PROJECT REPORT

ON
FOREIGN EXCHANGE OPERATION: A STUDY ON
SOCIAL ISLAMI BANK LIMITED

Submitted to

Controller of Examinations
National University, Gazipur

Supervised by:

Humayun Ahmed
Lecturer

Submitted by:

Toufiqul Islam
Registration no: 15501002717
Roll no: 20180
Session: 2010-20111
Major: Finance
BBA Program (Professional)

Department of Business Administration

Shaikh Burhanuddin Post Graduate College

Date of Submission:
 Letter of Transmittal
February ,2021

Controller of Examinations
National University
Gazipur

Subject: Submission of Internship Report on “Foreign Exchange Operation: A

Study on Social Islami Bank Limited”

Dear Sir,
This is a great pleasure for me to submit this internship report on “Foreign Exchange
Operation: A Study On Social Islami Bank Limited” The report has been
completed within one month. This is a privilege for me to meet the prerequisite for the
partial fulfillment of the course- Bachelor of Business Administration.
In this report I tried to illustrate “Foreign Exchange Operation: A Study On Social
Islami Bank Limited”. I have aimed to represent whatever I found and observed in the
organization during my internship program.
I am really indebted to you for your suggestions and recommendations. I will feel
glad if you please render your valuable comments and observations.

Sincerely yours,

Name: Toufiqul Islam

Roll No: 20180
Registration No: 15501002717
Major: Finance
BBA Program (Professional)
Department of Business Administration
Shaikh Burhanuddin Post Graduate College

i
 Supervisor’s Certificate
This is to certify that the internship Report on Foreign Exchange Operation: A Study
On Social Islami Bank Limited is done by Toufiqul Islam as a partial fulfillment of
the requirement of Bachelor of Business Administration (BBA), major in finance
degree from Shaikh Burhanuddin Post Graduate College under National University.

The report has been prepared under my guidance and is carried out successfully.

_________________
Humayun Ahmed
Lecturer
Department of Business Administration
Bachelor of Business Administration (BBA)
Sheikh Burhanuddin Post Graduate College

Date: February ,2021

ii
 Acknowledgement
First of all, I am expressing my heartfelt gratitude to the Allah, the most merciful and
the benevolent, for his special kindness to give me the opportunity to complete the
project successfully and prepare project report timely.

I would like to express my gratitude to the authority of National University and our
honorable coordinator Munmun Hossain, Department of Business Administration for
the valuable guidance.

I also like to give special thanks to my academic supervisor Humayun Ahmed,

Assistant Professor, Department of Business Administration, Shaikh Burhanuddin
Post Graduate College for her excellent supervision, individual suggestions,
continuous encouragement and unfailing enthusiasm throughout the process of
completion of this report.

This report suffers from many shortcomings; sever the less I have exerted my best
effort in preparation of this report. I seek excuse for the errors that might have
occurred inspire of the best of my efforts.

iii
 Executive Summary
This Internship report is prepared as a partial contentment of BBA program of the
department of BRAC Business School of BRAC University. This report will give a
clear knowledge about the Foreign Exchange Operation of Social Islami Bank Ltd.

Banking sector in Bangladesh is considered the most potential sector in recent times.
The performance of Social Islami Bank in last 20 years is an inordinate example of
that. From the origin in 1995, this bank has walked a lengthy way and reputed itself
one of the Islamic banks in private sector. Aiming the poverty, social Islami Bank Ltd
is certainly a notion of 21st century contributing 3 sector banking model in one in the
formal sector, it mechanism as an Islamic participating commercial bank through
human face tactic to tribute and banking on the profit and loss allocation it is a
informal banking with casual investment and credit platform that authorize and
humanize actual poor family and produce local income chances; “it is a Improvement
bank projected to monetize the charitable sector and management of waqf, Mosque
properties and introducing cash waqf scheme for the first time in the history. In the
formal corporate sector, the Bank would, among others, offer the furthermost up to
date banking services. To enhance the performance of the bank our administration
adopted strategic plan that include escalation in efficiency, establishment of
transparency, efficiency and accountability in all spheres of banking practices and as a
rational significance of reform. Launching Central Trade Processing Unit (CTPU),
Central Remittance Processing Unit (CRPU) and Central Clearing Unit (CCU) above
all customized products and services are the reform processes that they had assumed
from 2011 to 2015 to be the submissive in one hand and to serve our client more
efficiently and effectively on the other.” (Annual report SIBL 2014)

As foreign exchange transaction is measured one of the maximum revenue earning

transaction for any bank and commercial banks are playing a vital role in financing
import and exports of the country, Social Islami bank gives remarkable emphasize to
its foreign exchange transaction. This report emphases on Social Islami Bank as a
whole as well as complete process of its Foreign Exchange transactions in brief. This
report also gives a vibrant idea about the activities, the operation strategies, Foreign
Exchange management, and the performance of Social Islami Bank Ltd. As the

iv
supervisor of other banks activities Bangladesh Bank acts its role in governing the
foreign exchange act 1947 and foreign exchange guideline 2009.

Total of 21 branches of Social Islami Bank have the license to perform international
trade functions. Each of these AD branches have foreign exchange department whose
sole drive is to carry out cross border transaction required by the customers. Foreign
Exchange Department of Gausia branch Social Islami Bank Ltd contains of three
sections which are import section, export section and foreign remittance section. In
this report I have tried to provide a brief idea about the entire procedure of foreign
exchange operation of social Islami Bank Ltd where in involved import procedure,
export procedure and foreign remittance operation of SIBL. Analysis and Discussion
part is additional part of this report. In this part I have tried to accomplish different
types of analysis. Here I have also presented different types of analysis to represent
actual scenario of foreign exchange operation of Social Islami Bank Ltd. In trend
analysis it has five years trend of import, export, remittance. The performance
analysis of export, import, remittance demonstrations the even operation of foreign
exchange business of this bank. In SWOT analysis part I have made known its major
strength, weakness, opportunities and threats. In comparative analysis I have made a
contrast among five banks in case of Import-Export and foreign remittance since 2011
to 2015 where IBBL stands in first position and Social Islami Banks but the foreign
remittance position was not pleasing comparative than other four banks. At last
concluded states that Social Islami Bank’s Foreign Exchange operations approach is
to the company’s performance by emphasizing the areas where they have the gain
today and where they can grow quicker than some of other compititors.

v
 TABLE OF CONTENTS

TITLE PAGE NO.

