Internship Report

on

“Foreign Exchange Performance of National

Bank Limited”

Internship Report

on

“Foreign Exchange Performance of National Bank

Limited”

SUBMITTED TO:

Mahjabeen Ferdous

Assistant Professor

Department of Business Administration

Stamford University Bangladesh

SUBMITTED BY:

Niloy Saha

ID: BBA 054 16669

Department of Business Administration

BBA Program

Batch: 54 (Finance-A)

Stamford University Bangladesh.

Date of Submission: 11th January, 2018

LETTER OF TRANSMITTAL

11th January, 2018

Mahjabeen Ferdous

Assistant Professor

Department of Business Administration

Stamford University Bangladesh

Subject: Submission of the Internship Report.

Dear Madam,

It is my pleasure to present this Report on Foreign Exchange Performance Of

National Bank Limited as a requirement for completing my Bachelor of Business

Administration. I enjoyed preparing the report though it was challenging to finish

within the given time. In preparing this report, I have tried my level best to include all

the relevant information related to foreign exchange activities of National Bank

Limited. I have a strong belief that the report will fulfill your expectation and I have

tried to give my best effort so that I can prepare a solid report as per your instruction.

I would be very grateful if you accept my report.

Your kind consideration and cooperation will be highly appreciated.

All of my efforts will be successful if the report can serve its purpose.

Sincerely yours,

________ ____________

Niloy Saha

ID: BBA 054 16669

Department of Business Administration

BBA Program

Batch: BBA 54 (Finance-A)

Stamford University Bangladesh.

To Whom It May Concern

This is to certify that the internee report on “Foreign Exchange Performance of

National Bank Limited” For the degree Bachelor of Business Administration (BBA)

major in Finance from Stamford University Bangladesh carried out by Niloy Saha,

Student ID# BBA 054 16669 under my supervision. No part of the internship report

has been submitted for any degree diploma, title, or recognition before.

Mahjabeen Ferdous

Assistant Professor

Department of Business Administration

Stamford University Bangladesh

Internship Report

I here announce that the extensive study entitled

“Foreign Exchange Performance of National Bank Limited”

(Conducted on behalf of National Bank Limited)

Prepared in partial accomplishment of the Requirement for the award of degree

Bachelor of Business Administration

From

STAMFORD UNIVERSITY BANGLADESH

Is my original work and not put forward for

The award of any other degree / diploma / fellowship

Or other similar term or honor.

________ ____________

Niloy Saha

ID: BBA 054 16669

Department of Business Administration

BBA Program

Batch: 54 (Finance-A)

Stamford University Bangladesh.

ACKNOWLEDGEMENT

At first, all praises belongs to the mighty God, the most clement, most generous and

bounteous to all living creatures and their actions. In preparing this report of National

Bank Limited, I have received commendable support from all the employees of

National Bank Limited, Motijheel Branch.

I am very much grateful to my organizational supervisor Shamim Ara Haque, Senior

Principle Officer, National Bank Limited to give the opportunity to work on the

Motijheel branch. He has given me all kind official support to complete the report

perfectly. I like to thank Mahmud Al Hasan, Senior Assistant Vice President & 2nd

Man, National Bank Limited for helping me in every aspect for the completion of the

report. I am very much indebted to my supervisor Mahjabeen Ferdous, Assistant

Professor, Stamford University Bangladesh for giving me direction at different times

to prepare this report. It is his guided supervision that resulted in successful

completion and timely submission of the report.

EXECUTIVE SUMMARY

An internship program is very important and essential for acquiring experience

through learning and spreading the scope of knowledge. I have done my internship

program in National Bank Limited: Foreign Exchange Department and General

Banking Department, Motijheel Branch.

This internship report is aimed at providing a comprehensive picture to the areas of

Foreign Exchange performance of National Bank Limited. The report has been

divided into eleven parts. These are: Introduction, Corporate review of National Bank

Limited (NBL), Foreign Exchange, and Documents Used in Foreign Exchange

Business, Letter of Credit (L/C), Import, Export, Foreign Remittance, Findings and

Analysis, References.

National Bank Limited is one of the largest commercial Bank of Bangladesh. The

main objective of the Bank is to provide all of banking services at the doorsteps of the

people. The Bank also participates in various social and development programs and

takes part in implementation of various policies and promises made by the

Government. National Bank Limited plays a pioneering role in handling foreign trade

and foreign exchange transactions. With wide network of branches at home and a

large number of correspondent banks worldwide, it is handling the largest volume of

export-import business including homebound remittances. For this reason, Foreign

Exchange of the Bank is very much essential. But, now a day‟s banking sector of

Bangladesh is suffering the disease of default culture which is the consequence or

result of bad performance of most banks.

There are three types of modes of foreign exchange market, which are: Export

Financing, Import Financing and Foreign Remittance. Foreign Exchange Branch does

these foreign exchange activities vastly. In this report, I mention the overall operating

procedure of foreign exchange transaction of National Bank Limited (NBL). I also

mention the findings of my report and describe the recommendation to overcome the

limitation.

I have taken all the reasonable care to ensure the accuracy and quality to make the

report standard. And I believe that it has included all the necessary information to be

relevant.

Table of Content

CONTENTS PAGE

NUMBER Letter of Transmittal

Acknowledgment

Executive summary

Chapter 1 Introduction & Background of the study

1.1 Introduction

1.2 Background of the study & Rationale

1.3 Objectives of the Study

1.4 Scope of the report

1.5 Methodology

1.6 Limitations of the study

Chapter 2 Company Profile

2.1 History and heritage

2.2 Mission

2.3 Vision

2.4 Strategic priority

2.5 Core values

2.6 Organizational strategy

2.7 Functions of National Bank Ltd

2.8 National Bank foundation

2.9 Capital Structure

2.10 Organizational structure department

2.11 Organizational Structure of NBL

2.12 Management Level

2.13 Risk Management

2.14 Management Structure

2.15 HRD (Human Resources Department)

2.16 District Wise Branch Distribution

2.17 Financial Statement

2.17.1. Balance Sheet

2.17.2. Profit and Loss Statement (Income Statement)

2.17.3. Cash Flow Statement

Chapter 3 Foreign Exchange

3.1 Foreign Exchange

3.2 Foreign Exchange Market and Bangladesh

3.3 Foreign Exchange rate in Bangladesh

3.4 Foreign Exchange History in Bangladesh

3.5 Interbank transaction in foreign exchange

3.6 Foreign exchange reserve in Bangladesh

3.7 Category Wise Position of Interbank FX

transaction

3.8 Movement of Monthly Average of USD / BDT

Exchange Rate

Chapter 4 Foreign Exchange Department

4.1 Foreign Exchange Department

4.2 Flow chart of Foreign Exchange Department

Operation

Chapter 5 Export

5.1 Export

5.2 Export Transaction Procedures of NBL

5.3 Documentary Credit/Letter of Credit (L/C)

5.4 STEPS IN LETTER OF CREDIT OPENING

5.5 How to Letter of Credit work

5.6 Performance evaluation of National Bank Limited

(NBL), Motijheel Branch:

5.7 Name of Some Exported Items

Chapter 6 Import

6.1 Meaning of Import

6.2 Who is Importer

6.3 Types of Import

6.4 Name of Some Importers

6.5 Name of Some Imported Items

6.6 Goods Are not Importable

Chapter 7 Foreign Remittance of NBL

7.1 Meaning of Remittance

7.2 Types of A/C for Foreign Remittance

7.3 Process of Foreign Remittance

7.4 Bank with NOSTRO Account

7.5 Types Of Foreign Remittance

7.6 Inward Foreign Remittance

7.7 Outward Foreign Remittance

Chapter 8 Analysis

8.1 SWOT Analysis of the organization:

8.2 PEST Analysis

8.3 Ratio Analysis

Chapter 9 Findings

9.1 Major Findings

9.2 Policy Implications

9.3 Conclusion

9.4 Reference

9.5 Abbreviation

CV of Niloy Saha

Chapter-1

Introduction & Background of the study

1.1. Introduction:

The nature of this report is descriptive. So instead of doing any survey,

observation method is used to complete this qualitative research. I have tried to

collect all such information that will reflect the actual situation of the bank for

any report. I have collected various types of primary and secondary data while I

was performing my intern. I have collected various data from various sources by

face to face interview with the employees working in different departments of

National Bank Limited, Motijheel branch, personal investigation bankers of

different branches of NBL, circulars sent by Head office and maintaining daily

diary which contains all the activities that has been observed in the bank.

1.2. Background of the study & Rationale:

After completing my BBA from STAMFORD UNIVERSITY BANGLADESH, I

wanted to do Internship in a reputed Bank which would be helpful for my future

professional career. I got the opportunity to perform my internship in the National

Bank Ltd. I was sent to Motijheel Branch. It was a three months long practical

orientation program. This report is originated as the requirement of National

Bank Ltd.

Internship program offers an opportunity to know the environment of a

particular organization. By doing this program, I have developed and refined my

theoretical knowledge gained in the classroom. This program provides exciting

experience of planning, culture, behavior of employee and management style of

that organization, which helps me to fill the gap between theoretical and real

practical world.

Theoretical knowledge does not make a person perfect. To implement the

academic knowledge, practical knowledge related to it, is important. A perfect

consideration between theory and practice is important in the context of modern

business world. In order to resolve the dichotomy between theory and practice,

the Motijheel National Bank Limited internship program as a partial completion

of BBA program. This program is necessary for every student to complete his or

her academic degree. Internship program brings students closer to the business

theory and practical and thereby help them to substantiate their knowledge so that

they can prepare themselves to start a successful career.

Under the internship program, every student is assigned to an organization with a

view to acquire practical knowledge. After taking practical knowledge, each

student is required to prepare a report on the selected organization under the

guideline of his/ her assigned teacher.

As a participant in this program, I was place at National Bank Limited, Motijheel

branch, for a period of three months. As per the instruction of internship

supervisor, I was devoted to learn the banking operation of NBL. During the

tenure of my internship program, I worked in three sections of banking. However,

I have worked more vigorously in Foreign Exchange Department in particular.

Based on the learning and practical experience, I have prepared this report. It is

also mandatory to submit a report to the bank.

1.3. Objectives of the Study:

The main objective of the internship program is to formalize me with the real

market situation and help me learn how bookish concepts are used in the real

market. Therefore, from the very beginning of the study I have tried my level best

to conduct my internship with a view to achieve some specific objectives and I

have gone across the various department of the bank to acquire some

related information and functioning procedure regarding those department.

The objectives of the study are mentioned below:

1. To acquire knowledge about the different operations of a bank

2. To know the services those at banks provides for its customers.

3. To go through all the departments of a bank and observe what actually

happened in these departments.

4. To find out how the general banking system of a bank runs.

5. To observe the working environment in commercial banks.

6. To study existing banker-customer relationship.

7. To know the overall functioning of National Bank Ltd.

8. To have some practical exposures that will be helpful for my future

career.

1.4. Scope of the report:

This report has been prepared through extensive discussion with bank employees,

clients and officers and on the information gathered from the annual report and

prospectus of National Bank Limited. I have got the great opportunity to have an

in-depth knowledge of the General Banking of NBL.

1.5. Methodology:

To make the report more meaningful and presentable, two sources of data and

information have been used widely.

Sources of Data: Sources of data collection is divided into two ways. One of

them is Primary and another is secondary.

Primary sources: The “primary sources” are as follows:

Face-to-face conversation with the respective officers and staffs of the

Banks.

Informal conversation with the bankers.

Practical work exposure from the different desks six departments of the

branch.

Study of the relevant files as instructed by the officers concerned.

Personal diary (that contains every day experience in bank while undergoing

practical orientation).

Secondary sources: The “Secondary sources” of data and information are:

Annual Reports of National Bank Ltd.

Annual Report of other banks.

Periodicals published by Bangladesh Bank.

Various books, articles, compilations etc. Regarding general banking

functions, foreign exchange operations and credit policies.

