IntroductionIntroduction

1.0) INTRODUCTION:

Internship program is an external dimension of career development for a business

graduate. At the end of the graduation program (Academic part) the students of Faculty

of Business and Economics are sent to different organizations to get some real life

experience as internees. Usually this program has duration of three months. Throughout

these three months of internship program the internees are being assigned some

assignments, which help them to learn the attitude of working in the organization. At the

end of the internship program the internees are suppose to submit an internship report and

this report submission is the last step that brings a successful end up of graduation

program from a Faculty of Business and Economics.

Internship program of Stamford University mostly focuses on the field that a student is

concentrating. Moreover this program gives a student the opportunity to practice his

knowledge of theory in the field of practical life. This internship report is based on the

author’s internship experience in AB Bank Ltd, Karwan Bazar Branch, Dhaka .

1.1) Background of the study:

A bank is a financial institution whose main objective is the mobilization of fund from

surplus unit to deficit unit. In the process of acceptance & provision of loan, banks create

money. This characteristics feature sets Bank apart from other financial institution. A

Bank can influence the money supply through lending & investment. A Bank is also an

economic institution whose objective is to earn profit through exchange of money &

credit instruments.

Commercial bank is one, which is concern with accepting deposits of money from the

public, repaying on demand or otherwise & withdrawal on demand or otherwise &

employing the deposits in the form of loan & investment to meet the financial needs of

business & other classes of society.

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Bank is very old institution that is contributing toward the development of economy & an

important service provider in the modern world. In the globalization & free market

economy, banks provide their service worldwide & compete with other all over the

World.

The banking sector is one of the major sectors in Bangladesh economy & can be divided

mainly in to four categories - Nationalized bank, Local private bank, specialized financial

institution & foreign banks. In Bangladesh, the journey of private commercial banks is

not older. The banking in Bangladesh has passed three decades through different policy

environment & comprises central bank at the apex.

The country's central bank, Bangladesh Bank, controls & monitors the banking industry.

At percent, there are 4 nationalized, 5 are specialized, 30 are local private commercial

banks & 10 are foreign commercial banks. AB Bank Ltd. is one of the prominent thirds

generation banks in the banking sector.

1.2) Objective of the study:

The primary objective of this report is to partial fulfillment of MBA degree &

achievement of the knowledge about how bank mobilize their surplus fund to the

deficient units of AB Bank Ltd. There are some other important objectives of this report

are as follows:

Acquiring experience for future working life.

To describe the customer service process of AB Bank Ltd.

To analysis the bank position of deposits mobilization.

To get knowledge about the products & services offered by AB Bank Ltd.

To analysis how well manage a customer.

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1.3) Rational of the study:

The internship program is a partial requirement of the BBA program of Stamford

University Bangladesh which constructs & builds a bridge between the real life state of

affairs & theoretical concepts, which were taught in the class room. It is a great

opportunity for me to get the practical knowledge of the corporate world. That's why I

had to join in the AB Bank Ltd (Karwan Bazar Branch) as an internee & my internship

report is based on the practical experience that I gained from there.

1.4 Methodology and Sources of Data:

Sources of data :

The required data & information to prepare the report have been collected from the

following sources:

1.4.1) Primary Sources:

Personal interview with branch officials or executives.

Practical desk work.

Getting information from face to face dealing with the client.

Interviewing the persons who are treated experts in respective

to the assignment.

Customer files study in the account opening & loan div

1.4.2) Secondary Sources:

Annual reports of AB Bank Ltd.

Web site of ABBL.

Bangladesh Bank report.

Published or unpublished or personally collected data from

officers.

Files & documents of the branch.

Some articles on banking sectors.

Different textbooks.

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1.5) Limitation of the study:

AB Bank Ltd. is a large financial institution; therefore it is not possible to find out the true

picture within a short period. To prepare the report I faced some problems & limitations.

Those limitations are unavoidable for me. That may causes reduction in the quality of my

report. Some of the major limitations are pointed below.

Time constraint is one of the major limitations to know all the inside information of

the bank.

Bank has no formal guidelines for internship.

Employees are so busy with their work. That's why they do not have sufficient time

to co-operate with me.

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Organization Profile

Organization Profile

2)Organization Profile of AB Bank Limited

2.1)OVERVIEW OF THE ORGANIZATION:

AB Bank Limited, the first private sector bank was incorporated in Bangladesh on 31st

December 1981 as Arab Bangladesh Bank Limited and started its operation with effect

from April 12, 1982.

AB Bank is known as one of leading bank of the country since its commencement 27

years ago. It continues to remain updated with the latest products and services,

considering consumer and client perspectives. AB Bank has thus been able to keep their

consumer’s and client’s trust while upholding their reliability, across time.

During the last 27 years, AB Bank Limited has opened 74 Branches in different Business

Centers of the country, one foreign Branch in Mumbai, India and also established a

wholly owned Subsidiary Finance Company in Hong Kong in the name of AB

International Finance Limited. To facilitate cross border trade and payment related

services, the Bank has correspondent relationship with over 220 international banks of

repute across 58 countries of the World.

In spite of adverse market conditions, AB Bank Limited which turned 27 this year,

concluded the 2008 financial year with good results. The Bank’s consolidated profit after

taxes amounted to Taka 230 cr which is 21% higher than that of 2007. The asset base of

AB grew by 32% from 2007 to stand at over Tk 8,400 cr as at the end of 2008.

The Bank showed strong growth in loans and deposits. Deposit of the Bank rose by Tk.

1518 cr ie., 28.45% while the diversified Loan Portfolio grew by over 30% during the

year and recorded a Tk 1579 cr increase. Foreign Trade Business handled was Tk 9,898

cr indicating a growth of over 40% in 2008.

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The Bank maintained its sound credit rating in 2008 to that of the previous year. The

Credit Rating Agency of Bangladesh Limited (CRAB) awarded the Bank an A1 rating in

the long term and ST-2 rating in the short Term.

AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its

past identity – an identity that the bank carried as Arab Bangladesh Bank Limited for

twenty five long years. As a result of this decision, the bank chose to rename itself as AB

Bank Limited and the Bangladesh Bank put its affirmative stamp on November 14, 2007.

The Bank decided to change its traditional color and logo to bring about a fresh approach

in the financial world; an approach, which like its new logo is based on bonding, and

trust. The bank has developed its logo considering the contemporary time. The new logo

represents our cultural “Sheetal pati” as it reflects the bonding with its clientele and

fulfilling their every need. Thus the new spirit of AB is “Bonding”. The Logo of the bank

is primarily “red”, as red represents velocity of speed and purity. Our new logo innovates,

bonding of affiliates that generate changes considering its customer demand. AB Bank

launched the new Logo on its 25th Anniversary year.

AB Bank commits to nation to take a lead in the Banking sector through not only its

strong financial position, but also through innovation of products and services. It also

ensures creating higher value for its respected customers and shareholders. The bank has

focused to bring services at the doorstep of its customers, and to bring millions into

banking channels those who are outside the mainstream banking arena. Innovative

products and services were introduced in the field of Small and Medium Enterprise

(SME) credit, Women’s Entrepreneur, Consumer Loans, Debit and Credit Cards (Local

& International), ATMs, Internet and SMS Banking, Remittance Services, Treasury

Products and Services, Structured Finance for Corporate, strengthening and expanding its

Islamic Banking activities, Investment Banking, specialized products and services for

NRBs, Priority Banking, and Customer Care. The Bank has successfully completed its

automation project in mid 2008. It envisages enabling customers to get banking services

within the comfort of their homes and offices.

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AB Bank has continuously invests into its biggest asset, the human resource to drive

forward with its mission “to be the best performing bank in the country.” The bank has

introduced Dress Code for its employees. Male employees wear designed ties and

females wear Sharee or Salwar Kamiz, all the dresses are consisted with the unique AB

Bank logo.

AB is recognized as the people’s choice, catering to the satisfaction of its cliental. Their

satisfaction is AB’s success.

2.2) Historical Background of AB Bank Limited

AB Bank Limited, the first private sector bank under joint venture with Dubai Bank Limited. UAE incorporated in Bangladesh on 31st December 1981 & started its operation with effect from April 12, 1982.

Dubai Bank Limited (name subsequently changed to Union Bank of the Middleast Limited) decided to off-load their investment in AB Bank Limited with a view to concentrate their activities in the UAE in early part of 1987 & in teams of Articles 23 A & 23B of the Articles of association of the company & with the necessary approval of the relevant authorities, the shares held by them in the Bank were sold & transferred to Group "A" Shareholders, i.e. Bangladesh Sponsor Shareholders.

As of December 31, 2006; the authorized capital & the equity (paid up capital & reserve) of the bank are BDT 2000 million & BDT 2582.76 million respectively. The sponsor-shareholder holds 50% of the share capital; the General Public Shareholders hold 49.43% & the rest 0.57% shares are held by the Government of the People's Republic of Bangladesh. However, on individual sponsor shareholder of more then 10% of its total shares.

Since beginning, the bank acquired confidence & trust of the public & business houses by rendering high quality services in different areas of banking operations, professional competence & employment of state of art technology.

During the last 27 years, AB Bank Limited has opened 73 Branches in different Business centers of the country, one foreign Branch in Mumbai, India, two Representatives Officer in London & Yangon, Myanmar respectively & also established a wholly owned subsidiary finance.