Certificate from the organization I
Letter of Transmittal II
Supervisor’s Certificate III
Acknowledgement IV
Executive Summary V

CHAPTER-1 Introduction
1.1 Origin of the study 1
1.2 Objectives of the study 2
1.3 Methodology
1.4 Scope
1.5 Limitations
CHAPTER-2 Overview of the Organization
2.1
2.2
2.3
2.4
CHAPTER-3 Analysis & Evaluation
3.1 Trend Analysis
Regression Analysis
Common Size Statement Analysis
SWOT Analysis
CAMEL Ratings
Opinion Survey

CHAPTER-4 Findings, Recommendations & Conclusion

Bibliography

Appendix
 CHAPTER - 1

Introduction

1.1 Introduction of the study

Now the world is very much competitive and the banking sector of Bangladesh has
grown day by day. As a financial institution, most of the banks perform some
common functions but there is some difference between conventional banking and
Islamic banking. So everybody has to be expert in his field in both practical
knowledge and theoretical knowledge. As SUB aims is to build future magnate with
the practical knowledge of economic field of our country, Internship course and its
report is a significant aspect in the direction of accomplishing the goal. It is a
systematic process for gathering, recording and analyzing of data about the topic that
a student goes to learn on the program.

The aim of this internship report is to connect practical knowledge with theoretical
aspects. Being a student of MBA with major in Finance I have completed my
internship from Social Islami Bank Limited, Dhaka.

During my internship period, I have tried my best to use the opportunity to enrich my
knowledge on banking system. My findings were mostly related to the Foreign
Exchange, as I have been working under this department. Beside this, I came many
other findings, which are reflected through this internship report
1.2 Objectives of the study

The objective of the study is to gather practical knowledge regarding over all Islamic
Banking system and its operations. However my targeted area is know about the
details operation of Foreign Exchange on SIBL. So I tried my best to gather practical
and over all idea about Foreign Exchange on SIBL.

The Main Objective:

1) To get a good understanding of over all Foreign Exchange operation of Social

Islami Bank Ltd.
2) The Specific Objectives:
3) To gather knowledge know about the Export Operations and evaluate the
performance.
4) To gather knowledge know about the Import Operations and evaluate the
performance
5) To gather knowledge know about the Remittance Operations and evaluate the
performance
6) To explore the problems of Foreign Exchange operation.
7) To recommend solutions of the problems faced by SIBL.
1.3 Methodologies

This information for this report has been arranged from hands-on work experience at
the branch. This information has been collected from the most reliable sources.
Quantitative and Qualitative findings are also applied in this report which has made
the report more meaningful and presentable.

Research Type:

Descriptive research is used to describe physiognomies of a population or

phenomenon being studied but it does not response question about how/when/why the
characteristic occurred this study based on expressive research method. Both qualified
and quantified research designed is used for data demonstration.

Data Sources:

Annual reports of the bank, Foreign exchange function guideline provided by

Bangladesh Bank, various books, Articles regarding foreign exchange, website of
social Islami Bank Ltd, website of Bangladesh Bank was the sources of secondary
data collection.

Data Analysis Tools:

Analysis of data is the most vital part of any research. Here, I use data transformation
process to change data from their original from to a suitable format for performing the
data analysis. To analyze and present the mathematical data and values accompanying
with export, import and remittance following tools and techniques are used:

Microsoft Excel is used to calculate the growth rate of export, import and remittance
Tabular and graphic method is used to display the data

Microsoft Excel is used to construct the graphs column charts and pie chart

Sample Size:

I have selected five years from 2011 to 2015 of Social Islami Bank Limited and
selected five years data of two Islamic and two conventional bank from 2011 to 2015
for comparative analysis
1.4 Scope of the Study:
The following study tells the details of Social Islami Bank’s Standpoint about foreign
exchange activities emphasizing “Activities regarding Import and Export procedure
under letter of credit at Social Islami Bank Ltd” This study consists the reflection and
on the job experience throughout internship period in the foreign exchange
department at Social Islami Bank Ltd, Banasree branch. This study also highlights on
the sequential activities involved and used by Social Islami Bank Ltd for foreign
exchange transaction. This study also focuses on the influence of the foreign
exchange activities upon the customer.

1.5 Limitation of the study

I have tried my best to fulfill my report properly but there is some constraint during
my internship period which otherwise would enabled me in making my study more
appropriate and logical. The limitations were from side, the bank and as well myself

Main

1. The time is additionally the limitation which is inadequate to know all the
detail data.

2. Due to COVID-19 situation it was too difficult to collect any face to face
information from the organization.

3. For proficient reasons, it was extremely hard to gather data appropriately.

Others

Foreign Exchange is too big to cover:

Foreign Exchange is a too big to cover wholly in this limited scope. It required
huge time and huge space to cover. So, I have covered only some important
topics of credit management.

Engaged in work:

Every man of the branch was so busy in their work, so they were not able to
provide sufficient care to make the internship’s clear about different topics.

Time constraint:

I had to prepare this report within a period less than three month which was
not enough to prepare such a report. Because collection and arrangement of
information is a time consuming job. Then again I had to summarize those. So
I had to work in haste.

Confidential matter:

It is not possible to get all sorts of information due to official confidentiality.

