Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBLC HAPTER 1 introduction WHAT IS INTERNSHIP? Internship is a field project for a student of Business Administration of final year that gives the student a chance to apply business theory practically in any organizational environment. The objectives of internship are: 1. Practical fulfillment of MBA program. 2. Application of theoretical knowledge into practice. 3. Gaining work experiences. 4. Having an exposure for searching a good job in future. 5. Knowing/understanding gap between theoretical knowledge and practical situation. Parts of Internship Report: There are two parts of internship report. They are: Part A: Organization Part. Part-B: Project Part. Prepared By Md Elias Alam 1 Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Background of the Report The report comprises of the organizational overview, operation of Banking in the different section such as General Banking, Investment, Foreign Trade/Exchange and Briefly analysis the performance of the Branch. Finally the report has been concluded with some recommendations. During my two months study, I’ve tried my best to get knowledge about their overall banking operation with special emphasis on their performance. The Banking Industry in Bangladesh is characterized by strict regulations and monitoring from the central governing body, the Bangladesh Bank. The main concern is that currently there are many banks for the market to sustain. As a result, the market will only accommodate those banks that can transpire the most competitive and profitable in the future. Currently the major financial institutions under the banking system include: 1. 2. 3. 4. 5. Bangladesh Bank Private Commercial Banks State Owned commercials Bank Islamic banks Non-bank financial Institutions, etc. Of these, there are four state owned commercial banks (NCB), 5 specialized banks, 11 foreign banks, and 26 domestic private banks, 4 Islamic banks currently operating in Bangladesh. Prepared By Md Elias Alam 2 Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Scheduled Banks in Bangladesh FCB 20% NCB 8% PCB 54% Islamic 8% Specialized 10% FCB NCB Islamic Specialized PCB FIGURE: 1 Generally, the commercial banks and finance companies provide a myriad of banking products/services to cater to the needs of their customers. However, the Bangladesh banking industry is characterized by the tight banking rules and regulations set by the Bangladesh Bank, All banks and financial institutions are highly governed and controlled under the Banking Companies Act-1993. The range of banking products and financial services is also limited in scope; all local banks must maintain a 4% Cash Reserve Requirement (CRR), which is non-interest bearing and a 16% Secondary Liquidity Requirement (SLR). With the liberalization of markets, competition among the banking products and financial services seems to be growing more intense each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank. Competing through differentiation is increasingly difficult and other banks quickly imitate any innovative banking service. Prepared By Md Elias Alam 3 Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Objective of the Study The main objective of the study is to have knowledge about the investment management in the First Security Islami Bank Ltd. In order to study the credit management I have decided to study about the following facts: 1. To know about the Islamic banking system of First Security Islami Bank Limited. 2. To know about the different schemes, policies, procedures of FSIBL. 3. To know about investment policy of the Islamic banking systems. 4. To about the credit policies and limitations of FSIBL. 5. To know about the monitoring and recovery system in islami banking. 6. To observe the overall environmental situation of the Bank. Scope of the Study Scope means the area on which the study has to be done. The study is only related in First Security Islami Bank Limited, chawkbazar Branch, Chittagong. This report focuses on the Overview of the First Security Islami Bank Limited and mainly related with Lending Policy and recovery system. Prepared By Md Elias Alam 4 Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Limitation of the Study I have faced several problems during the preparation of this repot. Some of the limitations of this report are mentioned below: a. Credit management is a big subject: Credit management is a big subject to cover wholly in this limited space. It required huge time and huge space to cover. So, I have covered only some important topics of credit management and furnished only the gist here. b. Engaged in work: Every man of the branch was so busy in their work, so they were not able to provide sufficient time to make me clear about different topics. c. Time constraint: I had to prepare this report within a period less than three months which was not enough to prepare such a report. Because collection and arrangement of information is a time consuming job. Then again I had to summarize those. So I had to work in haste. d. Confidential matter: It is not possible to get all sorts of information due to official confidentiality. e. Lack of practical knowledge: For the lack of practical knowledge, some short comings may be available in the report. Because in some cases I could not practically involved because of bank’s policy limitations and operational bindings. The problems mentioned above are some of the major problems; I have faced during the preparation of this report. In spite of that, I have tried my level best to make the report as informative as possible. Prepared By Md Elias Alam 5 The relationship between bank and client is trustee. the term ‘Loan & Advance’ and ‘Investment’ are same. Although. Investment is the action of deploying funds with the intention and expectation that they will earn a positive return for the owner. there is no provision of charging interest in the Islami Banking system. Mudaraba means trusteeship. they are differently used in Conventional banking system and Islami Banking system. Prepared By Md Elias Alam 6 . Because. The client deposits his money to the bank with the permission of using the money in a way which is legal and according to the Shariah law. And also the Islami Bank is operated on the basis of Mudaraba basis.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL C HAPTER 2 Methodology of the Study Definition of Concepts & Assumption: The term ‘Loan and Advance’ is used as the ‘Investment’ in the Islami Banking system. the Islamic Banking helps to invest the client’s money in various sectors and give profit on the basis of agreement. As there is no provision of charging interest on the loan. They charge a provisional rate on the investment and charge the profit on the basis of weighted of the previous year’s profit. Prepared By Md Elias Alam 7 . f) Broachers etc. c) Face to face conversation with the clients. Data Source: The data sources used to prepare this report delineated as follows: 1. c) Bank’s financial statement. Secondary Source: a) Annual report of First Security Islami Bank Limited. b) Face to face conversation with the officers and executives. e) Bank’s daily affairs. d) Bank’s quarterly statement.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Methodology of the study The methodology of the study can be discussed under the major heads: Organization and development of the report: The report is organized and developed under a mixture of both descriptive and analytical framework. 2. Primary Source: a) Practical deskwork. b) Prospectus of First Security Islami Bank Limited. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Prepared By Md Elias Alam 8 . Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL C ABOUT HAPTER 3 THE FIRST SECURITY ISLAMI BANK LIMITED Prepared By Md Elias Alam 9 . the relationship between bank and clients is not debtors-creditors. or to receive the money of others on general deposit. if the institution sees fit to engage in such business. foreign and domestic bills of exchange. According to The OIC. The definition that is given approved by Organization of Islamic Conference is most popular. According to Mudaraba theory. credits. and with the privileges. Prepared By Md Elias Alam 10 ." Generally there are two main way of operating commercial bank.