AN INTERNSHIP REPORTON

Foreign Exchange Activities Of Standard Bank Limited

Standard Bank LimitedSetting a new standard in Bankin

INTERNSHIP REPORTON Foreign Exchange Activities OF STANDARD BANK LIMITED Submitted to:Nigar Sultana Sr.Lecturer Department of Business Administration Stamford University Bangladesh Submitted by:Sajiya Afrin PriyankaID BBA 042-13425 Batch 42 Department of Business Administration Major: Accounting (Stamford University Bangladesh) Date of Submission: 8th February, 2012.

Letter of Transmittal

26th December, 2013

Nigar Sultana S.r Lecturer Department Of Business Administration. Stamford University Bangladesh

Subject: Foreign Exchange Activities OF STANDARD BANK LIMITED

Dear Madam, With due respect, I would like to inform you that it is a great pleasure for me to submit the internship report on Foreign Exchange Activities of Standard Bank Limited". A closure looks on General & Foreign Exchange Dept; which you have assigned me in order to requirement of fulfilling my BBA program.

In preparing this internship report, I have tried my level best to include all the relevant information and tried to identify all of the relevant aspects of the report. Therefore, I sincerely believe and hope that you would be kind enough to accept my internship report and oblige thereby.

Sincerely Yours

Sajiya Afrin PriyankaID: BBA- 04213425Major: AccountingDepartment:BBA

Certificate

This is certified that the Internship report on Foreign Exchange Activities of Standard bank Ltd. Submitted for the award of the degree of Bachelor of Business Administration in Finance to the Stamford University Bangladesh is an authentic research carried out by Sajiya Afrin Priyanka under my supervision. No part of this report has been submitted by her for any degree, diploma, title or recognition before.

She is permitted to submit the Internship report & I wish her every success in life.

Nigar Sultana(Internship Supervisor) Sr.LecturerDepartment of Business AdministrationStamford University Bangladesh.

Declaration

I, Sajiya Afrin Priyanka a student of Business Administration, Stamford University Bangladesh, hereby declare that, the report entitled Foreign Exchange Activities of Standard bank Ltd is an original work done by me under the supervision of Nigar Sultana, Sr.Lecturer of Dept of Business Administration of Stamford University Bangladesh.

Name-Sajiya Afrin PriyankaID No. BBA 04213425Batch No-42 Major:AccountingDepartment of Business AdministrationStamford University Bangladesh

Preface

Internship program is a scope for acquiring practical knowledge after successful completion of academic curriculum. Theoretical knowledge gets a complete shape only when it is applied in a practical field. To breeze up the gap between theory and practice, the Faculty of Business Administration of Stamford University Bangladesh, has introduced the internship program for MBA course to bring the student closer to the practical work. This is undoubtedly a valuable appreciable addition to the institutional education.

I have accomplished my internship program at Foreign Exchange Operation Of Standard Bank Ltd. Foreign Exchange Branch. It is a Bank of new generation and is one step ahead from other Banks not only in making profit but also in serving people in an efficient way. To meet the customer needs and demand, the Bank has launched some lucrative products and services that show their deep orientation toward marketing philosophies.

During my three months internship program, Ive tried my best to get knowledge about their Foreign Exchange Activities operation with special emphasis on their performance.

The course is designed with excellent combination of theoretical and practical aspects to provide an opportunity to the student on the job exposure, the students are sent to different organizations with a view to fulfilling their degree requirement.

(Sajiya Afrin Priyanka) ID-BBA 042 13425BBA Program (42Batch)Department of BBAStamford University Bangladesh

Acknowledgements

It is high time for me to express my deepest gratitude and humble submission to the almighty Allah but for whose support I would not be able to complete a huge task of preparing this Internship Report within the scheduled time. I would like to take the opportunity to express my gratitude to my Internship Advisor Mrs.Nigar Sultana, Sr.Lecturer, Stamford University Bangladesh, whose gives me right direction, guidance and support helped me a lot in writing this report.

My deepest appreciation and thanks goes to MD. Suruj Ali, VP & Branch Manager, Foreign Exchange Branch, Standard Bank Ltd, for extending his support in completing this report. I would specially like to thank Mr. Akm Laznur Rahaman, AVP& Second Manager, MST Kamrun Nahar, Executive Officer(F.EX,Dept), & Mr.Pranal Kanti Sutradhar, Executive Officer,Marzia Islam,Officer, Standard Bank Ltd.; they helped me a lot during my Internship days with valuable advices, guidance and necessary information. I am indebted to the employees of Standard Bank Limited, for their willingness to help despite the workload they have to manage each and every day.

Above all I want to thank the authority of Standard Bank Limited and Department of Bachelor of Business Administration (BBA), Stamford University Bangladesh, for providing me such an opportunity to come closer to the real world and help me in enriching my knowledge.

Executive SummaryBBA program of Stamford University Bangladesh is organized and tailored to provide the students with the conceptual, theoretical and practical tools of analysis. Special stresses are given on theory and practice them under an organization. Therefore as an internee Ive completed my practice session and prepared this required report based on investigations carried out by myself in Standard Bank Ltd. A service is any act or performances that one party can offer to another that is essentially intangible and doesnt result in the ownership of anything. This report has been prepared on an organization which is service oriented. The name of the organization is Standard Bank Ltd. The bank within a short span of years, has successfully built its position in the banking area of the country. Standard Bank Limited (SBL) was incorporated as a public limited company on May 11, 1999 under Companies Act, 1994 and started its commercial operation on June 03, 1999 as a private sector commercial bank having authorized capital of Tk.750 million and paid up capital Tk.200 million. The Bank has increased its Authorized and Paid up Capital up to Tk.1250 Million and Tk.750 Million respectively.The motto of the Standard Bank Ltd. is to explore a new horizon of innovative modern banking. One of the main objectives of the bank is to be a provider of high quality products and services. The bank also caters to the needs of its corporate clients and provides a comprehensive range of financial services to national and multinational companies. At the end a very qualified and dedicated group of officers and staffs are working in the Standard Bank, Principal Branch and are always trying to provide the best service to the clients. They always monitor the activities in different castors and their position. Their approval and monitoring process and its performance increased very rapidly and still trying their best to improve more and more.Finally, I would recommend that if the central bank of the country and government itself take the necessary steps to restructure the banking system of this country then the present scenario of the banking system could be better. At the same time the management of the particular bank should take better and positive decisions to make the service reachable to the root level and make the service available to all sorts of people. Acronyms

SBL----------------------------------------------------------Standard Bank LtdGB-------------------------------------------------------------General BankingSTD------------------------------------------------------------Short Term DepositCDTF----------------------------------------------------------Current Deposit Twenty fiveCDF------------------------------------------------------------Current Deposit FiftyIBC-------------------------------------------------------------Inward Bills CollectionOBC------------------------------------------------------------Outward Bills CollectionPO--------------------------------------------------------------Payment OrderNCB-----------------------------------------------------------Nationalized Commercial BanksPCB-----------------------------------------------------------Private Commercial BanksFCB-----------------------------------------------------------Foreign Commercial BanksDD------------------------------------------------------------Demand Draft

Chapter 01

Introduction

1.1. Introduction

In todays world, education is the imperative tool for understand the real world and apply knowledge for betterment of the society as well as in Business Sector. From the education session the theoretical knowledge is obtained from various courses throughout the programs, which is only the half way of the subject matter. Practical knowledge has no alternative. The perfect coordination between theory and practice is of paramount importance in the context of modern business Graduates to get 12 weeks practical experience, which is known as Internship Program. That program is taken when the student is at the leg of his/her Bachelor/Masters Degree. Internship program brings student closer to the real life situation and thereby helps to launch a career with some prior experience. Internship is a step towards fulfilling this commitment by giving students an opportunity to get ready for the real world before they enter their practical life. Involvement of the banking sector in different financial events is increasing day by day. At the same time the financial arena is becoming faster, customer focused and its involvement got unavoidable in our everyday life. Now a day, it has become essential for every person to have some ideas on the economics and mostly on banking procedure. For the internship program, each student is attached with an organization. My internship placement was at Foreign Exchange Activities of Standard Bank Limited.

1.2. Rationale of the StudyThe primary purpose of the study is to develop an understanding about the organizational and operational aspects of the organization and take idea about overall Banking activities and Its Foreign Exchange Activities of SBL Foreign Exchange Branch. With the growing competition among nationalized, foreign and private commercial banks as to how the banks operate its banking operation and how customer service can be made attractive, the expectation of the customers has increase. Under the above circumstances, it has become necessary for SBL. The purpose of conducting this research is to find out the opportunities, problems related to and measures to be adopted by the bank for improvement to achieve more revenue. 1.3. Origin of the Study The BBA program conducted by Stamford University Bangladesh was introduced in order to provide a number of graduates in business sector. This program has been designed for the students and the futures prospective businessmen to provide basic theoretical and practical knowledge in the job activities in the context of Bangladesh as well as worldwide. Since the BBA Program is an integrated, practical and theoretical method of learning, the students of this program are required to have practical exposure in any kind of business organization.This report has been prepared on practical orientation. As such, I have worked on my interested business sector under Private Commercial Bank (PCB) and my projection was made on a country's leading PCB viz. Standard Bank Ltd.