Lack of practical knowledge:

For the lack of practical knowledge, some short coming may be available in
the report. Because in some cases I could not practically involved because of
bank’s limitation and risky nests.
 CHAPTER - 2

Organizational Overview
2.1 About Social Islami Bank Limited

The SOCIAL ISLAMI BANK LTD (SIBL), a second-generation commercial Bank,

operating since22nd November, 1995 based on Shariah Principles, has now 155
branches all over the country with two subsidiary companies – SIBL securities Ltd. &
SIBL Investment Ltd. Targeting poverty, SIBL is indeed a concept of 21st century
participatory Three sector model in one. In the formal sector, it works as an Islamic
participatory commercial bank with human face approach credit and banking on the
profit and loss sharing. It has a Non-Formal banking too with informal finance and
investment package that empowers and humanizes real poor family local income
opportunities and discourages internal migration. The bank has another sector to
monetize the voluntary sector and management of Wakf, Mosque properties and has
introduced cash Wakf system for the first time in the history of banking. In the formal
corporate sector, this bank, among others, offers the most up-to-date banking service
through opening of various types of deposit and investment accounts, financing trade,
providing letters of guarantee, opening letters of credit, collection of bills, leasing of
equipment and consumer’s durable, hire purchase and installment sale of capital
goods, investment in low-cost housing and management of real estates, participatory
investment in various industrial, agricultural, transport, education and health project
and so on.

The bank has taken a renewed drive aiming at consolidating its business in more
focused areas covering SME and Agro-finance with emphasis on searching for
alternative delivery channel under which SMS banking and mobile based remittance
payment systems and by gradually introducing the same to disseminate the SIBL
services to the doorsteps of the customers. The products are Sonali Din, Sommridhir
Sopan, Swopner Siri, Shukher Thikana, Sabuj Chhaya, Sabuj Shayanho, Subarnolata,
Subarnorekha, Sanchita etc. And Zameel ATM Debit card.
SIBL is a pioneer in introducing on-line banking among the Islami banks of the
country with state-of-the-art banking software. The-state-of-banking software enables
the bank to provide the bank to provide any branch real time banking service to the
clients. SIBL is supported by core banking solutions and our product and services are
strongly banked by IT infrastructure, which upgraded and expanded on continuous
basis.

SIBL has set its strategy to converts all its banking activities from traditional branch-
based banking system to an ideal blanding of both centralized processing unit (CPU)
and effective operation of branch that is based on modern essence of banking.

The Bank is running its payment system successful through BACPS, BEFTN under
BACH System as per guidelines of Bangladesh Bank, SIBL ensures security, safety
and hassle free faster transactions from end to end. Moreover, the bank is effectively
adopting regulatory guidelines on IT risk management.

SIBL is quite conscious of its social business responsibilities and is always trying to
participate in various social programs in the country under its CRS portfolio giving
emphasis on health, habits & education. The bank ensures to provide better integrated
idea of formal, informal and voluntary banking in the same platform. SIBL has its
unique feature to mobilize capital through CASH WAQF program.

SIBL lays emphasis on employment generating, environment friendly and green

banking based investment keeping an eye on equitable distribution of resources over
geographical territory of sustainable growth of macro economy in the country.
The corporate governance system in SIBL ensures transparency and accountability at
all levels in conducting business. The bank’s continuous effort has been increase the
shareholder’s value and to be valued as a compliant organization.
2.2 Following are the potential areas for the private
sector banks:

1. Social contribution by banks- sponsoring sports, anti drug campaign etc.

2. Consumer credit to improve quality of life
3. More jobs created
4. Entrepreneur ship development
5. Electronic Banking (ATM)
6. Fund Transfer from abroad through overseas correspondents
7. Credit Card/Debit card
8. Online banking (Phone link , money link)
9. Innovative Investment scheme
10. Contribution to export sector
11. Relationship banking
12. One stop service
13. Lease finance by bank

2.3 Mission:

1. Establishing Three Sector Banking Model

2. Transformation to a service oriented technology driven profit earning Bank
Fast, accurate and satisfactory customer service
3. Balanced & sustainable growth strategy
4. Optimum return on shareholders’ equity
5. Introducing innovative Islamic Banking Products
6. Attract and retain high quality human resources
7. Empowering real poor families and creating local income opportunities
8. Providing support for social benefit organizations by way of mobilizing funds
and social services
2.4 Vision:
Working together for a caring society.

2.5 Values of SIBL:

1. Honesty.

To be honest is ordained by the scripture – we stick to this value in all our service
provision.

2. Transparency.

Remaining transparent in all acts is a virtue that's builds trust - we adhere to it.

3. Efficiency.

Efficiency implies perfection in any job done - we strive to render full satisfaction
with it.

4. Accountability.

To be accountable is to be responsible and above any suspicion - we are dutifully

there.

5. Religiousness.

SIBL enhances economic wellbeing with regard to the bliss of religious ethics.

6. Innovation.

Our minds and eyes are open to the evolution in quality of life to innovate further
benefits for the service takers.

7. Flexibility.
Flexibility leads to better understanding and greater satisfaction - we pursue the
quality.

8. Security.

Customers must feel secure with all our products and services - we keep on
ensuring it.

9. Technology.

Modern life is technology dependent - we keep looking for the latest development
to provide the best in ease to our clients.
2.6 Marketing Strategies of SIBL:

To attain the above vision and mission SIBL follow the following Marketing
Strategies: The main strategy of the bank is using Islami Banking System to attract its
market.

1. Providing efficient customer service

2. Maintaining corporate and business ethics
3. Being trusted repository of customers’ and their financial advices
4. Making its products superior and rewarding to the customers
5. Display team spirit and professionalism
6. Sound capital base
7. Enhancement of shareholders wealth
8. Fulfilling its social commitments by expanding its charitable and humanitarian
activities
9. Providing high quality financial services in export and import trade.
10. Building tight personal relationship with customers and clients

2.7 SPECIAL FEATURES OF SIBL:

All activities of the bank are conducted according to Islamic Shariah where profit is
the legal alternative to interest.

