CHAPTER 1

Introduction

1.0 Introduction:

Banking system is expending its hand in different financial events every day. At the same time the banking service is becoming faster, easier and the banking arena is becoming wider as the demand for better service increases day by day, they are coming with different innovative ideas & products. In order to survive in the competitive field of the banking sector, all banking organizations are looking for better service opportunities to provide their fellow clients. As a result, it has become essential for every person to have some idea on the bank and banking procedure. Internship program is essential for every student, especially for the students of Business Administration, which helps them to known the real life situation.

1.1 Background of the Report:

This report was being assigned as a part of the BBA Program. To prepare the report under the BBA program requirement, I accommodate my internship program in the EXIM Bank Limited. For the completion of the program, I have already prepared a report. This report is being formed on the most important issue “Foreign Exchange performance of EXIM Bank Limited”. The entire report is based on practical experience of EXIM Bank Limited. I have tried to furnish all the issue that I gathered from through working with EXIM Bank limited.

1.2 Objective of the Report:

The objective of the report are mentioned according to the priority- 1. The most significant objective of preparing and submitting this report is to completion of the BBA program. 2. To gain practical experience in the job field is another most important objective. 3. To have a clear idea about the foreign exchange performance of EXIM Bank Limited is also required.

1.3 Scope of the Report:

This report provides a brief idea about the banking functions, management, organizational structure, foreign exchange activities – export and import, foreign remittance, financial performance, performance of foreign exchange activities and risk management. The report mainly focuses on the banking performance of EXIM Bank Limited from 2005 to 2009. The report also highlighted the SOWT analysis of this bank. The report mainly concerned with the performance of EXIM Bank.

1.4 Limitations:

This is an individual research work where only one individual researcher needs to undertake the whole process done alone. In all remain within I failed to escape by any means. These are as follows: 1. Two months time for internship is a pretty short time to acquire in depth knowledge about all the departments of EXIM Bank Limited. 2. To collect information I faced difficulty because of the excessive nature of confidentiality. 3. EXIM Bank is an Islamic bank for that reason I face some problems to understand their products & facilities they provide. Because some of the rules of the Islamic banking are different from the general banking rules. 4. It requires a lot of assistance from all level officers and stuff but as a bank the officer was busy in doing their jobs. 5. Since I was confined by a specific topic and should work on the topic related department (foreign exchange) but some time I need to worked in different department so it is not possible to learn hundred percent on that topic. 6. The study was limited by the availability of the data.

1.5 Methodology of the Study:

In preparing this report, both primary and secondary sources of information have been used and to analyze those data Excel have been used. Methods of collecting data include includes direct observation, face-to-face discussion with officers or employees of different departments, study of files, circulars, etc. and practical work.
The primary sources are- ➢ Direct communication with the clients ➢ File study. ➢ Exposure on different desk of the bank

The secondary sources are- ➢ Annual Report of EXIM Bank Limited. ➢ Periodicals published by the Bangladesh Bank. ➢ Bank website. ➢ Some internship report of EXIM Bank Limited

1.6 Analysis:

Since the research was qualitative, I have done some of the quantitative research. To find out the financial position and export and import conditions of EXIM Bank Limited I took interview of personnel of EXIM Bank Limited as well as go for the website. After getting the information from website I found EXIM Bank’s export – import business is in strength position. The financial position of the bank is also strong that I analyzed from the annual report of separate period. Then I have also shown the charts and diagram to graphically present the data. I have done some statistical work in the report to analyze the export import performance of EXIM Bank Limited over the years.

CHAPTER 2
Overview
OF
EXIM Bank of Bangladesh Limited

2.1 Background of the Bank

EXIM Bank came in to operation as scheduled commercial bank on 3rd August 1999 as per rules and regulations of Bangladesh Bank. It is established under the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the socio-economic development of our country. He had a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined their hands with the founder chairman to materialize his dream. In deed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligence, hard working and talent entrepreneurship. Among them, Mr. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman. Of its very beginning EXIM Bank Bangladesh limited was known as BEXIM Bank Limited. But some legal constraints the bank renamed as EXIM Bank, which means Export Import Bank of Bangladesh Limited. At present the bank is performing its work all over the country by 53 branches. The bank has migrated all of its conventional banking operation into Shariah based Islamic banking since July/2004.

2.2 Vision of EXIM Bank Limited

The gist of the vision is “Together Towards Tomorrow”. Export Import Bank of Bangladesh Limited believes in togetherness with its customers, in its march on the road to growth and progress with service. To achieve the desired goal, there will be pursuit of excellence at all stages with a climate of continuous improvement, because, in EXIM Bank, we believe, the line of excellence is never ending. Banks strategic plans and networking will strengthen its competitive edge over others in rapidly changing competitive environment. Its personalized quality services to the customers with the trend of constant improvement will be the keystone to achieve our operational success.

2.3 Mission of EXIM Bank Limited

The bank has chalked out the following corporate objectives in order to ensure smooth achievement of its goals-

➢ To be the most caring and customer friendly and service oriented bank. ➢ To create a technology based most efficient banking environment for its customers. ➢ To ensure ethics and transparency at all levels. ➢ To ensure sustainable growth and establish full value to the honorable stakeholders and ➢ Above all, to add effective contribution to the national economy.

Eventually the bank also emphasis on-

➢ Provide high quality financial services in export and import trade. ➢ Providing efficient customer service. ➢ Maintaining corporate and business ethics. ➢ Being the trusted depository of customers money and their financial adviser. ➢ Making its products superior and rewarding to the customers. ➢ Display team spirit and professionalism. ➢ Sound capital base. ➢ Enhancement of shareholders wealth. ➢ Fulfilling its social commitment by expanding its charitable and humanitarian activities.

2.4 Corporate Culture

This bank is one of the most regimented banks with an idiosyncratic corporate culture. Here we believe in shared meaning, shared understanding and shared sense making. Bank’s people can see and understand events, activities, objects and situation in a distinguishing 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 the bank. The personnel in the bank see themselves as a tight knit team / family that believe in working together for growth. The corporate culture of bank belong has not been imposed; it has rather been achieved through bank’s corporate demeanor.

2.5 Prime Operational Area

As a full-fledged islamic bank in Bangladesh, EXIM Bank has extended all islamic services including wide range of saving and investment products, foreign exchange and ancillary services with the support of sophisticated IT and professional management. The investment portfolio of the bank comprises of diversified areas of business and industry sectors. The sectors include textile, edible oil, ready-made garments, chemicals, cement, telecom, steel, real estate, and other service industry including general trade finance. The bank has given greatest important to acquire quality assets and is committed to retain good customers through customer relationship management and financial counseling. At the same time efforts have been made to explore or induct new clients having good potentiality to diversify and create a well- established structured investment portfolio and to minimize overall portfolio risks.

2. 6 Products & Services of EXIM Bank Limited

Deposit Products:
1. Al-Wadiah Current Deposit Account.
2. Mudaraba savings deposit account (MSD, MSTD, RFCD, and NFCD).
3. Mudaraba Term Deposit Receipt.
4. Mudaraba monthly saving scheme.
5. Mudaraba monthly income scheme.
6. Mudaraba Super Savings Scheme.
7. Mudaraba Hajj Scheme.

Investment Products:
1. Corporate Finance.
2. Commercial Finance.
3. Industrial Finance.
4. Project Finance.
5. Lease Finance.
6. Syndicate Finance.
7. Hire Purchase Finance.
8. Real Estate Finance.

2.7 Social Commitment

The purpose of company business is, obviously, to earn profit, but the promoters and the equity holders are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of art, culture and sports of the country. At least 2% of our annual profit of every year put aside for the foundation to conduct Corporate Social Responsibilities (CSR) activities. The mainstream of CSR activity that carries out through this foundation is: ➢ Healthcare services. ➢ Education Promotion Scheme (Interest free loan). ➢ Helping people affected by natural calamities. ➢ Helping people in slum areas. ➢ Donation to educational institutions to setup computer lab. ➢ Beautification of Dhaka City.

2.8 Achievements

It is a great pleasure that by the grace of Almighty Allah, we have migrated at a time all the branches from its conventional banking operation into Shariah based Islamic banking operation without any trouble in 2004. Lot of uncertainties and adversities were there into this migration process. The officers and executives of our bank motivated the valued customers by counseling and persuasion in light with the spirit of Islam especially for the non-Muslim customers. Our IT division has done the excellent job of converting and fitting the conventional business processes into the processes based on Shariah. It has been made possible by following a systematic procedure of migration under the leadership of honorable Managing Director.

2.9 Management Profile and Divisions:

EXIM Bank Limited has does this work very well. Different departments of EXIM Bank Limited are as follows: ➢ Financial Administration Division., Head Office ➢ Human Resources Division, Head Office ➢ International Division, Head Office ➢ EXIM Bank Training Institute ➢ Information Technology Division, Head Office ➢ Special Audit Division, Head Office, Dhaka. ➢ Accounts Division ➢ Treasury Division ➢ Operations Division ➢ Investment Division.

2.10 Human Resource Practices in EXIM Bank Limited

Employees are the core resources of any organization. Without them, one cannot run their organization. And, human resources approach is concerned with the growth and development of people toward higher level of competency, creativity and fulfillment. It helps employees become better, more responsible persons, and then it tries to create a climate in which they may contribute to the limits of their improved abilities. It assumes that expanded capabilities and opportunities for people will lead directly to improvements in operating effectiveness. Essentially, the human resources approach means that better people achieve better results.

2.11 Shariah Board

The Board of directors has formed a Sharia Supervisory Board for the Bank. Their duty is to monitor the entire Bank’s transactional procedures, & assuring its Sharia compliancy. This board consists of the following members headed by the chairmn.

The tasks of the Sharia supervisor in summary is replying to queries of the Bank’s administration, staff members, shareholders, depositors, & customers, follow up with the Sharia auditors and provide them with guidance, submitting reports & remarks to the Fatwa & Sharia Supervision Board and the administration, participating in the Bank’s training programs, participating in the supervision over the AlIqtisad AlIslami magazine, & handling the duty of being the General Secretary of the Board.

