THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH THE IMPORT DEPARTMENT: CITIBANK N.A.

DHAKA, BANGLADESH

by

Efaz Alam Chowdhury ID 0620382

An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration

INDEPENDENT UNIVERSITY, BANGLADESH May 2010

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH.

by

Efaz Alam Chowdhury ID 0620382

has been approved May 2010

____________________ Sylvana Maheen Ahmed Lecturer Finance School of Business Independent University, Bangladesh

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH Letter of Transmittal

May 2, 2010

Sylvana Maheen Ahmed Lecturer, Finance School of Business Independent University, Bangladesh (IUB) Dhaka, Bangladesh.

Subject: Submission of the internship working report.

Dear Madam, With due respect, I would like to inform you that, it is a great pleasure for me to submit the working report on The Import Department, Citibank N.A. Bangladesh., as a requirement for BBA 499 program. My internship period started from 10 March 2010 as is till 11 June 2010.I am working in the trade department of Citibank N.A. Bangladesh with the office is in Motijheel.

Sincerely Yours . Efaz Alam Chowdhury ID: 06203852

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH Acknowledgement

I am grateful to my academic supervisor Ms. Sylvana Maheen Ahmed for her guidance and instructions. I am also thankful to Head of HR Division of Citibank N.A. Bangladesh for giving me the opportunity to do the internship.

I am also grateful to the employees of trade department for their cooperation. They have been very helpful in showing me the work process and provided relevant information for my report whenever I approached. They never hesitated or did not feel disturbed when I asked questions. It was a great opportunity to do internship in such an organization. The experiences I have gathered will be very beneficial in my career.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH Table of Contents Content Page #

Abstract 1.0 Introduction 1.1. Origin of the Report 1.2. Objectives of the Report 1.3. Objectives of the Report

1 2 2 3 3

2.0 Background on Citibank 2.1. Citibank Bangladesh 2.2. Citibank Bangladesh Trade Operations 2.3. The products of Trade in Citibank Bangladesh

4 4 4 5

3.0 The Import Process, LC Issuance and Amendment 3.1. The Import Process 3.2. Letter of Credit Issuance and Amendment

6 6 7

4.0 My Work and Responsibilities

12

5.0 Conclusions and Recommendations 5.1. Conclusion 5.2. Recommendations References

14 14 15 16

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH Appendix Appendix I: LC issuance scan cover sheet Appendix II: LC amendment scan cover sheet Appendix III: LC application form Appendix IV: LC authorization form Appendix V: Import form Appendix VI: LC issued customer copy Appendix VII: LC amended customer copy Appendix VIII: LC issued advising bank copy Appendix IX: LC amended advising bank copy 17 17 18 19 20 21 22 25 26 29

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH Abstract

Citibank N.A. is one of the biggest banks in the world and in 1995 they open their business in Bangladesh. Over the years they have grown in Bangladesh and in trade services they are one of the best. Trade is one the primary services provided by banks. Citibank Bangladesh follows up transactions that Citibank India processes. Citibank Bangladesh has a very efficient system. There are a lot of important documents requires and so there are check point at almost every step of processing. As a result there is very little chance of mistake, as mistake may have enormous consequences. It is an honor for me to be a part of Citibank N.A. Bangladesh Trade Department and I thank IUB for providing me with this opportunity through their internship program.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 1.0 Introduction

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1.1 Origin of the Report

IUB has provided us, the fresh graduates the wonderful opportunity to learn about the real world through real time working environment. These experiences could never be gathered from books and are priceless. The course Bus 499 will help us to progress in to our working career. The requirement of this course is to work in an office for three months and for the completion of the course, at the end of the three month period a report has to be made on the experiences gather. Different types of reports can be prepared. I have chosen to do a working report titled The Import Department: Citibank N.A. Bangladesh. My internship started on March 11, 2010 and will end on June 09, 2010.

My organizational supervisor is Md. Muniruzzaman Molla, Vice President, Trade Operations, Citibank N.A. Dhaka, Bangladesh. He cooperated fully with me and without his help completion of the report wont have been possible. My working report is on the import section of the Trade Department. In an expanding economy like ours smooth import procedure is very important and Citibank N.A. Bangladesh provides just that.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 1.2 Objectives of the Report

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My objectives in this Report are to discuss about the Import process in Citibank N.A. Bangladesh. I am going to talk in details about LC issuance, LC amendment, LC preparation, LC Recording and LC closing.

