bi weekly reports.doc

STUDENT INTERNSHIP TIMESHEETS

Student's Name: Mr. Ananta Poudyal and Ms. Namrata Somani

Supervisor's Name: Mr. Rajan Manandhar

Date and Day Time Works Done and Problems encountered15th February, 2011(Tuesday)

10.00 to 18.00 Got orientation on "Letter of Credit and its operations in Nepal" Discussed on the procedures in operations of LC in Nepal

16th February, 2011(Wednesday)

10.00 to 18.00 Read handouts on "Letter of Credit" and files on the regulations on LC operations given by the supervisorObserved and studied files of LC of various clients

17th February, 2011(Thursday)

10.00 to 18.00 Learnt about import and export LC and its proceedingsObserved the use of codes given by ICC in LC documentationStudied and analyzed the LC files of clients and their differences

18th February, 2011(Friday)

10.00 to 15.00 Practiced the application of the NRB rules and LC codes of ICC in the LC documentsGave an oral examination on the knowledge of LC learnt and collected over the week to the supervisorProblem: Confusions on few regulations, Questions on effectiveness of some regulations

19th February, 2011(Saturday)

- HOLIDAY

20th February, 2011(Sunday)

10.00 to 18.00 Learnt on procedures, parties involved and documents required for opening, amendment and payment of LCObserved on the daily reporting of LC to NRB

Name of the Organization: Nabil Bank Ltd., Teendhara, Kathmandu, Nepal

Week: 15 th February, 2011 to 21 st February, 2011

Date and Day Time Works done and Problems encountered21st February, 2011(Monday)

10.00 to 18.00 Did the reporting of newly opened LCs to NRB Did cross-checking of the LC prepared by the bank with the LC application filled by the customer

Verified By:

__________________________Work Supervisor

Date: 22nd February, 2011





Week: 22 nd February, 2011 to 29 th February, 2011 Date and Day Time Works Done and Problems encountered22nd February, 2011(Tuesday)

10.00 to 18.00 Did the reporting of newly opened LCs to NRB Did cross-checking of the LC prepared by the bank with the LC application filled by the customer

23rd February, 2011(Wednesday)

10.00 to 18.00 Did the reporting of LC amendments to NRB Did cross-checking of the LC prepared by the bank with the LC application filled by the customer


10.00 to 18.00 Did the reporting of LC amendments to NRB Filed the LC documents in order as per the format advised by the supervisor


10.00 to 15.00 Did the reporting of LC payments to NRB Did cross-checking of LC with the application filled by the customerFiled the LC documents in order


- HOLIDAY


10.00 to 18.00 Did the reporting of LC payments to NRB Filed the LC documents in order Filled the BI BI NI formsProblem: Interpreting the BI BI NI forms

Date and Day Time Works Done and Problems encountered28th February, 2011(Monday)

10.00 to 18.00 Did the reporting of LC opening, payments and amendments to NRB Did cross-checking of the LC documentsFilled the BI BI NI forms

Verified By:

__________________________Work Supervisor

Date: 3rd March, 2011

BI-WEEKLY REPORT (From 15th February, 2011 to 1st of March, 2011)

We began our internship at the head office of Nabil Bank at Beena Marga, Teendhara, Kathmandu, Nepal from 15th February, 2011. We met the Head of CTO (Central Trade Operations). He introduced us to one of the head officers of CTO (Import) – Mr. Rajan Manandhar. Mr. Rajan Manandhar introduced us to the staffs of CTO and works done in that dept. He began by giving us orientation on the simple concepts about LC and its procedures. He also provided us with reading materials in print and paper to understand more about it.

ABOUT THE BANKNabil Bank Limited, the first foreign joint venture bank of Nepal, started operations in July 1984. Nabil was incorporated with the objective of extending international standard modern banking services to various sectors of the society. Pursuing its objective, Nabil provides a full range of commercial banking services through its 47 points of representation across the kingdom and over 170 reputed correspondent banks across the globe.

ABOUT THE DEPT. We started our work in CTO, particularly in the Documentary Credit section. CTO covers Import and Export Documentary Credits, Documentary Bills, Guarantee and Loans. The operation will be carried out by two units, (a) Centralized Trade Finance Division (CTFD) at Teendhara and (b) Trade Finance Executive (TFE) at the branch. TFE at the branch will act as the contact point directly interacting with the customers of the respective branch and the CTFD will perform the whole process of Trade Finance. Both the CTFD and TFE will maintain the time card for each and every step under the trade finance operation.

