Foreign Exchange Performance and Banks Profitability

an
Evaluation of Jamuna Bank Limited, Motijheel Branch

Submitted To
Asphia Habib
Brac Business School
Brac University

Prepared By
MD. Sadat Rahman Chowdhury
ID: 09304079

Submitted Date: 25

th

May 2014

Letter of Transmittal
Date: May 25, 2014
To

Asphia Habib
Senior Lecturer, BRAC Business School
BRAC UNIVERSITY
Subject: Submission of Internship Report
Dear Madam
With due respect I would like to submit the report on Foreign Exchange

Performance and
Banks Proftability: an Evaluation of Jamuna Bank Limited, Motijheel
Branch, This was
the topic of my internship program. I would like to say that this report was
prepared by me under the supervision of my internship supervisors.
I believe that this internship program has given me a vast opportunity to enrich
both of my
knowledge and experience. I made my best efort to fulfill the objective of the
report and believe that it will meet your expectation.
In preparing this report I have tried almost to include all the relevant information and
analysis to
make the report comprehensive as well as workable one.
I, therefore, hope that you will be enjoying reviewing this report.

Thank you.

MD. SADAT RAHAMAN

CHOWDHURY ID: 09304079
BRAC UNIVERSITY

Acknowledgement
It gives me immense pleasure to thank a large number of individuals for
their cordial cooperation and encouragement who have contributed directly
or indirectly in preparing this report.
Firstly, I would like to express my gratefulness to Almighty Allah who has
enabled me to
pursue my study.
I convey my gratitude to my honorable supervisor, Afsana Habib, Lecturer,
BRAC Business School (BBS), BRAC University for his guidance and cooperation, which helped me immensely to prepare this report.
I would like to also express my gratitude To Md. Elai Chowdhury, Vice
President & Manager (Operation), Jamuna Bank LTD, Motijheel Branch for
giving

me

the

opportunity

and appointment and lastly certifying the

internship program that I have completed.

Special

thanks

to

Mr.

Tofazzel

Islam

Executive

Officer,

Mr.

Topon

Chowdhury First Executive Officer, Mr. Md. Akbar Hossen First Executive
Officer, Of Jamuna Bank LTD, Motijheel Branch. It is them who made it
easy for me to understand and encouraged me a lot during my internship
program.
And last; I would like to thank all other wonderful personnel working in Jamuna
Bank LTD,
Motijheel Branch.

Table of Contents
CHAPTER
NO.

CONTENTS

PAGE
NO.

Introduction of the Report/Study

II

Organization Overview

8-16

III

About Foreign Exchange Department

17-19

IV

Import

20-21

Export

22-23

VI

Foreign Remittance

24-27

VII

Foreign Exchange Performance and Banks

Proftability

28-37

VIII

Recommendation and Conclusion

Bibliography

1-7

38

Executive Summary
Banking is topic, practice, business or profession almost as old as the very
existence of man, but literarily it can be rooted deep back the days of the
Renaissance (by the Florentine Bankers). It has sprouted from the very
primitive Stone-age banking, through the Victorian-age to the technologydriven

Google-age

banking,

encompassing

automatic

teller machines

(ATMs), credit and debit cards, correspondent and internet banking. But
the foreign exchange services have been a vicinity of concern not only to
bankers but to all in the business.
The axle of this study is to have a clearer picture of how Jamuna Bank LTD,
(JBL) manages its Foreign Exchange performance. An Introduction of JBL is
given in the first part, its objectives, scope, methodology, limitations, and
the

literature

profitability.

In

review

of

foreign

this

light,

the

exchange performance

study

in

its

second

and

part

banks

gives

an

Organization Overview. Third, fourth, fifth and sixth part includes the
theoretical review on foreign exchange, Export, Import, Remittance and
how bank profitable through foreign exchange services. In the last section
that includes some Recommendation, Findings and Conclusion.
Finally I have gone through my own assessment regarding their operation. I
hope that
Jamuna Bank Ltd may improve the operation in Bangladesh in future.

Chapter-1
Introduction of the Report/Study
1.1 Introduction
Bank can be termed as iron cell of blood in a financial system of a country.
Without bank a financial system cant survive. Form the very beginning
of

financial

activity

in

human civilization

bank

has a remarkable

contribution as a whole.
Banking-A pillar of economy- is guided by laws, rules, regulations and
practices. The prime objective of the banking industry as a whole is to
collect deposits from the public and to invest the same in the form of loans
and advances to businesses. The service necessary for financing of import,
export, guarantees etc is also the function of banks. In our country, like
others, Banking companies act 1991 remain operative to control and
monitor the function of banks in coordination with the other laws. Since the
banking functions are commercial in nature, many laws from the negotiable
instrument act to civil procedure code are essential in the day-to-day
operations of the banks.
Generally a bank comprises of three departments- General Banking,
Credit Department, and Foreign Exchange Department. The department that
is most important to a bank and to the interest of the country is Foreign
Exchange Department.
This report is an outcome of three months career at Jamuna Bank Ltd.
prepared as the partial requirement of BBA program of BRAC Business
School, BRAC UNIVERSITY. The organization attachment started on 20th
October, 2013 and finished on 15th January, 2014. The topic of the report is
Foreign

Exchange

Performance

and

Banks

Proftability:

an

Evaluation of Jamuna Bank Limited, Motizhil Branch

During three months intensive internship program, an approach has been
taken to get an inside out scenario of Foreign Exchange Activities of

Jamuna Bank Limited. At the beginning of paper an overview of the

Jamuna bank Ltd. has been given. This chapter contains history of the
dawn of the Jamuna Bank Ltd, its financial strength and some other
important details.
1|Page

Next to that overview, the detailed procedure of Foreign Exchange

Operation-Export, Import,

and

Remittance

that

related

with

banks

profitability are described in third chapters.