2.12 Shariah Council

Chairman:

Professor Maulana mohammad salah uddin

Members:

Moulana Mohammad Sadequl Islam

Professor H.M. Shahidul Islam Barakaty

Mr. A.S.M. Fakhrul Ahsan
Hafez Moulana Mufti Mohammad Khair Ullah

Mr. Md. Nazrul Islam Mazumder

Mr. A.K.M Nurul Fazal Bulbul

Mr. Md. Abdul Mannan

|Mr. Zubayer Kabir |
|Mr. Abdullah Al-Zahir Sawpan |
|Mr. Kazi Masihur Rahman |

2.13 Corporate Information

|Matters |Information |
|Date of incorporation |June 02,1999 |
|Inauguration |August 03, 1999 |
|Authorized capital |Tk. 1000.00 Corer |
|Paid-up capital |Tk. 337.39 Corer |
|Number of branches |53 |
|Proposed branches |10 |
| Credit Rating |
|Long term |‘AA-’(High Safety) |
|Short term |‘ST-2’(High Grade) |
|Notification of reporting |June 02, 2010 |
|Registered office |“SYMPHONY” |
| |Plot No. SE (F): 9 Road No .142 |
| |Gulshan Avenue, Dhaka -1212, Bangladesh |
| |PABX: 880-2-988 9363, |
| |Fax: 880-2-988 9358 |
| |Website : www.eximbankbd.com |
| |SWIFT: EXIMBKBDDH |

Chapter 3 Financial Position of EXIM Bank Limited

3.1 Financial Overview of EXIM Bank Limited

Export import bank of Bangladesh limited as one of the leading private commercial banks has achieved significant progress in the banking operations for more than 10 years. It has successfully mobilized Tk.73835.46 million as deposits and disbursed investment of Tk.68609.91 million up to 31 December 2009 through its 52 branches. The total income and expenditure of the bank were Tk.10383.62 million and Taka 7201.84 million respectively that led to an operating profit of Tk.3181.78 million with an annual growth rate of 26.34%higher than that of the previous year. The return on assets (ROA) after tax was 1.96% for the Year 2009. The table of financial performance of EXIM Bank Limited is mentioned in Appendices Table1.

3.2 Capital and Reserve Fund

The bank started its mission with an authorized capital of Tk1000 million and Paid-up Capital of Tk.225.00 million subscribed by the sponsors in the year 1999.its authorized capital was raised to Tk.3500.00 million in the year 2006. In the year 2009its authorized capital was further raised to Tk.10000 million. As on 31 December 2009, its total capital and reserve stood at Tk.6717.21 million that comprised of paid-up capital of Taka 3373.96 million and other reserves of Taka 3343.25 million. The bank has also made general provision on unclassified investment and off balance sheet exposures of Taka 997.47 million up to 31 December 2009.

3.3 Deposit

The deposit is the lifeblood for the commercial Banks. The core business of commercial Banks is accepting deposits and investing fund and it’s the main steam of revenue of commercial Banking. The EXIM Bank is not different. Deposit is the prime source of fund invested to earn revenue in the banking business. The total deposit of the bank stood at Tk.73835.46 million as on 31 December 2009 against Tk.58834.06 million of the previous year with an increase of Tk15002.40 million at a growth rate of 25.50%. The main strategy of increasing deposit base is maintaining competitive rates of profit and satisfactory customer services.

[pic] Figure 3.1: Deposit position of EXIM Bank

3.4 Investment

Total investment of the bank was Tk.68609.91 million as on 31 December 2009 against Tk.53637.68 million as on 31 December 2008 showing an increase of Tk.14972.23 million with a growth rate of 27.91%. The bank follows appropriate investment risk analysis while approving investments to customers in order to maintain quality of assets

[pic]

Figure3.2: Investment position of EXIM Bank Limited

3.5 Investment in Shares and Securities

The size of the investments portfolio as on 31 December 2009 was Tk2169.44 million (excluding investment in subsidiary) million while it was Tk 2894.02 million in 2008. The portfolio comprises mainly of Bangladesh Government Islamic Investment Bond and Shares of different companies.

[pic] Figure 3.3: Investment (Shares and Securities) position of EXIM Bank

3.6 Dividend Position of EXIM Bank Limited

Table 3.1: Year wise Dividend Position of the Bank
|Year |% Cash dividend |% Stock dividend |Total |
|1999 |-Nil- |-Nil- |-Nil- |
|2000 |14.00% |-Nil- |14.00% |
|2001 |25.00% |12.50% |37.50% |
|2002 |8.00% |24% |32.00% |
|2003 |40.00% |-Nil- |40.00% |
|2004 |-Nil- |40% |40.00% |
|2005 |-Nil- |30% |30.00% |
|2006 |-Nil- |25% |25.00% |
|2007 |7% |25% |32.00% |
|2008 |-Nil- |26% |26.00% |
|2009 |-Nil- |35% |35.00% |

3.7 Ratio Analysis of EXIM Bank

Ratio analysis is systematic uses of ratio o interpret/assess the performance and status of the firm. It is the numerical relationship between two variables. Some of the ratio analysis of EXIM Bank is calculated to assess the financial performance.

3.7.1 Leverage/Capital Structure Ratio

The long term lenders and creditors would judge the soundness of a firm on the basis of the long term financial strength measured in terms of its ability to pay the profit regularly as well as repay the installment of the principle on due dates or in one lump sum at the time of maturity. The long term solvency of a firm can be examined by using leverage or capital structure ratios. To understand the capital adequacy of EXIM Bank, the following ratio calculation is mandatory-

3.7.1.1 Debt-equity Ratio/ Capital Adequacy Ratio This ratio reflects the relative claim of creditors and shareholders against the assets of the firm. Alternatively this ratio indicates the relative proportions of debt and equity in financing the assets of the firm. For the financial institution the debt is the clients deposits and the inter bank borrowing occur at the time of liquidity crises. The formula of ratio calculation is as follows- D/E Ratio = Total debt / Shareholder’s equity ------------ (3.1)

Table 3.2 Debt-equity Ratio (Amount in million)
|Particulars | Year |
| |2005 |2006 |2007 |2008 |2009 |
|Debt |31804.28 |38681.86 |47460.50 |63457.26 |79496.16 |
|Equity |1912.42 |3111.69 |4042.53 |4989.20 |6717.21 |
|D/E ratio |16.63 |12.43 |11.74 |12.71 |11.83 |

I
Interpretation: The relative claim of creditors and shareholders against the assets is in the highest position in 2005. In 2009 this ratio shows 11.83 is fewer figures compared to 2008.

3.7.2 Profitability Ratio The operating efficiency of a firm and its ability to ensure adequate returns to its shareholders/owners depends ultimately on the profits earned by it .The profitability of a firm can be measured by is profitability ratio.

3.7.2.1 Return on Assets

The ROA measures the profitability of the total funds / investments of a firm. The ROA is measured in terms of the relationships between net profits and assets. The ROA may also be called profit- to- asset ratio. This ratio is measured in the following way-

Return on Assets = Net profit after tax / Average total Assets ---------- (3.2)

Table 3.3 Return on Assets (Amount in Million)
| | Year |
| | |
|Particulars | |
| |2005 |2006 |2007 |2008 |2009 |
|Net profit after tax |555.34 |650.29 |930.84 |1096.63 |1694.10 |
|Total Assets |33716.70 |41793.54 |51504.03 |68446.46 |86213.37 |
|ROA |1.64% |1.56% |1.81% |1.60% |1.96% |

Interpretation: This ratio shows the increasing position of the return on the assets. Except in 2006 this ratio was in slight decrease at 1.56%. But in 2009 this ratio shows a good position of the return on assets which is 1.96%.

3.7.2.2 Return on Equity Return on shareholders’ equity measures the return on the owners in the investment in the firm. Here the terms shareholders’ equity includes preference share capital and ordinary shareholders’ equity consisting of equity share capital, share premium, reserves and surplus less accumulated losses. This ratio reveals how profitably the owners’ fund has been utilized by the firm. The formula of calculating ratio is-

Return on Equity = Net profit after tax / Average total shareholders equity * 100---- (3.3)

Table 3.4 Return on Equity (Amount in Million)
|Particulars | Year |
| |2005 |2006 |2007 |2008 |2009 |
|Net profit after tax |555.34 |650.29 |930.84 |1096.63 |1694.10 |
|Equity |1912.42 |3111.69 |4042.53 |4989.20 |6717.21 |
|ROE |29.04% |20.90% |24.03% |21.98% |25.22% |

Interpretation: This trend shows that the bank is well utilizing shareholders’ equity. The return on equity was less in 2006. From 2007 it increased sharply. There was a sharp decline of 21.98% in 2008. Again in 2009 it goes up by 25.22%.

3.7.2.3 Investment to Total Deposit Ratio

EXIM Bank keeps peoples money and invests the money for getting profit. When profits are earned they share profit on the basis of deposit nature and weighted assets. Thus bank is liable and conscious about the pay back of money to the depositors. Investment to deposit ratio deals with investment by customer deposit that bank hold at the part of their liability and any time any customer obligation it pay of the deposit to the clients .Investment to deposit ratio generates the information based on the investment that means loan and advances that any bank treats as assets at its balance sheet with the amount of customer deposit that customer hold with the bank. Total investments are classified as several categories and make the recovery treatment based on the categories of the investment. The formula of calculating this ratio is as follows-

Investment-deposit ratio = Investment (general) / Customer deposit * 100------- (3.4)

Table 3.5: Investment to deposit ratio (Amount in million)
|Particulars | Year |
| |2005 |2006 |2007 |2008 |2009 |
|General investment |26046.34 |32641.27 |40195.24 |53637.68 |68609.91 |
|Customer deposits |28319.21 |35032.02 |41546.57 |57586.99 |73835.46 |
|Investment to |91.97% |93.18% |96.75% |93.14% |92.92% |
|deposit ratio | | | | | |

Interpretation: The ratio shows that EXIM Bank is gradually making more investment and makes proper use of the customer money. As the branches are expanded, the customers are escalating more. The more customer means more deposit and the more deposit means more money. Thus the future of this bank in terms of investment is promising.