ABOUT “LETTER OF CREDIT ”A letter of credit (LC), also known as documentary credit, is an undertaking by a bank to make a payment to a named beneficiary within a specified time, against the presentation of documents which comply strictly with the terms of the letter of credit. It is the safest and most convenient means of paying for exports and import. It is widely used to effect payments in domestic and international trade.

As per the definition of International Chamber of Commerce (ICC) "documentary credit is any arrangement however named or described whereby a bank, (the issuing bank) acting at the request and in accordance with the instructions of a customer (the applicant), is to make payment to or to the order of a third party (the beneficiary) or is to pay, accept or negotiate bill of exchange (drafts) drawn by the beneficiary, or authorise

such payments to be made or such drafts to be paid, accepted or negotiated by a other bank against stipulated documents in compliance with stipulated terms and conditions."

The parties involved in the working of LC are applicant, issuing bank, advising bank, confirming bank, beneficiary, negotiating/collecting bank and reimbursing bank.

LC has lots of advantages. The buyer gets assurance that his bank will refuse payment to seller unless terms and condition given by him to his bank are as stipulated in the credit is met. The seller gets less apprehensive that payment for goods might be delayed or jeopardized by political acts or other problems in the buyer's country.

There are mainly ten kinds of LC. They are revocable, irrevocable, unconfirmed, confirmed, revolving, back to back, sight, time LC and stand by LC

The LC takes place in a flow from applicant to the beneficiary with the help of various financial institutions in the way. Firstly, the applicant approaches the issuing/ opening Bank with LC application form duly filled and requests the issuing bank to issue a Letter of Credit in favor of beneficiary. Then, the issuing bank issues a Letter of Credit as per the application submitted by an applicant and send it to the advising Bank, which is located in Beneficiary’s country, to formally advise the LC to the beneficiary. Then, the advising bank advises the LC to the beneficiary. Once the beneficiary receives the LC and if it suits his/ her requirements, he/ she prepare the goods and hands over them to the carrier for dispatching to the applicant. He/ She then hands over the documents along with the transport document as per LC to the negotiating bank to be forwarded to the issuing bank. Issuing bank reimburses the negotiating bank with the amount of the LC post negotiating bank’s confirmation that they have negotiated the documents in strict conformity of the LC terms. Negotiating bank makes the payment to the Beneficiary. Simultaneously, the negotiating bank forwards the documents to the issuing bank to be released to the Applicant to claim the goods from the carrier. The applicant reimburses the issuing bank for the amount, which it had paid to the negotiating bank. Finally, the issuing bank releases all documents along with the titled transport documents to the applicant.

ABOUT THE GOVERNING RULESSociety for Worldwide Interbank Financial Telecommunications (SWIFT) is the fastest and most secured mode of transmission of financial messages.The Uniform Customs and Practice for Documentary Credits (UCPDC) is a set of rules on the issuance and use of letters of credit. The UCPDC is utilised by bankers and commercial parties in more than 175 countries. The word Incoterm is the abbreviation of International Commercial Terms. Incoterms are the price terms used to define the responsibilities of the buyer and seller as to the cost, insurance, freight, export and import clearance and other charges incurred during the shipment of goods from the seller’s warehouse to buyers place.

ABOUT THE NRB REPORTINGWe need to report to central bank i.e. Nepal Rastra Bank(NRB) about the everyday transactions done in foreign currency. The NRB wants this data to control the flow of foreign currencies to and from the nation. Every bank that does the handling of foreign currencies is responsible for the daily reporting of such transactions. I learnt to use the software given by the NRB to the banks for such reporting. We need to report basically in three forms – newly opened LCs, amendments done in LCs and payments of LC. Special care has to be taken while reporting.

ABOUT THE CROSS CHECKING AND FILING OF LC DOCUMENTSWe also learnt how to prepare the files of the clients. We learnt the documents required to open LCs. They are - Proper Line of Credit, LC Application, Proforma Invoice/ Sales Contract, Bi Bi Ni Form -3, Firm registration certificate, Insurance Policy and Other required documents ( if required any). The LC documents prepared by the issuing bank (here Nabil Bank) needs to be cross checked with the application form filled by the customer to avoid future dilemmas. We also learnt about Bi Bi Ni 3 and Bi Bi Ni 4. Bi Bi Ni stands for “Bidesiya vinimaya niyamawali”. They are the documents required to facilitate the basic information about the LC to parties like NRB, Custom office, bank and the customer.




