Term Paper, Mohammad Ataul Huq Bhuyan (18134801015)

A Study on Foreign Exchange
Operations of Janata Bank

Limited
By
Mohammad Ataul Huq Bhuyan

(ID No. 181 34 801 015)
A Term Paper Submitted to the School of Business,

Bangladesh Open University, Dhaka Campus in partial
fulfillment of the requirements of the degree of
MBA (Evening) Program, Major in Finance

School of Business
Bangladesh Open University
Dhaka Campus
June, 2020
1
DECLARATION
I hereby declare that this submission is my own work
towards the completion of MBA (Evening) Program and
that to the best of my knowledge, it contains no
materials previously published by another person nor
materials which have been accepted for the completion
for any other degree of the University except where due
acknowledgement has been made in the text.
Mohammad Ataul Huq Bhuyan

ID No. 181 34 801 015
Student Name & ID Signature Date
Certified By:
Dr. Mahammad Zahir Raihan

Term Paper Supervisor Signature Date
2
DEDICATION
This work is dedicated to my beloved wife and issues.
3
ACKNOWLEDGEMENT
I wish to acknowledge immeasurable grace and profound
kindness of Almighty Allah, the supreme ruler of the universe
who enables us to make my dream in a reality.
From its inception to its final completion, the success of the study
rests not only on me but also on the contribution of my
colleagues of Janata Bank Limited. They have given me a vivid
discussion, inspiration, influenced and guided my work. First of
all, I would like to acknowledge those who have provided
continue constructive counsel and incomparable guidance for
completing my term paper.
I would like to express my immense gratitude and my

especial debt to my respected & honorable teacher
(Dr. Mohammad Zahir Raihan, Term Paper Supervisor &
Associate Professor in Finance, School of Business,
Bangladesh Open University, Dhaka Campus). I am thankful
to his untiring guidance, help and suggestions.
Thanks also go to my friends and classmates. I am grateful to

them for their valuable comments correction etc. on my term
paper.
Finally, the inspiration, encouragement and support provided by

family members are worthy of acknowledgement.
4
Abstract
Today’s world is changing very rapidly as new businesses are
emerging by replacing the old ones. In this new millennium,
people feel a growing uneasiness about the future. Many
countries suffer from chronic high un-employment rate, a
persistent deficit and deteriorating purchasing power. Like the
other businesses, banking practices are also changing at an
incredible pace.
In the banking industry, community branch banks have long

been the marketing channels through which customers deposit
money and make payments. But the branch banking may soon
become a thing of the past. As a result of advances in bank
automation from automatic teller machine (ATM) to telephone
banking services-fewer than half of bank customer (43%) in the
United States now use bank branches. Half of the country’s bank
branch offices may disappear within a decade.
Now it is not easy to operate the banking practices like traditional

approaches of 1800 or 1900 A.D. Today’s banks need to
recognize that they are no longer geographically bound, and that
the introduction of electronic autobahn represents a whole new
delivery channel for financial services.
My honorable Term Paper Supervisor directed me all the

way to prepare this report. Without his help and kind co-operation
it was not possible for me to bring this report to a successful end.
5
Abbreviation & Elaboration
JBL : Janata Bank Limited

CRR : Cash Reserve System
CRAB : Credit Rating Agency of Bangladesh
STD : Short Term Deposit
FDTE : Fixed Deposit Scheme
DD : Demand Draft
IBC : Inward Bill for Collection
PO : Payment of Order
OBC : Outward Bills for Collection
A/C : Account No
B/C : Bill for Exchange
B/L : Bill for Landing
BTB : Back to Back
CIB : Credit Information Bureau
CCI & I : Chief Controller of Import and Export
CAD : Cash against Document
CFR : Cost and Fright
DA : Documents against Acceptance
DP : Document against payment
EXP : Export Form
ERC : Export Registration Certificate
EPB : Export Promotion Bureau
FDBP : Foreign Document Bill Purchase
FDBC : Foreign Document Bill Collection
FDD : Foreign Demand Draft
FC A/C : Foreign Currency Account
FOB : Fee on the Bond
FER : Foreign Exchange Regulation
6
FTT : Foreign Telegraphic Transfer
HO : Head Office
HP : Hire purchase
FTD : Foreign Trade Division
FRD : Foreign Remittance Division
IDBP : Inland Documentary Bill Purchase
ITC : International Trade control
IRC : Import Registration Control
L/C : Letter of Credit
LIM : Loan against Imported Merchandise
LTR : Loan against Trust Receipt
OD : On Demand
PC : Packing credit
PRC : Processed Realization Certificate
PAD : Payment against Document
PI : Pro-form Invoice
RMG : Readymade Garments
ROA : Return on Asset
SWIFT : Society for World Inter Bank Financial
Telecommunication
UCPDC : Uniform Customs and Practice for Document
Credit
TR : Trust Receipt
TIN : Tax Identification Number
TT : Telegraphic or Telephonic Transfer
VAT : Value Added Tax
SD : Savings Deposit
MT : Mail Transfer
7
Table of Contents
Part Topic Page N0
Title Page I
Declaration II
Dedication III
Acknowledgement IV
Abstract V
Table of contents VI
Abbreviation VII
Introduction 1-4
One 1.1 Background of the study 2

1.2 Problem Statement of the study 2
1.3 Objective of the study 3
1.4 Significance of the study 3
1.5 Scope for the study 3
1.6 Overview of the study 4
Overview of Janata Bank Foreign Exchange Operations 6-35
Regulations of Foreign Exchange 7

2.1.1 Foreign Exchange Act 1947 7
2.1.2 Foreign Exchange activities 7
2.1 2.1.3 Service needed for foreign trade (Financing foreign 7
trade- import and export finance)
2.1.4 Foreign Exchange Rate in Janata Bank Ltd 7
2.1.5 Foreign Exchange Product & Services by JBL 8
2.2 Exchange of foreign currencies between the clients and 8
Two JBL
2.3 Foreign Exchange Risk management of JBL 9
2.4 Foreign Exchange Dealing Hierarchy Chart of JBL 10
2.5 Export Financing of Janata Bank Limited 11
2.6 Banking at Export Processing Zone 11
2.7 Export Performance of Janata Bank limited last 9 12
Years
2.8 Import Products of Janata Bank Limited 12
2.9 Facilities Offered by JBL 12
2.10 Import Performance of Janata Bank Limited last 9 Years 13
Other information Regarding Janata Bank Limited 13
2.11.1 Background 13
2.11.2 Inception 14
2.11.3 Corporatization 14
2.11.4 Roundup 14
8
2.11.5 Objectives 14
2.11.6 Vision 15
2.11 2.11.7 Mission 15
2.11.8 Values 15
2.11.9 Business Philosophy 16
2.11.10 Long Term Strategy of JBL 16
2.11.11 Business Areas of JBL 17
2.11.12 Organizational Structure of Janata Bank 17
Limited
2.11.13 At a Glance of JBL 18
2.11.14 Board of Directors of JBL 19
2.12 Facilities Offered to the Remitters by JBL 19
2.13 Non-Resident Foreign Currency Deposit Account 20
2.14 Rules/Procedures for Opening NFCD Account 21
2.15 Taka Remittance Arrangement 21
2.16 Subsidiary Company of JBL 22
2.17 Number of JBL Head Office Division & Department, 22
Divisional Office, Area Office & Branch
2.18 Head Office Divisions of JBL 22
2.19 Head Office Departments of JBL 24
2.20 Divisional Offices of Janata Bank Limited 29
2.21 Area Offices of Janata Bank Limited 30
2.22 Janata Bank Staff Colleges 34
2.23 Citizen Charter of JBL 34
2.24 Deposit Product of JBL. 35
2.25 Loans & Advance Product of JBL. 35
LITERATURE REVIEW: Conceptual 36-81
3.0.1 Definition of Bank 36

3.0.2 Meaning and origin “Bank” 36
3.0.3 Objectives of “Bank” 37
3.0.4 Meaning of Banking 38
3.0.5 Over view of banking sector in Bangladesh 38
3.0.6 Banking sector in Bangladesh 39
3.0.7 What Is Foreign Exchange (Forex)? 44
3.0.8 How Does Foreign Exchange Work? 45
Three 3.0.9 Size of the Foreign Exchange Market 45
3.0.10 Trading in the Foreign Exchange Market 46
3.0 3.0.11 Differences in the Forex Markets 46
3.0.12 The Spot Market 47
3.0.13 The Forward Market 47
3.0.14 The Futures Market 47
3.0.15 Example of Foreign Exchange 47
3.0.16 Principles of Foreign Exchange 48
3.0.17 Functions of Foreign Exchange 48
9
3.0.18 Letter of Credit (L/C) 49
Form of Letter of Credit 49

3.0.19 3.0.19.1 Revocable L/C 49
3.0.19.2 Irrevocable L/C 50
Types of Letter of Credit 50
3.0.20.1 Sight payment credit 50
3.0.20 3.0.20.2 Deferred payment credit 50
3.0.20.3 Acceptance Credit 51
3.0.20.4 Negotiation credit 51
3.0.20.5 Red clause credit 52
3.0.20.6 Revolving Credit 52
3.0.20.7 Stand by credit 52
3.0.20.8 Transferable Credit 53
Parties of Letter of Credit 53
3.0.21.1 The opening Bank 54
3.0.21.2 The Advising Bank 54
3.0.21 3.0.21.3 The Buyer and the Beneficiary 54
3.0.21.4 The paying Bank 55
3.0.21.5 The Negotiating Bank 55
3.0.21.6 The Confirming Bank 55
Contents of the Letter of Credit 54
3.0.22.1 Buyer 54
3.0.22.2 Seller 54
3.0.22.3 Amount of the credit 55
3.0.22.4 Trade terms 56
3.0.22.5 Tenor 56
3.0.22.6 Expiration date 56
3.0.22 3.0.22.7 Documents required 56
3.0.22.8 General description of the 56
merchandise
3.0.22.9 Import trade control & 56
registration With C.C.I & E
3.0.22.10 Licensing for import 58
3.0.22.11 Registration of LCAF with 59
Bangladesh Bank
3.0.22.12 Utilization of LCAF 60
3.0.22.13 Application for issuing of Letter 61
of Credit
3.0.22.14 The importer is also required to 62
give the following authority to the
issuing Bank:
3.0.22.15 Accounting procedure 64
3.0.22.16 Advising Letter of Credit 65
3.0.22.17 Additional confirmation to import 66
Letter of Credit
3.0.22.18 Amendment to Letter of Credit 66
3.0.22.19 Shipment 67
10
3.0.22.20 Lodgment of documents 68
3.0.22.21 Security Documents 68
3.0.22.22 Accounting procedure at the time 70
of lodgment
3.0.22.23 Retirement of import documents 71
Clearance in absence of shipping documents 73

3.0.23.1 Shipping Guarantee: 73
3.0.23.2 Procedure for issue of guarantee 73
3.0.23.3 Liability Voucher: 73
3.0.23 3.0.23.4 Retirement Procedure for 74
Deferred Payment of Usance Bill
(D.A).
3.0.23.5 Bills negotiated under reserve of 74
indemnity
Loan Against Imported Merchandise- LIM 75

(Post Import Finance)
3.0.24 3.0.24.1 Definition of LIM 75
3.0.24.2 Cases of LIM Account 75
3.0.24.2.1 LIM Account in 75
importer's request
3.0.24.2.2 Forced Lim 77
Account
3.0.25 Letter of Trust 78
Foreign Remittance 79
3.0.26.1 Outward Remittance 79
3.0.26.2 Travel Related Services 79
3.0.26.3 Medical Treatment Abroad 79
3.0.26.4 Participation in Seminars, 79
3.0.26 Conferences
3.0.26.5 Release of Foreign Exchange for 80
Hajj
3.0.26.6 Remittance of Foreign Exchange 80
for Education Abroad
3.0.26.7 Transfer of Assets 80
3.0.26.8 Family Remittance Facility 80
Inward Remittance 81
3.0.27.1 Family maintenance 81
3.0.27.2 Commission earned from various 81
business
3.0.27 3.0.27.3 Disposal of Foreign Exchange on 81
Return from Abroad
3.0.27.4 Investment by Foreign Nationals 81
in Certificates & Securities
11
3.1 Literature Review: Empirical 82-86
Methodology 87-88
Four Introduction 87
4.1 Research Design 87
4.2 Sources of Data 87
4.3 Data Analysis 87
4.4 Ethical Issues 88
89-97
Findings and Analysis
Introduction 89
Five 5.1 Findings 89
5.2 Gross export, import and Foreign Remittance Earnings in 92
Bangladesh
Analysis 93-95
5.3.1 Import Business Analysis 93

5.3 5.3.2 Export Business Analysis 93
5.3.3 Comparison of Import & Export 94
5.3.4 Foreign Remittance 94
5.3.5 Operating Profit 95
SWOT analysis of Janata Bank Limited 95-97

5.4.1 Strengths 95
5.4 5.4.2 Weaknesses 96
5.4.3 Opportunities 96
5.4.4 Threats 96
5.05 Summary of Findings 97
Conclusion and Recommendation 98-100
Six 6.1 Conclusion 98

6.2 Recommendation 98
6.3 Limitation of the research 100
References 101
12
CHAPTER ONE
1.0 Introduction:
The report has been prepared to fulfill the partial requirements of the Master of
Business Administration (MBA-Evening) program at Bangladesh Open University.
Generally, trade means the buying, selling or exchange of commodities either by
wholesale or by retail sale within a country or between countries. The trade within
a country is known as domestic trade. On the other hand, the trade between
countries is known as foreign trade the concerned department dealing with foreign
trade in banks usually called foreign exchange department.
Foreign trade plays an important role in the economic development of a country.

The economic development of a country is comprised of domestic production and
foreign trade (especially the balance of export and import). It plays a vital role in
the balance of payment (BOP) of a country. Surplus (export-import) is favorable
for a country. Although Bangladesh usually exercises deficit BOP (import-export).
But it has to continue foreign trade. Because it needs to import the essential goods
and services, which does, not produced domestically. In this sense, foreign trade is
essential for each and every country for its complete economic development.
Devaluation or exchange rate fluctuation may influence the export-import business
and inward remittance.
To conduct foreign trade of a country, the bank plays an important role; usually,
this duty is played by commercial banks. Foreign trade operations play a significant
role in the overall business of PCBs and NCBs in order to strengthen their position.
I feel that export and import business-financing analysis one of the important and
complex matters which can provide a well understanding of this matter. I hope that
this study helps visualize the role of commercial banks in the area of foreign trade
in our country.
13
1.1 Background to the Study:
Today’s fast-growing banks need to hold banking services that fully meet the
expectations of the clients for speed, convenience, efficiency, and security. To
ensure their optimum level of satisfaction, regarding their necessity for this type of
affluent banking services, different types of local as well as multinational banks are
coming up with diverse and dynamic corporate banking services.
The term “bank” originally referred to an individual or organization, which acts as

a moneychanger and exchanges one currency for another. According to
Prof. Sayers - “Banks are an institution whose debt usually referred to as ‘Bank
Deposit’- are commonly accepted in final settlement of other people's debts”.
On the other hand, according to the Banking Regulation Act, 1949 – “Banking
means the accepting money for the purpose of lending or investment of deposit of
money from the public repayable on demand or otherwise and withdraw-able by
cheques, drafts order or otherwise”.
Banks are playing a vital role in the economic progress of our country. Nowadays,
banks try to give priority to the perspective of our national interest. The Banking
Industry in Bangladesh is one characterized by strict regulations and monitoring
from the central governing body, the Bangladesh Bank. The chief concern is that
currently there are far too many banks for the market to sustain. As a result, the
market will accommodate only those banks that can transpire the most competitive
and profitable ones in the future.
1.2 Problem Statement:
Bank performs the indispensable task of intermediating between two groups and
offer convenient financial service to surplus-spending individuals and institutions
in order to attract funds and provide loans to those who are deficit- spending.
Another contribution of the bank makes its willingness to accept risky loans from
borrowers while issuing low-risk securities to their depositors. Bank also satisfies
the strong need for customer’s liquidity. It is true that the underlying principle of
business of a bank is that the resources mobilized through the acceptance of deposit
must contribute to the mainstream of funds, which are to be utilized for lending or
investment purpose.
14
1.3 Objectives:
The main objectives of this study to explore the Foreign Exchange Performance of
Commercial Banking in Bangladesh.
The specific objectives of the study are as follows:
i) To find out the Import Trend of Janata Bank Limited.
ii) To find out the Export Trend of Janata Bank Limited.
iii) To find out the Foreign Remittance Trend of Janata Bank Limited.
iv) To analyses the Operating Profit of Janata Bank Limited.
1.4 Significance of The Study:

The Modern Banking system does not execute normal Banking activities. As a
service-oriented organization, the management should keep an eye on their retail
products and advertise on these for sale. The Bank should design their products in
such a way that can cater to the needs of people of different classes. In fact, banks
offer various products (loans and other services). Thus this study focuses on these
products base marketing of financial products as to how they are designed for which
segment of customers they offer, what are their usual benefit, what are the profits
and changes to the customers, what type of promotion measures the bank takes for
marketing these services smoothly and they like.
Basically, this study is conducted to unearth The Performance of General Baking
& Foreign Exchange related activities taken by the Bank and the degree of customer
satisfaction. The management should take new faces with innovative features
advertising diversified benefits to attract the customers. As a result, the practice of
General Baking& Foreign Exchange of the Public Limited Bank has been the
concern of this study with analysis of the Janata Bank Ltd. which could help the
management to think about their performance whether the present design of the
General Baking & Foreign Exchange practices are effective or require to be re-
furnished.
1.5 Scope for the Study:
The scope of this paper is limited to the organizational structure, background, and
objectives, functions, and investment performance of Janata Bank Limited as a
whole. The scope is also limited to different investment schemes, modes,
mechanisms, investment proposal appraisal procedures, monitoring and
documentation of Janata Bank Limited, foreign exchange operations.
15
1.6 Overview of the term paper:
The study is organized into six chapters. Chapter one is made up of the background
of the study, the statement of the problem, objectives of the study, the significance of
the study, scope, and limitation of the study.
Chapter two reviews Overview of Janata Bank Foreign Exchange Operations,
Regulations of Foreign Exchange, Foreign Exchange Act 1947, Foreign Exchange
activities, Service needed for foreign trade (Financing foreign trade- import and
export finance), Foreign Exchange Rate in Janata Bank Ltd, Foreign Exchange
Product & Services by JBL, Exchange of foreign currencies between the clients and
JBL, Foreign Exchange Risk management of JBL, Foreign Exchange Dealing
Hierarchy Chart of JBL, Export Financing of Janata Bank Limited, Banking at Export
Processing Zone, Export Performance of Janata Bank limited last 9 Years, Import
Products of Janata Bank Limited, Facilities Offered by JBL, Import Performance of
Janata Bank Limited last 9 Years, Other information Regarding Janata Bank Limited
(Background,Inception,Corporatization,Roundup,Objectives,Vision,Mission,Values
,Business Philosophy, Long Term Strategy of JBL, Business Areas of JBL,
Organizational Structure of Janata Bank Limited, At a Glance of JBL, Board of
Directors of JBL, Facilities Offered to the Remitters by JBL, Non-Resident Foreign
Currency Deposit Account, Rules/Procedures for Opening NFCD Account, Taka
Remittance Arrangement, Subsidiary Company of JBL, Number of JBL Head Office
Division & Department, Divisional Office, Area Office & Branch, Head Office
Divisions of JBL, Head Office Departments of JBL, Divisional Offices of Janata
Bank Limited, Area Offices of Janata Bank Limited, Janata Bank Staff Colleges and
Citizen Charter of JBL.
Chapter three describes literature both conceptual and empirical. LITERATURE
REVIEW: Conceptual: Definition of Bank, Meaning and origin “Bank”, Objectives
of “Bank”, Meaning of Banking, Overview of the banking sector in Bangladesh, the
Banking sector in Bangladesh, What Is Foreign Exchange (Forex)? How Does
Foreign Exchange Work?, Size of the Foreign Exchange Market, Trading in the
Foreign Exchange Market, Differences in the Forex Markets, The Spot Market, The
Forward Market, The Futures Market, Example of Foreign Exchange, Principles of
Foreign Exchange, Functions of Foreign Exchange, Letter of Credit (L/C),Form of
Letter of Credit, Revocable L/C, Irrevocable L/C, Types of Letter of Credit, Sight
payment credit, Deferred payment credit, Acceptance Credit, Negotiation credit, Red
16
clause credit, Revolving Credit, Stand by credit:, Transferable Credit:, Parties of
Letter of Credit:, The opening Bank, The Advising Bank, The Buyer and the
Beneficiary, The paying Bank, The Negotiating Bank, The Confirming Bank,
Contents of the Letter of Credit, Buyer, Seller, Amount of the credit, Trade terms,
Tenor, Expiration date, Documents required, General description of the merchandise,
Import trade control & registration With C.C.I & E, Licensing for import, Registration
of LCAF with Bangladesh Bank, Utilization of LCAF, Application for issuing of
Letter of Credit, The importer is also required to give the following authority to the
issuing Bank:, Accounting procedure, Advising Letter of Credit, Additional
confirmation to import Letter of Credit, Amendment to Letter of Credit, Shipment,
Lodgment of documents, Security Documents, Accounting procedure at the time of
lodgment, Retirement, of import documents, Clearance in absence of shipping
documents, Shipping Guarantee:, Procedure for issue of guarantee, Liability
Voucher:, Retirement Procedure for Deferred Payment of Usance Bill (D.A).,Bills
negotiated under reserve of indemnity, Loan Against Imported Merchandise- LIM
(Post Import Finance),Definition of LIM:, Cases of LIM Account:, LIM Account in
importer's request, Forced Lim Account, Letter of Trust, Foreign Remittance,
Outward Remittance, Travel Related Services, Medical Treatment Abroad,
Participation in Seminars, Conferences etc, Release of Foreign Exchange for Hajj,
Remittance of Foreign Exchange for Education Abroad:, Transfer of Assets:, Family
Remittance Facility:, Inward Remittance, Family maintenance:, Commission earned
from various business:, Disposal of Foreign Exchange on Return from Abroad,
:Investment by Foreign Nationals in Certificates & Securities:, Literature Review:
Empirical.
Chapter four contains the research methodology. Here, Introduction, Research
Design, Sources of Data, Data Analysis, and Ethical Issues are stated.
Introduction of Findings and Analysis, Findings, Gross export, import, and Foreign
Remittance Earnings in Bangladesh, Analysis: Import Business Analysis: Export
Business Analysis: Comparison of Import & Export, Foreign Remittance, Operating
Profit, SWOT analysis of JANATA BANK LIMITED: Strengths, Weaknesses,
Opportunities, Threats, and Summary of Findings are contained in chapter five.
Chapter six provides the CONCLUSION AND RECOMMENDATIONS:
Conclusion, Recommendation, and Limitation of the research of the study.
17
CHAPTER TWO
2.0 Overview of Janata Bank Foreign Exchange Operations:

Mainly transactions with overseas countries in respect of import, export, and foreign
remittance dealings are under the preview of the foreign exchange department.
International trade demands a flow of goods from the seller to the buyer and of
payment from the buyer to the seller. In this case, the bank plays a vital role to bridge
between the buyer and seller. The foreign exchange department plays significant
roles by providing different services for the customers. Opening or issuing letters of
credit is one of the important services provided by the banks.
The foreign exchange Operations of Janata Bank have two aspects:

i). Trading of foreign currencies.
ii). Helping in foreign trade operation means to import and export using foreign
currencies as a medium of exchange.
The activities can be clearly shown in the following diagram:
18
2.1 Regulations of Foreign Exchange:
Foreign Exchange transactions are being controlled by the following rules and
regulations:
2.1.1 Foreign Exchange Act-1947.