3.7.2.4 Earning per Share (EPS) Earning per share measures the profit available to the equity shareholders on a per share basis. That means the amount the shareholders can get on every share held. It is calculated in the following manner-

EPS = Net profit after tax / Number of ordinary shares outstanding ------- (3.5)

Table 3.6 Earning per share
|Particulars | Year |
| |2005 |2006 |2007 |2008 |2009 |
|Net profit after |555335174 |650292342 |930843607 |1096627046 |1694095372 |
|tax | | | | | |
|Ordinary Shares |11425050 | 14852565 |21421968 |26777460 |33739599 |
|EPS |48.61 |43.78 |43.45 |40.95 |50.21 |

Interpretation: EPS indicates the per share earnings after taxes that an investor is entities to get. We have analyzed last five years bank annual report. We can say that company earnings per share year are increasing. The bank is in a good position

Chapter 4
Foreign Exchange Performance of EXIM Bank of Bangladesh Limited

4.1 0verview 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 arises 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 can not 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 a well-known fact that the money is a medium of exchange for all types of transactions. In Bangladesh, we have Taka for financing the internal trade and other obligations. Therefore, the home currency is converted into currencies of other countries to meet the obligation that arises out of 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 settling international obligations is called Foreign Exchange.

4.2 Foreign Exchange Regulation Acts

Foreign Exchange Regulation Act, 1974

Foreign Exchange Regulation (FER) Act, 1947 (Act No. VH of 1947) enacted on 11th March, 1947 in the then British India provides the legal basis for regulating certain payments, dealings in foreign exchange and securities and the import and export of currency and gold bars. WHEREAS it is expedient in the economic and financial interests of Bangladesh to provide for the regulation of certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion;
It is hereby enacted as follows: 1. This Act may be called the Foreign Exchange Regulation Act, 1947. 2. It extends to the whole of Bangladesh and applies to all citizens of Bangladesh and persons in the service of the Republic wherever they may be. 3. (3) It shall come into force on such date as the Government may, by notification in the official Gazette, appoint in this behalf.

In this Act, unless there is anything repulsive in the subject or context, ( 1. "authorized dealer" means a person for the time being authorised under section 3 to deal in foreign exchange;

2. "currency" includes all coins, currency notes, bank notes, postal notes, money orders, cheques, drafts, traveler’s cheques, letters of credit, bills of exchange and promissory notes; 3. "foreign currency" means any currency other than Bangladesh currency; 4. "foreign security" means any security issued elsewhere than in Bangladesh and any security the principal of or interest on which is payable in any foreign currency or elsewhere than in Bangladesh;

5. "foreign exchange" means foreign currency and includes any instrument drawn, accepted, made or issued under clause (13) of Article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and any draft, traveler’s cheque, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currency; 6. Bangladesh currency" means currency which is expressed or drawn in Bangladesh Taka; 7. "Bangladesh Bank" means the Bangladesh Bank established under clause (1) of Article 3 of Bangladesh Bank Order, 1972;

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, Foreign Currency 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 abroad is free from income tax. It also states the documents required for the opening of such account.

4.3 Definition of Foreign Exchange

➢ "Foreign Exchange" means foreign currency and includes any instrument drawn, accepted, made or issued under clause (13) of Article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and any draft, traveler’s cheque, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currency; — Foreign Exchange Regulation Act, 1947, 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 checks, Letter of credit and bills of exchange, expressed or drawn in Bangladesh currency but payable in any foreign currency. — Bangladesh bank order 1972.

4.4 Types of Foreign Exchange Business

Foreign exchanger business of EXIM Bank is of three types- 1. Financing of import 2. Financing of export 3. Foreign remittance 4. Miscellaneous activities.

4.5 Export - Import procedures

The procedures, which follows at the time of Import are as, follow — 1. The buyer and the seller conclude a sale contract provided for payment by documentary credit. 2. The buyer instructs his Bank (the Issuing Bank) to issue a credit in favor of the seller / Exporter / Beneficiary. 3. The Issuing Bank then send message to another Bank (Advising Bank /Confirming Bank) usually situated in the country of seller, advice or confirms the Credit Issue. 4. The Advising / confirming Bank then informs the seller through his Bank that the Credit has been issued. 5. As soon as the seller receives the credit, if the credits satisfy him the he can reply that, he can meet its terms and conditions, he is in position to load the goods and dispatch them. 6. The seller then sends the documents evidencing the shipment to the, Bank where the Credit is available (nominated Bank). This can be the A issuing Bank or Confirming Bank; Bank named in the Credit as the paying, accepting and Negotiating Bank. 7. The Bank then checks the documents against the credit. If the documents meet the requirements of the credit, the Bank then pay, accept or negotiate according to the terms of credit. In the case of credit available by negotiation, Issuing Bank will negotiate with recourse. The Bank, if other then the issuing bank, sends the documents to the issuing Bank.

8. The issuing Bank checks the document and if they found that the document has meet the credit requirements, they realize to the buyer upon payment of the amount due or other terms agreed between him and the issuing Bank. 9. The buyer sends transport documents to the carrier who will then proceed to deliver the goods.

4.6 Letter of Credit

A letter of credit is a written undertaking by the importer’s bank known as the issuing bank on behalf of its customers, the importer(Applicant), promising to effect payment in favor of the exporter (Beneficiary ) up to a stated sum of money, within a prescribed time limit and against stipulated documents.

4.6.1 Types of Letter of Credit

1. Revocable Credit: A revocable credit is a credit which can be amended or canceled by the issuing bank at any time without prior notice to the seller.

2. Irrevocable Credit: An irrevocable credit constitutes a definite undertaking of the issuing bank (since it cannot be canceled without the agreement of all parties thereto). Provided that the stipulated documents are presented and the terms and conditions are satisfied by the seller. An irrevocable credit can be either confirmed or unconfirmed depending on the desire of the desire of the seller. This sort of credit is always preferred to revocable letter or credit.

3. Revolving Credit: The revolving credit is one, which provides for re-sorting the credit to the original amount after it has been utilized. How much time it will be taking place must be specifically mentioned in the credit? The revolving credit may be either cumulative or non-cumulative.

4. Transferable Credit: A transferable credit is one that can be transferred by the original beneficiary in full or in part to one or more subsequent beneficiaries. Such credit can be transferred once only. Fractions of a transferable credit can be transferred separately, provided partial shipments are not prohibited.

5. Back To Back Credit: The back-to-back credit is a new credit opened based on an original credit in favor or another beneficiary. Under back to back concept, the seller as the beneficiary of the first credit offers it as security to the advising bank for the issuance of the second credit. The beneficiary of the back to back to back credit may be located inside or the out side the original beneficiary’s country.

6. Anticipatory Credit: The anticipatory credits make provision for pre-shipment payment to the beneficiary in anticipation of his effecting the shipment as per L/C conditions.

7. Red Clause: When the clause of the credit authorizing the negotiating bank to provide pre-shipment advance to the beneficiary is printed typed in red, the credit is called “Red Clause letter of credit” under the said clauses, the opening bank is liable for the pre-shipment advances made by the negotiated bank, incase the beneficiary fails to repay or deliver the documents for negotiation.

4.6.2 Parties to the Letter of Credit

|The Applicant |Importer -Applies for L/C |
|The Beneficiery |Exporter – receipt L/C |
|Issued Rank |It is the Bank which opens or issues L/C on behalf of the |
| |importer |
|Confirming Bank |It is the bank, which adds its confirmation to the letter of |
| |credit and it is made at the request of issuing bank. |
| |confirming bank may or may not be advising bank |
|Advising |It is the bank through which the L/C is advised to the |
|or |notifying bank of exporter. This Bank is actually situated in |
|Notifying |exporter country. It may also assume the role of confirming and|
|Bank |lot negotiating bank depending upon the condition of the L/C |
|Negotiation Bank |It is the bank, which negotiates the bill and pays the amount |
| |to the beneficiary. The negotiating bank & advising Bank may or|
| |may not be the same. |
|Accepting hank |Sometimes it can also be confirming bank or accepting bank. It |
| |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 |

7. SWIFT Service:

EXIM Bank limited is one of the first few Bangladeshi Banks to obtain membership of SWIFT (Society for World Wide Inter- Bank Telecommunication). SWIFT is a member owned cooperative, which provides a first and accurate communication network for financial transactions such as letter of credit, fund transfer etc. by being a member of SWIFT, EXIM Bank has unlocked possibilities for uninterrupted connectivity with over 5800 user institutions in 171 countries all over the world.

Bank Identifier Code (BIC):

| Serial No. | Branch Name | BIC |
|1 |MOTIJHEEL BRANCH |EXBKBDDH001 |
|2 |PANTHAPATH BRANCH |EXBKBDDH002 |
|3 |AGRABAD BRANCH |EXBKBDDH003 |
|4 |KHATUNGANJ BRANCH |EXBKBDDH004 |
|5 |IMAMGANJ BRANCH |EXBKBDDH006 |
|6 |GULSHAN BRANCH |EXBKBDDH007 |
|7 |NAWABPUR BRANCH |EXBKBDDH010 |
|8 |NARAYANGONG BRANCH |EXBKBDDH011 |
|9 |RAJUK BRANCH |EXBKBDDH013 |
|10 |UTTRA BRANCH |EXBKBDDH015 |
|11 |JUIBLEE ROAD BRANCH |EXBKBDDH018 |
|12 |MIRPUR BRANCH |EXBKBDDH017 |
|13 |KARWAN BAZAR BRANCH |EXBKBDDH035 |
|14 |BOGRA BRANCH |EXBKBDDH021 |

4.8 Foreign Exchange Department of EXIM Bank Limited

In EXIM Bank limited, foreign exchange division is divided in to two parts according to the major activities: ➢ Import oriented foreign exchange activities. ➢ Export oriented foreign exchange activities
There is also foreign Remittance operation that carryout by the foreign exchange department.

4.9 Import Section of EXIM Bank Limited

The import section of EXIM Bank performs all work relating to the import. It acts on behalf of importer in the following way. The function of this section is mainly to deal with various components such as: ➢ L/C opening and amendment. ➢ Balancing of L/C contingent liability. ➢ Checking of L/C opening documents. ➢ Lodgment and retirement of L/C documents. ➢ Maintenance and record of pass book and IRC. ➢ Maintenance and record of related L/C documents. ➢ Credit report to Bangladesh Bank. ➢ Preparing of BLC statement.

4.10 Documents required for opening import L/C

There are a number of formalities, which on Importer has to fulfill before import goods. These formalities are explained bellow —

1. Import Registration Certificate (IRC)

The first thing one need to carry on a business of import is called Import Registration Certificate (IRC). But registration is not required for import goods, which do not involved remittance of foreign exchange like medicine; reading materials etc. can be imported without registration by the users within monetary limit. Documents to be required for Import Registration Certificate are as follows —

➢ Income Registration Certificate ➢ Nationality Certificate ➢ Certificate from Chambers of Commerce and Industry ➢ Registered trade association ➢ Bank solvency certificate ➢ Copy of Trade License ➢ Requisite fees

On receiving application, the respective CCI&E officer will scrutinize the documents, conduct physical verification, and issue demand note to the prospective importers to furnish the following papers through their nominated Bank-

➢ Original copy of treasury deposited as IRC fees ➢ Assets certificate ➢ Affidavit from magistrates ➢ Rent receipt ➢ Two passport size photographs ➢ Partnership deed in case of partnership firms ➢ Certificate of Registration, Memorandum and Articles of Association in case of Limited Company.