Date and Day Time Works Done and Problems encountered1st February, 2011(Tuesday)

10.00 to 18.00 Discussed on the operations of LC in Nepal Did the reporting of LCs to NRB Did cross-checking of the LC documentsLearnt how to close the files of LC whose operations have been completed

2nd February, 2011(Wednesday)

-PUBLIC HOLIDAY (Maha Shivaratri)

3rd February, 2011(Thursday)

10.00 to 18.00 Observed and studied files of LC of various clients Did the reporting of LCs to NRB Did cross-checking of the LC documentsClosed the LC files whose operations have been completed


10.00 to 15.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsLeant how to fill-up BI.BI.NI-3 forms


- HOLIDAY


10.00 to 18.00 PUBLIC HOLIDAY (Due to the demise of K.P.Bhattarai)

7th February, 2011(Monday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsFilled BI.BI.NI-3 forms in the LC files


Week: 1 st March, 2011 to 7 th March, 2011

Verified By:

__________________________

Work Supervisor

Date: 22nd March, 2011





Week: 8 th March, 2011 to 14 th March, 2011 Date and Day Time Works Done and Problems encountered8th March, 2011(Tuesday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsClosed the LC files whose operations have been completedFilled BI.BI.NI-3 forms in the LC files

9th February, 2011(Wednesday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsFilled BI.BI.NI-3 forms in the LC filesGave an oral examination to the supervisor


10.00 to 18.00 Cross checking of the NRB reported files of LCFiled the LC documents in order as per the format advised by the supervisor


10.00 to 15.00 Cross checking of the NRB reported files of LCDid cross-checking of LC with the application filled by the customerFiled the LC documents in order


-HOLIDAY


10.00 to 18.00 Did the reporting of LC payments to NRB Filed the LC documents in order Filled the BI BI NI forms

Verified By:

__________________________

Work Supervisor

Date: 22nd March, 2011

BI-WEEKLY REPORT (From 1st of March, 2011 to 14th of March, 2011)

A letter of credit is a written undertaking, or obligation of a bank made at the request of a customer (buyer / importer) to honor drafts or other demands for payments and acceptance made upon the Bank by the seller (or exporter), provided the seller has complied with the terms & conditions of the L/C.

Five parties involved in L/C transaction

i. Buyer (Importer)

ii. Carrier (Transporter)

iii. Seller (Consignor, Exporter, Shipper, Beneficiary)

iv. Buyer’s Bank (Opening Bank, Issuing Bank)

v. Seller’s Bank (Advising, Confirming, Negotiating Bank)

Steps on Letter of Credit:

i. A buyer and seller concludes a sales agreement

ii. The seller requests the buyer to open L/C

iii. The Buyer applies in his bank (issuing bank) for issuance of L/C

iv. The L/C contains terms agreed to in principle by buyer & seller

v. Effectively the issuing bank makes payment on behalf of its customer

vi. The seller ships the goods and present the shipping documents, L/C and draft to negotiating bank.

Vii. The negotiating bank examines documents against L/C’s and pays the seller. The bank deals with documents only, not goods.

Viii. The negotiating bank sends documents to buyer’s bank (issuing bank) and debits or arranges for reimbursement on the opening bank’s account.

ix. The opening (issuing) bank sends the documents to the buyer (importer) and debits the buyer’s account.

Major Documentations

i. Bill of Lading: It is a document used in foreign trade, similar in some respects to a delivery note. Bill of lading forms are supplied by the carrier (a steamship company). Bill of lading is a contract for delivery from one port of shipment to port of destination.

ii. Other Transport Documents: Rail Receipt, Truck Receipt, Parcel Post Receipt, Inland waterway bill of Lading (Canal, river, etc.), Airway Bill, etc

iv. Bill of Exchange: It is an unconditional demand for payment made by one party to another.

v. Commercial Invoice: A commercial invoice serves as an authoritative description of the goods shipped like cost of items per unit and total, description of items, number of items supplied, various transport charges & fees, etc

vi. Insurance Policy

vii. Certification of Origin: Normally issued by Chamber of Commerce

ix. Other Documents (if any): Weight Certificate, Packing List, Inspection Certificate, etc




Date and Day Time Works Done and Problems encountered15th March, 2011(Tuesday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsClosed the files of LC whose operations have been completedFilled-up BI.BI.NI-3 forms