Bangladesh bank issues Foreign Exchange Circular from time to time to control
the export, import, and remittance operation.
2.1.2 Foreign Exchange activities:
Trading of foreign currency (Purchase and sale of different currencies or exchange
of one currency into other).
Foreign trade operation (cross border transaction i.e. import and export of goods
and services).
2.1.3 Service needed for foreign trade (Financing foreign trade- import and export
finance)
i). Ministry of Commerce issues export and import policies giving basic formalities
for import and export
ii). Sometimes CCI issues public notices for any kind of change in Foreign
Exchange transactions.
iii). Bangladesh bank published two volumes of foreign exchange regulations in
1996. These comprise the complete instructions to be followed by the authorized
dealers in transactions related to Foreign Exchange.
2.1.4 Foreign Exchange Rate in Janata Bank Ltd:

The foreign exchange rate regime in the application in Bangladesh is the “Dirty
Float regime” whereby the exchange rates are determined according to the market
forces of demand and supply with intermittent interventions by the Bangladesh
Bank. The Bangladesh Bank usually declares the daily exchange rates for different
currencies. Using this exchange rate as a guideline, the individual commercial
banks and other authorized dealers determine their respective exchange rates.
The exchange rate at which JBL buys and sells different foreign currencies is
extremely important since this rate has a direct impact on the bank’s profitability
from foreign exchange trading. The exchange rate is determined by the back office
of the bank and the underlying strategy is to maximize the spread between the bid
rate and the asking rate.
19
In JBL, the exchange rate offered to customers is determined through a semi-
automated process. The back office of JBL continually monitors the foreign
currency movements and exchange rates in the major international markets and
generates a particular exchange rate. The officials at the back office then apply
their judgment in line with company policies and strategies to adjust the system
generated exchange rate to match local market needs. The management committee
of the bank sets a “Ceiling” and a “floor” for the extent to which any upward or
downward revisions can be made to the system generated rate.
2.1.5 Foreign Exchange Product & Services by JBL:

The bank mainly provides three broad types of products and services under their
foreign exchange management as follows:
i). Import financing services
ii). Export Financing services
iii). Remittance Services
2.2 Exchange of foreign currencies between the clients and JBL:

In the import and export process, JBL involves in the exchange of currencies with
its customers. The actual exchange process of foreign currencies between JBL and
its clients prior to and on the date of settlement can be illustrated as follows:
2.3 Foreign Exchange Risk management of JBL:
20
Foreign exchange risk is a risk that a bank may suffer losses as a result of adverse
movement in either spot or forward rate or combination of the two, in individual
foreign currency. This risk is associated with the transaction involved in import,
export, remittance, and foreign currency in hand and bank.
To mitigate the risk involved in the foreign exchange business, the foreign
exchange dealing operation in Janata Bank Limited is performed through the
Dealing Room(Front Office), Mid Office and Back Office. The dealers manage
market risk, avoid adverse exchange fluctuation, look for better investment of
funds, maintain sound liquidity, and protect the Bank from any unforeseen loss in
the situation of any market volatility. The Mid Office and Back Office are assigned
the responsibility of related support functions. The dealing room is restricted for
all excepting dealers and authorized executives.
The dealing room is equipped with modern facilities i.e. Reuters’s information,
SWIFT, receptors monitor, telephone, voice recorder, etc. Moreover, stop/ loss
limit, trading limit, the overnight limit is given by the concerned authorities. The
daily blotter and mark to market revaluation report are placed to management for
their review.
2.4 Foreign Exchange Dealing Hierarchy Chart of JBL :

The department of the foreign exchange dealing operation hierarchy of Janata Bank
Ltd. is shown in the following diagram:
21
2.5 Export Financing of Janata Bank Limited:
To boost up country's export, Janata Bank Limited has been providing different kinds
of assistance to exporters. Some of which are as under:-
22
i). Providing Pre-Shipment and Post-Shipment Finance, Export Guarantee and
bonding facility, etc.
ii). Concessional rate of interest for export finance.
iii). Back to Back L/C under bonded warehouse facility.
iv). Sight & Unasked L/C against Firm Contract for import of raw materials.
v). Sight L/C under EDF.
vi). Exporter's Retention Quota A/C both interest-bearing and non-interest-bearing.
vii). Export incentive program.
2.6 Banking at Export Processing Zone.
i). Scope for the establishment of an export-oriented industry by 100% foreign

investment and by joint-venture.
ii). The sole bank to disburse the Government Export Promotion Fund against the
export of Computer Software & Data Entry Processing.
iii). Undergone an agreement with Bangladesh Bank to obtain funds from
Government EEF (Equity & Entrepreneurship Fund) to build up entrepreneur's equity.
iv). Providing services to the exporter by utilizing most modernized technology like
Swift, Reuters, Internet, Fax, etc.
2.7 Table : 02- 01: Export Performance of Janata Bank limited last 9 Years:
SL Year BDT (Taka) in Million
01 2010 118,515.00
23
02 2011 153,758.00
03 2012 156,525.00
04 2013 153,252.00
05 2014 154,079.70
06 2015 145,373.60
07 2016 154,454.20
08 2017 139,920.90
09 2018 114,681.00
Source : Janata Bank Limited website(https://www.jb.com.bd/)
2.8 Import Products of Janata Bank Limited:

Through quite a good number of Authorized Dealer Branches and
1239.foreigncorrespondentsworld wide Janata Bank Limited has been extending the
full range of import and relevant financial facilities.
Import Items
i). Capital machinery and industrial raw materials.
ii). Fuel & Lubricants.
iii). Intermediate goods.
iv). Consumer durable, spare parts, and equipment.
v). Consumer goods: Food & Food Grains, Baby food, Petroleum, CDSO (Crude
Degummed Soya bean Oil), CPO (Crude Palm Olin) Oilseeds, Cement Clinker,
Construction Materials, Fertilizer, Chemicals and many other goods permissible by
Import by Import Policy of the country.
2.9 Facilities Offered by JBL:
i). Opening of L/C at competitive/ reasonable margin and commission.
ii). Interest at concession rate on import finance to the prime customers & interest
rebate facilities.
2.10 Table : 02- 02: Import Performance of Janata Bank Limited last 9 Years:
24
Keeping in consideration the importance of industrialization Janata Bank is
consistently and firmly extending its support in the import business. The Following
year-wise financial involvement table showing a sharply rising trend clearly
indicates Janata Bank's import business performance.
01 2010 183,744.00
02 2011 197,285.00
03 2012 188,284.00
04 2013 176,671.00
05 2014 144,556.80
06 2015 147,181.80
07 2016 126,650.00
08 2017 143,582.20
09 2018 220,413.70
2.11 Other information Regarding Janata Bank Limited:

2.11.1 Background:
With the emergence of Bangladesh as an independent, sovereign state in 1971 after a
devastating nine-month war against the West Pakistani occupation army, a war, full
of blood and tears, trauma and pain of millions of our beloved ones, the legacy of
rebuilding the already broken financial base of the country was felt like an urgent call
of the day against a collapsed economic reality of a newly born state.
2.11.2 Inception:
25
In this backdrop, in order to rebuild the country’s economy, measures had been taken
to merge a number of banks previously operated in this region and make new banks
and this initiative led to the formation of Janata Bank in 1972 by combining the
erstwhile United Bank Limited and Union Bank Limited under the Banks
Nationalization Order (President’s Order No. 26) of 1972.
2.11.3 Corporatization:
On 15 November 2007 Janata Bank got registered with the Joint Stock of Registrars
and restructured it as a public limited company with the name Janata Bank Limited.
2.11.4 Roundup:
Including 4 overseas branches in the United Arab Emirates, Janata Bank runs its
business with 913 branches across the country having a big family of around 11,966
(As on 30.06.2019) employees with its head office located at Janata Bhaban at
Motijheel C/A, the heart of the capital city, Dhaka.
At the end of 2018, the Bank held Deposit BDT 675,548.46 million, Advance BDT
533,707.17 million with Authorized capital BDT 30,000 million and Paid-up Capital
BDT 23,140 million.
Janata Bank Limited, a corporate body trusted over the years, the 2nd largest (in
respect of Deposits/Assets) commercial bank in Bangladesh, has been playing a
pivotal role in overall financial activities of the country and is possessing a long
heritage of discharging laudable services to the society since her embankment
immediately after the emergence of this verdant rich alluvial soil as a sovereign,
independent state.
The contribution of the Bank to the national economy and social reform has set the
standard bar so high that others in this business can’t help aspire to touch the
benchmark of success earned by JBL. More so a matter of great honor is that the
contribution, commitment, and success of the Bank have been recognized with a
number of prestigious awards by national and international organizations of repute.
2.11.5 Objectives:
JANATA Bank Ltd will be the absolute market leader in the number of loans given
to small and medium-sized enterprises throughout Bangladesh. It will be a world-
class organization in terms of service quality and establishing relationships that help
its customers to develop and grow successfully.
2.11.6 Vision:
26
JANATA Bank Ltd will be a unique organization in Bangladesh. It will be a
knowledge-based organization where the professionals will learn continuously from
their customers and colleagues worldwide to add value. They will work as a team,
stretch themselves, innovate, and break barriers to serve customers and create
customer loyalty through a value chain of responsive and professional service
delivery. Continuous improvement, problem solution, excellence in service,
business prudence, efficiency, and adding value will be the operative words of the
organization.
JANATA Bank Ltd will serve its customers with respect and will work very hard to
instill a strong customer service culture throughout the bank. It will treat its
employees with dignity and will build a company of highly qualified professionals
who have integrity and believe in the Bank’s vision and who are committed to its
success.
JANATA Bank Ltd will be a socially responsible institution that will not lend to
businesses that have a detrimental impact on the environment and people.
2.11.7 Mission:
JANATA Bank Ltd will adhere to high professional and ethical business principles
and internationally acceptable banking and accounting standards.
Every JANATA Bank Ltd professional will need first of all a commitment to
excellence in all that he/she does, a keen desire for success, a determination to excel,
and a drive to be the best. They will individually and jointly learn continuously from
customers and professional colleagues around the globe to improve the way they do
business so that they are the best. They will walk those miles with enthusiasm and
empathy to serve the customers and solve problems together so that the customers
succeed in their business and remain loyal to the Bank. They will set up goals for
ourselves and then exceed the goals that we set up.
2.11.8 Values:
JANATA BANK LTD. holds the following values and will be guided by these.
i). Creating an honest, open, and friendly environment.
ii). Have a strong customer focus and relationships based on integrity, superior
service, and mutual benefit.
iii). Strive for profit & sound growth.
iv). Work as a team to serve the best interest of their owners.
27
v). Relentless in pursuit of business innovation and improvement
vi). Value and respect people and make decisions based on merit.
vii). Base recognition and reward on performance
viii). Responsible, trustworthy, and law-abiding in all that they do.
2.11.9 Business Philosophy:
JANATA Bank Ltd, a full-service commercial bank with Local and International
Institutional shareholding, is primarily driven by creating opportunities and pursuing
market niches not traditionally met by conventional banks.
Today JANATA Bank Ltd is one of the fastest-growing banks in the country to
support the planned growth of its distribution, network, and for its various business
segments.
The reason JANATA Bank Ltd is in business is to build a profitable and socially
responsible financial institution focused on markets and businesses with growth
potential, thereby assisting JANATA and stakeholders build a “just, enlightened,
healthy, democratic, and poverty-free Bangladesh”. Which means to help make
communities and economy of the country stronger and to help people achieve their
dreams. They fulfill the purpose by reaching for high standards in everything we do.
For their customers, their shareholders, their associates, and their communities upon,
which the future prosperity of their company rests.
2.11.10 Long Term Strategy of JBL:

Summed up in a single sentence, their long-term strategy is to go where the market
is. The SME market in Bangladesh is large. The report produced by the Shore Bank
team, (Ronald Grzywinsky, Mary Houghton, and Lynn Pikholz) and the independent
consultant, Kaiser Zaman, indicates that the market size would be over hundreds of
billions of takes. They quote:
“As a result of the achievements of the micro-credit providers, Bangladesh now has
an hourglass-shaped banking market in which credit and other limited financial
services are valuable to both very large and very large and very small businesses and
very wealthy and very poor individuals. While there is well – known informal system
that provides credit to businesses, virtually nothing is available from either banks or
microfinance providers to the million the middle – businesses and individuals- who
are severely constrained in their ability to produce and save for lack of access to
financial resources and services. Until modern, competitive financial services are
readily available – including credit in amounts, terms, and conditions that small can
28
access, Bangladesh will not be able to create the large middle class that is a
prerequisite to social stability.”
2.11.11 Business Areas of JBL:
There are mainly eight major business areas where the bank is performing with a
high reputation. These areas are:
i). General Banking
ii). Foreign Exchange
iii). Small & Medium Scale Enterprise (SME)
iv). Large Scale Industries
v). Agriculture Sector
vi). Transport Sector
vii). Financing In Housing Sector& Land Developing
viii). Finance in Home Appliance
2.11.12 Organizational Structure of Janata Bank Limited :
Board of Directors
↓
Managing Directors (CEO &MD)
↓
Deputy Managing Directors (DMD)
↓
General Manager (GM)
↓
Deputy General Manager (DGM)
↓
Assistant General Manager (AGM)
↓
Senior Principal Officer (SPO)
↓
Principal Officer (PO)
↓
Senior Officer (SO)
↓
Officer
29
2.11.13 Table : 02- 03: At a Glance of JBL
Registered Address JanataBhaban, 110, Motijheel Commercial Area

Dhaka - 1000, Bangladesh.
Legal Status Public Limited Company
Chairman Dr. Jamaluddin Ahmed, FCA
CEO & Managing Director Md. Abdus Salam Azad (F.F.)
Company Secretary HussainYeahyeaChowdhury
Date of Incorporation 21 May 2007
Authorized Capital BDT 30,000 Million
Paid up Capital BDT 23,140 Million
Deposits 6,75,548 Million
Loans &Advance 5,33,707 Million
Operating Profit 9,789 Million
Net Profit 249 Million(AfterTax)
Export 1,14,681 Million
Import 2,20,414 Million
CRAR 10.09%
No. of Branches 915
(Including 4 Overseas Branches)
No. of Foreign Correspondent 551
Face value per share BDT 100 per share

Shareholding Pattern 100% Share owned by the Government of
Bangladesh
Number of Employees 11,895 (As on 31.10.2019)
Banking license obtained from 31 May 2007
Bangladesh Bank
Phone +88 02-9560000, 9566020, 9556245-49,
9565041-45, 9560027-30
Fax 88-02-9554460, 9553329, 9552078
SWIFT JANBBDDH
Website www.jb.com.bd, www.janatabank-bd.com,
30
2.11.14 Table : 02- 04 : Board of Directors of JBL:
SL Name Designation
01 Dr. Jamal uddin Former Director Chairman
Ahmed, FCA Bangladesh Bank
02 Mr. Ajit Kumar Paul, Additional Secretary(PRL) The Director
FCA Government of the People’s
Republic of Bangladesh
03 Mr. Meshkat Ahmed Former Joint Secretary Director
Chowdhury The Government of the
People’s Republic of
Bangladesh
04 Mr. K, M, Former District & Sessions Director
ShamsulAlam Judge
05 Mr. Muhammed Former Director Director
AsadUllah Sonali Bank Limited
06 Mr. Ziauddin Ahmed Former Additional Secretary Director
The Government of the
People’s Republic of
Bangladesh
07 Mr. Mohammad Helal Former Managing Director Director
Uddin Bangladesh Krishi Bank
08 Mr. Md. Abdus Salam CEO & Managing Director CEO & MD
Azad (F.F.)
2.12 Facilities Offered to the Remitters by JBL:
i). Commission for issuance of Taka Drafts from our UAE branches has been reduced
and re-fixed from AED 10.00 to AED 4.00 and commission for issuance of TTs
drawn on Bangladesh and payable at any bank branch are re-fixed at AED 12.00 from
AED 30.00
31
ii). Commission for issuances of Taka drafts at UAE branches has been reduced
irrespective of amount.
iii). 1% interest above the normal savings deposit rate is offered to SB accounts
receiving foreign remittance.
There are several types of Accounts and US Bonds.
i). Non Resident Foreign currency Deposit Account(NFCD).
ii) Resident Foreign Currency Deposit Account (RFCD)
iii) Non-Resident Investor's Taka Account (NITA)
iv). Wage Earners Development Bond (WEDB)
v). US Dollar Investment Bond and US Dollar Premium Bond (US Bonds
vi). NFCD
vii). RFCD
viii). NITA
ix). WEDB
x). US BONDS
2.13 NON- RESIDENT FOREIGN CURRENCY DEPOSIT ACCOUNT:
Expatriate Bangladeshi Nationals and persons of Bangladeshi origin including those

having dual nationality may open Non- Resident Foreign Currency Deposit Account
with any authorized dealer branch of Janata Bank Limited in Bangladesh for a period
of one month, three months, six months or twelve months on the renewable basis by
depositing minimum US Dollar 1000/- or Pound Sterling 500/-. The eligible person
may open this account at any time on their return to Bangladesh.
Interest in NFCD Account is applicable on the basis of the Euro currency interest rate
which is tax-free in Bangladesh. Principal amount including accrued interest is
convertible in local currency as well as repatriable to the account holder abroad. This
account may be maintained as long as the account holder desires.
NFCD Account opening Forms are available with authorized dealer branches of
Janata Bank Limited in Bangladesh and Embassy/ High Commission Offices of
Bangladesh abroad.
32
2.14 RULES/PROCEDURES FOR OPENING NFCD ACCOUNT:
i). Application in plain paper to the Manager of concern Authorized Dealer branches
of Janata Bank Limited.
ii) Signature of the applicant verified by an official of Bangladesh Embassy /High
Commission abroad or Notary Public of the country where the applicant resides and
photocopy of the pages of passport containing specimen signature of the applicant
where Janata Bank Limited branches or representative offices are not available. FC
Account may also be opened through our 4 (four) UAE branches and 2 (two) branches
of Janata Exchange Co. Italy.
iii) Photocopy of passport attested by officials of Embassy / High Commission Office
of Bangladesh abroad or our branch officials.
iv) Two copies of passport size photographs.
v) Letter of authority for the handover of NFCD Receipt
2.15 Table : 02- 05 : Taka Remittance Arrangement:
SL Name Address
1 Janata Exchange Company srl. ObiedSayah al-MansuriBuilding, PO Box
Janata Bank Limited, Abu Dhabi 2630, Electra Road, Abu Dhabi, UAE.
Branch
2 Janata Bank Limited, Dubai Baniyas Complex (NaserSquar)
Branch Al Maktoum Hospital Road,Deira,
PO Box- 3342, Dubai, UAE.
3 Janata Bank Limited, Al Ain Sheikh Khalifa Bin Mammad Al- Nahyan
Branch Building, PO Box- 1107, Main Market
Center, Main Street, Al-Ain, UAE.
4 Janata Bank Limited, Sharjah Saqer Bin Rashid Al- Quassim Building
Branch PO Box 5303,Al Shaiheen Street, Sharjah,
UAE.
Source : Janata Bank Limited website(https://www.jb.com.bd/)(PMIS)
33
2.16 Table : 02- 06 : Subsidiary Company of JBL:
SL Name Address
01 Janata Capital and Investment 48, Motijheel C/A (Floor-3), Dhaka-
Limited 1000
02 Janata Exchange Company srl, Apartment # 1, First Floor 31, Piazza
Rome Office Vittorio Emanuele II 00185 Rome,
Italy
03 Janata Exchange Company srl, Via LodovicoSettala 19 20124 Milan,
Milan Branch Italy
04 Janata Exchange Company Inc. 37-18,73 rd Street, Suit no 1R 1st floor,
USA Jackson Heights NY - 11372, USA
2.17 Table : 02- 07 : Number of JBL Head Office Division & Department, Divisional
Office, Area Office & Branch:
HEAD OFFICE HEAD OFFICE DIVISIONAL AREA BRANCH