After scrutinizing and verifying, the nominated Bank will forward the same to the respective CCI&E office with forwarding schedule in duplicate through Banks representative. Then CCI&E then issue Import Registration Certificate (IRC) to the Applicant.

2. IMP-form

The form IMP should be filled and signed by the importer ➢ Name and address of the authorized dealers ➢ Amount of remittance to be permitted (i.e. L /C amount) ➢ LCA forms no date and value in Taka. ➢ Description of goods. ➢ Invoice value in foreign currency, (i.e. L/C amount) ➢ Country of origin. ➢ Port of shipment. ➢ Name of steamer or airline ➢ Port of import ➢ Indenter’s name and address ➢ Indenter’s registration number with CCI & E and Bangladesh Bank ➢ Full name and address of the applicant ➢ Registration number of the applicant with CCI & E

4.11 Import Mechanisms

To import, a person should be competent to be an importer. According to import and export control act, 1950, the officer of the chief controller of import and export provides the registration certificate (IRC) to the importer. After obtaining this, this person has to secure a letter of credit authorization (LCA) from Bangladesh Bank and then a person becomes a qualified importer. He is the person who requests or instructs the opening bank to open an L/C. He is also called opener or applicant of the credit.

4.11.1 Proposal for Opening of L/C

Opening letter of credit means the bank issuing L/C on the request of applicant or importer in favor of exporter or beneficiary. The applicant or importer expresses his aspiration by writing on own Letter Pad to EXIM bank. According to import policy unless otherwise specified, all imports is to be made by opening irrevocable letter of credit. L/C can be opened against proforma invoice if the exporter has no agent and L/C can be opened if the foreign supplier has an indenting agent. In case of an L/C of a small amount only the prescribed application form i.e. the LCA (Letter of credit application) form is enough to open an L/C. But when the L/C amount is reasonably high, and then the importer is asked to submit a proposal to the bank authority to have a limit of L/C amount. This proposal should be approved in the meeting of the executive committee of the bank. The sufficient features of a proposal are —

➢ Full particulars of bank account ➢ Nature of business ➢ Required amount of limit ➢ Payment terms and conditions ➢ Goods to be imported ➢ Offered security ➢ Repayment schedule

A credit officer scrutinizes this application and accordingly prepares a proposal called Letter of Credit Porposal(LCP) and forwards it to the Head Office Credit Committee (HOCC). The committee, if satisfied, sanctions the limits and returns back to the branch. Thus the importer is entitled for the limit.

4.11.2 L/C Application

EXIM Bank provides a printed form for opening of L/C to the importer. This form is known as credit application form. A special adhesive stamp is affixed on the form. While opening L/C, the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin percentage. The importer provides the information -full name and address of the importer, full name and address of the beneficiary, credit to be advised by (Tele transmission/Airmail/Courier), availability of the credit by sight payment acceptance/ negotiation/deferred payment, time bar within which the document should be presented, sales type (CFR/ FOB/C&F), shipment date, place and transport, brief specification of commodities, price, and quantity, indent no, etc., country of origin, Bangladesh Bank registration No., import license, LCA No., current account number, Import Registration Certificate Number, H.S. Code number, insurance cover note/policy number, date, amount, name and address of the insurance company, Weather the partial shipment is allowed or not, Weather the Trans shipment is allowed or not, last date of shipment, last date of negotiation, other terms and condition if any, TIN number, margin in per cent against the L/C. EXIM Bank corresponding officials write this L/C information to the L/C opening register book and send the information through T24 software to the head office.

4.11.3 Registration of Letter of Credit Authorized (L/CA) Form

Cash foreign currency, product pledge, donation and other cases where the registration of Bangladesh Bank is necessary in that case the selected bank will send 7 copies of LCA form to the registration unit of Bangladesh bank. The 1sT and 2nd copies of LCA form will be send to the EXIM Bank and 4th and 5th copies to the authorities of import control for auditing and recording within 15 days.

4.11.4 Securitization of LIC Application

The bank officials scrutinizes the application in the following manners- ➢ The terms and condition of the L/C must be complied with UCPDC 500 and exchange control & import trade regulation. ➢ Check the signature and seal of L/C forms. ➢ Check the signatures of both the parties of supplier of Proforma invoice/ indent. ➢ Check the exchange rate mentioned accurately. ➢ Reimbursement clause is available or not. ➢ Eligibility of goods to be imported. ➢ The L/C must not be opened in favoring of the importer. ➢ Radioactivity report in case of food item. ➢ Survey reports or certificate in case of machinery. ➢ Carrying vessel is not of Israel or Serbia- Montenegro. ➢ Certificate declaring that the item is in operation not more than 5 years in case of car.

Besides these, EXIM Bank officials become sure about the following matters and takes necessary steps-

➢ The selected importer has legal import registration certificate (I.R.C.). ➢ The renew fee is paid accordingly that year. ➢ Credit status of the prospective applicant. On scrutiny, if the application is found prepared then the L/C is opened and particulars of the same are recorded in the L/C register and posting is made in T24 software with detail descriptions and with the names and copies of collected documents. Then the transmission of L/C is done through the following three methods-

➢ Telex ➢ Courier ➢ SWIFT(Society for World wide inter-bank financial transaction) ➢ How the L/C is transmitted to the beneficiary is mentioned in the L/C.

If the amount exceeds US$ 10,000 the bank takes the credit report of the beneficiary (CIB report) to ensure the worthiness of the supplying goods. The basic information of beneficiary is provided by the credit information bureau or by the Bangladesh Bank or the NRB or other authentic sources.

4.11.5 Amendment of L/C

Parties involved in L/C, particularly the seller and the buyer cannot always satisfy the terms and conditions in full as expected due to some obvious and genuine reasons. In such a situation, the letter of credit should be amended. The bank transmits the amendment by SWIFT to the advising bank. In case of revocable credit, it can be amended or cancelled by the issuing bank at any moment and without prior notice to the beneficiary. But in case of irrevocable letter of credit, it neither be amended nor cancelled without the agreement of issuing bank, the confirming bank (if any) and the beneficiary. For any amendment the importer must request the issuing bank in writing accordingly supported by revised indent/pro-forma invoice. The issuing bank then advises the required amendment to the advising bank or confirming bank and the beneficiary. If the L/C is revised, service charge and SWIFT charge are debited from the party account accordingly.

4.11.6 Adding Confirmation

Confirming bank gives confirmation at the request of the issuing bank. Conforming bank may or may not be the advising bank. The confirmation is not arranged before with the issuing bank. It is a inter bank connection with world’s other bank. Confirming bank confirms the beneficiary on issues -amount of items to be imported, name and address of the applicant, name and address of the beneficiary, tenor Date of shipment., date of expiry, port of loading, port of discharge, name of the advising bank, name of the reimbursing bank, name of the confirming bank.

4.11.7 Presentation of the Documents

The seller receives the letter from the issuing bank or advising bank. The seller being satisfied with the terms and conditions of the credit proceeds to dispatch the required goods to the buyer. After proper shipments of goods as per terms and conditions of the L/C, the seller has to present the shipping documents and other required to the negotiating bank on or before stipulated expiry date of the credit. After receiving all documents, the negotiating bank, then checks the documents against the L/C. If the documents are found in order as per L/C, then the negotiating bank negotiates the drafts by making payment to the beneficiary. Then the negotiating bank/advising bank forwards the drafts along with the shipping documents to the L/C opening bank. The usual documents

➢ Commercial invoice ➢ Non-negotiable Bill of lading ➢ Clean reports of findings ➢ Shipping advice ➢ Bill of exchange ➢ Packing list ➢ Pre-shipment inspection report. ➢ Certificate of origin ➢ Shipment certificate ➢ Local currency adjustment factor

The reimbursing bank (authorized by opening bank) makes payment to the negotiating bank by debiting NOSTRO A/C of the opening bank. Negotiating bank has got the option to send the drafts and documents to opening bank for collection.

4.11.8 Examination of Documents

if the issuing bank receive the import documents which have been negotiated. Export Import Bank of Bangladesh Limited (EXIM) officials check weather these documents has any discrepancy or not. Here discrepancy means the dissimilarity of any documents with the terms and conditions of LIC. The discrepancies are as follows- ➢ Full copies of documents as mentioned in the L/C have been received (6 copies). ➢ Whether the presentation date is latter than the date of L/C expire date. ➢ Commercial invoice-how many ➢ Packing list-how many ➢ Delivery date is greater than the last shipment date ➢ Export L/C is written in all the document ➢ Amount is correct ➢ Whether the shipment is partial check in the L/C ➢ Bill of Exchange is dully presented

In case any fault is identified in documents, the bank immediately informs the importer, whether it is acceptable or not. If the documents are not acceptable by the importer then L/C opening bank sends message by Swift to the negotiating bank for perceiving what mainly has to be taken. However, if the fault is acceptable by the importer, he should inform this to the bank. After proper scrutinizing, L/C is entered into the FDBC (Foreign Documentary Bill for Collection) register and this prouder is called lodgment. At the end of month the bank has to send monthly statement on this regard to the head office.

4.11.9 Retirement of Shipping Documents

On security, if it is found that, the documents drawn are in order of EXIM Bank, lodges the documents in payment against Documents (PAD) and few vouchers are passed.

4.11.10 Retirement or Import Bills

Importer will deposit the claim amount that the L/C value to the EXIM Bank Banker will prepare and pass retirement vouchers after certifying invoice then the Bank passes of vouchers. Then EXIM Bank officials entry this in the register. The Endorsement is made in the bill of exchange and transport document i.e. B/L AWB RB etc. At the end of the total procedure, importer takes the retirement of import bills/clearing c certificate from the Bank. the Importer ‘will clear the, goods from the port through the Clearing Agent and Forwarding Agent. On the other hand, completing the above all steps in the issuing Bank will prepare ‘Foreign Exchange Transaction Schedule” and send one copy to international division of Head Office and another one copy to recommendation.