After closely observing the Foreign Exchange Operation of Jamuna bank Ltd.
the problems and shortfall in the Foreign Exchange Activities has been tried
to find out. Regarding that problems and short fall some recommendation
has been specified.
1.2 Origin of the Report
Bachelor of Business Administration (BBA) Course requires a three months
attachment with an organization followed by a report assigned by the
faculty supervisor. I took the opportunity to do my internship in Jamuna
Bank Limited, Motizhil Branch. The organization attachment started on 20th
October 2013 and finished on 15th January 2014. Actually this is a feedback
which department accepts from the students who join in an organization
after the completion of theoretical part of the BBA program.
1.3 Rational of the study
Foreign exchange is an important department of Jamuna Bank Limited,
which deals with import, export and foreign remittances. It bridges between
importers and exporters. This department is playing an important role in
enhancing export earnings, which aids economic growth and in turn it
helps for the economic development. On the other hand, it also helps to
meet those goods and service, which are most demandable and not
adequate in our country. Foreign exchange operation is one of the significant
functions of the bank. It plays a vital role in overall economy of the
country. Bank collects information from numerous sources relating to cost
and revenue from foreign exchange operation. Through export, import, and
foreign remittances Foreign Exchange department of the banks earns their
profit. Banks is the intermediary of all export, import, and remittance
activities. Foreign Exchange Market allows currencies to be exchanged to
facilitate international trade and financial transactions. After passing a lot
of

phases,

present

foreign

exchange

market

has

established

and

performing to benefit all the parties incorporated here. There are basically

three players in the foreign exchange market of Bangladesh. Those are

the Bangladesh Bank, authorized dealers, and customers. This paper
discussed regarding the related issues of foreign exchange performances
and bank profitability of Jamuna Bank Ltd.
2|Page

1.4 Statement of the problem

Globalization of national economies has given a boost to international
trade. Through foreign services bank make their profits so this study
discuss how Jamuna bank foreign exchange department performed and
bank would be profitability. The study seeks answers to the following
questions:
1. How Foreign exchange department help to utilize more profit?
2. Does foreign exchange department performed efectively?
1.5 Objective of the study
General objective:
The general objective of this report is to know about the principle and how to
perform of
foreign exchange department of Jamuna Bank Ltd. Motizhil Branch.
Specifc objective

Analyze the organizational activities

To know about the Foreign Exchange Mechanism of the Branch.

To know about the regulations regarding Foreign Exchange Business in

Bangladesh.

Analyze the performance of Branch regarding Foreign Exchange

related with bank profitability

To find out the problems in the Foreign Exchange department and to

provide the possible solutions for those.

3|Page

1.6 Limitation
During groundwork of this report some obstacles have come across, which
can be termed as the limitation of the project, these reasons did not allow
this repot to go in depth of issues hence several parts of the report is not
concentrated. Therefore the limitations that were faced:
The website of the bank is not provided enough information.
The branch office is not providing the strategic and financial information
Unfortunately due to the banks limitations (business secrecy and
confidentiality), I
was unable to acquire sufficient information.
As this is my first report about Bank so I had to face some difficulties
to preparing the report.
Shortness of time
Improper combination among various departments
Foreign Exchange Department process and procedures are quiet
complicated and
huge formalities are maintained

1.7 Literature review

For this literature review, I conducted a database search of reviewed
academic

journal

exchange

articles

services

by

searching

for

terms

foreign

exchange

performance

like
and

foreign
Bank

profitability and many more. This search resulted in a large selection of

articles and publications, which I studied to determine which to be included
in the review for this paper. In addition to the reviewed journal articles, I also
used references from popular media sources and visited several relevant
online websites to provide what may be viewed as the popular mainstream
perspective.
According

to

The

Economist,(Published

by

the

International

Business Times AU. Retrieved: February 11, 2011) foreign exchange

market is arguably the world's largest market place. It has an average
daily turnover of US$1.9 trillion, with some other sources
4|Page

such as GO Markets Introduction to Foreign Exchange estimating the

market to have an average daily turnover in excess of US$4 trillion. The
Bank for International Settlements says that average daily turnover in
global foreign exchange markets is estimated at $3.98 trillion as of April
2010, which is a growth of more or less 20% over the $3.21 trillion daily
volume in

the same month back in

2007. Bottom line is foreign

exchange has a huge turnover.

Marrewijk, Charles Van, (October 2004) said that, the foreign exchange
market is a form
of

exchange

for

the

global

decentralized

trading

of

international

currencies. Financial centers around the world function as anchors of

trading between wide ranges of different types of buyers sellers around
the clock, with the exception of weekends. The foreign exchange market
assists

international

trade

and

investment

by

enabling

currency

conversation. For example, it permits a business in the United States to

import goods from the Europien Union member states especially Euro zone
members and pay Euros, even though its income is in USD. It also
supports direct speculation in the value of currencies, and the carry trade,
speculation

based

on

the

interest

rate

differential

between

two

currencies.
Chowdhury and Kashfa Ahmed (April, 2009) discussed that Banking
system plays a
very important role in the economic life of the nation. The health of the
economy is closely related to the soundness of its banking system. In a
developing country like Bangladesh the banking system as a whole play a
vital role in the progress of economic development. A bank as a matter of
fact is just like a heart in the economic structure and the Capital
provided by it is like blood in it. As long as blood is in circulation the
organs will remain sound and healthy. If the blood is not supplied to any
organ then that part would become useless. Export and Import facility
provided by the banks works as an incentive to the producer to increase

the production. Most of the banks carried on foreign exchange trade.