DIVISION Department OFFICE OFFICE
14 51 12 50 915
2.18 Table : 02- 08 : Head Office Divisions of JBL:
SL
Division Name Mailing Address
No.
Accounts & Financial Janata Bank Limited,
1 Management Division, Head JanataBhaban (10th Floor), 110 Motijheel
Office Commercial Area, Dhaka-1000
Janata Bank Limited,
Audit & Inspection Division,
2 59/2, Surma Tower (10th Floor), PuranaPolton,
Head Office
Dhaka-1000
34
Business Development Janata Bank Limited,
3 Marketing & Law Division, JanataBhaban (10th Floor), 110 Motijheel
Head Office Commercial Area, Dhaka-1000
Common Service Division,
4 JanataBhaban (10th Floor), 110 Motijheel
Head Office
Commercial Area, Dhaka-1000
Company Affairs Division,
Head Office
6 Credit Division, Head Office JanataBhaban (10th Floor), 110 Motijheel
Estate and Engineering
Division, Head Office
Human Resources Division,
Head Office
Information & Janata Bank Limited,
9 Communications Technology JanataBhaban (23rd Floor), 110 Motijheel
Division, Head Office Commercial Area, Dhaka-1000
Monitoring & Compliance 59/2, Surma Tower (8th Floor), PuranaPolton,
10
Division, Head Office Dhaka-1000

Research & Planning
Risk Management Division,
Head Office
35
Special Assets Management
Treasury & Foreign Trade
2.19 Table : 02- 09 : Head Office Departments of JBL:
SL
Department Name Mailing Address
No.
Accounts Department (AD), Head
Office
Audit & Inspection Department - Surma Tower (10th Floor), 13, Comrade
2
Corporate, Head Office Moni Singh Road, (Old-59/2, PuranaPaltan
Road), Dhaka-1000.
Audit & Inspection Department - Surma Tower (11th Floor), 13, Comrade
3
General, Head Office Moni Singh Road, (Old-59/2, PuranaPaltan
Road), Dhaka-1000.
Budget & Expenditure Control
Department (BECD), Head Office
Business Development Marketing Janata Bank Limited,
5 Department (BDMD), Head JanataBhaban (19th Floor), 110 Motijheel
Card Management Department
(CMD), Head Office
36
CIB Department (CIBD), Head
7 6th Floor, 48, Motijheel Commercial Area,
Office
Dhaka-1000
Company Affairs Department
(CAD), Head Office
Compliance Department - Surma Tower (9th Floor), 13, Comrade Moni
9
External, Head Office Singh Road, (Old-59/2, PuranaPaltan Road),
Dhaka-1000.
Compliance Department - Surma Tower (8th Floor), 13, Comrade Moni
10
Internal, Head Office Singh Road, (Old-59/2, PuranaPaltan Road),
Dhaka-1000.
Disciplinary Department (DD),
Head Office
End Use Foreign Trade &
12 Industrial Credit Department
57, PuranaPolton, Dhaka-1000
(EUFTICD), Head Office
End Use General Department Janata Bank Limited,
13
(EUGD), Head Office 57, PuranaPolton, Dhaka-1000
Estate Department (ED), Head
Office
Foreign Exchange Audit & Janata Bank Limited,
15 Inspection Department (FEAID), Moni Singh Srimty Trust Bhaban, 21/2
Head Office PuranaPaltan, Dhaka-1000
Foreign Remittance Department
(FRD), Head Office
37
Foreign Trade Department -
Import, Head Office
Foreign Trade Department-
Export, Head Office
Foreign Trade Monitoring
Comrade Moni Singh-FarhadSmrity Trust
19 Department (FTMD), Head
Bhaban (2nd Floor), 21/2, PuranaPaltan,
Office
Dhaka-1000
General Banking Department JanataBhaban (19th Floor), 110 Motijheel
20
(GBD), Head Office Commercial Area, Dhaka-1000

Human Resources Department
(HRD), Head Office
Commercial Area, Dhaka-1000.
Human Resources Development Janata Bank Limited,
22 Department (HRDD), Head HRDD, JanataBhaban (7th Floor), 110
Office Motijheel Commercial Area, Dhaka-1000
Industrial Credit Department Janata Bank Limited,
23 (ICD), Head Office JanataBhaban (18th Floor), 110 Motijheel
Information & Communications Janata Bank Limited,
24 Technology Department - JanataBhaban (22th Floor), 110 Motijheel
Operation, Head Office Commercial Area, Dhaka-1000
Information & Communications Janata Bank Limited,
25 Technology Department - System, JanataBhaban (20th Floor), 110 Motijheel
Head Office Commercial Area, Dhaka-1000
IT Audit & Inspection Janata Bank Limited,
26
Department (ITAID), Head Office Surma Tower (10th Floor), 13, Comrade
38
Moni Singh Road, (Old-59/2, PuranaPaltan
Road), Dhaka-1000.
27 Janata Bank Staff College (JBSC)
146/2-A, New Baily Road Dhaka-1217
Law Department (LD), Head
Office
Management Information System
Department (MISD), Head Office
ML & TF Prevention Department,
Head Office
Monitoring Department (MD), Surma Tower (9th Floor), 13, Comrade Moni
31
Head Office Singh Road, (Old-59/2, PuranaPaltan Road),
Dhaka-1000.
Overseas Banking Department
(OBD), Head Office
Procurement Department (PD),
Head Office
Dhaka-1000
Public Relation Department
(PRD), Head Office
Reconciliation Department (RD),
Head Office
Dhaka-1000
Recovery Department-1 (RD-1),
Head Office
Dhaka-1000
39
Head Office
Dhaka-1000
Head Office
Dhaka-1000
Research, Planning & Statistics
Department (RPSD), Head Office
Dhaka-1000
Retail Customer Department-1
(RCD-1), Head Office
Risk Management Department
(RMD), Head Office
Security Department (SD), Head
Office
Small and Medium Enterprise Janata Bank Limited,
46 Department (SMED), Head JanataBhaban (18th Floor), 110 Motijheel
40
Sustainable Finance Unit (SFU),
Head Office
Dhaka-1000
Transport Department, Head
Office
Treasury Department (TD), Head
Office
Vigilance Department (VD),
Head Office
Welfare Department (WD), Head
Office
2.20 Table : 02- 10 : Divisional Offices of Janata Bank Limited:
Sl. Division Name Address
MakkaBhaban (2nd Floor), Katpatty Road,

1 Divisional Office, Barishal
Barisal-8200
2 Divisional Office, Chattogram 27, Agrabad C/A (4th floor) Chittagong-4000
2nd Floor, Chatipotti, Rajgonj Road,

3 Divisional Office, Cumilla
Comilla-3500.
D.K Tower (4th Floor),94, BirUttam C R
4 Divisional Office, Dhaka North Datta Road (Sonargaon Road), Dhanmondi,
Dhaka-1205
7th Floor, 48, Motijheel Commercial Area,
5 Divisional Office, Dhaka South
Dhaka-1000
41
Faridpur Tower (2nd Floor), Mujib Road,
6 Divisional Office, Faridpur
Nilpuli, Faridpur
7 Divisional Office, Khulna 8, KDA Commercial Area, Khulna-9100
K B Ismail Road, Poura Super Market (First

8 Divisional Office, Mymensingh
Floor), Mymensingh-2200.
Sadar Road, Maijdee court, Noakhali, Post
9 Divisional Office, Noakhali
Code-3800.
353, BarnalirMor, Grater Road,Rajshahi-
10 Divisional Office, Rajshahi
6000
11 Divisional Office, Rangpur Parjotan More, R K Road, Rangpur-5400
2nd Floor, Dewan Complex, Airport Road,

12 Divisional Office, Sylhet
Amberkhana, Sylhet.
2.21 Table : 02- 11 : Area Offices of Janata Bank Limited :
Sl. Area Name Address

Khandakar Supermarket ( 2nd Floor) Rahater More,
1 Area Office, Bagerhat
Bagerhat-9300
Khoka Complex, Alfaz Uddin GedaSarok, RiazKazi
2 Area Office, Bogura Lane, Sutrapur, Bogura. Dist:Bogura, Postal Code-
5800
Faruk Tower (2nd) Floor),Holding-750/01,T.A
Area Office,
3 Road, P.O.+P.S.-Brahmanbaria, Dist-
Brahmanbaria
Brahmanbaria, Post Code- 3400
Tama Plaza (3rd floor), ShahidMuktizoddaSarak,
4 Area Office, Chandpur
P.O.+Thana+Dist: Chandpur. Post Code: 3600.
42
GabtolaMorh, P.O- Chapai Nawabganj, P.S. –
Area Office,
5 Chapai Nawabganj Sadar, Nawabganj, Post Code-
ChapaiNawabgonj
6300
Area Office, Chattogram - 27, Agrabad C/A (4th Floor) Sk. Mujib Road,
6
A Chittangong-4000
Area Office, Chattogram - Janata Bank Bhavan (2nd floor), 27, SK Mujib
7
B Road, Agrabad C/A, Chittagong-4000
Area Office, Chattogram - Janata Bank Bhaban (4th floor), 27, S.K. Mujib
8
C Road, Agrabad C/A, Chattogram-4000
9 Area Office, Cox's Bazar Fazal Market, 3rd Floor, Main Road, CoxsBazzar
Area Office, Cumilla
10 Regional Office, Shasangacha, Kotwali, Comilla
North
Janata Bank Limited, Area Office, Comilla South,
Area Office, Cumilla
11 Chatipotti (In Front Of ComillaAjitGuha College),
South
Rajgonj, Comilla-3500
12 Area Office, Dhaka East 48, Motijheel C/A (2nd Floor), Dhaka-1000
13 Area Office, Dhaka North 30, Shahid Captain Mansur Ali Saroni, Dhaka-1217
14 Area Office, Dhaka South 10/11, SayedHasan Ali Lane, Armanitola, Dhaka
COMRADE FORHAD SARAK, H-86,ROAD-

15 Area Office, Dhaka West
11/A,DHANMONDI R/A,DHAKA.
Maldahapatti, P.O- Dinajpur, P.S- Kotwali, Dist-
16 Area Office, Dinajpur
Dinajpur, Post Code- 5200
Faridpur Tower(2nd Floor), MujibRoad,Faridpur,
17 Area Office, Faridpur
Post Code-7800
18 Area Office, Feni 149, S.S.K Road, P.O+P.S.- Feni, Dist- Feni
19 Area Office, Habigonj P.O.+P.S.- Habiganj, Dist- Habiganj
20 Area Office, Jamalpur DariparaBaipas more, JamalpurSadar, Jamalpur
Jess Tower, 39, M.K.Road, P.O.- Jessore, P.S-
21 Area Office, Jashore
JessoreSadar, Dist- Jessore, Post Code- 7400,
43
H.S.S. Road, P.O.+P.S.- Jhenaidah, Dist- Jhenaidah,
22 Area Office, Jhenaidah
Post code- 7300
Janata Bank Bhaban,8 KDA Commercial Area, Post
23 Area Office, Khulna
Code:9100, District: Khulna
Madhobi Plaza, IshaKha Road, Rothkhola,
24 Area Office, Kishoregonj
Kishoreganj
25 Area Office, Kurigram Dadamore, P.O.+P.S.- Kurigram, Dist- Kurigram
Dadapur Road, Majampur, In Front of Police Line,
26 Area Office, Kushtia
Kushtia
27 Area Office, Madaripur NatunSahar, Mian Road, Madaripur
28 Area Office, Magura Syed ataraliRoad,Janata Bank Limited,Magura
95, Court Road, P.O.+P.S.- Moulvi Bazar, Dist-
29 Area Office, Moulvi Bazar
Moulvi Bazar, Post Code- 3200
Al-Barakah Convention Centre(1st Floor),
30 Area Office, Mymensingh 20/1,Charpara(Opposite Medical College Gate),
Post Code- 2200, MymensignSadar, Mymensingh .
P.O.+ P.S.- Noagaon, Dist- Noagaon, Post Code-
31 Area Office, Naogaon
6500
32 Area Office, Narayangonj B.B. Road, Narayangonj, Post Code- 1400
Sultan Uddin Shopping Complex, Bazir Moor,
33 Area Office, Narsingdi P.O..- Narsinghdi, P.S.- NarsinghdiSadar, Dist-
Narsinghdi, Post Code- 1600
34 Area Office, Natore P.O. + P.S.- Natore, Dist- Natore, Post Code- 6400
Sadar Road, Maijdee court, Noakhali, Post Code-
35 Area Office, Noakhali
3800.
36 Area Office, Pabna Court Road, Pabna.
Janata Tower, Town School Road, Mithapukur Par,
37 Area Office, Patuakhali
Patuakhali
105, kakoli House, Kazihata, Greater Road, Rajpara,
38 Area Office, Rajshahi
Rajshahi.
39 Area Office, Rangpur Circuit House More, 1/1 CS Road, Dhap, Rangpur.
44
LaboniTower(2nd Floor), AbulKashemSarak, P.O.
40 Area Office, Satkhira
+ P.S.- Satkhira, Dist- Satkhira, Post Code- 9400.
P.O. + P.S.- Sirajganj, Dist- Sirajganj, Post Code-
41 Area Office, Sirajganj
6700
P.O. + P.S.- Sunamgonj, Dist- Sunamgonj, Post
42 Area Office, Sunamgonj
Code- 3000
3nd Floor, Dewan Complex, Airport Road,
43 Area Office, Sylhet
Amberkhana, Sylhet.
Nagarjalfai (Ashekpur), P.O: Tangail, Thana:
44 Area Office, Tangail
Tangail, Dist: Tangail .
Islam Plaza, BangabandhuSarak, P.O.- Thakurgaon,
45 Area Office, Thakurgaon P.S.- ThakurgaonSadar, Dist- Thakurgaon, Post
Code- 5100.
Sadar Road, P.O.-Bhola, Dist - Bhola, Post Code-
46 Area Office, Bhola
8300
47 Area Office, Chuadanga Court Para, Chuadanga
Regional Office, Sadullapur Road, P.O.+P.S.-
48 Area Office, Gaibandha
Gaibandha, Dist- Gaibandha-5700.
49 Area Office, Munshigonj Munshigong
Aleya Plaza (4th floor), Satpai College Road,
50 Area Office, Netrokona
Netrokona
2.22 Table : 02- 11 : Janata Bank Staff Colleges:
Sl.
Branch Name Address
No.
45
Janata Bank Staff College
1 146/2-A, New Baily Road Dhaka-1217
(JBSC)
Janata Bank Regional Staff Bankers Park,Dr.Khadem Hossain Sarak,
2
College (JBRSC), Barishal Bangla Bazar, Barishal-8200
Janata Bank Bhaban (2nd Floor), 27 Sheikh
Janata Bank Regional Staff
3 Mujib Road, Agrabad Commercial Area,
College (JBRSC), Chattogram
Chattogram-4000.
4 113, Nazrul Avenue, Kandir Par, Cumilla-7000
College (JBRSC), Cumilla
5 8 KDA,C/A, Jessore Road, Khulna
College (JBRSC), Khulna
Janata Bank Regional Staff 48/4/1,kawout khali,Baipass Road (Moyna
6
College (JBRSC), Mymensingh More), Mymensingh
7 75, Laxmipur, KaziHata, Rajshahi-6000
College (JBRSC), Rajshahi
8
College (JBRSC), Rangpur
Source : Janata Bank Limited website (https://www.jb.com.bd/) (PMIS)
2.23 Citizen Charter of JBL.
Updated key information on various services/facilities is given in this citizen charter.

The charter holds no legal status in creating rights and/or obligations but promoting
better customer-banker understanding. Each service has its own detailed terms and
conditions; which can be made available on request.
As per regulatory directives citizen charter has been placed at the entrance of the
head office and at all the branches of the Bank. Customers may have their access to
necessary facilities through it.
The charter contains-
** Display office hours and transaction hours
** Render courteous services
** Attend all customers present in the bank premise even at the ending of
business hours
46
** Set up 'Help Desk' at branches
** Offer nomination facility to all deposit accounts and all safe deposit locker
hirers
** Display interest rates of deposit schemes
** Notify changes in interest rates on advances as well as service charges
** Provide details of various deposit schemes/services of the Bank
** Information on the issuance of Demand Drafts, Pay Orders, TT, etc.
** Provide complaint box in the branch premise
2.24 Deposit Product of JBL.
** Current Deposit
** Savings Deposit
** Special Notice Deposit
** Fixed Deposit Schemes
2.25 Loans & Advance Product of JBL.