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Definition of Bank: We can define A bank as an institution. Islamic Banking: The Islamic banking has been defined in a number of ways. of receiving special deposits and making collections for the holders of negotiable paper. And also it is operated on the basis of Mudaraba theory. of dealing in notes. or with both these powers. it is a relationship of trusteeship. usually incorporated with power to issue its promissory notes intended to circulate as money (known as bank notes). for its own benefit. to form a joint fund that shall be used by the institution. rules. bullion. and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of receipt and payment of interest on any of its operations. It appears from the definition that Islamic banking is a system of financial intermediation that avoids receipt and payment of interest in its transactions and conducts its operation ina way that it helps achieve the objectives of an Islamic economy. They are conventional banking and Islamic banking system. coin. The Islamic bank is a financial institution whose status. for one or more of the purposes of making temporary loans and discounts. and the remission of money. in addition to these basic powers. They charge interest on interest. The Islamic banks. borrowing from the money market is relatively easier. It aims at maximizing profit without any restriction. 11 2 3 4 2 3 4 5 6 7 Leading money and getting it back with interest is the fundamental function of the conventional banks. The conventional Banking system has the recycling system. In Islami Banking system. on the other hand. The status of Islamic bank in relation to its clients is that of partners. 5 6 7 8 8 9 1 0 1 1 9 1 0 1 1 Prepared By Md Elias Alam . Strictly speaking and Islamic bank cannot do it. it has become one of the serviceoriented functions of the Islamic banks to collect an distribute Zakat. It does not deal with Zakat. For the Islamic banks. The Islamic banks have no provision to charge any extra money from the defaulters. A conventional bank has to guarantee its deposits. It also aims at maximizing profit but subject to Shariah restrictions.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL The difference between Conventional and Islamic Banking are shown in terms of a box diagram as shown below: Conventional Banks 1 The functions and operating modes of conventional banks are based on manmade principles. there is no recycling of interest. it is comparatively difficult to borrow money from the money market. For interest-based commercial banks. 1 Islamic Banks The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah. In the modern Islamic banking systems. in relation to its clients. The status of a conventional bank. it promotes risk sharing between provider of capital and the user of funds. The investor is assured of a predetermined rate of interest. It can charge additional money in case of defaulters. give greater emphasis on the viability of the projects. The conventional banks give greater emphasis on creditworthiness of the clients. is that of creditor and debtors. Participation in partnership business is the fundamental function of the Islamic banks. In contrast. investors and trader. There is markup/rebate system. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL 1 2 In case of loan or credit. Dhaka. and performing other related services such as safe keeping. History of the First Security Islami Bank First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. loss is not bored by the investors. The Bank converted its banking operation into Islamic Banking based on Islamic Shariah from traditional banking operation on 01 January 2009 after obtaining approval from High Court.The Bank carries banking activities through its Ninety two (92) branches in the country. providing investment facilities. The Banking license for the Bank was issued by Bangladesh Bank on August 29. The Authorized Cap ital of the Prepared By Md Elias Alam 12 . conducting money transfer and foreign exchange transactions. collections and issuing guarantees. 1999 by Mr. the loss is bored by the capital supplier. discounting bills. Government of the People’s Republic of Bangladesh as the chief guest. The commercial banking activities of the bank encompass a wide range of services including mobilizing deposits. 1999 was opened on October 25. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. Saifur Rahman. SMS and ATM banking facilities for their clients. Finance Ministry and Bangladesh Bank. The Bank and its first branch at the busiest commercial hub of the country at 23. Branch Networks and Inter Division and Branch Coordination All the 92 branches are computerized branches are under distributed to open server within environment. Another few planning December 2010. The Bank went for public issue on 20 July 2008 and its shares are listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). M. FSIBL has already started their on-line. 1 2 In case of investment. Ex-Honorable Finance Minister. Dilkusha Commercial Area. acceptances and letter of credit. 7. 4. Steady return on shareholder’s equity. 4. Prepared By Md Elias Alam 13 . Balanced growth strategy. Innovative banking at a competitive price. First Security Islami Bank is today a synonym of quality banking products. They have structured their operational strategies to address the special and often complex needs of the customers. 3. 2.000. it has generated profit of Tk. To contribute the socio.300. 2. Attract and retain quality human resource.000 The sponsors of the Bank are the leading business personalities and eminent industrialists of the country having stakes in various segments of the national economy. Vision To be the premier financial institution in the country providing high quality products and services backed by latest technology and a team of highly motivated personnel to deliver excellence in banking. Fast and accurate customer service. 8. Firm commitment to the society and the growth of national economy. 6.000. Mission 1.600.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Bank is Tk. It has a diverse array of carefully tailored products and services to cater the needs of all customer segments.000 It’s paid up Capital and reserve reached at present Tk. 5. In the growth graph. First Security Islami Bank Now at Present Having started its operations as a commercial bank in 1999. High standard business ethics.economical development of the country. fsiblbd.com Prepared By Md Elias Alam 14 .978.1999 as a public limited company under the companies act 1994 and bank companies act 1991. 47. Commencement of Business Registered Office Website 25th October 1999 10. First Security Islami Bank Ltd. in Bangladesh. Corporate Information Name of the Company First Security Islami Bank Limited A scheduled commercial bank incorporated Legal Form on august 29. meeting the needs of all kinds of finance and related matters.12. Specially. Today First Security Islami Bank is one of the leading and one of the most successful banking institutions in Bangladesh with a total asset base of Tk.749 in the year 2012.552. it is extremely important that the country’s banking system should be in good health in the interest of investment activities. The curve keeps soaring upward with dawn of everyday. 230. www.000.952 as on 31.837. The bank has a strong branch network nationwide with 61 branches to effectively address the needs of its cross.2009.segment customer base. Over the years. the health of the banking system is very vital because the capital market is little developed here. As the banks are still the major sources of credit and exercise great influence on the financial system. Banks are the pillars of the financial system. has built itself as one of the pillars of Bangladesh’s financial sector and is playing a pivotal role in extending the role of the private sector of the economy. Listed in both the Dhaka and Chittagong stock exchange since late 2008 with an IPO that raised the paid-up capital of the bank to Tk. Dilkusha Commercial Area Dhaka-1000.000 the current price levels of its shares and turnover in trading is evidence of its high rating among investors. First Security Islami Bank has now emerged as a major player in the financial sector.