Whether they export or import, it is through banks that money is
transferred from one country to another. For example, bills of exchange and
letters of credit are the regular ways banks use to transfer money.

5|Page

Siddique and Islam (2001) pointed out that the Commercial Banks, as a
whole, are
performing well and contributing to the economic development of the
country. The average profitability of all Bangladeshi banks collectively was
0.09% during 1980 to 1995 but it will be increased year by year which
means that a profit of TK 0.09 was earned by utilizing assets of TK 100. In
every aspect of profit, banking sector contributes the national economy as
well as to the individual organization.
Jahangir, Shill and Haque (2007) stated that the traditional measure of
profitability
through stockholders equity is quite different in banking industry from any
other sector of business, where loan-to-deposit ratio works as a very good
indicator of banks' profitability as it depicts the status of asset-liability
management of banks. But banks' risk is not only associated with this
asset liability management but also related to growth opportunity. Smooth
growth ensures higher future returns to holders and there lies the
profitability which means not only current profits but future returns as well.
So, market size and market concentration index along with return to
equity

and

loan-to-deposit

ratio

grab

the attention of analyzing the

banks profitability. The banking industry of Bangladesh is a mixed one

comprising nationalized, private and foreign commercial banks. Many
efforts have been made to explain the performance of these banks.
Understanding

the performance of banks requires knowledge about the

profitability and the relationships between variables like market size,

bank's

risk

and

bank's

market

size

with

profitability. Indeed,

the

performance evaluation

of commercial banks is especially important

today because

fierce

of

the

competition.

The

banking

industry

is

experiencing major transition for the last two decades. It is becoming

imperative for banks to endure the pressure arising from both internal and
external factors and prove to be profitable. Until early 1985, Bangladesh
had a highly repressed financial sector (Chowhdury, 2002). Banks and
other financial institutions were fully owned by the government. In the

early part of 1980, Bangladesh entered into the IMF and World Bank
adjustment programs and the process of privatization and liberalization
gained momentum under the infuence of the World Bank and the IMF.
Since then the banking industry of Bangladesh has become an attractive
ground for both domestic and foreign investors to take part in the game.
It is of utmost importance that these players prove themselves profitable.
6|Page

1.8 Methodology of Data collection

For achieving the specific objective of the study, data will be gathered most of
from primary
sources and little from secondary sources.
Primary sources
Direct conversation with the employees of the Foreign exchange
Departments of JBL
By using organizational information.
Secondary Sources
Website of Jamuna BankLimited.
Annual Reports, Brochures, Manuals and Publication of Jamuna Bank Ltd.
Website of Bangladesh Bank
Foreign Exchange Manual published by Jamuna Bank Ltd

7|Page

Chapter-2
Organization Overview
2.1 About Jamuna Bank Ltd
Jamuna Bank Limited is a highly capitalized new generation Bank with
an Authorized Capital and Paid-up Capital of 1600.00 million and 390.00
million respectively. The Paid-up Capital has been raised to 429.00 million
and the total Jamuna Bank Limited (JBL) is a Banking Company registered
under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban,
3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June
2001.

Currently the Bank has 74 branches. The Bank undertakes all

types of banking transactions to support the development of trade and

commerce of the country. JBL's services are also available for the
entrepreneurs to set up new ventures and BMRE of industrial

units.

Jamuna Bank Ltd., the only Bengali named new generation private
commercial bank was established by a group of winning local entrepreneurs
conceiving an idea of creating a model banking institution with different
outlook to ofer the valued customers, a

comprehensive

range

of

financial services and innovative products for sustainable mutual growth

and prosperity.
The sponsors are reputed personalities in the field of trade, commerce and
industries. The Bank is being managed and operated by a group of highly
educated and professional team with diversified experience in finance
and banking.

The Management of the

bank constantly focuses on understanding and anticipating customers

needs. The scenario of banking business is changing day by day, so the
bank's responsibility is to device strategy and new products to cope with
the changing

environment.

Jamuna Bank Ltd. has already achieved

tremendous progress within only eleven years. The bank has already
ranked at top of the quality service providers & is known for its
reputation. Jamuna Bank ofers diferent types of Corporate and Personal

Banking Services involving all segments of the society within the purview
of rules and regulations laid down by the Central Bank and other
regulatory authorities.

8|Page

At present the Bank has 41 real-time centralized online banking branches

(Urban & Rural) throughout the Country having smart IT-Backbone. Besides
this traditional delivery point, the bank has ATM of its own, sharing with
other partner banks & Consortium throughout the Country
2.2 Mission, vision, strategy statement
VISION
To become a leading banking institution and to play a vital role in the
development of the country.

MISSION
The Bank is committed to satisfying diverse needs of its customers
through an array of products at a competitive price by using appropriate
technology and providing timely service so that a sustainable growth,
reasonable return and contribution to the development of the country
can be ensured with a motivated and professional work-force.

STRATEGIES
To manage and operate the Bank in the most efficient manner to enhance
financial
performance and to control cost of fund
To strive for customer satisfaction through quality control and
delivery of timely services
To identify customers' credit and other banking needs and monitor
their perception towards our performance in meeting those
requirements.
To review and update policies, procedures and practices to enhance
the ability to extend better service to customers.
To train and develop all employees and provide them adequate
resources so that customers' needs can be reasonably addressed.