** Agriculture Loans
** Working Capital Loan
** Rural Credit
** Tannery Trading
** Janata Bank Limited Commercial Real Estate Loan
** Janata Bank Limited Ekok greho Nirman Rin o Apartment Kraw Rin
** Consumers Financing Shikka Rin
** Janata Care-Shastusheva Rin
** Janata Support-Pension-Vogider Janno Bishes Rin
** Bisheshaita Rin (Mohila Uddogtha Unnon, Khodra Babshaye, Tat Rin

Ittadi)
47
CHAPTER THREE
LITERATURE REVIEW
3.0 LITERATURE REVIEW: Conceptual :
3.0.1 Definition of Bank:

Different authors, writers, and economists have given different definitions of ‘Bank’.
They present ‘Bank’ as an institute from a different angle. They define ‘Bank’
structurally and functionally. For example, “Bank is such a financial institution
which collects money in current, savings or fixed deposit account; collects cheques
as deposits and pays money from the depositors‟ account through cheques.”-- Sir
John Pagette. “Bank provides service to its clients and in turn receives perquisites in
different forms.”---P.A. Samuelson. “Bank is a financial intermediary institution
which deals in loans and advances”---Cairn Cross. “Bank is an institution that
collects idle money temporarily from the public and lends to other people as per
need.”----R.P. Kent. “Bank is such an institution that creates money by money
only.”-----W. Hock. Indian Company Law 1936 defines Bank as “a banking
company which receives deposits through a current account or any other forms and
allows withdrawal through cheques or promissory notes.”
3.0.2 Meaning and origin “Bank”

The word “Bank” is broadly and widely utilized and circled. The “Bank” in English
conveys similar importance in Bengali. The inception of the English word “Bank‟
appeared (when, where, and how) which couldn't be particularly recognized. The
history in regards to the inception of “Bank‟, even after the twelfth century, isn't
likewise clear which has been founded on surmises. As per some essayist, the word
“Bank” was gotten from “Banco”, “Bancus”, “Banque” or “Banc” all of which
means a seat whereupon the medieval European Money-banks and Money –
Changers used to show their coins. At any rate, this word has been being used from
the medieval times in association with a bank. In the expressions of German essayist
W. Frankace, a long stool or seat was said to be supplanted by Bank, Bangke, and
so on in the Scandinavian and Mid-2European nations. 28 Once more, Dutch and
48
French words “Banque”, “Bangko” were utilized to mean stool or seat and in course
of time, the word “Bank” happened. In the Medieval age, Italian states were sound
and dissolvable monetarily and industrially. Around then a gathering of individuals
used to direct business of exchange of cash sitting on a stool or seat which was
supplanted by “Banco,” “Banko” “Banca”, “Bangk”, “Bancus”, “Banc” etc. It is
accepted that the word “Bank” was started from these words. At a later age, an
English author Maclead tested the above concepts. His dispute was that the cash loan
specialists and cash changers used to show their coins which were not named as
“Banco”, “Banque”, “Banke”, “Banca”. Be that as it may, Banco in Italy and Banke
in German and Australia were comprehended as an open obligation or issue of paper
cash. As he would see it, these words were utilized with the end goal of the financial
exercises of various nations of Europe. Another British author Chamber, in his
Twentieth Century Dictionary, obviously expressed that the word “Bank” is gotten
from Banca and Banque. The French still uses “Banque” set up of the word “Bank”.
In the mid of twelfth-century Italian states were under political turmoil and in 1150
Venice was burdened with foes. Thus, the Government presented open obligation
bought in advance @ 5% necessarily on people in general for meeting the monetary
crisis. During that time this advance was called Banke, Banco, Compara, and Monte
and so on. Such a large number of scholars surmise that the German word “Banke”
and the Italian word “Banco” have been changed into the English word “Bank”.
3.0.3 Objectives of “Bank”

** To build up as a foundation for expanding benefits and to lead general
monetary exercises.
** To gather reserve funds or sit out of gear cash from people in general at a
lower rate of premiums and loan these open cash at a higher rate of
premiums.
** To keep up financial solidness by methods for controlling currency
advertise.
** To stretch out co-activity and advice to the Govt. on monetary issues.
** To help the Govt. for trade & business and financial advancement. To
issue and control notes and money as a national bank.
** To keep up and control trade rates as a national bank.
49
** To make an affinity for reserve funds among the general population
** To rouse individuals for contributing cash with a view to acquiring

dissolvability.
** To make cash against cash as an option for improving the supply of cash.
** To develop capital through reserve funds.
** To speed up ventures.
** To stretch out administrations to the clients.
3.0.4 Meaning of Banking:

Simply banking means a business strategy that is offered by a Bank. Managing
Banking can be characterized as the business movement of tolerating and defending
cash possessed by different people and elements, and after that loaning out this cash
keeping in mind the end goal to acquire a benefit.
Banking is a business that handles money, credit, and other budgetary exchanges.
Banks give a sheltered place to stock supplementary money and credit. The banking
system nowadays incorporates issuance of charge and MasterCard’s, giving safe care
of important things, lockers, ATM administrations, and online exchange of assets
over the nation. It will be said, nowadays banking service plays an inaudible, an
essential role in our everyday life. The banking business has done marvels for the
world economy. The basic-looking technique for tolerating cash stores from savers
and after that loaning similar cash to borrowers, saving money movement supports
the stream of cash to beneficial utilization and speculations. This thusly enables the
economy to develop. Without managing an accounting business, reserve funds
would sit still in our homes, the business people would not be in a situation to collect
the cash, customary individuals envisioning for another auto or house would not
have the capacity to buy cars or houses.
3.0.5 Over view of banking sector in Bangladesh:

Financial system in Bangladesh:
The financial system of Bangladesh is comprised of three broad fragmented sectors:
1. Formal Sector,
2. Semi-Formal Sector,
3. Informal Sector.
50
The sectors have been categorized in accordance with their degree of regulation.
The formal sector includes all regulated institutions like Banks, Non-Bank Financial
Institutions (FIs), Insurance Companies, Capital Market Intermediaries like
Brokerage Houses, Merchant Banks, etc.; Micro Finance Institutions (MFIs).
The semi-formal sector includes those institutions which are regulated otherwise but
do not fall under the jurisdiction of Central Bank, Insurance Authority, Securities
and Exchange Commission, or any other enacted financial regulator. This sector is
mainly represented by Specialized Financial Institutions like House Building
Finance Corporation (HBFC), Palli Karma Sahayak Foundation (PKSF), Samabay
Bank, Grameen Bank, etc., Non Governmental Organizations (NGOs and discrete
government programs.
The informal sector includes private intermediaries which are completely

unregulated.
3.0.6 Banking Sector in Bangladesh:
After independence, the banking industry in Bangladesh started its journey with
6 Nationalized commercialized banks, 3 State-owned Specialized banks and 9
Foreign Banks. In the 1980s banking industry achieved significant expansion with
the entrance of private banks. Now, banks in Bangladesh are primarily of two types:
• Scheduled Banks: The banks that remain in the list of banks maintained under the
Bangladesh Bank Order, 1972.
• Non-Scheduled Banks: The banks which are established for special and definite
objective and operate under any act but are not Scheduled Banks. These banks
cannot perform all functions of scheduled banks.
There are 60 scheduled banks in Bangladesh that operate under full control and
supervision of Bangladesh Bank which is empowered to do so through Bangladesh
Bank Order, 1972, and Bank Company Act, 1991. Scheduled Banks are classified
into the following types:
• State-Owned Commercial Banks (SOCBs): There are 6 SOCBs which are fully
or majorly owned by the Government of Bangladesh.
• Private Commercial Banks (PCBs): There are 45 private commercial banks that
are majorly owned by individuals/the private entities. PCBs can be categorized into
two groups:
51
• Conventional PCBs: 34 conventional PCBs are now operating in the industry.
They perform the banking functions in conventional fashion i.e interest-based
operations.
• Islami Shariah Based PCBs: There are 11 Islami Shariah based PCBs in
Bangladesh and they execute banking activities according to Islami Shariah based
principles i.e. Profit-Loss Sharing (PLS) model.
• Foreign Commercial Banks (FCBs): 9 FCBs are operating in Bangladesh as the
branches of the banks which are incorporated in abroad. and
• Specialized Banks (SDBs): 3 specialized banks are now operating which were
established for specific objectives like agricultural or industrial development. These
banks are also fully or majorly owned by the Government of Bangladesh.
Table : 03- 01 : List of Scheduled Banks in Bangladesh:
SL Bank Name
6 State Owned Commercial Banks (SOCBs)
1 1 Sonali Bank Limited
2 2 Janata Bank Limited
3 3 Agrani Bank Limited
4 4 Rupali Bank Limited
5 5 BASIC Bank Limited
6 6 Bangladesh Development Bank Limited
Private Commercial Banks
34 Conventional Commercial Banks
7 1 AB Bank Limited
8 2 Bangladesh Commerce Bank Limited
9 3 Bank Asia Limited
10 4 BRAC Bank Limited
11 5 City Bank Limited
12 6 Community Bank Bangladesh Limited
13 7 Dhaka Bank Limited
14 8 Dutch-Bangla Bank Limited
15 9 Eastern Bank Limited
16 10 IFIC Bank Limited
17 11 Jamuna Bank Limited
52
18 12 Meghna Bank Limited
19 13 Mercantile Bank Limited
20 14 Midland Bank Limited
21 15 Modhumoti Bank Limited
22 16 Mutual Trust Bank Limited
23 17 National Bank Limited
24 18 National Credit & Commerce Bank Limited
25 19 NRB Bank Limited
26 20 NRB Commercial Bank Ltd
27 21 NRB Global Bank Ltd
28 22 One Bank Limited
29 23 Padma Bank Limited
30 24 Premier Bank Limited
31 25 Prime Bank Limited
32 26 Pubali Bank Limited
33 27 Standard Bank Limited
34 28 Shimanto Bank Ltd
35 29 Southeast Bank Limited
36 30 South Bangla Agriculture and Commerce Bank
Limited
37 31 Trust Bank Limited
38 32 United Commercial Bank Ltd
39 33 Uttara Bank Limited
40 34 Bengal Commercial Bank Ltd
11 Islami Shariah Based PCBs
41 1 Al-Arafah Islami Bank Limited
42 2 EXIM Bank Limited
43 3 First Security Islami Bank Limited
44 4 ICB Islamic Bank Limited
45 5 Islami Bank Bangladesh Limited
46 6 Shahjalal Islami Bank Limited
47 7 Social Islami Bank Limited
53
48 8 Union Bank Limited
49 9 Standard Bank Limited
50 10 Jamuna Bank Limited
51 11 NRB Global Bank Limited
9 Foreign commercial banks (FCBs)
52 1 Bank Al-Falah Limited (Pakistan)
53 2 Citibank N.A (United States of America)
54 3 Commercial Bank of Ceylon PLC (Sri Lanka)
55 4 Habib Bank Limited (Pakistan)
56 5 HSBC (Hong Kong)
57 6 National Bank of Pakistan (Pakistan)
58 7 Standard Chartered Bank (United Kingdom)
59 8 State Bank of India (India)
60 9 Woori Bank (South Korea)
Source : Bangladesh Bank website (https://www.bb.org.bd/)
Table : 03- 02 : List of Specialized Banks (SDBs) in Bangladesh:
1 Bangladesh Krishi Bank
2 Rajshahi Krishi Unnayan Bank
3 Probashi Kallyan Bank
Table : 03- 03 : There are now 5 non-scheduled banks in Bangladesh which are:
1 Ansar VDP Unnayan Bank,
2 Karmashangosthan Bank,
3 Grameen Bank,
4 Jubilee Bank,
5 Palli Sanchay Bank
Financial Institutions :
Non-Bank Financial Institutions (FIs) are those types of financial institutions that
are regulated under the Financial Institution Act, 1993 and controlled by Bangladesh
Bank. Now, 34 FIs are operating in Bangladesh while the maiden one was
established in 1981. Out of the total, 2 is fully government-owned, 1 is the subsidiary
54
of a SOCB, 15 were initiated by private domestic initiative and 15 were initiated by
joint venture initiative. Major sources of funds of FIs are Term Deposit (at least three
months tenure), Credit Facility from Banks and other FIs, Call Money as well as
Bond and Securitization.
Table : 03- 04 : List of Non Bank Financial Institutions (FIs)

1 Agrani SME Financing Company Limited
2 Bangladesh Finance and Investment Company Limited
3 Bangladesh Industrial Finance Company Limited (BIFC)
4 Bangladesh Infrastructure Finance Fund Limited (BIFFL)
5 Bay Leasing & Investment Limited
6 CVC Finance Limited
7 Delta Brac Housing Finance Corporation Ltd. (DBH)
8 Fareast Finance & Investment Limited
9 FAS Finance & Investment Limited
10 First Finance Limited
11 GSP Finance Company (Bangladesh) Limited (GSPB)
12 Hajj Finance Company Limited
13 IDLC Finance Limited
14 Industrial and Infrastructure Development Finance Company
Limited (IIDFC)
15 Infrastructure Development Company Limited (IDCOL)
16 International Leasing and Financial Services Limited
17 IPDC Finance Limited
18 Islamic Finance and Investment Limited
19 LankaBangla Finance Limited
20 Lankan Alliance Finance Limited
21 Meridian Finance and Investment Ltd.
22 MIDAS Financing Limited. (MFL)
23 National Finance Ltd
24 National Housing Finance and Investments Limited
25 People's Leasing and Financial Services Ltd
26 Phoenix Finance and Investments Limited
55
27 Premier Leasing & Finance Limited
28 Prime Finance & Investment Ltd
29 Reliance Finance Limited
30 Saudi-Bangladesh Industrial and Agricultural Investment
Company Limited (SABINCO)
31 The UAE-Bangladesh Investment Co. Ltd
32 Union Capital Limited
33 United Finance Limited
34 Uttara Finance and Investments Limited
Table : 03- 05 : Specialized Financial Institution(Semi Formal Sector) in

Bangladesh
01 Bangladesh House Building Finance Corporation (BHBFC)
02 Palli Karma Sahayak Foundation (PKSF)
The major difference between banks and FIs are as follows:

• FIs cannot issue cheques, pay-orders, or demand drafts.
• FIs cannot receive demand deposits,
• FIs cannot be involved in foreign exchange financing,
• FIs can conduct their business operations with diversified financing modes like
syndicated financing, bridge financing, lease financing, securitization instruments,
private placement of equity etc.
3.0.7 What Is Foreign Exchange (Forex)?
Foreign Exchange (forex or FX) is the trading of one currency for another. For
example, one can swap the U.S. dollar for the euro. Foreign exchange transactions
can take place on the foreign exchange market, also known as the Forex Market.
The forex market is the largest, most liquid market in the world, with trillions of
dollars changing hands every day. There is no centralized location, rather the forex
market is an electronic network of banks, brokers, institutions, and individual traders
(mostly trading through brokers or banks).
56
3.0.8 How Does Foreign Exchange Work?
The market determines the value, also known as an exchange rate, of the majority of
currencies. Foreign exchange can be as simple as changing one currency for another
at a local bank. It can also involve trading currency on the foreign exchange market.
For example, a trader is betting a central bank will ease or tighten monetary policy
and that one currency will strengthen versus the other.
When trading currencies, they are listed in pairs, such as USD/CAD, EUR/USD, or
USD/JPY. These represent the U.S. dollar (USD) versus the Canadian dollar (CAD),
the Euro (EUR) versus the USD, and the USD versus the Japanese Yen (JPY).
There will also be a price associated with each pair, such as 1.2569. If this price was
associated with the USD/CAD pair it means that it costs 1.2569 CAD to buy one
USD. If the price increases to 1.3336, then it now costs 1.3336 CAD to buy one
USD. The USD has increased in value (CAD decrease) because it now costs more
CAD to buy one USD.
In the forex market currencies trade in lots, called micro, mini, and standard lots. A
micro lot is 1000 worth of a given currency, a mini lot is 10,000, and a standard lot
is 100,000. This is different than when you go to a bank and want $450 exchanged
for your trip. When trading in the electronic forex market, trades take place in set
blocks of currency, but you can trade as many blocks as you like. For example, you
can trade seven micro-lots (7,000) or three mini lots (30,000) or 75 standard lots
(750,000), for example.
3.0.9 Size of the Foreign Exchange Market:

The foreign exchange market is unique for several reasons, mainly because of its
size. The trading volume in the forex market is generally very large. As an example,
trading in foreign exchange markets averaged $5.1 trillion per day in April 2016,
according to the Bank for International Settlements, which is owned by 60 central
banks and is used to work in monetary and financial responsibility.
The largest trading centers are London, New York, Singapore, and Tokyo.
57
3.0.10 Trading in the Foreign Exchange Market:
The market is open 24 hours a day, five days a week across major financial centers
across the globe. This means that you can buy or sell currencies at any time during
the day.
The foreign exchange market isn't exactly a one-stop-shop. There are a whole variety
of different avenues that an investor can go through in order to execute forex trades.
You can go through different dealers or through different financial centers that use
a host of electronic networks.
From a historical standpoint, foreign exchange was once a concept for governments,
large companies, and hedge funds. But in today's world, trading currencies is as easy
as a click of a mouse—accessibility is not an issue, which means anyone can do it.
In fact, many investment firms offer the chance for individuals to open accounts and
to trade currencies, however, and whenever they choose.
When you're making trades in the forex market, you're basically buying or selling
the currency of a particular country. But there's no physical exchange of money from
one hand to another. That's contrary to what happens at a foreign exchange kiosk—
think of a tourist visiting Times Square in New York City from Japan. He may be
converting his (physical) yen to actual U.S. dollar cash (and maybe charged a
commission fee to do so) so he can spend his money while he's traveling.
But in the world of electronic markets, traders are usually taking a position in a
specific currency, with the hope that there will be some upward movement and
strength in the currency that they're buying (or weakness if they're selling) so they
can make a profit.
3.0.11 Differences in the Forex Markets:
There are some fundamental differences between foreign exchange and other
markets. First of all, there are fewer rules, which means investors aren't held to as
strict standards or regulations as those in the stock, futures, or options markets. That
means there are no clearing houses and no central bodies that oversee the forex
market.
Second, since trades don't take place on a traditional exchange, you won't find the
same fees or commissions that you would on another market. Next, there's no cut-
off as to when you can and cannot trade. Because the market is open 24 hours a day,
you can trade at any time of day. Finally, because it's such a liquid market, you can
get in and out whenever you want and you can buy as much currency as you can
afford.
58
3.0.12 The Spot Market:
Spot for most currencies is two business days; the major exception is the U.S. dollar
versus the Canadian dollar, which settles on the next business day. Other pairs settle
in two business days. During periods that have multiple holidays, such as Easter or
Christmas, spot transactions can take as long as six days to settle. The price is
established on the trade date, but money is exchanged on the value date.
The U.S. dollar is the most actively traded currency. The most common pairs are the
USD versus the euro, Japanese yen, British pound and Swiss franc. Trading pairs
that do not include the dollar are referred to as crosses. The most common crosses
are the euro versus the pound and yen.
The spot market can be very volatile. Movement in the short term is dominated by
technical trading, which focuses on direction and speed of movement. People who
focus on technology are often referred to as chartists. Long-term currency moves are
driven by fundamental factors such as relative interest rates and economic growth.
3.0.13 The Forward Market:

A forward trade is any trade that settles further in the future than spot. The forward
price is a combination of the spot rate plus or minus forward points that represent
the interest rate differential between the two currencies. Most have a maturity less
than a year in the future but longer is possible. Like with a spot, the price is set on
the transaction date, but money is exchanged on the maturity date.
A forward contract is tailor-made to the requirements of the counterparties. They can
be for any amount and settle on any date that is not a weekend or holiday in one of
the countries.
3.0.14 The Futures Market:

A futures transaction is similar to a forward in that it settles later than a spot deal,
but is for standard size and settlement date and is traded on a commodities market.
The exchange acts as the counterparty.
3.0.15 Example of Foreign Exchange:

A trader thinks that the European Central Bank (ECB) will be easing its monetary
policy in the coming months as the Eurozone’s economy slows. As a result, the
59
trader bets that the euro will fall against the U.S. dollar and sells short €100,000 at
an exchange rate of 1.15. Over the next several weeks the ECB signals that it may
indeed ease its monetary policy. That causes the exchange rate for the euro to fall to
1.10 versus the dollar. It creates a profit for the trader of $5,000.
By shorting €100,000, the trader took in $115,000 for the short-sale. When the euro
fell, and the trader covered their short, it cost the trader only $110,000 to repurchase
the currency. The difference between the money received on the short-sale and the
buy to cover is the profit. Had the euro strengthened versus the dollar, it would have
resulted in a loss.
3.0.16 Principles of Foreign Exchange
The following principles are involved in Foreign exchange:

• The entire system.
• The media used.
• The monetary unit.
3.0.17 Functions of Foreign Exchange
The Bank acts as a media for the system of foreign exchange policy. For this reason,
the employee who is related to the bank to foreign exchange, especially foreign
business should have knowledge of these following functions:
• How the rate of exchange works.
• Rate of exchange.
• Forward and spot rate.
• Methods of quoting exchange rate.
• Premium and discount.
• Risk of exchange rate.
• Causes of exchange rate.
• Exchange control.
• Convertibility.
• Exchange position.
• Intervention money.
• Foreign exchange transaction.
• Foreign exchange trading.
60
• Export and import letter of credit.
• Non-commercial letter of trade.
• Financing of foreign trade.
• Nature and function of foreign exchange market.
• Rules and Regulation used in foreign trade.
• Exchange Arithmetic.
3.0.18 Letter of Credit (L/C)
On behalf of the importer if the Bank undertakes to make payment to the foreign
bank is known as documentary credit or letter of credit.
A letter of credit is an instrument issued by a bank to a customer placing at the later
disposal such agreed sums in foreign currency as stipulated. An importer in a country
requests his bank to open a credit in foreign currency in favor of his exporter at a
bank in the latter country. The letter of credit is issued against payment of the amount
by the importer or against satisfactory security. The L/C authorizes the exporter to
draw a draft under L/C's terms and sell to a specified bank in his country. He has to
hand over to the bank the Bill of exchange, shipping documents, and such other
papers as may be agreed upon between the exporter and the importer. The exporter
is assured of his payment because of the credit while the importer is protected
because documents in respect of the export of goods have to be delivered by the
exporter to the paying bank before the payment is made.
3.0.19 Form of Letter of Credit
A letter of credit (L/C) may be two forms. These are as below:

