1.1 Introduction
The primary purpose of this report is to get an idea about the operations of “Foreign Exchange” of Janata Bank Limited. Foreign exchange plays an important role in the balance of trade in our economy. In this regard Foreign Exchange of Bangladesh, Banks plays an vital role. The word “Bank” refers to the financial institution, which deals with money transaction.
This report is an attempt to reflect the position of Foreign Exchange of Janata Bank Limited side by side Bangladesh.
1.2 Origin of the Report
BBA program is designed with an excellent combination of theoretical and practical aspects. As the classroom discussion alone cannot make a student perfect in handling the real business situation, so it is an opportunity for the students to know about real life situation through this internship program. This internship program provides the students to link up their theoretical knowledge with practical fields. In this connection, I was assigned to Janata Bank, Elephant Road Corporate Branch, foreign exchange department for my practical orientation.
I am required to prepare an internship report under the supervision of our honorable teacher M. Sadiqul Islam on “Foreign Exchange Management of Janata Bank Limited” to conduct a depth analysis on this subject matter. I have tried my level best to present my experience of the practical orientation in this report.
1.3 Objectives of the report
1.3.1 Broad objective
The primary purpose of this report is to get an idea about the management of and Foreign Exchange of Bangladesh as well as Janata Bank, and make an industry analysis on the banking sector of Bangladesh.
1.3.2 Specific Objectives
• To analyze the comparative Foreign Exchange performance of Bangladesh.
• To find out existing problems of Foreign Exchange of Bangladesh.
1.4 Scope of the report
The study would focus on the following areas of Janata Bank Limited. * Foreign Exchange management system of Janata Bank Limited. * Procedure of export, import and remittance management. * Opening of LC and maintain other formalities of foreign exchange. * Organization structures and responsibilities of management.
Each of the above areas would be critically analyzed in order to determine the efficiency of Janata Bank’s Foreign Exchange Management system.
1.5 Rationale of the study
Bangladesh is one of the developing country in the world. The economy of the country has a lot left to be desired and there are lots of scopes for massive improvement. In an economy like this, Foreign Exchange can play a vital role to improve the overall economic condition of the country. The banks by playing the role of an intermediary can mobilize the excess fund of surplus sectors to provide necessary finance, to those sectors, which are needed to promote for the sound development of the economy.
This report is an effort to reflect a clear idea about the strategies, activities, and performance of Bangladesh regarding Foreign Exchange Business.
1.6 Limitations
To prepare this report, I have faced some limitations, which are mentioned below.
• Limitation of time: It was one of the main constraints that hindered to cover all aspects of the study.
• Lack of Secondary Information: The secondary source of information was not enough to complete the report.
• Limitation of the Scope: Some confidential information was not disclosed by various personnel of their respective department.
Chapter TWO
Methodology
2.1 Techniques of Analysis
I have used both qualitative and quantitative methods to prepare this report. I have analyzed and presented the data by Microsoft excel and shows percentage, graphical presentation and different types of charts. I have tried my level best to analyze the major or numerical findings.
2.2 Data Required
To prepare this report I have mainly focused on numerical data. I have also used theoretical portion as report’s demand. Because to analyze foreign exchange management of a bank both theoretical and technical knowledge are necessary. Then based on everything I have analyzed and made conclusion.
2.3 Sources of Data
2.3.1 Sample Information
Information is mainly collected from annual report of Janata Bank Limited, annual meeting report, brochures and web sites. The information incorporated in this report is also collected both from the primary sources and as well as from the secondary sources.
2.3.2 Primary Source of Data
I collect data directly from the practical field of different sectors that is Janata Bank head office. This data is called primary source of data.
2 .3.3 Secondary Sources of Data
The secondary data is also collected from annual report, different conceptual matters, internet and different articles published in different sessions.
Secondary Sources are: * Annual Reports of different years of Janata Bank Limited. * Annual Report of Bangladesh Bank of 2009. * Other published documents of Janata Bank Limited. * Respective sectors of foreign department of head office.
Chapter THREE
Organizational Profile &
Foreign Exchange Department
3.1 Organizational Profile
3.1.1 Historical Background of the organization
Janata Bank Limited is the 2nd largest state owned commercial bank in Bangladesh. Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were named as Janata Bank. It was established under the Bangladesh Bank order 1972. During the privatization process it was incorporated as a public Limited Company on 21, May 07 vide certificate of incorporation No-C66933(4425)07. The Bank has taken the over the business of Janata Bank at a purchase consideration of Tk. 2593.90 million as a going concern through a vendor agreement signed between the Ministry of Finance of the Peoples’ Republic of Bangladesh and the Board of Directors on behalf of Janata Bank Limited on 15th November 2007. Janata Bank Limited operates through 851 branches including 4 overseas branches at United Arab Emirates and a subsidiary company named Janata Exchange Company Srl in Italy. It is linked 1202 foreign correspondents all over the world.