 To promote organizational effectiveness by openly communicating

company plans, policies, practices and procedures to employees in a
timely fashion
To cultivate a working environment that fosters positive motivation
for improved performance
9|Page

 To diversify portfolio both in the retail and wholesale market

To increase direct contact with customers in order to cultivate a closer
relationship
between the bank and its customers.

2.3 CORPORATE SLOGAN

Your Partner for Growth
2.4 SPONSORS
The sponsors of Jamuna Bank Limited are highly successful leading
entrepreneurs of the country having stakes in different segments of the
national economy. They are eminent industrialists & businessmen having
wide business reputation both at home & abroad.
2.5 MANAGEMENT
JBL is managed by highly professional people. The present Managing Director
of the Bank is a

forward-looking

senior

banker

having

decades

of

experience and multi discipline knowledge to his credit both at home

and abroad. He is supported by an educated and skilled
team

with

diversified

experience

in

finance

and

professional

banking.

The

Management of the Bank constantly focuses on the understanding and

anticipating customers needs and offer solution thereof. Jamuna Bank
Limited has already achieved tremendous progress within a short period of
its operation. The bank is already ranked as one of the quality service
providers & known for its reputation.
2.6 SERVICE
Jamuna Bank Limited offers different types of Corporate and Personal
Banking Services involving all segments of the society within the purview of
the rules and regulations as laid down by the Central Bank and other
Regulatory Authorities.

10 | P a g e

Deposit Products
(a) All Types of Deposit Accounts:
The client can maintain different types of deposit accounts i.e. Current,
Savings, STD, FDR and Foreign Currency Account accounting to his
necessity and convenience.
(b) Special Deposit Schemes

Loan Products
(a) General Loan Facility
(b) SME Credit Scheme
Electronic Products
Real Time On-Line any branch banking
24-hours ATM
Debit Card
Credit Card
Telephone Banking
SMS Banking
Internet Banking

11 | P a g e

(c) Retail Credit Products

Any purpose lifestyle loan
Loan against salary
CNG Conversion loan
Car Loan
Travel Loan
Consumer Loan
Household durable loan
Study Loan
JBL Debit & Credit Card
Doctors Loan
Marriage Loan

JBL Corporate Structure

Employees of JBL share certain common values, which helps to create a JBL
Culture
The client comes first
Search for professional excellence
Openness to new ideas & new methods to encourage creativity
Quick decision-making
Flexibility and prompt response
A sense of professional ethics.

12 | P a g e

2.7 OBJECTIVES
To earn and maintain CAMEL Rating 'Strong'
To establish relationship banking and improve service quality through
development
of Strategic Marketing Plans.
To remain one of the best banks in Bangladesh in terms of
profitability and assets quality.
To introduce fully automated systems through integration of
information technology.
To ensure an adequate rate of return on investment.
To keep risk position at an acceptable range (including any off
balance sheet risk). To maintain adequate liquidity to meet maturing
obligations and commitments. To maintain a healthy growth of
business with desired image.
To maintain adequate control systems and transparency in procedures.
To develop and retain a quality work-force through an effective
human Resources Management System.
To ensure optimum utilization of all available resources.
To pursue an efective system of management by ensuring
compliance to ethical norms, transparency and accountability at all
levels.

13 | P a g e

2.8 Organizational Organ gram

Chairman
Board of Directors

Managing Director & CEO

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior ASST Vice President

Asst.Vice President

First Asst. Vice President

Senior Executive Officer

Executive Officer

First Executive Officer

Probationary Officer

Junior Officer.

14 | P a g e

Figure: 1

Jamuna Bank Ltd at a glance

The financial statement and an overview of Jamuna Bank Ltd are given below:
Taka In BDT Million

Particulars

YR-2010

YR-2009

Income Statement
Interest income

5201.50

3788.90

Interest expenses

3725.17

2888.74

Net interest income

1476.33

900.16

Income from Investment

1152.80

1361.49

Non interest income

1112.78

666.34

Non interest expenses

1335.61

1013.74

Net Non-interest income & Investment income

929.97

1014.09

Profit before provision and tax

2406.30

1914.25

Provision for loans and assets

341.40

351.05

Proft after provision before tax

2064.90

1563.20

Contribution to Jamuna bank foundation

10.32

7.82

Tax including deferred tax

988.20

632.26

Proft after contribution to foundation and tax

1066.38

923.12

Authorized Capital

10000.00

4000.00

Paid up Capital

2230.09

1621.88

Toyal Shareholers Equity

6408.55

3980.88

Deposits (Core & Bank)

60673.56

42356.20

Long Term Liabilities

12303.00

14681.00

Loans and advances

49430.50

32287.66

Balance Sheet

15 | P a g e

Investments

10891.03

8503.44

Property, Plant and Equipment

1822.66

681.60

Earning Assets

61777.83

43465.18

Net Current Assets

44476.30

31159.26

Total Assets

70753.37

48730.95

Debt Equity Ratio

10.56

9.40

Current Ratio

1.17

0.97

Import

61034.50

46685.00

Export

41860.40

21407.00

Remittance

1594.11

2657.64

Guarantee

6620.00

2908.50

Total Risk weighted Assets

66839.00

31170.50

Core Capital (Tier-I)

4854.55

3054.14

Supplementary Capital (Tier-II)