1.4. Objective of the Report : The report has been prepared on the An Analysis on performance of Foreign Exchange activities of Standard Bank Limited. In this report I have given attention in depth of the foreign exchange management process and understand its importance. The objectives of the study are as follows:Broad Objectives:The prime objective of the study is to prepare report on An Analysis on Foreign Exchange activities of Standard Bank Limited.Specific objectives: To gather knowledge about the transaction of different department of the branch especially foreign exchange department. To study the Import finance performance of the Bank. To study the Export finance performance of the Bank. To study the Remittance performance of the Bank. To identify the problem of Foreign Exchange and management of Standard Bank.

1.5. Methodology of the ReportIn order to make the Report more meaningful and presentable, two sources of data and information have been used widely. Data Collection method:The sources of data are broadly classified in to two categories. Both the primary and secondary sources have been used for collecting data for the research. Primary Sources:Primary data are those which do the researcher collect for particular purpose. For this report, primary data has been collected by surveying the corporate clients, normal consumers or end users and by surveying the employees. For collecting primary data two methods have been applied. Face to face conversation with executives Practical work exposures form the different desks of the various departments of the Branch covered. Relevant file study as provided by the officers concerned. Different manuals of Standard Bank Ltd. Different circulars of Standard Bank Ltd. Direct fruitful dialogues with the officials of the bank.

Observation Method:Observation method has been followed to collect the necessary data. While the internship doing in the organization the behavior of the clients and the consumers also noted to understand their needs and want.

Secondary Sources: The data about the organization and short term plan was collected from some secondary sources. Theyre collected from various printed materials like newspapers, journals, magazines, etc. The sources are: Internal Sources: Annual Reports of Standard Bank Limited. Periodicals published by Bangladesh Bank. Information from the employees of the organization. External Sources: Various books, articles, compilations etc. regarding general banking functions, foreign exchange operations and credit policies. Government report. Newspapers.

1.6. Process of Preparation of the Report

To get a good result you must through a structured way, I also have done this. At the very beginning I select my target and try to find way to reach the goal. I collect data by observing the officer and managers of Standard bank though the observation method is not a good technique and not good for effective results I depend less on it. For collaborating the data and information collected through primary and secondary sources. I tried to analyze the major or critical findings. Then, based on everything; provided recommendations and conclude the internship report. The whole thing is a long process but I have tried to give you an idea about the process, which is presented in a chart in the next page.

Process of Preparation of the Report

1. Selecting the Goal.

2. Selection of Sample units.

3. Collection of Data through Primary and Secondary Sources.

4. Processing of Data.

5. Presentation, Analysis and Interpretation of data.

6. Drawing Conclusion and Recommendations.

7. Final Report Presentation.

Table 1: Process of Preparation of the Report

1.7. Scope of the report: During these three months internship program in Standard Bank Limited, Foreign Exchange Branch, almost all the desks have been observed. For that purpose I needed to get information from Standard Bank Head Office. But I was appointed into Standard Bank, Foreign Exchange branch. There I had to work in Foreign Exchange, department desk as a routine work. It was difficult to collect the information relevant my report, because the people of this Bank was so busy with their duty that they cannot be able to give me much time. Here I try to cover the Import Export and Remittance management activities and rules and regulation of the Standard Bank Limited.1.8. Limitations of the Report

Lack of comprehension of the respondents was the major problem that created much confusion regarding verification of conceptual question. Limitation of time was one of the most important factors that languished the report. Due to time limitation, many aspects could not be discussed in the report. Confidentiality of data was another important barrier that was faced during the conduct of the report. Every organization has their own secrecy that is not revealed to others. While collecting data on SBLs strategic plan, the personnel didnt disclose enough information for the sake of confidentiality of the organization. Rush hours and business was another reason that acts as an obstacle while gathering data. All of the employees are not much cooperative as expected. Also Bank policy did not allow disclosing some data and information for various reasons.

Chapter 02

AN OVERVIEW OF BANKING SECTOR IN BANGLADESH

2.1. Evolution of the WORLD BANK

The word bank originated from Italian word Banca which means long bench. In ancient time Italian Jews merchant used to do business of lending money by sitting on the bench. It is assumed that the word bank derived from the word Banca. To meet the expense of war of 1171 one type of credit certificate was launched in Italy at an interest rate of 5%. It was called as Monte in Italian language and Banke in German language when German language was widely used in Italy. As a result the word Banke gradually changed to the word Banca from which the word Bank originated.

2.2. The Emergency of Modern Banking

The linguistics and etymology suggests an interesting story about banking origins. Both the old French word Banque and the Italian word Banca were used centuries ago to mean a bench or moneychangers table. This describes quite well what historians have observed concerning the first bankers, who lived more than 2000 years ago. They were money changers, sitting usually at table or in a small shop in the commercial district, aiding travellers who came to town by exchanging foreign coins for local money or discounting commercial notes for a fee in order to supply merchants with working capital. The first bankers probably used their own capital to fund their activities, but it was not long before the idea of attracting deposit and securing temporary loans from wealthy customers became a source of bank funding. Loans were then made to merchants shippers and landowners at rates of interests low as 6 percent per annum to as high as 48 percent a month for the riskiest ventures! Most of the early bank was Greek in origin. The banking industry gradually spread outward from the classical civilizations of Greece and Rome into northern and western Europe. The early bank in Europe were places for safe keeping of valuable items (such as gold and silver bullion) as people were fearing loss of their asset due to war, theft, or expropriation by government. When colonies were established in North and South America, old world banking practices were transferred to the new world.

2.3. Objectives and aimsThe main strategic aim and objective for the nearest period is a dynamic development of the Bank and achievement of a qualitatively new level with the standards of the Basel Committee on Banking Supervision. The development strategy of the Bank is based on the components, which together will ensure strengthen of the financial and economic situation of the Bank and the preservation of its credibility with its customers.Main strategic aims are:1. Increase of authorized capital, raising size of own capital.2. Expansion of activity of the Bank by obtaining a License providing right to carry out transactions in foreign currencies and further entry into the deposit insurance system.3. Constant expansion of customer base with a priority on attracting small and micro-businesses.4. Formation of a diversified and sustainable resource base. 5. Commencement and active development of cooperation with financial institutions and mortgage systems. 6. The increase in capitalization of the Bank. 7. The introduction of international standards of banking operations. 8. The introduction and development of modern methods of marketing and PR.9. Improvement of risk management system.10. Improving the quality and diversity of the range of services for individuals, small and medium-sized businesses, in raising the volume of transactions and the pursuit of cost reduction of managing business, increasing its level of technology and control. Final result should be the creation of modern technologically Bank, which will possess by an optimal required network of service centers, provide high quality services to clients and enjoy significant authority in the market.

2.4. Banking in Bangladesh

Since early British rule, the history of banking in Bangladesh territory shows that the traditional trade-networks developed before the banks invaded rural areas. And the banking services have slowly flourished in Bangladesh territory. Even today, in many places, moneylenders provide credit services. Small shopkeepers and businessman use informal credit at high interest rate, traditional Mahajan,s money lending business gradually declined due to expansion of bank and the micro credit programs of NGOs, Cooperative banks and government agencies.

Bangladesh Bank (Central Bank)

Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank with retrospective effect from 16th December, 1971.

Public Sector Banks

During the liberation war in 1971, the economic, political, and social systems including the banking system were severally damaged. At that time, all big and medium financial institutions except two small banks had their head office in the West Pakistan. The non-Bengali owners and managers of the financial establishments that operated in East Pakistan had abandoned them. After independence in 1971, the new government had to take over management and ownership of all such institutions. The bank Nationalization Order 1972 was issued to nationalize banks and financial institutions (except those incorporated abroad) in order to control chaos in the field of ownership, party bureaucracy, the intelligentsia, and pressure group. By several orders six nationalized commercial banks (NCB), one industrial bank (BSB), one agricultural bank (BKB), and one industrial development financial institution (BSRS) were created the banks and financial institutions, which originated during the Pakistan period and were merged, and renamed and functioning after independence of Bangladesh. In the year 1983, the government allowed private sector to participate in the banking business. The Pubali Bank and the Uttara Bank were denationalized in 1985, due to non-profitability. This action reduced the number of NCBS to four. Such restructuring of public sector banks was in order to play their role in industry, agriculture, exporting, self employment etc.

Private commercial banks

Taking advantage of the liberalization policy of the government regarding participation of private sector in the banking business, a number of private banks were established in and after 1983. With the emergence of private banks in Bangladesh, a competitive situation in the sector has been created. Now there are about 50 commercial banks in Bangladesh. The emergence of private banks has added a new dimension to the banking system in Bangladesh. The private commercial banks show a steady growth in terms of number of branches deposits and advances.