3.2 Objectives of the organization
3.2.1 Mission:
To be recognized as the leading commercial bank in the Bangladesh market providing retail and corporate banking services and as a trusted and respected partner in the social and economic development program of our nation.
3.2.2 Vision:
To become effective largest commercial bank in Bangladesh to support socio-economic development of the country and to be a leading bank in South-Asia.
3.3 Services of the organization
Besides normal banking operation, Janata Bank Limited offers special services to a large number of clients/agencies throughout the country. Under the network of utility service, customers of different govt. organizations, corporate bodies, local bodies, educational institutions, students, etc are continuously getting benefits from the Bank. Janata Bank Limited's utility services are:
3.3.1 Bills Collection: * Gas bills of Titas, Bakhrabad and Jalalabad Gas Transmission and Distribution Companies. * Electricity bills of Dhaka Electricity Supply Authority, Dhaka Electricity Company, Bangladesh Power Development Board and Rural Electrification Board. * Telephone bills of Telegraph and Telephone Board. * Water/Sewerage bills of Water and Sewerage Authority. * Municipal holding tax of City Corporation/ Municipalities. * A pilot scheme is underway to provide personalized services to our clients.
3.3.2 Payments made on behalf of Govt. * Non- Govt. teacher’s salaries * Girl Students scholarship/stipend & Primary Student Stipend. * Army pension * Widows, divorcees and destitute Women Allowances * Old-age Allowances * Food procurement Bills
As per decision of the govt. 46 (Forty Six) branches of our bank (40 branches in Dhaka city, 1(one) branch in N.gonj city and 5(five) branches in Chittagong city) are involved to receive the all utility bills in a same station from January'04.
3.3.3 Services Areas
Branches
There are 851 branches of Janata Bank Limited in home and abroad. Among them 443 branches are situated in urban areas including four foreign branches and 408 branches are in rural areas. And all foreign branches are situated in United Arab Emirates.
Table: Branches of Janata Bank Limited
Source: Annual Meeting Report 2010
Overseas Branches:
Table: Foreign Branches of Janata Bank Limited
SL.No: | City | No of Branch | Status | 01. | Abu Dhabi | 01 | Foreign | 02. | Al-Ain | 01 | Foreign | 03. | Sharjah | 01 | Foreign | 04. | Dubai | 01 | Foreign | Total | 04 | |
Source: Annual Meeting Report 2010
3.4 Organizational structure
3.4.1 Management Aspect
Like every other business organization, the top management makes all the major decisions of Janata Bank. The board of directors being at the highest level of organizational structure plays an important role in policy formulation, but it is not directly concerned with the day-day operations of the bank. They have delegated this duty to the management committee. The board mainly establishes the objectives and policies of the bank.
One chairman, eleven directors, one CEO & MD and one company secretary are consist of Board of Directors of Janata Bank Limited.
Mid and lower level employees get the direction and instruction from the Board of Directors about the duties and tasks they have to perform. The chief executive provides the guideline to the managers and employees, but delegates responsibility for determining how tasks and goals are to be accomplished.
Chart: Management Hierarchy of JBL
Chairman
ORGANOGRAM
Managing Directors
General Manager
Deputy General Manager
Assistant General Manager
Senior Principal Officer
Principal Officer
Senior Officer
Officer
Sub Accountant
Senior Clark
Junior Clark
3.5 Future plans of the organization 1. To involve in export activities in a large scale by maintaining good communication with various parties. 2. To collect new members in FY2010 to start export related new business. 3. At least 2 new AD branch will open in FY2010. 4. More facilities will provide to the exporters on the basis of export priority. 5. New Credit Product will start in a large scale by name of BMRE Loan for export project to expand factory, import machineries, purchase transport among exiting parties. 6. To take the competitive position charge, decrease commission and other facilities will continue. 7. To increase export business monitoring system has made stronger in head office and respective branches. 8. To increase export business has appointed sufficient manpower, providing special services and related different training program of officers has been will be started.
Foreign Exchange Department 3.6 Introduction
One of the important businesses carried out by the commercial bank is foreign trading. The trade among various countries falls for close link between the parties dealing in trade. The situation calls for expertise in the field of foreign operations. The bank, which provides such operation, is referred to as rending international banking operation. Mainly transactions with overseas countries in respect of import, export and foreign remittance dealings under the preview of foreign exchange department. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. In this case the bank plays a vital role to bridge between the buyer and seller.