1491.47

943.52

Total Capital

6346.02

3997.66

Tier-I Capital Ratio

7.26

9.80

Tier-II Capital Ratio

2.23

3.03

Total Capital Ratio

9.49

12.83

Other Business

Capital Measures

Table 2: Financial statement and an overview of Jamuna Bank Ltd

16 | P a g e

Chapter-3
About Foreign Exchange Department
3.1 Introduction
Foreign exchange is the means and methods by which rights to wealth
in a countrys currency are converted into rights to wealth in another
countrys currency. In banks when we talk of foreign exchange, we refer to
the general mechanism by which a bank converts currency of one country
into that of another. Foreign Exchange Department is the international
department of the bank which deals globally. It facilitates international trade
through its various modes of services.
The

term

foreign

exchange

has

diferent

connotations

in

different

contexts. In terms of section 2 (d) of the Foreign Exchange Regulation

Act 1947, as adapted in Bangladesh, Foreign exchange means foreign
currency and includes any instruments drawn, accepted, made or issued
under clause 13 of article 16 of Bangladesh Bank Order, 1972, all deposits,
credits and balance payable in foreign currency as well as foreign
currency instruments such as Draft, TC, Bill of Exchange, promissory note,
and Letter of Credit payable in any foreign currency.
Bangladesh Bank issues license to scheduled banks to deal with foreign
exchange. These Banks are known as Authorized Dealers. If the branch
is authorized dealer in foreign exchange market, it can remit foreign
exchange from local country to foreign countries. JBL Motizhil Branch is an
Authorized dealers

17 | P a g e

3.2 Importance of Foreign Exchange in Economy

No country is self sufficient in this world. Every country is more of less
dependent on
another for goods or services.
For the following reasons foreign exchange is very important for any country:
International trade gives opportunity of exchange of goods.
National assets and resources of a country can be utilized properly.
Foreign Currency can be earned easily.
International trade helps to trade domestic production globally.

3.3 Foreign Exchange Regulations followed by JBL Motizhil Branch

Local Regulations
Foreign exchange transactions are controlled by the following rules and
regulation:

Foreign Exchange Regulation Act 1947

Bangladesh Bank issue foreign exchange circular time to time to

control the import and remittance business.

Ministry of commerce issues exports-Import Policy guidelines.

Bangladesh Bank published two volumes in 1996.

18 | P a g e

International Regulation
There are also some international regulations, infuencing foreign exchange
transactions.
Few of them are discussed below:

International

Chamber

of

Commerce

is

world-wide

non-

governmental origination of thousands of companies. It was founded

in 1919; ICC has issued publications like UCPDC that is being followed
by all the member countries.

There is also an international court of arbitration to solve the

international business disputes.

World Trade Organization is another international trade organization

established in 1995. General Agreement on Tarif & Trade was
established in 1948 after completion of its 8th round; the origination
has been abolished & replaced by W.T.O. This origination has vital
role in international trade through its 124 member countries.

3.4 Foreign Exchange Department at JBL Motizhil Branch

The Foreign Exchange Department at JBL Motizhil Branch is divided into two
sections:
i.

Foreign Trade (L/C Operation): It includes Import and Export.

ii.

Foreign Remittance

19 | P a g e

Chapter-4
Import
4.1 Import
Import

means

countries.

purchase

of

goods

and

services

from

the

foreign

Normally consumers, firms, industries and Government of

Bangladesh import goods to meet their various necessities. So, in brief we

can say that import is the fow of goods and services purchased by
economic agent staying in the country from economic agent staying abroad.
4.2 Import Regulations followed by the Bank
As per Import & Export control Act 1950 no person can indent, import or
export any goods in Bangladesh except in case of exemption issued by
the government of the peoples of Bangladesh. According to Import and
Export Control Act, 1950, to be an importer the person should obtain the
Import Registration Certificate (IRC) from the Office of Chief Controller of
Import and Export.
Goods from South Africa and Israel or goods originated from these
countries are not importable. Import of goods into Bangladesh is not
permissible on the fag vessel of Taiwan, South Africa and Israel.
4.3 Procedure of Import Registration Certifcate (IRC):
To carry on

the

business

of import

the

first

thing one

needs

is

registration with the licensing authority of the area. To get this registration
the interested person/institutions submits the application along with the
following papers/documents directly to the chief controller of imports and
Exports

or

respective

zonal

offices

of

CCI&E.

Following

papers/documents are usually required to obtain IRC.

1. Income tax registration
certificate 2. Nationality
certificate
3. Certificate from Chamber of Commerce and Industry or Registered
Trade Association 4. Bank solvency certificate

5. Copy of trade license

6. A forwarding letter to the CCI&E

20 | P a g e

On receiving application the respective CCI&E offices will scrutinize the

documents and conduct physical verification (if necessary) and issue
demand notice to the prospective Importers to furnish the following
papers/documents through their nominated Bank:
1. Original copy of Treasury Challan deposited as IRC fees
2. Assets certificate
3. Two copies of passport size photographs of the Importer
4. In case of partnership registered partnership deed
The nominated bank of the applicant will scrutinize the papers/documents
and

verify

the signature

of

the

applicant.

After

scrutinizing

and

verification the nominated bank will forward the same to the respective
CCI&E

office

with

forwarding

schedule

in

duplicate through banks

representative. The CCI&E office will acknowledge on duplicate copy of the

forwarding schedule and return back the same to the bank representative
On being satisfied after scrutinizing of the documents the respective zonal offices
of CCI&E
will issue Import Registration Certificate (IRC) to the applicants.
4.4 Methods of Importing
There exist a number of procedures of importing goods from the foreign
country. Goods may be directly imported from the foreign manufactures or
they may be imported through the selling agents of the foreign producers.
Whoever does the function there are some stages of importing, which are
as follows:

21 | P a g e

Chapter-5
Export

5.1 Introduction
Export means to transfer goods from one place to another. The exporter
must pay duty on goods exported. The exporter should obtain registration
from the office the chief controller of import & export, trade license ERC, LCA
to open export L/C.