Foreign banks

The state bank of India opened one branch July -September 1975. In 1975, the four foreign banks operating in Bangladesh were: American Express International Banking Corporation, Grind Lays Bank, The Chartered Bank and the State Bank of India. Now there are 10 foreign banks. The historical process shows the influence of the various social groups in the governance of the country and the banking systems. During the British regime banking was concentrated only in the areas of commercial and administrative importance. With the independence of India and Pakistan, the banking sector had to be reshaped. The government of Pakistan had to take major initiatives for the growth and extension of banking services to the different sectors of the economy and also to different regions. Independence of Bangladesh was yet another major change in the banking sector. Immediately after independence of Bangladesh, banks started their operations under full government ownership. Later, some of the banks were denationalized and the government allowed banks to be established in the private sector. Banking operations have been diversified and a number of specialized banks were established. Development finance institutions also exist to supplement the banking sector in an effort to boost the economy; government has been following a pragmatic policy relating to the banking sector in Bangladesh.

Foreign Banks

Citi Bank Hong Kong & Shanghai Banking Corporation (HSBC) Standard Chartered Bank Commercial Bank of Ceylon State Bank of India Habib Bank National Bank of Pakistan Woori Bank

Specialize Banks

Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two [Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS)] are for extending term loans to the industrial sector.

The Specialized banks are: Grameen Bank Bangladesh Krishi Bank Bangladesh Shilpa Bank Rajshahi Krishi Unnayan Bank Bangladesh Shilpa Rin Sangstha Basic Bank Ltd (Bank of Small Industries and Commerce) Bangladesh Somobay Bank Limited(Cooperative Bank) The Dhaka Mercantile Co-operative Bank Limited (DMCBL)

Chapter 03Historical backgroundOf theStandard Bank Ltd.

3.1. Background of Standard Bank Limited. (SBL)

The Standard Bank Limited witnessed record achievement in its business performance during the year 2010. The Bank was incorporated as a Public Limited Company on May 11, 1999 under the Companies Act,1994 and it achieved satisfactory progress from its commercial operation since June 03,1999. SBL introduced several attractive products and extended loans and credits to different sectors of the economy. Besides, the Bank has already introduced real on-line banking and it is now fully auto-mated. Through all these myriad activities, SBL has created a positive impact in the banking sector of the country.

The bank would serve as partner and advisor of the client to trade, commerce and industry. Standard Banks mission is to be utmost trustworthy stakeholder, careful, committed for equitable and sustainable growth based on diversified deployment of fund/resources leading the bank to the peak of healthy and wholesome financial institution. Standard Bank Limited was incorporated as a public limited company on May 11, 1999 under Companies Act, 1994 and started its commercial operation on June 03, 1999 as a private sector commercial bank having authorized capital of Tk.750 million and paid up capital Tk.200 million. The Bank has increased its Authorized and Paid up Capital up to Tk.8,800 Million and Tk.3,173 Million respectively subject to the approval of Bangladesh Bank who is regulating authority and the allocation of which are as follows:

3.2. Board of Director of Standard Bank Ltd. Board of directors consists of 19 directors, Chairman, Vice-Chairman and Managing Director. ChairmanMr. Kazi Akramuddin Ahamed

Vice-ChairmanMr. Ferdous Ali Khan

DirectorsMr. Md. Zahedul HoqueMr. Kamal Mostafa ChowdhuryMr. Mohammad Nurul IslamMr. Ashok Kumar SahaMr. Ferozur RahmanMr. Harun Rashid ChowdhuryMr. Md. Monzurul AlamMr. S. A. Md. HossainMr. Mohammed Abdul AzizAl-Haj Mohammed Shamsul AlamMr. Abdul AhadMr. Harun-Or-RashidAl-Haj Md. Yousuf ChowdhuryMr. Moshfeque Mamun RizviMr. Md. FayekuzzamanMr. Shaikh Mesba Uddin

Independent DirectorMr. S. S. Nizamuddin Ahmed

Managing DirectorMr. S. A. Farooqui

Board SecretaryMr. A. F. M. Nizamul Islam Chowdhury

3.3. Corporate Vision & Mission Of Standard Bank Limited

VisionTo be a modern Bank having the object of building a sound national economy and to contribute significantly to the Public Exchequer.

MissionTo be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability.

3.4. Objective OF Standard Bank Limited

The motto of the Standard Bank Limited is to explore new innovative banking in an automated and computerized environment. It aims at providing one stop service and prepares itself to face the new challenges of globalization and 21st century. One of the main objectives of the Bank is to be provider of quality products and services at a competitive price. The Bank also caters to the needs of its corporate clients and provides a comprehensive range of financial services to national and multinational companies. The dimension of responsible corporate behavior of the Bank is the maintenance of ethical standard in its functioning. To be a dynamic leader in the financial market in innovating new products as to the needs of the society. To earn positive economic value addition (EVA) each year to come. To top the list in respect of cost efficiency of all the commercial Banks. To become one of the best financial institutions in Bangladesh economy participating in the most significant segments of business market that we serve.

3.5. Core Values & Slogan of Standard Bank Limited

Corporate Core value

Our Shareholders: By ensuring fair return on their investment through generating stable profit.

Our customer: To become most caring bank by providing the most courteous and efficient service in every area of our business.

Our employee:By promoting the well being of the members of the staff.

Community:Assuring our socially responsible corporate entity in a tangible manner through close adherence to national policies and objectives.

Corporate Slogan: Standard Bank always try to serve better of its customer for that they serve in different ways. Their slogan is Setting a new standard in Banking

3.6. Corporate Cultures of Standard Bank LimitedStandard Bank is one of the best commercial Bank. Their main mission is to setup a new standard in the banking sector. This bank is one of the most restricted Banks with a distinctive corporate culture. Here they believe in shared meaning, shared understanding and shared sense making. People can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to them. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate conduct.

Group Corporate Structure

SBL Group

In Bangladesh

Standard Bank Limited.

OverseasStandard Co. (USA) Inc. U/A/N Standard ExchangeSBL Capital Management LimitedStandard Exchange (UK) LimitedStandard Bank Islami Wing

Figure -1: Group Corporate Structure

Aims & Objectives:The main strategic aim and objective for the nearest period is a dynamic development of the Bank and achievement of a qualitatively new level with the standards of the Basel Committee on Banking Supervision. The development strategy of the Bank is based on the components, which together will ensure strengthen of the financial and economic situation of the Bank and the preservation of its credibility with its customers.Main strategic aims are:1. Increase of authorized capital, raising size of own capital.2. Expansion of activity of the Bank by obtaining a License providing right to carry out transactions in foreign currencies and further entry into the deposit insurance system.3. Constant expansion of customer base with a priority on attracting small and micro-businesses.4. Formation of a diversified and sustainable resource base. 5. Commencement and active development of cooperation with financial institutions and mortgage systems. 6. The increase in capitalization of the Bank. 7. The introduction of international standards of banking operations. 8. The introduction and development of modern methods of marketing and PR.9. Improvement of risk management system.10. Improving the quality and diversity of the range of services for individuals, small and medium-sized businesses, in raising the volume of transactions and the pursuit of cost reduction of managing business, increasing its level of technology and control. Final result should be the creation of modern technologically Bank, which will possess by an optimal required network of service centers, provide high quality services to clients and enjoy significant authority in the market.

Corporate Information (Standard bank Ltd.)At a Glance:

(Information as per last Annual Report 2010)Name of the Company Standard Bank Limited

Chairman of the Bank Ln. Kazi Akramuddin Ahmed

Legal Form

A public limited company incorporated in Bangladesh on 11th May, 1999 under Companys Act 1994, listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited

Commencement of Business 3rd June, 1999

Registered Office

Metropolitan Chamber Building (3rd Floor) 122-124 Motijheel C/A, Dhaka-1000

Telephone

+880 2 7175698, 7169134, 9560299, 9558375

Tele, fax+880 2 7176367, 7169078

SWIFT Code SDBLBDDH

E-Mail sblho@bangla.net

Web Pagewww.standardbankbd.com

AuditorsHowlader, Yunus & CO Chartered Accountants

Legal AdvisorsMr. M Ziaul Hasan , Barrister-at-Law M/s. Hasan & Associates

Tax ConsultantsAlhaj Md. Serajul Islam Advocate and Tax Consultant

Managing Director & CEO Mr. S.A.Faruque

Additional Managing Director Md. Nazmus Salehin

Deputy Managing Director 1. Md. Alauddin Al-Azad1. ii. Md. Abul Hossain

Company Secretary A. F. M. Nizamul Islam Chowdhury

Table 2: Corporate Social Responsibility (CSR) of Standard Bank Ltd.

3.7. Organogram of the Standard Bank Ltd:

11. PRINCIPAL OFFICER12. EXECUTIVE OFFICER13. OFFICER17. TRAINEE ASSISTANT OFFICER16. ASSISTANT OFFICER15. JUNIOR OFFICER14. TRAINEE OFFICER5. EXECUTIVE VICE PRESIDENT6. SENIOR VICE PRESIDENT8. SENIOR ASSISTANT VICE PRESIDENT7. VICE PRESIDENT9. ASSISTANT VICE PRESIDENT10. SENIOR PRINCIPAL OFFICER1. CHAIRMAN2. MANAGING DIRECTOR3. DEPUTY MANAGING DIRECTOR4. SENIOR EXECUTIVE VICE PRESIDENTADVIOSORBOARD OF DIRECTOR

\

Figure 2: Organizational Configuration of Standard Bank Ltd.

