Foreign Exchange Management

i

FOREIGN EXCHANGE

MANAGEMENT OF JANATA BANK

LIMITED

ii

FOREIGN EXCHANGE MANAGEMENT

OF JANATA BANK LIMITED

iii

iv

E X E C U T I V E S U M M A R Y

Janata Bank Ltd is a govt owned bank with numerous branches spreading all

over Bangladesh. It collects remittances from NRB from different countries and

transfers the currency in BDT to the destined location. Here I have tried to

describe the remittance processing structure of JBL. Along with, I have

included the changes made by globally accepted protocol UCP-600 and wired

transfer service SWIFT.

In this report I have tried to show the contribution of JBL’s remittance earning

on national remittance earning. JBL’s performance is not dissatisfactory but the

remittance earning is not increasing as the rising national remittance

curve.After analyzing the data of JBL’s remittance earnings processthis report

have suggested that JBL lacks in foreign currency collection structure. Its

remittance earning is increasing but the increase is far below the national

remittance increase. JBL should take up to the mark structural change in

service to cope with the national trend and help Bangladesh earn more

remittance.

In addition, with this intern reporthave been included the regression analysis

of import-export volume with regard of exchange rate.

v

CONTENTS

1. Introduction .............................................................................................................................................................. 1

2. Origin of the Report ............................................................................................................................................... 1

3. Objectives of the report ........................................................................................................................................ 1

3.1. Broad objective .............................................................................................................................................. 1

3.2. Specific Objectives ........................................................................................................................................ 2

4. Scope of the report ................................................................................................................................................. 2

5. importance of the report ..................................................................................................................................... 2

6. Limitations ................................................................................................................................................................. 3

7. Analysis techniques ............................................................................................................................................... 3

8. Required data ........................................................................................................................................................... 3

9. Sources of Data ........................................................................................................................................................ 4

9.1. Sample Information ...................................................................................................................................... 4

9.2. Primary Source of Data ............................................................................................................................... 4

9.3. Secondary Sources of Data ........................................................................................................................ 4

10. Organizational Profile ...................................................................................................................................... 4

10.1. Historical Background of the organization .................................................................................... 4

11. organization mission and vision .................................................................................................................. 5

11.1. Mission: ......................................................................................................................................................... 5

11.2. Vision: ............................................................................................................................................................ 5

12. offered Services by the organization ......................................................................................................... 5

12.1. Bills Collection: .......................................................................................................................................... 6

12.2. Payments made on behalf of Govt. .................................................................................................... 6

12.3. Services Areas ............................................................................................................................................ 7

13. Organizational structure ................................................................................................................................. 8

13.1. Management Aspect ................................................................................................................................ 8

14. Future plans of the organization ...............................................................................................................10

15. Introduction .......................................................................................................................................................11

16. Swift .......................................................................................................................................................................12

The structure of SWIFT ......................................................................................................................................13

16.1. Cash Reporting: Supporting customer’s need for account information ..........................13

16.2. The Functions of SWIFt ........................................................................................................................14

Solutions for ............................................................................................................................................................14

17. changes made in UCP-600 ............................................................................................................................15

18. Opening Letter of Credit (L/C) ...................................................................................................................17

18.1. Procedure of opening the Letter of Credit (L/C) .......................................................................17

vi

18.2. L/C Application Form (L/CAF) .........................................................................................................18

18.3. L/C Authorization Form (L/CAF) ....................................................................................................19

19. Securities of L/C ...............................................................................................................................................21

20. Export ...................................................................................................................................................................21

20.1. Formalities of Export Procedure ......................................................................................................22

20.2. Disposal of Export procedure ............................................................................................................23

20.3. Import ..............................................................................................................................................................25

20.4. Import procedure ...................................................................................................................................25

20.5. Payment Modes .......................................................................................................................................26

21. Export Finance ..................................................................................................................................................28

21.1. Details Commodity Wise Export ......................................................................................................29

Details Export of Janata Bank Limited of 2006 to 2009 .................................................................................29

21.2. Export Target & World Economic Crisis .......................................................................................33

21.3. National and Janata Bank Limited's Export Performance .....................................................34

21.4. Comparison of Export of 2009 with Public Banks ....................................................................35

22. Import Finance ..................................................................................................................................................36

22.1. Commodity wise Import of Janata Bank Limited ......................................................................36

22.2. Import target and achieve in last 3 years .....................................................................................38

22.3. Contribution of Janata Bank in National Import ........................................................................38

22.4. Income from Import ..............................................................................................................................39

22.5. Contribution to National Import of JB in last decade ..............................................................39

23. Foreign Remittance .........................................................................................................................................41

23.1. Country wise remittance of Janata Bank Limited .....................................................................41

23.2. Wage Earners' Remittances of Nation ...........................................................................................44

23.3. Foreign Exchange and Foreign Trade of JBL ...............................................................................45

23.4. analysis: effect of exchange rate change on import and export volume of bangladesh

46

Data input .................................................................................................................................................................47

Regression analysis of import volume vs exchange rate ......................................................................49

Regression analysis of export volume vs exchange rate ......................................................................50

23.5. Problem of Foreign Exchange in Bangladesh .............................................................................51

conclusion ..........................................................................................................................................................................52

Reference ...........................................................................................................................................................................54

Introduction 1

1. INTRODUCTION

This report has a certain purpose to focus on the operations of “Foreign Exchange”

of Janata Bank Limited. Without any doubt Foreign exchange catches the flash as it

has great importance in the balance of trade in economy. Banks plays a vital role in

this discipline.

2. ORIGIN OF THE REPORT

Although total B.B.A. program combines an excellent blend of theoretical and

classroom knowledge but aside this internship program facilitates a student to bring

light on their theoretical knowledge to apply this in practical ground. I was assigned

to Janata Bank, Hotel Sheraton Corporate Branch, and foreign exchange department

for my practical execution.

I am required to prepare an internship report under the supervision of our honorable

teacher Muhammad MukhlesurRahmanon “Foreign Exchange Management of Janata

Bank Limited” to conduct a precision analysis on the typical subject. I have always

tried my best to reflect my experience of the practical incidence in this report.

3. OBJECTIVES OF THE REPORT

3.1. BROAD OBJECTIVE

The main purpose of the report is to get a clear idea about the management of and

Foreign Exchange of Bangladesh as well as Janata Bank limited, and make an

elaborate industry analysis on the banking sectoractivity of Bangladesh.

Scope of the report 2

3.2. SPECIFIC OBJECTIVES

• To analyze the real Foreign Exchange performance of Bangladesh.

• To find out critical problems of Foreign Exchange discipline of Bangladesh.

4. SCOPE OF THE REPORT

This study would focus on the following areas of Janata Bank Limited.

• Actual Foreign Exchange management of Janata Bank Limited.

• Overview the current procedure of export & import and remittance

management.

• Opening LC and maintenance of other formalities of foreign exchange.

• Organizational structures and responsibilities of management.

Each of the above areas would be critically analyzed to determine the

properefficiency of Janata Bank’s Foreign Exchange Management system.

5. IMPORTANCE OF THE REPORT

Bangladesh is considered as a developing country in the world. The economy of this

country has a lot left to go further and there are lots of scopes for massive

improvement. In an economy like Bangladesh, Foreign Exchange can play a major

role to improve the economic condition of the country. The banks play the role of an

intermediary that can mobilize the excess fund from surplus sectors to provide

necessary financing, to those sectors, which need a proper go ahead for sound

development of the economy.

This report is a total effort to reflect a clear idea about the strategies, activities, and

performance of Bangladesh regarding Foreign Exchange Business.

Limitations 3

6. LIMITATIONS

I have faced some limitations, when I was preparing this report which is mentioned

below.

• Time limitation It was one of the main constraints that affected covering all

aspects of the study.

• Lack of Secondary Information: The import export data of Bangladesh is not much

available over the net.Secondary source of information was not sufficient for the

completion of the report.

• Limitation of the Scope:Much confidential information was not disclosed by

respective personnel of the department.

7. ANALYSIS TECHNIQUES

Both qualitative and quantitative methods were applied for preparing this report.

The data were analyzed and presented by Microsoft excel and shows percentage,

graphical presentation and different types of charts. Best effort was given to analyze

the numerical findings.

8. REQUIRED DATA

I have mainly focused on numerical data in preparing the report. Also I have used

theoretical portion as the demand of the report. Analyzing foreign exchange

management of a bank, both theoretical and technical knowledge are necessary for

execution. Then everything with accuracy, I have analyzed and made conclusion.

Sources of Data 4

9. SOURCES OF DATA

9.1. SAMPLE INFORMATION

Main source of the information is annual report of Janata Bank Limited, report of

annual meeting, brochures and web sites. The information incorporated in this

report is heavily collected both from the primary sources and as well as from the

secondary sources.

9.2. PRIMARY SOURCE OF DATA

I have collected data directly from the different sectors of Janata Bank head

office. This is called primary source of data.

9.3. SECONDARY SOURCES OF DATA

The secondary data is collected from annual report, distinguished

conceptualmatters, websites and several published matter as articles in

different versions of printings .

Secondary Sources are:

• Annual Reports of different years of Janata Bank Limited.