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL 326. of Employees Stock Summary: Authorized Capital Paid up Capital Face Value per Share FSEBBDDH Mr. (Source: Exclusive Economic Weekly. 2.M Zakaria Prepared By Md Elias Alam 15 . 2009) Board of Directors Alhaj Md. Saiful Alam Chairman Alhaj Akkas Uddin Mollah Chairman Alhaj Late Hamidul Haq Director Alhaj Md Farooq Alhaj Syed Nurul Arefeen Vice Chairman Vice Chairman Farzana Parveen Rahima Khatun MS. Muhammad Ali Managing Director Managing Director A. Muhammad Loqman Director Mr.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL SWIFT Chairman Managing Director No. A.K. Sunday 29 March. Shamshad Jahan Director Director Director Atiqun Nesa Md. 4. A.000 Tk.600. of SME Centers No. Zakaria 92 05 929 Tk.000. 100 Position of the Bank: According to Bangladesh Bank CAMELS rating FIRSTY SECURITY Islami Bank Limited is a “A” class bank.000 Tk. INDUSTRY.A.M Ali Johar Director Director Director Alhaj Md.300. of Branches No. Sharif Hossain Alhaj A. Saiful Alam (Masud) Mr. which the only second one as Bangladeshi bank. Wahidul Alam Seth Shahidul Islam Director Director Mohammed Oheidul Alam Director Dr. M.000. consists of prominent Ulema. The Council.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Shariah Council Shariah Council of the Bank is playing a vital role in guiding and supervising the implementation and compliance of Islamic Shariah principles in all activities of the Bank since its very inception. Shamaun Ali.Sheika ( Mowlana)Mohammad Qutubuddin Member Secretary Moulana M. Sharif Hussain P Member Alhaj Md. which enjoys a high status in the structure of the Bank. Shariah Board Vice Chairman M Mufti Sayeed Ahmed M Chairman Mr. Members of the Shariah Council meet frequently and deliberate on different issues confronting the Bank on Shariah matters. Md. First Security Islami Bank Limited Prepared By Md Elias Alam 16 . renowned lawyer and eminent economist. Member Moulana Abdus Shaheed Naseem Member Mohammad Azharul Islam Member Md. Saiful Alam Chairman. Abdul Maleq Member Prof. reputed banker. They also conduct Shariah inspection of branches regularly so as to ensure that the Shariah principles are implemented and complied with meticulously by the branches of the Bank. Internal Control and Compliance Division 4. Marketing Division 6. Treasury and International Division 3.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Division of First Security Islami Bank All policy formulation and subsequent executions are done in the Head Office. Merchant Banking Division 7. Human Resources & Logistics Division 5. Share Division &Information Technology Division Organizational structure of First Security Islami Bank Ltd: Managing Director Deputy Managing Director Senior –Executive Vice President Executive Vice President Senior Vice President Vice President First Vice President Senior Assistant Vice President Assistant Vice President First Assistant Vice President Senior Principal Officer Principal Officer Senior Officer Officer Probationary Officer Junior Officer Assistant Officer Trainee Assistant Officer Prepared By Md Elias Alam 17 . It comprises nine major divisions. Credit & Administration Division 2. They are described below: 1. 2) Cash Department. As a branch of First Security Islami Bank Ltd Jubilee Road Br. issuing local remittance etc. Management Hierarchy of FSIBL. 2. to help opening the accounts. Jubilee Road Branch. Customer Care Department: Customer care department is one of the most important departments in the Bank. 1. 4) Investment Department. VP AVP Principal Officer Senior Officer Officer Junior Officer Assistant Officer Trainee Assistant Officer Different Departments involved in FSIBL. 2001.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL First Security Islami Bank Ltd is one of the fastest growing banks among all the private Commercial Banks in Bangladesh. started its function on 9th August. 5) Foreign Department. The responsibility of this department is to provide necessary information to the clients. There are various departments engaged in providing services to the clients in the FSIBL. to receive all the documents that are task of dispatching. These are: 1) Customer Care Department. Cash Department: Prepared By Md Elias Alam 18 . 1999. The institution started its function back on 25th October. 3) Accounts Department. 6) IT Department. 3. Liquidity position 6. according to the Shariah Law. So. Credit Section. Bai-Muajjal. The Islami Banks invest the capital on behalf of clients and against this charge profit on the investment. Bai-Salam etc. Foreign currency statement 4. because all the cash transactions are happened in this department. Musharaka. Branch Trail Balance 5. industrialist and other in consideration of its interest.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL It is another important department for the Bank. interest taking is not allowed. There are various modes of investment like Murabaha. Accounts Section: Accounts department is the most important department in the FSIBL as it supplies all numerical data and information of the bank. The vault of the bank is under this department. Total assets and Liabilities various income and expenditure are shown in the statement in the statement prepared by the accounts department. Income expenses statement. Sector wise balance position 2. It is one of the most risky departments of the bank. 4. Maturity balance sheet 3. To receive money and to give money according to the claim of the client with the proper signature of the authorities. in Islami Bank like First Security Islami Bank Limited. Statements prepared by Accounts section: 1. Staff payments. Products and Services Prepared By Md Elias Alam 19 . they called it investment. Investment Department: Bank offers loans to the businessman. But. Current deposit. Mudaraba Term Deposit Scheme (MTD) b. disbursement of investment. General Products a. Loan against trust receipt g. Mudaraba Short Term Deposit (MSTD) 2. Mudaraba Double Benefit Scheme (MDBS) c. Hire Purchase. Mudaraba Saving Account (MSD) b. 4.D. Murabaha Wes Bills. b) Foreign f. Investment Scheme a.. h. Western Union Money Transfer First Solution & other money transfer Locker Services Remittance. Services a. c. Such as. 1. etc Prepared By Md Elias Alam 20 . d. D. which a commercial bank performs. Bills Purchase & Discount : a) In-Land. c. e.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL FSIBL carries out all traditional functions. Mudaraba Monthly Saving Scheme (MMSS) 3.T.O. Al-Wadiah Current Account c. P. Deposit Scheme a. Bai-Muajjal. Consumer credit schemes. b. financing of export and import business and trade and commerce and so on. investment of funds.T. mobilization deposit. Staff loan. b.. Mudaraba Monthly Income Scheme (MMIS) d. Quard against TDR. Product and services offered by FSIBL can be visualized from the diagram in the following: Products and Services of FIRST SECURTY ISLAMI BANK LTD. d. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL C HAPTER 4 Foreign remittance Prepared By Md Elias Alam 21 . reciprocal claims of one bank against others are offset & only the net balance of drawing on the account of the debtor bank maintained with the Central bank. On Bangladesh. we can say that – “Transfer of funds from one place to another place without physical transfer of money”. commercial banks transfer funds from one place to another through By other way. Clearing-House: A banker’s clearinghouse system. Remittance may be a) Within the country. Types of clearing Outward clearing: When a particular branch receives instrument drawn on the other bank within the clearing zone and send those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch. let us know what Clearing-House is actually. To facilitate the need of customers. This branch is known as collecting branch.