3.8. Management hierarchy of the Standard Bank Ltd:

FOREIGN EX. EXCHANGE DEPARTMENTOFFICERJUNIOR OFFICERASSISTANT OFFICERTRAINEE ASSISTANT OFFICEROFFICERJUNIOR OFFICERASSISTANT OFFICERTRAINEE ASSISTANT OFFICERGENERAL BANKING DEPATMENTINVESTMENT DEPARTMENTEXECUTIVE OFFICERBRANCH MANAGERVICE PRESIDENT2nd OFFICERSENIOR PRINCIPAL OFFICER EXECUTIVE OFFICEROFFICERASSISTANT OFFICERTRAINEE ASSISTANT OFFICERJUNIOR OFFICEREXECUTIVEOFFICER

Figure 3: Organizational Configuration of ever Branchs, Standard Bank Ltd.

3.9. Products and Services of Standard Bank Ltd:

Deposit Products: Al-Wadiah Current Account Mudaraba Saving Account (MSA) Mudaraba Special Notice Deposit Account (MSND) Foreign Currency Account NFCD Account RFCD Account Midaraba Term Deposit Receipt Account (MTDR) Mudaraba Monthly Saving Scheme (MMSS) Mudaraba Haji Saving Scheme (MHSS).

Deposit Scheme:

Besides Fixed Deposits, Savings Bank Deposits and Current Account Deposits, the Bank has introduced the following customer friendly deposit schemes:a) Pension Savings Scheme (PSS)b) Education Savings Scheme (ESS)c) Marriage Savings Scheme (MSS)d) Savers Benefit Deposit Scheme (SBDS)e) Fixed Deposits (1, 2, 3, 6 & 12 months and 2, 3 years).

Unchanged Special Deposit Product Schemes of Standard Bank:Deposit Schemes:There are some deposit screams that Standard Bank can offer to the customers. Those are given below: SBL Regular Deposit Program ( SRDP):If any monthly installment remains unpaid for 5 (five) consecutive months, the account will be closed automatically and the account will be settled as detailed below:-Relationship/ TenureApplied Interest

Less than 1(one) yearNo interest

More than 1 year but less 3 yearsSavings Rate

More than 3 years but less 5 yearsMatured value of 3 years and rest as per prevailing interest rate on savings rate

More than 5 years but less 10 yearsMatured value of 5 years and rest as per prevailing interest rate on savings rate.

If failure to pay monthly installment on due dates he/she will pay penalty of Tk. 20/-(Twenty) next subsequent installment. Monthly Installment, Tenure and Maturity Value will be as per following Schedule:-Revised Special Deposit Product Schemes (2011): Standard Bank Limited (SBL) Regular Deposit Program (SRDP):MonthlyInstallment3 Years5 Years7 Years10 YearsRate of Interest

30013,00024,70039,90069,100

12.50%

50021,70041,40065,6001,15,100

100043,40082,8001,31,2002,30,200

200086,8001,65,6002,62,4004,60,400

25001,08,6002,07,0003,28,0005,75,500

50002,17,2004,14,0006,56,00011,51,000

100004,34,4008,28,00013,12,00023,02,000

Standard Bank Limited (SBL) Lakhopoti Plus (SLP+) Program:

Monthly InstallmentTenureAmount of afterMaturityRate ofInterest

38002 Years1,03,460

12.50%

26003 Years1,12,950

14005 Years1,15,090

Existing 800 Revised 1,0007 Years (Not Changeable)1,33,800(Not Changeable)

60010 Years1,38,210

Standard Bank Limited (SBL) Millionaire Plus (SMP+) Program:

Monthly InstallmentTenureAmount of afterMaturityRate ofInterest

24,0003 Years10,30,000

12.50%

13,5005 Years10,67,000

9,0007 Years10,90,000

5,50010 Years10,75,000

3,80013 Years10,77,000

SBL Regular Income Program ( SRIP ):1. SBL Regular Income Program is an income program, which helps you to earn a monthly fixed amount on your deposits at SBL for period of 3 years.2. Deposit of Tk. 50,000/- (Fifty Thousand) and multiples thereof but maximum limit of Tk. 25, 00,000/- (Taka Twenty Five Lac) at a time and depositor will earn 36 equal monthly profit.Depositor can earn money due date as per following schedule:-Deposit Amount50,0001,00,0002,00,0003,00,0004,00,000 & above

Monthly Interest Payable5001,0002,0003,0004,000 & Above

SBL Double Income plus (D+) Program:a. Deposit of Tk. 10,000/- (Ten Thousand) and multiples thereof but maximum limit of Tk. 25, 00,000/- (Taka Twenty Five Lac) at a time will be acceptable under the program.b. A specially designed receipt shall be issued for the deposit under the program.c. The instrument shall be issued for 6 years.d. At maturity after 6 years the depositor will be get double plus (DI+).e. If any depositor intends to withdraw his deposit before maturity, the following rules will apply :-

a) No benefit including interest/profit shall be allowed for pre-mature encashment within 1 (one).b) If the accounts/deposits are closed/en-cashed after 1 (one) year of its opening interest shall be allowed on the deposit at prevailing FDR Interest Rate.

The instrument will be acceptable as collateral security against any investment subject to registering lien with the issuing Branch. In case of instrument get lost, the procedure for the issuance of a duplicate receipt will be the same as applicable in case of loss of FDR.Depositor can earn money due date as per following schedule:-Amount of DepositMaturity After 6 YearsRate of Interest

10,00020,100

12.34%

20,00040,200

50,0001,00,500

1,00,0002,01,000

SBL 5 (Five) Lacks (Taka) Savings Scheme:a) Anybody can open this scheme by deposited Tk. 5,000/- (Five thousand) only per Month.b) The Tenure of the scheme is 6 (Six) years.c) After Six years depositor will get Tk 5,20,000/-d) If failure to pay Monthly installment in due dates he/she will pay penalty of Tk. 20/- (Twenty) on next subsequent installment.e) In case of premature close of the account the account holder will get saving rate interest less than 6 (Six) Month.f) If 4 (Four) consecutive monthly installment unpaid the account will be closed automatically.Depositor can earn money due date as per following schedule:-Monthly InstallmentAmount of After 6 (Six) Years MaturityRate of Interest

5,0005,20,00012.15%

SBL 10 (Ten) Lacks Saving Scheme:a) Anybody can open this scheme by deposited Tk. 4,500/- (Four thousand five hundred) only per Month.b) The Tenure of the scheme is 10 (Ten) years.c) After Ten years depositor will get Tk 10,00,000/-d) If failure to pay Monthly installment in due dates he/she will pay penalty of Tk. 20/- (Twenty) on next subsequent installment.e) In case of premature close of the account the account holder will get saving rate interest but not interest rate less than 6 (Six) Months.

f) If 4 (Four) consecutive monthly installment unpaid the account will be closed automatically.

Depositor can earn money due date as per following schedule:-Monthly InstallmentAmount of After 6 (Six) Years MaturityRate of Interest

4,50010,00,00011.83%

Consumer Credit Scheme: Lending rate has been shown in the following table where fixed rate (Bangladesh bank instructed rate) and mid-rate are given. Bank may re-fix 1.50 over the mid rate considering the risk involvement. These rates are effective from January 01, 2010.

SLParticularsFixed RateMid Rate

01Consumer Credit Scheme (Staff)12.00%--

02Consumer Credit Scheme (Commercial)--14.00%

Note: 1.00% additional interest rate will be charged for default in payment/ adjustment. All other charges, commissions and fees shall remain unchanged.3.10. BANK OPERATION AREA:During my internship, I was placed in Foreign Exchange Branch of the Standard Bank Ltd. First I have completed General Banking in this branch. General banking department is the heart of all banking activities. This is the busiest and important department of a branch. General banking of this branch consists of different sections namely,1) Account opening section2) Cheque Book issue3) Dispatch Section4) Deposit section5) Cash section6) Remittance section7) Clearing section 8) Accounts section

Account Opening Section:

Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account. A customer can open different types of accounts through this department. Such as:1) Savings Account2) Current Account3) Short Term Deposit (STD) Account4) Fixed Deposit Receipt (FDR) Account5) Deposit Scheme Account.Withdrawal amount should not be more t

Customer Benefit: Cheque book facility Opportunity to apply for safe deposit locker Utility payment service Collect foreign remittance Transfer of fund from one branch to another by- Demand draft Mail transfer Telegraphic transfer Online banking service.