5.2 Methods of Export

Figure: 3

22 | P a g e

5.3 Things Done in Export

In broader aspect the major responsibility that re performed here are
L/C Advising
Documents Collection
Documents negotiation
Export financing
Parties of the Export
L/C issuing
bank Importer
L/C advising
bank Exporter
Confirming
bank
Negotiation
bank
The paying / Reimbursing Bank

5.4 Export Formalities

The export trade of the country is regulated by the Imports and Exports
(control) Act, 1950. There are a number of formalities, which an exporter
has to fulfill before and after shipment of goods. These forma or procedures
are enumerated as follows:
A) Registration of the Exporter
B) Export Registration Certifcate (ERC)
c) Export permit Form (EXP)

23 | P a g e

Chapter-6
Foreign Remittance
6.1 Introduction
Foreign Remittance refers to the transfer of fund from one country to
another either through the office channel i.e. banking channel, post office
or the informal channel. In Bangladesh still informal market is playing a
significant role. However, we shall limit our discussion within the official
channel.
Foreign Exchange earnings are very important for the country as valuable
foreign exchange is involved in the transfer mechanism. From the year 1990,
financial liberalization has been started which is still going on. Due to
liberalization, restrictions on foreign remittance become ease Bangladeshi
Taka, is convertible for current amount transactions on March 24, 1994
with the view to achieve better exchange rate management system. And
from April 1994 Bangladesh Government has accepted the status of Article
VIII of International Monetary Fund.
JBL places an important role to transfer money from other countries to
Bangladesh and Bangladesh to other countries. Inward and outward T.T,
M.T

and

draft

are

the

main

components

of

foreign

exchange

remittance. The Foreign Remittance incoming and outgoing through this

branch are handled by Head Office.
6.2 AD Branch
Authorized Dealer Branches of the bank are those who are permitted by
the Bangladesh Bank to deal in Foreign Exchange Business subject to the
fulfillment of foreign exchange rules & regulations of the country. JBL
Motizhil Br. is a AD branch.
6.3 Agency Arrangement
To facilitate foreign exchange business throughout the world, agency
arrangement may be made

between

local

bank

and

foreign

bank.

However, in case of agency arrangement accounting relationship may or

may not be made.

24 | P a g e

6.4 Drawing Arrangement

Drawing arrangement is made to facilitate remittance through concluding
accounting
relationship between banks & corresponding bank or exchange house.
6.5 Functions Performed by Foreign Remittance
Issuance of TC, Cash Dollar/Pound.
Issuance of FDD, FTT & purchasing, payment of the same
Passport endorsement.
Encashment Certificate.
F/C Account opening & filing.
Maintenance of ledger of Cash Dollar, FC Deposit A/C & TC.
Preparation of all related statement, Voucher & posting
Preparation of Weekly, Monthly, Yearly Statement for Bangladesh Bank
return
timely.
Attending all related correspondence to other Bank or Institution.
6.6 Types of Foreign Remittance
JBL Jubilee Road Branch is an authorized dealer of foreign exchange.
Their

dealing in foreign

foreign
and

exchange

outward

exchange

covering

remittances

involves

inward remittances
sent

abroad.

wings i.e. Inward and Outward Remittance.

buying

and

received

selling

from

of

abroad

Foreign Remittance has two

Figure: 4

25 | P a g e

Inward Foreign Remittance:

Inward remittance covers purchase of foreign currency in the form of foreign
T.T., DD, and bills etc. sent from abroad favoring a beneficiary in
Bangladesh. Purchase of foreign exchange is to be reported to Exchange
control Department of Bangladesh Bank on Form C.
Followings are the Inward foreign Remittance of JBL:
I.

Foreign Telegraphic Transfer Payable

II.

Foreign Demand Draft Payable

III.

Travelers Cheque Payable

IV.

Encashment of foreign currencies endorsed in the passport.

V.

Purchase of Foreign Currencies.

Outward Foreign Remittance:

Outward remittance covers sales of foreign currency through issuing foreign
T.T. Drafts etc. as well as sell of foreign exchange. Sale of foreign
exchange is reported to Excel control Department of Bangladesh flank on
form T/M.
Remittances issued by JBL to foreign corresponds to fulfill its customers need
are the
Outward Foreign Remittance of JBL. It comprises the following:
I.

Foreign Demand Draft

Issued II.Travelers Cheque

Issued
III.

Foreign Telegraphic Transfer

IV.

Endorsement of Foreign Currencies in

passport V.

Sale of Foreign Currencies

26 | P a g e

6.7 List of Exchange Houses of JBL with their services:

Through these exchange houses money come from abroad to Bangladesh
the customer can collect the money by submitting specific document.