Personal diary maintained while undergoing the practical orientation.

Data Analysis:

SWOT analysis

Ratio analysis

1.6. Limitations of the Study:

Although I have got the full co-operation from employees, clients officers of

NBL and they also gave me much time to prepare this report properly in the way

of my study, I have faced some difficulties, which made my conduction of the

program little hazardous.

Some of these are mentioned below:

1. It should be certainly mentioned that the time three months is very short

to get the total view of the banking functions.

2. The officers were quite busy with their regular activities. For this

reasons it was also a little problem to collect detail information from

them.

3. In some cases, they could not be able to supply me any information for

the reason that they have no printed documents.

4. Office secrecy was one of the most important problems. Disclosing of

some information was restricted.

5. In case of secondary data collection, there was very little secondary

information. There were few support books, reports, journals, etc.

moreover, the branch office had very little of this information. That‟s

why bulk of it had to be collected from the head office.

6. As the officers were very busy with their day-to-day work, they could

provide very little time.

Chapter-2

Company Profile

2.1. History and Heritage:

National Bank Limited has its prosperous past, glorious present, prospective future

and under processing projects and activities. Established as the first private sector

bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the

largest private sector Bank with the passage of time after facing many stress and

strain. The members of the board of directors are creative businessmen and leading

industrialists of the country. To keep pace with time and in harmony with national and

international economic activities and for rendering all modern services, NBL, as a

financial institution, automated all its branches with computer networks in accordance

with the competitive commercial demand of time. Moreover, considering its forth-

coming future, the infrastructure of the Bank has been rearranging. The expectation of

all class businessmen, entrepreneurs and general public is much more to NBL. At

present we have 194 branches under our branch network. In addition, our effective

and diversified approach to seize the market opportunities is going on as continuous

process to accommodate new customers by developing and expanding rural, SME

financing and offshore banking facilities.

The emergence of National Bank Limited in the private sector was an important event

in the Banking arena of Bangladesh. When the nation was in the grip of severe

recession, the government took the farsighted decision to allow the private sector to

revive the economy of the country. Several dynamic entrepreneurs came forward for

establishing a bank with a motto to revitalize the economy of the country.

National Bank Limited was born as the first hundred percent Bangladeshi owned

Bank in the private sector. From the very inception, it was the firm determination of

National Bank Limited to play a vital role in the national economy. We are

determined to bring back the long forgotten taste of banking services and flavors. We

want to serve each one promptly and with a sense of dedication and dignity.

The then President of the People's Republic of Bangladesh Justice Ahsanuddin

Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at

48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23,

1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong.

At present, NBL has been carrying on business through its 194 branches & Branches

spread all over the country. Since the very beginning, the bank has exerted much

emphasis on overseas operations and handled a sizable quantum of home bound

foreign remittance. It has drawing arrangements with 415 correspondents in 75

countries of the world, as well as with 37 overseas Exchange Companies located in 13

countries. NBL was the first domestic bank to establish agency arrangements with the

world famous Western Union in order to facilitate quick and safe remittance of the

valuable foreign exchanges earned by the expatriate Bangladeshi nationals. This has

meant that the expatriates can remit their hard-earned money to the country with

much ease, confidence, safety and speed.

NBL was also the first among domestic banks to introduce international Master Card

in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power

Card. The Bank has in its use the latest information technology services of SWIFT

and REUTERS. NBL has been continuing its small credit program for disbursement

of collateral free agricultural loans among the poor farmers of Barindra area in

Rajshahi district for improving their livelihood.

NBL focused on all key areas covering capital adequacy, maintaining good asset

quality, sound management, satisfactory earning and liquidity. As a consequence, it

was possible to a record growth of 175.51 percent with Tk. 8,809.40 million pretax

profit in the year under review over the preceding year. The net profit after tax and

provision stood at Tk. 6,860.34 million which was Tk. 2,070.47 million in the

previous year registering a 231.34 percent rise. The total deposits increased to Tk.

102,471.83 million being 33.37 percent increase over the preceding year. Loans and

advances stood at Tk.92,003.56 million in the year under report which was Tk.

65,129.289 million representing 41.26 percent rise over the preceding year. Foreign

trade stood at Tk. 144,255.00 million in 2010 compared to Tk. 115,939.00 million,

increased by 24.42 percent compared to that of the previous year. During 2010, the

bank handled inward remittance of Tk. 49,145.30 million, 10.73 percent higher than

that of the previous year. Return on Equity (ROE) registered a 77.84 percent rise over

the preceding year.

Since its inception, the bank was aware of complying with Corporate Social

Responsibility. In this direction, we have remained associated with the development

of education, healthcare and have sponsored sporting and cultural activities. During

times of natural disasters like floods, cyclones, landslides, we have extended our hand

to mitigate the sufferings of victims. It established the National Bank Foundation in

1989 to remain involved with social welfare activities. The foundation runs the NBL

Public School & College at Moghbazar where present enrolment is 1140. Besides

awarding scholarship to the meritorious children of the employees, the bank has also

extended financial support for their education. It also provided financial assistance to

the Asiatic Society of Bangladesh at the time of their publication of Banglapedia and

observance of 400 years of Dhaka City.

The Transparency and accountability of a financial institution are reflected in its

Annual Report containing its Balance Sheet and Profit & Loss Account. In

recognition of this, NBL was awarded Crest in 1999 and 2000, and Certificate of

Appreciation in 2001 by the Institute of Chartered Accountants of Bangladesh.

The bank has a strong team of highly qualified and experienced professionals,

together with an efficient Board of Directors who play a vital role in formulating and

implementing policies.

Bank Name: National Bank Limited.

Address: Dhaka Branch Location

48, Dilkusha Commercial Area, Dhaka – 1000.

Phone: +880-2-956-3081 / +880-2-956-3081

Fax: +880-2-956-3953, 966-9404

Email: ho@nblbd.com

Website: http://www.nblbd.com/

Year of incorporation: March 28, 1983

2.2. Mission:

Efforts for expansion of our activities at home and abroad by adding new dimensions

to our banking services are being continued unabated. Alongside, we are also putting

highest priority in ensuring transparency, account ability, improved clientele service

as well as to our commitment to serve the society through which we want to get closer

and closer to the people of all strata. Winning an everlasting seat in the hearts of the

people, as a caring companion in uplifting the national economic standard through

continuous up gradation and diversification of our clientele services in line with

national and international requirements is the desired goal we want to reach.

2.3. Vision:

Ensuring highest standard of clientele services through best application of latest

information technology, making due contribution to the national economy and

establishing ourselves firmly at home and abroad as a front ranking bank of the

country are our cherished vision.

2. 4. Strategic Priority:

To have sustained growth, broaden and improve range of products and services in all

areas of banking activities with the aim to add increased value to shareholders‟

investment and offer highest possible benefits to our customers.

2.5. Core Values:

The banking system of NBL has different core values on different stakeholders

including for the customers, employees, shareholders and communities. Customers

desire a most caring bank which will provide them the most courteous and efficient

service in every area of their business. The employees always want a Bank that will

promote well being in every aspect of their lives. The main goal of the shareholders is

to yield fair return on their investment through generating stable profit. The general

view of our communities is that they show the propensity to assume the role of

banking system to be social responsible and close adherence to national policies.

2.6. Organizational Strategy:

As the financial services industry is a very competitive industry, the main strategy of

NBL is the organic growth – to build branches and strengthen their distribution

network. They will continue to invest and expand in Bangladesh as fast as local

regulations allow.

The principle strategies are –

People - Attract, retain and reward top performers.

Profitable Growth - Growing sales and increase the revenues.

Execution - Performing with skill and speed.

Credit Quality - Maintaining credit quality and understand the role in managing

losses.

Customer Centered - Always providing exceptional customer service.

Ownership – The performance and results should be owned.

Efficiency - Lowering the costs and wise use of resources.

2.7. Functions of National bank Ltd:

Some general function of National Bank are given below-

1. To maintain all types of deposit Accounts.

2. To make investment.

3. To conduct of reign exchange business.

4. To conduct other Banking services.

5. To conduct social welfare activities.

6. To work for continues business innovation and improvements.

7. To bui1d up strong-based capita1ization of the country.

8. To ensure the best uses of its creativity, well disciplined, well manages and perfect

growth.

2.8. National Bank Foundation:

Keeping the view the great objective of contributing to expansion of education and

welfare of the society, the National Bank Foundation was set up in 1989. With

financial assistance of the Foundation, The National Bank Public School and College

has been established in Moghbazar Dhaka. There are a total of 820 students studying

in the school section from class 1st to 10th, while there are 120 students at the college

section. In 2006, a total of 70 students appeared at the SSC Examination, of which

87% came out successful. In the college section, a total of 90 students appeared at the

HSC Examination, of which 81% came out successful.

2.9. Capital Structure:

Particulars Amount (in Tk)

Core Capital:

Paid up capital 804,741,524

Statutory reserve 806,240,084

General reserve 482,723,327

Retained earnings as per profit and 409,471,121

loss account

Supplementary Capital:

1% general provision 307,425,523

Exchange Equalization account 41,371,514

Other reserve 385,176,688

Total 3,237,879,790

Table-2.1: The Capital Structure of NBL

*Source: NBL Annual Report 2016

2.10. Organizational Structure and Department:

Organizational setup of the National bank Limited is consisting of three

organizational domains. Firstly the central top management, which contains Board of

Directors, Managing Director, Additional Managing Director and Deputy Managing

director. The major responsibilities of this group are to take central decision and

transmit it to the second step. Secondly the executive level management, which

contains Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and

Assistant Vice Presidents. The major responsibilities of this part are to supervise and

control division/ department. Thirdly, the branch operation management, which

contains branch manager and other mid/ lower level management. The major

responsibilities of this part are to the 100 branches of this bank and report to the Head

Office from time to time.

2.11. Organizational Structure of NBL:

Chairperson (Owner) ↓

Board of Directors (Owners) ↓

Managing Director and CEO ↓

Deputy Managing Director (DMD) ↓

Senior Executive Vice President (SEVP) ↓

Executive Vice President (EVP) ↓

Senior Vice President (SVP) ↓

Vice President (VP) ↓

Senior Assistant Vice President (SAVP) ↓

Assistant Vice President (AVP) ↓

Senior Principal Officer (SPO) ↓

Principal Officer (PO) ↓

Senior Executive Officer (SEO) ↓

Executive Officer (EO) ↓

First Executive Officer (FEO) ↓

Junior Officer ↓

Trainee Assistant Officer (TAO)

*Source: Source of NBL.

* Flowchart-2.1: Organizational Structure of NBL

2.12. Management Level:

Chairman

Board of Directors

Executive Committee

Managing Director

Additional Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

First Assistant Vice President

Senior Principal Officer

Principal Officer

Senior Executive Officer

Management Trainee Officer

Executive Officer

Assistant Officer

* Flowchart-2.2: Management Hierarchy of NBL.

Top Management

Executive Level

Management

Mid Level

Management

Junior Level

Management

2.13. Risk Management:

Risk Management encompasses all the activities that affect its risk domain. Risks are

generally defined by the adverse impact on profitability of several distinct sources of

uncertainty. National Bank attaches highest priority to establish, maintain and upgrade

risk management infrastructure, systems and procedures. Adequate resources are

allocated in this regard to improve skills and expertise of relevant employees to

enhance their risk management capacity. The risk management guideline and other

policies and procedural guidelines are approved by the Board of Directors of NBL

and it is regularly reviewed to bring these up to the finest satisfaction level. The

degree and types of risk that a bank faces depend upon a number of factors such as its

size, complexity of business activities, volume technology operations etc. Risks are

normally classified within following 3 categories:

*Flowchart-2.3: Classify of Risk Management.

Every single risk may contribute to direct and/or indirect damage to the bank, and

business with financial implications that may be an issue in the short, medium and

long term.