The banks investment policy follows different modes approved by Islamic Shariah
based on Quran & Sunnah.
\The bank is committed towards establishing welfare oriented banking system,
economic upliftment of the low-income group of people, create employment
opportunities.

The bank is contributing to economic and philanthropic activities side by side. SIBL
English Medium Madrasah and SIBL library are among mention worthy.
2.8 Corporate Profile of SIBL:

Social Islami Bank Limited (SIBL) was established in the year 1995 as a public
limited company which is engaged in Shariah based commercial banking in the
country and its modus-operandi are substantially different from other conventional
banks. This is the second- generation pioneer Islamic Bank in this country providing
online banking facilities to its customers.

Corporate Profile of SIBL

Name of the Company Social Islami Bank Limited
Legal Form Public Limited Company
Company Registration No C-28763(44)/95
Authorized Capital Taka 10,000,000,000
Paid up Capital Taka 703,14,15,640
Registered Office City Center, Level 19, 20, 21, 22, 28 & 29, 90/1
Motijheel C/A, Dhaka-1000 Phone PABX 88
02 09612001122 FAX 88 02 9568098
Email [email protected] Web:
www.siblbd.com SWIFT SOIVBDDH
Tax Payer Identification No 035-200-4971
VAT Registration No 9011046380 Area Code 90101
Credit Rating Agency Emerging Credit Rating Ltd. Auditors : M/S
KaziZahir Khan & Co. Chartered Accountants,
67/4, Pioneer Road, Kakrail,Dhaka-1000

Chairman Major Dr. Md. RezaulHaque (Retd.)

Managing Director & CEO Md. Shafiqur Rahman
Company Secretary Md. HumayunKabir
ACS Chief Risk Officer Md. Yunus Ali
Chief Financial Officer Walid Mahmud Sobhani
FCMA Number of Employees 2130
Number of Branches 111(one hundred eleven)
Number of Shares 703,141,564
 Listing Status (Shares) DSE (Dhaka Stock Exchange Ltd.) SIBL,
Listing Date 18.11.2000
CSE (Chittagong Stock Exchange Ltd.) Symbol
SIBL, Listing Date 04.10.2005 Market Price as
on 31.12.2015 DSE Taka 14.40 Category A,
CSE Taka 14.20 Category A

2.9 Products & Services of SIBL:

Social Islami Bank Limited offers various kinds of deposit products and investment
schemes. The bank also has highly qualified professional staff members who have the
capability to manage and meet all the requirements of the bank. The product and
services that are currently available are given below:

1. Deposit Products
2. Al-Wadeeah Current Account
3. Mudaraba Savings Account
4. Mudaraba Notice Deposit Account
5. Mudaraba Term Deposit Account
1 month
3 months
6 months
12 months
6. Mudaraba Monthly Profit Deposit Scheme
7. Mudaraba Millionaire Savings Scheme
8. Mudaraba Education Deposit Scheme
9. Sonali Din Special Deposit Scheme
10. Mudaraba Special Deposit Pension Scheme
11. Mudaraba Bashsthan Savings Scheme
12. Mudaraba Hajj Savings Deposit (Kafela)
13. Mudaraba Lakhopati Deposit Scheme
14. Mudaraba Double Benefit Deposit Scheme
15. Shamridhir Shopan Special Deposit Scheme
16. Mudaraba Marriage Savings Scheme
17. Mudaraba Mohorana Savings A/c (10 Years)
18. Mudaraba Mohorana Savings A/c (5 Years)
19. Shanchita Special Deposit Scheme
20. Subarnalata Special Deposit scheme
21. Subarna Rekha Special Deposit Scheme
22. Sabuj Chaya Special Deposit scheme
23. Sabuj Sayannaya Special Deposit Schemes
24. Shukher Thikana Special Deposit Scheme
25. Shachhanda Protidin Special Deposit Scheme
26. SIBL Young Star Account
 Investment Products

Bai Murababa

Bai Muajjal

Hire Purchase Under Shirkatul Melk

Mudaraba

Musbaraka

Bai Salam

Documentory Bill Purchase

Quard

SIBL Employee "House Building Investment

Scheme"

SME and Agricultural Finance

Service:

From many service of SIBL, these are mentioned everywhere and known:

Online Banking

Automated Clearing

ATM 24/ 7

Electronic Fund Transfer

CARD (Local & Foreign)

Mobile Banking

Off shoring

Centralized Trade Processing Services

Remittance

Locker Service

Capital Market Services through SIBL

Subsidiaries

Alternative Delivery Channel

School Banking
 CHAPTER - 3

Analysis & Evolution

3.1 Definition of Foreign Exchange

Foreign Exchange means exchange of foreign currency between two countries. If we

consider ‘Foreign Exchange’ as a subject, then it means all kinds of transaction
related to foreign currency. In other words, foreign exchange deals with foreign
financial transactions.

Necessity of foreign exchange

No country is self-sufficient in this world. Everyone is, more or less, dependent on

another, for goods or services. Say, Bangladesh has cheap manpower whereas Saudi
Arabia has cheap petroleum. So Bangladesh is dependent on Saudi Arabia for
petroleum and Saudi Arabia is dependent on Bangladesh for cheap manpower. People
of one country are going to abroad for Education, Medical service etc. Thus there is
exchange of foreign currency.

3.2 Regulations for foreign exchange:

Local Regulations:

Our foreign exchange transactions are being controlled by the following rules &
regulation. Foreign Exchange Regulation Act 1947.

1) Bangladesh Bank issues foreign exchange circular from time to time to control
the export, import & remittance business.
 2) Ministries of commerce issues export & import policy giving basic formalities
for import & export business.
3) Sometime CCI&E issues public notice for any kind of change in foreign
exchange transaction.
4) Bangladesh bank published two volumes in 1996. This is compilation of the
instructions to be followed by the authorized dealers in transitions relation to
foreign exchange.
International regulations of foreign exchange:

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

International Chamber of Commerce (ICC) is a worldwide non-governmental

organization of thousands of companies. It was founded in 1919. ICC has issued some
publications like UCPDC, URC, & URR etc, which are being followed by all the
member countries. There is also an international court of arbitration to solve the
international business disputes.