• Annual Report of Bangladesh Bank of 2009.

• Other published documents of Janata Bank Limited.

• Respective sectors of foreign matter of the head office.

10. ORGANIZATIONAL PROFILE

10.1. HISTORICAL BACKGROUND OF THE ORGANIZATION

Janata Bank Limited is the 2nd

largest state owned commercial bank in Bangladesh.

Immediately after the liberation of Bangladesh in 1971, the erstwhile United Bank

Limited and Union Bank Limited were renamed as Janata Bank. The established of

Janata Bank was happened under the Bangladesh Bank order 1972. It was

organization mission and vision 5

incorporated as a public Limited Company on 21, May 07 vide certificate of

incorporation No-C66933(4425)07 in the early era of privatization. The Bank has

taken over the business of Janata Bank at a purchase consideration of Tk. 2593.90

million as a going concern through a vendor agreement signed between the Ministry

of Finance of the Peoples’ Republic of Bangladesh and the Board of Directors on

behalf of Janata Bank Limited on 15th

November 2007. The operation of Janata Bank

Limited works through 851 branches and including 4 overseas branches at United

Arab Emirates and a subsidiary company named Janata Exchange Company Srl in

Italy. It is linked 1202 foreign correspondents all over the world.

11. ORGANIZATION MISSION AND VISION

11.1. MISSION:

As it is recognized as the leading commercial bank in the aspect of Bangladesh

market and it is providing retail and corporate banking services, it is trusted and

respected as a partner in the social and economic development program in our

country and among our nation.

11.2. VISION:

Becoming effective largest commercial bank in the perspective of Bangladesh to

support socio-economic development of the country and assists go ahead for

becoming leading bank in South-Asia.

12. OFFERED SERVICES BY THE ORGANIZATION

Beside regular banking operation, Janata Bank Limited offers specialized services to

different walks of clients/agencies throughout the country. Under the network of

utility services, customers of different govt. organizations, corporate bodies, local

offered Services by the organization 6

bodies, educational institutions, students, etc are getting essential benefits from the

Bank continuously. The utility services of Janata Bank Limited's are:

12.1. BILLS COLLECTION:

• Collecting the gas bills of Titas, Bakhrabad and Jalalabad Gas Transmission and

Distribution Companies.

• Regular collection of electricity bills of Dhaka Electricity Supply Authority,

Dhaka Electricity Company, Bangladesh Power Development Board and Rural

Electrification Board.

• Regularly collects the telephone bills of Telegraph and Telephone Board.

• Collects Water/Sewerage bills of Water and Sewerage Authority.

• Municipal holding tax of City Corporation/ Municipalities is collected by JBL.

• A pilot scheme is going underway to provide personalized services to the

clients.

12.2. PAYMENTS MADE ON BEHALF OF GOVT.

• Payment of non- Govt. teacher’s salaries

• Providing girl Students scholarship/stipend & Primary Student Stipend.

• Provides army pension

• Payment of widows, divorcees and destitute women allowances

• Old-age Allowances

• Food procurement Bills

As per decision of the govt. 46 (Forty Six) branches of JBL(40 branches in Dhaka city,

1(one) branch in Narayangonj city and 5(five) branches in Chittagong city) are

involved to receive all utility bills in a same station from January'04.

12.3. SERVICES AREAS

Table: Branches of Janata Bank Li

Division

Dhaka

Chittagong

Rajshahi

Sylhet

Khulna

Overseas

Total

offered Services by the organization

SERVICES AREAS

Branches

There are 851 branches of Janata

Bank Limited in home and abroad.

Among them 443 branches are

situated in urban areas including

four foreign branches and 408

branches are in rural areas. And all

foreign branches are situated in

United Arab Emirates.

Table: Branches of Janata Bank Limited

Town Rural zone

162

100

80

22

75

4

443

offered Services by the organization 7

There are 851 branches of Janata

Bank Limited in home and abroad.

Among them 443 branches are

situated in urban areas including

four foreign branches and 408

branches are in rural areas. And all

foreign branches are situated in

United Arab Emirates.

mited

Rural zone Total

82 244

88 188

131 211

36 58

71 146

0 4

408 851

Organizational structure 8

Overseas Branches:

Table: Foreign Branches of Janata Bank Limited

SL.No: City No of Branch Status

01. Abu Dhabi 01 Foreign

02. Al-Ain 01 Foreign

03. Sharjah 01 Foreign

04. Dubai 01 Foreign

13. ORGANIZATIONAL STRUCTURE

13.1. MANAGEMENT ASPECT

Like every other business organization, the foremost duty of the top management is

to makes all the major decisions of Janata Bank. The boards of directors are being at

the topmost level of organizational structure plays an important role in policy

formulation and successful execution, but it is not a direct concern of the day-day

operations of the bank. The duty was delegated to the management committee. The

board mainly sets the objectives and policies of the bank.

The management consists of one chairman, eleven directors, one CEO & MD and one company

secretary..

Mid and lower level employees get the direction and instruction from the Board of

Directors about the tasks they have to meet. The chief executive provides the

guideline to the managers and employees, but bears the responsibility for

determining how tasks and goals are to be attained.

Organizational structure 9

Org

an

iza

tio

n M

on

og

ram

Chairman

Managing Director

General Manager

Deputy General Manager

Assitant General Manager

Senior Principal Officer

Principal officer

Senior Officer

Officer

Sub Accountant

Senior Clark

Future plans of the organization 10

14. FUTURE PLANS OF THE ORGANIZATION

1. Involvement in export activitylargely by maintaining good communication

with diverse parties.

2. To collect new members in FY2010 to launch export related new business.

3. At least 2 new AD branch will open in FY2010.

4. More facilities will be provided to the exporters on the basis of export priority

and facilitate them on the basis of performance.

5. Sufficient workforce has involved increasing export and import business,

providing special services and initiated different training program of officers

has been started.

6. Very dynamic new dimensional Credit Product willbe started in a large scale

by name of BMRE Loan for export project to import machinery, expand

factory, purchase transport among exiting parties.

7. To take the competitive position charge, decrease commission and other

facilities will continue to complete the journey.

Introduction 11

F O R E I GN E X C H A N GE I N J B L A N D T H E

W O R L D

15. INTRODUCTION

One of the most important businesses carried out by the commercial bank is foreign

trading. General focusing states that, the trade among various countries falls for

close link between the parties dealing in trade. The situation calls for expertise in the

field of foreign operations. The bank, is referred to as rending international banking

operation which provides such services. Transactions with overseas countries in

respect of export, import and foreign remittance dealings are under the preview of

foreign exchange department. International trade demands a flow of goods from

seller to buyer and of payment from buyer to seller. In this case the bank forms

bridge between the buyer and seller.

Among all departments Foreign exchange department of Janata Bank Limited is one

of the most important. This department handles various types of activities. Among

these main three are as follows:

a) Export

b) Import and

c) Foreign remittance

Additionally I have included the global trends of money transfer method like SWIFT

and recent changes in the global protocol of exchange like UCP-600.

Swift 12

16. SWIFT

SWIFT means High-value payment market infrastructures focus primarily on security

and resilience to support time-critical payments, efficiency to have the right trade-off

between risks and cost. Liquidity cost reduction by early finality, easy collateral

coverage and better liquidity management through real-time interactive services

Balancing cost, efficiency and risk are your key requirements, and SWIFT meets them

with a reliable, secure and reusable messaging infrastructure, supporting

international and proprietary standards.

More than 62 high-value payments clearing and settlement systems covering more

than 90 countries and carrying more than 240 million payments a year, rely on SWIFT

for secure messaging services and common message standards essential to their

smooth operation.

Because customers are multilateral, customers need a trusted third party like SWIFT

to provide secure, reliable and proven messaging solutions. SWIFT’s offering is more

compelling in terms of cost and risk than alternatives, thanks to reusability of

participants’ existing SWIFT infrastructures, value-added services such as FIN Copy,

and standard support services. SWIFT solutions for high-value payment clearing

systems support the messaging layer for payment transaction processing, cash

management, business administration functions, reporting and generic

communication.

Swift 13

THE STRUCTURE OF SWIFT

16.1. CASH REPORTING: SUPPORTING CUSTOMER’SNEED

FOR ACCOUNT INFORMATION

The need for standardized solutions in cash reporting is driven by the centralization

of liquidity management and treasury functions, growing volumes of cross-border

payments, increasing volumes of 'time-payments' (payment versus payment, delivery

versus payment, real-time gross settlement systems), the emergence of cross-border

real-time payment settlement systems, in addition to existing domestic systems, and

regulatory pressure to manage liquidity and credit risk.

Swift 14

16.2. THE FUNCTIONS OF SWIFT

SOLUTIONS FOR

• For payments

• Cash Reporting

• Supporting your real-time account information needs

• Payments and cash management

Economic changes in the payments landscape have forced the banking community to

find new ways to reduce their operational costs, mitigate their liquidity risk and

increase the revenue and efficiency of their core payment products. Under the

pressure of regulators, the cash management service offering becomes more

transparent to meet new customer expectations. While conforming to regulation is a

must, service quality becomes a key differentiator.

