Submitted in partial fulfillment of requirements for the Bachelor of Business Administration degree. FOREIGN EXCHANGE PERFORMANCE AND PROFITABILITY OF THE BANK: AN EVALUATION OF SBL‖ under my supervision, which is a partial fulfillment of the BBA degree requirement.
Origin of the Report
Significance of the study
Objective of The report
To be aware of the various documents and procedures used in international trade banking service.
Methodology of the study
Primary Sources
Secondary Sources
Limitations
The details of many aspects of Standard Bank Limited's services have been omitted in the report due to various constraints, including time and space. Business category of export, import and remittances of immigrants; The amount received from international trade for their limitation is missing from the report.
Development of Banking in Bangladesh
Background of SBL
Features of SBL
Objectives of Standard Bank Limited
To become one of the best financial institutions in the Bangladesh economy participating in the key segments of the business market we serve.
Mission, Vision & Core Values of Standard Bank Limited
Management of Standard Bank Ltd
The Major Products & Service of SBL
Products of SBL
The lending rate is shown in the table below where the fixed rate (the rate instructed by the Bangladesh bank) and the average rate are given. Transmitting/transferring money from one country to another, Local Remittance represents remittances that take place within the territory of a country.
Services of SBL
From an SME banking perspective, there's no doubt that the world is getting more laid-back every day. Standard Bank introduced SME banking to provide the highest standard of service to its customers. To meet business challenges and opportunities, Standard Bank offers cash and loan management solutions to suit specific businesses and requirements.
Divisions of SBL
- Credit Administration Division
- Financial Institutions Division
- Audit and Risk Management Division
- Operation and Innovative Services
- Card Division
- Treasury and Central Accounts Division
- Information System and Technology Division
- Human Resources Division
- Investment Division
- Foreign Exchange Division
- Recent Development of SBL
- Problems of the Standard Bank Limited
The work of this department has become important because of the government's policy of making the Taka a convertible currency. All international deals and transactions must go through this department and after it refines the final decisions on going to the branches. The main duties of this department are to provide legal assistance to branches and implement recovery strategy for defaulted loan and ensure consistent compliance of rules and policies by all concerned banks through routine and unannounced checks and audits.
Implement rescheduling process for locked classified loans to the branches to obtain repayment schedule through strong persuasion and serve final notice etc. as condition required. In case of lack of moral suasion, concerned branches are advised to issue legal notice to defaulters. The main functions of this division are to develop General Banking, maintain public relations, technology development and support, strategic planning of purchases and supply all tangible goods to the branches.
An extensive network has been established that includes all divisions and departments so that most business functions and activities are integrated and accessible to users for making management decisions. The bank offered employees a new salary scale, which significantly improves the salary structure. Leave Fare Assistance is being introduced for the first time in a bank to inspire management.
Introduction
Registration with CCI&E
Purchase Contract between importer and exporter
Collection of LCA form
Opening a Letter of Credit (L/C)
Parties of L/C
Negotiating bank - is the bank that negotiates the bill and pays the amount for the recipient. Paying / Accepting Bank - is the bank to which the bill will be drawn (according to the credit terms). Reimbursing bank - is the bank that would reimburse the negotiating bank after receiving payment - instructions from the issuing bank.
Application for L/C limit
The L/C Application
The insurance cover note: The name of the issuing company and the insurance number must be stated on it. Forwarding for Pre-Shipment Inspection (PSI): Importer sends forwarding letter to exporter for Pre-Shipment Inspection.
Scrutiny of L/C Application
Transmission of L/C to Beneficiary through Advising Bank
Amendment of the Letter of Credit
Presentation of the Documents
Examination of Shipping Documents
Lodgment of Documents
Retirement of Documents
C&F agent clears the goods from the port and hands over the goods to the importer. After all official requirements are met, the C&F agent submits the admission letter to the banks. The Bill of Entry will be required from the party for evidence retention once the goods have arrived.
From the graph above, it can be interpreted that the growth rate of import revenue in 2017 was better. Although the bank has done a big deal in 2018 but it has lost percentage of revenue so the growth rate is showing a negative sign.
Export
Formalities for Export L/C
The customer must declare all export goods on EXP issued by the authorized dealers. Since the negotiating bank states the value before repatriation of the export proceeds, it is advisable to scrutinize and examine each and every document with great care if any discrepancy(s) are observed in the documents. The banks must ensure that the documents are strictly in accordance with the terms of the L/C before negotiating the export bill.