Foreign exchange department of Janata Bank Limited is one of the most important departments among all departments. This department handles various types of activities. Among these main three are as follows:
a) Import
b) Export and
c) Foreign remittance
3.7 Opening Letter of Credit (L/C)
In global business environment, buyers and sellers are often unknown to each other. So seller always seek guarantee of payment for his exported goods. In this situation bank plays an important role. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called “Letter of Credit” or LC. Thus the contract between importer and exporter is given a legal shape by the banker by its Letter of Credit.
3.7.1 Procedure of opening the Letter of Credit (L/C) The importer after receiving the proforma invoices from the exporter, by applying for the issue of documentary credit, the importer requests his/her bank to make a promise of payment to the supplier. Obviously, the bank will only agree to this request if it can rely on reimbursement by the applicant. As a rule accepted as the sole security for the credit particularly if they are not the shorts of commodity that can be traded on an organized market, such an agreement would involve the bank in excessive risk outside its specialized field. The applicant must therefore have adequate fund in the bank account or a credit line sufficient to cover the required amount. Banks deals with documents and not goods. Once the bank has issued the credit its obligation to pay is conditional on the presentation of the stipulated documents within the prescribed time limit. The applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary has not delivered goods. * The importer submit the following documents with the application for opening the L/C * Tax Identification Number (TIN) * Valid trade license * Import registration certificate (IRC) * The bank will supply the following documents before opening the L/C * LCA form * IMP form * Necessary charger documents for documentation The above documents/papers must be completed duly signed and filled by the parties according to the instruction of the concern banker.
After scrutinizing above-mentioned documents carefully, bank delivers the following forms to be filled up by importer and banker then check it carefully: * Whether the goods to be imported is permissible or not. * Whether the goods to be imported is demanding or not. 3.7.2 L/C Application Form (L/CAF)
L/C Application Form is a sort of an agreement between customer and bank on the basis of which letter of credit is opened. Bank provides a printed form for opening of L/C to the importer. A special adhesive stamp of value Tk.200 is affixed on the form in accordance with Stamp Act currently in force. While opening, the stamps are cancelled. Usually the importer expresses his decision to open the L/C quoting the amount of margin in percentage. Usually the importer gives the following information – * Full name and address of the importer * Full name and address of the beneficiary * Draft amount * Availability of the credit by sight payment/ acceptance/ negotiation/ deferred payment * Time bar within which the documents should be presented * Sales type (CIF/FOB/C&F) * Brief specification of commodities, price, quantity, indent no. etc. * Country of origin * Bangladesh Bank registration no. * Import License/LCAF no. * IRC no. * Account no. * Documents no. * Insurance Cover Note/Policy no., date, amount * Name and address of Insurance Company * Whether the partial shipment is allowed or not * Whether the transshipment is allowed or not * Last date of shipment * Last date of negotiation * Other terms and conditions (if any) * Whether the confirmation of the credit is requested by the beneficiary or not. * The L/C application must be completed/filled in properly and signed by the authorized person of the importer before it is submitted to the issuing bank.
3.7.3 L/C Authorization Form (L/CAF)
The Letter of Credit Authorization Form (LCAF) is the form prescribed for the authorization of opening letter of credit/payment against import and used in lieu of import license. The authorized dealers are empowered to issue LCA Forms to the importers as per basis of licensing of the Import Policy Order in force to allow import into Bangladesh. If foreign exchange is intended to be bought from the Bangladesh Bank against an LCAF, it has to be registered with Bangladesh Bank’s Registration Unit located in the concerned area office of the CCI&E. The LCA Forms available with authorized dealers are issued in set of five (05) copies each. First Copy is exchange control copy, which is used for opening of LC and effecting remittance. Second Copy is the custom purpose copy, which is used for clearance of imported goods from custom authority. Triplicate and Quadruplicate Copy of LCAF are to be sent to concerned area of CCI&E office by authorized dealer/Registration Unit of Bangladesh Bank. Quintuplicate Copy is kept as office copy by authorized dealer/Registration Unit. The Letter of Credit Authorization Form (LCAF) contains the followings – * Name and address of the importer * IRC no. and year of renewal * Amount of L/C applied for (both in figure and in word) * Description of item(s) to be imported * HS Code No. * Signature of the importer with seal * List of goods to be imported * Forwarding Documentary Credit by Advising or Confirming Bank:
There are usually two banks involved in a documentary credit operation. The issuing bank and the 2nd bank, the advising bank, is usually a bank in the seller’s country. The issuing bank asks another bank to advise or confirm the credit.