SWIFT has developed offerings in payments and cash management to help the

banking community meet these urgent challenges:

• Enhance customer service: automate exceptions and investigations in order to

reduce enquiry turn-around time and to provide transparency on enquiry status to

your customers, provide a compelling value proposition for corporates or person-

to-person retail payments for immigrants (workers’ remittances) – including

mobile payments.

• Improve liquidity and risk management: receive end-of-day as well as intra-

day cash reports – information vital to get visibility on cash positions across your

organization and to improve liquidity management. In addition, SWIFT is

considering extending its value proposition to include liquidity risk

management tools.

• Increase operational efficiency and save costs: SWIFT’s single window allows

you to rationalize your connectivity channels with:

1. Correspondent banks for clearing and settlement of domestic or foreign

currency payments using SWIFT’s payments clearing messaging services

changes made in UCP-600 15

2. High value payments clearing and/or settlement systems operating on a real-

time gross settlement basis using SWIFT’s secure and reliable FIN domestic

services for high value payment market infrastructures

3. Retail payments clearing systems using SWIFT’s cost efficient services for retail

payments market infrastructures: the services help to clear “batches” of

payments prior to settlement at discrete intervals, with or without netting.

17. CHANGES MADE IN UCP-600

Every single article has been redrafted and perhaps that is the most important

change from a corporate perspective. Language of article has been made more clear

and simple. Changes have made UCP 600 more user friendly set of rules. Failure to

comply with UCP 600 rules can put payment at risk. More than 220 rules and sub-

rules are covered by UCP 600 articles covering trade and services issues and

problems. Change is very user friendly. Main features of UCP 600 which the 7th

revision as follows:

- A leaner set of rules with 39 articles rather than 49 articles of UCP 500.

- Five article from UCP 500 were not included in UCP 600

• Article 5 Instruction to issue/amend credits

• Article 6 Revocable credit

• Article 8 Revocation

• Article 12 In complete and unclear instructions

• Article 38 Other documents

• Following articles have been changed and appear in new form either as

combination, adoptions or rewarding based on position papers issued by

Banking Commission. 2, 6, 9, 10, 20, 21, 22, 30, 31, 33, 35, 36, 46 & 47.

- Main focus has been to make the language more simple and clear. The

responsibilities of the parties to documentary credit transaction have

been more transparent. Article covering advising of L/C and

amendments has clear responsibility of the bank.

changes made in UCP-600 16

- Every single article has been redrafted and is most important change

for corporates.

- New Section of definition containing terms such as honour and

negotiations etc.

- New article for interpretation of the terms used in L/C to avoid

misunderstanding

- When the issuer decides to refuse to honour the documents, it must

give a single notice to that effect to the presenter

- Replacement of the term reasonable time with five working days for

examining and determining compliance of documents. New standard

for examination of documents

- A new provision concerning address of beneficiary and the applicant

has been added.

- An expanded discussion of original documents required 4

- Redrafted transport articles, amended to resolve confusion over the

identification of carrier & agents

- In UCP 600 articles on transport, various changes have been made like

definition of transshipment and the reference to charter party bill of

lading

- Period of presentation of 21 days is applicable to submission of original

documents

- Now the responsibility is on the issuer of L/C to reduce

misinterpretation by clear prescribing the terms & conditions in L/C

- Confirming bank has been authorized to discount deferred payment L/C

- Insurance document can be signed by proxies on behalf of issuance

company or underwriter and document may contain reference to any

exclusion clause.

- For transferable credits the transferring bank may send second

beneficiary invoices/draft if first beneficiary fail to perform..

- Miscellaneous provisions in UCP 500 have been replaced.

- eUCP, bank practices are related to UCP 600

Opening Letter of Credit (L/C) 17

18. OPENING LETTER OF CREDIT (L/C)

In global business environment, buyers and sellers are often unknown to each other.

So seller generally demands guarantee of payment for his exported goods. In this

situation bank has an important role. Bank gives export guarantee that it will pay for

the goods on behalf of the buyer. This guarantee is called “Letter of Credit” or LC.

Thus by letter of credit the contract between importer and exporter find a legal

sphere.

18.1. PROCEDURE OF OPENING THE LETTER OF CREDIT

(L/C)

After receiving the preform invoices from the exporter, by applying for the issue of

documentary credit, the importer requests his/her bank to make a promise of

payment to the supplier. Obviously, the bank will only agree to this request if bank

can relyfully on reimbursement by the applicant. According to the accepted custom

as the sole security for the credit, particularly if they are not the sorts of commodity

that can be traded on an organized market, such an agreement would make the bank

to bear excessive risk outside its specialized field. The applicant must therefore have

adequate fund in the bank account or a credit line sufficient to cover the required

amount.

Banks deals with documents and notwith goods. Once the bank has issued the credit

its obligation to pay is conditional on the presentation of the stipulated documents

within the prescribed time limit. The applicant cannot prevent a bank from honoring

the documents on the grounds that the beneficiary has not delivered goods.

� The importer submit the following documents with the application for

opening the L/C

• Tax Identification Number (TIN)

• Valid trade license

• Import registration certificate (IRC)

� The bank will supply the following documents before opening the L/C

• LCA form

• IMP form

• Necessary charger documents for documentation


The above documents/papers must be completed duly signed and filled by the

parties according to the instruction of the concern banker.

After scrutinizing above-mentioned documents carefully, bank delivers the following

forms to be filled up by importer and banker then check it carefully:

• Whether the goods to be imported is permissible or not.

• Whether the goods to be imported is demanding or not.

18.2. L/C APPLICATION FORM (L/CAF)

L/C Application Form is a sort of an agreement between customer and bank on the

basis of which letter of credit is opened. Bank provides a printed form for opening of

L/C to the importer. A special adhesive stamp of value Tk.200 is affixed on the form

in accordance with Stamp Act currently in force. While opening, the stamps are

cancelled. Usually the importer expresses his decision to open the L/C quoting the

amount of margin in percentage. Usually the importer gives the following

information –

1) Full name and address of the importer

2) Full name and address of the beneficiary

3) Draft amount

4) Availability of the credit by sight payment/ acceptance/ negotiation/

deferred payment

5) Time bar within which the documents should be presented

6) Sales type (CIF/FOB/C&F)

7) Brief specification of commodities, price, quantity, indent no. etc.

8) Country of origin

9) Bangladesh Bank registration no.

10) Import License/LCAF no.

11) IRC no.

12) Account no.

13) Documents no.

14) Insurance Cover Note/Policy no., date, amount

15) Name and address of Insurance Company

16) Whether the partial shipment is allowed or not

17) Whether the transshipment is allowed or not


18) Last date of shipment

19) Last date of negotiation

20) Other terms and conditions (if any)

21) Whether the confirmation of the credit is requested by the beneficiary or

not.

22) 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 issuing

bank.

18.3. L/C AUTHORIZATION FORM (L/CAF)

The Letter of Credit Authorization Form (LCAF) is the form prescribed for the

authorization of opening letter of credit/payment against import and used in lieu of

import license. The authorized dealers are empowered to issue LCA Forms to the

importers as per basis of licensing of the Import Policy Order in force to allow import

into Bangladesh. If foreign exchange is intended to be bought from 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. The LCA Forms available with

authorized dealers are issued in set of five (05) copies each. First Copy is exchange

control copy, which is used for opening of LC and effecting remittance. Second Copy

is the custom purpose copy, which is used for clearance of imported goods from

custom authority. Triplicate and Quadruplicate Copy of LCAF are to be sent to

concerned area of CCI&E office by authorized dealer/Registration Unit of Bangladesh

Bank. Quintuplicate Copy is kept as office copy by authorized dealer/Registration

Unit. The Letter of Credit Authorization Form (LCAF) contains the followings –

• Name and address of the importer

• IRC no. and year of renewal

• Amount of L/C applied for (both in figure and in word)

• Description of item(s) to be imported

• HS Code No.

• Signature of the importer with seal

• List of goods to be imported

• Forwarding Documentary Credit by Advising or Confirming Bank:


There are usually two banks involved in a documentary credit operation. The issuing

bank and the 2nd

bank, the advising bank, is usually a bank in the seller’s country. The

issuing bank asks another bank to advise or confirm the credit.

If the 2nd

bank is simply “advising the credit”, it will mention that when it forwards

the credit to seller, such a bank is under no commitment or obligation to pay the

seller.

If the advising bank is also “confirming the credit”, this mention that the confirming

bank, regardless of any other consideration, must pay accept or negotiate without

recourse to seller.Then the bank is called confirming bank also.

• Submission of Necessary Documents by Exporter to the Negotiating Bank:

As soon as the seller/exporter receives the credit and is satisfied that he can meet its

terms and conditions, he is in a position to load the goods and dispatch them. The

seller then sends the documents evidencing the shipment to the bank.

Exporter will submit those documents in accordance with the terms and conditions

as mentioned in L/C. Generally the documents observed by the foreign exchange

department are:

• Bill of exchange

• Commercial invoice

• Bill of lading / Air way bill / Truck receipt

• Certificate of origin

• Packing list

• Clean Report of Finding (CRF)

• Insurance cover note

• Pre-shipment certificate

• The Documents Sent To The Issuing Bank Through The Negotiating Bank:

The negotiating bank carefully checks the documents provided by the exporter

against the credit, and if the documents meet all the requirement of the credit, the

bank will pay, accept, or negotiate in accordance with the terms and conditions of

the credit. Then the bank sends the documents to the L/C opening bank.

