CHAPTER # ONE

1.1 Introduction

In service sector banking is a very emerging field in today’s family and business life. In our
country banking is profitable industry than many other countries of the world. After the
liberation war, most of the bank was under government control. In my report, I am going to
show the services that Agrani Bank Limited is offering to the market in foreign exchange.

With globalization, our country also takes part in the global and international business.
Manpower is now a very potential sector of government to export. There is no need to
explain how much we are being engaged with foreign exchange. My report is an effort to
introduce all the services of ABL regarding foreign exchange. My other objective is to show
how it is to take part in the international business. It is a way to encourage our business men
to take part in the import-export business. And the last one is how foreign exchange affects
our country’s economy, our family life and soon.

The internship program is helping students to come close to the real business world. As a
Business student of Accounting, this three-month internship program works as a training
program before step in the real corporate world.

1.2 Origin of the Report

The proposed internship report on which the assigned internship program has conducted is
Foreign Exchange Operations of Agrani Bank Limited. This report is a partial requirement of
the MBA program. Before preparation, this report three months organizational attachment
period has been completed successfully. My assigned organization to the needful is Agrani
Bank Limited (ABL), a leading government Bank in Bangladesh.

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1.3 Objectives of the Study

The objective is an important thing for the different purpose. Objective helps to go in a good
way that relates to the Report. The primary objective is to learn the real world experience
because I have gathered theoretical knowledge of MBA program and try to match real-world
experience with the theoretical knowledge.

1.3.1 Broad Objective

The broad objective of this report is to Foreign exchange operations of Agrani Bank Ltd.
(ABL).

1.3.2 Specific Objectives

Furthermore, the specific objectives of this report are:-

 To know the import, export financing procedure through ABL.

 To analyze the trend of import and export financing through ABL.
 To examine the division wise import and export financing and remittance.
 To analyze the earnings from foreign exchange division of ABL.
 Assessment of the ABL’s import, Export, foreign Remittance with total national
import, export, foreign remittance

1.4 Significance of the Study

The report prepared to fulfil the requirement of the internship program of the MBA program
in the Department of Accounting and Information System, Jagannath University. The Banks
provide different types of product and services to its counterparts like, Foreign Exchange
services or finance or investing that results transaction of currency. To do this, they also need
capital, assets and other resources. These elements of business results, changes in their
capital, assets and other factors which effects directly in the bank’s performance. This report
will be helpful to understand the performance of the Agrani Bank Limited, compare to some
other local Banks and as well their strengths and weaknesses. As a result, we can easily rank
the Banks position which will give us the idea of Banks capabilities.

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1.5 Methodology of the Study

1.5.1 Primary Data:

 Personal interview- face to face conversation and in-depth interview with the
respective officers of the branch.
 Personal observation- observing the procedures of banking activities (import)
followed by the department.
 Practical work exposure on the import section of the branch.
 Informal conversation with the client or customers.

1.5.2 Secondary Data:

Secondary data sources can be identified as follows-

1. Internal Sources:
 Annual report of Agrani Bank Limited.
 Periodicals published by Bangladesh Bank
 Official website of the Agrani Bank Limited.

2. External Sources:
 Relevant books, journals, newspapers and different newsletters
 For better interpretation, some data had been collected through Internet Browsing.

1.6 Scope of the Study

The main scope of the study is it obtain a clear idea about the foreign exchange business of
our banking operation i.e. the L/C is opened and how the import & export is done. The other
scopes are as follows.
 To fulfil the requirement of another MBA program.
 To evaluate the performance of the Agrani Bank limited, and its import and export
 business.
 To recommend about foreign exchange business of the Agrani Bank limited.

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1.7 Limitations of The Study

From the beginning to end, the study has been conducted with the intention of making it’s a
complete and truthful one. However, many problems appeared in the way of conducting the
study. During the study, it was not possible to visit the whole area covered by the banks
although the financial statements and other information regarding the study have been
considered. The study considers the following limitations:

Limitation of time was one of the most important factors that shortened the present
study. Due to time constraints, many aspects could not be discussing in the present
study.
Lack of comprehension of the respondents was the major problem that created many
confusions regarding verification of conceptual questions.
Confidentiality of data was another important barrier that was faced during the
conduct of this study. Every organization has their own secrecy that cannot be
revealed in public.
Rush hours and business was another reason that acts as an obstacle while gathering
data.
As, I had more dependence on the primary sources, so there might be some level of
inaccuracy with that collected information.
Insufficient books, publications, Facts and figures narrowed the scope of accurate
analysis.
ABL does not have a rich and wealthy collection of various types of banking related
books and journals.

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 CHAPTER # TWO

Agrani Bank Limited, a state owned leading commercial bank with 952 outlets strategically
located in almost all the commercial areas throughout Bangladesh, overseas Exchange
Houses and hundreds of overseas Correspondents, came into being as a Public Limited
Company on May 17, 2007 with a view to take over the business, assets, liabilities, rights and
obligations of the Agrani Bank which emerged as a nationalized commercial bank in 1972
immediately after the emergence of Bangladesh as an independent state. Agrani Bank
Limited started functioning as a going concern basis through a Vendors Agreement signed
between the ministry of finance, Government of the People's Republic of Bangladesh on
behalf of the former Agrani Bank and the Board of Directors of Agrani Bank Limited on
November 15, 2007 with retrospective effect from 01 July, 2007.

Agrani Bank Limited is governed by a Board of Directors consisting of 10 members headed

by a Chairman. The Bank is headed by the Managing Director & Chief Executive Officer;
Managing Director is assisted by Deputy Managing Directors and General Managers. The
bank has 11 Circle offices, 36 Divisions in head office, 52 zonal offices and 952 branches
including 34 corporate , 42 AD (authorized dealer) branches and 5 subsidiary companies.

Agrani Bank Limited (ABL) is the first state-owned Commercial Bank in Bangladesh
to introduce Agent Banking. Currently ABL has 200 agent booths that are operating Agent
Banking activities around the rural areas of Bangladesh. In Agrani Bank Limited, Islamic
Banking system is operated under 'Islamic Banking Unit' since February 28, 2010 through 5
Islamic Banking Windows.