• Revocable letter of credit.
• Irrevocable letter of credit.
3.0.19.1 Revocable L/C:
If any letter of credit can be amended or canceled by the exporter and without the
prior consent of importer is known as a revocable letter of credit.
A revocable letter of credit can be amended or canceled by the issuing bank at any
time without prior notice to the beneficiary. It does not constitute a legally binding
undertaking by the bank to make payment. Revocation is possible only until the
61
documents have been honored by the issuing bank or its correspondent. Thus a
revocable credit does not usually provide adequate security for the beneficiary.
3.0.19.2 Irrevocable L/C:
If any letter of credit can not be canceled or amendment without the consent of both
the importer and the exporter is known as an irrevocable letter of credit.
An irrevocable credit constitution a firm undertaking by the issuing bank to make
payment. It, therefore, gives the beneficiary a high degree of assurance that he will
pay to his goods or services provided he complies with terms of the credit.
3.0.20 Types of Letter of Credit:
Letter of Credit is classified into various types according to the method of settlement
employed. All credits must clearly indicate in major categories.
❖ Sight payment credit.
❖ Deferred payment credit.
❖ Acceptance credit.
❖ Negotiation credit.
❖ Red close credit.
❖ Revolving credit.
❖ Stand by credit.
❖ Transferable credit.
3.0.20.1 Sight payment credit:
The most commonly used credits are sight payment credits. These provide for
payment to be made to the beneficiary immodestly after the presentation of the
stipulated documents on the condition that the terms of the credit have been
complied with. The banks are allowed a reasonable time to examine the documents.
3.0.20.2 Deferred payment credit:
Under a deferred payment credit, the beneficiary does not receive payment when he
presents the documents but at a later date specified in the credit. On presenting the
required documents, he received the authorized banks written undertaking to make
payment of maturity. In this way, the importer gains possession of the documents
before being debited for the amount involved.
62
In terms of its economic effect, a deferred payment credit is equivalent to an
acceptance credit, except that there is no bill of exchange and therefore no
possibility of obtaining money immediately through a descant transaction. In certain
circumstances, however, the bank's payment undertaking can be used as collateral
for an advance, though such advance will normally only be available form the
issuing or confirming bank. A discountable bill offers a wider scope.
3.0.20.3 Acceptance Credit:
With an acceptance, credit payment is made in the form of a term bill of exchange
drawn on the issuing Bank. Once he has fulfilled the credit requirements, the
beneficiary can demand that the bill of exchange be accepted and returned to him.
Thus the accepted bill takes the place of a cash payment.
The beneficiary can present the accepted bill to his own bank for payment at
maturity or for discounting, depending on whether or not he wants cash
immediately. For simplicity's sake the beneficiary usually gives on instruction that
the accepted bill should be left in the safekeeping of one of the banks involved until
it matures. Bill of exchange drawn under acceptances credit usually has a term of
60-180 days.
The purpose of acceptance is to give the importer time to make payment. It sells the
goods before payments fall due, he can use the proceeds to meet the bill of Exchange
in this way, he does not have to borrow money to finance the transaction.
3.0.20.4 Negotiation credit
Negotiation means the purchase and sale of a bill of exchange or other marketable
instruments. A negotiation credit is a commercial letter of credit opened by the
issuing bank in the currency of its own country and addressed directly to the
beneficiary. The letter is usually delivered to the addressee by a correspondent
bank. This credit is sometimes also as Hand on credit.
The letter of credit empowers the beneficiary to draw a bill of exchange on the
using bank, on any other named drawer, or on the applicant for the credit. The
beneficiary can they present this bill to a bank for negotiation, together with the
original letter of credit and the documents stipulated therein.
Payment of the bill of exchange is guaranteed by the issuing bank on the condition
that the documents presented by the beneficiary are in order. The most common
form of negotiation credit permits negotiation by any bank. In a rare case, the
choice is limited to specified banks.
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3.0.20.5 Red clause credit
In the case of a red clauses credit, the seller can obtain an advance for an agreed
amount from the correspondent bank, goods that are going to be delivered under
the documentary credit. On receiving the advances, the beneficiary must give a
receipt and provide a written undertaking to present the required documents before
the credit expires.
The advance is paid by the correspondent bank, but it is the using bank that assumes
liability. If the sellers do not present the required documents in time and fails to
refund the advance, the correspondent bank debits the issuing bank with the amount
of the advance plus interest. The issuing bank, in turn, has revered to the applicant,
who therefore bears the risk for the advance and the interest accursed.
The clause permitting the correspondent bank to make an advance used to be
written on red in a home the name red clause credit.
3.0.20.6 Revolving Credit
Revolving credit can be used when goods are to be delivered in installment at

specified intervals. The amount available at any one time is equivalent to the value
of one partial delivery.
Revolving credit can be cumulative or non-cumulative means that the amount from
unused or incompletely used portions can be carried forward to the subsequent
period. If a credit is non-cumulative, portions not used in the prescribing period
case to be available.
3.0.20.7 Stand by credit:
Stand by credit is encountered principally in the US. Under the laws of most US
states, banks are prohibited from issuing regular quarantines, so credits are used
instead. In Europe, too the use of this type of credit is increasing by virtue of their
documentary credit, stand-by credit is governed by the UCP. However, their
function is that of a grantee.
The types of payment and performance that can be guaranteed by stand-by credits
include the following:
• Payment of thorium bill of exchange
• Repayment of bank advance
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• Payment of goods delivered.
• Delivery of goods in accordance with wets contract and
• Execution of construction contracts, supply, and install contracts.
In order to enforce payment by the bank, the beneficiary merely presents a
declaration stating that the applicant for the credit has failed to meet his contractual
obligation. This declaration may have to be accompanied by other documents.
3.0.20.8 Transferable Credit:
Transferable credits are particularly well adapted to the requirements of

international trade. A trader who receives payment from a buyer in the form of a
transferable documentary credit can use that credit to pay his own supplier. This
enables him to carry out the transaction with only a limited and lay of his own
funds.
The buyer supplies for an irrecoverable credit issued in the trader's favor. The
issuing bank must expressly designate the credit as transferable. As soon as the
trader receives the confirmation of credit he can request the bank to transfer the
credit to his supplier. The bank is under no obligation to affect the transfer except
in so far as it has expressly consented to do so. The costs of the transfer are usually
charged to the trader and the transferring bank is entitled to delete them in advance.
3.0.21 Parties of Letter of Credit:
A letter of credit is issued by a Bank at the request of an importer in favor of an

exporter from whom he has contracted to purchases some commodity or
commodities. The importer, the exporter, and the issuing bank are parties to the
letter of credit. There are, however, one or more than one banks that are involved
in various capacities and at various stages to play an important role in the total
operation of the credit.
❖ The opening Bank.
❖ The Advising Bank.
❖ The Buyer and the Beneficiary.
❖ The paying Bank.
❖ The negotiating Bank.
❖ The confirming Bank.
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3.0.21.1 The opening Bank:
The opening Bank is one that issues the letter of credit at the request of the buyer.
By issuing a letter of credit it takes upon itself the liability to pay the bills drawn
under the credit. If the drafts are negotiated by another bank, the opening Bank
reimburses that Bank. As soon as the opening Bank, issuing a letter of credit (L/C),
it expresses its undertaking to pay the bill or bills as and when they are drawn by
the beneficiary under the credit. When the bills are presented to or when an antic is
received that bills have been presented to a paying or negotiating Banks its liability
matures.
3.0.21.2 The Advising Bank:
The letter of credit is often transmitted to the beneficiary through a bank in the letters
country. The bank may be a branch or a correspondent of the opening bank. The
credit is sometimes advised to this bank by cable and is then transmitted by it to the
beneficiary on its own special form. On the other occasions, the letter is sent to the
bank by mail or telex and forwarded by it to the exporter. The bank providing these
services is known as the advising bank. The advising bank undertakes the
responsibility of prompt advice of credit to the beneficiary and has to be careful in
communicating all its details.
3.0.21.3 The Buyer and the Beneficiary
The importer at whose request a letter of credit is issued is known as the buyer. On
the strength of the contract that he makes with the exporter for the purchase of some
goods that the letter of credit is opened by the opening bank.
The exporter in whose favor the credit is opened and to whom the letter of credit is
addressed is known as the beneficiary. As the seller of goods, he is entitled to receive
payment which he does by drawing bills under the letter of credit (L/C). As soon as
he has shipped the goods and has collected the required documents, he draws a set
of papers and presents it with the documents to the opening bank or some other bank
mentioned in the L/C.
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3.0.21.4 The paying Bank
The paying bank only pays the drafts drawn under the credit but undertakes no
opening bank, by debating the letters accounts with it if there is such an account or
by any other measured up, between the two bankers. As soon as the beneficiary has
received payment for the draft, he is out of the picture and the rest of the operation
concerns only the paying bank and the opening bank.
3.0.21.5 The Negotiating Bank
The negotiating bank has to be careful in scrutinizing that the drafts and the
documents attached thereto are in conformity with the condition laid down in the
L/C. Any discrepancy may result in refused on the part of the opening bank to
honor the instruments is such an eventuality the negotiating bank has to look back
to the beneficiary for a refund of the amounts paid to him.
3.0.21.6 The Confirming Bank
Sometimes an exporter stipulates that an L/C issued in his favor be confirmed by a

bank in his own country. The opening this country to add it's confirming to the
credit the bank confirming the credit is known as the confirming bank and the credit
is known as confirmed credit.
3.0.22 Contents of the Letter of Credit
Banks normally issued a letter of credit (L/C) on forms that clearly indicate the
bank's name and extent of the banks obligation under the credit. The contents of
the L/C of different Banks may be different. In general L/C contains the following
information:
3.0.22.1 Buyer
Who is also known as the accounted since it is for his account that the credit has
been opened?
3.0.22.2 Seller
Who is also known as the beneficiary of the credit?
3.0.22.3 Amount of the credit
Which should be the value of the merchandise plus any shipping charges intent to
be paid under the credit?
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3.0.22.4 Trade terms
Such as F.O.B and CIF
3.0.22.5 Tenor
The tenor of the Draft which is normally dependent upon the requirements of the
buyer.
3.0.22.6 Expiration date
This is specified the latest date documents may be presented. In this manner or by
including additionally the latest shipping date, the buyer may exercise control over
the time of shipment.
3.0.22.7 Documents required
Which will normally include commercial invoice consular or customer’s invoice,

insurance policies as certificates, if the source is to be effected by the beneficiary
and original bills of lading?
3.0.22.8 General description of the merchandise
This briefly and in a general manner duly describes the merchandise covered by a
letter of credit.
3.0.22.9 Import trade control & registration With C.C.I & E
In almost all the countries of the world, there is import trade control in one form or
another which supervises the import into the country and controls certain items of
exports depending upon national exigencies. The main object of the import trade
control is to conserve the scarce foreign exchange resources of the country with a
view to meeting the needs of the development of its expanding economy. In
Bangladesh, the import of goods is regulated by the Ministry of commerce in terms
of import and Export (Control) Act, 1950; with import policy orders issued which
is valid for five years, and Public Notices issued from time to time by Chief
Controller of Imports and Exports (C.C.I & E), while payments of these imports
are regulated by Central Bank, i.e., Bangladesh Bank, through its Exchange
Control Policy Department. So, Import Trade Control and Exchange Control are
complementary and supplementary to each other.
According to the Imports and Exports (Control) Act, 1950 as adopted in
Bangladesh, anyone willing to carry import business needs registration with the
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licensing authority, i.e., Chief Controller of Imports and Exports and its offices at
the important trade centers of the country.
The following documents are required to be submitted to the licensing authority
for registration as importers.
** Questionnaire form duly filled in and signed
** Tax Identification Number (TIN) certificate
** Trade License from the City/Municipal Corporation or Local Authority
** Bank solvency certificate
** Nationality certificate
** Partnership Deed where applicable
** Certificate of Registration with the Registrar of Joint Stock Companies
and Memorandum & Article of Association in case of Private and Public
Ltd. Co.
** Membership Certificate from the Chamber of Commerce/Registered
Trade Association
** Ownership documents or rent receipts of the place of business
** Any other documents required under the relevant import policy.
On receipt of the application along with relative documents, the Chief Controller
of Imports and Exports and its regional offices scrutinizes the documents and
conducts physical verification (if considered necessary) and on being satisfied,
requests the applicant to pay fees towards registration through treasury challan.
After submission of the above documents and payment of requisite fees, if the
documents are found in order and the C.C.I& E are satisfied, the Import
Registration Certificate (IRC) is issued to the applicant I.E. Importer.
The IRC is a security document issued under embossing seal and duly signed by
authorized officials of C.C.I & E and to be kept under safe custody. The IRC is
required to be renewed every year on payment of usual fees.
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3.0.22.10 Licensing for import
Most imports into Bangladesh require a license from the licensing authority; from
the 1983-84 shipping period, the procedure has been liberalized. Commercial
Banks have been entrusted with the responsibility of licensing imports in both
industrial and commercial sectors. Licensing is done by commercial banks by
means of specially designed from known as Letter of Credit Authorization Forms
simply LCAF. LCA Forms are security documents printed by the respective bank.
Bankers must not hand over these to others. This form is in reality a substitute for
the conventional import license.
The following documents are required to be submitted by the importer to his
banker for licensing:
** The LCA form properly filled in quintuplicate signed by the importer.
** L/C Application duly signed by the importer.
** Purchase contract, i.e., indent for the goods issued by an inventor or
proforma invoice as the case may be.
** Insurance cover note.
** Membership certificate from a recognized Chamber of Commerce and
Industry or Town Association or registered Trade Association.
** Proof of payment of renewal fees for the Import Registration Certificate.
** A declaration in triplicate, that the importer has paid income-tax or
submitted income-tax return for the preceding year.
** In the case of the Public Sector, attested photocopy of allocation letter

issued by the allocation authority, Administrative Ministry or Division
specifying the source, amount, purpose, validity, and other terms and
conditions against the imports.
** Any such documents as may be required as per instruction issued/ to be

issued by Chief Controller of Imports & Exports from time to time. On
receipt of the LCA Form and the other documents, the bank should
carefully scrutinize the documents and lodge the same in their respective
registration books and duly verify the signature of the importer put on
LCA Form
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3.0.22.11 Registration of LCAF with Bangladesh Bank
If foreign exchange is intended to be bought form the Bangladesh Bank against

an LCAF it has to be registered with Bangladesh Bank’s Registration Unit located
in the concerned area office of the CCI&E. For such registration, the LCAF, duly
filled in and signed by the importer and authenticated by the Authorized Dealer,
shall be submitted by the Authorized Dealer to the concerned Registration Unit.
The Unit will put a registration number on all the copies and emboss a security
seal.
The Authorized Dealers should ensure that this registration number of the
importer is invariably furnished on IMP form. Where the importer is exempted
from such registration, a suitable mention of this fact should be made on the IMP
form.
After registration, the original and duplicate copies of the LCAFs will be
delivered to the authorized representatives of the Authorized Dealers. The
triplicate and quadruplicate copies will be passed on to the concerned area office
the CCI&E and the
Quintuplicate will be retained by the Registration unit.
Where no registration of LCAFs is needed, the Authorized Dealer will send the
triplicate and quadruplicate copies to the concerned area office of the CCI&E,
retaining the other copies with itself. Where an import is against a source of
financing (foreign project loans, grants) usable through a specifically designated
bank, the nominated Authorized Dealer of the importer will forward to the
designated bank the authentication LCAFs and the designated bank will
eventually forward the triplicate and quadruplicate copies of LCAF to the area
office of the CCI&E.
The Authorized Dealer will not issue blank LCAFs to their clients. The importer
should himself/herself sign the LCAF in the presence of an officer of the
Authorized Dealer, an authorized official of the Authorized Dealer should put
his/her signature with date and seal on the LCAF, evidencing verification of the
importer’s signature and import entitlement as per current import Policy Orders.
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The Authorized Dealer will maintain records of the signature of the authenticating
officers of the Bangladesh bank Registration Unit and verify, before opening L/C,
that the signature of the authenticating officer of the Registration Unit is genuine.
In no case, the Authorized Dealer will accept authenticated LCAF for opening
L/C direct from the parties. Normally the Authorized Dealer issuing and
authenticating and LCAF would also open the L/C but if the requires transfer to
another Authorized Dealer this should be done directly but the transferring
Authorized Dealer itself. The Authorized Dealer receiving the LCAF must
conduct its own verification of the signatures on the LCAF before opening L/C.
3.0.22.12 Utilization of LCAF
The Authorized dealer should take all precautions to quote the correct HS codes
number of the goods to be imported, in the LCAF and the L/C. Failure to do so
may lead to the imposition of penalties by the Customers Authorities. In all cases
of doubt, references should be made either by the Authorized Dealer or the
customer directly to the area office of the CCI&E.
The aggregate amount of foreign exchange sold against an LCAF whether under
L/C or otherwise, should not exceed the value mentioned in the LCAF.
LCAFs can normally utilize on a C&F basis. Full LCAF value is therefore not
remittable as F.O.B value of goods. In other world, freight charges payable on
imports on the F.O.B basis are to be adjusted against the relative LCAF value. In
the case of F.O.B imports, the Authorized Dealer should endorse, beside F.O.B
value, the freight payable in Taka as indicated in the Bill of leading, etc. In the case
where miscellaneous charges i.e. handling charges, cartage/surface transportation,
documentation charges, etc., are required to be paid by the importers on the arrival
of goods through the Airlines, the Authorized Dealers will also endorse on the
Exchange Control copy of the LCAFs the number of such charges as indicated in
the Airway bill along with the freight in Bangladesh Taka. The Authorized Dealers
should also give a certificate to the Importers to the effect that the amounts of
freight, handling charges, etc. have been endorsed on the relative LCAF. The issue
of this certificate is essential as the shipping companies etc. are under instructions
not to accept payment of freight in Taka unless the above-mentioned certificate is
produced to them. In cases where the F.O.B value and the amount of freight
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payable in Taka exceed the value of the LCAF the application should be referred
to the Bangladesh Bank for consideration with full particulars and supporting
documentary evidence.
3.0.22.13 Application for issuing of Letter of Credit
L/C application form is a sort of an agreement between customer and bank on the
basis of which letter of credit is opened. This is a printed form bearing stamps of
the prescribed amount in accordance with the Stamp Act in force. It stipulates the
condition governing the letter of credit, contains an undertaking by the customers
to make funds available in his account with the bank when bills would be presented
under the credit. The credit application must be clear and precise and generally
include the following items:
** Full name and address of the supplier, manufacturer, or beneficiary.
** Applicant’s name and address (including LCAF, TIN, VAT number),
etc.
** The total amount of credit asked for and whether the credit is specific
credit or a revolving Letter of Credit and amount of the currency in
which the documents are to be drawn.
** The type of credit to be opened, i.e. whether confirmed or transferable.
** The terms of sale, i.e. whether the contract is on CFR, FOB or CIF basis.
** The risk to be covered under the policy and the and the amount of
insurance.
** Brief description of goods including quantity, quality and unit price
** The terms of payment; whether Sight or Deferred payment.

** Specified documents required, such as commercial invoice, packing list,
transport document, certificate of origin, insurance document, etc
** Place of shipment destination and the latest date of shipment.
** The details of the mode of shipment and the documents which are to
accompany the Bill of Exchange that is, Viz, Airway Bill, or Air
Consignment Note, Bill of Lading, or Post Parcel Receipt. Whether part
shipment or transshipment is allowed.
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** The date to which the credit will remain valid and the date within which
documents should be presented for negotiation.
** Method of advice on credit. Whether it should be sent by Mail or
SWIFT.
3.0.22.14 The importer is also required to give the following authority to the issuing
Bank:
** The bank will have the pledge of documents and title to the goods
covered under the Letter of Credit.
** The importer will accept and pay on maturity if the Bills are drawn on
deferred payment basis and pay o presentation in case on Bill drawn on
at sight payment basis.
** The provision and articles of the Uniform Customs and Practice for
Documentary Credits usually govern the Letter of Credit operations
unless otherwise specified.
** The importer must submit the following papers along with L/C
application before opening Letter of Credit:
** Indent/Proforma invoice duly signed in.
** Insurance cover note.
** LCAF duly signed in.
** IMP forms duly signed in.
** Any other documents/papers as required.
Customers should be persuaded to reduce details to be included in L/C to a