World Trade Organization (W.T.O) is another international trade organization

established in 1995. General Agreement on Tariff & Trade (GATT) was established
in 1948, after completion of its 8th round; the organization has been abolished &
replaced by W.T.O. This organization has vital role in international trade, through its
124 member countries.

3.3 Foreign Exchange Mechanism

Foreign exchange department plays significant roles through providing different

services for the customer. Facilitating the trade with foreign country is the most
important among those services the key instrument which facilitates this trade is L/C
(Letter of Credit).

Letter of Credit:
Letter of Credit may be defined as an arrangement or guarantee issued by a bank at
the request of the customer to make payment to or order of the beneficiary or
authorized another bank to effect such payment or to pay, accept or negotiate such bill
of exchange against stipulated documents, provided that the terms and conditions of
the L/C are complied with. (UCPDC-500, 1993)
The Advising Bank:
It is the bank in the Exporter’s (Normally the exporter’s bank), which is usually the
foreign correspondent of Importer’s bank through which the L/C is advised to the
supplier. If the intermediary bank simply advises/notifies the L/C to the exporter
without any obligation on its part, it is called “Advising Bank”.

The Confirming Bank:

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

The Negotiating Bank:

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

The Accepting Bank:

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

The Paying Bank and the Reimbursing Bank:

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

3.4 Foreign Exchange Functions of SIBL:

Foreign Exchange Department (FED) is the international department Bangladesh

Bank issues license to schedule banks to contract with foreign exchange. These Banks
are known as Authorized Dealers. If the branch is authorized broker in foreign
exchange market, it can remit foreign exchange from local country to foreign
countries. At present, the bank has 21 Authorized Dealer Branches with well prepared
with highly trained professionals to meet different requirements of import and export
based clients.
One of the core accomplishments of the bank is to facilitate international trade
through export and import financing. Over the last few years, the foreign trade
financing of the Social Islami Bank has gained a constant expansion. The bank has
been achieving important growth in both export and import financing despite global
financing turmoil and worldwide economic slowdown since 2008.

During the year, the foreign trade business of the bank has recorded a significant
growth of 6.22%. Import business increased by 6.93% of which real value was TK.
84,906.70 million in 2019 from TK. 79,024.20 million in 2018. On the other hand
export business grew to 54212.20 million in 2015 which is 1.99% higher than the
export of Tk.53044.90 million in 2017. Foreign Exchange Business stood at Tk.
149,192.40 million in 2019 against Tk. 139,910.00 million in 2018, which is sharp
increase of 6.22% the break-up of this foreign exchange business is as under.

Table: Foreign Exchange Business of SIBL (2015-2019)

Particulars 2015 2016 2017 2018 2019

Import 68,198.50 76,985.60 73,859.40 79,024.20 84,906.70

Export 34,975.00 42,712.20 51,775.30 53,044.90 54,121.20
Remittance 5,134.90 6,822.10 6,740.00 7,839.90 10,164.50
Total 108,308.30 126,519.90 132,374.70 139,910.00 149,192.40
Source: Annual Report 2015 of SIBL
3.5 The Basic tasks of foreign exchange department of
SIBL:

1. Facilitating Import Trade

2. Facilitating Export Trade
3. Provided funded and non-funded credit facility
4. Providing noncommercial remittances
5. Maintaining foreign currency accounts
6. Selling of foreign currency.

The above function are done under three section –

Foreign
Exchange

Import Export Remiittanc

Section Section e Section

International
Local Export
Export

Direct Export

Export Through
Back To Back

Chart: the function of foreign exchange Department

3.6 Import Section:

In 2015 SIBL was involved in financing import business in the field of capital
machineries, industrial raw materials, food grains (rice, wheat, sugar, dal, onion,
spices, garlic), oil( soya bean, lubricant, palm), motor vehicle, spare parts, sport
accessories, garment accessory, perfumery items, chemicals, milk food etc. To import,
a person should be competent to be and importer according to Import and Export
Control Act, 1950, the office of chief controller of Import and Export provides the
registration (IRC) to the importer. Bank gives export guarantee that it will pay for the
goods on behalf of the buyer if the buyer does not pay. This guarantee is called letter
of credit. Thus the contract between importer and exporter is given a legal shape by
the banker by ‘letter of credit’.

There are three main function of import section –

1) LC opening
2) Lodgment
3) Retirement

Import L/C Financing:

SIBL has two modes of LC sponsoring one mode is Bai-Muzzal trust receipt and
another mode is Murabaha Post Import. These are similar to loan against Trust receipt
(LTR) & loan against Imported Merchandise (LIM) of conventional bank.
Bai – Muzzal Trust Receipt

Advance against a trust receipt obtained from the customers are allowed to only first
class tested parties when the documents covering an import shipment or other goods
pledged to the bank as security are given deprived of payment. However, for such
advances prior permission from head office must be gained

The customer grasps the goods or their sale-proceeds in trust for the bank, till such
time, the loan permitted against the trust receipts is fully paid off.
The trust receipt is a document that makes the banker’s hand on the goods and
practically amounts by hypothecation of the proceeds of sale in discharge of the lien

Murbaha post Import

Advance contrary to the security of merchandise imported over the bank may be
allowed either on initiate or hypothecation of goods, retaining margin prescribed or
their landed cost, depending on their categories and credit section imposed by
Bangladesh Bank. Bank shall also obtain a letter of undertaking and insurance from
the parties, before getting the goods unoccupied through this account.