2.14. Management Structure:

In 2001 National Bank Limited made commendable progress in all business, like

deposit, credit, fund management, investment, foreign remittance, credit card &

foreign exchange related business. Bank has expended business activities as holding

previously & parallel by diversification its investment to a new product. As a major

financier remarkable portion of total exports of the country. The total assets of the

bank were Tk38400.37 million as on 31st December 2005, which is higher than

previous year. This is the sign of good management. The management processes are

as follows:

2.14.1. Planning:

The strategic planning approach in NBL is top-down. Top management formulates

strategy at the corporate level, and then it is transmitted through the division to the

individual objectives. Board of directors or Executive committee usually takes the

decision. In this

Process lower level manager are detached in making process, even brainstorming of

lower level manager is absent in decision-making and planning process.

2.14.2. Organizing:

Organizing of the National Bank Limited is based on Departmentalization. The

organization is divided into twelve departments headed by Executive vice President or

Senior Vice President. In the National Bank Limited the whole operation is

centralized and authority is delegated by written guidelines. These guidelines are:

Operational manual approved by Head Office, where each aspect or banking

operation is elaborately defined.

Advance manual including advances limit for different management level.

Bad and doubtful recovery manual.

Code of conduct.

Foreign banking guidelines.

Central bank directives.

Different management position holders in departments and branches practice their

authorized power in different cases with administrative loophole.

2.14.3. Staffing:

Entry-level recruitment process of the National Bank Limited is conducted in three

ways. One way is recruitment of probationary officer. Each probationary officer has

one-year probation period. After completion of probation period the officer joins as

officer grade III (b). The career path of probationary officer is headed toward different

management positions. Second way of recruitment is to recruit non-probationary

officer who joins as a assistant officer. The career path of an assistant officer

is lengthier than probationary officer. The third way of recruitment is recruitment of

staff and sub-staff such as typist, messenger, driver, guard, attendant, cleaner and

other lower level positions. Promotion policy of NBL is basically based on seniority

basis. Sometimes, employees are promoted to the higher position for their outstanding

perfoffi1ance. However, it is found that the average length of a position held by an

employee is around five years.

2.14.4. Controlling:

The bank has strict control over its all-organizational activities. The Bangladesh Bank

directives indicate some control measures. Audits and inspection are conducted by

different parties to check whether the bank implement these control system properly

or not. The central bank conducts credit inspection by a team. The National Bank

Limited has audit and inspection department to take controlling measures in internal

operations. Audit and inspection team send to the branches now and then and is

responsible for preparing report that will be submitted to the chief Administration to

take necessary actions.

2.15. HRD (Human Resources Department)

The Human Resource Manager currently heads this department. The major

functions of this department are strategic planning and policy formulation for

Compensation, Recruitment, Promotion, Training and developments, Personnel

Services and Security. The HR department is very much concerned with the

discipline that is set up by the NBL group. NBL group has got strict rules and

regulations for each and every aspect of banking, even for non-banking

purposes. The Dress Code. All these major personnel functions are integrated in

the best possible way at NBL, which results in its higher productivity. The

Human resource officer monitors the employee staffing and administration

activities. The Training officer supervises Training, development & rotation

activities.

2.16. District Wise Branch Distribution:

National Bank Limited has total 179 branches all over the country. There are 42

Authorized Dealer Branch.

*Table-2.2: Branches of NBL.

District Number of Branch

Dhaka 100

Chittagong 32

Rajshahi 15

Rangpur 10

Sylhet 19

Khulna 10

Barisal 07

2.17. Financial Statement

2.17.1. Balance Sheet:

Particulars 2016 2015 2014 2013 2012

21,020,835,955 18,766,874,352 17,813,280,687 14,859,504,681 13,935,348,748

In hand (including foreign currencies) 2,566,153,043 2,301,844,946 2,181,316,440 2,350,521,500 2,677,259,183

Balance with Bangladesh Bank and it's agent

bank (including foreign currencies)18,454,682,912 16,465,029,406 15,631,964,247 12,508,983,181 11,258,089,565

3,059,969,383 8,318,634,416 3,535,896,025 5,624,337,221 3,465,241,917

In Bangladesh 1,133,106,050 6,054,058,454 940,498,680 1,896,062,848 736,963,279

Outside Bangladesh 1,926,863,333 2,264,575,962 2,595,397,345 3,728,274,373 2,728,278,638

3,091,300,000 1,495,300,000 98,300,000 98,900,000 849,100,000

60,665,879,535 59,658,523,102 54,885,523,925 56,827,520,761 54,326,463,832

Government 49,553,106,806 51,345,240,061 46,318,501,027 47,513,285,781 44,858,185,202

Others 11,112,772,729 8,313,283,041 8,567,022,898 9,314,234,980 9,468,278,630

209,383,074,511 186,179,451,869 172,964,721,444 151,098,985,890 126,169,786,806

Loans, cash credits, overdrafts, etc 205,393,057,850 181,723,092,553 167,325,501,311 146,270,580,076 121,633,914,771

Bills purchased and discounted 3,990,016,661 4,456,359,316 5,639,220,133 4,828,405,814 4,535,872,035

3,165,699,513 2,748,260,700 2,763,519,975 2,636,589,375 2,002,382,112

4,348,184,857 4,066,341,209 4,140,400,140 3,691,299,372 4,121,205,108

335,820,241 335,820,241 335,820,241 336,660,241 337,803,241

305,070,763,995 281,569,205,889 256,537,462,437 235,173,797,541 205,207,331,764

3,060,342,586 3,897,793,877 9,176,323,404 3,322,119,629 12,885,856,016

241,329,876,862 222,104,905,248 203,296,182,435 193,642,968,836 157,331,732,194

Current deposit and other account 21,659,650,401 20,720,154,666 19,967,086,570 19,121,953,740 17,140,389,788

Bills payable 5,611,244,593 2,501,292,434 2,624,680,314 2,225,679,010 2,025,057,936

Saving bank deposits 39,622,907,587 32,942,064,340 28,714,088,244 24,921,946,124 22,921,243,417

Fixed deposits 104,278,221,622 110,601,621,855 105,576,214,173 92,814,097,206 76,320,321,649

Term deposits 70,157,852,659 55,339,771,953 46,414,113,134 54,559,292,756 38,924,719,404

1,024,000,000 1,280,000,000 1,600,000,000 2,000,000,000 2,500,000,000

23,999,669,691 20,720,541,848 15,501,008,024 12,279,071,943 10,115,474,506

TOTAL LIABILITIES 269,413,889,139 248,003,240,973 229,573,513,863 211,244,160,408 182,833,062,716

36,202,874,856 33,557,964,916 26,963,948,574 23,929,637,133 22,374,266,048

Paid-up capital 19,753,779,120 17,177,199,240 15,615,635,680 14,196,032,440 14,196,032,440

Statutory reserve 11,392,420,005 9,707,793,205 8,439,142,029 7,411,663,610 6,713,680,908

Other reserve 1,091,968,708 4,014,930,622 1,274,947,661 900,929,703 610,387,280

Retained earnings 3,964,707,023 2,658,041,849 1,634,223,204 1,421,011,380 854,165,420

305,616,763,995 281,561,205,889 256,537,462,437 235,173,797,541 205,207,328,764

Balance with other banks and financial institutions

PROPERTY AND ASSETS

Cash

National Bank LimitedBalance Sheet (2012-2016)

Money at call and on short notice

Investments

Loans and advances

Fixed assets including premises, furniture and fixtures

TOTAL ASSETS

Other assets

Non-Banking assets

LIABILITES AND CAPITAL

Liabilities

Borrowing from other banks, financial institution and

agents

Deposits and other accounts

Total Liabilities and Shareholders' Equity

Total shareholders' equity

Shareholder's equity

Other liabilities

Subordinated bonds

2.17.2. Profit and Loss Statement (Income Statement):

Particulars 2016 2015 2014 2013 2012Interest income 18,947,931,710 19,504,685,819 20,621,010,559 18,981,405,720 19,103,179,268

Less: Interest paid on deposits and borrowings etc 14,872,877,573 16,571,691,845 16,511,700,458 16,166,135,843 13,679,661,151

Net interest income 4,075,054,137 2,932,993,974 4,109,310,101 2,815,269,877 5,423,518,117 Investment income 10,381,246,307 7,929,142,837 5,952,423,959 5,213,021,470 4,252,948,959

Commission, exchange and brokerage 1,327,775,031 1,501,224,230 1,699,384,658 1,806,869,913 1,496,571,591

Other operating income 534,926,231 713,295,389 754,480,472 956,484,125 868,942,329

12,243,947,569 10,143,662,456 8,406,289,089 7,976,375,508 6,618,462,879

Total operating income 16,319,001,706 13,076,656,430 12,515,599,190 10,791,645,385 12,041,980,996

Salaries and allowances 3,646,683,620 3,092,249,182 2,956,860,843 2,700,063,918 2,701,557,449

Rent, taxes, insurance, electricity etc 677,391,440 591,908,548 556,559,345 491,965,428 422,454,496

Legal expenses 26,524,444 25,148,904 24,708,834 33,950,173 14,669,791

Postage, stamp, telecommunication etc 77,754,500 79,549,115 76,737,432 79,124,089 68,635,677

Stationery, printing, advertisements etc 108,881,842 153,586,398 109,608,669 119,796,813 116,149,019

Managing Director's salary and allowances 10,148,295 7,496,452 6,678,709 10,331,291 11,040,000

Directors' fees and other benefits 6,046,513 3,336,004 2,445,639 2,249,035 15,154,668

Auditors' fees 500,000 450,000 450,000 425,000 400,000

Repairs, maintenance and depreciation 31,872,356 8,792,391 369,859,989 369,007,774 3,400,275,455

Charges on loan losses 657,454,086 466,477,221 1,345,510,729 3,017,758,260 329,208,113

Other expenses 322,610,609 387,519,131 343,786,906 427,060,096 1,234,240,198

Total operating expenses 5,565,867,705 4,816,513,346 5,793,207,095 7,251,731,877 8,313,784,866

Profit before provision 10,753,134,001 8,260,143,084 6,722,392,095 3,539,913,508 3,728,196,130 Profit before provision

Provision for loans and advances

Specific provision 1,112,000,000 1,560,000,000 365,000,000 270,000,000

General provision (including off - balance sheet items) 1,218,000,000 440,000,000 180,000,000

Provision from good borrowers 10,000,000

2,330,000,000 1,570,000,000 805,000,000 - 450,000,000

Provision for other classified assets - 346,887,206 780,000,000 50,000,000 -

Total provision 2,330,000,000 1,916,887,206 1,585,000,000 50,000,000

Profit before tax 8,423,134,001 6,343,255,878 5,137,392,095 3,489,913,508 3,728,196,130 Provision for taxation

Current tax 2,850,000,000 2,500,000,000 2,450,000,000 1,365,000,000 1,780,000,000

Deferred tax 5,262,174 (10,777,503) 27,098,612 8,322,900 7,283,199

2,855,262,174 2,489,222,497 2,477,098,612 1,373,322,900 1,787,283,199

Net profit after tax 5,567,871,827 3,854,033,381 2,660,293,483 2,116,590,608 1,487,912,931

Retained earnings brought forward from previous year 2,658,041,849 1,634,223,204 1,421,011,380 856,165,420 5,115,944,798

8,225,913,676 5,488,256,585 4,081,304,863 2,972,756,028 6,603,857,729

AppropriationsStatutory reserve (1,684,626,800) (1,268,651,176) (1,027,478,419) (697,982,702) (655,039,226)

Dividend 497,723,327 6% cash for 2012 (851,761,946)

10% bonus shares for 2013 (2,576,579,880) (1,561,563,560) (1,419,603,240) (5,592,376,410)

(4,261,206,680) (2,830,214,736) (2,447,081,659) (1,549,744,648) (5,749,692,309)

Retained earnings carried forward 3,964,706,996 2,658,041,849 1,634,223,204 1,423,011,380 854,165,420