• Making the Payment of Foreign Bill through the Reimbursing Bank:

The L/C issuing bank getting the documents checks immediately and if they are in

order and meet the credit requirements; it will arrange to make payment against L/C

Securities of L/C 21

through reimbursement bank and will send the importer the document arrival

notice.

19. SECURITIES OF L/C

Janata Bank Limited respective officials scrutinize the application in the following

manner-

a) The terms and conditions of the L/C must be complied with UCPDC 500

and Exchange Control & Import Trade Regulation Act.1947.

b) Eligibility of the goods to be imported.

c) The L/C must not be opened in favor of the importer.

d) Radioactivity report in case of food item.

e) Survey report or certificate in case of old machinery

f) Carrying vessel is not of Israel.

g) Certificate declaring that the item is operation not more than 5 years in case of

car.

20. EXPORT

Janata Bank Limited exports a large quantity of goods and services to many

countries. Readymade textile garments (both knitted and woven), Jute, Jute-made

products, frozen shrimps, tea, hide and skin, vegetables are the main goods that

Bangladeshi exporters exports to foreign countries. Garments sector is the largest

sector that exports the lion share of the country's export. Bangladesh exports most

of its readymade garments products to U.S.A and European Community (EC)

countries. Bangladesh exports about 40% of its readymade garments products to

U.S.A. Most of the exporters who export through Janata Bank Limited foreign

Export 22

exchange Branch are readymade garment exporters. They open export L/Cs here to

export their goods, which they open against the import L/Cs opened by their foreign

importers

20.1. FORMALITIES OF EXPORT PROCEDURE

There are a number of formalities, which an exporter has to fulfill before and after

shipment of goods. These formalities or procedures are enumerated in brief as

follows:

• Obtaining Export Registration Certificate ERC:No exporter is allowed to

export any commodity for export from Bangladesh unless he is registered with

Chief Controller of Imports and Exports (CCI & E) and holds valid Export

Registration Certificate (ERC). After applying to the CCI&E in the prescribed

from along with the necessary papers, concerned offices of the Chief

Controller of Imports and Exports issues ERC. Once registered, exporters are

to make renewal of ERC every year.

• Securing the order:After getting ERC, the exporter may proceed to secure

the export order. He can do this by contracting the buyers directly through

correspondence.

• Obtaining EXP: After having the registration, the exporter applies to Janata

Bank Limited with the trade license, ERC and the Certificate from the

concerned Government Organization to get EXP. If the bank is satisfied, an

EXP is issued to the exporter.

• Signing of the contract:After communicating with buyer the exporter has to

get contracted for exporting exportable items from Bangladesh detailing

commodity, quantity, price, shipment, insurance and mark, inspection,

arbitration etc.

• Receiving the Letter of Credit:After getting contract for sale, exporter

should ask the buyer for Letter of Credit clearly stating terms and conditions

of export and payment.

• Procuring the materials:After making the deal and on having the L/C

opened in his favor, the next step for the exporter is to set about the task of

procuring or manufacturing the contracted merchandise.

Export 23

• Endorsement on EXP:Before the exporter with the customs or postal

authorities lodges the export forms, they should get all the copies endorsed

by Janata Bank Limited. Before shipment, exporter submits EXP. form with

commercial invoice. Then Janata Bank’s respective officers check it properly, if

satisfied, certified the EXP. Without EXP exporter cannot make shipment. The

customer must declare all export goods on the EXP issued by the authorized

dealers

20.2. DISPOSAL OF EXPORT PROCEDURE

Original:Customs authority reports first copy of EXP to Bangladesh Bank after

shipment of the goods.

Duplicate:Negotiating bank reports the Duplicate to Bangladesh Bank in or after

negotiation date but not later than 14 days from the date of shipment.

Triplicate:On realization of export proceeds the same bank to the same authority

reports Triplicate.

Quadruplicate:Finally, the negotiating bank as their office copy retains

Quadruplicate.

• Shipment of goods:Exporter makes shipment according to the terms and

condition of L/C.

• Presentation of export documents for negotiation:After shipment, exporter

submits the following documents to Janata bank Limited for negotiation.

• Bill of Exchange or Draft

• Bill of Lading

• Invoice

• Insurance Policy/Certificate

• Certificate of origin

• Inspection Certificate

• Consular Invoice

• Packing List

Export 24

• Quality Control Certificate

• G.S.P. certificate

• Photo

• Examination of Document:Banks deal with documents only, not with

commodity. As the negotiating bank is giving the value before repatriation of

the export proceeds it is advisable to scrutinize and examine each and

every document with great care whether any discrepancy(s) is observed

in the documents. The bankers are to ascertain that the documents are strictly

as per the terms of L/C Before negotiation of the export bill. Bank officers

assigned for examining the export documents may use a checklist for their

convenience.

• Negotiation of export documents:Negotiation stands for payment of value to

the exporter against the documents stipulated in the L\C. If documents are in

order, Janata Bank Limited purchases (negotiates) the same on the basis of

banker- customer relationship. This is known as Foreign Documentary Bill

Purchase (FDBP).If the bank is not satisfied with the documents submitted to

Janata Bank Limited and gives the exporter reasonable time to remove the

discrepancies or sends the documents to L/C opening bank for collection. This

is known as Foreign Documentary Bill for Collection (FDBC).

• Settlement of Local Bills:

The settlement of local bills is done in the following ways, -

• The customer submits the L/C to Janata Bank Limited along with the

documents to negotiate

• Janata Bank Limited officials scrutinize the documents to ensure the

conformity with the terms and conditions.

• The documents are then forwarded to the L/C opening bank.

• The L/C issuing banks gives the acceptance and forwards an acceptance letter.

• Payment is given to the customer on either by collection basis or by

purchasing the document.

Import 25

20.3. IMPORT

Import means purchase of goods or services from abroad. Normally consumers, firms

and Government organizations import foreign goods or services to meet their various

necessities. Main import items are food item, edible oil, fertilizer, petroleum,

machineries, chemicals, raw materials of industry, cement clinkers etc. So, in brief,

we can say that import is the flow of goods and services purchased by local agent

staying in the country from foreign agent staying abroad.

20.4. IMPORT PROCEDURE

Authorized Dealer, banks are always committed to facilitate import of different

goods into Bangladesh from the foreign countries. Import Section, which is under

Foreign Exchange Department of a bank, is assigned to perform this job. And to serve

its parties demand to import goods, it always maintains required formalities that are

collectively termed as “Import Procedure”.

i) At first, the importer must obtain Import Registration Certificate (IRC) from

the CCI&E submitting the following papers:

• Up to date Trade License.

• Nationality and Asset Certificate.

• Income Tax Certificate.

• In case of company, Memorandum & Articles of Association and

Certificate of Incorporation.

• Bank Solvency Certificate etc.

• Required amount of registration fee

ii) Then the importer has to contact with the seller outside the country to obtain

the Proforma Invoice. Usually an indenter, local agent of the seller or foreign

agent of the buyer makes this communication. Beside these other sources are:

• Trade fair.

• Chamber of Commerce.

Import 26

• Foreign Missions in Bangladesh.

• Journals etc.

iii) When the importer accepts the Proforma Invoice, he/she makes a purchase

contract with the exporter detailing the terms and conditions of the import.

iv) After making the purchase contract, importer settles the means of payment

with the seller. An import procedure differs with different means of payment.

The possible means are Cash in Advance, Open Account, Collection Method

and Documentary Letter of Credit. In most cases, the Documentary Letter of

Credit in our country makes import payment. Purchase Contract contains

which payment procedure has to be applied.

20.5. PAYMENT MODES

• Cash in advance: Importer pays full, partial or progressive payment by a foreign

DD, MT or TT. After receiving payment, exporter will send the goods and the

transport receipt to the importer. Importer will take delivery of the goods from

the transport company.

• Open Account: Exporter ships the goods and sends transport receipt to the

importer. Importer will take delivery of the goods and makes payment by foreign

DD, MT, or TT at some specified date.

• Collection Method: Collection methods are either clean collection or

documentary collection. Again, DocumentaryCollection may be Document against

Payment (D/P) or Document against Acceptance (D/A). The collection procedure

is that the exporter ships the goods and draws a draft/ bill on the buyer. The

exporter submits the draft/bill (only or with documents) to the remitting bank for

collection and the bank acknowledges this. Then the remitting bank sends the

draft/bill (with or without documents) and a collection instruction letter to the

collecting bank. Acting as an agent of the remitting bank, the collecting bank

notifies the importer upon receipt of the draft. The title of goods is released to

the importer upon full payment or acceptance of the draft/bill.

• Letter of credit: Letter of credit is the well-accepted and most commonly used

means of payment. It is an undertaking for payment by the issuing bank to the

Import 27

beneficiary, upon submission of some stipulated documents and fulfilling the

terms and conditions mentioned in the letter of credit.