3.7 Export Section:

The export section of SIBL is noticeable in the field of readymade garments. The
bank has been attempting to diversify its export financing in other fields like leather,
agricultural products, dry fish, PET, Flakes, spare parts of ship etc. Establishment of
central trade Processing Unit (CTPU) was a timely decision which changed the total
process of foreign exchange business through speed up of the service and business
potential of SIBL.
They have CTPU facilities based in Dhaka and Chittagong. They open export LCs
here to export their goods, which they open counter to the import LC opened by their
foreign importers. Export LC operation is just reserve of import LC operation. For
exporting goods by the local exporter, SIBL may act as advising banks and the
collecting bank for the exporter. SIBL act as an advising or negotiating bank which
advice the L/Cs Export guidelines formulated by the Ministry of Commerce, GOB
provide the overall guideline incentives for promotion of exports in Bangladesh.

Export Financing:
Financing export countries an important part of a bank’s activities. Exporters require
financing amenities at four different stages of their export operation. During each of
these segments exporters need different types of financial assistance depending on the
nature of the export contract.
1. Pre shipment credit
2. Post shipment credit
3.8 Remittance Business:

As an authorized dealer, a bank must deliver some services to the clients regarding
foreign exchange and this department provides these services. The basic job of this
department are outward and inward remittance of foreign exchange from one country
to another country. In the procedure of providing this remittance service, it sells and
buys foreign currency. The adaptation of one currency into another takes place an
agreed rate of exchange, which the banker quotes, one for buying and another for
selling. In such transactions the foreign currencies are like another commodities
offered for sales and purchase, the cost being paid by the buyer in home currency, the
legal tender.

Foreign remittance section of SIBL is an essential part of Foreign Exchange

Department. And this section of foreign exchange department deals with incoming
and outgoing foreign currencies. They form centralized remittance processing unit
(CRPU) to provide better service to their customer. SIBL’s Foreign Remittance
business volume has triggered to Tk. 10,164 million in 2016 paralleled to Tk. 7,839
million in the year 2015. SIBL handles both inwards and outward remittance
products. The outward remittance includes FC cash. FDD, FTT & wire Transfer
through SWIFT, The Inward Remittance products are over the counter payment
(OTC), Account Credit to all bank all branches.

Therefore based on its function, foreign remittances are divided into two types:

Inward foreign remittance:

Inward remittance covers purchase of foreign currency in the form of foreign TT, DD
and bills etc. sent from abroad supporting a beneficiary in Bangladesh. Purchase of
foreign exchange is to be reported to exchange control department of Bangladesh
Bank on From-C.

Outward foreign remittance:

Outward remittance covers sales of foreign currency through issuing foreign TT,
Drafts, and Travelers Cheque etc. as well as sell of foreign exchange under LC and
against import bills retired. Sale of foreign exchange is reported to exchange control
department of Bangladesh Bank on form 1/M.

3.9 Trend Analysis:

Foreign Exchange Business Analysis:

i. Import
ii. Export
iii. Remittance

Import:

Year Import
2015 68198
2016 76985
2017 72168
2018 75321
2019 84906

Import
90000

80000

70000

60000

50000

40000

30000

20000

10000

0
2015 2016 2017 2018 2019

Import

Figure: Foreign exchange business analysis in import of SIBL (2015-2019)

Import is the vital part of the foreign exchange Business. From the graphical
presentation of the import it has shown the five years import foreign exchange
business analysis of Social Islami Bank Ltd since 2015 to 2019. In 2015 import was
Tk. 68,198 million, in 2016 import was Tk. 76,985 million and last in 2018 import
was Tk. 84,906 million. In every year import was increasing trend except 2017. In
2016 growth rate was 11.41%. In 2017 the growth rate decrease by 4.06% but again in
2018 it grow 6.54% and last year it grew 6.93%. So we can conclude that import
scenario of Social Islami Bank Ltd was satisfactory in Last five years.

Export:

Year Export
2015 34975
2016 42712
2017 51700
2018 52431
2019 54121

Export
60000

50000

40000

30000

20000

10000

0
2015 2016 2017 2018 2019

Export

Figure: Foreign Exchange Business Analysis in Export of SIBL (2015-2019)

Export position of the Social Islami Bank LTD. is increasing foreign exchange
business. Bank’s Major Export Items are RMG, Frozen Food etc. From the graphical
presentation of export says that the last five years export stability of Social Islami
Bank Ltd since 2015 to 2019. In 2015 the export was Tk. 34,975 million, in 2016 it
was Tk.42.712 million and in last year in 2019 export was Tk. 54,121 million. In
every year export was also increasing foreign exchange business and growth rate of
export was very fast. In 2016 growth rate was 18% and in 2016 the growth rate was
17.50%. The Export business grew to Tk. 54,121million in 2019 which is 1.99%
higher than export of Tk. 53,044 million in 2018. So we can conclude that export
scenario of Social Islami Bank Ltd. was good enough in last five year with increasing
foreign exchange business.

Remittance:

Year Remittance
2015 5134
2016 6822
2017 6522
2018 8922
2019 10164
 Remittance
12000

10000

8000

6000

4000

2000

0
2015 2016 2017 2018 2019

Remittance

Figure: Foreign Exchange Business Analysis in remittance

From the graphical presentation of the remittance it has shown the five years
remittance scenario of Social Islami Bank Ltd. since 2015 to 2019. In 2016 remittance
earning was Tk. 5,134 million, in 2017 earning was Tk. 6,822 million and in last 2019
remittance was Tk. 10,164 million. Except 2017 remittance was also increasing
foreign exchange business but the growth rate of remittance was very low though in
2019 it jumped higher. It’s remarkable that the growth rate of remittance was
excellent in 2016 which was 24.74% and in 2017 it fall by 1.2% then again in 2018 it
grew by 14%; in 2019 the growth rate was 23% approximately. So we can accomplish
that remittance growth rate of Social Islami Bank Ltd. was very good in last few year
except 2017.