3.11. Performances of Standard bank Ltd.

The year 2010 was remarkable year simultaneously for development and achievements of continuous growth rate in all the areas of banking operations. The bank has successfully been marching ahead with its prime business objective by earning a pre-tax profit of Tk. 2,771 million registering an annual growth of 3493% than that of the previous year. It has successfully mobilized Tk. 58,344 million deposits from depositors and arranged disbursement of Tk. 40195.2 million as Investment to 10091 accounts as on 31 December 2010 through its 41 Branches. The total Income and expenditure of the Bank were Tk. 3,657,526.058 & Tk. 878,582,556. The return on assets- (ROA) - was 1.84%. Achievements were possible because of the service excellence of management with the support from a very resourceful and skilled workforce who are rendering efficient and specialized services.

Deposit Tk. 58344 millionInvestment Tk. 7607 million

Figure-4: Deposits and Investment

Income Tk.3657.53 millionExpenditure Tk.878.58 million Figure-5: Income and Expenditures

Standard Bank LimitedConsolidated Balance Sheet as at 31st December, 2012Notes2012Taka2011Taka

PROPERTY & ASSETS

CASH3(a)4,755,177,4543,077,120,314

Cash in Hand (including foreign currencies)351,093,652294,146,477

Balance with Bangladesh Bank & its agent Banks (including Foreign Currencies)4,404,083,8022,782,973,837

BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS4(a)974,534,555638,246,698

In Bangladesh212,186,35744,542,377

Outside Bangladesh762,348,198593,704,321

MONEY AT CALL AND ON SHORT NOTICE5300,000,000630,000,000

INVESTMENTS6(a)7,607,141,6705,340,338,439

Government6, 528, 758, 3904,714,071,198

Others1,078,383,280626,267,241

LOANS AND ADVANCES / INVESTMENTS7(a)51,757,689,07338,055,753,147

Loans, Cash Credits, Over Draft etc./ Investments49,573,605,19836,723,327,850

Bills Purchased and Discounted2,184,083,8751,332,425,297

FIXED ASSETS INCLUDING PREMISES, FURNITURE & FIXTURE8(a)378,692,231178,511,495

OTHER ASSETS9(a)822,776,6431,080,929,421

NON-BANKING ASSETS--

TOTAL ASSETS66,596,011,62649,000,899,514

LIABILITIES & CAPITAL

Liabilities

Borrowings from other banks, financial institutions and agents10--

DEPOSITS AND OTHER ACCOUNTS11(a)58,344,441,29242,555,505,380

Current / AI-Wadeeah Deposits & Other Deposits7,218,704,5744,946,955,629

Bills Payable645,871,688453,829,597

Savings Bank / Mudaraba Savings Deposits2,456,147,2831,772,761,675

Short Term Deposits / Mudaraba Short Term Deposits1,804,483,8451,722,311,722

Fixed Deposits / Mudaraba Term Deposits43,987,607,13331,713,109,811

Deposits Under Schemes / Mudaraba Deposit Schemes2,231,626,7691,946,536,946

OTHER LIABILITIES12(a)2,626,514,4732,223,670,282

TOTAL LIABILITIES60,970,955,76544,779,175,662

CAPITAL / SHAREHOLDERS' EQUITY

Paid-up Capital133,172,906,5322,644,088,832

Statutory Reserve14(a)1,512,356,6441,033,683,881

General Reserve15-20,000,000

Revaluation Reserve on Investment15(b)48,388,94314,126,086

Bonus Share--

Surplus in Profit and Loss Account/ Retained earnings16(a)891,403,742509,825,053

TOTAL SHAREHOLDERS' EQUITY5,625,055,8614,221,723,852

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY66,596,011,62649,000,899,514

Standard Bank LimitedProfit & Loss Account for the year ended 31st December, 2012NotesDecember 31, 2012TakaDecember 31, 2011Taka

Interest Income / Profit on Investment185,849,984,5794,433,634,888

Interest / Profit paid on Deposits & Borrowings etc.194,126,218,7273,351,065,292

Net Interest / Net Profit on Investments1,723,765,8521,082,569,596

Investment Income201,011,527,081386,151,427

Commission, Exchange Earnings & Brokerage21740,844,608568,443,503

Other Operating Income22181,388,517154,643,061

TOTAL OPERATING INCOME (A)3,657,526,0582,191,807,587

Salary & Allowances23491,467,356318,598,034

Rent, Taxes, Insurance, Electricity etc.2490,194,29865,456,266

Legal Expenses251,691,4181,139,510

Postage, Stamp, Telecommunication etc.2619,928,59017,785,523

Stationery, Printing, Advertisement etc.2738,722,35435,753,279

Managing Director's salary & fees285,700,0003,785,000

Directors' Fee & Other benefits296,156,7895,321,745

Audit Fees30300,000300,000

Charges on loan losses31-65,530,932

Depreciation and Repair of Bank's Assets3260,330,11437,507,711

Other Expenses33164,091,637102,040,702

TOTAL OPERATING EXPENSES(B)878,582,556653,218,702

Profit / (Loss ) Before Provision (C) = ( A - B )2,778,943,5021,538,588,885

Specific Provision34146,450,268120,706,000

General Provision167,214,561109,479,677

Provision for Off-Balance Sheet items80,726,35615,342,193

Provision for diminution in value of investments--

Other Provision--

Total Provision ( D )394,391,185245,527,870

Total Profit / (Loss) before Taxes (E)=( C - D)2,384,552,3171,293,061,015

Provision for Taxation351,007,368,197520,000,000

Current Tax1,010,904,881520,000,000

Deferred Tax(3,536,684)-

Net Profit / (Loss) after Taxation :1,377,184,120773,061,015

Retained earnings brought forward from previous year16.18,056,5552,425,443

Net Profit available for distribution1,385,240,675775,486,458

Appropriations :

Statutory Reserve476,910,463258,612,203

Proposed Bonus Shares--

Standard Bank LimitedHighlights

Sl. No.Particulars20122011

01.Paid up capital3.172,906,5322,644,088,832

02.Total capital6,370,823,2084,738,589.878

03Capital surplus/(deficit)821,108,2081,244,724.778

04.Total assets66,596,011,62649,000,899,514

05.Total deposits58,344,441,29242,555,505,380

06.Total loans and advances51,757,689,07338,055,753.147

07.Total contingent liabilities and commitments22,168,336,98213,859,872,318

08.Credit deposit ratio88.71%89.43%

09.Percentage of classified loans against total loans and advances1.96%1.83%

10.Profit after tax and provision1,369,069,153764,249,513

11.Amount of classified loans during the year1,016,670,868696,521,000

12.Provisions kept against classified loan511,928,268365,478.000

13.Provision surplus/(deficit)--

14.Cost of fund9.44%9.33%

15.Interest earning assets51,898,851,95838,735,244.542

16.Non-interest earning assets14,697,159,66810,265,654.972

17.Return on investment (ROI)15.63%9.02%

18.Return on assets (ROA)2.37%1.84%

19.Incomes from investment1,011,527,081386,151,427

20.Earnings per share (Taka)43.1524.09

21.Net income per share (Taka)43.1524.09

22.Price earnings ratio (times)1514

3.12. Branch Network of Standard Bank Ltd.Standard Bank Limited has (65) branches to the following locations: Dhaka Chittagong Khulna Sylhet Madaripur Rajshahi Jessore Gopalgonj Brahmanbaria Barishal Bogra Rangpur Kushtia Mymensingh Kishoregonj Saidpur Dinajpur Patuakhali Faridpur Nilphamari Comilla Noakhali

Capital: Bank authorized capital was enhanced from Tk 880,00 crore to Tk1500,00 crore in 27th EGM on 14,11,2011.The paid up capital of the bank has stood at TK 487,36 crore yin 2012.The statutory reseve stood at TK 248,97crore .T he total equity capital and reserve of the bank at the end of the 2012 was TK 820,75 crore

Sl.Capital StructureAmount Tk.

1Initial Authorized Capital.

750 Million

1-A

Authorized Capital enhanced in 2012.8,800 Million

2

Initial Paid-up Capital200 Million

3.14. Deposit:SBL always tried to give the highest return on the deposits from the customers .The deposits of SBL reached the level of TK 76089 million during 2012 ,TK63871 million of previous year.The growth rate is 19%.cost of deposit for the year stood at 11.54% compared to the previous years cost of 9.81% .The bank has by this time achieved a stable and sizable deposit base managed its deposit and invest able fund efficiency for the purpose of both liquidity and profitability In addition to the normal deposit scheme, the bank introduces highly lucrative, innovative and attractive deposit schemes, to encourage and mobilize the deposits as well as for the benefit of the people.Various purpose-oriented deposit schemes have been appreciated by general people and have received popular response .Steps are being taken to further increase, the deposit base continuously at a reduced average cost of funds.

3.15. Loans and Advances:

The total loans and advances of the bank has increasd to TK 61380 million (including bill purchased and discounted) as on December 31,2012 compared to TK.55346.84 million as on December 31,2011 showing an increase of 11% over the figure of last year.The bank has been continuing to explore and diversity the areas of operation to extended credit facilities throughout the year to the various sectors of the economy. In wholesale/retail trading. Hotel, restaurant, real-estate, service sector &transport sector. The total loans are grouped in Tk12507.32 million as unclassified loans and Tk126.80 million as doubtful and bad/loss loan.