4.11.11 Payment Procedure of the Import Documents

This is the most sensitive task of the import department. The officials have to be very much careful while making payment. The task constitute the followings- ➢ Date of payment- Usually payment is made within five days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay. ➢ Preparing sale memo- a sale memo is made at B.C rate to the customer. As the TT & O.D rate is paid to the ID, the difference between these two rates is exchange trading. Finally an inter branch exchange trading credit advice is sent to ID. ➢ Requisition for foreign currency- for arranging necessary fund for payment a requisition is sent to the ID. ➢ Transmission of telex- a telex is transmitted to the correspondent bank ensuring the payment is being made.

4.12 Post Import Credit

Post import credit is called the kind of credit which is managed for unloading and warehousing the imported goods. Importer should bear its price, duty and sales tax etc. after reaching the goods in the port. Importer does not come to the bank to settle the transaction due to fund deficiency. In that case importer instructs EXIM Bank to unload the goods. Most of the time, importer does not come at all to unload these goods with his own accord. In that case EXIM Bank unloads the goods from the port and informs the importer creating a loan account to the name of importer which is called in the banking sector as forced loan. Importer can take the loan facility by the following names-

1. Payment against Documents: Payment made by the bank against lodgment of shipping documents of goods imported through L/C falls under this head. It is a temporary advance connected with import and is generally liquidated against payments usually made by the party for retirement of the documents for release of imported goods from the customs authority. It falls under the category of commercial loan.

2. Loan against Imported Merchandise (LIM): If the importer does not come to negotiate the shipping documents from the issuing bank it creates EXIM Bank clears the goods from the port and holds the goods in its warehouse. Beside the above as soon as the imported goods come to the port, the importer may fall into financial crisis and requests the bank to clear the goods from the port by making payment to the exporter. In this case, the party later may take the goods partly or filly from the banks by making required payment (if he/she takes the goods time-to-time, payment will be adjusted simultaneously).

3. Loan against Trust Receipt (LTR): Import documents are delivered against LTR issued by the importer to the bank for unloading goods. Generally this facility is given to the importer of government sector or the reliable clients of the bank. This type of loan is also granted to those people who take other types of loan facility from the bank. This facility is granted maximum for 3 months.

4.13 Reporting to Bangladesh Bank

Authorized Dealers shall report to the Bangladesh Bank particulars of all their foreign exchange transactions relating to import. For this purpose, authorized dealers must submit to the Bangladesh Bank monthly Summarized statements of their transactions in each currency in which a position is maintained by them and monthly summary statement of transactions effected on the Taka accounts of non-resident banks. The branches should submit the original copies of Statements/ Schedules directly to the Statistics Department, Bangladesh Bank, Head Office, and Dhaka the duplicate copies along with the relevant forms should be endorsed to the concerned area office of Bangladesh Bank. These monthly Statements/ Schedules from the branches should be so dispatched as to reach the Statistics Department at Head Office and the concerned area office of Bangladesh Bank by the 5th day of the following month. The monthly Statements/ Schedules from the Head Office/ Principal Office of the Authorized Dealer bank should likewise reach the Statistics Department at Head Office and the concerned area office of Bangladesh Bank by the l2th of the following month. The reporting procedures in this respect is as follows —

➢ Fill-up the E-2/P-2 schedule of S-1 category. The whole month import amount, quantity, goods category, country, currency, etc. all are mentioned. ➢ Respective IMP forms are attached with the schedule to fill E-3/P-3 for all invisible payment. ➢ Original IMP is forwarded to Bangladesh Bank with mentioning invoice value. The importer must sign it. ➢ Duplicate IMP is skipped with the bank along with the bill of entry. ➢ Triplicate IMP is kept with the bank for official record. ➢ Quadruplicate is kept for submission to Bangladesh Bank in case of import where documents are retired.

4.14 Export Section of EXIM Bank

By the term export, we mean that carrying of anything from one country to another. On the other hand, bankers define export as sending of visible things outside the country for dale. Export trade plays a vital role in the development process of an economy. With export earning, we meet our import bills.

The export trade of the country is regulated by the Import and Export (Control) Act, 1950. There are some formalities, which an exporter has to fulfill before arid after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry of Commerce through chief Controller of Imports and Exports (CCI&E). No exporter is allowed to export any commodity from Bangladesh unless he/she is registered with Chief Controller of Export & Import (CCI&E) and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year and this task is generally done by the bank. As per instruction by Bangladesh Bank, the bank has to report respective department of Bangladesh bank by mentioning latest payment. There are a number of activities that Export section should do. Some of these activities are- ➢ Scrutiny of export shipping documents. ➢ Follow up for realization of export proceeds. ➢ Authentication of L/C to the beneficiary. ➢ Transfer of export L/C to the beneficiary (exporter) and issuance of notice of transfer o L/C issuing bank. ➢ Recording of export L/C particulars in export L/C transfer register. ➢ Realizations of proceeds realization certificates, issuance of proceeds realizations certificate.

4.15 Documents Required for Export

There are a number of formalities, which on Exporter has to fulfill before import goods. These formalities are explained bellow —

1. Export Registration Certificate (ERC)

Similar to any other business, exporters are required to obtain ERC from the offices of the Chief Controller of Import and Export (CCI&E). No person is allowed to export any goods from Bangladesh without obtaining such ERC. For Registration, prospective Exporters required to submit the following documents — ➢ Application form ➢ Fees paid as treasury invoice ➢ Asset certificate ➢ Income tax clearance ➢ Valid trade license ➢ Nationality certificate ➢ Bank’s solvency certificate ➢ Registered partnership deed ➢ Memorandum & articles of association and certificate of incorporation ➢ Copy of rent receipt of the business firm ➢ Copy of rent receipt of the business premises.

On receipt of the above documents to the office of CCI&E, the applicant is required to deposit required registration fee to the treasury office and the receipted invoice should be sent to CCI&E office for enabling there to issue ERC. Every year registered exporters are to make payment of prescribed fee towards renewal of ERC.

2. Export Form

All Export of which the requirements of declaration vide Para- I of chapter XXI of Exchange Control Manual of Bangladesh Bank applies must be declared on the EXP forms by the customer, now issued by the Authorized Dealers. Rajuk Avenue Branch of EXIM Bank is an Authorized Dealer, which supply EXP form to the exporters. In all cases, the forms will be completed and signed by the exporter or his authorized agent.

Disposal of Export Form: The EXP Form is of 4 copies that have different use in different parties- 1. Original copy is sent from Custom Authority to Bangladesh Bank after shipment goods. 2. Duplicate copy is sent from Negotiating Bank to Bangladesh Bank after negotiation. 3. Triplicate copy is sent from Negotiating Bank to Bangladesh Bank after realization of the proceeds of the Export Bill. 4. Quadruplicate copy is retained by the Negotiating Bank as Office Copy. All shipping documents covering goods exported from Bangladesh and declared on EXP Form must be passed through the medium of an AD within 14 days from the date of shipment. The copies of the EXP Form and the shipping documents etc. should be submitted to the AD in time to enable it to submit the certified duplicate copy of the EXP Form to the Bangladesh Bank within 14 days from the date of shipment of the goods covered by the form. The export form contains in the Exp form are AD’s code, commodity to be exported, country of destination, quantity in unit and volume basis, value that means currency in which value is declared and amount of invoice value terms, terms of sale, name and address of importer, name of carrying vessel, bill of lading/ railway receipt/ airway bill/truck receipt/post parcel receipt, port of shipment/ post office of dispatch, land custom post, shipment date, name of the exporter with address, CCI&E’s registration number and date of the exporter, sector (public and private) under which the exporter falls. The export form must be filled up, signed by the importer, and certified by the authorized dealer.

4.16 Export Mechanism

The export trade of the country is regulated by the Import and Export (Control) Act, 1950.No exporter is allowed to export any commodity from Bangladesh unless he/she is registered with Chief Controller of Export & Import (CCI&E) and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year and this task is generally done by the bank. As per instruction by Bangladesh Bank, the authorized bank has to report to the respective department of Bangladesh bank by mentioning latest payment.

4.16.1 Acquiring ERC/Registration

The applicant is required to deposit required registration fee to the treasury office with required documents and receipted Invoice should be sent to CCI&E office for enabling there to issue ERC. Every year registered exporters are to make payment of prescribed fee towards renewal of ERC.

4.16.2 Obtaining EXP Form

Rajuk Avenue Branch of EXIM Bank is an Authorized Dealer, which supply EXP form to the exporters. He must submit following documents: ➢ Trade license ➢ Export Registration Certificate (ERC) ➢ Certificate from concerned Government Organization