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL CLEARING DEPARTMENT Before going to discuss about the functions of clearing department of FSBIL. Prepared By Md Elias Alam 22 Remittance: . the bank organized the clearinghouse where it has an officer. These methods of remitting money from one place to another are known as remittance. Inward Clearing: When a particular branch receives instruments.4 Local Remittance Demand draft or telegraphic transfer. which are on themselves and sent by other member bank for collection is treated as inward 4. Functions of Remittance section: The functions of Remittance section – Handling of all incoming and outgoing foreign and local remittance is the major function for this department.D. Pay Order (P. Other miscellaneous work of the department.R). Handling of incoming and outgoing T. c) Minimum cost.T. Instruments of Remittance: The most widely used instruments of inland remittance are: Telegraphic Transfer (T. Remittance has following advantage a) Convenience. on receipt of which.D). Outstation cheque collection.O). Prepared By Md Elias Alam 23 .T) A telegraphic transfer is a method of remittance. Demand draft handling. Security Deposit Receipt (S. the paying office pay the amount to the payee by crediting his account. Telegraphic Transfer (T. b) Speed.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL b) Outside the country. Demand Draft (D.T). which is effected by the banker through a coded telegram attested by secret cheque signal. D) is an unconditional order of the banker’s one branch to another to pay to the same person or order the amount mentioned there in on demand. sign it and send it to the telex operator for transmission of the message.T. Debit advice is send to the clients if clients account is debited for the amount of T. Credit ticket is used to credit the SJIBL general account.D) A demand draft (D. T. The first copy of the application form will be treated. A customer can purchase a Demand Draft (D.Demand Draft (D. as debit ticket while the second copy will be treated as credit ticket.D) making amount payable to any one including him. Prepared By Md Elias Alam 24 . GB will prepare necessary advice.T.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Issuance: The applicant fills up the relevant parts of the prescribed application form in triplicate. GB will prepare telex in appropriate form. GB will fill up the commission part for the bank’s use and request the applicant to deposit necessary cash or cheque at the cash booth. The third copy will be handed over to the applicant as customer’s copy. . duly signed the same and gives it to the GB. confirmation advice is send to the drawee branch. f) Authorized signature of two officers.D application form. Delivery of D.D. Deposit to requisite funds with commission voucher to prepare: 03. 03. e) Drawee branch. d) Amount in figures and words. An application from the D. Verify the signature of the applicant. if the amount above TK. Send the cancellation advice to the drawee branch.D Cancellation: 01. Telegram/Telephone to the drawee branch. Prepared By Md Elias Alam 25 .D. Filling of D. 05. D. b) Date of purchase. Realize cancellation charges. 06. Make entry-particulars of D. Obtain the original D.D issuing register. Particulars of D.D that issued.D in D. 1 lac.D signature of the applicant to be obtained on the back page of counter foil of D. 04. 05. 04. 02.D advice to the drawee branch should dispatch on the issuing day. 02. 25000).Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Issuing formalities: 01. D.D application requesting cancellation of D. 07.D: a) Name of the issuing branch. c) Name of the payee. g) Test number (for above TK. 000 to 5. 2.D.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Pay Order (P. Payees name. f)Amount in figure and word.2009. to pay a certain sum of money to a specific person or bank. Realization of the required fund + commission. 100. It includes the following things – a) b) c) d) e) g) Name of the issuing bank. 1.2008. Fill up payment order application form. o For TK.00. the commission is TK. 1 to 1. o For TK.O) is a written under issued by a branch of bank.00.000 the commission is TK. A/C payee seal. 5. It is a negotiable instrument and cannot be endorsed or crossed like D. 2007. 50. Date. It may be said as to be a banker’s cheaque as it is issued by a bank and payable by itself.000 the commission is TK.O) A Pay Order (P. 150.00. Deposit Year 2005 2006 2007 In Taka (‘000) 460000 1016267 1243475 26 Prepared By Md Elias Alam . Signature of two authorized official. 2006.000 to above. 1. Comparative analysis of the total amount of deposit Over the years 2005.00. For issuing pay order SJIBL charges commission on the following rates: o For TK. Contact number. 00 1.00 4000.00 2006 2007 2008 2009 2010 Prepared By Md Elias Alam 35.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL 2008 2009 1425642 1675246 Trend of Total Deposits Over the last 5 Years 2000000 1500000 1000000 500000 0 2005 2006 2007 2008 2009 Total Capital (taka in million) Year 2006 2007 2008 2009 2010 2011 Total Capital 1147.11 Total Capital £ 4.0000.00 0.00 2.03 4582.60% 2011 27 .21 million 5000.91 2862.582.00 3000.000.19 3379.28 1347.21 5622. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Remittance (taka in million) Year 2006 2007 2008 2009 2010 2011 Remittance 48.75 843.47 942.75 558.44 2006 2007 2008 2009 2010 2011 Foreign remittance Foreign remittance of the bank stood at taka 843.44 330 585. besides the bank has taken initiatives to make remittance arrangements with some leading exchange houses at abroad.57 Remittance Tk. 558. Prepared By Md Elias Alam 28 .844 843.47 330 48. 843.47 million as of December 31 2010 as against TK.47 million 900 800 700 600 500 400 300 200 100 0 60% 2007 558.75 million in 2009.84 558. 00 2006 2007 2008 2009 2010 2011 32% Prepared By Md Elias Alam 29 .00 4000.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Paid up capital (taka in million) Year 2006 2007 2008 2009 2010 2011 Total capital 900.00 Paid up Capital Tk.00 2300.00 2300.00 1000. 3.036 million 3000 2500 2000 1500 1000 500 0.00 3036. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL FIRST SECURITY ISLAMIC BANK BALANCE SHEET AS AT 31 DECEMBER 2010 particulars Note s 3 2010 4857543203 612173146 4245369057 1036199077 926081336 110117741 2859354561 2331134100 528220461 5212390316 4 47640238696 4483664468 573610332 2169188462 8 6361979779 9 5634495916 7 3354827146 5969978631 3 3920011486 6361979779 9 2009 5033532439 432907731 4600624708 731150321 494050218 237100103 1852026032 1610674000 241352032 38725874774 35616450493 3109424281 376477387 1259491999 47978552952 Property & assets Cash In hand Balance with Bangladesh bank and its agent Balance with other bank & financial institution In Bangladesh Out Bangladesh Investment in shares & securities General investment Bills purchase & discounted Investment Government other Fixed assets including premises. furniture &fixtures Other assets Non banking assets Total assets LIABLITIES & CAPITAL Deposits and other accounts Other liabilities Total liabilities Capital/shareholder equity Total liabilities & shareholder equity 4 5 6 7 42423092722 2690049475 45113142197 2865410755 47978552952 Prepared By Md Elias Alam 30 . 12.14 750837749 830515000 507694000 53834571 9.12.56 53510527 1. Highlights For the year ended 31 December 2010 particulars Paid-up-capital Total capital fund Capital surplus Total assets Total deposit Total investment Total contingent liabilities & commitment Investment deposit ratio Percentage classified investment Profit before tax & provision Amount of classified investment Provision kept against classified investment Provision surplus Cost of fund Profit earning assets Non Profit earning assets Return on investment Return on assets Income from investment Earning per share (tk.28 2.) 31.51 2.89 264208027 2.33 31.2009 2300000000 3379035832 267692742 47978552952 42423092722 38725874774 5971673066 91.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL First Security Islamic Bank ltd.2010 3036000000 4582217485 29266485 63619797799 56344959167 52123909164 8859668340 92.61 1203600731 1361392000 542894000 13658789 8.42 31 Prepared By Md Elias Alam .90 56040956802 7578840997 9.28 41371529125 6607023827 2.24 1.79 1. Statement of Fixed Assets As at 31 December 2010 COST Particulars 2009 Addition during The year Sales / Tran sfer durin g The year Balanc e as on 2010 DEPRECIATION Balanc e as on 2010 Jan. Charge during the year Adjustm ent Sales/ transfer 2010 Dec.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL First Security Islamic Bank ltd. Building Furniture & fixture Office equipment Vehicles Books Total 2010 Total 2009 66227032 24009004 7 17841003 0 37845372 78837 52265131 8 29737499 8 6395394 3 1080413 86 8088991 6 6631850 3442 2595205 37 2354108 20 13018 0975 34813 1433 25929 9946 44477 222 82279 78217 1855 52265 1318 37699 0 66587 335 65294 951 13843 196 71459 14617 3931 11300 6566 1646781 2323340 4 2991681 2 7586526 4069 6238759 2 4154482 6 8377461 2023 771 8982 0739 9521 1763 2142 9722 7552 8 2085 6152 3 1461 7393 1 128157204 258310694 164088183 23047500 6751 573610332 376477387 Prepared By Md Elias Alam 32 . Written down 2010 Dec. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL C HAPTER 5 DIFFERENT SOURCE OF FOREIGN REMITTANCE Prepared By Md Elias Alam 33 . of which US$316 billion went to developing countries that involved 192 third of their GDP. remittances promote access to financial services for the sender and recipient. contributing to economic growth and to the livelihoods of less prosperous people (though generally not the poorest of the poor). For some individual recipient countries. an essential aspect of leveraging remittances to promote economic development. remittances totaled US$414 billion in 2009. FOREIGN REMITTANCE: Foreign Remittance refers to the transfer of funds from one country to another. and Honduras (25%). The top recipients in terms of the share of remittances in GDP included many smaller economies such as Tajikistan (45%). From the year 1990. Moldova (38%). Prepared By Md Elias Alam 34 .Remittances are playing an increasingly large role in the economies of many countries. 1947’’“Foreign Remittance’’ means purchase and sale of freely convertible foreign currencies. remittances can be as high as a As remittance receivers often have a higher propensity to own a bank account. According to World Bank estimates. million migrant workers. post office or the informal channel. According to the “Foreign Remittance Regulation Act. which may be within the country or between two countries through banking channel. Purchase of foreign currencies constitutes inward foreign remittance & sale of foreign currencies constitutes outward foreign currencies. Foreign remittance is very important for the country as valuable foreign remittance is involved in the transfer mechanism.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Remittance? A remittance is a transfer of money by a foreign worker to his or her home country. 1994 with the view to achieve better exchange rate management system. For many recipients. clothing and other basic needs. They include the following. The former is most obvious in the way the dependent circumstances of individuals that are directly transformed. Individual poverty alleviation Remittance payments directly alleviate the poverty of the individuals and households to whom they are sent. in the ‘first round’ of effects. And from April 1994 Bangladesh Government has accepted the status of Article V111 of international monetary fund. Plays an important role in foreign remittance activities both inward & outward. Due to liberalization. the latter operates via a collective response much on the existence of institutions can leverage remittances to create true ‘development finance’. In NBL main components of foreign remittance are T.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL financial liberalization has been started which is still going on. The Role of remittance The increasing attention paid to the question of migrant remittances comes from the realization of the important role they play in poverty alleviation and.T. Bangladesh taka is convertible for current account transactions on March 24. ‘Survivalist’ income supplementation. circumstances permitting. National Credit & Commerce Bank Ltd. economic development more broadly. remittances provide food security. M. Prepared By Md Elias Alam 35 . The ways in which remittances alleviate the poverty of individuals are. restrictions on foreign remittance become ease. shelter.T & Draft. direct and fairly obvious. education is expensive at all levels. Remittances can be employed to meet marriage expenses and religious obligations and. Education In many developing countries. Remittances allow better matching of incomes and spending. upgrading and repair of houses is prominent in many widely different circumstances. have highly variable incomes. whatever the formal commitments of the State. affordable health care is often unavailable in many remittance recipient countries. funeral and related costs. especially in rural areas. Housing The use of remittances for the construction.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Consumption ‘smoothing’ Many recipients of remittances. As with education. Social spending Day-to-day needs include various ‘social’ expenditures that are culturally unavoidable. Prepared By Md Elias Alam 36 . less happily but even more unavoidable. Health Remittances can be employed to access preventive and ameliorative health care. Remittances can allow for the payment of school fees and can provide the wherewithal for children to attend school rather than working for family survival. the misalignment of which otherwise threatens survival and/or the taking on of debt. Pay Order Sources of Foreign Remittance : The foreign remittance is divided into two types: 1) Inward Foreign Remittance 2) Outward Foreign Remittance Sources of Inward Foreign Remittance : Export proceeds Remittance by expatriate Bangladesh Commissions earned by local business people Foreign loans & grants.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Types Foreign Remittance: One is inward & another is outward remittance.Local Remittance 1. Foreign Outward 2.Foreign Remittance 1. Tele Transfer 3. Foreign Inward b). donation & gift Prepared By Md Elias Alam 37 . Demand Draft 2. We can see it by the following figure: REMITTANCE a). TT. A local bank also receives indenting commission of local firm.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Sources of Outward Foreign Remittance: Payment of import liabilities Payment of consular fees & commissions etc Foreign travel quota through travelers Cheque Educational expenses for students abroad All other payments sent abroad in foreign currency Foreign Inward Remittance : Foreign Inward Remittance refers to the currency/remittance in foreign currency that is received from abroad to our country. trademarks. Prepared By Md Elias Alam 38 . patent fee etc. MT. TCs & cash currency is also known as inward remittance. Draft etc are drawn in local bank by the foreign banks of exchange houses. In case of Foreign Inward Remittance. When a local bank purchases foreign bills. FDD issued by local banks on foreign banks. Purpose of Inward Remittance: • • • • • • • Family maintenance Donation Indenting commission Gift Foreign investment Export proceeds Others Foreign Outward Remittance: Remittance that is made from our country to abroad is called Outward Remittance. bills retired etc.Invisible Inward Remittance such as family maintenance.Visible Inward Remittance such as export proceeds. reimbursements against import. This remittance includes issuance of TT. Prepared By Md Elias Alam 39 . Outward Remittance can be classified into two groups: I. II. Tic`s. MT. Visible Outward Remittance such as payment against import. Further it includes rate of foreign currency.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Inward Remittance can be classified into two groups: I}. II}. Invisible Outward Remittance such as membership fee. subscription fee etc. constancy fee etc. notes. Medical treatment. purpose of T. Evaluation fee. Prepared By Md Elias Alam 40 . In case of purchase of foreign currency. Business travel quota.T (Telegraphic Transfer) M. purpose of bills. Pre-shipment fee. Attending seminar & workshop.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Purposes of Outward Remittance: Traveling purpose.C Foreign currency notes & coins.O (Pay Order) Besides this foreign Inward Remittance also includes remittances on account of export. The prescribed application from like IMP from & for other types of remittance TM form is needed for payment against import. Educational purpose. Membership fee.C (Travelers Cherub) P. cheque issued on foreign banks in favor of beneficiaries in Bangladesh etc. Modes of Foreign Remittance: • • • • • T.D (Demand Draft) T.T (Mail Transfer) D. an applicant must be made to an authorized dealer & if necessary requires to Bangladesh Bank. Advertising of Bangladeshi commodities. TC is alternative to holding cash & it provides better security than holding cash in hand. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account. Prepared By Md Elias Alam 41 . If any unused leaf of TC is surrendered bank buys it from the customer. Banks generally buy only those TC. Most dollars Purchased comes from realization of Export Bill of Exchange.2. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of `Convertibility of Taka for Currency Transactions in Bangladesh’ Bank can purchase dollar from resident & non –resident Bangladeshi & Foreigner.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL 4. It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account. The payee can collect it for the drawer bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Customers can Ancash the TC in abroad from the drawer bank.The remittance process involves the following four modes: Bank sells Dollar/Pound for using in abroad by the purchaser. It also makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account. Sell Cash Remittance Dollar/Pound Purchase Issue of TC Traveler`s Cheque (TC) Buying of TC Outward TT Telex Transfer Incoming TT Foreign Demand Draft Bank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. TC is useful to traveler abroad. All payments are made in local currency. D A demand draft is a negotiable instrument issued by a bank drawn on other bank with the instruction to pay a certain amount to beneficiary on demand. where a foreign bank issue a T.T Cable or telex instructions of payment are called as Telegraphic Transfer. D. On receipt of the T. Prepared By Md Elias Alam 42 .C It is an instrument issued by the Banks/ Company’s payable to the purchaser on presentation. T.T in foreign currency or in equivalent Bangladesh Taka to the beneficiary. received form the remitter to the NOSTRO A/C of its correspondent bank. P. M. It may be said as to be a banker’s cheque as it is issued by a bank & payable by itself.T the paying bank in Bangladesh will make payment of the proceeds of the T.T M.T in favor of some one in Bangladesh. to pay am certain sum of money to a specific person or a bank.O A pay order is a written under issued by a branch of bank.T is an instrument issued by a remitting bank to the paying bank advising in writing to make payment of certain amount to specific beneficiary.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Various Modes of Foreign Remittance Modes of Inward Remittance: T. it credits the amount. Notes Authorized dealer branches are permitted to safe foreign currency notes as per ceiling fixed by Bangladesh Bank. Prepared By Md Elias Alam 43 . TC Authorized dealer branches can sale Travelers cheques as per the ceiling fixed by Bangladesh Bank. FDD Any authorized dealer branches can issue foreign drafts draw on the bank with which they have an accounting relationship.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Modes of outward remittance: TT Local banks can draw telegraphic transfer to those banks with which they have accounting relationship & message should contain test & brief description of the beneficiary. Foreign Currency. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL C HAPTER 6 CONTRIBUTION OF FOREIGN REMITTANCe Prepared By Md Elias Alam 44 . circumstances permitting. the latter operates via a collective response much on the existence of institutions can leverage remittances to create true ‘development finance’. it benefits the local and national economies in which they live. however. Indeed. The former is most obvious in the way the dependent circumstances of individuals that are directly transformed. the spending allowed by remittances has a multiplied effect on local economies—as funds subsequently spent create incomes for others 9 and stimulate economic activity generally. The increasing attention paid to the question of migrant remittances comes from the realization of the important role they play in poverty alleviation and. economic development more broadly. Economic distress in the home country—precisely the scenario least conducive to other financial flows such as FDI— inspires migrant workers to increase the volume of funds they remit. Beyond such multiplier effects.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Broader concerns: remittances and economic development Remittance income does not benefit just individual recipients. Remittances can provide receiving countries with much-needed foreign exchange. are other factors conducive to economic growth and stability.Adding to the appeal of remittance flows to local and national economies is the fact that their frequency and magnitude tend to be counter-cyclical. Prepared By Md Elias Alam 45 . Consumption Remittances ‘smoothing’ allow better Many recipients highly of remittances. Education In many developing countries. affordable health 46 Prepared By Md Elias Alam . remittances provide food security.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Individual poverty alleviation Remittance payments directly alleviate the poverty of the individuals and households to whom they are sent. Remittances can allow for the payment of school fees and can provide the wherewithal for children to attend school rather than working for family survival. ‘Survivalist ’ income supple mentation. direct and fairly obvious. especially in rural areas. whatever the formal commitments of the State. in the ‘first round’ of effects. For many recipients. shelter. education is expensive at all levels. They include the following. clothing and other basic needs. upgrading and repair of houses is prominent in many widely different circumstances. Health Remittances can be employed to access preventive and ameliorative health care. As with education. the misalignment of which otherwise threatens survival and/or the taking on of debt. Housing The use of remittances for the construction. have variable matching of incomes and spending. The ways in which remittances alleviate the poverty of individuals are. incomes. even after allowing for possibility of exchange restrictions or risk of nationalization might still be positive and Prepared By Md Elias Alam 47 . less happily but even more unavoidable. Due to liberalization. Of course.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL care Social is often unavailable in many remittance recipient countries. The risk adjusted returns. compared. spending Day-to-day needs include various ‘social’ expenditures that are culturally unavoidable. 1994 with the view to achieve better exchange rate management system. the risk is higher in Bangladesh and so it might be more Bangladeshi who are taking this risk than foreigners. From the year 1990. To dollar or other currency deposits abroad (1-2%) and they are sending their money for these higher returns. financial liberalization has been started which is still going on. restrictions on foreign remittance become ease. and thus bringing in hot money which could leave the country if the underlying interest rate differentials changed or other factors changed. funeral and related costs. One possibility is that given the government banks efforts to keep the exchange rate steady Bangladesh see the possibility of getting a higher return on taka deposits (13-15%) in Bangladesh. Influence in Foreign remittance in Bangladesh economy Foreign remittance is very important for the country as valuable foreign remittance is involved in the transfer mechanism. Remittances can be employed to meet marriage expenses and religious obligations and. but the possibility that something like this might be happening. And form April 1994 Bangladesh Government has accepted the status of Article VIII of international monetary fund. Bangladeshi taka is convertible for current account transactions on March 24. A very large number of Bangladesh are currently working & living in countries that are not their home. If our import bill starts increasing. This is essential for us to understand if we are to figure out whether the increased flows are good for us or not and how to ensure that they continue if they are. I. or if our imports start picking up. And remittance has been showing robust and sustained growth. right now. Foreign remittance is. then remittance flows become even more important to keep us in good stead? Given our budget. but evaded paying taxes on it. Now the FBR cannot do anything about it either. but that is of more academic interest and not related to the question at hand. made Rs 10 million form my work in Bangladesh. And if they are not hypotheses but if there is any Truth to them. Since all foreign remittance that Bangladesh gets is considered to be white money and there are no questions asked about source of funds. there might be people in Bangladesh who earn through non-documented sources evade taxes and then just whiten the money by taking it out through bangle and bringing it back as foreign currency. Deficits and debt stock. at least on entry. I. do pay some transaction cost for it. If this happens the question really is about the size of such flows. But it is not clear where this growth is coming from. and sending funds regularly back to Prepared By Md Elias Alam 48 .Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL significant. which is not uncommon in Bangladesh but now need to whiten the money so that I can bring into legitimate and documented economy send the money. and that is an empirical question. these flows are the main source of foreign capital for us. and there are no taxes on it as well. This year we are expecting more than $10 billion in foreign remittance. Through hundi. to UAE and then have it remitted back tome in dollars. but all of the money gets legitimacy and so the transaction cost is a small amount to pay for this whitening. saving us from major troubles. Which can if oil prices go higher or remain high. How big are they and do they help us explain the growth in foreign remittance or a significant part of it? There is the further question of what impact this has on our GNP figures and so on. Another possibility. This calls for some explanation and someone. After 9/11 & the crack down on Handy as well as harder living conditions outside of BANGLADESH. it could flow out as easily as well & this could get the economy in really hot waters. Initially it was speculated that the significant increases in Remittance were the result of one time increases where Bangladesh were. existing IMF programmer held in abeyance.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL their families in Bangladesh. Right now our import bill. for example. Foreign remittance is making a huge Contribution towards macroeconomic stability. in Bangladesh currently. this breathing space is important. But to the contrary. With large deficits. So we should be looking at who is sending the money. It is important to understand what sort of money is coming in as remittance & why because in some cases this might not be the kind of money. what is the source of the Bangladesh one can speculate & have hypotheses as to why this could be happening. few international lenders willing to give us loans. This was specially the case as remittance increases even when the world Economy went into a recession. or any semblance of it. is giving the breathing space that we see on foreign account side. due to economic Slowdown. Remittance started increasing substantially only a few Years ago. should look into this. in addition to the remittance inflows. is also low & this. It is allowing us to keep foreign reserves looking ok & keeping Exchange rate steady. large debt stock. State Bank research department or other macroeconomic researchers. But if this was indeed the case increases in remittance should have stopped & things should have gone to pre increase days. shifting back their wealth & savings to Bangladesh. BANGLADESH wants to attract too much of: if it is hot Money and is coming in for speculative reasons. But there are interesting things to think about regarding remittance Flows as well. we continue to see healthy growth in remittances. It is not the case that the world economy has improved or there is a boom in the countries where Bangladesh live &/or a lot of new Prepared By Md Elias Alam 49 . money that has been credited for the decline in poverty in the country. In August.’’ said Ziaul Hasan Siddiqui. The increase in remittance could also be partly due to two upcoming religious. But analysts say money Bangladesh are in low-end jobs and so the recession has not hit them as hard as it has affected blue collar workers.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL jobs have been created for Bangladeshis. “ The figure also shows that the global recession had little impact on the flow of remittance to Bangladesh although job opportunities in the major markets have declined in recent months. Millions at home are dependent on money sent by their expatriate Relatives. according to the Central Bank of Bangladesh. so How do we make sense of healthy growth rates in remittances? Remittance Boost in Bangladesh Economy: The amount of money sent home has reached a new record high in Bangladesh the amount of money sent home by Bangladesh living abroad has reached a new record high. However.’’ Many other countries have reported a sharp decline in remittances during the economic downturn. the total sum of money sent home reached a historic peak of $ 937m-up 30% from a year ago. The are an estimated 6. Europe and the United States. Remittances are the country’s second – highest Revenue earner after exports. the upward trend may not continue for long. mainly in the Middle East. deputy governor of the central Bank.5 million Bangladeshis living and working Abroad. as overseas employment has fallen in past months due to declining demand. The boost to the Bangladesh economy comes despite the global recession Hitting overseas jobs.’’ This is the highest monthly remittance we have received in our History. The flow of migrant workers returning home has also increased. The government Prepared By Md Elias Alam 50 . South East Asia. This gave a deficit of $5. in 2008. The migrants send back billons of dollars & the country can then use these resources for investment for industrial development.August period of the previous fiscal. Prepared By Md Elias Alam 51 . or make up the deficit between total export & import.62 billion in Bangladesh Balance of payment (BOP). The state will seek to open diplomatic missions in those countries. Allows for quick & efficient payments to ensure that the funds reach the Destination fast & safe.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL of Bangladesh has identified seven new countries including Lebanon. For example. improvement of educational facilities & services & extend & improve its health services. Remittance has been a key driver of economic growth & poverty reduction in Bangladesh.19 percent growth over the Remittances also help Bangladesh in making the balance of payments favorable. registering an 18.97 billion worth of goods & services & in turn imported $19. Bangladesh exported $13. Bangladesh received $ 1. Foreign remittance can be defined as the purchase & sale of freely convertible foreign currencies as admissible under. The money that is sent back is also beneficial to the families & to the country in that it helps reduce poverty & also allows for investment in small businesses & chances for furthering education.59 billion worth of goods & services. 2009-10. Romania and Greece – to send workers to. Sudan.823 billion during the July . Make fund transfers abroad through an integrated Banking system. to look for job opportunities. Bangladesh received remittance of $2 billion to $3 billion annually. Both foreign exchange reserve and remittance were broadly immune to the global recession that has been lingering for around two years now.41 percent.99 billion in the last fiscal year with a growth of 13. Normally import increases every year but the trend is negative now. With the cooperation of NGOs.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Bangladesh Scenario: Remittance and Foreign Exchange reserve Foreign exchange reserve and remittance marked an important milestone in Bangladesh economy in last couple of years and in 2010-11 they sent 11. A few years ago. And so remittance increased. In the year 2010 the main reasons behind the increase in foreign exchange reserve are a decline in import and the boost in remittance. The amount crossed $5 billion in fiscal 2006-07. foreign currency reserve grew from $1 billion to cross the $10 billion mark this year for the first time. experts also cautioned the government against any inflationary pressure that may be caused by the achievements in remittance and foreign exchange reserve. Prepared By Md Elias Alam 52 . In ten years. Bangladesh Bank Governor Dr Atiur Rahman told: "Banking sector is much active now." (Source: The Daily Star) If we analyze the date we find in the last 10 year on an average 35% of Import payment could be meet up with inward remittances. The remittance inflow was $10. Surprised at the successes . Many exchange houses and bank branches opened in different countries to send remittance. Now we Think of introducing payment through mobile phones.65 billion US dollar. the system of remittance delivery to the recipients has improved. Discrepancies are occurring much in Import department than Export Department. 3. Import department of FSBL (jubilee Road Br.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL SWOT ANALYSIS By the SWOT Analysis and other above discussions. It is said on the basis of efficiency but on the basis of number of L/C against export L/C. No initiative package for promoting export dept. packages and other facilities where as other competitors are using hard advertisement strategies. The bank is mostly dependent on deposit scheme. There has no any marketing department 8. observation some findings has come forward. 6. 2. 4. In spite of not good reputation this bank is less interested in doing their advertisement of branch products. Prepared By Md Elias Alam 53 .) is performing better than the export department. those are given below: 1. where as different credit facilities are available for import dept. The bank is not emphasizing in Foreign Exchange” where as other competitors are aggressively looking for this sector. The bank has no ATM facility. 5. 7. Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL C HAPTER 6 Recommendation & Conclusion Prepared By Md Elias Alam 54 . Right now. 7. for every loan decision is made by Head office. Rebate charge on loan should be increased so that more customers are attracted to make loan. The bank should recruit some young and energetic executives to ensure timely recovery of disbursed consumer credit loan. But to faster the speed of loan sanction the branch should be authorized to take decision. 3.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL Recommendations The existing credit policy is good enough to run the bank. 4. 8. 5. The period of loan should be extended. The credit management of First Security Islami Bank Ltd. can follow the following suggestion to improve their performance and distinguish from others: 1. Giving authority to the Branch officials to take decisions to sanction a loan. FSIBL Bank may also promote its loan program through different advertising tools i. The bank management can give permission to its branches to design or change lending products on the basis of local demand. News paper adds etc. FSIBL should upgrade its website regularly and provide details information of loan Scheme. TV adds. But as the competition is increasing day by day the bank should take some measures so that they can distinguish it from the others. The clients of loan should be facilitated with online Banks and other benefits. 2.e. 6. Prepared By Md Elias Alam 55 . FSBL take a vital part in export and import business of Bangladesh through their regulatory services and best quality services. The economy of any country depends with the import and export position of the country. Day by day its area of serving is increased all over the country through setting up new branch at new place. can follow the abovementioned suggestion to improve their performance so that they can be competitive in the market and can gain some competitive advantage. By observing the banking system in FSBL chawkbazar Branch for one month it is clear to me without bank involvement that kind of work cannot be possible. But if the interest rate decreases than the default loan will also decrease. the bank can follow other models besides the credit risk grading model. During the period of my internship Prepared By Md Elias Alam 56 . diversified and dynamic compared to traditional banking system. From the very early age it had taken in our society in the non-institutional form. to improve the life style of the people. Because of high interest rate. To risk grade the credit. Conclusion Banking has become the inspirable part of social transaction. 11. Because the credit risk grading model is not hundred percent up to the mark. some good loans turn to bad loans. The credit management of Southeast Bank Ltd. In banking sector FSBL is a name of trust. 10. to develop the business environment. FSBL is providing opportunity of gaining practical knowledge for the students like internship program. The bank management should always be concerned about the change in industry so that they can notice the change and take proper actions to adopt the situation. After the Second World War as a financial product lending had been fully structured and institutionalized in USA and other developed countries. Now banking sector play an important role in modern society and private commercial bank has competitive.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL 9. The Bank management can reduce the interest rate. 5.A Weekly supplement. Bibliography: 1. I wanted to know about the credit section of the bank because bank’s main earnings depend with that section. 7.fsiblbd. Prospectus of First Security Islami Bank Limited. Nusrat e Aziz. 2. Prepared By Md Elias Alam 57 . this report contain many errors. UCPDC-600. But I can’t because of the limited period. 2007 Revision. Annual Report of First Security Islami Bank Limited.com. 3. there may be some printing mistakes no doubt for this reason I apologize. 2006 8. ‘Industry’.A quarterly news bulletin. If any one wants to work in banking sector he must have to know about all the department in a bank because one department works related with another department works. ‘Amader Barta’. However it is also concern that this period of time was not enough to understand everything of the concern. First Security Islami Bank Limited. ‘Islamic Financial System’-By Md.Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL program I tried my best to understand the concern.Special Supplement on CAMELS Rating. Web Site Of First Security Islami Bank Limited: www.First Edition. Various Web Sites related to Islami Banking Systems. Even though I tried my best level to make the informative. September. 9. Previous Internship Reports. 4. 6.