minimum commensurate with safety and accuracy. The instruction should be
precise and free form any ambiguity. Vague terms such as “usual”, “customary”,
“as before” should not be accepted.
The L/C application must be completed/filled in properly and signed by the
authorized person of the importer before it is submitted to the opening bank.
Unless otherwise specified, for import under cash foreign exchange, letter of credit
has to be opened by importers within 150 days from the date of issue or registration
of LCA form. The above time limit may be extended up to such time as deemed fit
by the CCI&E. For import under foreign aid/grant and barter/STA, L/C is to be
opened within the time limit as notified by the CCI&E.
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Banks can open letters of credit only on behalf of their own customers who
maintain accounts with them and are known to be participating in the trade. By
opening a letter of credit, the bank undertakes to make a payment on behalf of the
customer to the extent of the amount of credit. The bank should, therefore, appraise
the means, standing, and creditworthiness of the customer and in a normal pattern,
the specific limit is allowed to the customer after assessment for the opening of a
letter of credit.
Bankers are also required to obtain a confidential report of the beneficiary of L/C
before opening the same as per Exchange Control Regulations.
Although at the time of opening of the letter of credit it only starts as a contingent
liability but later on it may turn into an advance when it may be necessary for the
bank to take recourse to the goods which form the security for opening letter of
credit. It is, therefore, necessary to see the nature of the goods shipped and whether
the same is rapidly marketable. Banks normally retain certain percentages of
margin from the importer against the credit. Sometimes additional securities are
also retained.
All L/C and similar undertakings covering imports into Bangladesh must be
documentary L/Cs and should provide for payment to be made against full sets of
onboard (shipped) bills of lading, air consignment note, railway receipts, post
parcel receipts showing dispatch of goods covered by the Credit to a destination in
Bangladesh. All L/Cs must specify the submission of signed invoices and
certificates of origin.
It is not permissible to open clean or revolving or packing credit. Applications for
opening such L/Cs should be referred to Bangladesh bank with full particulars.
The Authorized Dealers may open divisible, transferable L/C for import into
Bangladesh under cash LCAF without reference to the Bangladesh bank. It is not
permissible to open import L/C in favor of beneficiaries in countries from which
import into Bangladesh is banned by the competent authority.
The Authorized Dealer should open an L/C, see documentary evidence that a firm
order for the goods to be imported has been placed and accepted. The Authorized
Dealers should ensure while opening an L/C that a full description of the goods to
be imported is given in each Credit along with the unit price of the merchandise.
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L/C may be established proving for payment to the country of origin of goods or
any other country except those countries imports of which are prohibited. The L/C
may provide for payment or reimbursement in any freely convertible foreign
currency, in the currency of the country of the beneficiary or of the country of
origin/shipment of goods, or by way of credit to the non-resident Taka account of
the concerned bank abroad.
Through a letter of credit is to be opened in accordance with the terms of the
contract sale, bankers are committed only to the terms of the letter of credit and
not in goods. He is responsible only for the correctness of the documents. So, there
should not be any ambiguity in the terms of the letter of credit. A detail of
formalities to be observed before opening L/C has been discussed in the next
chapter “Documentary Credit”.
After the preliminaries are over, the bank opens the letter of credit in favor of the
supplier through its correspondent bank in the letter’s country by airmail. L/C must
be dispatched in two lots (original and duplicate).
When L/Cs are opened, full particulars thereof must be endorsed on the back of the
Exchange Control copy of the LCAF under the stamp and signature of the
Authorized Dealer. The Taka equivalent of the L/C opened is endorsed on the
LCAF at the ruling BC selling rate (spot), but if a forward exchange cover is
provided the conversion should be made at the actual forward rate.
Details of the amount remitted, whether under L/C or otherwise should be endorsed
on the Exchange Control copy of the LCAF together with the number of the relative
IMP form.
3.0.22.15 Accounting procedure
As soon as L/C is opened, the bank accepts liability on behalf of the importer to
make payment against the credit, provided that the shipment is made within the
period and that the stipulated documents are presented and other terms and
conditions as per L/C are complied with. Naturally, the bank has to pass an entry
in L/C Liability Ledger and also in General Ledger to show its actual liability
accepted on L/C. A liability voucher is passed as under:
Contingent liability voucher:
Customers Liability on L/C------------Debit.
Banker’s Liability on L/C--------------Credit.
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Margin & Bank Charges:
Margin, commission, postage, and cable charges are recovered from the party
bypassing entries as under:
Party’s Account------------------------------------Debit.
Sundry Deposit A/C Margin on L/C-----------Credit.
Income A/C Commission on L/C---------------Credit.
Tax on L/C Commission--------------------------Credit.
Vat on L/C Commission-----------------------------Credit.
Margin voucher should be posted in the margin deposit register party-wise,
incorporating L/C number.
L/C commission and other charges are realized form the party before L/C is
opened. The notional amount may be realized as FCC (Foreign Correspondent’s
Charges). FCC includes the advising, postages, cable charges, and foreign bank
charges. The amount of FCC is kept separately in an account and this entry may
be reversed as and when the debit advice is received from the foreign
correspondent bypassing voucher for the actual amount. If there is any shortfall,
the same is to be realized from the party.
3.0.22.16 Advising Letter of Credit
The letter of credit duly signed by two authorized officers, whose specimen
signatures already recorded with the correspondent banks, must be addressed to
the beneficiary. The issuing bank generally does not enter into direct contact with
the beneficiary. Instead, they utilize the services of its own branch office (if any)
or correspondent bank at the seller’s country for the purpose of advising it to the
seller (beneficiary). Thus, the correspondent bank becomes the “Advising Bank”.
The purpose of advising a credit consists of forwarding the original credit to the
beneficiary to whom it is addressed. Before forwarding/advising the credit to the
seller under appropriate forwarding coverage, the advising and has to verify the
signatures of the officers of the opening bank and ensure that the terms and
conditions of the credit are not in violation of regulations relating to export. While
advising, the advising bank does not undertake any liability.
The Article 9 of UCPDC (Publication 600) says,
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** A credit may be advised to a beneficiary through an advising bank. An
advising bank that is not a confirming bank advises the credit without
any undertaking to honor or negotiate.
** By advising the credit, the advising bank signifies that it has satisfied
itself as to the apparent authenticity of the credit and that the advice
accurately reflects the terms and conditions of the credit received.
3.0.22.17 Additional confirmation to import Letter of Credit
The beneficiary of L/C may ask for the additional confirmation to a letter of credit
by an internationally reputed bank located in the beneficiary’s country. In that case,
after adding confirmation, the negotiation becomes restricted to the bank who has
added their confirmation to the credit.
In case there is no branch of the advising bank of the beneficiary’s country, the
reimbursing bank may confirm to the advising bank that they are holding
reimbursing authority. This may also serve the purpose of adding confirmation.
As per normal practice, the charges of adding confirmation are borne by the
beneficiary. In case the charges are to be borne by the importer, the L/C opening
bank is to recover charges at the time of issuance of such instructions.
3.0.22.18 Amendment to Letter of Credit
The letter of credit opened by a bank may need amendment. If the supplier finds
that the term of the credit cannot be complied with in full, he would arrange for
the necessary amendment by the opener before the goods are shipped. These
amendments must be advised by the opening bank to the supplier through advising
bank.
Sometimes the opener also may like to amend the credit after it has been advised.
These amendments may relate to the decrease or increase in the amount of credit,
change in foreign currency, and change in the dates of shipment or negotiation,
change in-merchandise, and other terms of the credit. These amendments must also
be advised by the opening bank to the supplier through the advising or
confirmation bank before the shipment is made.
For this kind of amendment, the bank would need a written request from the
importer who generally makes this request after obtaining the consent of the
supplier. Such amendments will, of course, be effective if all the parties to letter
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of credit namely the L/C opening bank, the advertising bank, and the supplies,
agree to it.
The amendment is to be typed, like L/C, in the printed format in the manifold. The
copies of the amendment must be dispatched to all concerned as done in
dispatching the L/C. Amendment can be done by SWIFT or Airmail.
Amendment commission and other charges are to be realized form the party by
debiting his account. If the amount of L/C is increased, the liability voucher is to
be passed including the amount of increase on the date of amendment reserving
the old entry passed at the time of opening the L/C.
3.0.22.19 Shipment
Imports policy sets down the validity period applicable to each type of license on
the basis of the goods covered by them. Unless otherwise specified, a shipment of
goods shall take place within the validity of license/LCAF. Under the present
policy, LCAFs remain valid for remittances for one year subsequent to the month
of issuance/month of registration (in case of registration with Bangladesh Bank).
However, LCAFs issued for import of capital machinery and spare will remain
valid for remittance for 18 months subsequent to the month of
issuance/registration. The Authorized Dealers should not, under any circumstance,
make remittance against any LCAF after the expiry of the above-prescribed
validity periods without first obtaining revalidation of the LCAF. They may
however allow such remittances without obtaining revalidation only against
Foreign Currency funds of Bangladesh nationals working abroad.
The validity of LCAF issued against cash shall not be extended except where the
shipment cannot be made within the validity of LCAF due to circumstances
beyond the control of the importer. In such cases, validity may be extended by the
licensing authority for a minimum period considered necessary.
In case of a shipment made by sea, the date of shipment will be the date on the Bill
of Lading.
In case of imports by air, the date of relevant consignment note/ airway bill will
normally be taken as the date of dispatch, provided this represents the date on
which the goods left the last airport in the country from which the import is
affected.
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In case of post parcels, the date of the stamp of the office of dispatch on the packet
or the dispatch note is taken to be the date of dispatch.
In case of imports made from countries connected with land, the date of dispatch
of goods by rail, road, or other recognized mode of transport to the consignee in
Bangladesh or on consignment basis will be taken to be the date of shipment.
3.0.22.20 Lodgment of documents
After the shipment of contracted goods, the supplier prepares shipping documents
and presents these to the negotiation bank. On being satisfied that the documents
are in order in terms of the letter of credit, the negotiation bank makes payment to
the supplier by debiting the opening bank’s account, if any, maintained with it or
claimed reimbursement from another bank as stipulated in the reimbursement
clause of letter of credit and forwards the shipping documents to the opening bank.
The importer is to be advised with full particulars of shipment to retire the
documents against payment or to dispose of the import documents as per pre-
arrangement if any.
On receipt of the shipping documents from the negotiation bank, L/C opening bank
should carefully examine these to ensure that they conform to the terms of the
credit.
3.0.22.21 Security Documents
The L/C opening bank being received the documents from the negotiated bank will
scrutinize the documents with the respective L/C terms and conditions.
** Forwarding schedule of Negotiating Bank
** Whether there is any instruction.
** Whether these instructions can be complied with.
** Whether the negotiating commission realized.
** Bill of Exchange (Draft)
** Whether it is drawn in order.
** Whether the amount of draft corresponds with the L/C amount.
** The draft amount should be equal or less than the L/C amount.
** Whether the date of the draft of the within the date as per L/C etc.
** Bill of Lading (B/L)
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** Whether the B/L is clean i.e. there is no clause like some cartons are
broken or any other clause.
** Whether there is a signature of the shipping Authority.
** Whether the date of B/L is within the date of shipment as per L/C.
** Whether the freight is prepared or not as per L/C terms.
** Whether the part of shipment and port of destination are similar as per
L/C.
** Whether the title of B/L belongs to L/C opening bank.
** Whether the full sets of B/L dispatched by negotiating bank etc.
** Commercial Invoice
** Whether the full particulars of goods have been incorporated.
** Whether the amount of invoice corresponds with the amount of Bill of
Exchange and as per the L/C terms.
** Whether IRC No. LCA No etc. have been incorporated.
** Whether it is signed by the beneficiary.
** Other Documents
** Whether all other documents are prepared as per L/C.
In case of discrepant documents, Article 16 of UCPDC (Publication 600) says,

** When the issuing bank determines that a presentation does not comply,
it may refuse to honor or negotiate.
** When the issuing bank determines that a presentation does not comply,
it may in its sole judgment approach the applicant for a waiver of
discrepancies.
** When the issuing bank decides to refuse to honor or negotiate, it must
give a single notice to that effect to the presenter.
The notice must state:

** That the bank is refusing to honor or negotiate; and
** Each discrepancy in respect of which the bank refuses to honor or
negotiate; and
** a. That the bank is holding the documents pending further
instructions from the presenter; or
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** b. That the issuing bank is holding the documents until it receives a
waiver of the applicant agree to accept it, or receives for the
instruction from the presenter prior to agreeing to accept a waiver;
or
** c. That the bank is returning the documents; or
** d. That the bank is acting in accordance with Instructions previously
receipt from the presenter.
** The notice required in sub-article (c) must be given by
telecommunication or, if that is not possible, by other expeditious means
no letter than the close of the fifth banking day following the day of
presentation.
** If the documents are found in order and these are acceptable to the
importer, the bank lodge the bill in PAD (Payment Against Documents)
by converting the foreign currency representing the bill amount and
foreign correspondences charges into Taka and asks the importer to
retire the bill by sending a cost memo indicating the amounts payable by
him under different heads.
3.0.22.22 Accounting procedure at the time of lodgment
Whether the documents are paid or dishonored, the opening bank will reserve the
liability entries in their books as under:
Contingent liability reversal voucher:
Bank’s liability on L/C------------Debit.
Customer’s liability on L/C-----Credit.
Vouchers on lodgment of documents:

(PAD) A/C Cash------------Debit.
Exchange Account-------Credit.
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3.0.22.23 Retirement of import documents
After the retirement of documents by the importer, the bank will put an
endorsement on the draft stating “Received Payment” under seal and signature of
the bank’s authorized officer. The invoice is certified as “certify invoice value”
(stating foreign currency equivalent of Taka……………). The B/L is endorsed in
favor of the importer.
The draft together with all the other shipping documents is delivered to the
importer showing the detail of charges debited to the importer’s account along with
the Custom Purpose copy of import License/LCAF retained earlier.
Before delivering the import documents to the importers, the Authorized Dealer
should invariably endorse on the invoices accompanying the bills the amount in
figures and words which they have remitted from Bangladesh. In case of payment
on DA terms, the amount for which the bill has been accepted should be endorsed
in the invoices.
The aggregate amount of foreign exchange sold against an LCAF whether under
L/C or otherwise, should not exceed the value mentioned in the LCAF.
Remittance in excess of the value of the LCAF is not permitted without prior
approval of the Bangladesh bank except for payment of normal bank charges of
the foreign correspondents. Remittance of bank charges should be reported to
Bangladesh Bank as usual with TM forms and supporting documents.
An Authorized Dealer may not open L/C or make remittances of foreign exchange
covering imports into Bangladesh in cases where the Exchange Control copy of
the relevant LCAF has been issued in the name of a person or firm other than that
of an applicant.
An authorized Dealer should not remit the proceeds of the bills in cases where the
name of the importer on the bill of exchange differs from that on the LACF.
Bangladesh bank would be prepared to consider approval for advance remittance
against goods to be imported into Bangladesh where such goods are of specialized
or capital nature. Application for approval in form IMP should be submitted in
Bangladesh bang along with the Exchange Control copy of the relative LCAF, the
contract in original entered into between the importers and the foreign
manufacturer or supplier, and an undertaking on prescribed Performa.
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In all cases of purchase of foreign currency, an application must be made to an
authorized Dealer and, where necessary to Bangladesh Bank. For payments against
imports into Bangladesh, the prescribed application form, Form IMP is used and
for other types of remittances form TM is used.
Exchange control copies of the LCAFs submitted by the importers, should, when
fully utilized, is forwarded by the Authorized Dealer to the Bangladesh Bank.
Exchange Control copies of LCAFs which remain unutilized for the full amount
should also be surrendered by the Authorized Dealers to the Bangladesh Bank after
the expiry of the validity period for remittances.
An application for payments for imports into Bangladesh should be made on IMP
forms. The IMP forms must be submitted in duplicate by the importer or his duly
authorized agent. In cases where empowered to approve the remittances on behalf
of the Bangladesh bank, the Authorized Dealer will endorse its approval on the
reserve of the IMP form in the space provided for the purpose. In other cases, the
Authorized Dealer will submit the IMP form together with required supporting
documents to the Bangladesh Bank for approval.
The Authorized Dealer should mark with a bold letter “G” the IMP form for
remittances against an import in the name of a Government department or office
for which L/Cs are opened by the Authorized Dealer.
In all cases of remittances for imports into Bangladesh, the importer must submit
within 4 months from the date of remittances the relevant exchange control copy
of the customs bill of entry. In case of import by post, the importer must submit
the invoice certified by the customs authorities in lieu of the exchange control copy
of the bill of entry.
The Authorized Dealers will obtain an invoice, in duplicate, both of which will be
certified by them as usual. After recording in the IMP form the particulars of the
remittances effected, the original copy of the IMP form along with a copy of the
certificate invoice shall be forwarded to the Bangladesh Bank with usual monthly
returns.
The duplicate copy of IMP form will be retained by the Authorized Dealer.
Subsequently when the exchange control copy of the bill of entry/customs certified
invoice is submitted by the importer, the particulars therein should be matched and
checked with those in the IMP form and invoice field earlier, to see if the
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merchandise for which remittances was made has been duly received in
Bangladesh. If no material discrepancy is deleted, the case should be considered
closed, with the duplicate IMP form, invoice and custom bill of entry/custom
certified invoice field together for eventual inspection and disposal instruction
from inspection team from the Foreign Investment and Inspection Depa
3.0.23 Clearance in absence of shipping documents
3.0.23.1 Shipping Guarantee:
It is a guarantee-cum-indemnity issued by the bank in favor of the shipping company

on the prescribed form provided by the shipping company. When shipping documents
against L/C are not received by the bank but goods have arrived at port needing
immediate clearance of the consignment to avoid demurrage, this guarantee is issued.
The shipping company shall release goods to the importer on the production of this
guarantee. The shipping guarantee is signed by the importer and counter-signed by the
bank.
3.0.23.2 Procedure for issue of guarantee:
The importer should submit the following documents to the bank for issue of the
guarantee;
** Counter guarantee signed by the importer on the prescribed form of the bank.
** Copy of invoice
** Non-negotiable copy of Bill of Lading/Airway bill etc.
** Deposit of 100% margin on invoice value (foreign currency converted into
Taka at BC selling rate)
On receipt of the above documents and margin, the bank will give endorsement on the
shipping guarantee at the end in the following way:
“The above indemnity is countersigned on condition that the bank’s liability hereunder
shall not exceed Taka…………… and the bank will be finally discharged and released
from its liability of a claim hereunder s not lodged with the bank by…………”
3.0.23.3 Liability Voucher:
Liability vouchers of L/C are to be reserved, fresh voucher on liability against

guarantee is to be passed in the following way:
Customer’s liability on L/C-----Debit
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Banker’s liability on L/C--------Credit
On receipt of documents from a foreign banks, the Bill of Lading is detached and
surrendered to the shipping company for the release of guarantee.
As soon as the guarantee is received back, the liability voucher against guarantee
is to be reversed.
3.0.23.4 Retirement Procedure for Deferred Payment of Usance Bill (D.A).
When the draft is returned by the drawee (importer) having been duly accepted by
him, the following retirement procedure is followed:
** The maturity date of the bill is to be worked out and noted in the
PAD/BE register and also in due date diary.
** The Foreign correspondent should be advised the due date of maturity
and be authorized to debit the Nostro account to Authorized Dealer or to
claim reimbursement on the due date as per terms of L/C from the
reimbursing bank.
** In the case of D.A. Bill, all documents except the accepted draft are
delivered to the importer against a simple receipt.
** The invoice is marker “Documents delivered against acceptance and
remittance of ………………will be effected on due date”.
3.0.23.5 Bills negotiated under reserve of indemnity
Negotiation of bills under reserve or on indemnity is prevalent in international trade.

When there is a discrepancy in the documents the Foreign correspondents or the
banks negotiate documents under reserve or on indemnity at the risk and
responsibility of the paying bank (negotiating bank). If the remitting bank draws the
attention of the issuing bank to any irregularities in the documents or advice such
as a bank that it has paid, accepted, or negotiated under reserve or against a
guarantee in respect of such irregularities, the issuing bank shall not thereby be
relieved from any of its obligations. Such guarantee or reserve concerns only the
relations the remitting bank had with the beneficiary.
On receipt of such documents, the bill will be lodged and retired after acceptance
from the importer, and such a case must be deposited of the written maximum period
of 7 days.
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3.0.24 Loan Against Imported Merchandise- LIM (Post Import Finance)
3.0.24.1 Definition of LIM:
Import Finance plays a vital role in a country's foreign trade business. Import of
goods and service is needed not only for export production but also to supply the
domestic industry with the necessary inputs which are not locally available or
available at uneconomic cost and are needed for expansion and development.
Loan against Imported Merchandise (LIM) is a facility provided by the Bank to the
importers who are in shortage of funds to retire the import bills and thus to clear
the goods from the port authority. In other words, it may be referred to as an
advance against merchandise.
3.0.24.2 Cases of LIM Account:
LIM Accounts may be created in the following two cases:-