3.10 Performance Analysis:

Performance in Foreign Exchange

The performance of the Social Islami Bank in the Last couple of years especially in
the sector of Import, Export, Remittance and comparison of the data with the
operating profit of the Bank in graphically presented.
 Chart Title
90000

80000

70000

60000

50000

40000

30000

20000

10000

0
2015 2016 2017 2018 2019

Import Export Remittance Operating Income

Figure: Performance of foreign trade

The overall performance regarding foreign exchange operation from the year 2015-
2019 are placed in this figure an official year 2018 will be a milestone regarding its
overall performance in foreign trade. SIBL has established Centralized Trade
Processing Unit (CTPU) for serving clients in a more operative and efficient way. For
the branches around Dhaka Division and Chittagong Division, two base stations have
been established at Foreign Exchange Branch, Dhaka and Agrabad Branch of
Chittagong respectively. All the branches under CTPU Dhaka and Chittagong are able
to serve their clients through these base stations. As a result, processing becomes
faster and efficient. It has established the concept of any banking. As a result, the
operating income has increase significantly.

Percentage of total LC opens in 2018 & 2019:

 Percentage of total LC open in 2018

7% Industry Metarial
R M G Accessories
14%
Oil
Capital Machinary
10% 49% Consume Machinary
Others

12%
8%

Figure: Percentage of Total LC opened in 2018

From the graphical presentation of the pie chart it has shown that 49% LC opened in
Industrial raw material purpose which secured the majority portion of the LC opened
Than 12% in oil, 11% in capital machinery and 10% in consumer goods sector in
2018.
 Percentage of Total LC opened in 2019

6% Industry Metarial
8% R M G Accessories
Oil
14% Capital Machinary
52% Consume Machinary
others
12%
8%

Figure: Percentage of Total LC Opened in 2019

From the graphical presentation of the pie chat it has shown that 52% LC opened in
Industrial Raw Material purpose Which occupies the major part of the proportion of
LC opened then 14% in capital machinery, 12% in oil and 8% in consumer goods.
Percentage of Imported commodities

The Bank was involved in financing import business in the field of capital
machineries, Industrial raw material, food grains(rice, wheat, sugar, dal, garlic, onion,
spices), oil(soya bean, palm, lubricant), spare parts, garment accessories, motor
vehicles, sport item, chemical, perfumery items, milk food etc. Whereas the export
was conspicuous in the field of readymade garments.
3.11 SWOT Analysis:

SWOT Analysis is an important tool for estimating the company’s Strengths,

Weaknesses, Opportunities and Threats. It helps the organization to recognize how to
evaluate its performance and scan the macro environment, which in turn would help
the organization to navigate in the raging ocean of competition.

The abbreviation for SWOT stands for-

SWOT analysis of SIBL’s foreign exchange function is given below:

Strength:

1. Central trade processing unit CTPU): In order to smoothen trade finance,

founding of ‘central trade processing unit(CTPU)’ was a timely decision and
has changed the total process of foreign exchange business through speed up
of the facility and the business potential of SIBL. They have CTPU facilities
based in Dhaka and Chittagong.
2. Efficient Employee: At present, the bank has 21 well equipped Authorized
Dealer Branches with highly trained professionals to meet different
requirements of import and export based clients.
3. Minimum risk: Foreign exchange risk is negligible because of the transactions
are conceded out on behalf of customers against underlying LC commitments.
If the importer fails to pay the amount to the exporter then the bank pays on
behalf of the importer but the payment is made against import documents or in
the form of loan against imported merchandise.
 4. Well-structured Foreign Exchange Department: Foreign exchange risks are
managed and checked by well-structured Foreign exchange department.
Foreign exchange operation is concentrated on funding operation and foreign
exchange dealings.

Weaknesses:

1. Sometimes risk may not be appropriately measured and can cause holdings
loss
2. Foreign exchange department sometimes do not work well in dealing foreign
exchange business.
3. Sometimes they can’t estimate foreign exchange rate properly it may cause
future trouble.
4. Sometimes clients do not show the genuine price of imported product to avoid
customer duty which generates risk for banker but they have nothing to do for
that.
5. If information from the correspondents and subsidiaries are not readily
available then the business may be hampered.

Opportunity:

1. SIBL endured within the prescribed holding limits set by Bangladesh Bank.
2. All foreign exchange transactions are revaluated at Market to Market rate as
determined by Bangladesh Bank
3. It has well managed holdings for transferring remittance and this is the first
initiative of any Islamic bank in Bangladesh ever.
4. It has good impression to public which ensure future vision of foreign
exchange income of the bank
Threats:

1. Major threat for foreign exchange department is the instability of prices of

foreign currency
2. SIBL has to strive with the other private commercial & Islamic bank &
foreign banks in case of its foreign exchange business
3. Govt. policy change may affect its functions.
4. Lack of responsiveness of people is also responsible for not using the proper
way in transferring remittance.
5. The foreign exchange business is also facing loss because of not transferring
the remittance to the suitable way.
 CHAPTER - 4

Findings, Recommendations &

Conclusion
4.1 Findings of the Report:

Major findings of the study are as follows:

1. SIBL looks onward to a new horizon with a individual mission to become a

highly competitive modern transparent organization compellable to any of its
kind at home and abroad. Import earnings are pleasing levels of this bank the
earning from remittance is not satisfactory.
2. In case of LC opening, Bank provides NIL margin facility to only some big
client, but they can also offer this capability to some small but efficient client.
3. In opening LC, bank sometimes rejects the small business enterprise, which
eventually decreases the bank’s profit and also wellbeing of the country’s
economy.
4. Profit rate on foreign currency account is inferior than other commercial bank
for that reason bank can’t fascinate more NRB clients.
5. Nostro accounts of SIBL are not adequate. As a result payment for LC are
becoming difficult to make through those accounts
6. Changes such as SWIFT changes (change for sending the LC electronically),
Document Handling charges and stamps charges are high in SIBL which
distresses to collect more clients.
7. SIBL is not concerned to open more LC’s with higher value. It means that,
bank isn’t willing to upsurge the value of the limit on LC value, which
eventually decreases the potential clients.
8. Initiatives on credit facilities for exporter are not sufficient. Export credit
guarantee is not enough for the possible exporter for that reason exporter are
trying to find out credit facilities from other source.
9. The bank tries to adopt all the latest conveniences to boost their business.
Social Islami Bank has already brought software called Ababil particular for
famous core banking software, which is now being realized to all of its
branches but in terms of foreign exchange operation this software is not
enough supple.
4.2 Recommendations:

It is not easy to recommend some proposition to enhance the performance level of the
organization like SIBL. Although Social Islami Bank is now providing a very
efficient Foreign exchange services, there is also room for enhancement to offer their
services even better. On the basis of my observation I would like to present the
following recommendations.

Invite for increasing remittance income

Most of the time the bank efforts to provide quality service to their known clients, it
may loses the general unknown potential good customer and which ultimately
decrease the bank’s remittance income. Bank can provide excellence service to their
unknown but efficient client. To increase the remittance income it can serve
remittance service quicker than other bank and they can reduce their commission
charge which will finally increase the remittance income.

LC margin
A customer is asked to pay the bank security percentage of the total LC value in
advance beforehand opening LC, which is termed LC margin. If Social Islami Bank
Ltd decreases the rate of margin then perhaps they can attract more customers.

Profit on FC account can be increase

Profit rate on FC account can be rise; if it increases the profit rate then the bank can
attract Non Residence of Bangladesh clients.

Increase the number of nostro accounts

Nostro accounts are the foreign currency accounts that the banks hold with foreign
banks operating in different countries. If they increase the number of such accounts
then disbursements for LC could be easily made through those accounts rather than
accelerating the foreign currency through other foreign banks.
Encourage to open smaller LC value
Being a well reputed bank, SIBL no longer wants to demeanor smaller LC request
coining from SME’s As a result, they are disregarding a huge number of potential
customers. The bank now pays extra attention to big customers and if their attitude
towards smaller business does not change soon, they might fall far behind its
competitors.

Reduce charges
In order to do any kinds of foreign trade whether it to be remittance export or even
import charges are valid everywhere. Charges include SWIFT charges; Document
handling charges, stamps charges. Social Islami Bank will be able to fascinate more
customers if the bank reduces these charges.

Increase the limit on LC value

Every LC has parameters on its total value, imposed on them according to Bangladesh
banks regulations, and based on the risk factors. However, the bank still has the
consultant to make some changes to the limit within a certain specified range. If
Social Islami Bank become more flexible, than it can open more LC’s with higher
value thus growing their profitability; however in this case there will be more risk.

Export credit guarantee can be publicized as incentive

Export credit guarantee can be publicized adequately, so that the exporters are
attracted to this scheme, which could play an significant role in substituting additional
securities, often required by bankers. Bank can offer more enticements to their
exporter to attract such as credit facilities.

Simplification and modification of the software

Social Islami Bank has by now brought software called Ababil specialized for well-
known core banking software, which is now being implemented to all of its branches.
However, the employees are still struggling to bear foreign exchange services through
this software because of complexity. As a result, precious time and energy are being
wasted while conduction such foreign exchange services. Some further simplification
and modification of this software might actually help the bankers to work more
efficiently in providing international trade services like Export, Import and
Remittance.
4.3 Conclusion:

Social Islami Bank is a bank with excellence. During the time of my internship
program I have assembled lots of practical knowledge and experience and lastly
agreed to this statement to be true. Working and get involved in such a reputed bank
is really a great pleasure for me. This internship program is noticeably helpful for
further thinking about my career. I must thankful to all of the officials with whom I
have worked and who have given me appropriate chance to apply my theoretical
knowledge in the practical field.

SIBL deals full range of banking service that includes deposit banking, investment,
export, import and financing national and international remittance facilities etc. the
policy of SIBL is to add more strength to the company’s performance by emphasizing
the area where they have the advantage today and where they can grow faster than
their competitors. The bank think different to give distinguished service to its
customers and try to run business improved than every passing day better than their
competitors.
Govt. is taking necessary steps to enhance its export sector through the help of market
mechanism as well as different financial and influential incentives to exporters.

At the same time SIBL is taking necessary steps to attract foreign investment and
generating efficient human resource to fight edge of competition. In the line of
liberalization of our economic sector, our current account has already been made
adaptable along with floating exchange rate. The Social Islami Bank already has
shown impressive performance in different financial sector.

At last we can conclude that Social Islami Bank’s Foreign exchange operation
strategy is, to add more strenght to the company’s performance. Along with upholding
standard level of service Social Islami Bank Ltd is playing a foremost role in
economic development of the country I think Social Islami Bank is contributing
greatly to the economy of Bangladesh along with high level of corporate social
responsibility. Working and get involved in such a reputed bank is really a great
pleasure for me. This internship program is obviously helpful for me further career
planning.

Bibliography

Books
i. Jeffry, A friedan , (2016) , Currency Politics: The Political Economy of
Exchange Rate Policy Paperback.
ii. Anna Coulling, 1st Edition, A Complete Guide: To Volume Price Analysis.
iii. Jeswald W. Salacuse, Twenty-First Century Kindle Edition, The Global
Negotiator: Making, Managing and Mending Deals Around the World
iv. Gaucan ,Violeta – Introduction to The Foreign Exchange Market Investment,
TituMaiorescu University, Bucharest ,Romania

Websites:
1) www.SIBL.com
2) www.assignment point .com
3) ecenter24.blogepost.com
4) www.banksbd.org
5) www.academia.edu
6) en.wikipedia.org/wiki/SIBL

Others:
1) Annual Report 2017, Social Islami Bank Limited
2) Foreign Policy 2017, Social Islami Bank Limited