Sl No.
1
2
3
4
5
6
7
8
9
10
11
12
13

Name of
the
Exchange
WesternUnio
n Money
Transfer
Money
Gram
Payment
Xpress
Money
Services
Ltd
Placid NK
Corporatio
Transfast
Remittan
ce LLC
Al
Ansari
Exchang
LULU
Internation
al
Home Link
Remit (UK)
Money
Link U.K.
Ltd
Raffles
Exchang
FasteRemit
Ruman
a
Money
Service
ZENJ
Exchange
Co. (Turbo
Cash)

Location
Global

Instant Cash

Global

Instant Cash

Global

Instant Cash

Global
Global

Instant Cash & Account

Credit
Instant Cash

UAE

Instant Cash

UAE

Instant Cash & Account

Credit

UK

Instant
Credit
Instant
Credit
Instant
Credit
Instant
Instant
Credit

UK
UK
Malaysia
UK
Bahrain

Table: 3
27 | P a g e

Offered Services

Cash & Account

Cash & Account
Cash & Account
Cash & Account
Cash & Account

Instant Cash & Account

Credit

Chapter-7
Foreign Exchange Performance and Banks Proftability
7.1 Foreign Trade Business
Figure in Million Taka

Table: 4

7.2 Earnings through Import

Figure in Million Taka

Table: 5
28 | P a g e

7.3 Whole Bank Import

Figure in Million Taka

70000

61035

65189.97

60000

46685
40000
30312
22192
2000

50000
30000

2010

2011

1000
00
2007

2008
2009

Figure: 5
7.4 Branch Import
700
0
600
0
500
0
400
0
300
0
200
0
100
0
0

Figure in Million Taka

5809.43 6510.23
4743.72
4094.08

Figure: 6
The total import handled by JBL increased year by year to some extent. In
year 2008 it was Tk 30311.71 Million, and it increased to Tk. 46685 Million in
year 2009. Further we see the growth continues as the import handled
increased to Tk. 61034.50 Million in year 2010. We can observe in the
graph which shows the upward trend of the import handled by JBL.

29 | P a g e

But in case of import handled by the Motizhil branch, it increased to Tk.

4743.72 Million from Tk. 4094.08 Million in year 2009 as compared to year
2008. Increasingly year by year the amount will be increasing. It is assure
that the branch will be raising profit year by year.
If i compare the import business with other bank like United Commercial Bank
Ltd then
you see that
Figure in Million Taka

150
00
145
00
140
00
135
00
13000
Import

12500

120
00
115
00
110
00
2008

2009

2010

2011

Figure: 7(performance of UCBL)

In 2008 Jamuna bank ltd will perform better than UCBL then gradually in
next three years Jamuna Bank performs better rather than UCBL. The
performance of import business will show in figure#6

30 | P a g e

7.5Earning through Export

Year

Whole Bank Export

Branch Export

2008

18617

2479.82

2009

21407

3267.69

2010

41860

3476.59

2011

45237

4418.05

Table: 6
Figure in Million Taka

7.6 Whole Bank Export

Figure in Million Taka

5000
0

5000
0

4500
0
4000
0

18617

3500

21407

0
3000
0
2500
0
2000
0
1500
0
1000
0

2007

2008

2009

13990

4
5
2
3
7

8
6
0

4
1

2010

Figure: 8

31 | P a g e

2011

7.7 Branch Export

Figure in Million Taka
5000
4500
400
0
350
0
300
0
250
0
200
0
150
0
100
0
500
0

4418.05

2479.
82

2008

3476.59

3267.
69

2009

2010

2011

Figure: 9
The total export handled by JBL increased year by year to some extent. We
can observe in the fgure# 10, which shows the upward trend of the
export handled by JBL. Export volume of this brunch reached Tk. 4418.05
million which is 3.5% higher than that of FY 2010. So, it should said that
the bank make profit from Export. Major export items involved with the
banks

foreign

trade

activities were

readymade

traditional items.
Figure in Million Taka

garments

and

non-

350
00
300
00
250
00
200
00
15000
Export 10000

500
00
2008

2009

2010

2011

Figure: 10(Performance of UCBL)

32 | P a g e

If I compare figure#8& 10 you see that in every year the performance regarding
Jamuna
Bank Ltd is better than UCBL

7.8 Foreign Remittance Of JBL

Year
Remittance

2006

2007

2008

2009

2010

2262.00

2506.00

3165.00

2657.64

1594.11

Table: 7

7.9 Foreign remittance of JBL(Graph)

3500
3000
2500
2000
1500
1000
500

Remittance

0
2006

2007

2008

2009

2010

Figure: 11

Remittance is a big factor to develop a countrys economy. The table

contains the total foreign remittance through the JBL. We can observe that
the remittance increased in year 2007 and 2008, but it decreased in 2009
and further more it decreased in 2010 the reason behind decreases the
foreign remittance in two years was some of the private banks perform
better rather than JBL because they are signing contract with different
foreign exchange house and the fow of foreign remittance will also be low
because of economic situation is not so god in foreign countries. Ex- like
America
33 | P a g e

7.10 Banks Proftability

Banks make profit in diferent way. One of the ways is foreign exchange
services.

In

the income

statement,

the

net

incomes

will

gradually

increasing. The total income of foreign exchange increased Tk. 9286.05

million to Tk. 10928.28 million.
Return on assets (ROA) is measured by the ratio of net income and total
assets. By the returning assets, if the banks net income increases the
profitable ratios of the bank increases. Also by measuring the ROA, it can
be determined that what percentage of the total asset is the net income
i.e. how much return are they getting over the assets. JBL is giving
continued emphasis on quality assets, which resulted in providing a
sound asset base for the bank.