I will also discuss about my various work in the trade department.

1.3 Sources of Information

Primary Source: From informal discussions with the officers of the trade the trade department. From daily activities conducted by me.

Secondary source: Web sites. Citibanks trade manual (L.O.P).

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 2.0 Background on Citibank

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2.1 Citibank Bangladesh

Citibank N.A. started its operations in Bangladesh in 1987, with the opening of a representative office. The bank opened its first full-service branch in Dhaka in 1995 (www.bangladeshtrades.com, n.d.). The bank has now has four branches and two offshore banking units with 175 employees serving both corporate and some individual customers (www.asia.citibank.com, n.d.).

Since 1987, Citis operations encompass primarily on corporate and commercial banking services under the Institutional Clients Group (ICG). It provide a comprehensive range of financial services including treasury management, transaction services, foreign exchange and structured finance to corporate clients, governments and financial institutions. The bank has been offering its customers the highest standard of financial services backed by sophisticated technology and innovative product solutions. The bank also provides remittance services to the expatriate community all across the world and largely in the Middle East (www.asia.citibank.com, n.d.).

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 2.2 Citibank Bangladesh Trade Operations

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Citibank offers a robust operational infrastructure to handle large transaction volumes. The regional and global trade experts forming partnership with the clients deliver the best-tailored trade solutions that facilitate the complex process of crossborder trade transactions. The bank has an array of products that facilitate import and export transactions and offers the unique feature of real-time creation, monitoring and controlling of international commercial transactions through its world-class CitiDirect Online Banking platform (www.asia.citibank.com, n.d.).

2.3 The products of Trade in Citibank Bangladesh

Import LC Issuance Import bill under LC Incoming collection Delivery order Advance payments

Export Export LC collection Export collection Export LC confirmation Export bill negotiation Export bill discounting Export loan

(Source: Muniruzzaman, 2010)

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 3.0 The Import Process, LC Issuance and Amendment

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3.1 The Import Process

Citibank N.A. facilitates imports of three sections: Local Export processing unit or EPZ Foreign

The steps of the overall import process (Muniruzzaman, 2010): 1. There is a sales contract between Applicant (importer) and Beneficiary (exporter). 2. Applicant gives Letter of Credit (LC) application to issuing bank. 3. The issuing bank issues the L/C and sends to the advising bank for advising. 4. The advising bank delivers the L/C to the beneficiary. 5. The beneficiary ships the good to the applicant. 6. The beneficiary sends the documents to the negotiating bank. 7. The negotiating bank sends the documents and reimbursement claims to the issuing

bank. 8. Applicant pays the issuing bank and collects the received documents. 9. Issuing bank pays off advising bank or negotiating bank. 10. Negotiating bank pays the beneficiary. 11. The applicant picks up the goods.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 3.2 Letter of Credit Issuance and Amendment

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I was employed in the back to back LC Issuance and Amendment section of the import department. Back to back import is only for garments industries, which are given the privilege by the Bangladeshi government to just keep 20% to the amount they are to import as collateral. The back to back option is only provided on the sales contract between the applicant and the beneficiary .This has significantly helped in the development of our garments industries. Other businesses have to keep hundred percent of the import amount as collateral to the bank. I am going to explain the steps followed by Citibank in LC issuance and amendment (Muniruzzaman & Islam, 2009).

Along with the guide lines of Bangladesh Bank, Citibank and TCS (the Indian Citibank Team) has the following system of LC issuance and Amendment.

For an LC to be issued or amended the documents required are:

LC applications form (ref. to appendix III). This has to be properly filled by the

applicant.

LC authorizations (LCA) form (ref. to appendix IV). This has to be properly filled

by the applicant.

Import (IMP) form (ref. to appendix V). This has to also be filled by the applicant.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH

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Valid and firm proforma invoice or indent. This gives detail of the goods or services

which is to be imported by the applicant along with details of per unit prices.