Earnings per share (EPS) 2,082.00 1.95 1.70 1.49 1.05

National Bank LimitedProfit and Loss (2012-2016)

2.17.3. Cash Flow Statement:

Particulars 2016 2015 2014 2013 2012A) Cash flows from operating activities

Interest received 18,931,273,933 19,050,396,664 20,991,016,888 18,843,746,506 19,103,179,268

Interest paid (13,798,926,916) (16,258,519,811) (16,539,015,330) (15,278,856,150) (13,236,920,898)

Income from investment 5,274,124,548 5,339,512,655 4,889,892,619 4,787,697,219 3,238,529,141

Fees, commission, exchange and brokerage 1,327,775,031 1,501,224,230 1,699,384,658 1,806,869,913 1,496,571,591

Paid to emmplooyees (3,462,878,428) (3,103,081,638) (2,965,985,191) (2,712,644,244) (2,727,752,117)

Paid to suppliers (1,108,613,799) (1,022,377,278) (846,381,197) (820,123,100) (698,946,709)

Income taxes paid (2,367,642,260) (2,337,375,599) (1,442,616,790) (2,012,846,969) (3,097,930,756)

Received from other operating activities 534,824,468 712,121,600 750,445,900 811,773,079 760,548,473

Paid for other operating activities (322,605,002) (384,370,048) (343,783,735) (426,989,540) (415,024,814)

Operating profit before changes in operating assets and

liabilities 5,007,331,575 3,497,530,775 6,192,957,822 4,998,626,714 4,422,253,179

Increase/(decrease) in operating assets and liabilities

Sale of trading securities-quoted shares 79,177,010 47,324,474 646,380,260 943,892,362 372,106,974

Purchase of trading securities-quoted shares (38,714,801) (65,942,780) (827,787,249) (969,332,350)

Loans and advances to other banks

Loans and advances to customers (21,181,261,886) (6,658,477,357) (21,494,645,612) (27,946,957,344) (13,588,161,038)

Other assets (545,062,420) 66,382,432 (1,656,828,813) 548,940,154 1,704,394,723

Deposits from other banks 7,065,014,688 519,422,858 (4,548,616,552) 5,124,462,940 1,656,463,939

Deposits from customers 12,151,956,926 18,297,299,955 14,201,830,151 31,186,773,702 27,459,298,915

Other liabilities (1,123,110,292) 623,774,588 1,275,052,692 1,550,057,372 (410,559,233)

(3,592,000,775) 12,895,726,950 (11,642,770,654) 10,579,381,937 16,224,211,930

Net cash from /(used in) operating activities 1,415,330,800 16,393,257,725 (5,449,812,832) 15,578,008,651 20,646,465,109

B)Cash flows from investing activitiesProceeds from sale of securities 126,663,601,594 67,974,447,277 45,703,238,368 34,704,173,770 22,389,573,620

Payments for purchase of securities (127,541,944,025) (71,369,464,003) (44,429,018,237) (36,711,564,950) (47,442,866,600)

Purchase of property, plant and equipment (857,349,988) (291,462,310) (418,893,970) (943,128,728) (355,185,767)

Sale proceeds of fixed assets 114,818 10,003,383 4,451,699 184,965,653 160,763,939

Net cash from /(used in) investing activities (1,735,577,601) (3,676,475,653) 859,777,860 (2,765,554,255) (25,247,714,808)

C) Cash flows from financing activitiesBorrowings from other banks, financial institutions and agents (837,451,291) (5,278,529,527) 5,854,203,775 (9,063,736,387) 7,047,007,910

Redeemption of subordinated bonds (256,000,000) (320,000,000) (400,000,000) (500,000,000)

Cash dividend paid (851,761,946)

Net cash from /(used in) financing activities (1,093,451,291) (5,598,529,527) 5,454,203,775 (10,415,498,333) 7,047,007,910

D)Net increase /(decrease) in cash and cash-

equivalents (A+B+C) (1,413,698,092) 7,118,252,545 864,168,803 2,396,956,063 2,445,758,211

E)Effects of exchange rate changes on cash and cash

equivalents 3,718,362 13,478,511 3,924,407 (69,937,026) (67,224,087)

F) Cash and cash-equivalents at beginning of the year 28,588,413,468 21,456,682,412 20,588,589,202 18,261,569,165 15,883,035,041

G) Cash and cash-equivalents at end of the year (D+E+F)27,178,433,738 28,588,413,468 21,456,682,412 20,588,588,202 18,261,569,165

Cash and cash-equivalents at end of the year

Cash in hand (including foreign currencies) 2,566,153,043 2,301,844,946 2,181,316,440 2,350,521,500 2,677,259,183

Balances with Bangladesh Bank and its agent bank(s) 18,454,682,912 16,465,029,406 15,631,964,247 12,508,983,181 11,258,089,565

Balances with other banks and financial institutions 3,059,969,383 8,318,634,416 3,535,896,025 5,624,337,221 3,465,241,917

Money at call and on short notice 3,091,300,000 1,495,300,000 98,300,000 98,900,000 849,100,000

Reverse repo

Prize bonds 6,328,400 7,604,700 9,205,700 5,847,300 11,878,500

27,178,433,738 28,588,413,468 21,456,682,412 20,588,588,202 18,261,569,165

National Bank LimitedCash Flow (2012-2016)

Chapter-3

Foreign Exchange

3.1. Foreign Exchange:

Foreign exchange is the exchange of one currency for another or the conversion of

one currency into another currency.

Foreign exchange is the conversion of one country's currency into that of another. In a

free economy, a country's currency is valued according to factors of supply and

demand. In other words, a currency's value can be pegged to another country's

currency, such as the U.S. dollar, or even to a basket of currencies. A country's

currency value also may be fixed by the country's government. However, most

countries float their currencies freely against those of other countries, which keep

them in constant fluctuation.

Foreign exchange also refers to the global market where currencies are traded

virtually around the clock. The largest trading centers are London, New York,

Singapore and Tokyo. The term foreign exchange is usually abbreviated as "forex"

and occasionally as "FX."

3.2. Foreign Exchange Market and Bangladesh

Foreign Exchange Market allows currencies to be exchanged to facilitate

international trade and financial transactions. Evolution of the market in Bangladesh

is closely linked with the exchange rate regime of the country. It had virtually no

foreign exchange market up to 1993. Bangladesh bank, as agent of the government,

was the sole purveyor of foreign currency among users. It tried to equilibrate the

demand for and supply of foreign exchange at an officially determined exchange rate,

which, however, ceased to exist with introduction of current account convertibility.

Immediately after liberation, the Bangladesh currency taka was pegged with pound

sterling but was brought at par with the Indian rupee. Within a short time, the value of

taka experienced a rapid decline against foreign currencies and in May 1975, it was

substantially devalued. In 1976, Bangladesh adopted a regime of managed float,

which continued up to August 1979, when a currency-weighted basket method of

exchange rate was introduced. The exchange rate management policy was again

replaced in 1983 by the trade-weighted basket method and US the dollar was chosen

as intervention currency. By this time a secondary exchange market (SEM) was

allowed to grow parallel to the official exchange rate. This gave rise to a curb market.

At present, the system of exchange rate management in Bangladesh is to monitor the

movement of the exchange rate of taka against a basket of currencies through a

mechanism of real effective exchange rate (RFER) intended to be kept close to the

equilibrium rate. The players in the foreign exchange market of Bangladesh are

the Bangladesh Bank, authorized dealers, and customers. The Bangladesh Bank is

empowered by the Foreign Exchange Regulation Act of 1947 to regulate the foreign

exchange regime. It, however, does not operate directly and instead, regularly watches

activities in the market and intervenes, if necessary, through commercial banks. From

time to time it issues guidelines for market participants in the light of the country‟s

monetary policy stance, foreign exchange reserve position, balance of payments, and

overall macro-economic situation. Guidelines are issued through a regularly updated

Exchange Control Manual published by the Bangladesh Bank. The authorized dealers

are the only resident entities in the foreign exchange market to transact and hold

foreign exchange both at home and abroad. Bangladesh Bank issues licenses of

authorized dealership in foreign currencies only to scheduled banks.

The amount of foreign exchange holdings by the authorized dealers are subject to

open position limits prescribed by Bangladesh Bank, which itself purchases and sells

dollars from and to the dealers on spot basis. The size of each such transaction with

Bangladesh Bank is required to be in multiples of $10,000, subject to a minimum of

$50,000.

The foreign exchange market of the country is confined to the city of Dhaka. The 32

scheduled banks operating as authorized dealers in the inter-bank foreign exchange

market are not permitted to run a position beyond certain limits. In the event of

speculation on an appreciation of the value, an authorized dealer may buy more

foreign currencies than it needs, but at the end of the day it must maintain its limit by

selling excess currencies either in the inter-bank market or to customers.

The average monthly transactions of the inter-bank market accounted for $23.46

million in 1991-92 and crossed the $1 billion mark in 1998-99. The average monthly

turnover for the six months between July and December 2000 was $1.5 billion.

The phenomenal growth of inter-bank transactions was due mainly to relaxation of

exchange control regulations and expansion of the activities of the Bangladesh

Foreign Exchange Dealers Association (BAFEDA) formed on 12 August 1993.

The-interbank foreign exchange market of Bangladesh is still at its rudimentary stage.

The market is an oligopolistic one and is dominated by a few relatively large banks,

which have remained only as dealers instead of developing themselves into buyers or

sellers. The most widely used practice is spot transaction; this covers 95% of the total

transactions. Only forward transactions offer protection against foreign exchange

risks. Deals in foreign exchange market are usually confirmed over telephone,

followed by a written advice. Confirmed deals may be cancelled on payment of

necessary costs.

3.3. Foreign Exchange rate in Bangladesh

3.3.1. Inter-bank exchange rates as on 8th

November, 2017:

Currency Buy Sell

USD 82.65 81.65

EUR 95.78 92.92

GBP 108.71 105.53

JPY 0.73 0.70

CHF 84.17 79.80

AUD 62.13 58.51

CAD 61.59 58.01

SGD 62.06 58.45

Table-3.1: Inter-bank exchange rates as on 8th November, 2017:

*Source: National Bank Limited

3.3.2. Exchange Rate (Taka per US$)

Average End of the period

2012-2013 84.39 81.37

2013-2014 79.60 77.75

2014-2015 77.63 77.80

2015-2016 77.82 78.40

2017-July 80.60 81.60

*Table-3.2: Exchange Rate Movements as on 8th November, 2017 (Taka per US$)

*Source: Bangladesh Bank

3.4. Foreign Exchange History in Bangladesh

Up to 1990, multiple exchange rates were allowed under different names of export

benefit schemes such as, Export Bonus Scheme, XPL, XPB, EFAS, IECS, and Home

Remittances Scheme. This led to a wide divergence between the official rate and the

SEM rate. The situation also gradually gave rise to a number of conflicting

regulations, poor risk management, and various types of implicit or explicit

government guarantees to the users of foreign exchange. This resulted in a number of

macro-economic imbalances prompting the government to adjust the official rate in

phases and to liquidate its difference with the rate at SEM. The two rates were finally

unified in January 1992. The first step towards currency convertibility was taken on

17 July 1993 and this marked the beginning of a relatively open foreign exchange

market in the country. Until then the Bangladesh Bank used to declare mid-rate along

with the buying and selling rates for dollar applicable to authorized dealers. Initially

the spread was BDT 0.10, which was gradually widened to BDT 0.30.

At present, the system of exchange rate management in Bangladesh is to monitor the

movement of the exchange rate of taka against a basket of currencies through a

mechanism of real effective exchange rate (RFER) intended to be kept close to the

equilibrium rate. The players in the foreign exchange market of Bangladesh are the

Bangladesh Bank, authorized dealers, and customers. The Bangladesh Bank is

empowered by the Foreign Exchange Regulation Act of 1947 to regulate the foreign

exchange regime. It, however, does not operate directly and instead, regularly watches

activities in the market and intervenes, if necessary, through commercial banks. From

time to time it issues guidelines for market participants in the light of the country‟s

monetary policy stance, foreign exchange reserve position, balance of payments, and

overall macro-economic situation. Guidelines are issued through a regularly updated

Exchange Control Manual published by the Bangladesh Bank.