After satisfaction on the documents, the banker will issue EXP form to the exporter. The authorized bank gives entry to the EXP register when the EXP form is issued. Before lodging the EXP Forms with the Customs /Postal Authorities, the exporter should get copies of the forms certified by an AD. After receipt of the EXP Forms from the exporters for certification purposes, the ADs will see and ensure that each set of the forms is duly filled in. Thereafter, they will record full particulars of the forms in the Export Register to be maintained as per proforma at Appendix 5/65 and assign a number for each set of the EXP forms in the following manner, which is to be inserted in the space provided at the top of each form:
|AD’ Code Number |Register Serial |Year |
| | | | |
| Import |
|1 |L/C opening commission under cash |1st Quarter |@0.25% |
| |(with | | |
| |100% cash margin realized at the | | |
| |time of | | |
| |opening L/C) | | |
| | |For each subsequent |@0.25% |
| | |quarter | |
| | |Minimum |Tk.=1000/- |
|2 |L/C opening commission under |1st Quarter |@0.40% |
| |cash(below 100% cash margin) | | |
| | |For each subsequent |@0.40% |
| | |quarter | |
| | |Minimum |Tk.=1000/- |
|3 |L/C opening commission under ID/ |1st Quarter |@0.40% |
| |Loan/Credit/Barter etc. | | |
| | |For each subsequent |@0.30% |
| | |quarter | |
| | |Minimum |Tk.=1000/- |
|4 |L/C opening commission or back to |1st Quarter |@0.40% |
| |back L/C on Account of Export | | |
| |oriented Garments, textile | | |
| |industries etc. | | |
| | |For each subsequent |@0.40% |
| | |quarter | |
| | |Minimum |Tk.=1000/- |
|5 |L/C opening commission for deferred |1st Quarter |@0.50% |
| |payment | | |
| | |For each subsequent |@0.50% |
| | |quarter | |
| | |Minimum |Tk.=1000/- |
|6 |If L/C are transmitted by |India |At actual |
| |mail/courier (this shall cover cost | | |
| |of registered mail of L/C to | | |
| |advising bank and copy to | | |
| |reimbursing bank) | | |
| | |Other SAARC countries |At actual |
| | |All other countries |At actual |
|7 |If L/C are transmitted by full telex| |Tk. 3000/- Flat |
| |or swift | | |
|8 |If L/C's are transmitted in short | |Tk.=1,000/- |
| |and nonoperative | | |
| |Telex/SWIFT | | |
|9 |Amendment of L/Cs by Mail(this shall| |Tk. =750/- Flat |
| |cover | | |
| |cost of Registered Mail of | | |
| |amendments of the | | |
| |advising and reimbursing Bank) | | |
|10 |If amendment of L/C is transmitted | |Tk. =750/- Flat |
| |by SWIFT | | |
|11 |If amendment includes increase of | |As per L/C opening commission rate. Plus |
| |value or | |Sl no. 9 or 10, which is applicable. |
| |extension of time, then L/C opening | | |
| |commission for additional time and | | |
| |value | | |
| |should be recovered as prescribed at| | |
| |the | | |
| |opening stage. | | |
|12 |If Amendment intended to avoid | |As per L/C opening commission/charge |
| |opening of | |rate. |
| |fresh L/C shall be recovered. | | |
| |For our arranging confirmation from | | |
| |Third | | |
| |Bank | | |
|13 |For sight L/Cs on applicant's | |@2.00% Flat |
| |account | | |
|14 |For sight L/Cs on beneficiary’s | |@0.20% Flat |
| |account charges to be recovered from| | |
| |the applicant | | |
|15 |For D.P. L/Cs up to 180days on | |@3.00% Flat |
| |applicant's | | |
| |A/C. | | |
|16 | For D.P. L/Cs over 180days | |@ 3.50% Flat |
|17 |For D.P. L/Cs on beneficiary’s | |@0.20% Flat |
| |account charges to be recovered from| | |
| |the applicant | | |
|18 |Service charges and F.C. account | |Nil |
| |activity fee for all types of | | |
| |L/C(FCC) | | |
|19 |Amendemnt all types of L/C | |Tk. 750/- |
|20 |Cancellation charges for expired or | | |
| |unutilized | | |
| |L/C. | | |
| |A) By Cable/ telex/Swift | |Nil |
| |B) By Air Mail | |Nil |
|21 |Acceptance commission under deferred|1st Quarter |@0.40% |
| |payment L/Cs. | | |
| | |For each subsequent |@0.40% |
| | |quarters or part thereof | |
| | |Minimum |Tk.=1000/- |
|22 |Deduction on discrepancy fee from | | Bills for |
| |Import bills. | | |
| | | |$ 1 to $ 10,000/- |charges $25/- |
| | | |$ 10,001/- to $ |charges $50/- |
| | | |100,000/- | |
| | | | $ 100,000/- to above |charges |
|23 |Collection of Credit Report on the | |US$50.00 plus Service charge for Tk. = 500/- |
| |beneficiary | | |
| |of the L/C by Telex/SWIFT (Other | | |
| |than D&B). | | |
| Export |
|24 |Negotiation commission on export | |@0.15%-Flat |
| |bill in | | |
| |Foreign Currency (where documents | | |
| |are | | |
| |purchased at a discount) | | |
|25 |Negotiation commission export bill | |@0.15%-Flat |
| |in Local | | |
| |Currency | | |
| |(where discounting is not allowed | | |
| |particularly | | |
| |for bills under barter/STA) | | |
|26 |Advising of foreign Bank L/C (Export| |Tk. 750/- |
| |L/C) to the local beneficiary. | | |
| |Amendment to above | |Tk. 750/- |
| |Transfer of export L/C | |Tk. 750/- |
| |Pre-advising of export L/C | |Tk. 750/- |
| |Adding of confirmation | |@0.20% per quarter |
| |Issuance of PRC | |Tk. 500/- per certificate |
|27 |Foreign Bank's Guarantee Commission | |At actual |
| |against Discrepant Bills | | |
|28 |Deduction of discrepancy fee from | |Upto USD 50,000/- Charges $ 50/- |
| |Import | |Above USD 50,000/- Charges $ 100/- |
| |bills(BTB). | | |
|29 |Collecting Bank's charges | |At actual |
| |abroad. | | |
|30 |Documents under collection | |@0.15% |
| |foreign currency (where buying & | | |
| |selling | | |
| |allowed.) | | |
|31 |Documents under collection of | |@0.15% |
| |foreign currency (where buying & | | |
| |selling is not | | |
| |allowed.) | | |
|32 |Any other charges not mentioned | |At Actual Minimum Tk. 1,000/- |
| |above | | |
|33 |Mailing of Export documents |By courier |Tk. 2500/- |
| |By Mail Tk. 750/- | | |
| | |By mail |Tk. 750/- |
| Foreign Bank Guarantee |
|34 |Advising of Gaurantees to the | |Our Clients Tk. = 1,000/- |
| |beneficiary in | |Non-clients Tk. = 1,500/- |
| |original without any engagement on | | |
| |out part. | | |
|35 |Advising of Gaurantees in original | |@0.50% per quarter or part thereof |
| |by adding | |Minimum Tk.=1,500/- or US$25.00 |
| |confirmation. | | |
|36 |Advising of Guarantee in our | |@0.50% per quarter or part thereof |
| |own format or on the format | |Minimum Tk.=1,500/- or US$25.00 |
| |supplied by the opening Bank with | | |
| |our full | | |
| |engagement. | | |
|37 |Indemnity for shipping Guarantee in | |Tk. =1,500/- |
| |absence | | |
| |of original documents (provided 100%| | |
| |value | | |
| |document plus 5% as Exchange | | |
| |Fluctuation | | |
| |risk/F. Bank charges is deposited by| | |
| |the | | |
| |client.) | | |
| Foreign Remittance |
|38 |Purchase of foreign Bank | |Tk.=0.25 per US Dollar Tk.=0.25 per Euro |
| |Drafts drawn abroad | |Tk.=0.40 per GBP all other currencies at |
| | | |par with US Dollar |
|39 |Payment of any foreign Taka Draft on| |No charges |
| |our | | |
| |Bank | | |
|40 |Payment of any foreign T.T.in Taka | |No charges |
| |at our counter. | | |
| Collection |
|41 |For Collection of clean item (F.C. | |Our Clients-Tk.100/- Non clients Tk.=300/ |
| |draft/cheque etc.) | |plus Postage |
|42 |For inward documentary Bills for | |@0.25% minimum Tk.=500/- |
| |collection | | |
| |(without L/C) | | |
|43 |For inward documentary Bills for | |@0.25% minimum Tk.=750/- |
| |collection | | |
| |under Grant (without L/C) | | |
|44 |Handling charges for collection of | |At actual plus Tk. =300/- to be deducted form the|
| |foreign of | |collected proceeds. |
| |Foreign currency drafts from abroad | | |
|Passport Endorsement |
|45 |Issuance of T.CEndorsement | |Rulling BC selling rate plus 1% |
| |in passport | |commission and Tk.=300/- fee per passport. |
|46 |Issuance of Cash (F.C.)- | |Rulling BC selling rate plus Tk.=300/- fee per |
| |Endorsement in passport | |passport. |
|47 |Transaction by Nominee/ | |No charges |
| |Account holder in F.C. accounts | | |
|48 |Issuance of F.C. Drafts on | |Tk.=500/- per instrument |
| |foreign correspondents | | |
|49 |Remittance by TT (F.C.) Through | |Tk.=1,000/- per TT including telex charges |
| |foreign | | |
| |correspondents | | |
|50 |Cancellation of Drafts in | |Tk. =500/- Flat |
| |foreign Currency | | |
|51 |Opening of Student File in F.C. | |Tk.=3,000/- per File |
| Others |
|52 |Handling of documents for MPI(LIM) | |@0.15% on the landed cost subject to minimum Tk. |
| | | |1,000/- |
|53 |Application/ confirmation of | |Tk.=500/- flat per new test or confirmation (our |
| |Test (Applicable for other banks | |Bank reserves the right to refuse such service to|
| |only) | |other Banks) |
|54 |Credit Information on Local | |US$50.00 Flat per instance |
| |Firm/Companies | | |
|Inland L/C |
|55 |Opening Commission |1st Quarter |@0.40% |
| | |For each subsequent |@0.40% Tk. =1000/- |
| | |quarter | |
|56 |Advising of L/C | |Tk. 750/- |
|57 |Reimbursement of ILC | |Tk. =1,500/- or US$ 15.00 or Euro 12.00 |
| | | |Flat per Reimbursement |
|58 |Negotiation of local bill in Taka | |Profit Rate of Investment |
|59 |Processing of Inland documents under| |@0.15% |
| |collection in F.C. (where buying & | | |
| |selling is not | | |
| |allowed) | | |
|60 |Processing of Inland documents under| |@0.15% |
| |collection in F.C. /TK. (where | | |
| |buying & selling | | |
| |is not allowed) | | |
|61 |Cash Incentive application | |Tk. =3,000/- per application. |
| |processing fees | | |
|62 |Bills of lading / Bank Guarantee | |Tk.=200/- Per Deal / Unit |
| |Authentication | | |
| |/ Verification fees / Charges | | |

Chapter 5
Performance Analysis of Foreign Exchange Business of
EXIM Bank Limited

5.1 Foreign Exchange Business Performance EXIM Bank

Foreign exchange business performance of the financial year has been analyzed from 2005-2009. The growth rate is shown in these years.

Table 5.1 Foreign Exchange Business
|Year |Foreign Exchange Business |Growth Rate |
| |(Amount in million Taka) | |
|2005 |72940.00 |0.0% |
|2006 |96175.10 |31.86% |
|2007 |117900.14 |22.59% |
|2008 |156434.57 |32.68% |
|2009 |162604.61 |3.94% |

Graphical Presentation of Foreign exchange Business over the years

[pic] Figure 5.1 Foreign Exchange Businesses

Interpretation: Export Import Bank of Bangladesh Limited is doing good job in foreign exchange businesses over the years. From the above graph we can see, this bank is not performing well in the foreign Exchange business. In the year 2006 performance growth is slightly down as their expectation. But in 2008, it again achieves sharp growth in foreign exchange businesses. But in 2009 the foreign exchange business falls down sharply. As far as Trend Line is concerned, EXIM Bank must be careful to improve the foreign exchange performance in the future to stay competitive.