Company in Hong Kong in the name of AB Bank International Finance Limited. To facilitate cross border trade & payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of world.

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AB Bank Limited, the premier sector bank of the country is making headway with a mark of sustainable growth. The overall performance indicates mark of improvement with Deposit reaching BDT 42076.99 million, which is precisely 53.78% higher then the preceding year. On the Advance side, the Bank has been able to achieve 46.32% increase, thereby raising a total portfolio to BDT 31289.25 million which places the bank in the top tier of private sector commercial banks of the country.

On account of Foreign Trade, the bank made a significant headway in respect of import, export & inflow of foreign exchange remittances from abroad.

2.3) CORPORATE INFORMATION AT A GLANCE

(Information as per last Annual Report 2009)

Name of the bank : AB Bank of Bangladesh Limited

Status : Public Limited company:

Date of Incorporation : 31December, 1981.

Inauguration of the Jubilee Road Branch : 26th July , 1994.

Head Office, BCIC Bhaban, 30-31,

Dilkusha Commercial Area,

Dhaka

Registration No : C281461 (1992)/95

Chairman : Mr.M.Wahidul Haque

Managing Director : Kaiser A Chowdhury

Manager of Mirpur Road Branch : Mr. Chy. A.N.M. Masarraf Ali Beg

Authorized Capital : TK.800 Million

Paid up Capital : TK. 519.76 Million

Directors : 8

Number of branches : 67

Deposit : Tk. 27,361.44 Million

Loan : Tk. 21,384.63 Million

Number of Employees : 1525

Telephone :( +8802)956 0312

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Telefax :( +8802) 956-4122-23

No of foreign

Correspondences/Bank : 350

SWIFT code : ABBLBDDH

E-mail : info@abbank.com.bd

Web site :www.abbank.com.bd

2.3) CORPORATE MISSION OF THE AB BANK LIMITED (ABBL)

1. To receive, borrow or raise money on deposit, loan or otherwise, upon such terms

as the company may approve and to give guarantees and indemnities in respect of

all debts and contacts.

2. To establish maintain, carryon, transact and undertake all kinds of investment,

merchant and financial business, including underwriting, managing and

distributing the issue of stocks, shares bonds, debentures, import permits other

securities directly or thorough jointly with one or more banks or financial

institution.

3. To carry on the business of dealers in foreign exchange including buying and

selling of foreign exchange, dealing in foreign currency notes, granting and

issuing of letters of credits, travelers cheques, circular notes and negotiating, and

discounting of export documents and all other matters related to foreign exchange

business.

4. To carry on the business of buying and selling gold and other valuable species.

5. To provide for safe deposit vaults and safe custody of valuables of all kinds.

6. To act as agents for the sale and purchase of any stocks, shares or securities or for

any other monetary or mercantile transaction.

7. To form, manage, join or subscribe to any syndicate, or any holding company or

trust to carry on business of an investment trust company.

8. To act as official liquidator and receiver.

9. To conduct the business of banking in its branches and abroad.

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10. To act as executors and trustees of wills, settlements and trust deeds of any kind made by customers and other matters related thereto

VISION & MISSION

2.3.1) Vision Statement:

“To be the trendsetter for innovative banking with excellence & perfection”

2.3.2) Mission Statement:

“To be the best performing bank in the country”

2.4) Change of name:

Arab Bangladesh Bank Limited changed its name to AB Bank Limited(ABBL) with effect from 14 November 2007 vide Bangladesh Bank BRPD circular letter no.-10 dated 22 November 2007.Prior to that shareholders of the bank approved the change of name in the Extra-Ordinary General Meeting held on 4 September 2007.

2.5) Birth OF the Logo

The coat of arms of the new logo is inspired by traditional "Shital pati " or "Sleeping mat". The knit and the pattern of interlace in the new logo that echoes the intricate weave of Shital pati symbolizes bonding. This bonding reflects the new spirit of AB Bank.

2.6) Company Philosophy

The motto or the philosophy of the Bank is "Bonding Generation". Whether in Personal, Corporate, Treasury or Trade transactions AB Bank Limited is committed to provide the best. Meeting the demand of the bank's discerning customers is not the sole objective. The Bank endeavor to deliver a quality that makes every transaction a pleasurable experience. AB Bank feels that, if they can meet maximum clientele requirements in less time with efficiency, then they will be able to accomplish a successful business in the world of banking. Their main objective is - they want to provide every single customer service available in today's banking procedure for their clientele. Thus they can guarantee the excellence in banking to their valuable customers.AB Bank has remained a bridge-builder between generations for the past 26 years through its reliable, modern and efficient services.

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2.7) Branch Location :

2.7.1) DHAKA DIVISION :

1. Bandura2. Joypara3. Nawabpur Road4. Kakrail5. Bhairab Bazar6. New Elephant Road7. Karwan Bazar8. Board Bazar9. North South Road10. Madhabdi11. Chandra12. Mirpur13. Pagla14. Dhanmondi15. Motijheel16. Principal Branch17. Imamganj18. Mohakhali19. Rokeya Sharani20. Gulshan21. Mymensingh22. Uttara23. Jinjira24. Narayanganj25. Islampur

2.7.2) Chittagong Division : 1. Agrabad2. Chaumuhani3. Khulshi4. Comilla5. Lohagara6. Bahaddarhat7. Cox's Bazar8. Boalkhali9. Export Processing Zone (EPZ)10. Port connecting Road11. Brahmanbaria12. Feni13. Sitakunda14. CD A Avenue

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2.7.3) Khulna Division:

1.Benapole 2. Jhikargacha 3. Kushtia 4. Jessore 5. Khulna 6.Satkhira

2.7.4) Raishahi Division ;

1 .Bogra2. NaogaonS.Rangpur4.Chapai5. Nawabganj6. Saidpur

2.7.5) Svhhet Division :1 .Boroikandi2. Garden Tower3. Sreemongal4. Tajpur5. Dargahgate6. Moulvibazar

2.7.6) Barisal Division:1 .Barisal

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2.8) ORGANOGRAM:

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Chairman

Vice Chairman

Board of Director

Managing Director & President

SEVP SEVP SEVP SEVP

EVP EVP EVP EVP

SVP SVP SVP SVP

VP VP VP VP

SAVP SAVP SAVP SAVP

AVP AVP AVP AVP

SPO SPO SPO SPO

PO PO PO PO

SO SO SO SO

OFFICER OFFICER OFFICER OFFICER

2.9) Performance of AB Bank

2.4.1.1 Analysis of capital structureCapital structure of AB Bank has changed from year to year. The components of the capital structure are paid-up capital; proposed issue of dividend, share premium, statutory reserve, proposed cash dividend, retained earnings and other reserve.

Authorized and paid up capital of AB Bank:

Table no.1

sFigure 01s: Authorized and paid up capital of AB Bank

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Authorized Capital (TK) In Million

Year Paid Up Capital (Tk.) In Million

6000 2009 3373.96

3000 2008 2677.75

2000 2007 743.26

1500 2006 571.14

800 2005 878.85

2.4.1.2 Reserve fund and other reserve

In the year 2005 the total reserve was tk. 826.33 in million, but in the year 2006, it was increased on tk. 1456.47 in million. So in the year 2007 was tk. 2072.53 in million, at the year of 2008 it is reached at tk. 2702.95 in million and in 2009 it was tk.3980.30 million.

Table-02

Year Amount ( tk. in Millions)

2009 3980.30

2008 2702.95

2007 2072.53

2006 1456.47

2005 826.33

Reserve fund and other reserve position of AB Bank Ltd.

Figure 02s: Reserve Fund

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2.4.2 Deposit

Deposit is one of the principal sources of fund for investment of commercial banks and investment of deposit is the main stream of revenue in banking business. The total deposit of the bank stood at Tk.41, 546.57 million as on December 2007 against Tk. 35,032.02 million of the previous year which is an increase of 18.60%. This growth rate may be termed as a remarkable achievement for the bank. The present strategy is to increase the deposit base through maintaining competitive rates of profit and having low cost of funds.

Deposit Position of AB Bank:

Table no-3

Year Amount of Deposit ( tk. in Millions)

2009 83087.13

2008 68560.47

2007 53375.35

2006 35032.02

2005 27361.44

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Figure 04: Deposit Position

2.4.3 Investment (General)

Total investment of the bank was tk. 16369.30 million as on 31st December 2009 against tk. 11395.94 million as on 31 December 2008 showing an increase of tk. 14,972.23 million with a growth rate of 27.91%. The Bank Follows appropriate Investment Risk Analysis while approving investments to Customer in order to maintain quality of assets.

Table no-4

Year Amount (TK In Millions)

2009 16369.30

2008 11395.94

2007 8884.60

2006 6301.28

2005 4060.95

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Investment Activities of AB Bank

Figure 05: Investment Activities (General)

Investment in Share and SecuritiesThe size of the investment portfolio as on 31st December 2009 was tk. 16369.30 million (excluding investment in subsidiary) million while it was tk. 11395.94 million in 2008. The portfolio comprises mainly of Bangladesh Government Islamic Investment Bond and Shares of different companies.

Year Amount (TK In Millions)

2009 16369.30

2008 11395.94

2007 8884.60

2006 6301.28

2005 4060.95

Investment Activities of AB Bank:

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Figure 06: Investment Activities (Share and Securities)

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Deposit mix

Sector wise credit portfolio

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Five Years Financial Performance at a glance of AB Bank Ltd.