Export Finance 28

21. EXPORT FINANCE

Export through Janata Bank Ltd. for the year 2008 and 2009 is Tk.85418.00 million

and Tk. 87500.00 million respectively. In spite of Global Financial Crisis the growth

chart in export through Janata Bank Ltd. remains upwards due to our timely steps

regarding credit facilities and services packages. We have already re-fixed our

schedule of exchange at a reduced rate the loan pricing is more competitive. With

the credit lines our experts have introduce the following new products:

• Cash Credit: Working capital facility to dyeing unit and packaging unit.

• Mid term Loan: For procurement of machinery, space parts, boiler, generator,

vehicles etc. to export oriented industrial unit.

• Packing Credit: Working capital facility to pay wages salary utility bills etc.

• LTR, FC: Short term credit for procurement of capital machinery from abroad.

• Term Loan: For (Export oriented) Ship Building.

• Export Project BMRE: Loan for factory building construction. Expansion,

development and Maintenance, construction of factory godown, purchase of

machineries from local and foreign markets, covered van, generator and

establish ETP.

Export Finance 29

21.1. DETAILS COMMODITY WISE EXPORT

Here given details commodity wise export figures of Janata Bank Limited from 2006

to 2009. It has shown here commodity wise and monthly wise export figures in

details.

DETAILS EXPORT OF JANATA BANK LIMITED OF 2006 TO 2009

Month Raw Jute Jute

Goods Tea

Hide &

Skin RMG F.FiSH

Vegetabl

es Others

20

06

January 3.04 38.56 1.33 58.76 244.75 47.91 13.7 85.31

February 2.68 35.07 0.56 37.7 260.93 41.94 12.54 61.67

March 10.16 23.2 0.9 67.21 295.23 34.05 7.17 67.67

April 4.95 33.55 0 64.01 337.37 46.25 8.54 121.69

May 1.8 89.94 0 75.84 269.97 75.46 19.37 79

June 6.4 29.18 0 82.22 302.17 65.55 10.48 151.68

July 2.71 37.11 0 76.66 329.88 77.37 13.58 83.59

August 2.72 33.18 0 54.31 322.15 65.13 17.77 165.86

September 3.52 32.13 0 49.65 265.47 77.13 9.76 166.92

October 15.94 30.52 0 53.45 260.08 22.32 6.81 111.28

November 10.13 53.69 0 54.41 302.6 46.59 7.12 113.77

December 4.79 108.27 0 84.44 359.22 74.77 9.51 145.89

Total 68.84 544.4 2.79 758.66 3549.82 674.47 136.35 1354.33

Grand Total 7089.66

20

07

January 3.11 32.66 0 34.63 280.16 53.71 9.48 129.76

February 2.06 43.5 0 60.85 285.08 21.21 9.32 106.83

March 6.75 44.96 0 86.3 270.15 29.4 6.95 124.47

April 9.69 46.76 0 74.4 243.85 59.85 8.44 122.07

May 5.92 35.41 0 75.02 291.78 69.91 11.06 195.85

June 5.32 30.76 0 73.79 293.72 83.87 14.06 113.35

July 6.11 40.35 0.33 63.69 338.71 72.26 14.69 101.07

August 6.92 38.62 0 55.82 338.56 91.98 12.02 100.1

September 9.06 44.41 0 59.97 270.65 79.64 14.01 95.2

October 5.1 42.44 0.18 61.68 247.73 63.33 8.79 65.4

November 7.69 41.55 0.68 56.04 269.27 88.15 9.14 92.92

December 8.18 54.13 0.75 78.51 411.27 29.97 9.09 173.17

Total 75.91 495.55 1.94 780.7 3540.93 743.28 127.05 1420.19

Export Finance 30

Grand Total 7185.55 2

00

8

January 8.18 35.74 0.56 39.81 323.65 65.04 11.36 80.13

February 1.55 57.35 0.83 52.56 332.52 45.16 11.34 90.25

March 4.88 90.44 0.47 74.6 348.78 53.54 10.22 99.13

April 4.76 74.57 0.46 89.53 278.37 66.17 10.4 157.21

May 3.66 48.59 0.3 69.31 284.77 44.88 13.17 200.85

June 7.27 55.09 0 65.47 384.56 102.27 15.62 152.75

July 9.73 45.29 0.34 58.16 376.99 111.91 18.97 127.65

August 4.79 46.03 0.37 65.4 358.42 65.73 16.15 200.13

September 7.11 43.51 0 94.6 344.92 102.1 28.56 200.3

October 5.73 45.41 0 106.46 331.72 51.07 11.02 89.39

November 4.7 55.21 0 72.86 368.23 71.88 8.77 159.13

December 12.32 47.31 1.87 48.77 456.99 42.48 7.32 247.84

Total 74.68 644.54 5.2 837.53 4189.92 822.23 162.9 1804.76

Grand Total 8541.76

20

09

January 1.98 37.32 0.39 64.21 330.34 63.6 12.08 202

February 3.5 38.15 0 65.37 385.78 40.83 9.82 146.68

March 3.03 38.56 1.05 74.3 447.59 35.75 9.74 114.08

April 4.78 44.91 0 37.67 426.23 52.16 10.33 135.54

May 4.32 39.01 0 103.5 325.72 80.79 14.15 178.66

June 10.03 26.69 0.12 89.93 432.8 92.21 14.52 99.29

July 2.96 41.8 0.07 118.53 396.29 77.5 16.67 146.8

August 6.65 44.05 0 99.85 397.05 97.43 17.96 77.58

September 20.06 42.48 0.39 91.42 332.96 70.44 13.61 101.43

October 27.52 52.78 0 79.55 265.8 69.34 13.37 158.33

November 11.55 72.35 0.07 127.69 353.31 76.36 12.88 153.26

December 5.4 43.31 0 69.2 353.95 61.12 11.47 283.21

Total 101.78 521.41 2.09 1021.22 4447.82 817.53 156.6 1796.86

Grand Total 8865.31

In 2006 total export of Janata Bank was Tk. 7089.66 crore. Ready Made Garments

was Tk. 3549.82 crore and it was the highest position. Hide & skin and frozen fish

took the second and third position consequently. It is also clearly observed that in

the month of August and September export amount was highest through the year.

In 2007 total export of janata bank was tk. 7185.55 crore. Readymade garments was

tk. 3540.93 crore and it was the highest position. Hide & skin and frozen fish took the

second and third position consequently. First half of the year 2007 export amount

was comparatively better posi

observed that total export amount of 2007 is little bit higher than

In 2008 total export of janata bank was tk. 8541.76 crore. Ready made garments was

tk. 4189.92 crore and it was the highes

frozen fish tk. 822.23 crore took the second and third position consequently.

Throughout the whole year 2008 export amount was comparatively better than the

last two years. It is also me

higher than 20060and 2007.

In FY 2009 target export was Tk. 66480.00 million, but earned Tk. 88653.10 million

against the target amount. This was 133% higher than the target. It may mentioned

here that up to October 2009 earn

export had attained before two months end of the year.

In spite of world economic crisis and political instability in the country Janata

Limited has kept its upward export trend up to last year. Because Its expertise and

experienced management team offered different promotional offer and financially

7089.66

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2006

Export comparison of JBL from 2006 to 2009

was comparatively better position than the second half of the year. It is also clearly

observed that total export amount of 2007 is little bit higher than 2006.


tk. 4189.92 crore and it was the highest position. Hide & skin tk. 837.53 crore and



last two years. It is also mention here that total export amount was significantly

higher than 20060and 2007.



here that up to October 2009 earned was Tk. 7231.80 million, that means target of

export had attained before two months end of the year.

In spite of world economic crisis and political instability in the country Janata



7185.55

8541.768865.31

2007 2008


Export (in mil)

Export Finance 31

tion than the second half of the year. It is also clearly

2006.


t position. Hide & skin tk. 837.53 crore and



port amount was significantly



ed was Tk. 7231.80 million, that means target of

In spite of world economic crisis and political instability in the country Janata Bank



8865.31

2009


Export Finance 32

assisted to the exporters to boost up the export trend. They main offered and

assisted-

• Concessional rate of interest.

• Export incentive programs.

• Export Processing Zone facility.

• Scope of establishment of export oriented industry by 100% foreign

investment and by joint venture.

• Full-fledged infrastructural and logistic support for export i.e. project finance,

working capital, pre-shipment & post-shipment export finance, guarantee,

bonding facility, etc.

• Consulting facility by an expert group of officials.

21.2. EXPORT TARGET & WORL

From 2006 to 2009 export of Janata Bank

economic crisis period Janata Bank’s management shows their best performance.

That is why export position remains in upward condition.

In spite world economic crisis export growth has increased 4%. Which is hig

among four government owned banks.

Table: Export growth of Janata Bank Limited

Year

2007

2008

2009

0

20000

40000

60000

80000

100000

2007

Export target and achievement of Janata

EXPORT TARGET & WORLD ECONOMIC CRISIS

From 2006 to 2009 export of Janata Bank is in increasing pattern. Even during world


That is why export position remains in upward condition.

In spite world economic crisis export growth has increased 4%. Which is hig

among four government owned banks.