3.5. Interbank transaction in foreign exchange

The interbank market is the top-level foreign exchange market where banks exchange

different currencies. The banks can either deal with one another directly, or through

electronic brokering platforms. The Electronic Brokering Services (EBS) and Reuters

Dealing 3000 Matching are the two competitors in the electronic brokering platform

business and together connect over 1000 banks. The currencies of most developed

countries have floating exchange rates. These currencies do not have fixed values but,

rather, values that fluctuate relative to other currencies.

The interbank market is an important segment of the foreign exchange market. It is a

wholesale market through which most currency transactions are channeled. It is

mainly used for trading among bankers. The three main constituents of the interbank

market are:

The Spot market

The Forward market

SWIFT

The interbank market is unregulated and decentralized. There is no specific location

or exchange where these currency transactions take place. However, foreign currency

options are regulated in the United States and trade on the Philadelphia Stock

Exchange. Further, in the U.S., the Federal Reserve Bank publishes closing spot

prices on a daily basis.

3.6. Foreign exchange reserve in Bangladesh

Foreign Exchange Reserves also known as Official Reserves and International

Reserves are the foreign assets held or controlled by the central banks. The reserves

themselves can either be gold or a specific currency like the dollar or the euro. They

can also be special drawing rights and marketable securities denominated in foreign

currencies like treasury bills, government bonds, corporate bonds and equities and

foreign currency loans. The reserves are generally used to finance the balance of

payments imbalances or to control exchange rates.

3.7. Category Wise Position of Interbank FX transaction.

The foreign exchange market (Forex, FX, or currency market) is a

global decentralized or over-the-counter (OTC) market for the trading of currencies.

This market determines the foreign exchange rate. It includes all aspects of buying,

selling and exchanging currencies at current or determined prices. In terms of trading

volume, it is by far the largest market in the world, followed by the Credit market.

The foreign exchange market is the mechanism by which participants: transfer

purchasing power between countries; obtain or provide credit for international trade

transactions, and minimize exposure to the risks of exchange rate changes.

US dollar involved in 87% of all transactions. London is the largest FX market.

Only 11% of daily spot transactions involve non- financial customers. 66% of all

foreign exchange transactions involve cross-border counterparties. Largest of all

financial markets with average daily turnover of over $2 trillion.

One way to deal with the foreign exchange risk is to engage in a forward transaction.

In this transaction, money does not actually change hands until some agreed upon

future date. A buyer and seller agree on an exchange rate for any date in the future,

and the transaction occurs on that date, regardless of what the market rates are then.

The duration of the trade can be one day, a few days, months or years. Usually the

date is decided by both parties. Then the forward contract is negotiated and agreed

upon by both parties.

3.8. Movement of Monthly Average of USD / BDT Exchange Rate.

Here is monthly movement of USD / BDT. It‟s show from 10th

October, 2017 to 07th

November, 2017. It‟s started from 82.15 BDT (USD 1) to 83.30 BDT (USD 1).

*Flowchart-3.1: Monthly BDT vs. USD exchange rate movement.

*Source: www.exchange-rates.org

Chapter-4

Foreign Exchange Department

4.1. Foreign Exchange Department

Foreign Exchange Department is the international department of a bank. It deals

globally. It facilities international trade through the various modes of services it

possess. If the branch is an authorized dealer in foreign exchange market, it can remit

foreign exchange from home country to foreign countries. The department mainly

deals with foreign currencies. Hence it is called foreign exchange department. The

department brides with the Export, Import and Foreign Remittance.

4.2. Flow chart of Foreign Exchange Department Operation

*Flowchart-4.1: Functions usually done by Foreign Exchange department of NBL. *Source: FED of NBL.

Chapter-5

Export

5.1. Export

An export is a function of international trade whereby goods produced in one country

are shipped to another country for future sale or trade. The sale of such goods adds to

the producing nation's gross output. If used for trade, exports are exchanged for other

products or services in other countries.

5.2. Export Transaction Procedures of NBL

Export L/C operation is just reverse of the import L/C operation. For exporting goods

by the local exporter, bank may act as advising banks and collecting bank (negotiation

bank) for the exporter. NBL also has the capacity to support the exporters in

Bangladesh. There are basically 2 types of L/C‟s - Local L/C and Foreign L/C, which

for the commercial banks to deal with. NBL also deals with these 2 kinds of L/C‟s.

5.2.1. Registration for the Exporter to Export in Abroad

In the export policy of Bangladesh any one cannot export goods in abroad. To export

goods an exporter needs a valid Export Registration Certificate from the Chief

Controller of Import and Export (CCI&E). Exporters find an Export Registration

Certificate (ERC) number which is incorporate on Export form and papers connected

for obtaining Export Registration Certificate. A Bangladeshi exporter has to apply to

the controller or joint controller or Deputy Controller or Assistant Controller of

Import and Export to get an ERC. The ERC have to renew every year. An exporter

can do this registration from Dhaka, Chittagong, Sylhet, Comilla, Barisal, Borga,

Rangpur, Dinajpur and from Mymensingh. The following documents are required for

ERC-

1. National ID card

2. Memorandum and Article of Association

3. Certificate of Incorporation in case of limited company.

4. Trade license.

5. Bank statement.

6. Assets Certificate.

7. Income Tax certificate

8. TIN certificate

9. BIN certificate

10. Membership of chamber of Commerce.

5.3. Documentary Credit/Letter of Credit (L/C):

Letter of Credit is an undertaking by a banker of the importer to the exporter, to the

effect that the amount of the L/C will be duly paid. The banker on behalf of the

importer issues the L/C in favor of the exporter (beneficiary) and forwards the same to

the exporter to the effect that the bill drawn by him shall be duly accepted and paid. It

creates confidence in the mind of the exporter so far as payment of the bill is

concerned. It is also facilitate the exporter to get the benefit of discounting the bill

before the date If maturity. Now in every bank L/C is transferred and verified through

SWIFT which is the genuineness of verification.

*Figure-4: Functions usually done by Foreign Exchange department of NBL.

*Flowchart-5.1: The process of Letter of Credit (L/C).

5.4 STEPS IN LETTER OF CREDIT OPENING

On receiving the document or papers from the importer the letter of credit opening

bank is to perform the following function in connection with opening the letter of

credit:

i. To scrutinize the document thoroughly and to consult with import policy,

Bangladesh Bank and International Division‟s circular.

ii. To prepare and “offering sheet”. This offering sheet is nothing but a

prescribed office note on which the branch manager will sanction the margin

to be obtained from the importer.

iii. Commission of letter of credit to be calculated as 50% of the total amount

equivalent to Bangladesh currency.

iv. P&T charges to be realize for taka 100 (fixed charge) if the letter of credit

dispatched through Airmail. If it is a cable or telex letter of credit the P&T

charges to be realized at actual.

v. Foreign correspondents adjusting charges (FCC) to be realized TK.1500 (fixed

amount).

vi. To make entry in “letter of credit opening register”.

vii. To dispatch the letter of credit as follows:

• First and second copy – Advising Bank, which in turn forward the

original copy of the exporter.

• Third copy – Reimbursing Bank.

• Fourth & Fifth copy – Importer.

• Sixth copy – C.C.I. & E.

• Seventh to Ninth copy – Letter of credit opening bank‟s copy.

5.5. HOW TO LETTER OF CREDIT WORK

*Flowchart-5.2: The Processing of Letter of Credit.

5.6. Performance evaluation of National Bank Limited (NBL), Motijheel

Branch:

Exporter Name November, 2016 ($) December, 2016 ($)

Britannia Label BD Ltd. 4,099 14,317.77

Ultimate Fashions Ltd. 810,3103.84 53,459.41

Ewings Garments & Textile 26,455 4 0,740.82

Padma Satel Arab Fashion 72,547.17 4,09,587.62

Baig Trimming Ltd. 4,628.94 22,083.35

Total 918,040.95 10,21,288.97

*Table-5.1: Performance evaluation of NBL.

*Source: NBL Motijheel Branch.

5.6.1. Analysis and results:

In 2016 the growth in L/C of Motijheel branch was Four times higher than

November, 2014. So from the diagram I can say the performance of Motijheel

branch (NBL) in 2014 was excellent.

5.7. NAME OF SOME EXPORTED ITEMS

Name of commodity

Jute goods

Chemical

Tea

Leather

Fish and shrimp

News print

Fertilizer

` *Table-5.2: Some Exported items by NBL.

*Source: NBL Motijheel Branch.

Chapter-6

Import

6.1. MEANING OF IMPORT

A good or service brought into one country from another country in a fair and

acceptable fashion, typically for use in trade. Imported Goods or services introduce

domestic consumers to newer thinks by foreign producers.

Companies usually import goods and services to supply to the domestic market at a

cheaper price and provide goods that are superior compared to goods manufactured in

the domestic market.

6.2. WHO IS AN IMPORTER?

The person who deals in import business obtaining import Registration Certificate

(IRC) in terms of importers, exporters and indenters (Registration) order – 1981 from

the CCI&E submitting the following papers is treated as importer.

1. National ID card

2. Memorandum and Article of Association

3. Certificate of Incorporation in case of limited company.

4. Trade license.

5. Bank statement.

6. Assets Certificate.

7. Income Tax certificate

8. TIN certificate

9. BIN certificate

10. Membership of chamber of Commerce.

6.3. TYPES OF IMPORT

There are two types of import-

a. Commercial Import.

b. Industrial Import.

Commercial Import: Importer does commercial import only for trading purpose.

These products are finished goods. Such as; rice, wheat, soybean oil etc.

Industrial Import: Importer does industrial import for industrial use only. These

products are raw materials and capital machinery. Such as; raw cotton, crude oil etc.

6.4. NAME OF SOME IMPORTERS

NAME NAME

Everwin Chemicals Ltd Fujita Corporation

M/S Nourish Poultry &Hatchary Ltd Imperial Dye Cam Company Ltd.

Nourish Grand Parents Ltd Saka International

Tokeo Enterprise M/S The IbneSina Trust

SatataShomvar Samin Enterprise

A.J Enterprise M.H. Enterprise

M/S UniqMarbel&Grnite Ltd. Tausif International

K.N Enterprise Tokeo Enterprise

Al Amin Agency M/S A.H Corporation

*Table-6.1: Some Importers of NBL.

*Source: NBL Motijheel Branch.

6.5. NAME OF SOME IMPORTED ITEMS

NAME NAME

Rice Wheat

Sugar Cements

Milk Food Scrape vessel

Refined Oil Paper

Crude Oil Raw cotton

Dry Fruits Textile Fabrics

Pulses Chemical products

Onions Capital Machinery

Ginger Others Machinery

Motor Vehicles Computer &accessories

Drugs & Medicine Coals

*Table-6.2: Some Imported items.

*Source: NBL Motijheel Branch.

6.6. GOODS ARE NOT IMPORTABLE

The following types of goods are not importable-

Books, Newspaper, periodicals, documents and other papers, posters

photographs, films, gramophone records, audio and video cassette

tapes etc. containing matters likely to outrange the religious feeling

and beliefs of any class of the citizen of Bangladesh.

Unless otherwise specified in this order, old, second-hand and

recondition goods, factory reject add goods of job-lot or stock-lot of

secondary or substandard quality.

Maps, chart and geographical globes which indicate the territory of

Bangladesh but do not do so in accordance with the maps published by

the department of survey, Government of the people‟s republic of

Bangladesh.

Horror comics, obscene and subversive literature including such

pamphlets, posters, newspaper, periodicals, photographs, films,

gramophone records audio and video cassette tapes etc.

Reconditioned office equipment, photocopier, type writer machine,

telex, phone, computer and fax.