2.1 Vision

To operate ethically and fairly within the stringent framework set by our regulators and to
assimilate ideas and lessons from best practices to improve our business policies and
procedures to benefit our customers and employees.

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 2.2 Mission

To become the best state-owned commercial bank of Bangladesh operating at the

international level of efficiency, quality, sound management, excellent customer service and
strong liquidity.

2.3 Values

We value integrity, transparency, accountability, dignity, diversity, growth and

professionalism to prove to all our customers and stakeholders inside and outside the country.

2.4 Motto

To adopt and adapt modern approaches to stand supreme in the banking arena of Bangladesh
with a global presence.

2.5 Strategic Objectives of Agrani Bank Limited

 Gaining competitive advantage by lowering overall cost compared to that of

competitors.
 Overtaking the competitors by proving good quality customer service.
 Strengthening research capability for innovative products.
 Strengthening the Bank’s brand recognition.
 Achieving technological leadership among the peer group.
 Winning at least 6.50 percent share of deposits and 5.50 percent share of loans and
advances of Bangladeshi market.
 Contributing to the economic well-being of the country by focusing particularly on
remittance, SME and agricultural sectors.

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 2.6 Agrani Bank Limited at a Glance

Corporate Structure (As on 31st December 2017)

Name Agrani Bank Limited
Public Limited Company (Business conducted as per the Bank
Legal Status
Companies Act 1991)
Registered Office 9/D Dilkusha, Dhaka 1000, Bangladesh
Date of Incorporation 17 May 2007 under the Companies Act 1994
Date of Commencement of Business 17 May 2007
Chairman Dr. Zaid Bakht
Managing Director & CEO Mohammad Shams-Ul Islam
Company Secretary Khandaker Sajedul Haque
Authorized Capital Tk. 2500.00 Crore
Paid up Capital Tk. 2072.29 Crore
Number of Branches 946
Number of ATM Booth 1200
Number of Circle Office 11
Number of Zonal Office 53
Number of Corporate Branch 34
Number of Authorized Dealer (AD)
42
Branch
Number of Foreign Correspondent 335
Number of Employees 13,269
SWIFT Code AGBKBDDH
Alpha Credit Rating Limited rated on Short-Term
Long-Term
December 04, 2017
Entity Rating 2016 (as Govt. ST-1
AAA
Credit Rating Guaranteed Bank)
Surveillance Rating 2016(Stand ST-3
A-
None Basis)
Outlook Stable

Table 1: ABL Corporate Structure

Source: ABL, Annual Report 2017

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2.7 Hierarchy of Agrani Bank Limited

Figure 1: Hierarchy of ABL

Source: Taken From Official Website of ABL

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2.8 Products and Services of Agrani Bank Limited

2.8.1 Accounts and Deposits

i. Current Account: Current account means any account which pays little or no interest
but form which the customer can withdraw money when he wants by writing cheque
during a working day. This type of accounts may be established in the name of
individual or firms. This account is best suited for a businessman.

ii. Savings Accounts: Savings Bank Account can be opened in any branch of Agrani
Bank by any Bangladeshi citizen in the name of an individual or a group of
individuals which can be operated singly or jointly.

iii. Fixed Deposit Receipt (FDR): Opening a Fixed Deposit Account for different terms
with any Branch of Agrani Bank Limited is very simple. Any individual or a group of
individuals can step into any Branch of Agrani Bank Limited, fill out a prescribed
form, hand over cash or easily cashable instrument of any amount and leave the
Branch with a Fixed Deposit Receipt.

2.8.2 Loans and Advances

i. Term Loan: The Bank takes collateral against giving any Term Loan to a firm.
Bank prefer short-term loan (like- current assets, accounts receivable and inventory)
which can be transferred into cash much sooner than fixed assets.

ii. Secured Overdraft (SOD): In it, Bank takes the security of customer’s FDR or
balance in DPS/SDPS/ MDS/ SDS/ EDS A/Cs are marked as a lien.

iii. Transport Loan: To buy any type of transport, the borrower applies for this loan.
Here, the collateral is only that transport which the borrower will buy by this
Transport Loan.

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iv. House Building Loan: For giving this house loan the Banks takes collateral of that
house’s land and building.

2.8.3 Business Account

a. Import Finance

i. Loan against Imported Merchandise (LIM): This type of finance is offered to

the importer to finance their needs for meeting the cost including freight,
insurance, and customs and excise duty payable on the imported merchandise. The
lending bank mostly pledges the imported goods. The merchandise is released for
the use of the importer (borrower) upon repayment of the banks' finance and
charges either fully or partially, on the production of the Delivery Order issued by
the banker in favour of the borrower.

ii. Loan against Trust Receipt (LTR): This is a loan against a Trust Receipt
provided to the client when the documents covering an import shipment are given
without payment. Under this system, the client will hold the goods of their sale
proceeds in trust for the bank, until the loan allowed against the Trust Receipt is
fully paid. We provide LTR to manage immediate liquidity of importers.

iii. Loan against Export Development Fund (EDF): The bank provided EDF Loan
to the eligible exporters for enhancing export.

iv. Payment against Documents (PAD): This is a Short Time Loan provided to the
importer for delivery the shipping documents in order to release imported goods.

b. Export Finance

i. Pre-shipment Credit: The bank provides pre-shipment finance in the form of

Export Packing Credit (PC) and Back to Back Letter of Credit to assist for export
from Bangladesh.

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 ii. Packing Credit: the Bank provide pre-shipment finance in the form of Export
Packing Credit to manage Exporters cash flows for the purpose of procuring raw
materials, manufacturing, processing, transporting, warehousing, packing,
shipping of goods, etc.