Table no-08

Sl. No.Particulars 2005 2006 2007 2008 2009

01. Authorized Capital 1000.00 3500 3500 3500 10000

02. Paid-up Capital 878.85 1713.76 2142.20 2677.75 3373.96

03. Reserve Fund 569.99 810.88 1134.64 1532.55 2092.97

04. Deposits 28319.21 35032.02 41546.57 57586.99 73835.46

05. Investment(General)26046.34 32641.27 40195.24 53637.68 68609.91

06. Investment(Shares & Bonds)1633.03 2233.25 2457.72 2894.02 2169.44

07. Foreign Exchange Business 72940.00 96175.10 117900.14 156434.57 162604.61

a) Import Business 41432.00 49596.70 61399.40 78540.49 83911.51

b) Export Business 31285.00 46234.60 55790.42 76465.62 76240.77

c) Remittance 223.00 343.80 710.32 1428.46 2452.33

08Investment as a % of total Deposit

91.97% 93.18% 96.75% 93.14% 92.92%

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09 No. of Foreign Correspondent 222 246 256 278 333

10 Shareholders’ Equity1912.42 3111.69 4042.53 4989.20 6717.21

11 Total Capital ( Tier I +Tier II) 2179.81 3467.37 4569.56 5763.89 7718.89

12 Total Assets33716.70 41793.54 51503.03 68446.46 86213.37

13 Total Liabilities31804.28 38681.86 47460.50 63457.26 79496.16

14 Total Contingent liability15941.53 18994.09 22632.65 26070.57 30109.11

15 Total Risk weighted Assets25681.45 32401.36 40706.47 53428.99 69058.87

16 Total Fixed Assets166.98 178.43 200.70 293.53 381.98

17 Operating Income3433.39 4967.57 6407.96 8356.82 10383.62

18 Operating Expenditure2257.63 3588.89 4499.76 5838.43 7201.84

19 Profit before provision and tax1175.76 1378.67 1908.20 2518.39 3181.78

20 Profit before Tax1063.30 1199.49 1618.80 1989.55 2802.12

21Net Profit after provision and tax

555.34 650.29 930.84 1096.63 1694.10

22 Profit earning asset28743.43 35161.48 42357.65 56192.52 69006.56

23 Non profit earning asset4973.27 6632.07 9145.38 12253.94 17206.81

24 Capital adequacy ratio8.49% 10.70% 11.23% 10.79% 11.18%

25 Dividend30 25 38 26 35

a)Cash0 0 7 0 0

b)Bonus30 25 25 26 35

c)Right Share1R:2 1R:2

26 Cost of fund8.08% 9.17% 9.07% 9.52% 9.09%

27 Net asset value per share217.61 181.57 188.71 186.32 199.09

28 Earring per share48.61 43.38 34.76 40.95 50.21

29 Price earnings ratio8.10 7.74 9.09 7.85 7.52

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4.0) GENERAL BANKING ACTIVITIES OF AB BANK LIMITED"

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Function of ABBL

Function of ABBL

The AB Bank Limited is one of the leading private commercial bank in the country. It incorporated in Bangladesh on 31st December 1981 & started its operation with effect from April 12, 1982.AB Bank

As they are facing the challenges on way to further improving the profitability of the bank, they have to rely on their skilled & experienced workforce. The organizational structure is included in terms of organization culture & quality of work life. Then I have moved on towards the strategic, operational and legal issues of the ABBL to justify the report.

I discussed about General Banking, its prospect & necessity. General banking operation like: General Accounts Opening Section, Requirement of opening current A/C, Saving A/C, Fixed Deposits A/C, Rate of interest on Deposits, Procedure closing A/C, Cheque clearing & bills department section, Collection section, Local Remittance department, Deposits section, Loans & credits department.

Foreign trade department plays a major role in the international business. Here banks offer opening a letter of credit (L/C) Indifferent forms, provide the exporter the guarantee of payment of the merchandise exporter & the importer the title of goods. International business is unthinkable without the facility of the L/C. Bank also offers different loan facility in pre-shipment & post-shipment level.

4.1) SECTIONS OF GENERAL BANKING27 | P a g e

During my practical orientation in AB Bank, Karwan Bazar Branch, it came to the

observation that general banking section is divided with five areas. These are:

4.2) ACCOUNT OPENING SECTION

One of the vital sections under general Banking is the account opening section. Banker

customer relationship begins through this section. Various tasks are performed in this

section. Such as:

Opening of different types of account.

Issue of checkbook.

Transfer and closing of account.

Enquiry of account.

Checking The Signature of the client.

Locker opening & closing.

4.3) Deposit Scheme:

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4.2 General Banking Section

Account Opening

Bills and Clearing

Remittance Mail Receive and

Dispatch

Cash Section

Ogrim Munafa Patra (May 29, 2008)

Let your money grow with us. AB Bank Ogrim Munafa Patra (OMP) allows you to maximize growth potential through this unique certificate.

How does the OMP work?A depositor may purchase an OMP by depositing the discounted value of the principal sum: For example, for purchasing a Receipt for Tk.100,000 with a maturity of 12 months (at 12% interest rate) the depositor will have to pay Tk. 89,286/- for purchasing the OMP certificate.

Who can open an OMP?Any individual, business organization and institution.

How much does one have to invest?Simply a minimum of Tk 25,000/-

What is the tenure of the OMPs?OMPs shall be available for three, six and twelve month’s maturity tenures.

What is the rate of interest?12 percent. Govt tax and duties are applicable.

Can one obtain loan against OMP?Yes. Loan/Overdraft facility up to 90% of the deposited amount will be available.

How does, one approach AB Bank to purchase OMP?Loan facilities will be available at any of the 73 branches of AB Bank. For details, please contact your nearest AB Bank branch.

Be a millionaire in 3 years (May 29, 2008)

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The dream of becoming a millionaire is no longer a distant one. You can actually become a millionaire, that too within a space of three to six years, by opening an AB Bank Millionaire Scheme Account (MSA).

How does this MSA work?Monthly deposit of installments.At the end of the respective term, total savings with interest, after deduction of Govt. tax and duties, will amount to One million Taka.Any individual, business organization or institution can open an MSA. What is the tenure of the MSA?

MSAs can be opened for three, four, five, or six-year terms.

What is the annual interest rate for MSA?

Millionaire in 3 years

Interest Rate

12.00% 12.00% 11.50% 11.50%

Tenor (Years)34 56

Monthly Savings23.602/-16, 7667/-12, 8367/-10, 1387/-

Gross Return

1, 016, 71 17/-1, 021, 7487/-1, 025, 5867/-1, 030, 0847/-

Income Tax (Currently 10%)

16, 7047/-21, 6987/-25, 5437/-3, 0015/-

Net Return1,000,007/-1000,050/-1,000,044/-1,000,070/-

New Product30 | P a g e

AB Bank SMS Banking (September 10, 2010)

We can do our day to day banking on our mobile at our own convenience 24 hour a day. Just dial AB Bank short code 16207 and text our desired service requirement. No hassle, no queue and easy to use.

To register our mobile phone we can follow the simple processes illustrated below to avail the SMS Banking Service:

For free registration, contact with nearest AB Bank BranchCell: 01199 AB Bank (222265)Email: smsbanking@abbank.com.bdWeb: www.abbank.com.bd

Send all the SMS to 16207 Transaction AlertTransaction Alert Messages will be sent from 01819249868Subscriber may limit the number of Debit and/or Credit Transaction AlertsPIN = Personal Identification Number (4 digits confidential password reset by you

Services Hotkey / Keyword SMS Example

Balance Enquiry(For Primary/Default Account)

BAL PIN BAL 1234

Balance Enquiry(For Different Account)

BAL PIN ACCTSerial BAL 1234 1 or 2 or 3

Mini Statement(For Primary/Default Account)

STM PIN STM 1234

Mini Statement(For Different Account)

STM PIN ACCTSerial STM 1234 1 or 2 or 3

Check Linked Accounts ACC PIN ACC 1234

PIN Change PIN OLDPIN NEWPIN PIN 1234 8596

PIN Reset PIN RESET PIN RESET

Fund Transfer FTR PIN ACC1 AMOUNT FTR 1234 1 250 2

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ACC2

Mobile Top UP(For Registered Mobile Number)

TOP PIN AMT TOP 1234 500

Mobile Top UP(Different Mobile Number)

TOP PIN AMT MobileNOTOP 1234 500 01XXXXXXXXX

Mobile Bill Payment BILL PIN AMT MobileNOBILL 1234 500 01XXXXXXXXX

Help HELP HELP

4.4) Current short term deposits (CD)

In future Current Account is opened for both individuals & business concerns including non-profit making organization. But now individual account is closed for the by the order of Bangladesh Bank. Account must be open only on the name of business.

For opening a sole proprietorship account, the account holder must provide his organizations names , what type of organization that is, where that is located, his true names, present & permanent address of the business owners, date of birth, place of birth, account holders recent two copies color passport size photograph , one copy nominees photograph, proprietorship valid trade license photocopy, TIN certificate, national ID card photocopy or passport or other employees ID card or certificates from the ward commissioner or union council chairman certificates. Detail of occupation or employment & source of wealth or income. He have to need a introducer, who has a existing account with ABBL.