If the 2nd bank is simply “advising the credit”, it will mention that when it forwards the credit to seller, such a bank is under no commitment or obligation to pay the seller. If the advising bank is also “confirming the credit”, this mention that the confirming bank, regardless of any other consideration, must pay accept or negotiate without recourse to seller. Then the bank is called confirming bank also. * Submission of Necessary Documents by Exporter to the Negotiating Bank:
As soon as the seller/exporter receives the credit and is satisfied that he can meet its terms and conditions, he is in a position to load the goods and dispatch them. The seller then sends the documents evidencing the shipment to the bank.
Exporter will submit those documents in accordance with the terms and conditions as mentioned in L/C. Generally the documents observed by the foreign exchange department are: * Bill of exchange * Commercial invoice * Bill of lading / Air way bill / Truck receipt * Certificate of origin * Packing list * Clean Report of Finding (CRF) * Insurance cover note * Pre-shipment certificate * The Documents Sent To The Issuing Bank Through The Negotiating Bank:
The negotiating bank carefully checks the documents provided by the exporter against the credit, and if the documents meet all the requirement of the credit, the bank will pay, accept, or negotiate in accordance with the terms and conditions of the credit. Then the bank sends the documents to the L/C opening bank. * Making the Payment of Foreign Bill through the Reimbursing Bank:
The L/C issuing bank getting the documents checks immediately and if they are in order and meet the credit requirements; it will arrange to make payment against L/C through reimbursement bank and will send the importer the document arrival notice.
3.8 Securities of L/C
Janata Bank Limited respective officials scrutinize the application in the following manner-
a) The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation Act.1947.
b) Eligibility of the goods to be imported.
c) The L/C must not be opened in favor of the importer.
d) Radioactivity report in case of food item.
e) Survey report or certificate in case of old machinery
f) Carrying vessel is not of Israel.
g) Certificate declaring that the item is operation not more than 5 years in case of car.
3.9 Export
Janata Bank Limited exports a large quantity of goods and services to many countries. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea, hide and skin, vegetables are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country's export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through Janata Bank Limited foreign exchange Branch are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers
3.9.1 Formalities of Export Procedure
There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. These formalities or procedures are enumerated in brief as follows: * Obtaining Export Registration Certificate ERC: No exporter is allowed to export any commodity for export from Bangladesh unless he is registered with Chief Controller of Imports and Exports (CCI & E) and holds valid Export Registration Certificate (ERC). After applying to the CCI&E in the prescribed from along with the necessary papers, concerned offices of the Chief Controller of Imports and Exports issues ERC. Once registered, exporters are to make renewal of ERC every year. * Securing the order: After getting ERC, the exporter may proceed to secure the export order. He can do this by contracting the buyers directly through correspondence. * Obtaining EXP: After having the registration, the exporter applies to Janata Bank Limited with the trade license, ERC and the Certificate from the concerned Government Organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter. * Signing of the contract: After communicating with buyer the exporter has to get contracted for exporting exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and mark, inspection, arbitration etc. * Receiving the Letter of Credit: After getting contract for sale, exporter should ask the buyer for Letter of Credit clearly stating terms and conditions of export and payment. * Procuring the materials: After making the deal and on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise. * Endorsement on EXP: Before the exporter with the customs or postal authorities lodges the export forms, they should get all the copies endorsed by Janata Bank Limited. Before shipment, exporter submits EXP. form with commercial invoice. Then Janata Bank’s respective officers check it properly, if satisfied, certifie the EXP. Without EXP exporter cannot make shipment. The customer must declare all export goods on the EXP issued by the authorized dealers
3.9.2 Disposal of Export procedure
Original: Customs authority reports first copy of EXP to Bangladesh Bank after shipment of the goods.
Duplicate: Negotiating bank reports the Duplicate to Bangladesh Bank in or after negotiation date but not later than 14 days from the date of shipment.
Triplicate: On realization of export proceeds the same bank to the same authority reports Triplicate.
Quadruplicate: Finally, the negotiating bank as their office copy retains Quadruplicate. * Shipment of goods: Exporter makes shipment according to the terms and condition of L/C. * Presentation of export documents for negotiation: After shipment, exporter submits the following documents to Janata bank Limited for negotiation. * Bill of Exchange or Draft * Bill of Lading * Invoice * Insurance Policy/Certificate * Certificate of origin * Inspection Certificate * Consular Invoice * Packing List * Quality Control Certificate * G.S.P. certificate * Photo * Examination of Document: Banks deal with documents only, not with commodity. As the negotiating bank is giving the value before repatriation of the export proceeds it is advisable to scrutinize and examine each and every document with great care whether any discrepancy(s) is observed in the documents. The bankers are to ascertain that the documents are strictly as per the terms of L/C Before negotiation of the export bill. Bank officers assigned for examining the export documents may use a checklist for their convenience. * Negotiation of export documents: Negotiation stands for payment of value to the exporter against the documents stipulated in the L\C. If documents are in order, Janata Bank Limited purchases (negotiates) the same on the basis of banker- customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).If the bank is not satisfied with the documents submitted to Janata Bank Limited and gives the exporter reasonable time to remove the discrepancies or sends the documents to L/C opening bank for collection. This is known as Foreign Documentary Bill for Collection (FDBC).