2.8.4 Services

i. ATM Services: Agrani Bank Limited has launched Debit card under Q-cash
brand shared ATM network system maintained by Information Technology
Consultants Limited (ITCL). At present more than 26 banks are the members of
this Q-Cash branded shared Network and more than 1200 ATMs are in operation
in the network.

ii. SWIFT: The Society for Worldwide Interbank Financial Telecommunication

("SWIFT") operates a worldwide financial messaging network which exchanges
messages between banks and other financial institutions. SWIFT was founded in
Brussels, Belgium in 1973, supported by 239 banks in 15 countries. Agrani Bank
Limited is a member of SWIFT.SWIFT code is AGBKBDDH. Different 35
branches of the bank are connected with SWIFT through SAP (SWIFT Access
Point).SWIFT is operated via a dial-up connection and receives & sends messages
from the central server.

iii. Locker Service: For safekeeping of customers' valuables like important

documents and goods like jewellery and gold ornaments, Agrani Locker Service is
available in most of the Branches in urban areas.

iv. Agency Services: Agrani Bank Limited, is a state-owned Bank, has both
commercial commitments to its clients and societal commitment to the nation.
Besides catering service to its clients at nominal fees/charges the Bank has to
provide a plethora of services, free of charges, in respect of transferring money to
different benevolent organizations and groups of professionals in far-flung areas
through its branches in urban and rural areas all over Bangladesh.

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 CHAPTER # THREE

3.1 Introduction

Foreign exchange means foreign currency and includes all deposits. Foreign trade can be
easily defined as a business activity, which transcends national boundaries. Foreign trade can
usually be justified on the principle of comparative advantage. It is economically profitable
for a country to specialize in the production of that commodity in which the producers have
the greater comparative advantage and to allow the other country to produce that commodity
in which it has the lesser comparative advantage. In order to conduct foreign exchange
operation systematically and methodically the Foreign Exchange Regulation (FER) Act, 1947
enacted on the 11th March 1947 for regulating receipts and payments and dealings in the
foreign exchange and securities. Basic regulations for conducting foreign exchange operation
are issued by the Government as well as by the Bangladesh Bank.

3.2 Definition of Foreign Exchange

Foreign exchange is a process which converts one national currency into another and
transfers money from one country to other countries. Foreign exchange is that section of
economic science which deals with the means and method by which right to wealth in one
country’s currency is converted into the right to wealth in term of another country’s currency.

3.3 Foreign Exchange Accounts

i. Nostro Account: Nostro account means “our account with you”. A nostro
account is a foreign currency account of Agrani Bank maintained by its foreign
correspondents abroad.

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 ii. Vostro Account: Vostro account means “your account with us”. The account
maintained with a foreign correspondent in Agrani Bank of a particular country is
known as Vostro account.

iii. Loro Account: Loro account means “their account with you”. The account
maintained by the third party is known as Loro account.

3.4 Foreign Exchange Services

ABL is rendering various kinds of services in the international transaction of their clients.
Some are described below:

3.4.1 L/C Opening

Bangladesh is mainly an import oriented country. So, L/C is a very important import
document which is issued by ABL. In the international market, two parties are not known to
each other. The importers of Bangladesh give an L/C to exporters of a foreign country to give
the assurance of payment. ABL is opening L/C in favour of their clients.

3.4.2 Export Processing

When exporters’ foreign document comes to ABL, ABL collects payment from a foreign
bank for its party. ABL purchase bill if their party will need early cash.

3.4.3 Back to Back and Local L/C:

In against of export L/C ABL give the facility to open Back to Back and Local L/C.
3.4.4 Dollar Sale and Purchase

ABL sells dollar against passport. The rate of exchange is given by Bangladesh Bank which
is changed every day.

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3.4.5 Loan Facilities

Loan facility is given to clients to help in foreign exchange. Different types of loan facilities
are –
(a) PAD
(b) LTR
(c) LIM
(d) Demand loan
(e) FBP
(f) IBP
(g) PC

3.4.6 Customers

ABL is a well-known bank is foreign exchange business. It is helping the business and people
working abroad from the very beginning. The parties of ABL in foreign exchange are as
follows:

Serial No. Kinds of parties

1. Importer’s of bicycle parts
2. Importer’s of chemical
3. Importer’s of fresh fruits
4. Importer’s of parts & capital machinery
5. Importer’s of garments accessories
6. Exporter’s of garments items
7. People working abroad
8. Resident & Non – resident Bangladeshis
9. Government parties working abroad
10
People travelling from Bangladesh and to Bangladesh

Table 2: Customers in ABL

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3.5 Functions of Foreign Exchange

Agrani Bank
Limited

Foreign Exchange
Department’s

Import Export Remittance

Figure 2: Functions of Foreign Exchange

Import:
The opening of the letter of credit (L/C)
Advance bills
Bills for collection
Import loan and guarantees

Export:
Pre-shipment advances
Purchase of foreign bills
Negotiating foreign bills
Export guarantees
Advising/ confirming letters-letter of credit
Advance for deferred payments exports
Advance against bills for collection

Remittances:
An issue of DD, MT, TT etc.
Payment of DD, MT, TT etc.
Issues and enhancement of travelers cheque.

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 Sale and enhancement of foreign currency notes.
Non-resident accounts.

3.6 Import Section

Import is the flow of goods and services purchased from one country to another. Hence,
import of merchandise essentially involves two things: bringing of goods physically into the
country and remittance of foreign exchange towards the cost of the merchandise and services
connected with this to the importer. In the case of import, the importers are asked by their
exporters to open letters of credit so that their payment against goods is ensured. ABL
provides different services to the importer of Bangladesh.

3.6.1 Import Procedures

ABL provides different services to the importer of Bangladesh. To get an import facility the
party must have the following requirements-
 Current deposit Account (CD)
 IRC (Import registration certificate)
 Mortgage
 TIN Number.
 Insurance policy
 Proforma Invoice / Indent.
 Membership certificate from a recognized Chamber of Commerce and Industry or
Town Association or registered Trade Association.
 Letter of Credit Authorization (LAC) Form properly filled in quintuplicate signed by
the importer.
 L/C application duly signed by the importer.
 One set of IMP Form.
 Insurance Cover Note with money receipt.
 A bank account with the branch.
 Import Registration Certificate (IRC).
 Tax Payer’s Identification Number (TIN).

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  VAT Registration Certificate (for Commercial Importers).
 In the case of 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 are issued by the
Chief
 The controller of Imports & Exports (CCI&E) from time to time.