Unless or otherwise specified in this order, all kinds of waste.

Goods hearing words or inscriptions of a religious connotation the use

or disposal of which may injure the religious feeling and beliefs of any

class of the citizen of Bangladesh.

Goods bearing any obscene picture, writing inscription or visible

representation.

Chapter-7

Foreign Remittance of NBL

7.1. Meaning of foreign Remittance:

The word “Remittance” originates from the word “remit” which means to transmit

fund. In banking terminology, the word remittance means “transfer of fund one place

to another”. When money transferred from one country to another is called “Foreign

Remittance”. That means foreign remittance is the transfer of foreign currency from

one country to another country.

7.2. Types of Account for Foreign Remittance:

NOSTRO A/C

When a Bank maintains a Foreign Currency account with a foreign Bank abroad

the account is called NOSTRO account. NOSTRO account means “our Account

with you”.

Example:

If National Bank Limited maintains a US Dollar account with American Express

Bank, New York, then it is a NOSTRO account of NBL.

VOSTRO A/C

When foreign bank maintains a convertible taka account with a Bangladeshi bank

or with its branch in Bangladesh, the taka account is called VOSTRO account.

VOSTRO account means “your account with us”.

Example:

If American Express Bank and New York maintains taka account with the help of

NBL then that taka account is a VOSTRO account for NBL.

What is the Nostro account for a bank in a particular country is a Vostro account for

the bank abroad maintaining the account thus the account of NBL with Standard

Charted Bank, New York, regarded as its Nostro account held with Standard Charted

Bank, New York. While Standard Charted Bank, New York, regards it as its Vostro

account held for NBL.

LORO A/C

When two Banks maintain two NOSTRO accounts with a same foreign Bank in

abroad, then one Bank‟s NOSTRO account is Loro account for another Bank.

Loro account means “their account with you”. Account maintained by third party

is known as Loro account.

Example:

NBL & Agrani Bank both maintains a NOSTRO account No 1 & 2 respectively

with American Express Bank New York. Then NOSTRO account 1 & 2 are

LORO account for each other.

7.3. Process of Foreign Remittance:

Fund transfer from one country to another country goes through a process which is

known as remitting process. National Bank Limited has 175 domestic branches. The

bank has “Nostro Account” with a foreign bank Standard Charted Bank, New York.

Bangladeshi expatriates are sending foreign remittances to their local beneficiary,

through that account.

Now, the Bangladeshi expatriates will contact with Standard Charted Bank

to remit fund to Bangladesh.

Then Standard Charted Bank will credit the “NOSTRO A/C” of NBL and

send the message through SWIFT.

Next the local bank‟s Head Office international division will receive telex

message and the TFMD will record the advice and generate the advice

letter to the respective branch of the bank.

The branch will first decode the test, verify signature and check the

account number and name of the beneficiary.

After full satisfaction, the branch transfers the amount to the account of

the beneficiary and intimates the beneficiary accordingly.

But sometimes the complexity arises, if the foreign Bank has no

“NOSTRO A/C” in which country where the expatriates want to remit

fund. Then the Foreign Bank has to take help of a third bank who has

“NOSTRO A/C” with intended Bank.

7.4. Banks with NOSTRO Account:

In order to meet the customer needs for International Trade, the Bank has developed a

wide network with more than 580 Banks all over the world. Some Banks with

NOSTRO A/C are:

Standard Chartered Bank, New York, USA.

Mashreq Bank PSC, New York, USA.

ICICI Bank Limited, Hongkong.

Commerz Bank, AG

Habib Bank, AG Zurich.

Korea Exchange Bank Limited.

Sonali Bank UK(USD).

UBAF, Singapur.

7.5. Types of Foreign Remittance:

Foreign remittance is two types: • Inward Foreign Remittance. • Outward Foreign Remittance.

*Flowchart-7.1: Types of Foreign Remittance.

7.6. Inward Foreign Remittance:

Inward Foreign Remittance means Remittance received from foreign countries from

abroad. To the bankers or ADs inward remittance means purchase of foreign currency

by authorized dealers. In other words remittance coming into our country from other

countries by the remitter by way of permissible banking channel is called „Inward

Foreign Remittance‟ i.e. beneficiaries point of view it is inward foreign remittance.

On the other hand remitter‟s point of view it is called outward Foreign Remittance.

Ways of Inward Foreign Remittance:

Spot Cash.

FTT

FDD

TC

Spot cash:

Only from Foreign Exchange House Spot Cash can be send to Bank.

No need to have account receiver.

Photocopy of NID or student ID and PIN code are must for receiving money.

Service charge is gained by Bank.

FTT:

From Bank remitter can send fund to beneficiary.

Here account is must for beneficiary. Because fund is credited to beneficiary‟s

account. Then beneficiary can withdraw money as his/her necessity.

Here the Foreign Bank credit the NOSTRO account of NBL.

In case of outward remittance it is vice versa.

FDD:

It is instrument.

Here instrument is given to the concern Bank from which it is taken.

Here purpose may be many such as, payment to anybody, for Business issue,

may be travelling etc.

It is collection basis that means Banks normally takes 3 to 4 days for payment.

After giving payment NOSTRO account is debited.

In case of NBL there must have two officers signature in this instrument.

In case of outward remittance it is vice versa.

TC:

It is an instrument.

Here the format of intermediary Bank is used.

Normally American Express Travelers Cheque or Standard chartered TC is

used.

That means here standard format is used.

It is on cash basis. That means after taking the TC the fund is readily

available.

In case of outward remittance it is vice versa.

7.7. Outward Remittance:

Remittance from our country to foreign countries is called outward foreign

remittance. On the other word, sales of foreign currency by the authorized dealer or

formal channels may be addressed as outward remittance. . The remitter has to deposit

money along with the application contains name and address of the payee name of the

currency etc. All outward remittances must cover the transactions approved by the

Bangladesh Bank. The authorized dealers must utmost caution to ensure that foreign

currencies remitted or released by them are used only for the purposes for which they

are released. Outward remittance may be made by appropriate method to the country

to which remittance is authorized.

Purposes of Outward Remittance:

1. Travel

2. Medical treatment

3. Educational purpose.

4. Attending seminar etc.

Ways of outward Foreign Remittance:

FDD

FTT

TC

7.8. Western Union Money Transfer Section:

National bank Ltd. signed an agreement with the Western Union Financial

services, USA in 1993. Millions of people from different parts of the world are

sending money with confidence to their near and dear through the western union

has the most modern technology for remitting money within quiets possible time

from any part of the world through their more than 170000 representatives in 190

countries and regions has established a unique money transfer system with

western union of. Through an online computer system units can be instantly of

the world. 56.17 million dollar was remitted to this bank through this

organization during the year 2003.NBL brought a substantial amount of foreign

exchanges in to the country through the western union in 2003, which is 44%

higher than that of 2002 The western union is a globally reputed name in money

transfer services and data exchange forever 150 years. Western union has

continued its tradition of possessing the latest technology and handling wide scale

remittances.

Payment of remittance by expatriate Bangladeshis through the western union are

being made at 121 branches of NBL. These branches are connected with the on-

line computer system of the western union.

The special feature of services is as follows:

Fast: Remits money in minutes

Safe: World-class security system

Easy: Over 2, 00,000 agents locations across 200

Countries and territories worldwide

Reliable: Trusted by millions for over 150 years.

Chapter-8

Analysis

8.1. SWOT Analysis Of the organization:

Every organization has some strength that helps it to survive, some weakness that

push it backward, some opportunities that helps it to compete and also some

threats that keeps it aware. NBL also has some SWOTs. These are mentioned

below.

*Flowchart-8.1: SWOT Analysis.

8.1.1. Strengths of the organization:

NBL is a very competitive organization. It is operated by a very efficient

management group. There is a good employee-employer relationship in its head

office and also its all branches. It has a healthy dislike of is competitors. NBL has

sponsored to the top programs, seminars, writing competition and gained valuable

coverage. In Bangladesh, it has 194 branches to provide services to the people.

All these branches are located in such a place in where customers feel

comfortable and safe to make their transaction. There are 3129 staffs who work

for NBL either in back office or in front office. It has a better financial position

than others in the banking business. It is strong at research and development, as is

evidenced by its evolving and innovative product & service range. NBL has more

social awareness than other banks in Bangladesh right now.

8.1.2. Weakness of the organization:

The organization does not have a diversified range of products & services. Still

the bank is not fully computerized. Manual registers are used in some cases.

However, the income of the business is still heavily dependent upon its share on

the retail market. It caters less the corporate market than the SCB. This may leave

it vulnerable if for any reason its market share erodes. The retail sector is very

price sensitive. But it pays very less interest than other banks. So, if they found

higher interest rate offering by other private banks of Bangladesh then they will

lose customers. It has less promotion campaign than the other bank, because they

believe brand value is the top promoting entity for the company.

8.1.3 Opportunities of the organization:

NBL has a goodwill that it provides different banking services to the people with

a minimum cost and cut a very little charge on its transactions. Although it

already has 194 branches to provide services to its customers, it also has the

opportunity to build up more branches to make more convenient for the

customers. The banking business of NBL and its other social activities have

increased day by day. Sophisticate customer service scheme of the NBL more

preferable to customers than other banks. Products & services development offers

NBL many opportunities. There is the opportunity to develop products and

services such as insurance business & huge investment in capital market etc.

Such high value items will tend to have associated with them, high profits. There

are also global marketing events that can be utilized to support the brand such as

the sports & other cultural activities.

8.1.4. Threats of the organization:

NBL is exposed to the international nature of trade. It has to deals in different

currencies and so costs and margins are not stable over long periods of time. Such

an exposure could mean that NBL may be doing banking business at a loss. The

new technology emerges to protecting the currency value & use options for better

credit rate earnings. The market for banking sector is very competitive. The

model developed by NBL to be world‟s local bank is now commonly used and to

an extent is no longer a basis for sustainable competitive advantage. Competitors

are developing alternative brands to take away the market share of NBL. The

roles and regulation of the government and conventional laws of Bangladesh are

also act as threats for the growth of banking business development in Bangladesh.

As discussed above in weaknesses, the retail banking sector is becoming price

competitive. This ultimately means that retail consumers are transacting in bank

around for a better deal. So if NBL charges a comparative high price for a bank

account service, or loan rate service, then the customers could go to the other

bank to compare fees & charges for the exactly the same services, and will take

decision the cheaper of the two.

Such customer‟s price sensitivity is a potential external threat to NBL.

Converting Threats into Opportunities

NBL has to expose its international nature of trade more efficiently. It has to

recover costs and maintains margins over long periods of time. The new

technology has to use to protecting the currency value & use options for better

credit rate earnings. NBL has to come to with other sort of criterion that‟s why

the competitor have to fight very long to copy that exposure. NBL has to give a

better deal in the banking fees & charges for the customers for the retail banking

sector.

Converting Weakness into Strength:

NBL has to focus equally to both ranges of customers either retail or corporate. It

has to build up a proper strategy that‟s why the corporate customers can be

interested to open more of corporate account in NBL. NBL also has to give

higher interest rate for various products & services to gain more market share in

banking business. They have to advertise their brand name more. They can

sponsor their name for various social activities, which will bring up NBL value

more to the local customers. They can also make social awareness to the local

customers.

8.2. PEST Analysis:

We know that a scan of the external macro-environment in which the firm

operates can be expressed in terms of the following factors:

1. Political.

2. Economic.

3. Social.

4. Technological.

*Figure-8.2: PEST Analysis.

NBL considers the PEST analysis very important to understand better the local

environment before beginning the marketing process. NBL‟s environmental

analysis is a continuous process.

8.2.1. Political Factors

The political arena has a huge influence upon the regulation of NBL‟s businesses.

We can consider the following aspects

1. The political environment is not stable, so as the banking sector. Though the

business activity is wholly regulated by Bangladesh Bank, in a country like

Bangladesh, NBL‟s banking activity is depending on the political culture of

Bangladesh.