Insurance. An open insurance policy is valid only for vendor marketing products

which fall under the criteria of back to back imports. An open insurance policy means that the client has to pay a yearly premium, which will cover all transactions for that period as long as the transaction amount doesnt exceed that of the amount on which the premium is paid (Muniruzzaman & Islam, 2009, TRD 10, Page-2).

There may be imports with unusual risks like related to Gambling, Military arms and equipment, and Political candidates or organizations. In those cases especial permission has to obtain in accordance with GCIB credit policies and procedures (Muniruzzaman & Islam, 2009).

Another important document is beneficiary credit report. This is provided by Citibanks partner Dun and Bradstreet D&B. They give a yearly report of the financial condition of the beneficiary. Without this Citibank cannot proceed with any transaction.

The required documents are received at the Citibank desk and are dated and time stamped immediately. Then the application set is reviewed and signature is verified. Then the following sequence is followed till reporting. (Source: Muniruzzaman & Islam, 2009, TDR-10, Page-2)

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 1. Scanning preparation:

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The scan cover sheet is attached which is basically a check list. The documents that are to be scanned are original LC application, attachments,

proforma invoice or indent, LCA form and forward cover, if the information is booked by Citibank then there is a deal slip or if booked by another bank, the letter send to Citibank and the confirmation of the deal from the other bank. If the signature is not proper in the documents or the documents are incomplete, a

deferral is initiated. (Source: Muniruzzaman & Islam, 2009, TDR-10, Page-3)

2. Scanning:

The application along with the relevant information is scanned with priority 5 in

TRIMS or trade information management system the data base of trade. Then date and time of scanning, the base number and the LC amount is inputted. The scanned stamp is then put on the attached cover sheet.

(Source: Muniruzzaman & Islam, 2009, TDR-10, Page-3)

3. Registration:

The system will generate a registration number. This registration number is then written on the physical document.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH

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Registration stamp along with the previous scanned stamp (ref. to appendix I &II) is

then put on the cover sheet. The soft copy of the scanned and registered transaction is then ready to be picked up

by the TCS (the Indian Citibank Team), who will give the conformation that every thing is properly done and they will start processing the transaction. (Source: Muniruzzaman & Islam, 2009, TDR-10, Page-4)

4. Exceptions:

If there is a problem with the transaction then TCS will find it from the soft copy of

the scanned and registered documents. The specific transaction will be obtained by the reference number put during the

registration process. The physical documents will be taken by the Dhaka team. All expectations will be resolved by sending TCS the necessary information through

mail. When all exceptions are resolved TCS will start processing.

(Source: Muniruzzaman & Islam, 2009, TDR-10, Page-4 & 8)

5. Post Transaction processing, dispatching and archiving:

After all transactions are authorized, the system will show the transaction as

Opened.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH

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Then LC customer copy and office copy are made (ref. to appendix VI, VII, VIII &

IV). The customer copy is dispatched and the office copy is foldered with the previously scanned records. (Source: Muniruzzaman & Islam, 2009, TDR-10, Page-4)

6. LC closure:

LC expired over 15 days is to be closed in TRIMS and on a monthly basis a report is

received from TCS giving LCs within the period closure. Based on this report the LC containing folders are sorted out. Cancellation prior to the expiry date will be done only at the written request from

the applicant and the beneficiarys consent through the advising bank. (Source: Muniruzzaman & Islam, 2009, TDR-10, Page-4)

7. Reporting (Source: Muniruzzaman & Islam, 2009, TDR-10, Page-5):

This is the last and most crucial step. TCS will send all reports to Bangladesh and fortnightly LC outstanding reports to

customers and credit officers.

This concludes the LC issuance and amendment process. Then the transaction moves to the billing section where negation takes place and payments are made which then leads to the collection of goods or services from the port by the applicant.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 4.0 My Work and Responsibilities

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I joined Citibank N.A. as an intern on 11 March 2010. I was placed in the back to back import section. My daily works included sorting out the LC and then attaching the scan cover sheet and pass it onto the scanning section. Then I sorted the beneficiary credit reports and pointed out any irregularities with them. I also sorted the sales contract on which the back to back LC where issued or amended.