3.6.2 Import Business

The foreign exchange market was relatively stable throughout the year. In the year 2017 total
import of Bangladesh increased by 9.0 percent and stood at USD 47,005 Million as compared
to total import USD 43,122 million in the year 2016. Total Import of ABL in 2017 was BDT
13266.61 Crore which is 3.52 percent of total import of Bangladesh. The major imported
item through ABL was petroleum & petro-products, industrial raw materials, capital
machinery, machinery for misc. industry, raw cotton, chemical, food grains, medicine, milk
and cream, spices, pulses, sugar, POL, plastic and rubber articles etc.

Figure 3: Import Business of ABL

Sources: ABL, Annual Report 2017

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3.6.3 Import Financing Sectors of Agrani Bank Ltd

Agrani Bank is the major financier of import business in our country. In extend credit, grant
and other facilities, Agrani Bank finances to the following sectors:
Machinery and transport equipment.
Petroleum and petroleum products.
Textile, yarn, fabrics, article and related products.
Chemicals and iron and steels.
Cereal and cereal preparations.
Dairy products and eggs.
Other including loans and grants.

3.6.4 Import Systems of Agrani Bank Ltd

Registration of import.
Income tax registration certificate.
Partnership deed in the case of partnership concern.
Certificate of registration with the register of joint stock companies.
Articles and memorandum of association in the case of limited companies.
Nationality certificate and bank certificate.
Ownership documents in place of business.
Trade license from the relevant authority.
Survey clearance from the relevant authority.
Other documents prescribed in the import policy

3.6.5 Import Scrutiny

The import bills consist of the following documents and the order of their scrutiny should be
as below:
Forwarding schedule of negotiating bank.
Bill of exchange.
Invoice.

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 Bill of lading
Insurance documents.
Certificate of origin.

3.6.6 Import Bills Retirement

The banker will prepare and pass retirement vouchers.

The importer will deposit the claim amount.
Certifying invoices and entry in the register.
Endorsement in the bill of exchange and transport documents i.e. Bill of Lading.
At the end of the total procedure, taking the retirement of import bills or clearing
certificate from the bank, the importer will clear the goods from the port through the
clearing and forwarding agent.
On the other hand, completing the above all steps the issuing bank will prepare
"foreign exchange transaction schedule" and send one copy to the international
division of head office and another one copy to reconciliation.

3.6.7 Risk of Import Financing

In the trade - there are so many risk factors involved. In the banking sector, the bank faces risk
basically from loans and advances and foreign exchange. In this section, I will discuss the risk of
import financing. There may be abrupt changes in the socio-economic or political situation in the
buyer's country or in the seller's country. Even the exchange value of currencies of the two
countries had gone so much down that they were not acceptable or exchangeable in the
international market. Moreover, the importer or the exporter may not be able to comply with the
terms of credit for some reasons. Agrani Bank has to consider the following risk in financing the
import procedure:-

(a) Commercial Risk

Violation of the requirement of a letter of credit authorization or letter of credit.

Import against indent and Proforma Invoice.

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 (b) Political Risk

The sudden outbreak of war, revolution, coups or civil disobedience in the seller's
country.
Imposition of restriction on remittance.
Imposition of trade embargo or blockade.
New import restriction on the buyer or cancellation of the license.
Additional handing transport or issuance charges due to interruption or diversion of the
voyage, which can't be recovered from the buyer.

(c) Informational Risk

There may be an informational risk inherent in import financing on the importer because of a
shortage of required information. So it is much harder to judge the financial strength, reputation
and integrity of a seller or buyer who is thousands of miles away and belongs to a different
culture.

3.7 Export Section

Export is the process of selling goods and services to other countries. Creation of wealth in any
country depends on the expansion of production and increasing participation in international
trade. An exporter is who exports the goods to another customer whether in the domestic
country or abroad. In exporting the stipulated goods, he may require financing. So export
financing may be required at two stages:

a) Pre-shipment credit
b) Post-shipment credit

a) Pre-shipment Credit

Pre-shipment credit is the credit which is given to finance the export activities of an exporter
for the actual shipment of goods. The purpose of each credit is to meet the working capital

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needs from the procuring of raw materials to the transportation of goods for the export of the
foreign country.

b) Post-shipment Credit

There is a time gap between the export of the goods and the realization of the proceeds. So
exporter may require finance in that period to continue his business. So Agrani bank may
finance against export documents ensuring the following:

Export documents comply with the credit terms.

Party’s past performance is satisfactory.
Any other security in case of exporting under contract.

3.7.1 Export Procedures

There are a number of formalities which an exporter has to fulfil before and after shipment of
goods. These formalities or procedures are enumerated as follows:
Obtaining Export Registration Certificate (ERC).
Securing the Order.
The signing of the Contract.
Receiving the Letter of Credit.
Endorsement on EXP.
ABL permit 50% to 70% loan against the mortgage. Other loan facilities are –
1. Back to back- 75% of export L/C
2. Cash credit-90% in FDBP
3. Packing credit (PC)- 90% of export L/C

3.7.2 Export Business

In the year 2017, the total export of Bangladesh increased by 1.69 percent and stood at USD 34,835
million as compared to total Export USD 34,257 million in the year 2016. Total export of ABL in 2017
was BDT 7,059 Crore which is 2.53 percent of the total export of Bangladesh. The major exported
item through ABL was knitwear and woven garments, tea, raw jute, jute goods, footwear, leather

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goods, frozen foods, leather and handicraft products, engineering products, plastic products, cotton and
cotton products, chemical products etc.

Figure 4: Export Business of ABL

Source: ABL, Annual Report 2017

3.7.3 Export Financing Sectors of Agrani Bank Ltd

Export financing can play a vital role in the development process of Bangladesh. With
earning on export, we can meet our import bills. The export trade is always encouraged
because the major portion of foreign exchange earnings is derived from export. Because of
the shortage of adequate capital exporters have to come in contact with the commercial bank
and financial institution to get finance from them. Agrani Bank as a commercial bank
provides certain facilities to the exporters to boost up export earnings. The traditional and
non-traditional sectors in which Agrani Bank provides export-financing facilities are as
follows:

Ready Made Garments in all sorts.