2. Government policy influence laws that regulate NBL‟s business.

3. The government‟s position on marketing ethics, culture & religion is totally

based on custom & culture of Bangladesh. So, NBL is following that custom.

8.2.2. Economic Factors

NBL considers the state of a trading economy in the short and long-terms. The

interest rates for various accounts are quite attractive. The bank also invested a

huge portion of money to the T-bill market. The level of inflation also affects the

business values in Bangladesh. Though as being a fore bank it can adjust that

inflation very easily.

8.2.3. Socio cultural Factors:

NBL considers the social and cultural factors considerably. Like-

1. It thinks about the principle religion of the country and gives its employees the

best possible benefit for that. Two bonuses in a year are based on two Eid

festivals.

2. The attitudes towards other products and services of other competitive banks

are marked specifically. They try to update their system & procedure in a

standard manner.

3. Our mother tongue is Bengali. I saw the top level mangers are converse with

one another in Bengali.

4. NBL knows that, the people of Bangladesh are very emotional in nature. So, it

tries to adopt that emotion in their business for better understanding the local

customer.

8.2.4. Technological Factors

Technology is vital for competitive advantage, and is a major driver of

globalization.

NBL allows a better technology for its products and services to be made more

cheaply and to a better standard of quality to the customer. These technologies

offer consumers and businesses more innovative products and services such as

ATM machine.

NBL offers its customers to a new way to communicate with consumers e.g.

Customer Relationship Management (CRM) etc.

8.3. Ratio Analysis:

A tool used by individuals to conduct a quantitative analysis of information in a

company's financial statements. Ratios are calculated from current year numbers and

are then compared to previous years, other companies, the industry, or even the

economy to judge the performance of the company. Ratio analysis is predominately

used by proponents of fundamental analysis.

(Investopedia)

Ratio analysis is a study of the relationships between

financial variables. It is very important in fundamental

analysis which investigates the financial health of any

financial institution. This ratio analysis gives frank

financial information in this current business world. By

giving a glance anyone will be able to know what the position that institution is now.

Therefore managers, shareholders, creditors etc. all take interest in ratio analysis. For

example using liquidity ratios managers can use the information if the institution's

liquidity is struggling and they may have to take out short term finance. For this

reason to evaluate the performance of NBL the ratio analysis has been selected. Here

in this report contains the most common ratios and analysis to evaluate the

performance of NBL over the year 2012 and 2016.

To do an analysis, the following ratios and values have been calculated:

8.3.1. Current Ratio:

This ratio is calculated by dividing the total current assets of an institution by its total

current liabilities. It shows how any institution like NBL meets its current liabilities

through its current assets.

2012 2013 2014 2015 2016

Current Ratio:

(CA/CL)

0.71 1.03 0.85 1.22 1.03

*Table-8.1: 5 years Current Ratio of NBL.

*Graph-8.1: Current Ratio.

In 2016 company‟s current ratio was 1.03 times higher than current liabilities. Current

ratio has increased than last year as current asset increase also current liabilities

increase in a higher proportion which is good for the bank. As we know higher the

current ratio is better for the institution because this higher ratio helps to prevent

getting default.

8.3.2. Return on asset (ROA):

ROA is a profitability ratio which shows how profitable a bank is related to its total

assets. ROA gives an idea that how efficient the management of a bank is to generate

profits using its assets.

Return On Asset (ROA) =

Net income / Average Total

Asset

2012 2013 2014 2015 2016

0.80% 0.96% 1.08% 1.43% 1.90%

*Table-8.2: 5 years Return on asset (ROA) of NBL.

0.71

1.03

0.85

1.22

1.03

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2012 2013 2014 2015 2016Current Ratio: (CA/CL)

*Graph-8.2: 5years Return on Asset (ROA) of NBL.

ROA is the most used profitability ratio. As NBL was a part of banking industry and

its most of the assets come from the debt which was the reasons for its low net profit

as well as poor ROA. As a result the NBL had low ROA in the year of 2016 which

were 0.01825. In the year 2016 the net profit of the bank had decreased.

8.3.3. Return on equity (ROE):

Return on equity measures a bank‟s profitability which calculates how much net profit

that bank may generates with the money that shareholders have invested as equity.

Return On Equity % 2012 2013 2014 2015 2016

=Net Income/Equity 6.78% 9.14% 10.45% 12.74% 15.96%

*Table-8.3: 5 years Return on equity (ROE) of NBL.

*Graph-8.3: 5 years Return on Equity (ROE) of NBL.

ROE is very popular ratio toward the shareholders of any bank. After doing the

analysis from NBL‟s financial statements its shows those in years 2016 and 2012 the

6.78%

9.14%

10.45%

12.74%

15.96%

0.00% 5.00% 10.00% 15.00% 20.00%

2012

2013

2014

2015

2016

Return On Equity %

20122013

20142015

2016

0.80% 0.96% 1.08%1.43%

1.90%

ROA

ROA

return from 100 taka invested by the shareholders was respectively 0.15380 and

0.04110. The higher the percentage is the better for the bank as well as for

shareholders.

8.3.4. Interest Income:

Net interest income is the difference between the revenue that is generated from a

bank's assets and the expenses associated with paying out its liabilities. A typical

bank's assets consist of all forms of personal and commercial loans, mortgages and

securities. The liabilities are the customer deposits. The excess revenue that is

generated from the interest earned on assets over the interest paid out on deposits is

the net interest income.

Interest Income 2012 2013 2014 2015 2016 (Tk in Millions)

19,103.18

18,981.41

20,621.01

19,504.69

18,947.93

*Table-8.4: 5years Interest Income of NBL.

*Graph-8.4: 5years Interest Income of NBL.

8.3.5. Number of Employees:

Number Of Employees 2012 2013 2014 2015 2016

3,919

4,126

4,236

4,266

4,617

*Table8.5: Number of Employees of NBL.

19,103.18 18,981.41

20,621.01

19,504.69

18,947.93

18,000.00

18,500.00

19,000.00

19,500.00

20,000.00

20,500.00

21,000.00

2012 2013 2014 2015 2016

Interest Income Interest …

*Graph-8.5: Number of Employees of NBL.

In NBL number of employees is in crease day by day. In 2012 there was emplooyees

3,919 and in 2016 it was increase to 4,617. It is good for a country about employment.

8.3.6. Capital

Adequacy

Ratio:

Also known as capital-to-risk weighted assets ratio (CRAR), it is used to protect

depositors and promote the stability and efficiency of financial systems around the

world. Two types of capital are measured: tier one capital, which can absorb losses

without a bank being required to cease trading, and tier two capital, which can absorb

losses in the event of a winding-up and so provides a lesser degree of protection to

depositors.

*Table-8.6: 5 years Capital Adequacy Ratio of NBL.

Total Capital Adequacy

Ratio 2012 2013 2014 2015 2016

12.80% 11.69% 11.71% 12.05% 13.19%

3,400 3,600 3,800 4,000 4,200 4,400 4,600 4,800

2012 2013 2014 2015 2016

Number Of EmployeesNumber Of Employees

*Graph-8.6: 5 years Capital Adequacy Ratio of NBL.

8.3.7. Capital:

The bank's capital management framework ensures that the bank and its subsidiaries

are capitalized conformity with the risk profile, regulatory requirements, and

economic capital standards approved by the Board of Directors of the bank.

Maintenance of adequate capital base in line with Basel Ill is bank's main focus.

Capital management of NBL usually refers to implementing measures aimed at

maintaining adequate capital, assessing internal capital adequacy of the bank and

calculating its Capital to Risk Weighted Assets ratio.

As part of the internal capital adequacy assessment process (ICAAP) of NBL,

management identifies the risks that the bank is exposed to, and determines the means

by which they will be mitigated. Capital is used to cover some of these risks, and the

reminder of these risks is mitigated by means of collateral or other credit

enhancements. Contingency planning additional reserves and valuation allowances,

and other mechanisms. NBL always maintains a prudent balance between Tier- and

Tier-2 capital to support the projected business and regulatory requirement Total

capital as on December 31, 2016 was Tk.37,422.33 million and Capital to Risk

Weighted Assets Ratio (CRAR) was 13.19% in solo basis and 13.10% in consolidated

basis. Availability of sufficient capital enhanced the Bank's single borrower's

exposure limit up to a desired level to meet the corporate customers demand The

capital management approach clearly calculates and estimates existing and forecasted

capital for business continuity minimizing risks and maximizing earnings in

progressive manner.

12.80%

11.69% 11.71%12.05%

13.19%

10.50%

11.00%

11.50%

12.00%

12.50%

13.00%

13.50%

2012 2013 2014 2015 2016

Total Capital Adequacy …

Capital (Taka in Millions) 2012 2013 2014 2015 2016 Authorized Capital

17,500.00

17,500.00

17,500.00

17,500.00

17,500.00 Paid Up Capital

14,196.03

14,196.03

15,615.64

17,177.20

19,753.78 Reserve Fund & Surplus

8,178.24

9,733.61

11,348.31

16,380.76

16,449.09

*Table8.7: Capital Management.

*Source: NBL Annual report 2016.

*Graph-8.7: Last 5 years Capital Management of NBL.

17,500.00 17,500.00 17,500.00 17,500.00 17,500.00

14,196.03 14,196.03 15,615.64

17,177.20

19,753.78

8,178.24 9,733.61

11,348.31

16,380.76 16,449.09

2012 2013 2014 2015 2016

Capital (Taka in Million)Authorised Capital Paid Up Capital Reserve Fund & Surplus

8.3.8. Share of NBL:

The authorized capital of the Bank is Tk.30, 000 million while the paid-up capital is

Tk. 19,753.78 million as of December 31, 2016. NBL‟s shares are being maintained

with central depository system since 2004. A total number of 1926.12 million shares

have been recorded with the CDS while 44.26 million shares remained in script till

31.12.2016.

The net asset value (NAV) per share was Tk.18.33 in 2016 which was Tk.19.54 in

2015. The earrings per share (EPS) increased by 44.62% to Tk.2.82 in 2016 from

Tk.1.95 of 2015. Though capital market showed ups and downs, NBL shares are still

admired by the investors due to the inner strength of the bank.

2012 2013 2014 2015 2016

Earnings per share (EPS):

Net Income/No of Share

outstanding

1.05 1.49 1.70 1.95 2.82

*Table8.8: Earning per share.

*Graph-8.8: Earnings per share (EPS).

-

0.50

1.00

1.50

2.00

2.50

3.00

2012 2013 2014 2015 2016

Earnings per share (EPS)

8.3.8. Profit of NBL:

*Table-8.9: 5 years Profit Trend of NBL.

*Graph-8.9: 5 years Profit Trend of NBL.

NBL timely prudent decisions contributed to overcame the challenges of 2016.

Consistent contribution from each segment of business, earning capability from the

core banking operation has increased signification during 2016. Total profit of the

NBL is increasing year by year. In 2012 profit before and after tax & provisions was

3725.20 & 1487.91 millions but in 2016 it was increased to 10,753.13 & 5,567.87.

8.3.9. LAST 5 YEARS IMPORT BUSINESS OF NBL:

*Table-8.10: LAST 5 YEARS IMPORT BUSINESS OF NBL. (Tk in Millions)

PROFIT Trend (Taka in

Millions) 2012 2013 2014 2015 2016

Profit before Tax &

Provision

3,725.20

3,539.91

6,722.39

8,260.14

10,753.13

Profit After Tax & Provision

1,487.91

2,116.59

2,660.29

3,854.03

5,567.87

2012 2013 2014 2015 2016

94,137.40 113,492.00 99,994.10 85,598.27 69,852.90

-2,000.00 4,000.00 6,000.00 8,000.00

10,000.00 12,000.00

2012 2013 2014 2015 2016

Profit before Tax & Provision

3,725.20 3,539.91 6,722.39 8,260.14 10,753.1

Profit After Tax & Provision

1,487.91 2,116.59 2,660.29 3,854.03 5,567.87

Profit Trend

*Graph-8.10: 5 YEARS IMPORT BUSINESS OF NBL. *Source: NBL Annual Report.