I was sometimes sent to the export bill collection section. This was the busiest section of the office. There I had to sort bills. I also put export for entries in to the register which is directed by the Bangladesh Bank. I also prepared the duplicated and triplicate of the export form which is to be reported to Bangladesh bank. I sometimes did DHL entries which keeps tract of the bill that are dispatched from this section. I had to write down the DHL number and the bill reference number. I also entered the proceed realization certificated to the LCs of Square Fashions Ltd. for period 2007 to 2009. This closed all the LCs and Square Fashions and got their proceeds. There was also a discrepancy report from Bangladesh Bank that in the period 2007 to 2008 there was numerous amounts of bills whose proceeds where less than 90%, where as the Bangladesh Bank regulation is to keep proceeds to minimum 95%. I was given the work to find bills reference whose proceeds where less than 90% from the report register of 2007 and 2008. After this I reported the bill numbers which where in turn reported to the Bangladesh bank. I had to also endorse bill of lading (BL) so that the clients could release the goods from the port by showing the authorized BL.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH I was also sent to the import bill collection section. There I sorted the bills and

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helped prepare the bill scanning copy by attaching the import bill scan cover. Then once the documents where scanned and registered I had to file the documents and store it in a fire proof cabinet. I also helped in LC advising.

There were other sections in this department but I haven't been needed there yet. Citibank is very information sensitive. They do not allow any interns to access the computers connected to the network. As a consequence all my work was manual.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 5.0 Conclusions and Recommendations

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5.1 Conclusion

1. Citibank is very efficient in trade transaction; this is brought about by their smooth system flow.

2. There are partners to Citibank Bangladesh. Infact in the trade service Citibank N.A. Bangladesh is not a separate entity it falls under Citibank India. So for processing Citibank Bangladesh has to wait for Citibank India to give the go ahead before they can do anything. Basically Citibank Bangladesh provides follow up to Citibank India.

3. Citibank is underemployed. This puts a lot of pressure on employees during the rush days of the week. Even though office hours are till 6 almost every one stays back till 8 and some leave regularly at 10. And these extra hours dont even count as over time.

4. Even thought Citibank is automated compared to most of the banks in Bangladesh, it still has a lot of paper works. This paper work is very time consuming and take a lot of place to store.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH 5.2 Recommendations

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1. More automation is needed. It wont be very expensive plus expenses related to paper documentation can be saved. One small example is export form registration. The serial number can be simply printed and the amount can be stored in a simple data base. This would reduce the time taken for manual entry and the huge register doesnt need to be maintained. Another small thing that can be done is that instead of giving the customers a printout of the LC copy and soft copy can be mailed to them.

2. Citibank needs to really think about employing more employees in the trade department. When someone does not show up one day it leaves a lot of pressure on the rest, who already have enough work of their own and then they have to also do the work of their absent colleague.

3. Citibank Bangladesh has not seen gone for loss. This proves their efficiency. If they are given more authority by Citibank India regarding processing, they will be able to serve the clients faster and better.

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH References

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Foreign Banks in Bangladesh (n.d.). Retrieved April 10, from a Bangladesh bank website :http://www.bangladeshtrades.com/banks-in-bangladesh/foreign-banksin bangladesh.html

Munirruzaman, M. M. (2010, February 23). Core Banking 2010: Trade operations [PowerPoint slides]. Retrieved from Citibank N.A. Bangladesh trade O&T department.

Munirruzaman, M. M. and Islam, M.R. (2009, 31 August), ``TRD 10 LC Issuance and Amendment'', L.O.P Citibank N.A. Bangladesh Trade Department, 2-9.

Trade Service. (n.d.). Retrieved April 10, from Citibank N.A. Bangladesh official website: https://www.asia.citibank.com/CBKWebPortal/appmanager/ citibanker/hm_bd_co_en?_nfpb=true&_windowLabel=extLandPageLeft_1_6&e xtLandPageLeft_1_6_actionOverride=/cbk/control/pageflow/extLandPageLeft/s howContent&_pageLabel=bd_en_co__desktops_external_bd_corporate_en_ho me_portal_page_39

THE IMPORT DEPARTMENT: CITIBANK N.A. DHAKA, BANGLADESH Appendix

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