Jute manufactures.
Jute - raw and Mesta.
Fish and Prawns.
Hides, Skins and Leather.
Tea and Fertilizer etc.

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3.7.4 Export Financing System of Agrani Bank Ltd

Bangladesh as a developing country depends mainly on foreign exchange earnings for its
development activities. The major portion of foreign exchange earnings is derived from export
obviously, to boost export; the government provides certain incentives to the exporters namely:
Export financing.
Development financing.
Export credit Guarantee Scheme.
Export performance benefits.
Duty Drawback.
Rebate on duty and tax.
Income tax rebate.
Insurance premium rebate.
Conditional cash subsidy to garments industry etc.

3.7.5 Risk of Export Financing

While there are many advantages to exporting, it is not without risk. Indeed, there are often factors
present in the international market, which makes foreign exchange substantially more risky
than domestic ones, including the credit risk of non-payment or non-acceptance of the
merchandise by the buyer. For international sales, these risks are far more pronounced than they
are domestically. For these reasons, Agrani Bank also accompanied with elements of uncertainty
some which are as follows:

(a) Commercial risk

Insolvency of the overseas buyer, which results in non-realization of export proceeds.

Failure of the buyer to retire credit already accepted by him/her in case of stance bill
within the stipulated period.
Willful negligence of the importer to accept of pay bill or to accept goods for no fault of the
exporter.

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 (b) Political risk

The sudden outbreak of war revolution or civil disobedience in buyer's country.

Imposition of restrictions on remittance on any government action in the buyer's country
which may block or delay payment.
Imposition of trade embargo or blockade against any country.
New import restriction on the buyer or cancellation of the license.
Additional handling transport or insurance charges due to interruption or diversion of the
voyage, which cannot be recovered from the buyer.
Bankrupt or closure of a bank or stoppage of operation of a bank may hamper repatriation
of exports proceeds of letters of credit opened by such a bank.
Any other cause of loss occurring outside the exporter's country beyond the control of
importer or exporter.

(c) Informational risk

Often credit information on the importer is not available or at best sketchy because buyers and
sellers live in the different socio-economic and political environment. It is much harder to
judge the financial strength, reputation, integrity of a buyer who is thousands of miles away and
belongs to a different culture.

(d) Pre-shipment export credit risk

Pre-shipment export credit risk involves the following additional risks:

There may be a diversion of the fund because of low-interest rate.
Uncertainties relating to non-availability of new materials may hamper processing of
exportable products.
The exporter may not be able to make shipment within the stipulated time due to power
failure, strike, natural calamities etc.
The materials under the back-to-back letter of credit may not reach well in time to allow
the exporter to process goods within the expiry date of the original export letter of credit.

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3.8 Documents Used in Foreign Exchange

(a) Letter of Credit (L/C)

Letter of Credit is an undertaking by a banker of the importer to the exporter, to the effect that the
amount of the L/C will be duly paid. The banker on behalf of the importer issues the L/C in favour of
the exporter (beneficiary) and forwards the same to the exporter to the effect that the bill drawn by him
shall be duly accepted and paid.

(b) Bill of Exchange

A bill of exchange is an instrument in writing, containing an unconditional order, signed by the maker,
directing a certain person to pay on demand or on fixed or determinable future time a certain sum of
money only to or to the order of a certain person or to the bearer of the instrument.

(c) Bill of Lading

A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched by
sea. It is evidence of a contract of carriage, is a receipt for the goods, and is a document of title to the
goods. It also constitutes a document that is or may be, needed to support an insurance claim.

(d) Commercial Invoice

A commercial invoice is the accounting document by which the seller charges the goods to the buyer.
A commercial invoice normally including the following information:
Date, name and address of the buyer and seller.
Order or contract number, quantity and description of the goods, unit price and the total price.
The weight of the goods, the number of packages and shipping marks & number.
Terms of delivery & payment.
Shipment details.

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 (e) Inspection Certificate

This is usually issued by an independent inspection company located in the exporting country
certifying or describing the quality, specification or other aspects of the goods, as called for in the
contract and/or the letter of credit.

(f) Proforma Invoice or Indent

Seller’s quotation or agreement is between seller and buyer. In this, the seller declared the rate,
quantity, quality, manufacturing and other information about goods and that accepted by the buyer.

3.9 Letter of Credit (L/C)

Letter of Credit is an undertaking by a banker of the importer to the exporter, to the effect that the
amount of the L/C will be duly paid. The banker on behalf of the importer issues the L/C in favour of
the exporter (beneficiary) and forwards the same to the exporter to the effect that the bill drawn by him
shall be duly accepted and paid. It creates confidence in the mind of the exporter so far as payment of
the bill is concerned. It also facilitates the exporter to get the benefit of discounting the bill before the
date of maturity.

Forms of Letter of Credit

A letter of credit (L/C) may be two forms. These as follows:

i. A revocable letter of credit.
ii. An irrevocable letter of credit.

Revocable L/C: If any letter of credit can be amendment or change of any clause or cancelled by
consent of the exporter and importer is known as a revocable letter of credit.

Irrevocable L/C: If a letter of credit cannot be changed or amendment without the consent of the
importer and exporter is known as an irrevocable letter of credit.

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3.9.1 Parties of Letter of Credit Transaction

i. Issuing Bank

Issuing Bank is the bank who opens a letter of credit. Letter of credit is created by issuing bank who
takes responsibility to pay the amount on receipt of documents from a supplier of goods (beneficiary
under LC).

ii. Beneficiary party

The beneficiary is one of the main parties under the letter of credit. The beneficiary of Letter of credit
gets the benefit under Letter of credit. The beneficiary is the party under the letter of credit who
receives an amount under the letter of credit. The LC is opened on Beneficiary party’s favour.
Beneficiary party under the letter of credit submits all required documents with is a bank in accordance
with the terms and conditions under LC.

iii. Advising Bank

Advising bank is another party involved under LC. Advising bank, as a part of the letter of credit takes
responsibility to communicate with necessary parties under the letter of credit and other required
authorities. The advising bank is the party who sends documents under Letter of Credit to opening
bank.

iv. Confirming Bank

Confirming bank is one of the other parties involved in the Letter of Credit. Confirming bank as a party
of the letter of credit confirms and guarantees to undertake the responsibility of payment or negotiation
acceptance under the credit.

v. Negotiating Bank

Negotiating bank is one of the main parties involved under the Letter of Credit. Negotiating Bank, who
negotiates documents delivered to the bank by the beneficiary of LC. Negotiating bank is the bank that

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who verifies documents and confirms the terms and conditions under LC on behalf of the beneficiary
to avoid discrepancies

vi. Reimbursing Bank

Reimbursing Bank is one of the parties involved in an LC. Reimbursing bank is the party who
authorized to honour the reimbursement claim of negotiation/ payment/ acceptance.

vii. Second Beneficiary

The second beneficiary is one of the other parties involved in the Letter of Credit. The second
beneficiary who represent the first beneficiary or original beneficiary in their absence, wherein the
credits belongs to the original beneficiary is transferable as per terms.