16th March, 2011(Wednesday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsLearnt how to verify the reference numbers of newly created LCs in FINACLE

17th March, 2011(Thursday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsClosed the LC files whose operations have been completed Filled-up BI.BI.NI-3 forms

18th March, 2011(Friday)

10.00 to 15.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsFilled-up BI.BI.NI-3 forms

19th March, 2011(Saturday)

- HOLIDAY

20th March, 2011(Sunday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsVerified the reference numbers of newly created LCs in FINACLE

21st March, 2011(Monday)



Week: 15 th March, 2011 to 21 st March, 2011

Verified By:

__________________________Work SupervisorDate: 28th March, 2011





Week: 22 nd March, 2011 to 28 th March, 2011 Date and Day Time Works Done and Problems encountered22nd March, 2011(Tuesday)

10.00 to 18.00 Cross checking of the NRB reported files of LC Did cross-checking of the LC documentsClosed the LC files whose operations have been completedFilled BI.BI.NI-3 forms in the LC files

23rd March, 2011(Wednesday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsFilled BI.BI.NI-3 forms in the LC filesDone filing of the newly created files in the store

24th March, 2011(Thursday)

10.00 to 18.00 Done cross checking of the NRB reported files of LCDone filing of the newly created files in the storeDone filing of the dispatch copies(swift messages) of LC settlements

25th March, 2011(Friday)

10.00 to 15.00 Cross checking of the NRB reported files of LCDid cross-checking of the LC documentsFilled BI.BI.NI-3 forms in the LC filesDone filing of the dispatch copies(swift messages) of LC settlements

26th March, 2011(Saturday)

-HOLIDAY

27th March, 2011(Sunday)

10.00 to 18.00 Did the reporting of LC payments to NRB Filed the LC documents in order and cross-checked them tooFilled the BI BI NI-3 formsDone filing of swift messages of LC

settlementsEntered the value date in the work card of settled files

Date and Day Time Works Done and Problems encountered28th March, 2011(Monday)

10.00 to 18.00 Did the reporting of newly opened and amended LCs Filed the LC documents in order and cross-checked them tooFilled the BI BI NI-3 formsDone filing of swift messages of LC settlementsEntered the value date in the work card of settled files

Verified By:

__________________________Work Supervisor

Date: 28th March, 2011

BI-WEEKLY REPORT (From 15th of March, 2011 to 28th of March, 2011)

The regular works that we had been doing since the past few weeks, continued this week

too. We learnt few new works this week too.

We were assigned to enter data in the software given by Nepal Rastra Bank (NRB).

Every bank has to report, through the software, about the inflow and outflow of the

foreign currency to NRB. The newly opened, amended and payments of the LCs has to

be reported. This reporting helps NRB to manage the reserves of foreign currency and

prevent capital flight from the nation too. This is the major reason of this reporting.

We were also given the responsibility of cross-checking the LC documents. The

documents included the swift messages, application form and pro-forma invoice. We

cross-checked them so that all the documents match with one another. Any discrepancy

found would be reported to the senior to take actions. While cross-checking the

documents, we filled the BI.BI.NI-3 forms too. The information to be filled in the

BI.BI.NI.-3 forms was divided in two halves. The first half was filled by the applicant

himself. The second half was filled by the bank officials. The information that we had to

fill is – Import L/C No., Date of issue, Date of expiry, Amount of L/C, Payment sources,

Exchange rates applied, name of the advising bank, L/C payment term, etc.

Nabil Bank uses FINACLE as its banking software to manage its operations. We learnt

how to verify the reference numbers of newly created LCs in FINACLE.

After all the transactions associated with a LC are completed and the BIBINI-4 along

with the pragyapan patra is received from the custom office, we close the files. Before

closing the files, certain things have to be checked. They are – the LC no., signature of

the custom officer on the documents returned from custom, TBF no., LC value, etc. After

it is found error free, we close them and store them.

SWIFT (Society for Worldwide Interbank Financial Telecommunications) has been a

very important tool to transmit messages quickly and all over the world. It’s considered

to be the fastest and most secured mode of transmission of financial messages. It has a

pre-formatted template, requires specific values in each field, conditional values as well

in some fields, etc. Certain characters are not allowed e.g !, @, #, $, %, &, * etc.