Figure-6: Overdraft & Term loan

Chapter:4

Foreign Exchange divisionOfStandard Bank Ltd

5.0 Overview of Foreign Exchange:

In the modern world no country is self-sufficient; one country is to depend on other countries and from this point of view there raises the question of foreign trade and foreign currency transactions. That is, the international trade involves foreign exchange transactions particularly for receipt and payment against export and import of goods and services from one country to another. As without foreign exchange transactions we cannot think of foreign trade. Of course, various rules and regulations are to be followed in connection with the foreign trade and foreign exchange transactions. It is well known fact that the money is a medium of exchange for all transactions that take place inside the country as well as outside the country. In Bangladesh, we have the Taka for financing the internal trade and other obligation. So, the home currency has to be converted into currencies of other currencies, to meet the obligation that arises out import of goods and services from other countries. That part of the economic science that deals with the conversion of Home Currency into Foreign Currency for the purpose of setting international obligations is called Foreign Exchange.

5.1. Foreign Exchange Regulation Act, 1994:This Act regulates the exchange of foreign currencies, remittances and opening of foreign currency account under various classifications. According to this law, FC Accounts can be opened without initial deposits, and bears no interest and both the account holder and the nominee can operate the account. The entire remittance from adored is free from income tax. It also states the documents required for the opening of such account.5.2. Definition of Foreign Exchange: Foreign exchange means foreign currency and includes all deposits, credits and balance of payable in foreign currency as well as Draft, Traveler's cheques, Letter of credit, Bills of Exchange drawn in local currency but payable in foreign currency. Foreign Exchange Regulation Act, 47, Sec 2 (a) Foreign exchange means foreign currency and includes any instrument drawn, accepted, made or issued under clause 13 of section 16 of the Bangladesh bank Order, 1972 all deposits and credits and balances, Travelers cheques, Letter of credit and bills of exchange, expressed or drawn in Bangladesh currency but payable in any foreign currency. Bangladesh bank order 1972.

5.6. Administration of Foreign Exchange Operations by Standard Bank:After the relaxation of economic barrier at 90s, firms become interested to do business globally and banks play a key role in this aspect. For doing foreign exchange business in favor of firm, bank follows some administrative framework and this chapter describes the administration of foreign exchange business of Standard Bank Ltd. and the role of Bangladesh Bank in foreign exchange business. One of the most important components of Standard Bank business profile is international trade that has been playing a significant role in the over all foreign exchange business inception of the bank.SBL is contributing in country,s national economy by successfully handlng foreign exchange offering a broad spectrum of trade finance product through its 17 authorized dealer (AD) including international division. .Foreign correspondences of SBL:Quality and quantity of foreign exchange business depends on enhanced correspondent relationship with reputed banks all over the world. Among others, increasing foreign exchange business is an objective of the bank. Keeping the objective in consideration, SBL has the effort to establish correspondent banking relationship with internationally reputed banks all over the world is in continued process. Now the bank has correspondent banking network with 423 renowned banks around the globe along with RMA (Relationship Management Application) under SWIFT covering their all branches globally. During the year 2012, RMA arrangement under SWIFT with 40 local banks has been established. The bank is enjoying credit life of substantial amount from most of the renowned banks globally where Standard Chartered Bank, Mashreq bank Psc, HSBC Bank Ltd, Habib American Bank New York ( China, Turkey, Japan, South korea, Indonesia, UAE, ). ICICI Bank ( Singapore, New York , India, Hongkong, London).Commerz bank AG Germany, AB Bank Mumbai, AB international Finance Hongkong, HBZ Finance Hongkong and UBAE, Italy are mentionable this helps SBL to honour SBL- LCs and fulfill the payment commitment abroad. In addition Asia Development Bank (ADB ) under the agreement signed in 2009 will confirm the SBL-LCs for big amount through SBL correspondent bank abroadForeign Exchange Department of SBL:Standard Bank Ltd. (Foreign Exchange Branch) foreign exchange division mainly deals with three parts of foreign trade:1. Import2. Export 3. Foreign remittance

Import

Import section of SBL:The Import Section helps business and other people to import goods. In international environment, buyers and sellers are, in most of the cases, unknown to each other. So a seller always seeks guarantee for the payment for his exported goods. It is the bank that guarantees the seller the payment for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between the importer and the exporter is given a legal shape by the banker by its Letter of Credit.Facilities provided by import section of SBL: Opening of Letter of Credit Facilitating payments to the exporter on behalf of the importer Providing funded and non-funded credit facility Issuing bank guarantee in foreign currency on behalf of foreign companiesLegislations for Import:Imports are foreign goods and services purchased by consumers, firms & Government agencies in Bangladesh. To import, a person should be competent to be an importer. According to Import and Export Control Act, 1950, the office of the Chief Controller of Imports and Exports (CCI & E) provides the registration (IRC) to the importer. Import of goods in Bangladesh is regulated by the Ministry of Commerce in terms of the Import and Export Control Act, 1950; Import Policy Order and the Public Notice issued by the Office of the Chief Controller of Imports and Exports (CCI&E)At present it is regulated by the Import Policy Order (1997-2002), which came into effect on June14, 1998. The duration of the Import Policy Order was extended up to June 2003 by an amendment. This policy directs certain import procedures and administers the whole activity

Import Mechanism:Letter of Credits can be opened with any of the Branch authorized to deal in foreign exchange. Bank issuing L/Cs has to perform the following functions that are to be done in the different stages:

Figure Import mechanism Applicants approach to the bank Application for letter of credit limitYESRejection Taking necessary documents from the applicant Lodgment

If primary requirements fulfilled NO

Fig-03: Import mechanism.

i. Applicants approach to the bankThe applicant of Letter of Credit must be a known customer to the bank. He has to approach the bank to open a Letter of Credit for import of goods through an application in the letterhead pad.

ii. Application for letter of credit limitBefore opening Letter of Credit, importer applies for Letter of Credit limit. To have an import Letter of Credit limit, an importer submits an application to the import division of Standard Bank furnishing the following information Particulars of account maintained with the bank Nature of business Required amount of limit Payment terms and conditions Goods to be imported Security offered Repayment scheduleA credit officer scrutinizes this application and accordingly prepares a credit limit proposal (CLP) and forwards it to the Head Office Credit Committee (HOCC). The committee, if satisfied, sanctions the limit and returns it to the branch. Thus the importer is entitled to an approved credit limit. Once a party succeeds in opening an L/C through Standard Bank Ltd, generally it requires no fresh credit limit on subsequent occasions; however, further approval of the Head Office is required only if it proposes to increase its credit limit.

.

5.5. Parties to the Letter of Credit:

The Applicant Importer (Applies for L/C

Issued BankIt is the Bank which opens issues a L/C on behalf of the importer

Confirming BankIt is the Bank, which adds its confirmation to the credit and it, is done at the request of issuing Bank. Confirming Bank may or may not be advising bank

Advising or Notifying Bank

It is the bank through which the L/C is advice to the Notifying Bank exporter. This Bank is actually situated in exporter country. It may also assume the role of confirming and /or negotiating bank depending upon the condition of the L/C

Negotiation Bank

It is the Bank which negotiated the bill and pays the amount to the beneficiary. The advising Bank and the negotiating bank may or may not be the same

Accepting bank

Sometimes it can also be confirming Bank accepting Bank lit is the Bank on which the bill will be drawn ( as per condition of the credit) usually it is the issuing Bank

Reimbursing Bank

It is the bank ,which would reimburse the negotiating Bank after getting payment

iii. Taking necessary documents from the applicantSBL takes the following documents with the application from the applicant while opening a Letter of Credit: Application for Letter of Credit duly signed by the importer Letter of Credit Authorization Form (L/CAF) Import Permit Form (IMP) Valid Import Registration Certificate (IRC) Indent or Pro-forma Invoice Valid Membership Certificate Documents evidencing payment of fee for current year for Import Registration Certificate (IRC) Declaration by the importer that he has paid income tax and submitted returns to the Income tax authority for the last three years Insurance Cover Note and Stamped Tax Insurance Policy

Note: For import of capital machinery and initial spares to set up a new industry, a Letter of Credit can be opened without Import Registration Certificate (IRC). No waiver from the Chief Controller of Imports and Exports is necessary for this purpose.

iv. LodgmentAfter the scrutiny, the following steps are taken to process for lodgment of import documents received from the negotiating bank. Lodgment means retirement of funds. Usually payment is made within seven days after the documents have been received. If the payment is deferred, the negotiating bank may claim interest for making delay. However, after receiving the documents, the Foreign exchange Branch authority collects the documents by contacting the importer.

