank depend on the efficient utilization of this debt.
owner fund
2. Net worth total asset = Total asset
307140609
Ratio = 16863765215
= 0.05: 1

Net worth total asset ratio is 0.05: 1 that means if owner claims Tk. 0.05 then
creditors claim Tk. 1 in fixed asset.

7.4. Profitability ratio:

Net Pr ofit
100
1. Net profit ratio = Turnover
363309239
100
= 704809337
= 51.6%

Profit caring capacity of EXIM Bank is very high that 51.6 percent of total
turnover. Higher earning profit defines that management are high efficient in using
borrowing capital.
2. Return on capital employment ratio =
Net profit before taxes
100
Employed Capital
 Employed capital= Total assets minus current liabilities.
= 16863765215 2520156179
= 14343609036
363309239
100
Return on capital employment ratio = 14343609036
= 2.5%
EXIM Bank earns very poor profit against it total employed capital.

7.5 Comment on analysis:

Bank is the financial institution that doing business with other funds, Bank is
compelled to repay the client money and earn profit by investing client money. So Bank
keep high current asset on hand. EXIM Bank debt equity ratio is high that is 198.93%:1.
But it is not matter of fear that EXIM Bank earn high profit by efficiently using this
borrowed fund from customers and other agent and financial institution or BD. EXIM
Bank earn high profit compare to turnover that is more than 50%. So I can say that
financial condition EXIM Bank is very good.
8.00 Recommendation
i) EXIM Bank should take care more for selection a customer
basically it should analysis the financial possession of its customer for
giving loan advances.
ii) It is better for the EXIM Bank to give loan for short-term period.
iii) EXIM Bank should not give loan to the few customers as large
amount. So it should giving loan may customer a small amount.
iv) EXIM Bank should not give attention for higher interest for loan
and advances because the greed of higher interest is the responsible
for Bank croupy.
v) EXIM Bank should consider the interest expenses rate for
deposits of customer.
vi) EXIM bank should not invest its current account balances
because it may causes of liquidity crisis.
vii) For security of loan and advances EXIM Bank should priority
for movable and liquid assets.
viii) EXIM Bank should so carefully observe the repayment history
of the borrower.
9.00 Conclusion
The success of the Bank Depends on the Utilization of its fund. For this
reason Bank should select customer very carefully. EXIM Bank does not
consider the highest rate of interest in the time of sanction loan only. EXIM
Bank considers about the repayment by the customers as a result bad debt for
loan and advances of EXIM Bank is very few compare to others. Recovery of
loan and advances of the EXIM Bank is good.During the three months Practical
orientation program at SHIMRAIL Bazar Branch, almost all the desks have been observed
more or less. This practical orientation program, in first, has been arranged for gaining
knowledge of practical banking and to compare this practical knowledge with theoretical
knowledge. Comparing practical knowledge with theoretical involves identification of
weakness identified. Though all departments and sections are covered in the internship
program, it is not possible to go to the depth of each activities of branch because of time
limitation. However, highest effort has been given to achieve the objectives the internship
program.

In the conclusion, I want to give thinks to the EXIM Bank Head office authority,
especially Mr. Md. SHAH ABDUL BARI vice president of the Human Resources
Division. I give special thanks to all the officials of EXIM Bank,SHIMRAIL Bazar Branch
who helped me a lot amount my practical exposure in the Bank. I want to express my
deepest respect and thanks to my Guide teacher, MD MONJUR MORSHED who guided
me with his kind help in completing my internship program in EXIM BANK.
 Acronyms

BGMEA Bangladesh Garments Manufacturers & Exporters Association

BB Bangladesh Bank
BL Bill of Lading
CC Cash Credit
CCI & E Chief Comptroller of Import & Export
C&F Clearing & Forwarding
CIB Credit Information Bureau
CRF Clean Report Findings
EPB Export Promotion Bureau
ERC Export Registration Certificate
EXP Form Export Form
IBCA Inter Branch Credit Advice
IBCT Inter branch Credit Transaction
IBDA Inter Branch Debit Advice
ID International Division
IMP Form Import Form
IRC Import Registration Certificate
LIM Loan Against Imported Merchandise
LTR Loan Against Trust Receipt
MBM Masters in Bank Management
OBC Outward Bills for Collection
PAD Payment Against Document
SOD Secured Overdraft
SWIFT Society for Worldwide Inter bank Financial
TIN Telecommunication Tax Identification Number
 Bibliography

Ali, S.A., Foreign Exchange and Financing of Foreign Trade, Lita Academics, Dhaka,
1995.

Awasthi, G.D., Trade Payments: Commentary, Cases & Text, Academy of Business
Studies, New Delhi, 1997.

Basudevan, S.V., Theories of Commercial Banking, Reading Materials on Theory &

Practice of Banking (B-1 01), Bangladesh Institute of Bank Management (BIBM),
2004.

Chowdhury, L.R., A Textbook On Foreign Exchange, Fair Corporation, Dhaka, 2000.

Choudhury, Dr. T.A., Modes of Payment in International Trade, Reading Materials on
International Trade & Finance (E-102), Bangladesh Institute of Bank
Management (BIBM), 2004.

Credit Manual, BASIC Bank Ltd.

Farooqi, Q.G.M., Charging of Securities, Talk Synopsis.

Gordon, E. & Natarajan, K., Banking: Theory, Law & Practice, Himalaya Publishing
House, Mumbai, 1996.

Gulshan, S.S. & Kapoor, G.K., Banking Law and Practice, S Chand & Company, New
Delhi, 1994.

Habib, S.M.A, Project Appraisal - Concept~ Techniques & Uses, Reading Materials on
Credit Management in Banks (B-104), Bangladesh Institute of Bank
Management, 2004.

Miah, AA, Scrutiny, Lodgement and Retirement of Import Bills, Reading Materials on
International Trade & Finance (E-102), Bangladesh Institute of Bank
Management (BIBM), 2004.
Morium, S. & Rahman, S., Credit Investigation and Preparation of Credit Report,
Reading Materials on Credit Management in Banks (B-104), Bangladesh Institute
of Bank Management, 2004.

BASIC Bank Annual Report, 2005.

Sundharam, K.P.M. & Varshney, P.N., Banking Theory, Law and Practice, Sultan Chand
& Sons, New Delhi, 1996.

Faruk, kaji, principle of Banking, Kaji prokashoni, Dhaka, 2006.