5.2 Import Business

As on 31 December 2009, the bank opened 36834 letters of credit and the import volume stood at Tk.83911.51 million with a growth of 6.84% in volume in comparison with previous year of Tk.78540.49 million.

Table 5.2 Import Business (Amount in Million)
|Year |Import Business |Growth Rate |
|2005 |41432.00 |0.0% |
|2006 |49596.70 |19.71% |
|2007 |61399.40 |23.78% |
|2008 |78540.49 |27.92% |
|2009 |83911.51 |6.84% |

Graphical Presentation of Import Business:

[pic] Figure 5.2 Import Businesses

Interpretation: EXIM Bank Limited displays more or less consistent growth in Import businesses from 2006 to 2008. Import business has contributed the lion share in total foreign exchange business. From the above graph we can see, that import business grows steadily from 2006 to 2008. In 2009 the growth rate of import business falls to 6.84%. Trend Line shows that EXIM Bank authority need to be careful in providing special services to import business client.

5.3 Export Business

As on 31St December 2009, the bank handled 33575 export bills for Tk. 76240.77 million while it was Tk.76465.62 million in the previous years.
|Year |Export Business |Growth Rate |
| |(Amount in million TK) | |
|2005 |31285.00 |0.0% |
|2006 |46234.60 |47.79% |
|2007 |55790.42 |20.67% |
|2008 |76465.62 |37.06% |
|2009 |76240.77 |(0.29%) |

Table 5.3 Export Businesses (Amount in Million)

Graphical Presentation of Export Business

[pic]

Figure 5.3 Export Businesses

Interpretation: Export Import Bank of Bangladesh Limited has performed poorly in Export business over the years. The above graph demonstrates that this bank has achieved highest growth rate in 2006. In 2007 it falls due to unknown reason to 20.67%. But again in 2008 it increased quickly to 37.06%. In 2009 the export business broke all the point by making unenthusiastic growth rate export business by 0.29%. As far as Trend Line is concerned, EXIM Bank will be out of competitive range in export business with other banks.

5.4 Foreign Remittance:

As of 31st December 2009, foreign remittance of the bank stood at Tk.2452.33 million as against Tk.1428.46 million in 2008 with a growth rate of 71.68%. For smooth handling of foreign remittance our bank opened branches in remote areas. The bank has made remittance arrangements with several local banks to facilitate faster delivery of remitted fund to the beneficiaries. To encourage Bangladeshi expatriates in sending hard earned money through legal channels, the bank has opened exchange house in London, UK in the name of “EXIM Exchange Company (UK) Limited” fully owned by the bank. The bank has also been trying to open exchange house in Canada and USA subject to the approval of the regulatory bodies. We have remittance arrangements with Western Union Money Transfer. We are a member of EL DORADO which is a web based remittance system for facilitating bank to bank, intra bank electronic fund transfer.

Table 5.4 Foreign Remittance

|Year |Foreign Remittance |Growth |
| |(Amount in million Taka) | |
|2005 |224.00 |0.0% |
|2006 |343.80 |54.17% |
|2007 |710.32 |106.61% |
|2008 |1428.46 |101.10% |
|2009 |2452.33 |71.68% |

Graphical Presentation of Foreign Remittance

Figure 5.4 Foreign Remittance

Figure 5.4 Foreign Remittance

Interpretation: Foreign Remittance business is not an insignificant part of foreign exchange business services. EXIM Bank earns a good amount of money by doing this business. In 2006 and 2007 remittance business increased. In 2007 it records highest growth rate of 106.61%. But in 2009 this business falls to 71.68%. It may happen due to some remitting countries foreign expatriate policy and the people’s return to the home. Though there is a fluctuation in foreign remittance business growth over the year, trend line depicted that EXIM bank’s foreign remittance business future is bright.

5.5 Stability of Export and import Business of EXIM Bank:

Stability in foreign exchange business is influenced by several international and domestic factors. Factors that influenced in foreign exchange businesses are — exchange rate, bargaining power of exporter and importer, country’s political disorder, competitiveness of banking sector and other macro economic factors.

For measuring stability of export and import business of EXIM Bank, we have calculated Standard deviation (SD) and Coefficient of variation (CV) which is relative measures of standard deviation. From average we get one single value of export and import business that describes the characteristics of the entire data. Standard deviation shows how far an average is representative of the entire data. On the other hand, coefficient of variation points out the relative measure of variation. When we want to compare the variability of two or more than two series, we use this. That series for which coefficient of variation is greater is said to be more variable or conversely less consistent. In contrast the series for which coefficient of variation is less, is said to be less variable or more consistent.

Table 5.5 Export Import Business (Amount in million Taka)
|Year |Export Business |Import Business |
|2005 |31285.00 |41432.00 |
|2006 |46234.60 |49596.70 |
|2007 |55790.42 |61399.40 |
|2008 |76465.62 |78540.49 |
|2009 |76240.77 |83911.51 |
|Average |57203.28 |62976.02 |
|SD |17478.72 |16286.09 |
|CV |30.56% |25.86% |

Interpretation: Here we see, average export and import of EXIM Bank are accordingly Taka 57203.28 and Taka 62976.02. The average export business is greater than import. But standard deviation in export business of EXIM Bank is Taka 17478.72 and Coefficient of Variation is 30.56%. On the other hand import business standard deviation is of Taka 16286.09 less than standard deviation of export. But coefficient of variation of import is 25.86% that is less than export which clearly suggest that import business of the Export Import bank of Bangladesh limited is more stable then the business of export.

5.6 Calculation of Coefficient of Correlation:

EXIM Bank limited earns a huge amount of profit from foreign exchange business. The incomes earned during the year come not only from investment but also from foreign exchange activities. The relationship of profit, export and import can be measured by the correlation analysis of the five years data mentioned in the annual report. The statistical tool with the help of which the relationships between two variables is studied is called correlation. The measure of correlation is called coefficient of correlation that is denoted by small letter ‘r’. Coefficient of correlation summarizes in one figure the direction and degree of correlation. The value of coefficient value of correlation shall always lie between +/-1. When r = +1, It means there is perfect positive correlation between 2 variables. When there is r = -1, it means there is perfect correlation between 2 variables. When r =0, it means there is no relationship between 2 variables. We normally get values that lie between +1 and -1. The calculation of coefficient of correlation between Export, Import and Profit is mentioned in Appendices Table 3 and Table 4.

Table 5.6 Coefficient of Correlation (Amount in million Taka)

|Year |Export Business |Import Business |Profit After |
| | | |Tax |
|2005 |31285.00 |41432.00 |555.34 |
|2006 |46234.60 |49596.70 |650.29 |
|2007 |55790.42 |61399.40 |930.84 |
|2008 |76465.62 |78540.49 |1096.63 |
|2009 |76240.77 |83911.51 |1694.10 |
|Formula r =∑ x*y/√ x^2*√ y^2 |
|Export Business r =0.865 of Export |
|Import Business r= 0.925 of Import |

Interpretation: From the EXIM Bank measurement of correlation, we see that both export and import business have positive correlation with the profit. Here correlation coefficient (R) of export & profit is 0.865 which clearly indicated the positive movement direction of the two variables. On the other hand R of import & profit is 0.925 which is almost perfectly positively correlated that indicates that if import business increases then profit after tax will be increased by same proportion. So, if EXIM Bank Limited wants to achieve high profit, it has to pay more attention on import Business.

5.7 Regression Analysis

The statistical tool with the help of which we are in a position to estimate the unknown values of one variable from known values of another variable is called Regression.

If we take the case of two variables X and Y we shall have two regression lines as the regression line of X on Y and the Regression line of Y on X. The regression line of Y on X gives the most probable values of Y for given values of X and the regression line of X on Y gives the most probable value of X for given values of Y. thus we have two regression lines. Where there is either perfect positive or perfect negative correlation between the two variables, the two regression lines will coincide; we will have one line. The farther the two regression lines from each other the lesser is the degree of correlation and the near the two regression lines to each other, the higher is the degree of correlation. If the variables are independent, r is zero and the lines of regression are at right angles.

Regression equations are algebraic expression of the regression lines. Since there are two regression lines, there are two regression equations- the regression equation of X on Y is used to describe the variations in the values of X for given changes in Y and the regression equation of Y on X is used to describe the variation in the values of Y for given changes in X. The parameter ‘a’ determines the level of the fitted line. The parameters ‘b’ determines the slope of the line X= a + b Y------------ (5.1) Y=a + b X ------------- (5.2)

5.7.1 Calculation of Regression Equation of Profit on Export Business (Amount in Million)

|Year |Export |(X-X`) |(X-X`)^2 |Profit |(Y-Y`) |(Y-Y`) ^2 | x*y |
| |Business(X) |x |x^2 |After |y |y^2 | |
| | | | |Tax (Y) | | | |
|2005 |31285.00 |-25918.28 |67175 |555.34 |-430.10 |184986.01 |11147 |
| | | |7238.20 | | | |452.23 |
|2006 |46234.60 |-10968.68 |12031 |650.29 |-335.15 |112325.52 |36761 |
| | | |1940.90 | | | |53.10 |
|2007 |55790.42 |-1412.86 |19961 |930.84 |-54.6 |2981.16 |77142.16 |
| | | |73.38 | | | | |
|2008 |76465.62 |19262.34 |37103 |1096.63 |111.19 |12363.22 |21417 |
| | | |7742.30 | | | |79.56 |
|2009 |76240.77 |19037.49 |36242 |1694.10 |708.66 |502199.00 |13491 |
| | | |6025.5 | | | |107.66 |
|N=5 |∑X=286016.41 |∑(X-X`) |∑x ^2 |∑Y= |∑( Y-Y`)=0 |∑y^2 |∑x*y=30533 |
| | |=0 |=15275 |4927.20 | |=814854.91 |634.71 |
| | | |29120 | | | | |

Regression equation of Profit Y on Export X: Y-Y` = byx (X-X`) ------- (5.3)

byx =∑x*y/ ∑x^2 byx =30533634.71/1527529120 byx = 0.020
Y – Y` = 0.02(X –X`)
Y – 985.44 = 0.02X – 0.02* 57203.28
Y – 985.44 = 0.02X – 1143.43
Y = 0.02X – 1143.43 + 985.44
Y = 0.02X – 157.99

(Profit) Y’s regression equation on X (Export Business) = 0.02X-157.99
Regression Line of Profit on Export

[pic] Figure 5.5 Regression equation of profit on export business

Interpretation: With the help of this regression line, we can determine the relationship between a dependent variable Y, independent variable X. Here we can measure the dependency or relationship of one variable-Profit after Tax (Y) on Export business (X). This relationship shows that with the increase of export business the profit of the EXIM Bank will be declined by Taka 157.99. The banks need to be more careful in improving the service to boost the export business.