Figure in Tk

Table: 8(Calculation of ROA)

34 | P a g e

7.11Findings
It is not so easy to find out and analyze the Foreign Exchange performance
regarding this mechanism within short time span. Despite of this, an
inclusive approach has been taken to find out of foreign exchange activities
of Jamuna Bank Ltd in this paper.
SWOT analysis is a simple framework for generating strategic alternatives from a
situation
analysis. The complete elaboration of SWOT analysis is followingS= Strength.
W= Weakness.
T= Threat.
O= Opportunities.
SWOT analysis is very helpful to measure and evaluate a stated objective
within a very short time. Hence this approach has been adopted in this
paper. After monitoring closely and working proactively in the Foreign
Exchange Department of Jamuna Bank Ltd. Motizhil Branch, Dhaka the
following Strength, Weakness, Threat, and Weakness has been found

Strength

According to the CAMEL rating Jamuna Bank Ltd. is the top most bank of
Bangladesh.
Quality,

This rating

Management,

is

based

Earnings,

on

Capital

and

Adequacy,

Liquidity

of

the

Asset
bank.

Bangladesh Bank monitors these parameters and publishes the ranking.

This top most position of Jamuna Bank is the most important strength of the
Bank. This is the reason why every household clients and corporate clients
relies on this bank. Other strengths areThe Bank has well reputation in the market.

Has good relation with Importers and

Exporters. Sound Import and Export
operation.
35 | P a g e

 Executives working in the Foreign Exchange Division are highly

qualified and experienced. They are quite capable of handling large
scale of export and import transactions and making a profitable
customer relationship with the clients.
The Branch follows the Foreign Exchange rules and regulation very strictly
In export and import activities there are lots of provisions of making
unethical and unlawful transactions. But Jamuna Bank Ltd. gives it
utmost attention so that such unethical and unlawful does not takes
place. This image of Jamuna Bank Ltd. is also a vast strength of the
Bank.
Recently Jamuna Bank Ltd. has gone through an agreement with
diferent exchange house to provide quick and more authentic
remittance service to its clients.
Weakness
There is no unmixed blessing in the earth. Every object in the world has some
lacking. So it is
quite natural to have some perforates in the performance of the Jamuna Bank Ltd.

In Foreign Exchange Division Jamuna Bank still uses lots of register for
maintaining its foreign exchange transactions. It is time consuming and
there are lots of chances for making mistakes. Computer software
should be used to maintain these transactions to ensure timeliness and
error free recording.

There is no customer complain desk in the Banks branches. It is not

only important part of the foreign exchange activities but also for other
two department of the Bank-General Banking and Credit Department.

Being a well reputed Bank, JBL no longer wants to conduct smaller

L/C request coming from small parties and as a result they are
neglecting a huge number of potential customers.

While

dealing

LDBP

(Local

Documentary

Bills

Purchased)

with

government bank, the bank faces a problem because the government

bank doesnt have online system. Hence it delays the process.

36 | P a g e

 Opportunities

As stated earlier that Jamuna bank ltd. One of popular bank in

Bangladesh. Both exporters and importers have their faith on this
Bank.

The percentage of classified loans is below 2% which is far better than

international standard.

Jamuna Bank Ltd. has already 74 branches all over the country and
recently they have planned to set up branches in some other places of
the country.

Threat
Economic stagflation and economic break down of the country
especially after 9/11. As countrys export is RMG sector depended,
reduce in RMG export has affected
foreign exchange department of the Bank.
The margin for opening L/C is different for different customers. The
margin is more for new customers while the margin is less for corporate
and reputed customers.

Government continuous pressure to reduce interest rate.

Frequent fuctuation of domestic currency worth against

US Dollar.

Political crisis and decaying country image

as exporter.

Rapid increase of private sector Bank in number and size.

37 | P a g e

8.2 CONCLUSION
Bank

is

very

important

and

vital

for

economic

development

in

mobilizing capital and other resources. JBL is also contributing to the

advancement of the socioeconomic condition of the country. To keep
pace with the current market and demand, JBL is following several
strategies and taking new initiatives, offering new products and services to
the customers. The bank should maintain well-structured communication
from upper level to lower level. JBL have a strong position in the
competitive market. It is among one of the fastest growing Bank.
As the economy of Bangladesh is increasing so is the foreign trade and JBL
Bank like always have played its role in making sure that things go
smoothly. The bank is doing its best to provide better Import, Export and
Remittance services to the customers.
Export, Import and Remittance are all showing positive trends even
after the global challenges that we are facing today. But the foreign trade
handled by bank decreased in recent year, this may be because of opening
of new branches in different business centers and the instability in the
economy of the world.

38 | P a g e

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Chowdhury, Tanbir Ahmed., and Kashfia

Ahmed

(April,2009),

Performance Evaluation of Selected Private Commercial Banks in

Bangladesh. International Journal of Business and Management, vol.4,
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Chowdhury, A. (2002). Politics, society and financial sector reform in
Bangladesh. Intenrational Journal of Social Ecorronlics. 29(12), 963-988.
Jahangir, N., Shill, S., and Haque, M. A. J. (2007). Examination of
Profitability in the Context of Bangladesh Banking Industry. ABAC
Journal, Vol. 27, No. 2.
Journal of Banking and Finance, Volume 35, issue 4 (April, 2011),
p. 819-839. ISSN: 0378-4266 DOI: 10.1016/j.jbankfin.2010.11.006
Elsevier Science
Manual for Foreign Exchange Division, Volume IV, Issue 2009,
Jamuna Bank Ltd. Marrewijk, Charles Van, An Introduction to
International Money and Foreign
Exchange Markets, October 2004.
Siddique, S. H., and Islam, A. F. M. M. (2001). Banking Sector in
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Its

Contribution

and

Performance.

Business Research, Jahangirnagar University, Vol. 3.

http://www.bangladeshbank.org/econdata/index.php
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Journal

of

39 | P a g e