3.9.2 Procedure for Letter of Credit Opening

After completion of the previous particulars, then the party take the money and bank give a letter of
credit to the party by checking the declared particulars of the party. Then one copy sends to the
beneficiary/ negotiating bank. The beneficiary bank sends the document to the exporter. The exporter
is the beneficiary bank for shipment of the goods. Then the beneficiary bank sends back to the letter of
credit opening bank. The LC opening bank scrutinizes the documents and sends to the importer. When
the importer accepts the documents then LC opening bank do lodgment (it is the payment procedure in
lodgment voucher). The party goes for customs clearing. After clearing the importer to submit the
customs "Bill of entry" certificate within four months to the LC opening bank. The LC opening bank
matching the documents and report to the Bangladesh Bank within the month of the retirement of LC.
Then the letter of credit is fully closed.

3.9.3 Required Documents For Letter of Credit Opening

Following documents are needed to open LC-

 Proposal letter.
 Application and agreement for irrevocable LC with the adhesive stamp of TK.150.
 Import license.

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  TIN.
 VAT registration.
 Indenting certificate.
 Performa invoice - two copies.
 LCA (Letter of Credit Authorization) form for industrial consumer.
 Signature of director of the firm and manager of Agrani Bank.
 IMP form - Four copies.
 Money receipts of insurance policy.
 After preparing the procedure the bank provides an offer in prescribed "offering sheet".
 Approval certificate of Bangladesh Bank on behalf of the importer.

3.9.4 Services Provided by Bank Against Export L/C

A. Advising of export L/C:

The advising bank getting the import L/C sent by the issuing bank located abroad will advise the L/C
to the beneficiary without any engagement or responsibly on their part. It will see the following only:
i. The authenticity of L/C (Test agreed in case of Telex L/C and signature verified in case air
mail L/C.
ii. Merchandise specified in the L.C is permissible and clauses incorporated in the L/C are not
against country’s regulations.

B. Add Confirmation of Export L/C

The bank may add additional confirmation to export L/C where there is specific instruction from the
L/C issuing bank to do so. Additional confirmation of L/C gives the seller a double assurance of
payment. Bank’s requirement of adding confirmation:
 Issuing Bank should be a reputed bank.
 Credit line/ Arrangement with the L/C issuing bank.
 L/C clause is to be acceptable to confirming bank
 Approval from the competent authority for adding confirmation of export L/C/
 Confirmation charges are to be recovered as per rules.

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 C. Negotiating of Export L/C

Documents/papers to be submitted by the exporter to the bank for negotiation/ collection against export
L/C. The exporters submit the documents to the bank as per requirement of the bank. List of export
documents is as follows:
a) Export L/C
b) EXP Form
c) Bill of exchange
d) Invoice
e) Bill of Lading
f) Packing List
g) Certificate of Origin
h) Inspection Certificate
i) Insurance Document
j) Weight List
k) ERC (Export registration certificate)
The bank must scrutinize all the documents stipulated in the credit with reasonable care to ascertain
whether they conform with the terms of the credit, the bank may negotiate and pay the value of export
bill to the exporter at:
OD buying rate (Sight Draft)
Usage rate (For DA Bill)
Appropriate rate (For DP Bill)

D. Foreign Documentary Bill Collection (FDBC)

If the export document is not purchased by ABL it is called Foreign Documentary Bill Collection. At
the maturation date of export, bill ABL collects the payment for the party. The collection process is the
same as LDBC. Only the postage charge is high. The postage charge is Tk. 800 within SAARC
countries within Asia Tk.1500 and outside Asia is Tk. 2000.

E. Foreign Documentary Bill Purchase (FDBP)

If the exporter needs money before that the maturation of export document. He/ She can sale it to ABL.
It is called Foreign Documentary Bill Purchase.

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3.9.5 Back to Back or Local L/C

In against of export L/C, ABL give the facility to open back to back and local L/C. If the exporter
exports the garments products as a shirt, then he has to also purchase the bottom, logo, tag, yearn etc.
for the shirt. And in this case, if the exporter has not enough money to purchase that, then the bank
would help the exporter to purchase the accessories by the lien of the L/C. There are four parties in
back to back L/C or local L/C:

Opening/
Issuing bank
(ABL)

Back to Negotiation
Beneficiary Back and or Advising
Bank
Local L/C

Applicant

Figure 5: Parties of Back to Back L/C or Local L/C

3.9.6 Kinds of Back to Back L/C

Back to Back L/C can be divided into two types: Foreign and local.

Figure 6: Kinds of Back to Back L/C

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 1. Foreign Back to Back L/C

ABL issue or advice this kind of L/C. It is opened against a master L/C to do business aboard.
Payment is given in another country.

2. Local L/C

Local back to back L/C is opened against a master L/C to pay the local businessman. Local
L/C can be divided into two types:

a. Cash L/C

It is the L/C normally open for a bank acceptance. No master L/C is needed. Sometimes
people want a bank guarantee. It is one of them. It can be at sight and maybe defer.

b. Local Back to Back

It is used to do business in Bangladesh. It is opened against a master L/C. ABL receive a big
amount of profit from back to back L/C. ABL is not a mysterious entity. They are business
people just like the importers & exporter. They are in the business of lending money for the
purpose of financing attractive proposals. The suggestions they make can save considerable
expense and Tim of an international businessman. ABL can work as advising bank or issuing
bank.