Lodgment Constitutes the Followings Conversion of foreign currency amount of the bill and the charges of the foreign bank into Taka is done separately by applying Bills Collection (B.C.) selling rate ruling on the date of lodgment. If the forward exchange was booked, the booked rate is applied. Payment against Documents (PAD) is made by debiting PAD account and crediting bank account. Full particulars of the documents are entered in the prescribed PAD register allotting a consecutive serial number. Documents are endorsed under seal and signature. Inter-Brach credit advice (IBCA) is sent to the Head Office along with a prescribed Statement to provide them credit for the payment from their overseas account through Standard Bank Limited General Account. Head Office (International Division) in receipt of the IBCA and the statement will respond the entry by debit to branch account (through Standard Bank Limited General Account) and contract credit to NOSTRO Account of the negotiating bank abroad. To arrange necessary fund for payment, a requisition is sent to the International Department. As the T.T & O.D rates are paid to the ID, the differences between these two rates remain as exchange gain for the Branch. As soon as the above formalities are completed the importers are served with PAD bill intimations for retirement of concerned import document. A letter of intimation (P.A.D. intimation) regarding receipt of the documents should be sent to the applicant with a request to take delivery of the documents on settlement of all dues against it and mentioning the maturity date of P.A.D. The Import mechanism is completed with the lodgment because most of the import operates by the Standard Bank Ltd. is c ash letter of credit.

Export

Export section of SBL: Bangladesh exports a large quantity of goods and services to foreign households. Creation of wealth in any country depends on the expansion of production in the export sector in international trade. Standard bank emphasized on export of both traditional items like Raw jute, Jute goods, Readymade garments, Leather and traditional item like Tiles, Bicycle, Shrimp, Handicrafts, Betel leaf , coriander seeds, Pet bottle flakes etc. Most of the exporters who export through Standard Bank open export Letters of Credit here to export their goods, which they open against the import Letters of Credit opened by their foreign importers.

Export Policy:Export policies formulated by the Ministry of Commerce, GOB provide the overall guideline and incentives for promotion of exports in Bangladesh. Export policies also set out commodity-wise annual target. It has been decided to formulate these policies to cover a five-year period to make them contemporaneous with the five-year plans and to provide the policy regime. The export-oriented private sectors, through their representative bodies and chambers, are consulted in the formulation of export policies and are also represented in the various export promotion bodies set up by the government. However, Exports forms Bangladesh are regulated by the following Acts, Guidelines and authorities:

Bangladesh Bank by issuing guidelines and circulars in compliance with Foreign Exchange Regulation Act-1974 under the authority given to it by the aforesaid Act. It controls physical and payment aspects of exports.

Ministry of Commerce by issuing Export Policy Order under the authority given to it by Export Import Act, 1950; It outlines the Governments export development strategies and lays down the package of incentives to promote exports. It also provides the list of items, which are either banned for export or whose export is subject to fulfillment of certain conditions. Controller of Export and Import Export Promotion Bureau National Board of Revenue (Regarding duties and customs issues) Ministry of Finance by providing Financial Assistance (like cash incentives, fixation of lower interest rate of export credit etc.)

Export Mechanism:The mechanism of letter of credit under export has been shown in Figure in the next page. The description of the mechanism is stated after the figure,

Obtaining export registration certificate (ERC)Securing the orderAdvising of L/C to the exporterRealization of advising/conformation chargesVerification about the genuineness of the letter of creditReceiving the letter of creditSigning of the contractObtaining EXPApplication for Opening Back to Back L/CShipment of goodsProcuring the materialsExamination of documentPresentation of export documents for negotiationBTB L/C IssueBill for acceptancePayment made by the importer (Client of bank)Exporter can import raw materials to complete the export order by L/C against the Export L/C.BTBL/CMECHANISMFig-04: Export Mechanis

I.Obtaining export registration certificate (ERC)

No exporter is allowed to export any commodity from Bangladesh unless he is registered with the Chief Controller of Imports and Exports (CCI & E) and holds a 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 get the ERC renewed every year. For registration the following documents are required: Nationality and Assets Certificate; Memorandum and Article of Association and Certificate of Incorporation in case of Limited Company; Bank Certificate; Income Tax Certificate; Trade License etc.

ii. Securing the orderAfter getting ERC, the exporter may proceed to secure the export order. He can do this by contracting the buyers directly through correspondence. In this purpose, exporters can get help form Liaison Officer of foreign companies, buyers local agent, buying house, RPB, Bangladesh Mission Abroad, Chamber of Commerce and other Trade Associations like BGMEA, Chamber of Commerce of the Foreign Courtiers, Trade fair, searching internet/websites. After communicating with buyer, exporter has to get contracted for exportable item(s) form Bangladesh dealing commodity, quantity, price, shipment, insurance and marks, inspections & arbitration.

iii. Obtaining EXPAfter having the registration, the exporter applies to the Bank 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.

iv. Signing of the contractAfter communicating with buyer, the exporter has to get contract for exporting exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and mark, inspection, arbitration etc.

v. Receiving the letter of creditAfter getting contract for sale, exporter should ask the buyer for Letter of Credit clearly stating terms and conditions of export and payment. The export is normally, executed against letter of credit opened by buyers. Sometimes, exports are made on CAD, DP, and DA on Consignment Sale basis without cover of letter of credit. On receipt of Letter of Credit, it is checked thoroughly by advising bank.

vi. Verification about the genuineness of the letter of creditIn case of receipt of L/C other than form the issuing bank, the advising bank must confirm the genuineness of the L/C .In all the cases, the bank must ascertain the authenticity of the Letter of Credit received before acting upon that.

vii. Advising of L/C to the exporterHaving ascertained the genuineness of the Letter of Credit, the Advising bank takes the following steps: The concerned branch of the bank communicates with the beneficiary and advices him about the Letter of Credit received. The Branch enters full particulars of the Letter of Credit in the Letter Credit Advising Register (Performance Register) allotting separate serial number for each Letter of Credit Particulars of all amendments (if any) are also to be recorded in the same Register before advising the same to the beneficiary. If the L/C contains any request by the opening bank, it has to be complied with under intimation to the beneficiary; the approval of Head Office required for this. Any amendment to a Letter of Credit received form Issuing Bank should be advised to the beneficiary promptly. Only request of the Issuing bank for any amendment should be accepted. A suitable clause should be incorporated at the bottom of the L/C stating that the L/C is subject to the provision of UCPDC- ICC Publication No. 5000.

viii. Realization of advising/conformation chargesFor advising Letter of Credit to the beneficiary, the branch records Letter of Credit advising commission at the prescribed rate from the beneficiary. If the beneficiary is the banks client the charge is debited to his count under advice to him. If the beneficiary is not the banks client; the Letter of Credit is delivered to him against cash payment. Letter of Credit conforming charges should be recovered either form the beneficiary or the opening bank depending on the terms of the Letter of Creditix. Procuring the materialsBefore the export forms are lodged by the exporters with the customs/postal authorities, they should get all the copies endorsed by Standard Bank. Before shipment, exporter submits export form (EXP) with commercial invoice. Then Bank officer checks it properly, if satisfied, certifies the export form. Without it exporter cannot make shipment. The customer must declare all exports goods on the EXP issued by the authorized dealers.

x. Shipment of goodsAfter certification of EXP forms issued by the AD, the next steps for the exporter to make necessary arrangements for shipment of goods.

xi. Presentation of export documents for negotiationAfter shipment, exporter submits the following documents to SBL for Negotiation. Beneficiarys declaration about the shipment of goods as per Letter of Credit /Contract Terms Bill of Exchange or Draft Bill of Lading Certificate of origin Consular Invoice Freight Certificates in case of FOB contract G.S.P. certificate (if required) Inspection Certificate Insurance Policy/Certificate arranged to cover transit risk Invoice Packing List Photo Sanitary Certificate. Quality (Control) Certificate Shipping Advice

xii. Examination of documentBanks 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 is observed in the documents. The bankers are to ascertain that the documents are strictly as per the terms of Letter of Credit.. Bank officers assigned for examining the export documents may use a checklist for their convenience. After examining the document; the bank sends them to the importers bank through DHL. Here the export procedure is completed.

Back-to-back Letter of Credit: There is another area of export. In readymade garments sector the exporter has to import the raw materials for completing the order. In that case the exporter may seek financing facility from the bank. In this situation the bank finance the exporter by opening back to back L/C against the Export L/C. There are four types of Back-to-Back L/Cs. These are Back to Back Local (Within Bangladesh) Back to Back EPZ Back to Back EDF Back to Back Foreign

Back-to-back L/C mechanism:i. Application for Opening Back to Back L/CAt first the exporter applies for opening BTB L/C against the Export L/C. He has to write an application to the Branch Manager stating the amount of the L/C along with a L/C form and Pro-forma Invii. BTB L/C IssueThe authorized officer issues the L/C if the document is OK and sends the L/C to the bank of the beneficiary.iii. Bill sent by the beneficiarys bank for acceptanceWhen the exporter gets an L/C he sends his goods to the importer and the bill for the export sends to the importer bank. If there is no discrepancy in the document then the opening bank give acceptance and fix the due date of payment according to the tenor. iv. Payment made by the Importer When the bill is due, the bank pays it with the money that the importer receives from the export. The proceeds are given to the exporter (importer for BTB L/C). This is his profit. The Back-to-Back L/C Mechanism is completed here.