Negotiation of Export Documents: Negotiation means the payment of value to the exporter on the basis of the documents recorded in the L\C. If the documents are in order, SBL purchases (negotiates) them based on the banker-customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP). If the bank is not satisfied with the documents provided, SBL will issue the.
The customer submits the L/C to SBL along with the documents to negotiate. SBL officer examines the documents to ensure that the terms and conditions are met. Payment is given to the customer on either a collection basis or by purchasing the document.
Disposal of Export Forms
Mode of Payment of Export Bill under L/C
In a Sight Payment Credit, the bank immediately pays the stipulated amount against the exporter's presentation of the documents. In the case of deferred payment, the bank agrees to pay on a specific future date or event upon presentation of the export documents. In acceptance credit, the exporter presents a bill payable to him and drawn at the agreed maturity (that is, on a certain future date or event) on the bank that will accept it.
In the case of a negotiated credit, the exporter must, in addition to other documents negotiated by the bank, submit a bill of exchange that must be paid to him.
Advising L/C
Test key Arrangement
Back-to-back L/C
Features of Back-to-Back L/C
Checklist to Open Back-to-Back L/C
Papers Required Opening Back-to-Back L/C
Steps to Issue Back-to-Back L/C
Payments under back-to-back L/C
A simple mechanism of back-to-back L/C
Earning from Export Business
Then we entered the pandemic in the year 2020, we can observe that the earnings had dropped to 43,561, which is 23%. As the export business and export earnings gradually increased every year, but the earnings growth was not at the same pace.
Remittance Department
6 Economic Exchange Center UAE 7 Maniflo Money Exchange Ltd USA 8 Bangladesh Money Exchange Canada 9 Global Exchange Italia Sri, Italy Italy. In case of Western Union 10-digit code is used and in Xpress Money Services 16-digit codes are used. After filling the form by the client, he transfers the information in the Western Union software.
Then receive a 10-digit code number from the customer and give the customer money. Two forms prescribed by the Bangladesh Bank are used to purchase foreign currencies, e.g. Form EXP: Remittances received for export of goods from Bangladesh are made using form EXP.
However, declaration in Form C is not required in case of remittances by Bangladeshi nationals working abroad. Utmost care should be taken while purchasing Money Notes, Traveller's Cheque, Demand Draft and similar instrument to protect the bank from probable loss as well as the safety of the concerned Bank officials. The impact of the fluctuation of foreign remittance business affects the earnings of foreign remittances.
Total earning from Foreign Exchange
Major Findings
Analysis of findings
Although the import and export business has increased year after year, the bank's revenue growth rate has fluctuated greatly during the last four years except the year of 2020. The decline in export earnings growth rate for the past year has not been at the same rate of growth of export business . It should concentrate more effort on improving export earnings and remittance earnings for our economy.
The growth rate of export revenue and the growth rate of import revenue have been very stable in recent years 2016-2019. Finally, we recommend SBL to improve the efficiency of remittances as the performance of this sector is not very good.
Recommendation
The authority of the SBL should put pressure on government agencies to properly and adequately implement banking laws in Bangladesh. To do this, this bank must provide facilities to the internees through good placement and practical operations as well as job security for those who present themselves as the best performers in their duties. In case of export L/Cs, the government is encouraging the exporters by providing various facilities such as tax rebates.
I think the bank should also think of such facilities for exporters because Bangladeshi exporters like readymade garments Exporters will face a tuff situation in coming years from exporters of other countries. I think the bank should review the customers' transaction behavior over a period of time and should develop a certain policy in this direction. In the case of export L/Cs, sometimes customers insist on making their payments even though their documents are found to be inconsistent.
I think the bank should be as strict as possible in giving payments against inconsistent documents without harming the customer.
CONCLUSION
After globalization and free trade policy, nowadays our manufacturers as well as the exporter are facing acute constraints to meet the challenge. If we intend to maintain our market share and keep pace with our competitors, we must make careful decisions and carefully assess the pros and cons of expanding into new markets. If our companies are going to succeed internationally, we need to know as much or more than our customers and our competitors.
A single wrong step can not only harm our company's business, it can cause major delays and heavy fines. The bank has a vision to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, good governance etc. Every officer should be valued and treated as a part of the bank and should have the privilege of devoting himself to the improvement of the bank's services.
The whole process includes credit risk management, currency risk, money laundering prevention, asset liability management, internal control and compliance.