3.10 Foreign Remittance Section

ABL has been able to keep the first position unchanged in the year 2017 to earn foreign
remittance among state-owned banks. ABL has earned $1313.77 million foreign remittances,
the highest among the state-owned banks and the second highest among all banks in
Bangladesh. Agrani Bank is accomplishing an important role by providing foreign currency
in the national economy and in the development of GDP as well as poverty reduction of a
rural community, employment generation and creating the opportunity to receive education
and healthcare. To create employment opportunities abroad, ABL is providing loan through

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‘ABJL’ project at a single digit interest. Up to December 2017, ABL disbursed BDT 65.9
million in this sector. Currently, we have an arrangement for bringing foreign remittance of
Bangladeshi diaspora living in Singapore, Malaysia, Canada, Australia, Brunei and so on.

3.10.1 Kinds of Remittance

All kind of remittance comes to the head office server of ABL SWIFT is used to transfer
money. When remittance comes to the head office it is sent to different branches for final
payment. Remittance can become & go in the following ways.
 Foreign T/T
 Mail Transfer (MT)
 Foreign demand draft (FDD)
 Import payment
 Travelers cheque
 Export cheque
 Cash dollars
 Credit card (International)

3.10.2 Money Transfer by Remittance Company

ABL has contact with online money transfer companies. They have 50:50 profit-sharing
contracts. The receiver need not to any given chance to the bank. The online companies’ are-
 Western Union.
 Money Gram.
 Xpress money payment.
 ABL quick pay.
 Cash express.
Western Union money transfer is very popular in Bangladesh. ABL is first to contract with
Western Union. As a result, inward remittance can come to Bangladesh in a minute from
anywhere of the world. People can collect from any branch of ABL from Bangladesh. For it,
the receiver doesn’t need any bank account with ABL and they don’t need to pay money.

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3.10.3 Steps for Money Collection

People can send money from any Western Union agent of the world. They deposit the money
and take a receipt and Money Transfer Controlling Number (MTCN)
The sender informs the receiver the follows:
• Amount of money
• Sender’s name
• Receivers name
• Country name
• MTCN

3.10.4 Money Transfer by Exchange House

Agrani Bank Limited maintains a strong network with the Overseas Exchange Companies
and Banks in different parts of the world ensuring better remittance services for its customers.
Agrani Bank has remittance arrangements with a different bank and exchange houses in
various countries throughout the world. The bank has earned the confidence and reputation as
a reliable organization of paying hard earned money of the expertly Bangladesh to their
beneficiaries in the country safely and quickly.

3.10.5 Outward Remittance

The term "Outward remittances" include not only remittance i.e. sale of foreign currency by
TT. MT, Drafts, Travelers Cheque, but also includes payment against imports into
Bangladesh and local currency credited to Non-resident Taka Accounts of foreign banks or
Convertible Taka Account.

Two forms are used for Outward Remittance of foreign Currency such as:

 IMP Form: All outward remittance on account of imports is done by form IMP.
 T.M. Form: For all other outward remittances from T.M. is used.

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3.10.6 Inward Remittance

The term" Inward Remittance" includes not only purchase of Foreign Currency by TT, MT,
Drafts etc. but also purchases of bills, purchases of Traveler's cheque.
Two forms as prescribed by Bangladesh Bank are used for the purchase of Foreign
Currencies such as.

 EXP Form: Remittances received against exports of goods from Bangladesh are done by
form EXP.
 Form C: Inward remittances equivalent to US$2000/- and above are done by Form" C".
However, a declaration in Form C is not required in case of remittances by Bangladesh
Nationals working abroad.

So I see that there are two types of foreign remittance:

Mode of Foreign Outward Remittance Mode of Foreign Inward Remittance

 Foreign Telegraphic Transfer  Telegraphic Transfer (TT).
(FTT).  Mail Transfer (MT).
 Foreign Mail Transfer (FMT).  Foreign Demand Drafts (FDD).
 Foreign Demand Drafts (FDD).  Payment Order (PO).
 Travellers Cheque (TC).  Travellers Cheque (TC).
 Foreign Currency Notes  Foreign Currency Notes.

Table 3: Types of Foreign Remittance

3.10.7 Foreign Remittance Business

Inward foreign remittance plays a pivotal role in our national economy. Agrani Bank Limited
is committed to disburse the hard earned money of our expatriates to their kith and kin in a
time effective way. Professional attitude, time-bound payment facility & technological
support in foreign remittance business make our bank first among the state-owned banks and
second among all banks in the Bangladeshi market for consecutive six years. Updated
technology, online remittance management system & spot cash remittance facility are playing

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a key role in our remittance flow. To keep it up, attention has been given on specialized
customer service and techno based distribution system.
Million USD
Year Total National Foreign ABL’s Share In Percentage (%)
Remittance
2013 13,831.65 1,622.58 11.73
2014 14,807.86 1,670.40 11.28
2015 15,316.94 1,699.25 11.09
2016 13,603.98 1,535.26 11.29
2017 13,538.32 1,313.77 10.00

Table 4: Remittance Scenario of Bangladesh from 2013 to 2017

Sources: ABL, Annual Report 2017

Figure 7: Remittance Scenario of Bangladesh (Million USD)

Sources: ABL, Annual Report 2017

3.10.8 Achievement of Foreign Remittance in 2017

Agrani Bank Limited is relentless to keep the momentum of remittance collection. In line
with our expansion policy our subsidiary, Agrani Remittance House Sdn. Bhd. Malaysia’s
branches number stood up to 6 after commencing operation of a new branch. Saudi
Investment Bank (SAIB) tied up & started operation with us in 2017. In the year we have

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been able to add more feathers to our cap by tying up with 3 more exchange houses and these
are Aman Exchange & Joyalukkas Exchange of Kuwait and Alwaneh Exchange of Jordan.
Agrani Bank Limited with its different exchange houses sponsored promotional program
during the festival to motivate our remitter to send the money through legal channel.