The requirement of sole limited company account is same as of sole proprietorship account plus:

• Certificate of incorporation.• Resolution of the board of directors.• Memorandum & articles of association.• Proper information as of personal account & directors & account operators.• Certificate of the returns submitted to the register of joint stock companies.• Attestation by embassies or high commissions in the respective countries if the company is incorporated outside of Bangladesh.Also different club, co-operative society, private school, college & madrasa, trustee board can open current as per provide their board resolution, deed of those organization & others documents as per types of organization.

4.4.1) Saving Account (SB):

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Saving account always opened by individuals for saving purpose of deposited amount over a period of time. For opening a saving account a persons must provide his true names, parents names, present & permanent address, date of birth, place of birth, account holders three copy color photograph, one nominees photograph, voter ID card and passport or other employees ID card or certificate from the ward commissioner or union council chairman certificates. Detail of occupation or employment & source of wealth or income. He has to need an introducer, who has an existing account with ABBL. Interest on saving account is 6.00%.

4.4.2) Fixed Deposits Account (FDR):

The Bank offers higher rates of interest on such deposits. Usually customers are allowed to open this A/C for a certain period. FDR with different maturity offered by the bank can be shown by the Following table:

Maturity Interest rates

Up to 10 lac Over 10 lac to 50 lac Above 50 lac

FDR for 1 months 8% 8.25% 8.50%

FDR for 3 months 9.50% 9.50% 10.00%

FDR for 6 months 9.00% 9.00% 9.50%

FDR for 12 months & above

11% 11.25% 11.50%

4.4.3) Monthly Saving Deposit (MSDS):

Monthly saving deposit accounts open for the businessman & for the general people who wants to save money. This account must deposit with in 10th banking days of every month & if any one fail to deposit then deposit next with current month installment by provide some fine.

4.4.4) Special Term Deposit (STD):

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These types of account also known as special notice deposit & STD account provide interest for minimum balance TK.5 lac to above & interest rate is 5.00%.

4.5) Procedure of Closing Account:

A customer may close out his/her account any time submitting to the branch. The customer should be asked to draw the final check for the amount standing to credit of his account less the amount and other incidental charge & surrender the unused cheque leaves. The account is debited for the account closing charge etc. And unused cheque leaves should be destroyed by the authorized officer of the bank.

4.6) Remittance Department:

4.6.1) Local Remittance Department:

Banks have a wide network of branches all over the country & offer various kinols at remittance facilities to the public. Obviously the bank charges commission on the basis of bills amount. Remittance are safe , swift, inexpensive & simple.

Type of Remittance: a) Pay order (PO) b) Demand Draft (DD) c) Telegraphic Transfer (TT)

Pay Order (PO):

Pay order is an instruments, which is used to remit money with in a city through banking channel the instrument are generally safe as most of them are crossed .It remove the fear of stealing.

Demand Draft (DD):

Demand draft is many popular instruments for remitting money from one corner of country to another. The instrument is basically used for transfer & payment. Difference between pay order & Demand Draft is in terms of place only PO is used for remittance money with the city where as DD is used for within the country too, constitute current liability on the part of a Bank.

Telegraph Transfer (TT):

Telegraph Transfer is one of the fastest means of transferring money from one branch to another or from one to another. The TT issuing bank instructs its counterpart by telex

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message regarding remittance of money. No instruments is given for TT, Both parties should have account as money is for transferred.

4.6.2) Foreign Remittance:

The word "REMITTANCE" means transfer of funds from one place to another either within the country (local Remittance) or from one country to other country globally (Foreign Remittance) by means of different recognized modes. The foreign remittance is divided into two (2) parts, which is:- Outward Foreign Remittance- Inward Foreign Remittance

Outward Foreign Remittance:

An outward foreign remittance in involves foreign trade & is as such subject to the approval of Bangladesh Bank with the expectation of remittances, for specified purposes for which authorized dealers (AD's) have the authority to initiate remittances without prior reference to the central bank.

Inward Foreign Remittance:

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

Types of Foreign Remittance:

• Foreign Demand Drafts (FDD)• Mail Transfer (MT)• Traveler's Cheque (TC)

4.7) Foreign Exchange Department:

Trade refers to the process or mechanism by which the currency of one country is converted into the currency of another country. Foreign trade is the means & methods by which rights to wealth in another country's currency.Transfer of goods & services from one country to another country against foreign exchange. Trades among nations are a common occurrence & normally benefit both the exporter & importer.

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Components of Foreign Trade:

Foreign Trade mainly divided into three wings. They are as below • Import • Export • Foreign Remittances

4.8) Regulation for foreign

4.8.1) Local Regulations:

Our foreign exchange transactions are being controlled by the following rules & regulation. .

Foreign Exchange Regulation Act 1947. Bangladesh Bank issues foreign exchange circular from time to time to control the export, import & remittance business.Ministries of commerce issues export & import policy giving basic formalities for import & export business.Sometime CCI&E issues public notice for any kind of change in foreign exchange transaction. Bangladesh bank published two volumes in 1996. This is compilation of the instructions

4.8.2) International regulations of foreign exchange:

There are also some international organizations, influencing our foreign exchange transactions. Few of them are discussed bellow:

International Chamber of Commerce (ICC) is a world wide non-governmental organization of thousands of companies. It was founded in 1919. ICC has issued some publications like UCPDC, URC, & URR etc, which are being followed by all the member countries. There is also an international court of arbitration to solve the international business disputes. World Trade Organization (W.T.O) is another international trade organization established in 1995. General Agreement on Tariff & vital role in international trade, through its 124 member countries.

Trade (GATT) was established in 1948, after completion of it's 8th round; the organization has been abolished & replaced by W.T.O. This organization has vital role in international trade, through its 124 member countries.

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4.9) Foreign Exchange Mechanism

Foreign exchange department plays significant roles through providing different services for the customer. Facilitating the trade with foreign country is the most important among those services the key instrument which facilitates this trade is L/C (Letter of Credit).

4.9.1) Letter of Credit (L/C):

Letter of Credit may be defined as an arrangement or guarantee issued by a bank at the request of the customer to make payment to or order of the beneficiary or authorized another bank to effect such payment or to pay, accept or negotiate such bill of exchange against stipulated documents, provided that the terms and conditions of the L/C are complied with. (UCPDC-500, 1993).

The Advising Bank:It is the bank in the Exporter's (Normally the exporter's bank), which is usually the foreign correspondent of Importer's bank through which the L/Cis advised to the supplier. If the intermediary bank simply advises/notifies the L/C to the exporter without any obligation on its part, it is called "Advising Bank".

The Confirming Bank;

If the Advising Bank also adds its own undertaking to honor the credit while advising the same to the beneficiary, he becomes the Confirming Bank, in addition, becomes liable to pay for documents in conformity with the L/C's terms and conditions.

The Negotiating Bank:

The Bank that negotiates the bill of exporter drawn under the credit is known as Negotiating Bank. If the advising bank is also authorized to negotiate the bill drawn by the exporter, he becomes the Negotiating Bank.

The Accepting Bank:

A Bank that accepts time or unasked drafts on behalf of the importer is called an Accepting Bank. The Issuing Bank can also be the Accepting Bank.

The Paying Bank and the Reimbursing Bank:

If the Issuing Bank does not maintain any account with a bank that will be negotiating the documents under a L/C, then arrangement is made to reimburse the negotiating bank for the amount to be paid under from some other bank with which the Issuing Bank maintains his account. The latter bank is known as Reimbursing Bank.

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4.9.2) Importer Department

Understanding:

Imports are foreign goods and services purchased by consumers, firms, & Governments in Bangladesh. The importers are asked by their exporters to open letter of credits so that their payment against goods is ensured.

Classification of importers:

Goods are being imported for personal use, commercial purpose or industrial use. So, there are three kinds of importers such as:

Personal importer: If the importer is insisting to import goods from the abroad for his need this importer called personal importer.

Commercial importer: If the importer is insisting to import goods for Commercial purpose then it is called commercial importer.

Industrial importer: If the importer is insisting to import goods for industrial purpose then it is called Industrial importer.

Import Policy:

Under the import and export control Act, 1950 the Government of Bangladesh formulates the Import policy through Ministry of Commerce. The existing Import policy (1997-02) has come into effect from June 14, 1998 to June 30, 2002.

4.9.3) Steps Involved in Import Procedures:

*** Procurement of IRC from the concerned authority

*** Signing purchase contract with the seller.

*** Requesting the concerned bank (importer's bank to open an LC (irrevocable) on behalf of the importer favoring the exporter/ seller/ beneficiary

*** The issuing bank opens/ issues the LC in accordance with the instruction/ request of the importer and request another bank (advising bank) located in seller's /exporter's country to advise the L'C to the beneficiary. The issuing may also request the advising bank to confirm the credit, if necessary.

*** The advising bank advises/informs the seller that the LC has been issued.

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*** As soon as the exporter/seller receives the LC and is satisfied that he can meet LC terms and conditions, he is in a position to make shipment of the goods.

*** After making shipment of goods in favor of the importer the exporter/s submits the documents to the negotiating bank for negotiation.

4.9.4) Money transfer:

Western Uniona fast, reliable and convenient way toSend money transfer:

Western Union Financial Services Inc. U.S.A. is the number one and reliable money transfer company in the world. This modern Electronic Technology based money transfer company has earned world wide reputation in transferring money from one country to another country within the shortest possible time.