Week: 29 th March, 2011 to 4 th April, 2011 Date and Day Time Works Done and Problems encountered29th March, 2011(Tuesday)

10.00 to 18.00 Did reporting of LCs in the NRB softwareDid cross-checking of the LC documentsFilled BI.BI.NI-3 formsClosed the LC files whose operations have been completedVerified the reference numbers of newly created LCs in FINACLE

30th March, 2011(Wednesday)

10.00 to 18.00 Cross checking of the NRB reported files of LC Did cross-checking of the LC documentsFilled BI.BI.NI-3 forms in the LC files

31st March, 2011(Thursday)

10.00 to 18.00 Cross checking of the NRB reported files of LCDid cross-checking of the LC documentsFilled BI.BI.NI-3 forms in the LC filesVerified the reference numbers of newly created LCs in FINACLE

1st April, 2011(Friday)

-PUBLIC HOLIDAY (Ghode Jatra)

2nd April, 2011(Saturday)

-HOLIDAY

3rd April, 2011(Sunday)

10.00 to 18.00 Did the reporting of newly opened LCs to NRB Filled the BI BI NI-3 formsDid cross-checking of the LC documentsCross checked the pro-forma invoices submitted by the applicants

Date and Day Time Works Done and Problems encountered4th April, 2011(Monday)

10.00 to 18.00 Did the reporting of LC payments in the NRB softwareFilled the BI BI NI-3 formsDid cross-checking of the LC documentsCross checked the pro-forma invoices submitted by the applicants

Verified By:

__________________________Work Supervisor

Date: 11th April, 2011





Week: 5 th April, 2011 to 11 th April, 2011 Date and Day Time Works Done and Problems encountered5thApril, 2011(Tuesday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsClosed the LC files whose operations have been completedFilled BI.BI.NI-3 forms in the LC files

6thApril, 2011 (Wednesday)


7thApril, 2011 (Thursday)

10.00 to 18.00 Did the reporting of LCs to NRB Did cross-checking of the LC documentsGot a CASE STUDY to analyze

8thApril, 2011 (Friday)

10.00 to 15.00 Cross checking of the NRB reported files of LCHad a Q&A session with work supervisorVerified the reference numbers of newly created LCs in FINACLE

9th April, 2011 (Saturday)

-HOLIDAY

10th April, 2011(Sunday)

10.00 to 18.00 Did the reporting of LCs in the NRB softwareFiled the LC documents in order Filled the BI BI NI formsCross checked the pro-forma invoices submitted by the applicants Done filing of swift messages of LC settlementsEntered the value date in the work card of settled files

Date and Day Time Works Done and Problems encountered11th April, 2011(Monday)

10.00 to 18.00 Had a Q&A session with a work supervisor Done filing of swift messages of LC settlementsEntered the value date in the work card of settled files

Verified By:

__________________________Work Supervisor

Date: 11th April, 2011

BI-WEEKLY REPORT (From 29th of March, 2011 to 11th of April, 2011)

This week turned out to be the most interesting among all other weeks as we had many

Q&A sessions with our supervisors. In one of the interactive sessions, we talked about

use of SWIFT, procedures in Confirmed LC, etc. In the other sessions, we talked about

the major rules of NRB in LC operations, actions to be taken by a bank in various

conditions, etc. All of the sessions were really fruitful as we collected a lot of information

and clarified many queries.

We also learnt about Incoterms. It is the abbreviation of International Commercial

Terms. Incoterms are the price terms used to define the responsibilities of the buyer and

seller as to the cost, insurance, freight, export and import clearance and other charges

incurred during the shipment of goods from the seller’s warehouse to buyers place.

Commonly known Incoterms are FOB (Free on Board), CIF (Cost, Insurance and

Freight), etc.

We also got to know about the commission and charges that Nabil Bank charged its

customers. The commission rate was 0.025% or NPR.1000 whichever is higher.

Similarly, we also got to know the swift charges for various nations, amendment charges,

etc.

Apart from the LC issuance, we also did filing of swift messages of settlement in their

respective files. We didn’t have much time to learn deeper about settlement, so we just

managed to get an overview of it. We learnt to enter value date in the work card of settled

files. Value date refers to the date on which settlement of LC has been done. We got to

know about the top 5 corresponding banks of Nabil Bank through which it communicates

mostly. They included ICICI, Citi Bank, Standard Chartered Bank Limited, etc.

We also got to know about the major clientele list of the bank who were the potential

customers.

This week we also learnt to enter data in FINACLE of LC issuance and get a LC

printed. It was a lengthy process and needed concentration, so that we don’t miss out data

to be entered. We realized that Finacle was not tough to handle, rather it just needed some

regular practice.