** LIM Account on importer's request.
** Forced LIM Account.
3.0.24.2.1 LIM Account in importer's request
After lodgment of documents, the importers concerned to be intimated for early

retirement of the documents by paying outstanding bill amount including other
charges. If the importer is not in a position to retire the bill out of his own sources,
at that moment they may request the bank to clear the goods by creating LIM
Account. On receipt of the importer's request, the official of the import bills
section will calculate the total landed cost of the consignment. To ascertain the
landed cost the following points are to be considered.
Efforts should be taken so that at least 20% to 30% margin of the landed cost
may be realized from the importer. The realization of margin will depend on the
banker customer relationship and also on the marketability of the goods.
The following charge documents have to be executed by the importer:-
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** DP Note (Demand Promissory note).
** Letter of Arrangement.
** Letter of Disbursement.
** Letter of pledge.
** Any other document of necessary.
The branch Managers are not empowered to sanction the LIM A/Cs in favor of
the importers for clearance of the goods without obtaining the approval from
Head Office.
On getting approval from Head Office the branch will send the documents to the
port city branch by endorsing the bill of lading in favor of them with the
certification of the invoice value for clearance the goods through importers
nominated as well as Bank's approved C&F agent. In the forwarding letter clear
instructions to be given for dispatching the goods either by train or by truck duly
insured. Before sending the documents to the port city branch the following
charge documents have to be executed by the importer:
** DP Note (Demand Promissory note).
** Letter of Arrangement.
** Letter of Disbursement.
** Letter of pledge.
** Any other document of necessary.
The following accounting entries and vouchers are generally to be passed in the
set of Retirement Vouchers on the same day at the branch:-
Customer A/C---------Debit.
LIM-----------------------Debit.
IBTA / Pay order------Credit
PAD----------------------Credit
The particulars of LIM A/C must be entered and voucher to be posted in the LIM
Register.
After clearance, the goods should be stored either in Bank's godown or an
importer's godown under bank's lock and key and the particulars of goods to be
entered in the space provided in the LIM Register. At the same time insurance of
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goods covering fire and other risks are to be made. Godown staff salary, godown
rent (if the goods stored at the Bank's godown), and other miscellaneous charges
in connection with the LIM A/C will be realized by debit to party's LIM A/C
under advice to the importer.
3.0.24.2.2 Forced Lim Account
Immediately after lodgment of documents the branch incumbent and concerned

dealing official shall vigorously pursue importers for the retirement of bills. PAD
should not remain outstanding for more than 30 days from the date of lodgment
as per norms.
If the party fails to retire the documents within 30 days or within the date of
arrival of ship whichever is earlier, the branch should arrange clearance of the
goods by creating forced LIM. Other formalities in connection with the forced
LIM will be the same as in the case of LIM created on the importer's request.
No further L/C's of the party for whom the Bank was forced to clear the
consignment and the party failed to take delivery of the goods within the time
specified under the Head office approval should be opened without prior
approval from Head Office even if the same is within the discretionary power of
branch Manager.
** The LIM liability should be adjusted within a maximum period of 45
days from the date of storage for commercial importer and 60 days
for industrial importers. (It may vary as per circular)
** Part delivery against payment may also be allowed if so desired by
the party to clear the LIM liability within the aforesaid time after
recovery margin over the landed cost if possible, but such payment
should be proportionate with outstanding LIM liability taking into
account the interest, godown rent and other charges up to eventual
date of final delivery. This should be so arranged that with the last
delivery the entire LIM liability is fully adjusted. Special care should
however to be taken to protect the bank's interest in a case where all
the packets/bundles are not of equal size quality and price.
** Additional 30 days may be allowed to both commercial and
industrials if so approached by them for final adjustment. In the event
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of importer's failure to lift the goods on payment of bank's dues in full
even within the extended period of 30 days, the following steps shall
be taken by the branch incumbent:
** I. Final notice shall be issued on importer's giving 15 days’ time
for payment.
** II. In case the concerned borrowers do not liquidate the liability
within the stipulated time limit, but come forward with a prayer for
further time, in such cases bank may allow further 30 days’ time only
provided that bank is satisfied that the importer will be in a position
to repay the outstanding dues within the extended period under advice
to Head Office.
In case the party fails to liquidate their liability within the extended time granted
as mentioned in the proceeding Para, the matter should be referred to Head Office
asking their final instruction for disposing of the goods
3.0.25 Letter of Trust:
By executing the standard letter of trust (or trust receipt) the customer
acknowledges receipt of the documents of title to goods, as the case may be and
agrees to hold them and the relative goods, when delivery thereof is taken by
him, in trust as agents for the bank until the goods are sold or used for the express
purpose for which they were released to him. The customer also undertakes to
keep the transaction separate and assign and deposit with the bank the sale
proceeds immediately realization but in any case not later than the time period
stipulated in the letter. Further, the customer undertakes to keep the goods insured
and in the event the goods or may part thereof cannot be used by him for the
declared purpose or on demand being made by the bank for the return of the
documents/goods, he promised to restore the goods or documents to the bank's
custody. The trust receipt, thus, enables the importer customer to take re-delivery
of the documents pledged to the pledge bank.
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3.0.26 FOREIGN REMITTANCE
3.0.26.1 OUTWARD REMITTANCES:
Outward remittances are those sent aboard in foreign exchange. These also
include payment into convertible Taka account or non-resident Taka Account
(the so-called Vostro Account) of foreign banks maintained with banks in
Bangladesh. The bank must exercise the utmost care to see that foreign exchange
sold to a client is used for the declared purpose.
3.0.26.2 Travel Related Services:
There would be a large number of customers– regular as well as casual– coming

to the bank to buy foreign exchange for travel abroad for various purposes. Up
to US$ 1000 or equivalent per person may be issued during a calendar year to
Bangladesh nationals proceeding by air to destinations in SAARC member
countries and Myanmar. Within this annual limit, up to $ 500 or equivalent may
be issued per person for overland travels to these countries. For visits to
destinations in other countries, foreign exchange up to $ 3,000 per person may
be issued during a calendar year.
3.0.26.3 Medical Treatment Abroad :
Up to $10,000 or equivalent may be released by the branch on the basis of a

recommendation of the Medical Board set up by the Health Directorate, a foreign
exchange may be released as per the cost estimate given by the foreign medical
institution. Applications for release of exchange exceeding $10,000 should be
forwarded along with supporting documents to Bangladesh Bank for prior
approval.
3.0.26.4 Participation in Seminars, Conferences etc.:
Up to $ 250 per diem for countries in the SAARC region and Myanmar and $200
per diem may be released by the branch to private sector officials for attending
seminars, conferences, and workshops arranged by recognized international
bodies.
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3.0.26.5 Release of Foreign Exchange for Hajj:
The Government of Bangladesh announces each year the scale at which foreign
exchange may be issued to intending pilgrims for performing Hajj. Release of
foreign exchange for this purpose should be made as per instructions issued for
this purpose by Bangladesh Bank at the beginning of Hajj season
3.0.26.6 Remittance of Foreign Exchange for Education Abroad:
Foreign exchange may be released for studies abroad by Bangladesh nationals in

all regular courses (subject to being consistent with the Education Policy of the
Bangladesh Govt.) in recognized institutions.
3.0.26.7 Transfer of Assets:
Foreign nationals leaving Bangladesh permanently on expiry of employment

contracts may transfer abroad their genuine savings from salaries/benefits clearly
stated in the employment contracts approved by the Board of Investment (BOI).
They shall also be eligible to transfer abroad retirement benefits such as provident
fund, pension, and gratuity as per the employment contracts. The branch may,
without prior approval of Bangladesh Bank, effect remittances of those dues
including sale proceeds of investment in government securities as per the
following instructions.
3.0.26.8 Family Remittance Facility:
Foreign nationals who are resident in Bangladesh and have income in Bangladesh
are permitted to make monthly remittances to the country of their domicile out
of their current savings up to 50% of their net income to cover their commitments
abroad. Bonus or commission receivable by foreign nationals cannot be added
for calculating monthly entitlement in anticipation of the grant of bonus or
commission This can be included only after the net amount of bonus or
commission has been actually paid by the employers. Remittance will be spread
over the subsequent twelve months.
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3.0.27 INWARD REMITTANCES:
Inward remittances are those received from aboard in foreign exchange. The bank
should encourage its customers to send more foreign exchange through various
accounts. Inward remittance is very important for Bangladesh, as a large portion
of our foreign exchange comes from Wage Earners and other inward related
business The branches must exercise the utmost care to see that foreign exchange
received from a client is credited swiftly so that they cannot be interested in sent
money through the unauthorized channel.
3.0.27.1 Family maintenance:
Bangladeshi National Working Abroad can send the foreign exchange to

Bangladesh from the country of their domicile which is exempted from tax. This
amount has to be credited by the bank within 03 days from that date of necessary
documents by the bank.
3.0.27.2 Commission earned from various business:
Commission arise from the business between residents and nonresidents can send
such amount to Bangladesh, which is maybe taxable subject to the government
annual gazette declaration.
3.0.27.3 Disposal of Foreign Exchange on Return from Abroad :
On return, unspent amounts brought back (with the declaration in FMJ form for
amounts more than US$ 5000) may freely be sold to an AD or may be retained
in RFCD Account an amount of up to US$ 5000 may be retained in hand.
3.0.27.4 Investment by Foreign Nationals in Certificates & Securities:
All requests for investment by foreign nationals in Bangladesh Government

Securities such as Defense Savings Certificate for the purpose of claiming
income tax relief against investment allowance should be submitted through the
branch to the Bangladesh Bank for prior approval.
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3.1 Literature Review ( Empirical) :
Foreign Exchange is the trading of one currency for another. Foreign exchange
transactions can take place on the foreign exchange market, also known as the
Foreign Exchange Market. The Foreign Exchange Market is the largest, liquid
market in the world, with trillions of dollars changing hands every day. There is
no centralized location; rather the Foreign Exchange Market is an electronic
network of banks, brokers, institutions, and individual traders (mostly trading
through brokers or banks).
There is not any sufficient literature available on this specific topic. Different
work has been done at different times regarding various topics included in the
research objective of this study. An overview of the existing literature is given
here.
The importance of foreign exchange operations risk cannot be neglected for any
firm or banking organization. Banks face foreign exchange risk management due
to dealing in foreign currencies result in the operations in foreign countries or
dealing with foreign exchange for their own account or for customer accounts.
Exchange Rate Risk is an integral part of every firm’s decision regarding foreign
currency exposure (Allayannis, Ihrig, & Weston). Currency risk hedging
strategies involve eradicating or reducing currency risk and need an
understanding of both the ways that the exchange rate risk can impact the
operations of economic agents and techniques to deal with the resulting risk
implications (Barton, Shenkir, & Walker, 2002). Foreign currency exposure and
risk management are very important for the firm to avoid any vulnerability from
exchange rates fluctuation which can affect the profits and assets values in a
negative way. Different traditional types of foreign exchange risk i.e.
translational, transactional, and economic risks were reviewed. Also, different
ways and strategies for managing foreign currency risk were analyzed along with
the advantages and disadvantages of each strategy and technique. Additionally,
best practices widely spread were outlined along with data on financial
derivatives and hedging practices by US firms. Sources of risks for the banking
sector have been investigated by many researchers in different economies.
(Daugaard& Valentine, 1993) worked out different sources of risks and they
94
found out that stock prices of banks have a relationship with different variables
like interest rates, exchange rates, banks' profitability and market risk factor.
Studied foreign exchange risk in industries in Australia including the banking
sector. According to them, the banking industry as a whole does effective foreign
exchange risk management and therefore, this type of risk is insignificant in
pricing banking companies stocks. A study conducted on 48 largest US
commercial banks (Choi, Elyasiani, &Kopecky, 1992) for the period 1975-1987
showed that the effects of the exchange rate depend on the Net position of the
bank in foreign currencies. According to them, when banks had a positive net
position, depreciation of foreign currencies negatively affected the stock prices
of banks before the year 1979, and after 1979 banks stock returns responded
positively with the depreciation of foreign currencies as banks had changed from
positive to negative net open positions. In a similar study on Canadian banks
(Atindehou & Gueyie, 2001), it is found out for the Canadian Banks that stock
prices responded positively with the depreciation of foreign currencies. Foreign
Exchange Risk is also found out to be one of the major sources of risks in the
African Region. It clearly shows the importance of the fact that banks give
significant attention to risk management issues and techniques. Contrariwise,
international investors usually use their underlying assets and liabilities to
manage foreign exchange risk. Since the currency exposure of international
investors is majorly related to translation risks on assets and liabilities held in
foreign currencies, they tend to consider foreign currencies as a separate asset
class, totally separate from other assets, requiring a currency overlay mandate
(Allen, 2003). Banks use Derivatives to manage foreign currency risk. A review
of the literature on the usage of derivatives and banks’ foreign exchange risk is
given here. There is much literature that shows that foreign currency management
tools significantly reduce foreign currency exposure. One such study conducted
on it (Allayannis, George, Ofek, & Eli, 2001), using S & P 500 non-financial
firms with the help of multivariate analysis suggested that with the use of foreign
currency derivatives, foreign exchange risk is significantly reduced. (Hue Hawa
Au Yong, Faff, & Chalmers, 2006) Investigated derivative activities in banks in
the Asia Pacific region and tried to discover that level of derivative usage is
linked with the perceptions of the market about the interest rate and exchange
95
rates. They did not find any significant relationship between derivative activities
of banks and exposures. Hedging allows the commercial banks to manage foreign
exchange risk but hedging itself poses additional risk to the bank. (Gandhi G. S.,
2006) in the paper for “The Chartered Accountant” for Instt. Of Chartered
Accountants of India is mentioned that currency derivatives like currency futures,
currency forwards, currency swaps and currency options help in hedging foreign
exchange risk of firms and other ways of hedging including off-setting positions
against the underlying assets and money markets are themselves risky. Hedging
and hedging right are two different things. If the hedging is not done properly in
the right way, it itself can become a serious source of risk and have the potential
to pose a serious financial loss to the firm. Fluctuations in the foreign exchange
rate force the changes in the portfolio returns as uncertain future exchange rates
translate the returns on investments denominated in foreign currencies into US
dollar returns. Foreign exchange risk can be managed if the diversification of the
portfolio is done across the assets in different currencies. Cash flows of a
portfolio can be affected or changed by the usage of derivative securities. The
usage of currency derivatives additionally reduces the risk of a whole diversified
portfolio (Abken & Shrikhande, 1997). “Foreign Currency options” are the
derivative instruments that give the buyer of that option the right but not the
obligation to exercise a specific transaction in the currency pair underlying the
respective derivative contract. It entitles the buyer of the option the flexibility of
exercising settlement of that option or not. The article focused on the dynamics
of hedging foreign exchange risk with the usage of currency options applications.
Indeed, the foreign currency options are one of the best tools available for
hedging foreign exchange exposures in different foreign exchange market
conditions, like volatile market conditions, stagnant, bullish, or bearish. (Gandhi
G. S., 2006).
Several people in Bangladesh had worked with different Banks of Bangladesh

and Foreign Exchange for better understanding from a very close range. Some of
their work helped me a lot. Some of them are:
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Asif Ahmed Tonmoy (2016) from BRAC Business School, BRAC University,
conducted a study on ‘’Foreign Exchange and impact of Bangladesh
Development Bank Ltd’’ In which, he tried to show the trend of Foreign
Exchange, SWOT analysis, deviation of classified foreign exchange of Sonali
Bank; Uttara Branch.
TanzinaTisha (2015) from BRAC University carried out a study on ‘’General

Banking Activities - Internship Report on Sonali Bank Limited’’ in Gulshan
Branch in which she tried to explain general activities along with various
functions of SBL including Foreign exchange in brief.
Tithi Rahman (2015) from Sher-e Bangla Agricultural University, conducted a

study on ‘’A Short Analysis of Foreign Exchange Market in Bangladesh: A Study
on Sonali Bank; Krishi Bazar Branch, Dhaka’’ focusing the foreign exchange
theoretically, mostly based on observation and informal l questionnaire set.
Sultana Khatun (2017) student of Stamford University carried out a study on

‘Present Scenario of Foreign Exchange in Bangladesh : Practice in Sonali Bank
LTD; Dhanmondi Branch’’ This study seeks to have a sound understanding of
foreign exchange system and procedure followed in the Sonali Bank Ltd and to
get knowledge about the effectiveness of Export, Import, and Remittance
specially opening of Letter of credit.
Tipu Sultan (2018) student of North South University carried out ‘a study on
A study of Foreign Exchange System of Mercantile Bank Limited, Kawran Bazar
Branch’ This study seeks to deep knowledge of Exports, Imports procedure and
Remittance collection system of Mercantile Bank Limited.
TanvirHossin (2018) a student of Department of Business Administration MBA

Program Batch: 62 ID: MBA 06217012 Stamford University Bangladesh carried
out Thesis Report On Reporting on ‘Foreign Exchange activities in the Banking
Industry of Bangladesh Two Selected Commercial Banks’ focusing the foreign
exchange theoretically, mostly based on observation.
97
Hafizul Islam(2018) a student of (Exam ID 142082, Session 2013-2014) BBA
Program Department of Finance & Banking Jahangirnagar University carried out
‘A Study on Foreign Exchange activities of Janata Bank Limited’ This study
seeks to deep knowledge of Exports, Imports procedure and Remittance
collection system of Janata Bank Limited.
Sirajul Islam(2018) (ID No: BBA 05216342, BBA Program) a student of

Finance Department of Business Administration, Stamford University
Bangladesh carried outThesis Paperon “Foreign Exchange activities of
Commercial Banks in Bangladesh”focusing the foreign exchange Formalities.
Md. Ashikur Rahman(2017) (ID: 09204109) BRAC Business School, BRAC

University published a Internship Report On ‘National Bank Limited and its
Foreign Exchange activities’ focusing on Foreign Trade and Foreign Remittance
of National Bank Limited.
Regarding the above issue a report published on website
(https://www.educarnival.com) in the name of ‘foreign-exchange-operations-in-
Bangladesh’. This report has a lot of foreign exchange related terms and activities
of foreign trade of Bangladeshi Banking System.
and
Mr. Niloy Saha, (2018) a Student of Stamford University Bangladesh,
Department of Business Administration(BBA Program) published a Internship
Report on ‘Foreign Exchange Performance of National Bank Limited’ focusing
foreign Trade related activities of National Bank Limited.
Besides the above study report, I collect more information from Janata Bank Ltd.
The website and I read it’s the annual report of recent years. From those, I gather
much information which is not published ever. I work for my term paper about
4-5 months but in this 4-5 months, a had many experiences that are not before.
98
CHAPTER FOUR
METHODOLOGY
4.0 Introduction:
The study requires a systematic procedure from the selection of the topic to the
preparation of the final report. To perform the study, the data sources were to be
identified and collected, to be classified, analyzed, interpreted, and presented in a
systematic manner and key points were to be found out. The overall process of
methodology has been given below:
4.1 Research Design
This is an ―Exploratory Research, which briefly reveals the ―Foreign Exchange

operations of Janata Bank Limited. Data have been collected from secondary
sources
4.2 Sources of Data
This study is mainly based on secondary data available from the various
divisions/department of Janata Bank Limited, in addition to this other necessary
information have been collected from the daily newspapers, relevant journals, annual
reports of Janata Bank Limited, Janata Bank Troimashik Bulletin.
Secondary sources of data:
a) Annual report
b) Procedure manual
c) Files and documents
d) Different circulars
e) Other published information of the bank.
f) JANATA bank’s website.
4.3 Data Analysis
The secondary data obtained were scrutinized to determine their suitability,

reliability, adequacy, and accuracy. The secondary data were presented by some of
these statistical tools and by way of narration. The presentation of the data on these
statistical tools made the analysis very easy to understand.
99
4.4 Ethical Issues
Almost all the financial institutions have strict policies on confidentiality and one
can pay the ultimate price for the breach of this duty of confidentiality. Divulging of
information by employees to a third party can expose the institution to potential legal
tussle and therefore being mindful of this ethical issue, the respondents were
sometimes apprehensive in the disclosure of information. This genuine apprehension
was addressed by first explaining the essence of the study to the respondents and
also with the assurance that the data will be handled professionally and that their
identities are not going to be revealed. The confidentiality of the information
collected from interviewees was preserved by ensuring that their names and other
information that could bring out their identities were not disclosed in the data
collected. They were also made to understand their role in the data collection activity
to find answers to the research questions. To avoid imposing the interviews on
respondents, they were given the choice to opt-out of the interview would affect
them in any way or if for some reason they were not comfortable in participating in
the study.
The methods and procedures explained above were used in seeking the needed data
for the analysis which are captured in the next chapter.
100
CHAPTER FIVE
Findings and Analysis:
5.0 Introduction
The chapter captures the findings of the work. The objective of the study is to
introduce the operations of foreign exchange of the bank. The chapter plays a very
key role in the entire research work since it relates empirical data to secondary data
reviewed in the previous chapters
5.1 Table : 05-01: Findings
The various kind of financial data of Janata Bank Limited is stated below for
analyzing:
Figure in million (unless stated otherwise)
SL Particular 2018 2017 2016 2015 2014
1 Authorized capital 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00
2 Paid up capital 23,140.00 19,140.00 19,140.00 19,140.00 19,140.00
Total capital (Tier-

3 54,322.81 44,596.31 43,189.82 37,128.33 36,468.38
I + Tier-II)
4 Required capital 53,823.05 44,341.90 40,408.89 36,562.52 35,420.25
Surplus/(shortage)
5 499.75 254.41 2,780.93 565.82 1,048.13
of capital
Capital to Risk
6 Weighted Asset 10.09% 10.06% 10.69% 10.16% 10.30%
Ratio (CRAR)
7 Total assets 866,046.48 805,988.41 778,603.91 683,157.58 628,415.27
8 Total deposits 675,548.46 649,440.78 641,819.15 568,911.14 516,010.74
Total loans and

9 533,707.17 459,580.05 403,037.41 349,861.30 319,773.25
advances
101
Total contingent
10 liabilities and 94,744.23 120,881.92 105,174.55 121,570.94 72,495.16
commitments
11 Credit deposit ratio 79.00% 70.77% 62.80% 61.50% 61.97%
Total classified
12 179,984.47 75,995.50 59,359.80 43,181.70 37,375.67
loans
Percentage of
13 classified loans 33.72% 16.54% 14.73% 12.34% 11.69%
against total loans
14 Import 220,413.70 143,582.20 126,650.00 147,181.80 144,556.80
15 Export 114,681.00 139,920.90 154,454.20 145,373.60 154,079.70
16 Foreign remittance 76,078.10 72,022.00 90,081.80 106,336.30 106,677.10
Income from
17 11,350.63 14,414.82 16,597.90 18,260.44 16,742.67
investment
18 Operating profit 9,788.97 11,369.48 10,038.29 10,720.50 10,683.34
Profit after tax and