* Settlement of Local Bills:
The settlement of local bills is done in the following ways, - * The customer submits the L/C to Janata Bank Limited along with the documents to negotiate * Janata Bank Limited officials scrutinize the documents to ensure the conformity with the terms and conditions. * The documents are then forwarded to the L/C opening bank. * The L/C issuing banks gives the acceptance and forwards an acceptance letter. * Payment is given to the customer on either by collection basis or by purchasing the document.
3.10 Import
Import means purchase of goods or services from abroad. Normally consumers, firms and Government organizations import foreign goods or services to meet their various necessities. Main import items are food item, edible oil, fertilizer, petroleum, machineries, chemicals, raw materials of industry, cement clinkers etc. So, in brief, we can say that import is the flow of goods and services purchased by local agent staying in the country from foreign agent staying abroad.
3.10.1 Import procedure
Authorized Dealer, banks are always committed to facilitate import of different goods into Bangladesh from the foreign countries. Import Section, which is under Foreign Exchange Department of a bank, is assigned to perform this job. And to serve its parties demand to import goods, it always maintains required formalities that are collectively termed as “Import Procedure”. i) At first, the importer must obtain Import Registration Certificate (IRC) from the CCI&E submitting the following papers: * Up to date Trade License. * Nationality and Asset Certificate. * Income Tax Certificate. * In case of company, Memorandum & Articles of Association and Certificate of Incorporation. * Bank Solvency Certificate etc. * Required amount of registration fee ii) Then the importer has to contact with the seller outside the country to obtain the Proforma Invoice. Usually an indenter, local agent of the seller or foreign agent of the buyer makes this communication. Beside these other sources are: * Trade fair. * Chamber of Commerce. * Foreign Missions in Bangladesh. * Journals etc. iii) When the importer accepts the Proforma Invoice, he/she makes a purchase contract with the exporter detailing the terms and conditions of the import. iv) After making the purchase contract, importer settles the means of payment with the seller. An import procedure differs with different means of payment. The possible means are Cash in Advance, Open Account, Collection Method and Documentary Letter of Credit. In most cases, the Documentary Letter of Credit in our country makes import payment. Purchase Contract contains which payment procedure has to be applied.
3.10.2 Payment Modes
* Cash in advance: Importer pays full, partial or progressive payment by a foreign DD, MT or TT. After receiving payment, exporter will send the goods and the transport receipt to the importer. Importer will take delivery of the goods from the transport company. * Open Account: Exporter ships the goods and sends transport receipt to the importer. Importer will take delivery of the goods and makes payment by foreign DD, MT, or TT at some specified date. * Collection Method: Collection methods are either clean collection or documentary collection. Again, Documentary Collection may be Document against Payment (D/P) or Document against Acceptance (D/A). The collection procedure is that the exporter ships the goods and draws a draft/ bill on the buyer. The exporter submits the draft/bill (only or with documents) to the remitting bank for collection and the bank acknowledges this. Then the remitting bank sends the draft/bill (with or without documents) and a collection instruction letter to the collecting bank. Acting as an agent of the remitting bank, the collecting bank notifies the importer upon receipt of the draft. The title of goods is released to the importer upon full payment or acceptance of the draft/bill. * Letter of credit: Letter of credit is the well-accepted and most commonly used means of payment. It is an undertaking for payment by the issuing bank to the beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit.
Chapter FOUR
Analysis and Findings
4.1 Export Finance
Export through Janata Bank Ltd. for the year 2008 and 2009 is Tk.85418.00 million and Tk. 87500.00 million respectively. In spite of Global Financial Crisis the growth chart in export through Janata Bank Ltd. remains upwards due to our timely steps regarding credit facilities and services packages. We have already re-fixed our schedule of exchange at a reduced rate the loan pricing is more competitive. With the credit lines our experts have introduce the following new products: * Cash Credit: Working capital facility to dyeing unit and packaging unit. * Mid term Loan: For procurement of machinery, space parts, boiler, generator, vehicles etc. to export oriented industrial unit. * Packing Credit: Working capital facility to pay wages salary utility bills etc. * LTR, FC: Short term credit for procurement of capital machinery from abroad. * Term Loan: For (Export oriented) Ship Building. * Export Project BMRE: Loan for factory building construction. Expansion, development and Maintenance, construction of factory godown, purchase of machineries from local and foreign markets, covered van, generator and establish ETP.