Analysis: Import trade finance of NBL has been decreased to TK. 69,852.90 million

in the year 2016 compared to TK. 85,598.27 million in the year 2015. The decrease

in TK. is by 0.89%. The main commodities were scrap vessels, rice, wheat, edible

oil, capital machinery, petroleum products, Fabrics and other consumer items.

8.3.10. LAST 5 YEARS EXPORT BUSINESS OF NBL:

*Table-8.11: LAST 5 YEARS EXPORT BUSINESS OF NBL. (Tk in Millions)

2012 2013 2014 2015 2016

69,062.90 75,912.41 76,459.20 67,888.84 50,167.64

94,137.40

113,492.00 99,994.10

85,598.27

69,852.90

-

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

2012 2013 2014 2015 2016

Import (Tk in Million)Import (Tk in Million)

69,062.90 75,912.41 76,459.20

67,888.84

50,167.64

-

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

2012 2013 2014 2015 2016

Export (Tk in Million)

Export (Tk in Million)

*Graph-8.11: 5 YEARS EXPORT BUSINESS OF NBL. Source: NBL Annual Report.

Analysis: Export trade finance of NBL has been decreased to TK. 50,167.64 million

in the year 2016 compared to TK. 67,888.84 million in the year 2015. The decrease

in TK. is by 0.62%. The main commodities were tea, fish, jute, jute products, Fabrics

and other consumer items.

8.3.11. Comparison of Export with National Bank and other

commercial Banks

Name Export in 2016(BDT in Millions)

National Bank Limited 50,167.64

Janata Bank Limited 154,454.20

Dutch Bangla Bank Limited 134,166.5

*Table-8.12: Comparison of Export with National Bank and other commercial Banks.

*Graph-8.12: Comparison of Export with National Bank and other commercial Banks.

Among That‟s Banks in Bangladesh, National Bank has lowest contribution in

assisting export financing. The state owned Janata Bank is on highest position.

National Bank Limited

Janata Bank Limited

Dutch Bangla Bank Limited

50,167.64 154,454.20 134,166.50

0.0020,000.0040,000.0060,000.0080,000.00

100,000.00120,000.00140,000.00160,000.00180,000.00

8.3.12. Comparison of Import with National Bank and other

commercial Banks

Name Import in 2016(BDT in Millions)

National Bank Limited 69,852.90

Janata Bank Limited 126,650.00

Dutch Bangla Bank Limited 134,768.1

*Table-8.13: Comparison of Import with National Bank and other commercial Banks.

*Graph-8.13: Comparison of Import with National Bank and other commercial Banks.

Among That‟s Banks in Bangladesh, National Bank has lowest contribution in

assisting import financing. Private commercial Dutch Bangla Bank is on highest

position.

0.00

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

National Bank Limited

Janata Bank Limited Dutch Bangla Bank Limited

69,852.90 126,650.00 134,768.10

8.3.13. Comparison of Foreign Remittance with National

Bank and other commercial Banks:

*Table8.14: Comparison of Foreign Remittance with National Bank and other commercial Banks.

*Graph-8.14: Comparison of Foreign Remittance with National Bank and other commercial Banks.

Among That‟s Banks in Bangladesh, National Bank has lowest contribution in

assisting import financing. Private commercial Dutch Bangla Bank is on highest

position.

Name Foreign Remittance in 2016(BDT in Millions)

National Bank Limited 45,437.58

Janata Bank Limited 90,081.80

Dutch Bangla Bank Limited 11,94,496.00

0.00

200,000.00

400,000.00

600,000.00

800,000.00

1,000,000.00

1,200,000.00

National Bank Limited

Janata Bank Limited

Dutch Bangla Bank Limited

45,437.58 90,081.80 1194496

Chapter-9

Findings

9.1. Major Findings:

The L/C Processing in NBL is satisfactory but has some problems. There have also

some problems in other sectors. The presentation of data can be summarized as of the

following findings:

Internet Banking has been introduced. But most of the time the server is

unavailable.

Profit rate is low. So to somebody it is unattractive.

In case of import and export financing it takes long time to sanction the

fund.

NBL banks have their own websites which acts as an information center and

promotional tool for the banks.

NBL has own banking software.

Lack of available information on banking product.

Customers are often unaware about banking services.

Lack of Manpower in foreign exchange department.

NBL Motijheel Branch has SWIFT facilities. Very few bank in our country

offer this. By using this modem technology Motijheel Branch, provide faster

service.

The monitoring system of the foreign exchange department of NBL is

excellent. The chain of command is strictly maintained here. The executives

now and then visit the department, which keeps all the officers alert about

their duty.

Government rules and regulation often make problem for import and export

market in Bangladesh.

The Foreign Exchange Department is very much Strong. Clauses they use in

dealing with the foreign Bank in term of L/C opening and amendment of L/C

are very much eligible to the foreign Bank. It is giving a competitive

advantage to the NBL. For this, businessmen like to deal their business with

the NBL.

9.2. Policy Implications:

The following steps may be taken for the betterment of the company:

Branch should intensify its quality of client service. Customer services must

be made dynamic and prompt.

Bank employ and train up more employees in foreign exchange department.

Put more emphasis on Export business, the depository service and create

more depository services.

Technological Skills should be developed. NBL should establish its own

networking system between its branches so that they can exchange their

information faster and efficiently.

National Bank Ltd. should train up their officers of all branches about all sort

of information regarding SWIFT and its services.

National Bank Ltd. should always monitor the performance of its

competition in the field of Foreign Trade and General banking Service.

NBL should locate their branches in the important places of the rural area so

that most people will know about the Foreign Remittance Service of NBL.

Government should remove barriers on foreign exchange businesses.

The Bank should create such situation so that people put confidence on private

bank for huge money transaction.

NBL should sponsor seminar and symposium for the purpose increase

awareness about the services of NBL.

NBL should conduct strong Marketing Innovation activities to increase

business in & outside Bangladesh.

NBL should invest its fund in the profitable sector that will produce more

profit for the owner of the account so that people will attract for NBL.

Encourage and facilitate Imports of Industrial goods.

9.3. Conclusion:

Though Bangladesh is a small country in nature but its import and export activities in

the world is considerable. Every year Bangladesh exports a large volume of jute, tea,

woven Garments, Knitwear, Frozen fish, Leather etc. and import raw materials for

readymade garments, manure, accessories and different apparels.

In Bangladesh many banks are providing foreign exchange services in terms of letter

of credit and foreign remittance and among them National Bank is one of the

successful bank. Even in last year 2016 the whole world sank in the global

commercial recession but the foreign exchange activities of NBL was quite steady

through the year.

In 2016 National Bank limited forwarded total number of 89,750 LCs amounting to

US$ 7441 Million in import trade with a growth of over the previous year. The main

commodities were scrap vessels, rice, wheat petroleum products etc. and In export

trade it handled total 81763 export LCs amounting to US$ 4587 million which was

13.42% higher over the previous year‟s records.

Besides the above activities NBL is showing its interest in foreign operation. NBL has

own exchange house in Oman, Singapore, Malaysia, Myanmar and arrangement with

different world leading exchange houses. Through which the foreign exchange

operation and transfer of remittance have becomes ease. In the last four month the

total inflow of foreign remittance is US$ 2356 Lac which shows an envious

performance of National Bank among its competitors.

9.4. Reference:

Annual Report 2012 to 2015, National Bank Ltd. Company Report. Available

from: Annual Report.

DataStream, 2017, Daily Index Data 2012-2015. Available From: Register Book,

General Services Division, National Bank Limited.

Dr. Ramani Mohan Debnath, 2013, Business of Banking, 3rd

Edition, Lotus

Publications, Dhaka.

International Finance Corporation (IFC) 2013, Scoping study of foreign exchange

business in Bangladesh, Bangladesh

K.K. Andley& V.J. Matto, „Foreign Exchange Principles and Practice‟, 8th Edition

1996, Sultan chand and Sons, 23, Daryaganj, New Delhi-110002

Press Release, 2017, National Bank Limited, 2012-2015.Avilable from: Press

Release, National Bank Limited.

9.4.1. Websites:

www.bangladesh-bank.org

www.epzbangladesh.org.bd

www.foreignexchange.com

www.nblbd.com

www.mincom.gov.bd

http://www. nblbd.com/branch.php

https://www.investopedia.com/

https://www.slideshare.net/

9.5. Abbreviation:

ABBREVIATION ELABORATION

NBL National Bank Limited

FE Foreign Exchange

CCI & E Chief Controller Of Import &Export

IRC Import Registration Certificate

UCPDC Uniform Customs & Practices For Documentary Credit

LCAF Letter Of Credit Authorization Letter

ERC Export Registration Certificate

A/C Account

TFMD Treasury & Fund Management Department

L/C Letter Of Credit

SWIFT Society For Worldwide Inter Bank Financial

Telecommunication

TIN Tax Identification Number

FTT Foreign Telegraphic Transfer

FDD Foreign Demand Draft

TC Travelers Cheque

CSR Corporate Social Responsibility

NID National Identification Number

ID Identification Number

ATM Automated Teller Machine

PIN Personal Identification Number

SMS Short Message Service

I-BANKING Internet Banking

NILOY SAHA

CAREER SUMMARY:

EDUCATION QUALIFICATION: BBA:

Bachelor of Business Administration (2014-2017) Stamford University Bangladesh, Dhaka Major-Finance CGPA- 3.39 (out of 4.00) (Up to 10th Semester)

HSC:

Higher Secondary Certificate (HSC) - 2013 Narsingdi Model College, Narsingdi. Group- Business Studies. GPA-4.90 (out of 5.00) Dhaka Board

SSC:

Secondary School Certificate (SSC) - 2011 Brahmondi KKM Govt’ High School, Narsingdi. Group- Business Studies. GPA-4.44 (out of 5.00) Dhaka Board

OTHER SKILLS:

MS Office (Word, Excel, Power point)

Able to work under pressure

Clean driving license

Hardware Assembling, Internet Access, Paints

Adobe Photoshop

Language (Bangla, English, Hindi)

COURSES: Spoken English

MS Office Package

Credit Rating Procedures at Stamford University Bangladesh

Address: 12-A,51/3 jahan tower,

Purana palton, Dhaka-1000. E-mail: niloysaha546@gmail.com Mobile: +88-01681690014

My Objective: I would like to

derive professional satisfaction

by helping others.

I have completed my BBA major in Finance and done professional training on Finance as well. My education, professional training make me competent to work effectively in any organization’s Finance Department.

Internship Programme: Organization: National Bank Limited Duration: 17th September, 2017 - 17th December, 2017 Project Title: Genaral Banking & Foreign Exchance Department.

PERSONAL

DETAILS: Father's Name : Narayan Saha Occupation : Business Mother's Name : Jharna Saha Occupation : House wife Present Address : 12-A, 51/3 jahan tower,

Purana palton, Dhaka-1000 Permanent Address : Vill- East Ghoradia, Ward-08,

Post- Narsingdi Govt’ College (1602), Thana- Narsingdi Sadar, Dist-

Narsingdi. Date of Birth : 28th Dec 1996

Blood Group : A(+ve)

Marital Status : Single Nationality : Bangladeshi by Birth Religion : Hinduism Language : Bangla, English, Hindi.

HOBBIES:

REFERENCES:

Date NILOY SAHA

a. Reading, b. Internet Searching , c. Travelling, d. Cycling,

e. Making New Friends, f. Taking Challenges, g. Music,

1) Mohon Saha

Deputy Director

Department of Off-Site Supervision

Bangladesh Bank, Head Office

Motijheel C/A,

Dhaka-1000 Mobile: 01712-692389

2) Mahjabeen Ferdous

Assistant Professor

Department of Business Administration

Stamford University Bangladesh

Mobile: 01740-726748