Remittance

Remittance section of SBL:Standard Bank Ltd is one of the most technologically advanced private commercial bank in the country having wide branch & associate network throughout the Country. All the branches are running with real-time Online and ATM facilities to settle their transaction from remote areas. They have dedicated NRB desk to ensure personalized services to the valued customers at branch & Head Office Level.SBL has an admirable Remittance Tie-up with a good number of worlds renowned Exchange Houses and Banks throughout the World to facilitate the Remittance services to the beneficiaries in both as Instant Cash (payment over the counter) and Account credit. Remittance services provided by Standard Bank Limited are:Inward remittance:Inward foreign remittance is one of major sources of the foreign currency reserve of the country and in order to encourage inflow of remittances through banking channel from the Non-resident Bangladeshis, Standard Bank Limited provides quality service for repatriation and collection of remittances with the help of its foreign correspondents and trained personnel.Inward remittance services provided by Standard Bank Limited are: Process / collection of cheque/ Draft TT, EFT in USD GBP EURO AUD, JPY

Presently SBL has remittance drawing arrangement with wall street finance LLC,USA,Wall Street Exchange center ,LLC,UAE and Money Gram inc, USA Money Gram facilities remittance made by Bangladeshi expatriates all over the world by using their global network, remittance drawing arrangement with Wall Street exchange center, LLC, UAE has been commenced in 2011. The SBL has also made drawing arrangement with Western Union and Zenj as sub agent. The bank continues its effort to make remittance arrangement with different exchange houses in the potential countries. The bank has signed agreement with Universal Exchange center and Economic Exchange center of UAE, also waiting to sign the agreement with the Lulu International Exchange, Al Ghorair Exchange, Al Ahalia Money Exchange, Bureaw and Bin Bakhel Exchange in UAE and in UK with Fast Encash and Dex international UK Ltd.

Outward Remittance:Outward remittance services provided by Standard Bank Limited are: Issuance of FDD, TT, EFT in USD, GBP, EURO, AUD and JPY Issuance of AMEX Travelers Cheques in USD Handling of Student file of the students going abroad for educational purpose in USD, GBP, EURO, AUD and JPY

Mechanism of remittance collection:

Foreign RemittanceBy Exchange House having agreement with SBLDirectly by Telephonic TransferBy Exchange House having no agreement with SBLNon A/C holderFor A/C holderDirectly deposited in A/CSender will give a pin code to receiverReceiver will tell the pin code to the authorized officerOfficer will check Disburse the cashOnly for A/C holderThat bank issue PO to SBLOnly for A/C holderRemittance come in another bank with whom they have agreementDirectly deposited in A/CSBL receive cash by the clearing house and deposits it to receivers A/CStandard Bank Ltd. follows three ways to collect foreign remittance. The mechanism is presented in Figure,

Fig-05: Mechanism of remittance collectionStandard Bank Ltd. follows three ways for collecting remittance. These are: exchange houses with which bank has agreement, direct telephonic transfer and the exchange house with which bank has no agreement.

i. Exchange House with which SBL has agreement:In this way the remittance can come for anyone. He can be an A/C holder can be not. If the receiver is an A/C holder the remittance directly deposited to his account. If he is not an A/C holder then the procedure is different. The senders bank will give a pin code that the sender has to inform the receiver. The receiver than tell the pin code, his name and other information to the authorized officer. The officer will check and if everything is alright, the officer will give the cash to the receiver

ii. Telephonic Transfer:The bank provides this service only to its A/C holders. When the remittances come it is directly deposited to receivers account.

iii. Exchange house having no agreement with SBLThis is another way that the bank follows. This service is also limited to its A/C holders. If a remittance is sent through an exchange house having no agreement with SBL, it comes to the bank that has an agreement with the exchange house. After getting the remittance, the bank issues a pay order in favor of SBL. Then SBL collects the cash through clearing house and deposits it to receivers account.

Foreign Currency Accounts: Standard Bank Limited provides different Foreign currency account services as prescribed by the guidelines of central bank and offer competitive interest rate for those accounts. Foreign Currency Account. (FC) Non- Resident Foreign Currency Deposit Account (NFCD) Resident Foreign Currency Deposit Account (RFCD) Non Resident Non-convertible Taka Account.

Chapter: 5

Analysis & Findings

5.1Analysis of foreign Exchange Management: Quantitative Data Analysis:Analyzing the financial performance (also called financial analysis) is so much essential for each and every business institution as well as for the Banking institutions to assess their past financial performance and to identify the sources, where the necessary improvement is needed to perform better in the future and to meet the future challenges by taking effective business strategy. Trend Analysis: Particulars 2008 2009 2010 2011 2012Import Business1926.002678.104143.204949.676139.94Export Business1512.462241.843128.504623.465579.04Remittance 235.00 113.79 223.00 343.80 710.32Total F.ex 3461.96 4931.257294.009617.5111790.01 After observing the figure drawn above, we have found that, during the time period between the years 2004 to 2008 the Import Business of the Standard Bank was increasing, and the growth is on average 23.80% which was a good sign. We hope that the Standard Bank can maintain their Import business in near future.Export Business:After observing the figure drawn above, we have found that, during the time period between the Years 2004 to 2008 the Export Business of the Standard Bank was increasing and the growth is on average 20.67% which was a good sign. We hope that the Standard Bank can maintain their Export business.Foreign Remittance:After observing the figure drawn above, we have found that, during the time period between the years 2004 to 2008, the Foreign Remittance Business of the Standard Bank was increased by on Average 54.18%, which was a good sign. We hope that the Standard Bank can increase their Remittance business in near future.

Overall growth of Import Export and Remittance Business:After observing the figure drawn above, we have found that during the time period between the years 2004 to 2008 the Import Business of the Standard Bank was increasing, which a good sign was. In 2008 the overall performance of Export Import Bank of Bangladesh Limited is in satisfactory level. Because, in 2007 Banks performance is better compare to previous performance, in almost every aspect. Ratio analysis:Ratio calculated as: Import ratio = Import / total foreign exchangeParticulars 2008 2009 2010 2011 2012Import Ratio 0.553632 0.543087 0.568029 0.514652 0.520775Export Ratio 0.436879 0.454619 0.728914 0.480734 0.473201Remittance Ratio 0.016157 0.015832 0.01612 0.014335 0.016185 Import Ratio:After observing the figure drawn above, we have found that during the time period between the years 2008 to 2012, the Import Ratio of the Standard Bank was fluctuating. We hope that the Standard Bank can increase their Import ratio in near future.Export Ratio:After observing the figure drawn above, we have found that during the time period between the years 2008 to 2012, the Export Ratio of the Standard Bank was fluctuating. We hope that the Standard Bank can increase their Export ratio in near future.Remittance Ratio:After observing the figure drawn above, we have found that during the time period between the years 2008 to 2012, the Remittance Ratio of the Standard Bank was fluctuating. We hope that the Standard Bank can increase their Remittance ratio in near future.

Overall Import Export and Remittance Business Ratio:After observing the figure drawn above, we have found that during the time period between the years 2008 to 2012the Foreign Exchange Business Ratio of the Standard Bank was stable, which was a good sign. We hope that the Standard Bank cans upward their Foreign exchange business ratio in near future-In 2012-the overall performance of Export Import Bank of Bangladesh Limited is in satisfactory level. Because, in 2012 Banks performance is better compare to previous performance, in almost every aspect. Their Foreign Exchange Business almost stable during those years. Evaluation of Foreign Exchange DepartmentTo evaluate the performance of foreign exchange department is very much important as because Standard Bank mainly deals with import, export and foreign remittance. Foreign exchange is an international department of the bank. It facilitates international trade through its various modes of services. It bridges the between importers and exporters. This department mainly deals with foreign currency that is why it called foreign exchange department. This department is playing an important role enhancing export, import and remittance earning, which aids economic growth.The income generate of foreign exchange department from the three sectors:1. Import.2. Export.3. Remittance.Income from Import:After observing the figure drawn above, we have found that during the time period between the years 2008 to 2012 the Import income of the Standard Bank was increasing, which a good sign was, we hope that the standard Bank can increase their Import income in near future.Income from Export:After observing the figure drawn above, we have found that during the time period between the years 2005 to 2008 the Export income of the Standard Bank was increasing, which a good sign was. We hope that the Standard Bank can increase their Export income in near future.Income from Remittance:After observing the figure drawn above, we have found that during the time period between the, years 2004 to 2008 the Earnings of Remittance of the Standard Bank was increasing, which was a good sign. We hope that the Standard Bank can increase their Earnings of Remittance in near future Overall growth Import, Export and Remittance:In 2012 the overall performance of Standard Bank Limited is in satisfactory level. Because in 2009 Banks performance is better compare to previous performance. Contribution of Foreign Exchange department on total IncomeAs an Export Import bank, the contribution of foreign exchange department puts the major part in the total income level of the Standard Bank Limited.YearGeneral bankingInvestmentForeign exchange2009 23% 35% 42%2010 24% 30% 46%2011 11% 28% 61%2012 16% 27% 57% After observing the figure drawn above we have found that during the time period between the years 2012-209 the contribution o