AB Bank Limited has set up a Representation Agreement with Western Union Financial Services Inc. U.S.A. Millions of people have confidence on Western Union

for sending money to their friends and family. Through Western Union Money Transfer Service, Bangladeshi Wage Earners can send and receive money quickly from over 280,000 Western Union Agent Locations in over 200 countries and territories world wide- the world's largest network of its kind, only by visiting any branches of AB Bank Limited in Bangladesh.

4.10) Types of Cheques collected by clearing Department:

1. Transfer Cheque:Transfer cheques are those cheques which are colleted and paid by the same branch of ABBank.

2. Local Bills Collection Cheques (LBC):Local bills collection cheques are those cheques which are collected and paid by two different branches of a bank situated in the same city.

3. Outward Bills Collection Cheques (OBC):OBC cheques are those cheques, which are collected and paid by two different branches of same or different bank situated in the outstation.

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4. Clearing Cheques:When the payee or endorsee (whoever deposits cheque for collection) and the drawer of a cheque maintain accounts with different banks, the collecting bank can receive the amounts of cheques from the paying banker is any of the following manners:* It can send its representative with the cheque to each of the following banks and collect cash. This procedure is wasteful of time and incubersome and risky.

*Frequent transportation of the currency, but it has all the other disadvantages of the first. Besides, it may result in lying up the bank can maintain account with the paying banks (practically of the local banks), deposit cheques with the drawee banks for credit to its account. The method avoids the risk of considerable sums of the money most of the local banks.

*The most efficient method of collecting and paying such cheques is that in which these cheques are exchanged by representatives of the various banks, who meet a fixed place at fixed hours and make the settlement through controlling banks. The banks, so joining, from themselves into a "member of clearing house" and the fixed meeting place are called a "clearing house".

4.11) Clearing House:

Where inter-bank receivables and obligations are settled. A particular house/place under the control and supervision of the central bank of the country where representatives of the member banks / scheduled banks/ assembles/meet together for settlement of their respective banks receivables and payables. It sits on all workingdays. In our country clearing house is organized by the Bangladesh Bank (state bank of Bangladesh) at the different big cities.

Common procedure for all kind of cheques etc;

* Receiving and scrutinizing the cheques and other deposit instruments, and the pay-in-slip at the counter.* Affixing the stamps.* Scrutiny receipt by the authorized officer.* Returning the counterfoil to the depositor.*Separate the cheques into transfer, LBC & clearing house.

Scrutiny of the pay-in-slip (Deposit-slip) & cheques:

1. On both the counter-foil and the deposit-slip, the following should be checked – * Date of deposit * Account number. * Title of the account.

* The cheques number, amount and the drawee bank's name. * Total amount in words and figure.

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2. The depositors name should be given on the larger portion of the pay-in-slip.3. Customer should use separate deposit slip for transfer, LBC, & clearing cheques

etc.4. The instrument is checked for any apparent discrepancy and is compare with the

particulars noted in the pay-in-slip and its counter foil. 5. The instrument is checked for any apparent discrepancy and is compare with the particulars noted in the pay-in-slip and its counter foil. 6. The instrument is checked for any apparent discrepancy and is compare with the particulars noted in the pay-in-slip and its counter foil. 7. The instrument is checked for any apparent discrepancy and is compare with the particulars noted in the pay-in-slip and its counter foil. 8. The instrument is checked for any apparent discrepancy and is compare with the particulars noted in the pay-in-slip and its counter foil.

11. In case an order instrument is being deposited in second payee's account guarantee may be obtained from the second payee and is attached to the pay-in-slip.

12. In case the payee's name on the crossed instruments may be accepted but only from customers well known to the bank and after obtaining an indemnity.

13. The amount noted should be the same as the amount of the instrument and the amount in

words and figure should be same.

4.12) Types of Clearing;

• Outward Clearing:-

When a particular branch receives instrument drawn on the other bank within the clearing zone and those instruments for collection through the clearing arrangement is considered as outward clearing for that particular branch.

• Inward Clearing:-

When a particular branch receives instruments which drawn on themselves and sent by the other member bank for collection are treated as inward clearing.

4.12.1) Process Flow Chart Clearing (Inward):

(1)Receipt of the instrument from messenger

(2)Scrutiny of the instrument & tallying the amount of the schedule & that of the instrument.

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(3)Entry into Inward Clearing Register

(4)Sending the instrument to respective department for postingPreparation of single credit voucher & IBCA of honored cheques / instruments

(5)Preparation of reason memo if any dishonor cheque/instruments

(6)Hand-over the IBCA & dishonor instruments if any to messenger.

(7)Filling the schedules and statements in the respective files

4.12.2) Process Flow Chart Clearing (Outward):

(1)Receipt of the instruments with the paying-in-slip

(2)Scrutiny of the instruments & paying-in-slip & affixing Received Seal

(3)Affixing Special Crossing Endorsement & clearing Seal on the back of the instrument.

(4)Return of the counterfoil to the depositor with seal signature.

(5)Entry into the Outward Register.

(6)Separation of the instrument from the paying-in-slip.

(7)Classification of the instrument first bank wise & then branch wise.

(8)Preparation of schedule branch wise & bank wise & signed.

(9)Preparation of clearing house book & signed by the officer.

(10)Tally the total of clearing house-book with the total amount shown in the clearing register.

(11)Preparation of the debit Voucher (IBDA) by debiting Local Branch.

(12)Sending the instrument, schedule, clearing house-book along with IBDA to the Local office through messenger.

(13)Filling/Recording all office copies.

(14)Releasing the credit vouchers to respective dept. for posting.

(15)Preparation of Debit Voucher if any instrument returned dishonor.

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4.12.3) Cheque returns:

Reasons for returning cheques:

* Insufficient fund/balance exceeded. * Account closed. * Payment stopped. * Amount in words and figures differs. *Drawer signature differs/illegible/required. *Alteration/mutilation requires drawer's confirmation. * Cheque post dated /cheque out of date. * Date incomplete /wrong/missing. * Payee's endorsement required /irregular. * Warrant no./folio no./advice no. differ from booklet. * Clearing house /crossing stamp missing. *Present through collection basis. *Not drawn on us /please send on our concerned branch. * Advice/ intimation not yet received. * Signature and seal required. * 7 day's notice required. * Please present after 2/3 days.

4.12.4) FCD Department:

FCD department is the nerve center of bank. Total transaction per day is recorded in accounts dept. all departments of the branch send their daily transaction statement to the accounts department.

4.13) Functions of the department;

** To maintain all transaction through double entry system in 'Cash- Cum- Day Book'.** To maintain record in General ledger for different heads of affairs.**To maintain record in subsidiary ledger for only suspense and sundry accounts.**‘To provide Statement of affairs' which includes everyday assets and liabilities position.** To record daily IBTA (Inter branch transaction account) Extract.** To prepare statement of income for everyday**To prepare statement of expenditure for everyday.**To maintain transfer book for IBTA.** To prepare supplementary from transfer book.** To prepare statement of provisional income for the month.** To prepare statement of provisional expenditure for the month.** To prepare consolidated statement of provisional income & expenditure for the month** To prepare salary statement for every month.

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**To maintain salary disbursement register.**Keeping al vouchers after the transactional period.** Weekly & monthly statement of affairs with income, expenditure & subsidiaries.** Half-yearly Schedule Bank Statements-3 (SBS-3)** Monthly Schedule Bank Statements-1 (SBS-1)**Quarterly Schedule Bank Statements-2 (SBS-2)**Monthly comparative statement

4.14) Loan and Advance department:

Loan and advance department is the heart of bank. The major source of Bank's income comes from loan and advance. For this reason, Proper credit management is a crying need of a bank. This section is crucial for the bank because of the associate risk and profit potential. There are several types of credit that the bank offers for the customer. Bank loan or bank advance is a form of finance. It indicates- a specified sum of money lent by a bank to customer, usually for a specified rate of ordinary interest (calculated by taking 360 day as a year). Handling 'load and advance' is the major function of bank.

Difference between loan and advance:

Loan: It refers to loan term credit i.e. "money lent by a bank for more than one year (e.g.5or 10 or 15 year etc)

Such as - Loan general, House building loan, Project loan etc.

Advance: it refers to short term credit i.e. 'Money lent by a bank for less than one year' Such as - Cash credit, overdraft, discount etc.

In comprehensive sense, loan is considered as a part of advance despite of the above difference. AB Bank also classified loans and advances according to this comprehensive

Loans:

Under the loan system, credit is given for a definite purpose and for a predetermined period. Normally, these loans are repayable in installments, some major loans of the bank are describes as under:

a) Loan General:

When an advance is made in lump sum repayable either in fixed monthly installments and no subsequent debit is ordinarily allowed expect by way of interest, incidental charges etc called general loan, it is usually for a single purpose where the entire amount may be required at a time or in a number of installments within a short period of time.