4.1.1 Details Commodity Wise Export
Here given details commodity wise export figures of Janata Bank Limited from 2006 to 2009. It has shown here commodity wise and monthly wise export figures in details.
Table: Details Export of Janata Bank Limited of 2006
Source: Photo Copy from Head Office In 2006 total export of Janata Bank was Tk. 7089.66 crore. Ready Made Garments was Tk. 3549.82 crore and it was the highest position. Hide & skin and frozen fish took the second and third position consequently. It is also clearly observed that in the month of August and September export amount was highest through the year.
Table: Details Export of Janata Bank Limited of 2007
In 2007 total export of Janata Bank was Tk. 7185.55 crore. Ready Made Garments was Tk. 3540.93 crore and it was the highest position. Hide & skin and frozen fish took the second and third position consequently. First half of the year 2007 export amount was comparatively better position than the second half of the year. It is also clearly observed that total export amount of 2007 is little bit higher than 2006.
Table: Details Export of Janata Bank Limited of 2008
In 2008 total export of Janata Bank was Tk. 8541.76 crore. Ready Made Garments was Tk. 4189.92 crore and it was the highest position. Hide & skin Tk. 837.53 crore and frozen fish Tk. 822.23 crore took the second and third position consequently. Throughout the whole year 2008 export amount was comparatively better than the last two years. It is also metion here that total export amount was significantly higher than 20060and 2007.
In FY 2009 target export was Tk. 66480.00 million, but earned Tk. 88653.10 million against the target amount. This was 133% higher than the target. It may mentioned here that up to October 2009 earned was Tk. 7231.80 million, that means target of export had attained before two months end of the year.
Table: Details Export of Janata Bank Limited of 2009
In spite of world economic crisis and political instability in the country Janata Bank Limited has kept its upward export trend up to last year. Because Its expertise and experienced management team offered different promotional offer and financially assisted to the exporters to boost up the export trend. They main offered and assisted- * Concessional rate of interest. * Export incentive programs. * Export Processing Zone facility. * Scope of establishment of export oriented industry by 100% foreign investment and by joint venture. * Full fledged infrastructural and logistic support for export i.e. project finance, working capital, pre-shipment & post-shipment export finance, guarantee, bonding facility, etc. * Consulting facility by an expert group of officials.
4.1.2 Export Target & World Economic Crisis
From 2006 to 2009 export of Janata Bank is in increasing pattern. Even during world economic crisis period Janata Bank’s management shows their best performance. That is why export position remains in upward condition. In spite world economic crisis export growth has increased 4%. Which is highest among four government owned banks.
For global economic recession and political instability inside the country contribution to national export of Janata Bank limited was lowest in the fiscal year 2007-2008 among last six fiscal years. And in fiscal year 2008-2009 it turned up warding.
Because to increase export business providing the exporter more foreign currency, to strengthen their production capacity, to facilitate the in every maximum scope, the bank has took four incentives. These have been proved to be fruitful adding Tk.2.00cr (approx.) more to the bank’s annual income through only export business.
These new four incentives are as follows in brief: * In addition with the existing working capital it provides exporters emergence need to execute their foreign order. * For importing bulk quantity of dies, chemical it is a great support for the exporter. * Loan for importing generator, small machines, vehicles for emergency need. * For importing capital machinery.
4.1.4 Comparison of Export of 2009 with Public Banks
Table: Comparison of Export of 2009 with Public Banks Limited
| Tk. (Mill.) | Janata Bank | 88653.1 | Sonali Bank | 64243.3 | Agrani Bank | 44606.8 | Rupali Bank | 7458.1 |
Source: Photo Copy from Head Office
Figure: Comparison of Export of 2009 with Public Banks Limited
Total export Janata Bank Limited in 2009 was Tk.88653.1 million. Sonali Bank’s export was Tk.64243.3 million. Agrani Bank’s and Rupali Bank’s export was Tk.44606.8 million and Tk.7458.1 million respectively. From above table and graph we can say that Janata Bank Limited is the top position among four government owned banks with a large difference. Its nearest competitor is Sonali Bank Limited.
4.2 Import Finance Traditionally Janata Bank Ltd. is pioneer in handling major portion of country’s import business. The total volume of import as on 30-11-2009 is 107168 million. Major import items are industrial raw materials, chemicals, capital machineries, scraped vessels and petroleum etc.