Table: Export growth of Janata Bank Limited

Target Achievement Percentage of Target

77983.8 71855.5

86226.6 85417.8

66480 88653.1

2008 2009


Bank Limited

Target Achievement

Export Finance 33

D ECONOMIC CRISIS

is in increasing pattern. Even during world


In spite world economic crisis export growth has increased 4%. Which is highest

Percentage of Target

92.18%

99.06%

133.00%


Export Finance 34

21.3. NATIONAL AND JANATA BANK LIMITED'S EXPORT

PERFORMANCE

Contribution to National Export of Janata Bank Limited (mil $)

National Export

Contribution to National Export

of Janata Bank Limited

Financial Year Target Achievement Achievement Percentage

2003-2004 7227.70 7603.00 632.90 8.21%

2004-2005 8565.78 8655.00 692.80 8.00%

2005-2006 10159.20 10526.16 958.02 9.10%

2006-2007 12500.00 12187.5 1057.68 8.68%

2007-2008 14500 14411.1 1034.56 7.12%

2008-2009 16298.43 15565.1 1300 8.35%

For global economic recession and political instability inside the country contribution

to national export of Janata Bank limited was lowest in the fiscal year 2007-2008

among last six fiscal years. And in fiscal year 2008-2009 it turned up warding.

Because to increase export business providing the exporter more foreign currency, to

strengthen their production capacity, to facilitate the in every maximum scope, the

bank has took four incentives. These have been proved to be fruitful adding Tk.2.00cr

(approx.) more to the bank’s annual income through only export business.

These new four incentives are as follows in brief:

• In addition with the existing working capital it provides exporters emergence

need to execute their foreign order.

• For importing bulk quantity of dies, chemical it is a great support for the

exporter.

• Loan for importing generator, small machines, vehicles for emergency need.

• For importing capital machinery.

21.4. COMPARISON OF EXPORT

BANKS

Comparison of Export of 2009 with

Total export Janata Bank Limited in 2009 was Tk.88653.1 million. Sonali Bank’s

export was Tk.64243.3 million. Agrani Bank’s and Rupali

Tk.44606.8 million and Tk.7458.1 million respectively. From above table and graph

we can say that Janata Bank Limited is the top position among four government

owned banks with a large difference. Its nearest competitor is Sonali Bank Li

88653.1

Janata Bank

Comparison of Export of 2009 with other Banks

COMPARISON OF EXPORT OF 2009 WITH PUBLIC

Comparison of Export of 2009 with other Banks (tk in Mil)

Janata Bank 88653.1

Sonali Bank 64243.3

Agrani Bank 44606.8

Rupali Bank


export was Tk.64243.3 million. Agrani Bank’s and Rupali Bank’s export was



owned banks with a large difference. Its nearest competitor is Sonali Bank Li

64243.3

44606.8

Sonali Bank Agrani Bank


(tk in Mil)

Export (in Mil)

Export Finance 35

OF 2009 WITH PUBLIC

other Banks (tk in Mil)

88653.1

64243.3

44606.8

7458.1


Bank’s export was



owned banks with a large difference. Its nearest competitor is Sonali Bank Limited.

7458.1

Rupali Bank


Import Finance 36

22. IMPORT FINANCE

Traditionally Janata Bank Ltd. is pioneer in handling major portion of country’s

import business. The total volume of import as on 30-11-2009 is 107168 million.

Major import items are industrial raw materials, chemicals, capital machineries,

scraped vessels and petroleum etc.

22.1. COMMODITY WISE IMPORT OF JANATA BANK

LIMITED

Commodity wise Import of JB from 2006 to 2009

Commodities 2009 2008 2007 2006

Food Item 904 1075.91 396.25 12.14

Edible Oil 339.42 155.97 18.9 14.66

Fertilizer 2300.96 2779.16 1140.44 599.37

Petroleum 3483.1 4448.87 3659.86 8774.58

Machineries 1190.41 1108.28 853.11 1089.54

Chemicals 559.45 988.37 608.84 490.82

Raw Materials of Industry 2600.52 1306.44 1289.95 1408.16

Ship Breaking 23.31 177.95 101.4 144.25

Cement Clinkers 257 279.55 230.9 209.79

Others 194.33 620.8 106.89 137.59

Total 11852.5 12941.3 8406.54 12880.9

Through quite a good number of Authorized Dealer Branches and 1198 nos. foreign

correspondents worldwideJanata Bank Limited has been extending full range import

and relevant finance facilities. Setting Industrial vision to facilitate optimally, bank's

involvement has been showing sharp rising trend.

Import Trend of JB from 2006 to 2009

Year

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

From 2000 to 2006 import of Janata

the country was under caretaker government. Export, import, foreign remittance,

0

20000

40000

60000

80000

100000

120000

140000

2000 2001 2002



Total Import (in mil)

48005

54666

58889

60477

74920

72912

128809

84065

129413

118525

From 2000 to 2006 import of Janata Bank Limited is gradually increasing. But in 2007


2002 2003 2004 2005 2006 2007 2008


Total Import (in mil)

Import Finance 37

mil)

Bank Limited is gradually increasing. But in 2007


2009

Import Finance 38

employment in abroad etc. were moving forward in slow rate. For this reason import

in 2007 sharply down compare with 2006. Again in 2008 import of Janata Bank

Limited reached higher than 2007. And in 2009 import is dropped little bit.

22.2. IMPORT TARGET AND ACHIEVE IN LAST 3 YEARS

Year Target Achieved Percentage of

Achieved

2007 8000 840.54 105%

2008 9247.19 12941.3 140%

2009 10172 11852.5 116%

22.3. CONTRIBUTION OF JANATA BANK IN NATIONAL

IMPORT

Year National Import

Tk.(crore) Growth

Import of

Janata Bank

Tk.(crore)

Growth

2006 111307 0 12880.9 0

2007 127221 14.30% 8406.5 -35.20%

2008 163505 27.78% 12941.3 54.17%

2009 18440 -9.23% 11852.5 -8.41%

Import Finance 39

22.4. INCOME FROM IMPORT

Particulars 2007 2008

L/C Commissions and Other charges 77.87 86.53

Interest (PAD,LIM,LTR and Others) 387.63 278

Total 465.5 364.53

22.5. CONTRIBUTION TO NATIONAL IMPORT OF JB IN LAST

DECADE

Table: Contribution to National Import of Janata Bank Limited

Fiscal Year National Tk.

(Crore)

Janata bank Tk.

(Crore) Percentage

1995-1996 28303.78 4009.87 14.16726

1996-1997 30539.62 3799.45 12.44105

1997-1998 34183.13 3731.94 10.91749

1998-1999 38480.32 4646.58 12.07521

1999-2000 42130.6 4754.46 11.28505

2000-2001 50371 5233.07 10.38905

2001-2002 49049.1 5345.2 10.89765

2002-2003 55917.63 6117.06 10.93941

2003-2004 64256.56 6952.62 10.82009

2004-2005 80894.78 8397.96 10.38134

2005-2006 99130.07 9230.42 9.311423

2006-2007 118389.8 10757.9 9.086847

2007-2008 166974.3 9466.11 5.669201

Increase of import indicates the country is less wealthy and decrease of import

indicates that the country has sufficient resources and is able to fulfill its local

demand. So as a publicly owned bank Janata bank Limited is less service providing

attitude to the importers. It provides little facilities to its importers. As a result

import contribution percentage to national is decreasing gradually from fiscal year

1995-1996 to fiscal year 2007

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

National Import vs JBL's import in last

1995

-

1996

1996

-

1997

JBL Tk. (Cr) 4010 3799

0

2000

4000

6000

8000

10000

12000T

k.

in c

rore

JBL's contribution from 1995 to 2007




to the importers. It provides little facilities to its importers. As a result


1996 to fiscal year 2007-2008.


decade (1995 to 2007)

National Tk. (Crore) Janata bank Tk. (Crore)

1997

-

1998

1998

-

1999

1999

-

2000

2000

-

2001

2001

-

2002

2002

-

2003

2003

-

2004

2004

-

2005

2005

2006

3732 4647 4754 5233 5345 6117 6953 8398 9230

JBL's contribution from 1995 to 2007

Import Finance 40




to the importers. It provides little facilities to its importers. As a result



2005

-

2006

2006

-

2007

2007

-

2008

9230 1075 9466

Foreign Remittance 41

23. FOREIGN REMITTANCE

Inward foreign remittance through Janata Bank Ltd. up to November 2009 is Tk.

51508.55 million. Foreign remittance from NBRs reached record high of Tk. 45924

million in 2008 against Tk.36788 million in 2007 and continue to play an important

supporting role in strengthening the economy of the county Janata Bank ltd. by

reducing lead-time, has ensured quick delivery of foreign remittance, an NBR branch

has been opened to serve exclusively Non-resident Bangladeshis through Speedy

Money Remittance System with instant to the beneficiaries. Anybody willing to

remit foreign currency from any corner of the world can use wide network of the

bank. The remittance reaches to the beneficiary within 3 days without charging any

commission. Our worldwide network includes 4 branches in UAE, 2 exchange houses

in Italy and correspondent relationship with all the major Banks and all important

trade centers of the world.

Recently Janata Bank Ltd. has launched its Speedy Foreign Remittance Payment

System which enables beneficiaries to receive their money within shortest possible

time. The beneficiary also gets information of remittance through automated SMS.