19 248.98 2,686.50 2,605.48 4,807.88 3,813.15
provision
Provision kept
against loans and
20 advances (G+S) 33,920.65 29,614.04 24,869.90 21,661.71 25,454.54
including OBS
exposures
Provision kept
21 against classified 30,804.01 23,910.51 19,914.24 17,670.80 21,688.26
loans and advances
Provision
22 surplus/(deficit) 0.90 59.39 251.56 83.77 418.95
against loans and

23 Cost of fund
advances 7.10% 7.28% 8.05% 7.94% 8.82%
24 Cost of deposit (%) 4.34% 4.47% 5.49% 6.76% 7.34%
102
Average return on
25 7.15% 8.04% 8.54% 9.35% 11.44%
loans and advances
26 Interest spread 2.81% 3.58% 3.05% 2.59% 4.10%
27 Net spread 1.48% 1.77% 2.06% 2.45%
28 Earning assets 568,956.07 610,004.45 605,444.04 548,634.47 496,866.59
29 Non earning assets 297,090.42 195,983.96 173,159.87 134,523.10 131,548.69
Return on
30 8.37% 6.90% 7.19% 8.61% 8.47%
investment (ROI)
Return on assets
31 0.03% 0.33% 0.33% 0.70% 0.61%
(ROA) after tax
Return on equity
32 0.46% 5.23% 5.22% 11.44% 9.66%
(ROE)
Earning per share

33 1.17 14.04 13.61 25.12 19.92
(EPS)
Net operating
34 46.20 59.40 52.45 56.01 55.82
income per share
Net assets value

35 235.77 268.36 260.66 219.63 206.14
per share (NAVPS)
Net operating cash

36 flow per share (151.15) (167.99) 103.13 165.93 89.18
(NOCFPS)
Source : Janata Bank website & Annual Report 2018
103
5.2 Table : 05-02 : Gross export, import and Foreign Remittance Earnings in
Bangladesh
Total Export Total Import Foreign Remittance

Fiscal Year
(in bn. US$) (in bn. US$) Earnings (in bn. US$)
2007–2008 $14.11 $25.21 $8.9b
2008–2009 $15.56 $22.51 $9.68b
2009–2010 $16.7 $23.83 $10.87
2010–2011 $22.93 $32b $11.65
2011–2012 $24.30 $35.92 $12.85
2012–2013 $27.09 $34.09 $14.4
2013–2014 $30.10b $34.08 $14.2b
2014–2015 $31.2 $40.69 $14.23
2015-2016 $34.97 $40.08 $13.60
2016-2017 $35.00 $44.83 $12.76
2017-2018 $36.63 $54.46 $15.31
2018-2019 $40.53 $55.44 $14.98
Source : https://en.wikipedia.org/wiki/Economy_of_Bangladesh
104
5.3 Analysis of Data:
5.3.1 Table : 05-03: Import Business Analysis:
Year 2018 2017 2016 2015 2014

Import
220,413.70 143,582.20 126,650.00 147,181.80 144,556.80
Business
Change to 76831.50 16932.20 (-) 20531.80 2625.0
previous
Year
Growth 53.51% 13.37% (13.95%) 1.82%
Rate
Keeping in consideration the importance of industrialization Janata Bank is

consistently and firmly extending its support in the import business. The above table
showing year-wise financial involvement a sharply rising trend clearly indicates Janata
Bank's import business performance except in the year 2016. Whereas, the national
Import trend(Fiscal Year2013–2014 to Fiscal Year2018–2019) clearly rising. 2015-
2016 fiscal year’s import slightly declining to the previous fiscal year, which is (40.60
US$ - 40.08 US$) 0.52 billion US$.
5.3.2 Table : 05-04: Export Business Analysis:;
Year 2018 2017 2016 2015 2014

Export 114,681.00 139,920.90 154,454.20 145,373.60 154,079.70
Business
Change to (-)25239.90 (-) 14533.30 9080.60 (-) 8706.10
previous
Year
Growth (18.04%) 9.41% 6.25% (5.65%)
Rate
In the Banking Sector, Janata Bank plays a vital role in Export Business. Though in
recent years the export business of Janata bank limited declining trend except in the
year 2016. Whereas, the national Export trend(Fiscal Year2013–2014 to Fiscal
Year2018–2019) clearly rising.
105
5.3.3 Table : 05-05: Comparison of Import & Export:
Year 2018 2017 2016 2015 2014 Average

Import 156476.90
220,413.70 143,582.20 126,650.00 147,181.80 144,556.80
Business
Export 141701.88
114,681.00 139,920.90 154,454.20 145,373.60 154,079.70
Business
Difference (-) 14775.20
105732.27 3661.3 1808.20 (-) 9522.90
27804.20
We can say that the Importation progress amount of JBL is greater than the
Exportation progress degree of JBL in an average in the year 2014 to 2018. So, we
can effortlessly remark that Importation is healthier than the exportation of JBL.
5.3.4 Table : 05-06: Foreign Remittance:
Year 2018 2017 2016 2015 2014

Export Business 76,078.10 72,022.00 90,081.80 106,336.30 106,677.10
Change to (-)
4056.10 (-) 16254.50 (-) 340.80
previous Year 18059.80
Growth Rate 5.63% (20.05%) (15.29%) (0.32%)
In the Banking Sector, Janata Bank plays a vital role in foreign remitters. Though
recent years the Foreign Remittance business of Janata Bank Limited declining trend
except in the year 2018.
On the other hand, the national foreign remittance trend(Fiscal Year2013–2014 to
Fiscal Year2018–2019) is mixed(increased/declined).
106
5.3.5 Table : 05-07: Operating Profit :
Year 2018 2017 2016 2015 2014

Operating profit 9,788.97 11,369.48 10,038.29 10,720.50 10,683.34
Change to
(-) 1580.51 1331.18 (-) 682.21 37.16
previous Year
Growth Rate (13.90%) 13.26% (6.36%) 0.34%
Janata Bank plays a vital role in foreign remitters In the Banking Sector. Though in
recent years the export business of Janata Bank Limited declining trend except in the
year 2016.
On the other hand, the national foreign remittance trend(Fiscal Year2013–2014 to
Fiscal Year2018–2019) is mixed(increased/declined).
5.4 SWOT analysis of JANATA BANK LIMITED:
SWOT analysis is a tool for auditing an organization and its environment. It is the
first stage of planning and helps marketers to focus on key issues.
SWOT stands for strengths, weaknesses, opportunities and threats.
Strengths and weaknesses are internal factors. Opportunities and threats are external
factors. The SWOT analysis heading provides a good framework for reviewing
strategy, position, and direction of a company or business proposition or any other
idea. S = Strengths (Positive + Internal)
W = Weaknesses (Negative+ Internal)
O = Opportunities (Positive + External)
T = Threats (Negative+ External)
SWOT analysis of Janata Bank Limited is given below:

5.4.1 Strengths:
i) The Bank has been providing services successfully and has achieved goodwill in
all over the country.
ii) Bank has a very competent and experienced top Management.
iii) JBL is operating its business all over the country with 911 branches and 4
overseas branches.
107
iv) Stable Source of Funds
v) Strong Liquidity Position
vi) Satisfactory Profitability
vii) Low-Cost Fund
5.4.2 Weaknesses:
The Bank does not have any formal promotional activity, does not give any sort of
advertisement, or does not have any marketing activity. A limited number of ATM
booths. The remuneration of the officers of Janata Bank is lower compared to other
private Banks. This is why high skilled human resources are discouraged to join
here. The decision making of the Bank is too much centralized. No decision is made
without the authorization of the head office.
5.4.3 Opportunities:
i). Scope of wholesale banking with NBFIs (Non-Banking Financial Institution).

ii). Increasing awareness of the banking system
iii). E-money facility
iv) Advanced credit card business
v) The growing need for alternate banking channel
vi) Banks can offer new innovative products
vii) Increase ATM Booth.
5.4.4 Threats:
i). Increased completion in the banking sector

ii) Many multinational banks operate their activities in the country.
iii). Many A/C holders trust to the multinational banks rather than local
commercial banks.
iv). Inadequate market information
v). Third generation private commercial banks and their offering different types
of attractive products.
vi). Large non-performing assets of public sector banks
vii). The overall liquidity crisis in the money market.
108
5.05 Summary of Findings:
** Most of the clients of Janata Bank Limited are satisfied with the Foreign
exchange service of giving statements.
** All the officers are so much helpful and have a friendly working environment.
They help each other when an officer falls in trouble.
** It provides little assistance in relation to foreign exchange to the small
entrepreneur comparing to large business houses. The small entrepreneur has
to keep higher-margin, sometimes 100%, regarding opening an L/C.
** The numbers of employees are fewer than the volume of works which creates
a problem in prompt service.
** The operations of international trade are conducted as per local and
international laws, rules, customs, and practices.
** The adoption of technology along with investing in training bank employees'
inappropriate use of technology is less. Basic cyber-security precautions are
not notably taken.
** Charges are transparent, by providing a detailed breakup of the charges stamp,
postage, processing fees, etc.
** Proper documentation and filing process of foreign exchange operations are
user friendly.
** Attractive incentive packages for the exporters help to increase the export and
accordingly it diminishes the balance of payment gap.
** The international division of the branch is focused to make relationship with
the renowned foreign banks.
** Mass online banking service is implemented in the branch.
** It promotes the services where most of our remittances are generated like
middle east countries.
109
CHAPTER SIX
CONCLUSION AND RECOMMENDATIONS
6.1 Conclusion:
From the summary of the findings of the study as provided above, some conclusions
can be drawn from the analysis. It is obvious from the findings that Janata Bank
Limited is one of the leading commercial banks in Bangladesh. It has introduced a
new dimension in the field of innovative and benevolent banking in our country.
The bank has successfully made a positive contribution to the economy of
Bangladesh. Its profit is gradually increasing. It plays a great role in collecting
scattered Deposit, Loan settlement, and International Trade, etc. For better growth
and a healthy economic position, it should introduce new and lucrative long-term
credit schemes especially for new investors and schemes for poverty alleviation like
microcredit.
6.2 Recommendation :
The findings of the research have brought to the fore the following are some
recommendations for the company.
** Margin and commission on L/Cs vary from customer to customer. A customer

is allowed to open an L/C even with nil margins. The bank should review the
customers' transaction behavior for a period of time and should develop a
certain policy in this regard.
** In the case of Export L/Cs, the Government encourages the exporters by
giving different facilities like tax-cuts. The bank should also think about such
types of facilities to be given to the Exporters because Bangladeshi Exporters
like Readymade garments. Exporters are going to face a tuff situation in the
coming years from the exporters of other countries.
** In the case of Export L/Cs, sometimes customers insist to give their payments
through their documents are found discrepant. In some cases, Bank has to give
payment to these customers for different reasons. But it lessens the credibility
of the Bank. The Bank should be as stricter as possible about giving payments
against discrepant documents without hurting the customers.
110
** Foreign exchange operations are going to be a hugely competitive market.
And for making a profit from this position the bank has to change its business
policy from time to time. And they have to maintain a good relationship with
their customer. Also, a good advertisement may help to attract new customers
as well.
** In many cases, the foreign banks want confirmations from other foreign banks
with which this bank has correspondence. This proves the poor financial
condition of our country. Banks should try to improve this situation.
** The bank should try to arrange more training programs for its officials.
Quality training will help the officials to enrich them with more recent
knowledge of International Trade Financing.
** To communicate with the Negotiating Bank, Advising Bank. Reimbursing
Bank the branch uses SWIFT as well as these media. The Bank could use the
E-mail, which is cheaper and faster than those media.
** Overburden of work and ill-defined assignment makes the employees unable
to discharge their duties in a cool manner. It also creates a hazardous situation
in the work process. So all the employees should be assigned with proper and
specific assignments.
** Bank can introduce a more advanced MIS system to mobilize its day to day
activities. It will help the employee to do their works more quickly and at the
same time maintaining their quality of work.
** They should expand their business in a balanced way which means they
should not focus on a particular industry like readymade garments industries.
** Management needs to observe all the activities of the employees because in
my observation I see that sometimes employees are not utilizing their time
properly for doing their work. I think the Management should employ at least
a few more employees in the foreign trade department. I have seen from my
practical experience that many customers wait for a long time for any service
as they see that the three concerned officials are doing their best to meet the
requirements of the customers. But as the foreign trade procedure is designed
with many small tasks. There is a burning need for some additional
employees.
111
6.3 Limitation of the research:
Although I have obtained the wholehearted co-operation from the employees in different
divisions, departments, and branches of Janata Bank Limited in the way of my study, I
have faced the following problems, which may be termed as the limitations of the study.
Some limitations are as under:
** The main constraint of the study was the insufficiency of information, which was
required for the study. There is various information the bank employee cannot
provide due to security and other corporate obligations.
** Lack of in-depth knowledge and analytical ability for writing such reports.
** Data and information used in this study are mostly from secondary sources.
** Very inadequate time to make an in-depth inference about the foreign exchange
business.
** Large-scale research was not possible due to constraints and restrictions posed
by the organization.
** Part of the original structure was written from individual perception and it may
vary from person to person.
The report has encountered these limitations that may hinder the progress of the study but with
constant effort, I try to minimize the negative effects of these limitations.
112
REFERENCES
01 Abken, P. A., & Shrikhande, M. M. (1997). The role of currency derivatives in
internationally diversified portfolios. Economic Review of Federal Reserve
Bank of Atlanta, Third Quarter 1997.
02 Allayannis, G., Ihrig, J., & Weston, J. (n.d.). Exchange Rate Hedging: Finacial
Vs. Operational Strategies. American Economic Review Papers &
Proceedings, 91 (2), pp391-395.
03 Allen, S. L. (2003). Financial Risk Management: A Practitioner’s Guide to
Managing Market and Credit Risk. Hoboken, New Jersey: John Wiley and
Sons.
04 Asif Ahmed Tonmoy, (2016) from BRAC Business School, BRAC University,
conducted a study on“Foreign Exchange and impact of Bangladesh Development
Bank Ltd.”
05 Atindehou, R., & Gueyie, J. (2001). Canadian Chartered Banks' Stock returns and
exchange rate risk. Management Decisions, 39 (4), 285-295.
06 Barton, T. L., Shenkir, W. G., & Walker, P. L. (2002). making Enterprise Risk
Management Pay Off: How Leading Companies Implement Risk Management.
Brookfield, Connecticut: Fei Research Foundation
07 Choi, J. J., Elyasiani, E., & Kopecky, K. J. (1992). The sensitivity of bank stock
returns to market, interest & exchange rate risks. Journal of Banking and Finance,
16, 983-1004.
08 Choudhury, Toufic A (2005) Reading Materials of International Trade Payment
and Finance
09 Choudhury, Toufic A and Habib, Shah Md. Ahsan (2007), “An Evaluation of the
operations of international trade payment methods in Bangladesh”, keynote paper
presented in the seminar.
10 Chowdhury, L.R, (2002) “A Text Book on Banker’s Advances”, 2nd edition, Fair
Corporation, Dhaka.
11 Daugaard, D., & Valentine, T. (1993). Bank Share prices and profit stability.
Working Paper Series (No.31), School of Finance & Economics, University of
Technology. Sydney.
113
12 Gandhi, G. S. (2006). Hedging Foreign Exchange Risk - Isn't it also a risk. The
Instt. of Chartered Accountants of India, "The Chartered Accountant", August
2006, Page 260-264.
13 Gandhi, G. S. (2006, November). Selecting a Suitable Currency Options Hedging
Strategy for Managing Foreign Exchange Risk. "The Chartered Accountant". The
Instt. of Chartered Accountants of India.
14 Hafizul Islam(2018) a student of (Exam ID 142082, Session 2013-2014) BBA
Program Department of Finance & Banking Jahangirnagar University carried out
‘A Study on Foreign Exchange activities of Janata Bank Limited’.
15 ICC Uniform Customs and Practice for Documentary Credit 2007 Revision ICC
Publication no. 600. The International Chamber of Commerce, Paris
16 Janata Bank Limited Annual Report, 2014
21 Janata Bank Troimashik Bulletin : December- 2018
22 Janata Bank Troimashik Bulletin : June- 2019
23 Janata Bank Troimashik Bulletin : September-2019
24 Md. Ashikur Rahman(2017) (ID: 09204109) BRAC Business School, BRAC
University published a Internship Report On ‘National Bank Limited and its
Foreign Exchange activities’ focusing on Foreign Trade and Foreign Remittance
of National Bank Limited.
25 Mr. Niloy Saha, (2018) a Student of Stamford University Bangladesh, Department
of Business Administration(BBA Program) published a Internship Report on
‘Foreign Exchange Performance of National Bank Limited’
26 Official Website of Janata Bank Limited.
27 Saha, Sujit R., Reading Materials of Foreign Exchange, BIBM Library
28 Sirajul Islam(2018) (ID No: BBA 05216342, BBA Program) a student of Finance
Department of Business Administration, Stamford University Bangladesh carried
out Thesis Paper on “Foreign Exchange activities of Commercial Banks in
Bangladesh’.
114
29 Sultana Khatun (2017) student of Stamford University carried out a study on
‘Present Scenario of Foreign Exchange in Bangladesh : Practice in Sonali Bank
LTD; Dhanmondi Branch’’
30 Tanvir Hossin (2018) a student of Department of Business Administration MBA
Program Batch: 62 ID: MBA 06217012 Stamford University Bangladesh carried
out Thesis Report On Reporting on ‘Foreign Exchange Activities in the Banking
Industry of Bangladesh Two Selected Commercial Banks’
31 Tanzina Tisha (2015) from BRAC University carried out a study on ‘’General
Banking Activities - Internship Report on Sonali Bank Limited’’ in Gulshan
Branch.
32 Tipu Sultan (2018) student of North South University carried out ‘a study on
A study of Foreign Exchange System of Mercantile Bank Limited, Kawran Bazar
Branch’.
33 Tithi Rahman (2015) from Sher-e Bangla Agricultural University, conducted a
study on ‘’A Short Analysis of Foreign Exchange Market in Bangladesh: A Study
on Sonali Bank; Krishi Bazar Branch, Dhaka’’
34 Uniform Customs and Practice for Documentation Credit (UCPDC 600)
115

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A Study on Foreign Exchange

Operations of Janata Bank

Mohammad Ataul Huq Bhuyan

A Term Paper Submitted to the School of Business,

MBA (Evening) Program, Major in Finance

Mohammad Ataul Huq Bhuyan

Dr. Mahammad Zahir Raihan

This work is dedicated to my beloved wife and issues.

I would like to express my immense gratitude and my

Thanks also go to my friends and classmates. I am grateful to

Finally, the inspiration, encouragement and support provided by

In the banking industry, community branch banks have long

Now it is not easy to operate the banking practices like traditional

My honorable Term Paper Supervisor directed me all the

JBL : Janata Bank Limited

One 1.1 Background of the study 2

Overview of Janata Bank Foreign Exchange Operations 6-35

Regulations of Foreign Exchange 7

LITERATURE REVIEW: Conceptual 36-81

3.0.1 Definition of Bank 36

Form of Letter of Credit 49

Clearance in absence of shipping documents 73

Loan Against Imported Merchandise- LIM 75

5.3.1 Import Business Analysis 93

SWOT analysis of Janata Bank Limited 95-97

Conclusion and Recommendation 98-100

Six 6.1 Conclusion 98

Foreign trade plays an important role in the economic development of a country.

The term “bank” originally referred to an individual or organization, which acts as

1.4 Significance of The Study:

2.0 Overview of Janata Bank Foreign Exchange Operations:

The foreign exchange Operations of Janata Bank have two aspects:

The activities can be clearly shown in the following diagram:

2.1.1 Foreign Exchange Act-1947.

2.1.4 Foreign Exchange Rate in Janata Bank Ltd:

2.1.5 Foreign Exchange Product & Services by JBL:

2.2 Exchange of foreign currencies between the clients and JBL:

2.3 Foreign Exchange Risk management of JBL:

2.4 Foreign Exchange Dealing Hierarchy Chart of JBL :

iii). Back to Back L/C under bonded warehouse facility.

v). Sight L/C under EDF.

vi). Exporter's Retention Quota A/C both interest-bearing and non-interest-bearing.

vii). Export incentive program.

2.6 Banking at Export Processing Zone.

i). Scope for the establishment of an export-oriented industry by 100% foreign

SL Year BDT (Taka) in Million

Source : Janata Bank Limited website(https://www.jb.com.bd/)

2.8 Import Products of Janata Bank Limited:

SL Year BDT (Taka) in Million

Source : Janata Bank Limited website(https://www.jb.com.bd/)

2.11 Other information Regarding Janata Bank Limited:

2.11.10 Long Term Strategy of JBL:

Registered Address JanataBhaban, 110, Motijheel Commercial Area

No. of Foreign Correspondent 551

Face value per share BDT 100 per share

Source : Janata Bank Limited website(https://www.jb.com.bd/)

2.12 Facilities Offered to the Remitters by JBL:

2.13 NON- RESIDENT FOREIGN CURRENCY DEPOSIT ACCOUNT: