Report on Foreign exchange procedures of al arafah islami bank ltd

www.AssignmentPoint.com

Letter of transmittal

Date

Mr. Anisuzzaman

Lecturer,

School of Business

……… University

Subject: Submission of Internship Report.

Dear Sir,

I would like to thank you for your cooperation in preparing this report. It has been a great

opportunity for me to explore and learn the activities of foreign exchange procedures of AL-

Arafah Islami Bank Ltd (AIBL).

The report contains the activities of foreign exchange department of AIBL. With out your help it

would have been difficult to complete this report. With deep gratitude, I also acknowledge the

cooperation provided by Mr. Rafik-ul- Islam (In charge) foreign exchange, for his utmost

supervision during my internship.

I would really appreciate if you enlighten me with your thoughts and views regarding this report.

If you have any enquiry about this report, I would be glade to answer you.

Yours sincerely

……………………..


Acknowledgement

All praises to Almighty Allah for enabling me to complete the internship report on “Foreign

Exchange procedures of Al-Arafah Islami bank” successfully with a sound health condition.

I would like to express my deepest gratitude toward my internship supervisor Mr. Rafiq-Ul-

Alam, Incharge, (Foreign exchange) for giving me necessary suggestions and helping me to

prepare this internship report.

I want to extend my special gratitude and thanks to Mr. Arif, senior executive officer, Foreign

exchange department, AIBL with out the special guidance of whom it would be impossible for

me to complete this report successfully. I am also grateful to Mr. Asaduzzaman , Head, Foreign

exchange for his excellent cooperation, support and contribution to make it worthy. There is no

doubt that because of their help, I as an inexperienced person was able to accomplish the report.

Finally, I tried my best to complete this report. I must say that as a freshman in banking sector

these few days are not enough to cover every aspects of banking and complete such a report.

There might be some mistake due to my limited aptitude. In this regard, I do believe to get a kind

consideration from every one.


Preface

Theoretical knowledge becomes an effective tool when it is accompanied by practice. A perfect

co-ordination between theory and practice is of paramount importance in the context of the

modern business and economic world. In order to resolve the dichotomy between these two areas

school of business has introduced internship program. It brings the student closer to the practical

world and there by help us to substantiate our practical knowledge.

To prepare an internship report for BBA I choose Al- Arafah Islami Bank Ltd to do my

internship report for the period of three months starting from 15th January 2011 to 16th april

2011. I was placed at AIBL uttara branch where I worked in Foreign Exchange department. I

tried my level best to focus on my specific department and learn foreign exchange procedures.

My organization supervisor was Mr. Rafik-Ul-Alam (Incharge) foreign exchange. I prepared “ A

Report on Foreign Exchange Procedures of AIBL”. I worked under my academic supervisor Mr.

Anisuzzaman Lecturer, School of business. Uttara University also approved and guided me to

prepare this working report.

As it is a working report, most of this information is based on the experiences that I have

gathered while working as an intern. This report describes about what the working procedures of

my department was, how my supervisor helped me on my works and finally what I have learned

from this internship program.

To draw a conclusion, I feel that I have tried my best to cover all significant dimension of the

topic. My all efforts would be meaningful and I would feel pleasure if the internship serves the

purpose effectively.


Table of ContentsPage No

1.0 History of AIBL 5

2.0 Corporate Profile 5

3.0 Structure of AIBL (organization chart) 6

4.0 Corporate mission and vision 7

5.0 Business Objective 7

6.0 Financial Position at a glance 8

7.0 Capital Structure (sector wise investment) 9

8.0 Progressive Analysis 9

9.0 Product/ Service information 10

9.1 General Banking (Deposit Scheme) 10

9.2 Finance/ Investment 10

9.3 Foreign Exchange 11

10.1 Introduction of foreign exchange department 11

11.0 Function of foreign exchange department 11

11.1 Letter of credit 12

11.2 Export business 13

11.2.1 Pre-shipment finance 13

11.2.1.1 Back to back credit 14

11.2.1.2 Packing credit 14

11.2.2 Post-shipment finance 15

11.3 Import business 15

11.3.1 Procedure for sanction of post-shipment credit 15

11.4 Export and import performance of AIBL 16

12.0 Remittance 17

12.1 Inward remittance 18

12.2 Outward remittance 18

12.3 Performance of AIBL in remittance 18

13.0 Relationship with immediate supervisor 19

14.0 The level of responsibility 19


15.0 Problems encountered in handling tasks assigned 20

16.0 Competences and skills acquired in handling the job 20

17.0 Evaluate the performance of the tasks assigned 21

18.0 Major findings 21

19.0 Recommendation 22

20.0 Conclusion 24

Appendix

Appendix 1 : Form of Export (EXP Form). 25

Appendix 2 : Bill of Lading. 26

Bibliography 27

List of Figures

01. Structure of AIBL (Organization chart) 06

02. Capital structure 09

03. Export and Import performance 16

List of Tables

01. Financial Position Chart 08

02. Export and Import performance 16

03. Performance of Foreign Remittance 18

Executive Summary www.AssignmentPoint.com

Al-Arafah Islami Bank Ltd (AIBL) is one of the largest Banks in Bangladesh. Day by day AIBL

has become a giant in the banking sector. It has two main divisions of operation-Corporate and

General/Consumer Banking. General banking deals with retail banking services to customers.

Banks perform this function in two ways-1 .taking deposits from various areas in different

forms.2 1ending that accumulated amount of money to the potential investors in other different

forms.

General Banking is the starting point of the entire bank operating. General Banking department

aids in taking deposits and simultaneously provides some ancillaries services. It provides those

customers who come frequently and those customers who come one time in banking for enjoying

ancillary services. In some general banking activities, there is no relation between banker and

customers who will take only one service form bank. On the other hand, there are some

customers with whom bank are doing its business frequently. It is the department, which

provides day-to-day services to the customers. Everyday it receives deposits from the customers

and meets their demand for cash by honoring cheques. It opens new accounts, demit funds, issue

bank drafts and pay orders etc. since bank in confined to provide the service everyday general

banking is also known as retail banking.

Under General Banking Division, I was working as an intern in the front desk. This department

mainly provides service by opening various deposit accounts, saving scheme to customers for a

wide variety of purposes. They are always on the run to search for new customers.

This report is based on finding out their way to satisfy the consumer as well as how AIBL is

financially performing. My overall objective of AIBL financial statement analysis is the

examination of financial position and returns in relation to risk. This must be done with a view to

forecasting the firm's future prospective.

At the end part of the report I have stated some recommendations, which I hope will be helpful

for ban to recover all the weaknesses.

1.0 History of Al-Arafah Islami Bank Limited (AIBL):


Islamic ideology encourages us to succeed in life here & hereafter. To achieve this success we

must follow the way dictated by the HOLY QURAN and the path shown by Rasul (SM). With

this goal in view Al- Arafah- Islami Bank Ltd was established (registered) as a public limited

company on 18 June 1995. The inaugural ceremony took place on 27 September 1995. The

authorized capital of the Bank is TK.5000.00 million of which the paid up capital is TK.

1,798.00 million. Some very renowned Islamic personalities and pious businessmen of the

country are the sponsors of the bank. The total paid up capital was invested locally. The Bank is

committed to contribute significantly in the national economy. It has made a positive

contribution towards the socio economic development of the country by opening 60 branches of

which 17 authorized dealer (AD) throughout the country. The equity of the bank stood at

TK.3,564 million as on 31 December 2010, the manpower was 1,296 and number of

shareholders was 11,382. The Bank conducts its business on the principles of Musaraka, Bai-

muazzal, and hire purchase transactions approved by Bangladesh Bank.

2.0 Corporate Profile of (AIBL):

With the objective of achieving success here & hereafter by pursuing the way directed by Allah

and the path shown by His Rasul (SM), Al Arafah Islami Bank Ltd was established (registered)

as a private limited company on 18 June 1995. The inaugural ceremony took place on 27

September 1995. The authorized capital of the Bank was Tk.5,000.00 million and the paid up

capital was Tk. 1,798 million as on 31.12.2010. Renowned Islamic Scholars and pious

businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned

by indigenous shareholders. The equity of the bank stood at Tk. 3,564 million as on 31

December 2010, the number of employee was 1,296 and the number of shareholders was 11,382.

It has achieved a continuous profit and declared a good dividend over the years. High quality

customer service through the integration of modern technology and new products is the tool of

the bank to achieve success. The bank has a diverse array of carefully tailored products and

services to satisfy customer needs.

The Bank is committed to contribute significantly to the national economy. It has made a

positive contribution towards the socio economic development of the country with 60 branches

as on 31.12.2010 of which 17 is AD (Authorized Dealer) throughout the country.


3.0 Structure of AIBL : (Organizational Chart)

Figure 1: Organizational Flow chart of AIBL.

4.0 Mission & Vision of (AIBL):


Managing Director

Deputy Managing Director

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

Senior Principal Officer

Principal Officer

Senior Officer

Officer

Junior Officer

Vice-Chairman

Assistant Officer

Guard/Peon

Deputy Managing Director

Executive Vice President

Chairman

Vision: To be a pioneer in Islamic Banking in Bangladesh and contribute significantly to the growth of the national economy.

Mission:

Quality financial services by adopting the latest technology.

Fast and efficient customer service.

Steady & competitive return on shareholders' equity.

Innovative banking at a competitive price

Attract and retain quality human resources.

Involving more in Micro and SME financing

5.0 Business objectives:

Achieve sound and steady growth in both mobilizing deposits and making quality

investment to keep the position as a leading Islami bank.

To deliver financial services with to retail, small and medium scale enterprises, as well as

corporate clients through sufficient branches across the country.

Design business initiatives to match the changing trade and industrial need of the clients.


6.0 Financial Position of AIBL (At a glance):

(In million taka)

Particulars 2006 2007 2008 2009 2010

Authorized Capital 1000.0 2500.00 2500.00 2500.00 5000.00

Paid up Capital 677.94 854.20 1153.10 1383.81 1798.95

Reserve Fund 542.22 835.98 1091.95 905.33 1223.18

Shareholders Equity 1220.16 1690.18 2037.

502705.74 3564.73

Deposit 11643.66 16775.34 23009.13 29690.12 38355.50

Investment 11474.41 17423.19 22906.37 29723.79 36134.08

Import 12631.60 1882.14 27042.72 32685.13 34074.80

Export 4932.90 914.27 12714.91 20176.64 23546.10

Total Income 1452.68 2172.48 2955.61 4387.26 5643.86

Total Expenditure 904.48 1202.71 2199.43 2859.16 3146.17

Profit before Tax 548.20 855.47 756.18 1523.09 1729.83

Profit after Tax 262.90 470.02 347.31 668.24 858.99

Income Tax 215.10 385.45 235.53 590.66 590.66

Total Assets 15336.89 21368.17 30182.32 39158.44 48515.79

Fixed Assets 208.00 215.11 334.48 396.76 466.30

Earning per share (Taka)

387.80 550.24 30.12 48.29 57.45

Price equity ratio (Times)

7.91

4.89

14.62 9.5

311.23

Dividend per share 26% 35% 20% 30% 38%

Bonus

No. of Shareholders 5402 4487 12013 10664 12876

Number of Employees 771 912 1033 1080 1124

Number of Branches 45 46 46 50 64

Manpower per Branch 19 20 23 35 39

Table 1 : Financial Performance of AIBL.


4

7.0 Capital Structure in 2010: (Sector wise Investment)

Sectors Taka in million

(a) Agriculture & Forestry 568(b) Industry 10,277(c) Construction 1,812 (d) Water & Sanitary Service 9.27 (e) Transport & Communication 1,235(f) Storage 13.99(g) Trade Finance 23,884(h) Miscellaneous 644TOTAL 38,393.27

Figure 2 : Sector wise investment.8.0 Progressive Analysis:

At the end of financial year 2010, the number of depositors stood at 3,43,273 and the amount of

deposit has accumulated to BDT 38,355.50 million. The total amount investment extended to a

sum of BDT 36,134.08 million. The investment income was BDT 4,004.54 million during the

year 2010 which registered a growth of 15.86% over the previous year. Investment income is

75.48% of the total income of BDT 5,305.63 million. The bank has the depositors BDT 2,667.34

million which is 66.61% of the investment income and 74.59% of the total expenditure for the

year 2010. It indicates 20.13% growth over the year 2009.

The scenario could be better understood by the following comparison:

AIBL in Year 2000 AIBL in Year 2010

-Lack of revenue momentum

-Over layered organization

-Weak risk control environment

-Basic product offering

-High cost structure

-Manual Banking

-Inefficient and Madrasha Educated

manpower

-Revenue driven target or goal.

-Revenue diversification & sustainability

-Strong risk management culture in place

-Higher value-added , customized product

-Cost efficiency

-Computerized Banking (Partly)

-Efficient and University educated

manpower.


Investment Foreign ExchangeGeneral Banking

9.0 Product/Service Information:

Islamic banks render almost similar services to their customers that conventional banks do.

However, differences exist in administering incentives for depositors and charging for capital

investments, in so far as techniques of calculating the incentive or the cost of the capital are

concerned. Like a conventional bank, AIBL also accepts deposits from customers and advances

loans. The bank invests its funds for short as well as long term deposits. AIBL perform mainly

three different types of functions.

9.1 General Banking (Deposit Scheme):

Individuals Account

Joint Accounts

Partnership Accounts

Public/Private Limited Company Accounts.

Different types of Deposit.

9.2 Finance/Investment:

Cash Credit

Secured Overdraft

Bank Guarantee

Long Term and Short Term Financing

House Building Loan

9.3 Foreign Exchange:

Non Resident Foreign Currency Account (NFCD)


Product/ service Information

Import Business RemittanceExport Business

Non Resident BDT Deposit Account (NRTA)

Resident Foreign Currency Deposit Account (RFCD)

Foreign Currency Deposit Account

10.0 Introduction of Foreign Exchange Department :

Foreign exchange is the means and methods by which rights to wealth in a country's currency are

converted into rights to wealth in another country's currency. Foreign Exchange Department is

the international department 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. So Al-Arafah Islami Bank (AIBL), Principal branch is an authorized dealer.

There are three kinds of foreign exchange transactions:

11.0 Functions of Foreign Exchange Department:

The main functions of Foreign Exchange department are:

Issuing Letter of Credit

Issuing Letter of Guarantee

Issuing Back to Back L/C

Purchasing Inland and foreign bills

Trading foreign Currencies.


Foreign Trade

11.1 Letter of Credit:

A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the

instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking

that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain

conditions mentioned in the letter have been complied with.

Steps for opening letter of credit are:

(a) Customer application for opening L/C with indent or proforma invoice.

(b) Proposal preparation as per circular security of papers submitted by the importer (list

of papers).

(c) Sanction of proposal- Terms and conditions.

(d) Fill up the forms submitted by AIBL

(e) Security of LCAF, LCA, IMP, L/C advice copy.

(f) Realization of margin, commission, postage charges, register entry numbering, passing

of voucher.

(g) Passing of L/C by airmail, cable tale transmission, SWIFT.

(h) Opening of L/C file (marking/ preserving)

(i) Amendment of L/C (if required)

(j) Extra Precaution (including fund for import)

Parties to the L/C:

Importer Who applies for L/C

Issuing Bank It is the bank which opens/issues a L/C on behalf of the

importer.

Confirming Bank It is the bank, which adds its confirmation to the credit and it is

done at the request of issuing bank. Confirming bank may or

may not be advising bank

Advising or Notifying Bank It is the bank through which the L/C is advised to the exporters.

This bank is actually situated in exporter’s country. It may also

assume the role of confirming or negotiating bank depending

upon the condition of the credit.

Negotiating Bank It is the bank, which negotiates the bill and pays the amount of

the beneficiary- The advising bank and the negotiating bank


may or may not be the same. Sometimes it can also be

confirming bank.

Accepting Bank It is the bank on which the bill will be drawn (as per condition

of the credit). Usually it is the issuing bank

Reimbursing Bank It is the bank, which would reimburse the negotiating bank after

getting payment - instructions from issuing bank.

11.2 Export Business:

The goods and services sold by Bangladesh to foreign households, businessmen and Government

are called export. 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. As a negotiating bank, it negotiates the bills and other shipping

documents in favor of the exporter. That is it collects proceeds of the export bills from the

drawer and credit the exporters account for the same amount. Sometimes bank purchase the bills

at discount from the local exporters and waits till maturity of the bill. In times of maturity, bank

presents it to the drawer to Ancash.

Exporters need finance in the following ways:

Pre-shipment finance.

Post-shipment finance.

11.2.1Pre-shipment Finance:

The exporters may obtain facilities during pre-shipment stage in the following ways:

Back to Back credit.

Packing credit.


11.2.1.1 Back to Back credit:

Under this arrangement AIBL an export by opening a letter of credit on be half of the exporter

who has received a letter of credit from the overseas buyer but is not the actual manufacturer or

producer of the exportable goods. The letter of credit is opened in favor of the actual producer

with in or outside the country. Since the second letter of credit is opened on the strength of, and

backed by another letter of credit it is called back to back credit. The need for back to back credit

arises because the beneficiary may have to procure the goods from the actual producer who may

not supply the goods unless its payment is guaranteed by AIBL in the form of letter of credit.

Documents Required for Opening a Back-to-back L/C:

In AIBL Principal Branch, following papers or documents are required for opening a back-to-

back L/C:

1. Master L/C.

2. Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC).

3. L/C Application and LCAF duly filled in and signed.

4. Proforma Invoice or Indent.

5. Insurance Cover Note with money receipt.

6. IMP Form duly signed.

Payment of back to back L/C:

In case of maturity of back to back LC of 60-90-120-180 days, deferred payment is made.

Payment is given after realizing export proceeds from the L/C issuing bank.

11.2.1.2 Packing credit:

Packing credit covers the credit extended by AIBL to the exporters prior to the shipment of the

goods. Such credit is guaranteed to the exporters for the procurement and processing of raw

materials, manufacturing of finished products, packing or transporting goods meant for export to

foreign country. Such facility is allowed to an exporter just at the time when he has foreign

buyers order by the way of confirmed export letter of credit. When the order is executed, the

packing credit gets paid out of the proceeds of the bill drawn on the foreign buyer.


11.2.2 Post-shipment Finance:

Post-shipment credit is given to the exporters by AIBL after the actual shipment of goods. The

necessity for post shipment finance arises because the exporters who have shipped goods have to

wait for a long time for receiving payment from the overseas buyers, the period of waiting

depends on the terms of payment. The exporters need fund to carry on normal export activities.

Finance is required for these activities. AIBL generally finance exporters at post shipment stage

on verification of the credit worthiness and financial soundness of both buyer and the seller.

11.3 Import Business:

International trade takes place between seller and buyer located in different countries.

The parties to a trade transaction are not always known to each other. Even if they are

known to each other the seller may not have the full confidence in the credit worthiness

of the buyer or the buyer may not like to pay before he actually receives the goods. Under

a banker’s letter of credit the issuing bank (AIBL) gives written undertaking on be half of

the buyer that the bank will honor the obligation of payment or acceptance on the

presentation of stipulated documents. Importer bank issue the letter of credit at a margin

prescribed by the Government. This margin varies from commodity to commodity.

According to government instruction the bank does not generally issue letter of credit less

than at 50% margin.

10.3.1 Procedure for sanction of post-shipment credit under document negotiation:

The usual method of providing finance at the post- shipment stage is negotiation under letter if

credit. In this regard AIBL carefully verify following points for negotiation documents:

The document should be presented for negotiation before expiry of the credit.

The amount of bill should not exceed the amount authorized in the L/C.

All the documents asked for in the L/C have been submitted.

Operation activities for import section: Officers in L/C opening desk process L/C application.

Internal Approval- It is made for those importers who are enjoying L/C limit facility

for a period of 12 months approval by head office.


Head Office Approval- Proposal made on case to case basis in a detail format for those

importers during their initial 3 to 6 months period. Satisfactory performance in the

account would enable them to avail full fledge credit line on 12 month basis.

Next step is to open letter of credit:

An L/C number is provided.

Opening charges or commission recovered.

Charges and liability vouchers are passed.

Preparation and checking of L/C body in accordance with pro-forma (PI) invoice or

indent.

11.4 Export and Import performance of (AIBL)

Year Total Export( In Million Tk) Total Import ( In Million Tk)

2010 23546.10 34074.80

2009 20176.60 32685.10

2008 12714.90 27042.70

2007 9142.70 18821.40

2006 4932.90 12631.60

2005 3639.34 9337.49

2004 3075.52 7698.29

2003 1894.77 5162.51

2002 2524.63 5559.27

Table 2 : Export Import Performance

Total Export and Import: (In million Taka)


At the end of 2010, the total amount of

foreign trade was 60,453.18 million Tk

showing a growth of 8.85%. The total export

of the bank was 20,176.64 m Tk in 2008,

which has increased by 16.70% to 23,546 m

Tk in 2009. Similarly the amount of import

has increased from 32,685.13 m Tk of 2008

to 34,074.80 m Tk in 2009. Experiencing a

a growth 0f 4.25%.

Figure 3 : Export & Import Performance.

12.0 FOREIGN REMITTANCE:

This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a

bank must provide some services to the clients regarding foreign exchange and this department

provides these services. The basic function of this department are outward and inward remittance

of foreign exchange from one country to another country. In the process of providing this

remittance service, it sells and buys foreign currency.

Remittance procedures of foreign currency:

There are two types of remittance:

1. Inward remittance

2. Outward remittance.

12.1 Inward Foreign Remittance:


Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and

bills, T.C. 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.

12.2 Outward Foreign Remittance:

Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts,

Travelers Check etc and as well as sell of foreign exchange under L/C and against import bills

retired.

12.3 Performance of Foreign Remittance: (2004-2008)

Performance in foreign remittance (in million)

Year Remittance

National AIBL % of AIBL

2005 94,484 7,644 7.76

2006 115,785 9,879 8.53

2007 116,844 14,670 8.9

2008 164,913 14,668 8.01

2009 196,536 23,669 12.04

Table 3 : Performance of Foreign Remittance

The performance of foreign remittance shows an increasing trend from 2005 to 2009. It can be

seen from the chat that there is a sharp improvement in the performance from 2005 to 2008.


13.0 Relationship with immediate supervisor:

The relationship with immediate supervisor was very friendly. Always he used to take care about

all of the official works. He also tried to train me by providing updated information to ensure a

better performance. When ever I was busy in providing information to existing clients and at the

same time new account holders who were interested to open an LC, he used to make my job

easier. While putting entries manually in different register books, supervisor used to cross check

if any mistake has been made. If any mistake was found, then he (supervisor) helped to catch up

the mistake and made it right. His politeness and cooperation helped me to continue my work

smoothly with satisfaction.

14.0 The level of Responsibility:

The level of responsibility was very crucial in making manual entries in the register book.. Under

foreign exchange department I had to maintain four to six register books every day. On each

register book I had to input transaction amount with transaction detail of an L/C, which is more

then on an average BDT 2,000,000. So, any minor mistake might lead to a big loss for AIBL.

Due to a wrong entry AIBL might lose its potential clients, because this is a sensitive issue to

directly affect customer loyalty. The principle officer used to recheck these entries to find out

whether there are any discrepancies. If any mismatch with manual entries and software records

were found, supervisor used to send it back to me for a recheck. These manual entries and

examination of proper documentation were quite sensitive task to handle.

15.0 Problems encountered in handling tasks assigned:www.AssignmentPoint.com

There are a number of tasks that I had to perform under foreign exchange department of AIBL.

Finding out files of a specific party was a difficult task to manage. Documents and files of

different clients were not sequentially arranged according to the maturity date. There fore lots of

time is being spent in arranging and finding out thousands of files. More over different business

clients used to come at a time to take their payments. As records of all parties were maintained in

one record book, so it was time consuming to find out the maturity date of each party. On the

other hand maintaining a single register book for all parties enable one party to wait for the other.

Hence, convincing client was a critical job. After arrangement of every thing payment to client is

to be made. This payment making is another complex task. Before making payment I had check

the balance of foreign currency account. Based on the sufficiency of I had to make payments.

These payment were done by FDD foreign demand draft. Any minor mistake in FDD block

would lead to a severe loss to AIBL. There the task required full attention and accuracy.

16.0 Competencies and skills acquired in handling the job:

Working under foreign exchange department of AIBL enabled me to gather some valuable

experiences. One of the major skills that I have acquired is how to work under a team of

experienced employees. With in the team of fifteen members each person had different

mentality. I had to be very dynamic and compromising in order to cope up with the team. More

over in handling clients I have acquired fluency in speaking and convincing power. Continuous

dealings with client’s problems and enquiries gave me an idea of which technique to apply to

satisfy clients. Finally, I could learn the importance document arrangement to build a smooth

working environment.


17.0 Evaluate the performance of the assigned tasks:

Tasks that I handle were quite important and sensitive. As I choose to work in foreign exchange

department, I had to maintain all important documents including L/C opening, FBP, FBC register

books. These tasks ultimately reflected the bank’s accuracy and affectivity. A minor mistake

might lead to severe losses. Though all records were maintained by AIBL’s own different soft

wares, but these manual entries helped them to cross check the accuracy of the data at the end of

the day. More over another important to play in this department was the examination of L/C

form. An L/C form checked by me ensured its accuracy. Only checking L/C form was not

sufficient, at the same time I had to motivate and guide a client to think about why AIBL is

different from other commercial banks. Consumer loyalty partly depended up on my behavior

and the quality of information provided. This ensures whether the client would return to avail the

service and make next transaction. Hence, handling this job was quite sensitive.

18.0 major findings:

(a) The working environment is not well organized. Furniture and other necessary tools of

foreign exchange division are not properly arranged therefore it becomes difficult for the

clients to share their information. Therefore, tasks become lengthy and time consuming.

(b) The organizational hierarchy is tall therefore decision making process is very slow. If

there is any requirement for repair and replacement then the branch manager has to wait

for a long time to get the support. More over sometimes clients also have to suffer for

this lengthy decision making process.

(c) The record keeping system is manual and backdated. Therefore time is wasted in

recording several L/C documents in register book. Moreover like other banks there is no

separate recording book for each party. All are recorded in a single register book so; one

business client has to wait for the other.

(d) The banking system of AIBL is not modernized in compare to other rivals in the

competitive market. The bank dose not has ATM facilities therefore clients don’t have

the option of withdrawing money any time from any where. Therefore, a large portion of

customer is out of reach.

(e) It takes more time to open up L/C due to the shortage of authorized dealer (AD)

branches.


(f) Lack of delegation. Branch manager fails to take immediate action in order to accelerate

banking activities due to lack of sufficient power.

(g) The organization does not provide any extra incentive for showing extra ordinary

performance. Therefore, the tendency of showing better skills does not exist.

(h) The recruitment and selection process is mostly fair but too much time consuming and

lengthy. It take two to three months for a recruitment.

(i) There is no policy to ensure better relationship and coordination among employees.

More over one way communication don’t allow employees to share their opinion and

feedbacks with the top management.

(j) AIBL as an organization in Islamic banking it is committed to avoid interest. Therefore,

even though there are many profitable projects available but it cannot invest the

permissible part of its statutory liquidity reserves and short term liquidity surplus in

these sectors.

19.0 Recommendation:

In order to ensure better progress of AIBL in future, some necessary steps are recommended

bellow on the basis of collected data, observation, client’s opinion, and my personal judgment.

(a) AIBL of Uttara should go for internal readjustments. The management should enhance

their service of foreign exchange department by ensuring a proper rearrangement of

furniture and other logistical supports. This readjustment would ensure fast and better

service to the clients.

(b) Automated Teller Machine (ATM) should be introduced as soon as possible. This is

because with out this facility a large portion of client is out of reach. Now a days

educated clients are looking for modern automated banking service.

(c) The bank should go for aggressive advertisement and undertake several promotional

activities to get hold over large portion of the market. It would help to collect more

deposits and investment scope.

(d) The entire department should be informed regarding their goals and objectives. It is

essential to turn company objective in to individual target. A philosophy of working for

the customer instead of working for boss must be introduced.


(e) It is observed that officers have to spend more time in preparing vouchers. This must be

avoided through automation. In foreign exchange section individual record book need

to be maintained for each party, so one party don’t have to wait for the other.

(f) Branches of AIBL are not sufficient as per demand of the people, so the management

should concentrate on setting up more branches.

(g) The bank has the provision of internship but is no organizational program to train

interns. The management can come up with such programs to help an intern in

gathering valuable experience.

(h) Job description should be clarified and proper training facilities should be insured to

improve the performance of the bottom line management.

(i) The management should always monitor the performance of its rival in the field of

foreign trade. This would enable them to remain updated.

(j) An official training regarding SWIFT must be insured.

(k) The management can follow flat organizational hierarchy in stead of tall. This would

enhance decision making process. Moreover delegation should be decentralized so that

branch managers can take decisions at a short notice.


20.0 Conclusion:

Bangladesh is a developing country and its economy has changed enormously in the last decade.

This change has raised the need for better banking facilities. To meet this increasing need a

number of private commercial banks, nationalized commercial banks and foreign banks

operating their activities in Bangladesh. Al-Arafah Islami Bank is one of them.

It is a great pleasure to have practical exposure to AIBL uttara branch. It helped me a lot to be a

professional banker in near future.

Foreign exchange is the pivotal department to any modern banking. Foreign exchange

department acts as a media between exporters and importers. Payments of foreign bills, FDD,

FTT and all transactions relating to foreign exchange of the bank can be well explained as

foreign trade.

AIBL is serving a large number of clients in Uttara branch. Its foreign exchange department is

quite busy. Turag garments, XL-composite, One way, Robin garments, Skamp garments are

some of the potential clients of AIBL foreign exchange. Total export and import performance of

Uttara branch is increasing in last five years tremendously. The number of opening export and

import LC has also increased. Foreign exchange procedures are more or less well organized and

management is trying their best to satisfy their clients.

Bank always contribute towards the economic development of a country. In compare to other

banks, AIBL is contributing a significant portion by investing more of its fund in fruitful projects

leading to an increase in production of the country. It is obvious that right channel of banking

establish a successful network over the country and increase resources.

AIBL is playing its leading role in socio-economic development of the country. Since inception,

AIBL has been rendering its banking service with the needs of the nation to cope with the

demand of the people in the country.


BIBLIOGRAPHY

Al-Arafah Islami Bank Limited annual report (2010).

Al-Arafah Islami Bank Limited annual report (2009).

Monthly Report on Foreign Exchange AIBL.

Documentary collections of AIBL.

A textbook on foreign exchange, L.R. Chowdhury.

Website:

www.al-arafahbank.com