It’s a secured, easy, cost effective and speedy way of remittance for the remitter.

Janata bank Ltd. has signed an agreement with Western Union Network to facilitate

wide range of remittance of the globe. Both the organizations make it possible to

receive the money from about 300,000 locations of 200 countries instantly with

prevailing mutual mechanism and workforce. The achievement of Janata Bank Ltd. in

attracting foreign remittance as compared to country’s performance is given bellow:

23.1. COUNTRY WISE REMITTANCE OF JANATA BANK

LIMITED

To facilitate sending money in Bangladeshi Taka directly, Janata Bank Limited has

Taka Drawing Arrangement with many banks/exchange companies in different

countries. The expatriate Bangladeshis may send their money in BDT (Bangladeshi

Taka) through the branches/subsidiaries of Janata Bank Limited and foreign

banks/exchange companies. Remittance services are available at all branches and

foreign remittances may be sent to any branch by the remitters favoring their

beneficiaries. Remittances are credited to the account of beneficiaries instantly or

within shortest possible time.

Table: Country wise Foreign Remittance of JBL from 2004 to

country

JanataEchange Co., Italy

Janata Bank, UAE Branches

Other Exchange Co.

Kuwait

Saudi Arabia

Oman

Bahrain

Greece

UK

Qatar

United States

Malaysia

Singapore

Korea

Canada

Australia

Other sources (SWIFT/Telex)

Grand Total

0

10000

20000

30000

40000

50000

60000

Country wise Foreign Remittance of JBL from 2004

2004

Foreign Remittance

Table: Country wise Foreign Remittance of JBL from 2004 to

country 2004 2005 2006 2007

JanataEchange Co., Italy 1182.5 2077.1 3102.1 3513

Janata Bank, UAE Branches 5196 5638 5666.7 9188.3

Other Exchange Co. 2143.5 2279.5 2901.7 4714

Kuwait 3468.6 4089.3 5652.6 7615.9

Saudi Arabia 4057.9 3762.7 3598.3 3025.2

Oman 1129.8 1095.6 1106.2 1171

Bahrain 785.2 817.4 853.2 834.5

Greece 0 0 537.9 697.9

UK 0 0 0 0

Qatar 196.1 190.8 149.2 173.6

United States 26.9 29.2 132.8 153.6

Malaysia 1139.3 623.9 264.2 208.7

Singapore 0.2 0.4 5.3 0.7

Korea 0 23.2 2.5 0

Canada 166.7 0 6.6 7.2

Australia 14.4 0 0 0

(SWIFT/Telex) 4556.4 5945.7 5288 5484.4

Grand Total 24063.5 26572.8 29267.3 36788

Grand Total


to 2006

2004 2005 2006 2007 2008 2009


Table: Country wise Foreign Remittance of JBL from 2004 to 2006

2008 2009

2289.8 1446.8

12548.8 16207.7

6878.2 8738.1

7780.1 6764.3

4536 7718.2

1341.6 1038.7

916.7 716.1

591.5 524.5

2213.3 6174.9

200.6 118.9

222.3 285.7

113.2 23.9

20.2 98.1

0 0

0 0

0 0

6272.1 6334.2

45924.4 56190.1



Inward remittance from Bangladeshi nationals working abroad continued to play an

important role in strengthening the current account. Receipts on this sector

increased gradually in every year from 2006 to 2009. The underlying reason was that

Bangladesh Bank has simplified the approval policy of drawing arrangements

between foreign exchange houses and domestic bank. Janata Bank’s management

has taken this opportunity.

For quick payment of TTs issued by 4(Four) UAE branches of Janata Bank Limited (

Abu Dhabi, Al-Ain, Dubai &Sharjah branch) Foreign Exchange Corporate Branch,

Dhaka( FECB, Dhaka), Laldighi East Corporate Branch, Chittagong(LDE, Ctg), Foreign

Exchange Corporate Branch, Sylhet( FECB, Sylhet), Khulna Corporate Branch, Khulna,

Barisal Corporate Branch, Barisal &Rajshahi Corporate Branch, Rajshahi are

nominated. To facilities to its remitters Janata bank Limited has started-

1. FECB, Dhaka will cover whole Dhaka Division,

2. LDE, Ctg will cover whole Chittagong Division, except branches under greater

Comilla and Noakhali Area.

3. FECB, Sylhet will cover whole Sylhet Division,

4. Khulna Corporate will cover whole Khulna Division,

5. Barisal Corporate will cover whole Barisal Division,

6. Rajshahi Corporate will cover whole Rajshahi Division,

7. Comilla Corp. will cover all branches under greater Comilla district.

8. Noakhali Corp. will cover all branches under greater Noakhali district.

Commission for issuance of Taka Drafts from our UAE branches has been reduced

and refixed from AED 10.00 to AED 4.00 and commission for issuance of TTs drawn

on Bangladesh and payable at any bank branches are re-fixed at AED 12.00 from AED

30.00.

Commission for issuances of Taka drafts at UAE branches has been

reduced irrespective of amount. 1% interest above the normal savings deposit rate is

offered to SB accounts receiving foreign remittance.

23.2. WAGE EARNERS' REMITT

Inward remittances from Bangladeshi nationals working abroad continued to play an

important role in strengthening the current account of Ba

this sector increased by 22.4 percent to USD 9689.3 million in FY 09 from USD 7914.8

million in FY 08. The underlying reason was that Bangladesh Bank has simplified the

approval policy of drawing arrangements between foreign exch

domestic banks. As a result 40 banks have been allowed for establishing 820 drawing

arrangements with 208 exchange houses all over the world for collecting

remittances. Due to these measures, remittances have recorded a substantial

increase by 22.4 percent to USD 9689.3 million during the year 2009. Remittances as

percentage of GDP increased by 089 percentage points to 10.84 in FY 09 from 9.95 in

FY 2008. The shares of major source countries in the remittance receipts of FY 2008

and FY 2009 are given bellow.

Wage earners' remittances

2008

Country Percentage

Kingdom of

Saudiarabia

29.40%

UAE 14.30%

UK 11.30%

Kuwait 10.90%

USA 17.50%

Other countries 16.60%

Total 100.00%

Foreign Remittance

WAGE EARNERS' REMITTANCES OF NATION


important role in strengthening the current account of Bangladesh Bank. Receipts on



approval policy of drawing arrangements between foreign exchange houses and




by 22.4 percent to USD 9689.3 million during the year 2009. Remittances as



are given bellow.


Percentage

29.40%

14.30%

11.30%

10.90%

17.50%

16.60%

100.00%

UK

11%

Kuwait

11%

USA

18%

Other

countries

17%


2008


ANCES OF NATION


ngladesh Bank. Receipts on



ange houses and




by 22.4 percent to USD 9689.3 million during the year 2009. Remittances as



Kingdom of

Saudiarabia

29%

UAE

14%


Wage earners'

remittances 2009

Country Percentage

Kingdom of

Saudiarabia

29.50%

UAE 18.10%

UK 8.20%

Kuwait 10.00%

USA 16.30%

Other countries 17.90%

Total 100.00%

This is the whole scenery of inward foreign remittance of 2008 and 2009 of

Bangladesh. In the sector of foreign remittance earning 2008 Kingdom of Saudiarabia

in highest position that is 29.40%, USA second position

Emirates is third position 14.30%. And in 2009 Kingdom of Saudiarabia again top

position, in second position United Arab Emirates and in third position USA. Their

inward remittances are 29.50%, 18.10% and 16.30% respectively.

23.3. FOREIGN EXCHANGE AND

Foreign Exchange and Foreign Trade of JB Trade of JB 2008

Year

Import

Export

Remittance

Foreign Remittance



in highest position that is 29.40%, USA second position- 17.50% and United Arab

position 14.30%. And in 2009 Kingdom of Saudiarabia again top


inward remittances are 29.50%, 18.10% and 16.30% respectively.

FOREIGN EXCHANGE AND FOREIGN TRADE OF JB

ign Exchange and Foreign Trade of JB Trade of JB 2008

2006 2007 2008

128809 84065 129413

70897 71855 85418

29267 36788 45924

UAE

18%UK

8%

Kuwait

10%

USA

16%

Other

countries

18%


2009




17.50% and United Arab

position 14.30%. And in 2009 Kingdom of Saudiarabia again top


FOREIGN TRADE OF JBL

ign Exchange and Foreign Trade of JB Trade of JB 2008

2008 2009

129413 118525

85418 88653

45924 56190

Kingdom of

Saudiarabia

30%

UAE

18%


Export and foreign remittance are in good position. They are in

2006 to 2009. And due to global economic crisis and for various trade barriers and

quotas import does not grow much higher compare with export and foreign

remittance. In 2007 export and import are comparatively low with other years du

political instability inside the country. But inward remittance is continuously upward

trend up to 2009.

23.4. ANALYSIS: EFFECT OF

IMPORT AND EXPORT VO

The import and export volume is dependent on various variables.

one of them. It has some influence over the import and export volume.

the effect of change in exchange rate of between BDT and USD

and export volume of Bangladesh

collected from September 2007 to October 2010

rate is averaged to calculate average monthly exchange rate and the import

data is gathered by accumulating total monthly trade in USD.