4.2.1 Commodity wise Import of Janata Bank Limited
Table: Commodity wise Import of JB from 2006 to 2009
Through quite a good number of Authorized Dealer Branches and 1198 nos. foreign correspondents world wide Janata Bank Limited has been extending full range import and relevant finance facilities. Setting Industrial vision to facilitate optimally, bank's involvement has been showing sharp rising trend.
Table: Import Trend of JB from 2006 to 2009
From 2000 to 2006 import of Janata Bank Limited is gradually increasing. But in 2007 the country was under caretaker government. Export, import, foreign remittance, employment in abroad etc. were moving forward in slow rate. For this reason import in 2007 sharply down compare with 2006. Again in 2008 import of Janata Bank Limited reached higher than 2007. And in 2009 import is dropped little bit.
Increase of import indicates the country is less wealthy and decrease of import indicates that the country has sufficient resources and is able to fulfill its local demand. So as a publicly owned bank Janata bank Limited is less service providing attitude to the importers. It provides little facilities to its importers. As a result import contribution percentage to national is decreasing gradually from fiscal year 1995-1996 to fiscal year 2007-2008.
4.3 Foreign Remittance
Inward foreign remittance through Janata Bank Ltd. up to November 2009 is Tk. 51508.55 million. Foreign remittance from NBRs reached record high of Tk. 45924 million in 2008 against Tk.36788 million in 2007 and continue to play an important supporting role in strengthening the economy of the county Janata Bank ltd. by reducing lead-time, has ensured quick delivery of foreign remittance, an NBR branch has been opened to serve exclusively Non-resident Bangladeshis through Speedy Money Remittance System with instant to the beneficiaries. Anybody willing to remit foreign currency from any corner of the world can use wide network of the bank. The remittance reaches to the beneficiary within 3 days without charging any commission. Our worldwide network includes 4 branches in UAE, 2 exchange houses in Italy and correspondent relationship with all the major Banks and all important trade centers of the world.
Recently Janata Bank Ltd. has launched its Speedy Foreign Remittance Payment System which enables beneficiaries to receive their money within shortest possible time. The beneficiary also gets information of remittance through automated SMS. It’s a secured, easy, cost effective and speedy way of remittance for the remitter.
Janata bank Ltd. has signed an agreement with Western Union Network to facilitate wide range of remittance of the globe. Both the organizations make it possible to receive the money from about 300,000 locations of 200 countries instantly with prevailing mutual mechanism and workforce. The achievement of Janata Bank Ltd. in attracting foreign remittance as compared to country’s performance is given bellow:
4.3.1 Country wise remittance of Janata Bank Limited
To facilitate sending money in Bangladeshi Taka directly, Janata Bank Limited has Taka Drawing Arrangement with many banks/exchange companies in different countries. The expatriate Bangladeshis may send their money in BDT (Bangladeshi Taka) through the branches/subsidiaries of Janata Bank Limited and foreign banks/exchange companies. Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries. Remittances are credited to the account of beneficiaries instantly or within shortest possible time.
Table: Country wise Foreign Remittance of JBL from 2004 to 2006
Figure: Country wise Foreign Remittance of JBL from 2004 to 2006
Inward remittance from Bangladeshi nationals working abroad continued to play an important role in strengthening the current account. Receipts on this sector increased gradually in every year from 2006 to 2009. The underlying reason was that Bangladesh Bank has simplified the approval policy of drawing arrangements between foreign exchange houses and domestic bank. Janata Bank’s management has taken this opportunity.
For quick payment of TTs issued by 4(Four) UAE branches of Janata Bank Limited ( Abu Dhabi, Al-Ain, Dubai & Sharjah branch) Foreign Exchange Corporate Branch, Dhaka( FECB, Dhaka), Laldighi East Corporate Branch, Chittagong(LDE, Ctg), Foreign Exchange Corporate Branch, Sylhet( FECB, Sylhet), Khulna Corporate Branch, Khulna, Barisal Corporate Branch, Barisal & Rajshahi Corporate Branch, Rajshahi are nominated. To facilities to its remitters Janata bank Limited has started-
1. FECB, Dhaka will cover whole Dhaka Division,
2. LDE, Ctg will cover whole Chittagong Division, except branches under greater Comilla and Noakhali Area.
3. FECB, Sylhet will cover whole Sylhet Division,
4. Khulna Corporate will cover whole Khulna Division,
5. Barisal Corporate will cover whole Barisal Division,
6. Rajshahi Corporate will cover whole Rajshahi Division,
7. Comilla Corp. will cover all branches under greater Comilla district.
8. Noakhali Corp. will cover all branches under greater Noakhali district.
Commission for issuance of Taka Drafts from our UAE branches has been reduced and refixed from AED 10.00 to AED 4.00 and commission for issuance of TTs drawn on Bangladesh and payable at any bank branches are re-fixed at AED 12.00 from AED 30.00.