Figure 8: Foreign Remittance (BDT in Crore)

Sources: ABL, Annual Report 2017

Million USD
Name of Bank Year
2015 2016 2017
IBBL 3,883.29 3,234.14 2,645.75
Agrani Bank Limited 1,699.25 1,535.26 1,313.77
Sonali Bank Limited 1,458.46 1,225.62 1,055.38
Janata Bank Limited 1,302.01 1,188.46 878.34
Others Bank 6,973.93 6,420.50 7,645.08
Total 15,316.94 13,603.98 13,538.32

Table 5: Bank-wise Remittance Statement (2015-2017)

Source: ABL, Annual Report 2017

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 CHAPTER # FOUR

4.1 SWOT Analysis

SWOT Analysis is the detailed strategy of an organization’s exposure and potential in

perspective of its strength, weakness, opportunity and threat. This analysis used the
organization to make their existing line of performance also foresee the future to improve
their performance in comparison to their competitors.
By SWOT Analysis, an organization can also observe their current position. It can also be
considered as an important tool for making changes in the strategic management of the
organization.
The acronym SWOT stands for:

Strength

SWOT is an acronym for the internal strength and weakness of a firm and the environmental
Opportunity and Threat facing that firm. So if we consider Agrani Bank as a business firm
and analyze its strength, weakness, opportunity and threat the scenario will be as follows:
 Energetic as well as smart teamwork
 Good Management
 Lending rate is relatively competitive
 Cooperation with each other
 Membership with SWIFT
 Good banker-customer relationship
 Strong Financial Position
 Strong position in CAMEL rating
 Huge business area
 Service charges are comparatively reasonable.
 Strong corporate identity
 Young enthusiastic workforce
 Empowered Workforce

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Weakness

 Lack of proper motivation, training and job rotation

 Lack of experienced employees in junior level management
 Lack of own ATM services
 The tendency to leave the bank in quest of flexible environment
 Lack of proficient manpower in some department
 Limited advertising and publicity of bank’s products and activities

Opportunity

 The growth of sales volume

 Change in the political environment
 Launching own ATM card services
 Expansion of banking services into other different services
 Expansion branches of online

Threats

 Existing card services of Standard Chartered Bank or other private Bank

 Daily basis interest on deposit offered by HSBC
 The entrance of new PCB’s
 The government has been controlling industrial credit
 The recession of the global economy
 Intensification of competition in the industry

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 CHAPTER # FIVE

5.1 Findings

By analyzing the various data the following problems have been found:

One problem relates to modern technology of foreign exchange department, the bank
must try to adopt new technologies.
The officers are very helpful to the businessmen. Some of businessmen do not know
exactly the procedures of opening L/C.
The lengthy process of opening L/C is observed at Agrani Bank Ltd. of Ramna
Corporate Branch.
Lack of manpower of the export department.
Lack of depth knowledge and Analytical ability for writing import documents.
SWIFT is being used in some branches and the Head Office of the bank with
optimum security for trade finance related operation like documentary credit,
documentary collection, fund transfer, guarantee, etc. but not in all branches.
Foreign exchange-related charge fees are not clear to the customers.
Poor relationship with the foreign bank is observed at Agrani bank Ltd.
The database system of the foreign exchange department is not very systematic. Also,
documentation and filling process of the forms for foreign exchange operation is not
user-friendly, which sometimes wastes valuable time.
Operational risk may arise from error, frauds bake surprise improper processes due to
the lack of effective internal control and compliance mechanism.
Foreign exchange department has highly adhered with procedures; rules and
regulations provided by Bangladesh bank but most of the cases the officers are not
knowledge about this regulation and Acts.

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5.2 Recommendations

By identifying the above-mentioned problems during my internship, I would like to

recommend some way to overcome those problems. These are as follows:

 ABL should engage in more promotional activities, it should go for aggressive

advertising and promotional activities to get a broad geographic coverage. Corporate
Head Office should make some plans for all the branches located in different areas so
that the branches can get the maximum exposure from the surrounding areas.
 The interior should have to be renovated and modernized. As in today’s context, the
decoration of a facility and the interior is to be highly concerned by an organization.
 ABL should improve its service quality; otherwise, it will fall back of other private
commercial banks.
 ABL should make a database to maintain their registry records into the Computer. So
by only giving a ‘search’ command, they may find out their required clearing
information.
 Local L/C is not introduced in our society very much. Agrani Bank Ltd can give
attention to attract local businessman for convincing them about local L/C.
 Where computer leads every sphere of lives including banking activities most of the
ABL’s employees are still not expert on computer literacy. So for it, the management
should give computer training to their employees.
 They may make a database or search for other solution to prepare their debit and
credit voucher. As by adopting a better solution will make their work easier.
 Prompt attention should be given to the FDR customers if the bank does not want to
lose new customers.

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 CHAPTER # SIX

Many new commercial banks have been established in the last few years and these banks
have made the banking sector very competitive. So, now the banks have to organize their
operation and do their operations according to the need of the market. The major task for
banks, to survive in this competitive environment is by managing its assets and liabilities in
an efficient way. As an internee student of Agrani Bank Ltd at Ramna Corporate Branch, I
have truly enjoyed my internship from the side of learning to the side of experiences
viewpoint. During my intern period in the Agrani Bank Limited, Ramna Corporate Branch, I
worked under for all departments’ particularly general banking and foreign exchange
department of the bank. I am confident that the three-month internship program in Agrani
Bank Limited will definitely help me to realize a career in the job market. But during my
intern period, it was not much possible for me to go to the depth of the branches’ sections
thoroughly because of the time limitations. Agrani Bank Limited (ABL) is one of the widely
expanded Banks in Bangladesh. Due to the threat of deposit shortage, this Bank may
minimize its different types of unnecessary expenditure and should maximize profit through
launching new schemes and obtain different people’s belief. I do also believe that all of these
will assist me further in my career build-up in the future. At last, I would like to conclude
that as a student of MBA I had to undertake this training program to fulfil the partial
requirement of the MBA program. I have tried to the best of my capacity to prepare and
submit this report within a very short period of time. I am highly pleased being able to make
a report on this kind of program. If there is any kind of error kind consideration is requested.

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