The objective is to measure the relatio

volume. That’s why exchange rate

import volume is taken as dependent variable.

0

20000

40000

60000

80000

100000

120000

140000

Import

Foreign Exchange and Foreign Trade of JBL

Foreign Remittance

Export and foreign remittance are in good position. They are in increasing trend from



remittance. In 2007 export and import are comparatively low with other years du


ANALYSIS: EFFECT OF EXCHANGE RATE CHANGE

IMPORT AND EXPORT VOLUME OF BANGLADESH

The import and export volume is dependent on various variables.

one of them. It has some influence over the import and export volume.

the effect of change in exchange rate of between BDT and USD effects the import

and export volume of Bangladesh, exchange rate, import and export data was

lected from September 2007 to October 2010. The monthly recorded exchange

rate is averaged to calculate average monthly exchange rate and the import

data is gathered by accumulating total monthly trade in USD.

he objective is to measure the relationship of exchange rate with import

exchange rate was taken as independent variable and export

import volume is taken as dependent variable.

Export Remittance


2006 - 2008

2006 2007 2008 2009


increasing trend from



remittance. In 2007 export and import are comparatively low with other years due to


EXCHANGE RATE CHANGE ON

LUME OF BANGLADESH

The import and export volume is dependent on various variables. Exchange rate is

one of them. It has some influence over the import and export volume.To analyze

effects the import

, exchange rate, import and export data was

. The monthly recorded exchange

rate is averaged to calculate average monthly exchange rate and the import-export

nship of exchange rate with import-export

as independent variable and export-

Remittance



DATA INPUT

Import-Export volume and exchange rate data for regression analysis

(Sep 2007 to Oct 2010)

IMPORT (IN MIL USD)

RATE (BDT AGAINST

USD) EXPORT (IN MIL USD)

2007-M09 1173678 59.6 894416

2007-M10 1077910 59.6 919419

2007-M11 911127 59.6 823967

2007-M12 863274 59.6 942246

2008-M01 1206805 59.6 907999

2008-M02 1081391 59.6 822775

2008-M03 1197316 59.6 1053795

2008-M04 1205496 59.6 1149721

2008-M05 1058890 59.6 1219383

2008-M06 1132444 59.6 1242458

2008-M07 1432522 59.6 1245967

2008-M08 1384172 59.6 1222807

2008-M09 1376703 64.81054 1207476

2008-M10 1267754 67.5895 1060847

2008-M11 947948 67.5895 957916

2008-M12 1116305 68.36333 1169821

2009-M01 1224113 68.78 947356

2009-M02 1157303 68.78 860481

2009-M03 1371920 68.78 1150489

2009-M04 1211932 68.86095 1249552

2009-M05 1071066 68.95 1179575

2009-M06 1212953 68.95 1033356

2009-M07 1399738 68.95 1040726

2009-M08 1370168 68.95 1125030

2009-M09 1340855 68.95 1228856

2009-M10 1183320 68.95 1253137

2009-M11 977274 68.95 1271118

2009-M12 1120641 68.95 1346689

2010-M01 1120365 68.95 1150258

2010-M02 1125516 68.95 1132371

2010-M03 1361427 68.95 1333799

2010-M04 1325043 69.07687 1430597

2010-M05 1172987 68.76616 1496174

2010-M06 1342205 69.04641 1455841

2010-M07 1391786 69.11474 1496609

2010-M08 1683012 69.17916 1393738

2010-M09 1617571 69.18572 1563642

2010-M10 855785 69.78913 1161274

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

import trend (in mil USD)

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

export trend (in mil USD)

Foreign Remittance

import trend (in mil USD)

import

export trend (in mil USD)

export



REGRESSION ANALYSIS OF IMPORT VOLUME VS EXCHANGE RATE

Running the analysis with the data using spss the report that generated:

Variables Entered/Removedb

Model Variables Entered

Variables

Removed Method

1 exchange ratea . Enter

a. All requested variables entered.

b. Dependent Variable: Import vol

Model Summary

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .244a .059 .034 1.79733E5

a. Predictors: (Constant), exchange rate

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 7.555E10 1 7.555E10 2.339 .135a

Residual 1.195E12 37 3.230E10

Total 1.271E12 38


b. Dependent Variable: Import vol

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) 536726.574 442746.405 1.212 .233

exchange rate 10246.483 6700.223 .244 1.529 .135

a. Dependent Variable: Import

vol


Coefficientsa

Model


Standardized

Coefficients


1 (Constant) 536726.574 442746.405 1.212 .233

exchange rate 10246.483 6700.223 .244 1.529 .135

We can say from the coefficient table that, the equation is

YExport = 536726.574mil + 10246.483mil * (exchange rate)

if the exchange rate increases or decreases by 1 tk against USD then the import

volume will be increased or decreased by 10246.483mil USD worth.

From the model summary table, we can say that R square is only .059. it means the

changes in exchange rate can only explain 5.9% of the change in import volume. It

also means that there are other important factors are there to influence the import

volume rate.Its also true that Bangladesh is using controlled floating exchange rate

with USD. The dispersion is not much significant for short time but with long time it

has some effects.

REGRESSION ANALYSIS OF EXPORT VOLUME VS EXCHANGE RATE

Model Summary

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .273a .074 .049 2.32013E5


ANOVAb


1 Regression 1.598E11 1 1.598E11 2.969 .093a

Residual 1.992E12 37 5.383E10

Total 2.152E12 38



ANOVAb


1 Regression 1.598E11 1 1.598E11 2.969 .093a

Residual 1.992E12 37 5.383E10

Total 2.152E12 38

b. Dependent Variable: export vol

Coefficientsa

Model


Standardized

Coefficients


1 (Constant) 156722.528 571528.004 .274 .785

exchange rate 14903.507 8649.116 .273 1.723 .093

a. Dependent Variable: export vol

We can say from the coefficient table that, the equation is

Yimport = 156722.528mil + 14903.507mil * (exchange rate)

If the exchange rate increases or decreases by 1 tk against USD then the import

volume will be increased or decreased by 14903.507mil USD worth.

The R square value is .074, which means the changes of exchange rate can influence

only 7.4% of the variation of import volume.

23.5. PROBLEM OF FOREIGN EXCHANGE IN BANGLADESH

As a developing country, here there is a great opportunity to expand a business

easily. Human resources cost are also cheap. On the other hand people have strong

faith to the banking sector. But this sector is not free from problems. Some

challenges of the banking sector are:

1. Global economic crisis which decreases the consumptions of goods and also

the exports.

2. Withdrawal of restriction on China for RMG export to Europe and USA in

2009.

3. Export volume has dropped due to lack of global demand.

conclusion 52

4. Lack of diversification, especially for export sector.

5. Very high dependency on Textile and RMG Sectors to export.

6. In case of import prices of commodities and raw materials in international

market.

7.Slow recycling of investment of commodity in commercial sectors.

8 . Low level of project Finance in 2007, 2008 & 2009 due to the

national political instability.

It is clear that the Janata Bank Limited Foreign Exchange department has ensured

both quality and services which helps to improve the overall status of the Bank. For

this reason Janata bank Limited has able to achieve second position in country and

top position among public banks in export sector in 2009. However the branch may

have scope to improve in a few areas. Such as-

01. Insufficient number of exporter and importer is not enough to achieve the goal

who operate through this bank. So JBL should offer more facilities to attract their

clients.

02.. It is a crying needto provide more quality services to their clients in order to

compete in the market.

CONCLUSION

Nearly edge is seen while inspecting the Foreign Exchange Department of Janata

Bank Ltd.’s success. That means, this bank successfully finished last year with an

appreciable performance .JBL attained first place in the last year among the

government banks forit’s flawless completion of blending of solid quality and sincere

service.

For a greater achievement and attain more priority among the customers and clients

JBL can walk through the way under some precision direction:

o JBL should approach more attractive facilities with clear go ahead.

o To survive in the cut throat competition JBL must step into launching ATM

service as well as debit and credit card facilities.

conclusion 53

o Banking sector moves toward a very newer and wider type of voyage that results

in ending up with some critical marketing overkill. Now a dayspeople are looking

for a further opportunity to have some scheme in the same bank from where

they have collected the remittance.

o Total revival of investment of commodity in commercial sector requires a very

rapid and complete action to provide a more accurate and fast recycling of

invest/

o Less interesting export facilities should be proven improved.

o Finding out the newer destination of our export goods and ending up with being

adjusted with the newer sector’s customs.

o With successful promotional programs JBL can attract more people from this

particular walk of life.

o The overall matter of foreign remittance should be driven under a complete

computerized system having a main server country wide to keep up a congenial

environment.

Reference 54

REFERENCE

1. JANATA BANK LTD WEBSITE

2. JANATA BANK ANNUAL REPORTS

3. EXPORT PROMOTION BUREAU

4. TRADEMAP.ORG FOR IMPORT EXPORT DATA

5. EXCHANGERATE.COM

a. (http://www.exchangerate.com/past_rates.html?letter=B

&continent=&cid=239-

USD&currency=20&last30=&date_from=09-30-

2007&date_to=01-04-2011&action=Generate+Chart)

6. SWIFT.com