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Generally, when the advance can't be classified into any category, it is considered as 'Loan General'.

b) House Building loan:

In order to solve financial incompatibility to make a house, the bank offers this loan to middle class people. Period of loan is maximum 5 years. Limit of the amount of the loan depends on the customer banker relationship.

c) Loan against imported merchandise (LIM):

LIM is a temporary loan and allowed against imported goods. LIM may be created at the request of the importer while he is not in a position to take delivery of import bills by making payment of entire bank dues. The importer has to keep the goods in bank's custody for getting this loan.

d) Loan against trust receipt (LTR):

LTR is also a temporary loan and allowed to the customer against their application on the basis of only trust which is generally built on good customer-banker relationship. After sanction of LTR, import bills are handled over to the importer who will clear the goods from the custom authorities by making payment duty, VAT and other charges.

e) Consumer finance scheme:

The Scheme aims at improving the standard of living of the fixed income group. Under the scheme the clients may secure loan facilities at easy installments to procure household amenities. It meets household needs of service holders: Furniture/ TV/ Refrigeration & others house-hold durables. Its Credit Ceiling is Up to tk. 1.00 lac and term is 2 years.

f) Lease finance scheme:

An entrepreneur, under this scheme, may avail of the lease facilities to procure industrial machinery (without having to purchase it by down payment) with easy repayment schedule. The clients also get special rebate in their income- tax payment under the scheme. Items leased out to the new/ existing industries to procure machines for the industries.

g) Small business loan:

This loan is introduced for smooth running/ expansion of business of small entrepreneurs who are honest, sincere & promising. This type of loan diversifies bank's lending with the requirement of the time. Its 'Credit Ceiling' is Up to tk. 5.00 Lac and 'term' is 2-5 years.

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h) House renovation loan:

The purpose of the loan is to help genuine house or flat owners (not developers) to undertake repairing or renovation works for better living or increased rental income. 'Credit ceiling' of the loan is Up to tk. 5.00 Lac and 'Term' is 5 year.

I) Personal loan:

The loan serves the purpose of meeting emergency financial expenses of service holders such as Medical treatment, Marriage, Maternity, Admission of Children,

Purchase of banks, Exam fees etc. Credit Ceiling of the loan is Up to tk.1.00 Lac and Term is at least 6 month but not more than 3 years.

Overdrafts:

When a current account holder is permitted by the banker to draw more than what stands to his credit, such ah advance is called an overdraft. ' it is an automatic coverage by the bank of all checks presented against the firm's account, regardless of the account balance'. Interest is calculated and charged only on the debit balances on daily product basis.

Generally two type of overdraft is exercised in the bank-

SOD (FO): It is allowed against financial obligation for promotion of economic and business activities.

SOD (GE): It is allowed to the traders for business promotion and economic activities.

Cash Credit:

Cash Credit is a continuous type of short term advance. 'Under this system, the banker specifies a limit, called the cash credit limit, for each customer, up to which the customer is permitted to borrow against the security of tangible assets or guarantees.' Two types of cash credit are exercised in ABBL—

a) Cash Credit (Hypothecation):

Hypothecation is a charge on company for a debt, but neither ownership nor possession passes to the creditors. In hypothecation, both ownership and possession remain under debtor. This type of credit is allowed to the traders and industrial borrowers for

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promoting trade and commerce and industries. This type of advance depends mainly upon the trustworthy of the party.

b) Cash Credit (Pledge):

In this case, possession of goods passes to the creditor or bank. It is allowed for promoting trade, commerce and industries of the country against pledge of stock in trade under Bank's control.

4.15) SME Loan:

Considering the volume, role and contribution of the SMEs, in the last two decades AB Bank has been patronizing this sector by extending credit facilities of different types and tenor. As of now 54% of the banks total loan portfolio is segmented to the SMEs which deserve all out attention in our plans, projections and forecasting.

As such the bank has emphasized on the following issues:

» To provide the best services to the SME sector» To increase the SME portfolio of ABBL significantly» To improve the quality of ABBL's portfolio.

4.16) FOREIGN EXCHANGE

Commercial bank collects the ideal saving from the people and supplies them into productive channels. The success of a commercial bank depends on how successfully it can be mobilizing saving and advance short and long term credit to business community. In addition to deposit mobilization and credit management, commercial bank as well as AB Bank of Bangladesh Limited deals in foreign exchange, which includes remittance of currency and financing, exports and imports. Foreign exchange dealing is one of the main functions of the bank and it generates a significant portions a bank’s income.

Foreign Trade is one of the most important segments of Bank Business. With the changes

of time international trade is diversifying gradually. Modern banks (like ABBL) are

playing significant role in foreign trade. Foreign trade Comprises of Import & Export 47 | P a g e

business. A lot of work relating to export and import are done by banks. While

performing those tasks bank should be very much cautious as lot of complexities are

there. Foreign trading is strictly controlled by the Bangladesh Bank. Therefore a

deviation or mistake will cost bank a more. Dealing in foreign trading needs a lot of

concentration, accuracy and technical know how as any mistake or malpractice may lead

to disaster for a Bank’s Business. Personnel should posses the above qualities to work in

this arena.

Summery of Foreign Exchange Procedure:

The buyer and the seller conclude a sales contract providing for payment by

documentary credit.

The buyer instructs his bank-the issuing bank to issue a credit in favor of the seller

(beneficiary).

The issuing bank asks another bank of the seller, to advise or confirm the credit.

The advising or confirming bank informs the seller that the credit has been issued.

As soon as the seller receives the credit and is satisfied that he can meet its terms and

conditions, he is in a position to load the goods and dispatch them.

The seller then sends the documents evidencing the shipment to the bank where the

credit is available (the nominated bank). This may be the issuing bank, or the

confirming bank or a bank named in the credit as the paying, accepting or the

negotiating bank. If the credit allows for negotiation by any bank there will not be

negotiates bank and documents be sent to any bank willing to negotiate.

The bank checks the documents against the credit. If the documents meet the

requirements of the credit, the bank will pay, accept or negotiate according to the

terms of the credit. In the case of a credit available by negotiation, the issuing bank or

the confirming bank will negotiate without recourse. Any other bank including the

advising bank if it has not confirmed the credit, which negotiates, will do so with

recourse.

The bank, if other than the issuing bank, sends the documents to the issuing bank.

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The issuing banks checks the documents & if they meet the credit requirements,

either

Effects payment in accordance with the terms of the credit, either to the seller if

he sends the documents directly to the issuing bank or to the bank that has made

funds available to him in anticipation, or

Reimburses in the pre-agreed manner the confirming bank or any bank that has

paid accepted or negotiated under the credit.

When the documents have been checked by the issuing bank and found to meet the

credit requirements, they are released to the buyer upon payment of the amount due

or upon other terms agreed between him and the issuing bank.

The buyer sends the transport document to the carrier who will then proceed to deliver

the goods.

s4.17)Foreign Exchange Mechanism

49 | P a g eBUYER/IMPORTER

SELLER/EXPORTER/

BENEFICIARY

PAYING / REIMBURSING BANK

INDENTOR

Issuing L/C

Sales/ purchase Contract

Adv

ises

or

conf

irm

s L

/C

Sources: International Tarde Finance - Journal, (Page - 30)

Bangladesh Institute of Bank Manage Management

4.18 IMPORT SECTION AND IMPORT FINANCING

Import is the flow of goods and services purchased by economic agents located in one country from economic agents located in another. Hence, import of merchandise

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ISSUING BANKL/C OPENNING

BANK

ADVISING BANKCONFIRMING BANKNEGOTIATING BANK

Forwards Documents

Makes payment

Mak

es P

aym

ent

Pre

sent

doc

umen

ts

Pay

or

Rei

mbu

rses

Instructs to pay or reimburse

Application for opening L

/C

Makes P

ayment against

documents

Subm

its documents

essentially involves two things: bringing of goods physically into the country and remittance of foreign exchange towards the cost of the merchandise and services connected with its dispatch to the importer. In case of import, the importers are asked by their exporters to open letters of credit so that their payment against goods is ensured.

Figure: Types of Importers

4.18.1 IMPORT PROCEDURE

An importer is required to submit the following documents in order to get a license to import through Rampura Branch of Dutch-Bangla Bank Ltd. –

A bank account with the branch

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Importer

Public Sector

(Govt. Organs. & Corpns.)

Private Sector

Commercial (finished products)

Industrial (raw materials,

machineries etc.)

Actual Users

Import Registration Certificate (IRC) Tax Payer’s Identification Number (TIN) Pro-forma Invoice Indent Membership Certificate from a recognized Chamber of Commerce & Industry or

Town Association or registered Trade Association Letter of Credit Authorization (LCA) Form properly filled in quintuplicate

signed by the importer L/C Application duly signed by the importer One set of IMP Form Insurance Cover Note with money receipt VAT Registration Certificate (for Commercial Importers) In case of Public Sector, attested photocopy of allocation letter issued by the

allocation authority, Administrative Ministry or Division specifying the source, amount, purpose, validity and other terms and conditions against the imports

Any such documents as may be required as per instructions issued/to be issued by the Chief Controller of Imports & Exports (CCI&E) from time to time.

On receipt of the LCA Form and the other documents, the branch officials carefully scrutinize the documents and lodge the same in their respective registration books and duly verify the signature of the importer put on the LCA Form.

To import, a person should be competent to be an “Importer”. According to the “Import & Export Control Act, 1950”, the office of the Chief Controller of Imports & Exports (CCI&E) provides the registration (IRC) to the importer. After obtaining the IRC, the person has to secure a “Letter of Credit Authorization” (LCA) registration from the Registration Unit of Bangladesh Bank. After getting the LCA registration, a person becomes a qualified importer. He is the person who requests or instructs the opening bank to open an L/C. he is also called the “Opener” or “Applicant” of the credit.