Commission for issuances of Taka drafts at UAE branches has been reduced irrespective of amount. 1% interest above the normal savings deposit rate is offered to SB accounts receiving foreign remittance.
4.3.2 Wage Earners' Remittances of Nation
Inward remittances from Bangladeshi nationals working abroad continued to play an important role in strengthening the current account of Bangladesh Bank. Receipts on this sector increased by 22.4 percent to USD 9689.3 million in FY 09 from USD 7914.8 million in FY 08. The underlying reason was that Bangladesh Bank has simplified the approval policy of drawing arrangements between foreign exchange houses and domestic banks. As a result 40 banks have been allowed for establishing 820 drawing arrangements with 208 exchange houses all over the world for collecting remittances. Due to these measures, remittances have recorded a substantial increase by 22.4 percent to USD 9689.3 million during the year 2009. Remittances as percentage of GDP increased by 089 percentage points to 10.84 in FY 09 from 9.95 in FY 2008. The shares of major source countries in the remittance receipts of FY 2008 and FY 2009 are given bellow.
Country | Percentage | Kingdom of Saudiarabia | 29.40% | UAE | 14.30% | UK | 11.30% | Kuwait | 10.90% | USA | 17.50% | Other countries | 16.60% | Total | 100.00% |
Country | Percentage | Kingdom of Saudiarabia | 29.50% | UAE | 18.10% | UK | 8.20% | Kuwait | 10.00% | USA | 16.30% | Other countries | 17.90% | Total | 100.00% |
This is the whole scenery of inward foreign remittance of 2008 and 2009 of Bangladesh. In the sector of foreign remittance earning 2008 Kingdom of Saudiarabia in highest position that is 29.40%, USA second position- 17.50% and United Arab Emirates is third position 14.30%. And in 2009 Kingdom of Saudiarabia again top position, in second position United Arab Emirates and in third position USA. Their inward remittances are 29.50%, 18.10% and 16.30% respectively.
4.3.3 Foreign Exchange and Foreign Trade of JB
Table: Foreign Exchange and Foreign Trade of JB Trade of JB 20082008 2008
Figure: Foreign Exchange and Foreign Trade of JB Trade of JB 20082008 2008
Export and foreign remittance are in good position. They are in increasing trend from 2006 to 2009. And due to global economic crisis and for various trade barriers and quotas import does not grow much higher compare with export and foreign remittance. In 2007 export and import are comparatively low with other years due to political instability inside the country. But inward remittance is continuously upward trend up to 2009.
4.3.4 Problem of Foreign Exchange in Bangladesh
As a developing country, here there is a great opportunity to expand a business easily. Human resources cost are also cheap. On the other hand people have strong faith to the banking sector. But this sector is not free from problems. Some challenges of the banking sector are: 1. Global economic crisis due to the financial meltdown in USA and Europe. 2. Withdrawal of restriction on China for RMG export to Europe and USA in 2009. 3. Export volume has dropped due to lack of global demand. 4. Lack of diversification, especially for export sector. 5. Very high dependency on Textile and RMG Sectors to export. 6. In case of import prices of commodities and raw materials in international market. 7. Slow recycling of investment of commodity in commercial sectors. 8. Low level of project Finance in 2007, 2008 & 2009 due to the national political instability.
Chapter FIVE
CONCLUSION
It is clear that the Janata Bank Limited Foreign Exchange department has ensured both quality and services which helps to improve the overall status of the Bank. For this reason Janata bank Limited has able to achieve second position in country and top position among public banks in export sector in 2009. However the branch may have scope to improve in a few areas. Such as-
01. The number of exporter and importer who operate through this bank is not enough to achieve the goal. So JBL should offer more facilities to attract their clients.
02. In addition with the present services they should include more services. It is badly needed to provide more quality services to their clients in order to compete in the market.
03. Foreign exchange department should be fully computerized that the exchange process would be convenient for both the bankers and the clients.
04. Bank should offer more facilities to the customers such as debit card, credit card, ATM machine etc. to survive in the competition.
05. One of the business strategies is promotion. Successful business depends how they can promote their products or services to the customers. In this connection to improve the business status the JBL should introduce more promotional programs. Lastly it can say that there are a lot of opportunities for increasing foreign exchange in Bangladesh if stay political stability. The Human Resources are cheapest here which play an important role in any business. Bangladesh government should take proper steps to maintain congenial atmosphere for sustainable foreign exchange business in the country.