5.7. 2 Calculation of Regression Equation of Profit on Import Business:

(Amount in Million)
|Year |Import |(X-X`) |(X-X`)^2 |Profit |(Y-Y`) |(Y-Y`) ^2 |
| |Business |x |x^2 |After |y |y^2 |
| |(X) | | |Tax (Y) | | |
|1 |Authorized Capital |1000.00 |3500.00 |3500.00 |3500.00 |1000.00 |
|2 |Paid-up Capital |878.85 |1713.75 |2142.20 |2677.75 |3373.96 |
|3 |Shareholder’s Equity |1912.42 |3111.69 |4042.53 |4989.20 |6717.21 |
|4 |Total Capital |2179.81 |3467.37 |4569.56 |5763.89 |7718.89 |
|5 |Statuary Reserve |569.99 |810.88 |1134.64 |1532.55 |2092.97 |
|6 |Total Assets |33716.70 |41793.54 |51504.03 |68446.46 |86213.37 |
|7 |Total Liabilities |31804.28 |38681.86 |47460.50 |63457.26 |79496.16 |
|8 |Deposits |28319.21 |35032.02 |41546.57 |57586.99 |73895.46 |
|9 |Investment |26046.34 |32641.27 |40195.24 |53637.68 |68609.91 |
|10 |Investment (Shares and |1634.03 |2233.25 |2457.72 |2894.02 |2169.44 |
| |Securities) | | | | | |
|11 |Total Contingent |15941.53 |18994.09 |22632.65 |26070.57 |30109.11 |
| |Liabilities | | | | | |
|12 |Total Risk Weighted Assets|25681.45 |32401.36 |40706.47 |53428.99 |69058.87 |
|13 |Total Fixed Assets |166.98 |178.43 |200.70 |293.53 |381.98 |
|14 |Operating Income |3433.39 |4967.57 |6407.96 |8356.82 |10383.62 |
|15 |Operating Expenditure |2257.63 |3588.83 |4499.76 |5838.43 |7201.84 |
|16 |Profit before Provision |1175.76 |1378.67 |1908.20 |2518.39 |3181.78 |
| |and Tax | | | | | |
|17 |Profit before Tax |1063.30 |1199.49 |1618.80 |1989.55 |2802.12 |
|18 |Net Profit after Provision|555.34 |650.29 |930.84 |1096.63 |1694.10 |
| |and Tax | | | | | |
|19 |Foreign Exchange Business |72940.00 |96175.10 |117900.14 |156434.57 |162604.61 |
|19(a) |Import Business |41432.00 |49596.70 |61399.40 |78540.49 |83911.51 |
|19(b) |Export Business |31285.00 |46234.60 |55790.42 |76465.62 |76240.77 |
|19(c) |Remittance |224.00 |343.80 |710.32 |1428.46 |2452.33 |
|20 |NO. of foreign |222 |246 |256 |278 |333 |
| |correspondents | | | | | |
|21 |Profit earning assets |28743.43. |35161.48 |42357.65 |56192.52 |69006.56 |
|22 |Non profit earning assts |4973.27 |6632.07 |9145.38 |12253.94 |17206.81 |
|23 |Investment as a per cent |91.97% |93.18% |96.75% |93.14% |92.92% |
| |of total deposit | | | | | |
|24 |Capital adequacy ratio |8.49% |10.70% |11.23% |10.79% |11.18% |
|25 |Dividend |30 |25 |32 |26 |35 |
| |Cash |0 |0 |7 |0 |0 |
| |Bonus |30 |25 |25 |26 |35(proposed) |
| |Right share | |1R:2 | | |1R:2(proposed) |
|26 |Cost of fund |8.08% |9.17% |9.07% |9.52% |9.09% |
|27 |Net assets value per share|217.61 |181.57 |188.71 |186.32 |199.09 |
|28 |Earning per share |48.61 |43.48 |34.76 |40.95 |50.21 |
|29 |Price earning ratio |8.10 |7.74 |9.02 |7.85 |7.52 |
|30 |Return on assets before |3.49% |3.94% |4.39% |4.45% |4.14% |
| |tax | | | | | |
|31 |NO. of shareholders |15542 |18771 |23284 |24387 |29302 |
|32 |Number of branches |28 |30 |35 |42 |52 |

Appendices Table 2: Calculation of average, standard deviation and coefficient of variation export and import Business

(Amount in million Taka)

|Year |Export(X) |(X-X`) |(X-X`)^2 |Import (X) |(X-X`) |(X-X`)^2 |
|2005 |31285.00 |-25918.28 |671757238.20 |41432.00 |-21544.02 |464144797.80 |
|2006 |46234.60 |-10968.68 |120311940.90 |49596.70 |-13379.32 |179006203.70 |
|2007 |55790.42 |-1412.86 |1996173.38 |61399.40 |-1576.62 |2485730.62 |
|2008 |76465.62 |19262.34 |371037742.30 |78540.49 |15564.47 |242252726.40 |
|2009 |76240.77 |19037.49 |362426025.5 |83911.51 |20935.49 |438294741.5 |
|N=5 |∑X=286016.41 |∑(X-X`) =0 |∑(X-X`) ^2 |∑X=314880.10 |∑(X-X`) =0 |∑(X-X`)^2= 1326184200 |
| | | |=1527529120 | | | |

|Particulars |Average |Standard Deviation |Coefficient of Variation |
| |( X`) |( σ ) | |
|Formula | | |σ |
| |X`=∑X/N |σ |C.V.=------*100 |
| | |= √∑(X-X`)^2 /√N |X` |
|Export B Export |TK57203.28= |TK.17478.72= |=30.56% |
|Business |286016.41/5 |√1527529120/√5 | |
|Business | | | |
|Import Business |TK62976.02= |TK.16286.09= |25.86% |
| |314880.10/5 |√1326184200/√5 | |

Appendices Table 3: Calculation of coefficient of correlation of export and profit after tax

(Amount in million Taka)

|Year |Export |(X-X`) |(X-X`)^2 |Profit |(Y-Y`) |(Y-Y`) ^2 | x*y |
| |Business(X) |x |x^2 |After |y |y^2 | |
| | | | |Tax (Y) | | | |
|2005 |31285.00 |-25918.28 |67175 |555.34 |-430.10 |184986.01 |11147 |
| | | |7238.20 | | | |452.23 |
|2006 |46234.60 |-10968.68 |12031 |650.29 |-335.15 |112325.52 |36761 |
| | | |1940.90 | | | |53.10 |
|2007 |55790.42 |-1412.86 |19961 |930.84 |-54.6 |2981.16 |77142.16 |
| | | |73.38 | | | | |
|2008 |76465.62 |19262.34 |37103 |1096.63 |111.19 |12363.22 |21417 |
| | | |7742.30 | | | |79.56 |
|2009 |76240.77 |19037.49 |36242 |1694.10 |708.66 |502199.00 |13491 |
| | | |6025.5 | | | |107.66 |
|N=5 |∑X=286016.41 |∑(X-X`) |∑x ^2 |∑Y= |∑( Y-Y`)=0 |∑y^2 |∑x*y=30533 |
| | |=0 |=15275 |4927.20 | |=814854.91 |634.71 |
| | | |29120 | | | | |

Appendices Table 4: Calculation of coefficient of correlation of import and profit after tax
Year |Import
Business(X) |(X-X`) x |(X-X`)^2 x^2 |Profit
After
Tax (Y) |(Y-Y`) y |(Y-Y`) ^2 y^2 |x*y | |2005 |41432.00 |-21544.02 |464144797.80 |555.34 |-430.10 |184986.01 |92660
83.00 | |2006 |49596.70 |-13379.32 |179006203.70 |650.29 |-335.15 |112325.52 |44840
80.00 | |2007 |61399.40 |-1576.62 |2485730.62 |930.84 |-54.6 |2981.16 |86083
.45 | |2008 |78540.49 |15564.47 |242252726.40 |1096.63 |111.19 |12363.22 |17306
13.42 | |2009 |83911.51 |20935.49 |438294741.5 |1694.10 |708.66 |502199.00 |14836
144.34 | |N=5 |∑X=314880.10 |∑(X-X`) =0 |∑x^2= 1326184200 |∑Y=
4927.20 |∑( Y-Y`)=0 |∑y^2
=814854.91
|∑x*y=
30403
004.21 | | (Amount in million Taka)

BIBLIOGRAPHY

Reference Books:

M Y Khan and P K Jain (2009), Financial Management, 4th ed. Tata McGraw-Hill Publishing Company Limited, New Delhi.

Dr. S. P. Gupta and Dr. M.P. Gupta (2006), Business Statistics, 14th ed. Sultan Chand & Sons Educational Publishers, New Delhi.

Abu Ahmed (2009), Investment in Share Market: The Winning Strategy, 1st Publication. Nahid Add. & Printing, Dhaka.

John D. Daniels, Lee H. Radenbaugh and Daniel P. Sullivan (2007), International Business: Environments and Operations, 11th ed. Pearson Prentice Hall, Upper Saddle River, New Jersey.

Publications:

Government of Peoples Republic of Bangladesh, Ministry of Commerce, Export Policy 2009-2012.Dhaka.

Government of Peoples Republic of Bangladesh, Ministry of Commerce, Import 2009-2012, Dhaka.

EXIM Bank Annual Report 2008-2009.

EXIM Bank Manuals and Prospectus.

Reports of other authors.

Files of EXIM Bank Limited.

Md. Safiullah, “Superiority of Conventional Banks & Islamic Banks of Bangladesh-
A Comparative Study,” International Journal of Economics and Finance, Vol.2, No.3; August 2010

Online Source: www.eximbankbd.com www. incoterms.com

[pic][pic][pic][pic][pic][pic][pic]
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“A” remitter

NOSTRO A/C
In Foreign bank

Local bank in Home country

“B” Beneficiary

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