4.19 EXPORT SECTION & EXPORT FINANCING In the Export Section, two (02) types of L/Cs are handled –

1) Back-to-Back L/C2) Export L/C

Export financing can be done in two ways. These are –1) Pre-shipment Financing2) Post-shipment Financing

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Pre-shipment financing can be done by opening of back-to-back L/C and pre-shipment cash credit. In case of pre-shipment financing, 90% is financed by the bank. Of the portion, 75% is for back-to-back L/C and 15% is for pre-shipment cash credit. Example of post-shipment financing by bank is FBPN (Foreign Bill Purchase & Negotiation).

4.19.1 BACK-TO-BACK L/C:

In case of a “Back-to-Back” letter of credit, a new L/C (an import L/C) is opened on the basis of an original L/C (an export L/C). Under the “Back-to-Back” concept, the seller as the beneficiary of the first L/C offers it as a ‘security’ to the Advising Bank for the issuance of the second L/C. The beneficiary of the back-to-back L/C may be located inside or outside the original beneficiary’s country. In case of a back-to-back L/C, no cash security (no margin) is taken by the bank; bank liens the first L/C. In case of a back-to-back L/C, the drawn bill is usage/time bill.In Rampura Branch, papers/documents required for opening of back-to-back L/C are as follows –

Master L/C Valid Import Registration Certificate (IRC) and Export Registration Certificate

(ERC) L/C Application and LCAF duly filled in and signed Pro-forma Invoice or Indent Insurance Cover Note with money receipt IMP Form duly signed In addition to the above documents, the following papers/documents are also

required to export oriented garment industries while requesting for opening of back-to-back letter of credit –

Textile Permission Valid Bonded Warehouse License Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favor

of the applicant for quota items

In case the factory premises is a rented one, Letter of Disclaimer duly executed by the owner of the house/premises to be submitted. A checklist to open back-to-back L/C is as follows –

Applicant is registered with CCI&E and has bonded warehouse license The master L/C has adequate validity period and has no defective clause L/C value shall not exceed the admissible percentage of net FOB value of

relative Master L/C Usage Period will be up to 180 days.

4.19.2 PAYMENT FOR BACK-TO-BACK L/C:

In case of back-to-back L/C for 30-60-90-120-180-360 days of maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C Issuing Bank. For Garments Sector, the duration can be maximum 180 days. For importing machinery, without permission from Bangladesh Bank, Kawran Bazar Branch can

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authorize for 360 days. In such cases, the Manager of the branch used to exercise his discretionary power.

4.19.3 MODES OF PAYMENT FOR EXPORT BILLS UNDER L/C

The most common methods of payment under a L/C are as follows –

At Sight Payment Credit: In At Sight Payment Credit, the bank pays the stipulated sum immediately against the exporter’s presentation of the documents.

Deferred Payment Credit: In deferred payment credit, the bank agrees to pay on a specified future date or event, after presentation of the export documents. No bill of exchange is involved. In Karwan Bazar Branch, the payment is given to the party at the rate of D.A. 30-60-90-180-360 as the case may be. But the Head Office is paid under T.T. Clean Rate. The difference between the two rates is the exchange trading for the branch.

Negotiation Credit: In Negotiation Credit, the exporter has to present a bill of exchange payable to him in addition to other documents that the bank negotiates.

Acceptance Credit: In Acceptance Credit, the exporter presents a bill of exchange payable to him and drawn at the agreed tenor (that is, on a specified future date or event) on the bank that is to accept it. The bank signs its acceptance on the bill and returns it to the exporter. The exporter can then represent it for payment on maturity. Alternatively he can discount it in order to obtain immediate payment.

Social corporate responsibility

ABBF Donates Computers to Vocational Institute in Bhairob

Under the Bank’s CSR initiatives, Arab Bangladesh Bank Foundation (ABBF) donated four computers along with UPS, Printers and Computer Tables to Rajnagor Karigori & Banijjo College, Bhairob, Kishoregonj, which is the only vocational institute under the Board of Vocational Education in Bhairob Upozilla. As Computer learning has become compulsory for class XI & XII under the present academic curriculum, the college administration would be benefited by the computers given by ABBF to cope with increasing demand of computers for its students.

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Additional Managing Director of the Bank, Mr. Fazlur Rahman handed over the computers & accessories to the college authority at a simple ceremony at the Rajnagar Karigori & Banijjo College premises.

AB Bank sponsoring the exhibition- Traditional Boats of Bangladesh

The non-government organization Friendship in association with AB Bank organizing a boat exhibition tilted “Traditional Boats of Bangladesh” at the Bangladesh National Museum’s Nalinikanta Bhattashali Gallary from 23 March to 19 April, 2010. AB Bank is the main sponsor of the exhibition.

The exhibition will be displaying different aspects of traditional boats, including scale models, the building of the boats and the livelihood associated with boat-building. The exhibition has been organized to allow people to not only admire the beauty and craftsmanship of these collectable items but also to raise awareness of a heritage on its way to being lost.

To announce this exhibition, Friendship organized a press conference in the National Press Club on March 19, 2010. Among others Mr. Shamim A. Chaudhury, Deputy Managing Director AB Bank Limited, Mrs. Runa Khan, Executive Director Friendship, Mr. Tajul Majumder, Manager Taratari Shipyard and Mr. Javed Tariq, Vice President and Head of Corporate Affairs, AB Bank Limited were present in the press conference.

AB bank training for women entrepreneur AB Bank Limited organized a day-long training programme on Entrepreneurship Development for Women Entrepreneurs Wednesday at ABBL Training Academy in the city.

The training programme was arranged for SME customers with a focus to increase awareness regarding proper banking activities while applying for SME loans,it is a step forwards involving the vast number of women population in the economic activities of the country.

Mr. Sukamal Sinha Choudhury, GM of SME & Special Programmes Department, Bangladesh Bank inaugurated the programme.

Mr. Kaiser A. Chowdhury, President & Managing Director of AB Bank Ltd and Mr. Moshiur Rahman Chowdhury, Head of SME Banking Division, AB Bank Ltd were also present.

In his inaugural speech, Mr. Sukamal Sinha Choudhury highly appreciated the initiatives that banks are coming up with the respond from Bangladesh Bank. He believes that these activities would help promoting women entrepreneurs business competence therefore contributing towards the economic development of the country.

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Thirty five women entrepreneurs participated in the programme. Participants were awarded with certificates at the end of the training session.

CAMEL RATING

Bangladesh bank (BB) does the CAMEL rating every year. But it is not published. When BB does the CAMEL rating it takes information both from the balance sheet and from inside the bank. It can collect information from any part of the bank as it has the authority. So no shortcomings of the bank are unknown to the BB. Here I based on the data of Balance Sheet & published data. So, my rating may differ from the BB or any other rating.

The following factors are considered here-i. Capital Adequacy (C)

ii. Asset Quality (A)iii. Management Ability (M)iv. Earnings (E)v. Liquidity (L)

Capital Adequacy

The related factors to capital adequacy are: Capital adequacy: It is the ratio between the risk-weighted assets and the

shareholders equity. Now the minimum percentage is 8%. Leverage Ratio: It is the ratio of average assets and the shareholders equity.

By this ratio bank can assess the amount of assets by giving loan to increase his income. The standard ratio is 8%.

Return on Equity: It is the ratio between the shareholders equity and profit. This ratio is helpful to find out the amount of capital of a bank and it's proper utilization. The standard ratio is 30%.

Net worth protection: Classified loan is one of the main reasons for the bank's loss. Bank gives his loan from the shareholders equity, reserve and deposit. When the classified loan is within the amount of shareholders equity and reserve then bank possible loss is within the limit of bank. It will not affect the depositors. For this reason shareholder equity and reserve must cover the classified loan for the safety of the depositors. And this is the reason for which net worth protection is an important calculation.

Asset QualityLoan and advance is the main source of income to the bank. When a loan becomes classified, no income is there from that loan and there is a possible chance to incur loss

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from it. The classified loan affects the asset quality of a bank. The more the classified loan the more the asset quality goes down. The present standard ratio is 10%. Management QualityManagement quality is totally a qualitative factor. It can't be assessed by quantity. It is sometimes dependent on the Bank's organizing structure, work process flow, MIS, Accounting system, etc. Besides these, the followings also taken into consideration:

i. Per Capita Expenseii. Per Capita Profit

EarningsIt is calculated and dependent on the followings-

Return on Assets: It is the ratio of net profit & average assets. Asset is collected and utilized to increase the income. So, more the net income interns of assets, the more the ability of the assets to earn. The present standard ratio is 4%.

Net Investment Margin: The profit from investment is the difference between the income and expense of investment. The ratio of average earning assets and profit from investment is the net investment margin. The standard ratio is 6%.

Diversification Ratio: Interest from loan and advances is not the only source

of income now a day. Various types of fees and commission are also there. Almost 50% collected from these sources.

Liquidity

The following assesses the standard of liquidity: Investment-deposit Ratio: Liquidity and profit affect one another. If liquidity is

more, profit will be less because investment will be less. Again if over investment is there, liquidity problem may arise. So what will the amount to invest and what will be the liquidity must be determined on the basis of experience, to meet up the demand of depositor and to earn the maximum profit.

Ability to meet up the current Liability: It is the ratio of deposit and liquid assets. The more the ratio, the more the bank has the ability to meet up the current liability.

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Camel Rating Tables

RatingQuantitative Value

Capital Adequacy

Asset Quality

Earnings Quality & Quantity

Liquidity

Capital Adequacy Ratio

Classified Loan/ Total Loan

Return on Assets

Deposit/Liquid Asset

Deposit/Loan

Strong 1 9% 5.55% 85% 30% 60%Satisfactory 2 8% 10% 65% 20% 80%

Exact 3 7% 15% 45% 19% 85%

Marginal 4 6% 20% 35% 15% 90%Unsatisfactory 5 5% 21% Net Loss 10% 91%

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Average Value Rating1.0-1.4 Strong1.5-2.4 Satisfactory2.5-3.4 Exact3.5-4.4 Marginal4.5-5.0 Unsatisfactory

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Findings of the report

Findings of the report

SWOT Analysis

SWOT Analysis is the detailed study of an organization’s exposure and potential in

perspective of its strength, weakness, opportunity and threat. This facilitates the

organization to make their existing line of performance and also foresee the future to

improve their performance in comparison to their competitors. As though this tool, an

organization can also study its current position, it can also be considered as an important

tool for making changes in the strategic management of the Operation & Financial

Performance activities.

4.1.1 Strengths

AB Bank Limited has already established a favorable reputation in the banking industry

of the country. It is one of the leading private sector commercial banks in Bangladesh.

This bank has already displayed its strengths in operation & financial performance.

Compare to other competitor banks and financial organization it enjoys

strong position in operation & financial performance.

The bank has a wide image in the banking industry.

As our economy largely depends on import, ABBL mainly performs financial

activities to its client but they take special consideration over export finance as

well as foreign remittance service. And these activates play an effective role to

well socio-economic turnover of our country.

Monitoring and supervision activities in case of Financial Performance operation

are stunning and matured.

Keep strong documentation in operation & financial performance, for this ABBL

and its client feel more secured.

“Clients are the partners” the bank believes that. Any suggestions from clients are

heartily acceptable. Strengths in managerial skills, cohesion and avoiding

bureaucracy help the bank in creating valuable services to their customers.

Sophisticated automated system has been introduced.

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4.1.2 Weaknesses

Heavily depends on Head Office for decision making.

All branches are not equally not well decorative

4.1.3 Opportunities

In order to achieve higher growth, AB Bank Limited has to concentrate not only

one section of foreign trade business but also give simultaneous concentration

over all the sections.

Foreign Exchange business (export, import & remittance) has bright future in our

country. Export, Import & Remittance flow of Bangladesh growth is increasing

which suggests that there is an opportunity to flourish the operation & financial

performance in near future. ABBL has to take that chance by preparing up to date

strategic plan.

Operation & Financial performance hugely depends on political stability of a

country. After 1/11, in Bangladesh there is a good situation exist for foreign trade

and as banks are important player in foreign trade, it has good opportunity to

increase their financial performance activities.

For getting higher market share performing their financial activities, ABBL has to

be more efficient and swift in service.

Introduction of Online Banking throughout all branches within Bangladesh.

4.1.4 Threats

All sustain multinational and private commercial banks force enormous threats to

AB Bank Limited. If that happens the intensity of competition will rise further

and bank has to develop strategies to compete against foreign banks competition.

Foreign Bank like- Standard Chartered & HSBC has extensive network

worldwide which is an integral part in foreign trade. Both banks enjoy this

competitive advantage.

Certain Bangladesh Bank rules and regulation.

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BCG growth matrix

AB Bank Limited introduced many new services. Through their well-built network they

have been able to grab a significant share of the market. But recently due to some

government regulation and intense competition from some new players in the market AB

Bank Ltd. could not maintain the same growth as usual. So, as a whole, ABBL is in the

cash cow quadrant in the Boston Box.

High High Low

Star (*) Problem Child (?)

Cash Cow ($)

Dutch Bangla

Bank Ltd.

Pet (x)

Figure: BCG growth-share matrix.

4.3 Financial Ratio Analysis

Ratio analysis is a relatively simple yet powerful tool in diagnosing the financial

condition of an organization. No single ratio could begin to meet the burden imposed be

different needs. Thus five major categories of financial ratios have been developed, each

designed to address important aspect of the firm’s financial condition.

1. Liquidity ratio: Such as current ratio measure the quality and adequacy of current

assets to meet current liabilities as they come due.

2. Activity ratio: Such as fixed turnover, total assets turnover measure the efficiency

with which the firm is using its resources.

3. Financial leverage Ratio: SUCH AS Debt-ratio, Debt-equity ratio measure a firm’s

ability to service its debt.

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High

Low

Market Growth

Market Share

4. Profitability Ratio: Such as gross profit Margin, Operating profit margin, return on

total asset, etc. measure management effectiveness as indicated by the return on sales,

assets and owner’s equity.

Return on Asset:

Return on Asset=Earnings after tax/Total Assets

Table 09: Return on Assets (ROA) (%)

Year ROA

2009 1.20

2008 0.76

2007 0.50

2006 0.39

2005 0.07

Return on Equity:

Return on Equity=Earnings after Tax/Total equity

Table 10: Return on Equity (ROE) (%)

Year ROE

2009 18.32

2008 15.23

2007 10.64

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2006 7.24

2005 1.53

Price Earnings Ratio:

Price Earnings Ratio =    Current market share/price Earnings per share

Table 11: Price Earnings Ratio

Year Price Earnings Ratio

2009 17.21

2008 15.13

2007 11.68

2006 20.95

2005 53.89

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Capital Adequacy Ratio: Capital Adequacy Ratio (CAR) = (Tier One Capital +

Tier Two Capital)/Risk Weighted Capital

Table 12: Capital Adequacy Ratio

Year Capital Adequacy Ratio(% )

2009 10.16

2008 9.59

2007 9.17

2006 9.09

2005 9.17

EPS (Earning per Share):

Earnings per Share=Net profit for Shareholders/No. of Shares

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Table 13: Earnings per Share

Year EPS

2009 131.13

2008 89.72

2007 256.10

2006 93.08

2005 31.26

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5. Recommendation

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Recommendation

Recommendation

AB Bank Ltd. is a well known and reputed organization in the banking sector. The Bank has achieved the particular place among the country people of Bangladesh because of their well maintained standard. During my three month internship I have noticed positive attitude about ABBL among their clients. But maintaining a position is as tough as gaining the position. From my personal view point I have some recommendation for ABBL which will hopefully help to better maintain the achieved position. I am mentioning some points according to me

AB Bank Ltd. should increase some man power in some brunches so that officers can give more time to the client and work effectively.

Working environment of some old and busy branch is not up to satisfactory level; authority should keep that in consideration.

ATM Booth of ABBL is not widely spread in Dhaka and all over in Bangladesh. Maintenance of these ATM Booths should be in a proper way.

Some branch have accommodation problem for the clients. Some Branches can not accommodate all clients at a time.

AB Bank Ltd should open some new branch in some sweat commercial area, may be that can solve the accommodation problem to some extent.

Some Branch needs some more office equipment to maintain files, working environment and to keep pace with the work load. E.g. computer, printer, file shelf, etc. management should keep these in consideration.

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6. Conclusion

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ConclusionConclusion

There are a number of nationalized and foreign banks operating their activities in

Bangladesh. The ABBL is one of them. For the future planning and the successful

operation in achieving in its’ ABBL goal in this current competitive environment this

report can be a guideline.

There are computers almost in every branch in the AB Bank Limited; it is maintaining a network among them. The networking system obviously charges a high installation cost, but it will definitely reduce the overhead cost and an error free banking may be in progress. Moreover by adopting this system the bank join the modern banking along with e-commerce concept. The main problem is that the foreign banks and other private commercial banks have started providing these facilities. So introduction of these facilities are very necessary for surviving and thriving in the modern competitive banking.

Bank always contributes towards the economic development of a country. ABBL, compared with other banks are contributing more by investing most of their funds in fruitful projects leading to increase in production. It is obvious that right thinking of this bank including establishing a successful network over the country and increasing

Resources will be able to play a considerable role in the portfolio of development

financing in the developing country like ours.

ABBL continues to play its’ leading role in socio-economic development of the country

as a companion of Independent Bangladesh. Besides its’ traditional function such as

deposit mobilization, deployment of fund in trade, commerce, industry, agriculture,

import & export business, outward and inward remittance. ABBL has emerged as the

pioneer of playing key role in the country. On the other hand cash are properly used at

that time this bank reached in the top-level private bank in our country.

BIBLIOGRAPHY

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Reference Books:

1. International Trade and Foreign Exchange [Published by BIBM]

- S.M. Ahsan Habib & Md. Sajjdur Rahman

2. Foreign Exchange and Financing of Foreign Trade

- Syed Ashraf Ali

3. Essential Statistical Methods for Business

- Edward N. Dubois

Annual Reports, Manuals & others:

Annual Reports of AB Bank Limited - 2008-2009 Bangladesh Economic Review 2008, Economic Advisor’s wing,

Finance Division Ministry of Finance. Quarterly Economic Update Bangladesh by Asian Development Bank Economic Trends, Bangladesh Bank State of Bangladesh Economy – Early Signals of FY 2008, CPD Import Policy Order 2004-2008.

Ministry of Commerce, Government of the people’s republic of Bangladesh.

Export Policy 2004-2008. Ministry of Commerce, Government of the people’s republic of Bangladesh

Newsletters, Journal, Prospectus of AB BankWebsites:

www.abbankbd.com

www.siblbd.com

www.epb.gov.bd

www.mincom.gov.bd

www.bangladesh-bank.org

www.cpd-bangladesh.org

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