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“Foreign Exchange Operations of a Commercial Bank: A Case study of Mutual Trust Bank Ltd.”
Prepared By:
MD. Sadid Al Saharea
ID No: 113011052
ULAB School of Business
Supervised By:
Dr. Milan Kumar Bhattacharjee
Professor
ULAB School of Business
University of Liberal Arts Bangladesh
An internship report Submitted to the ULAB School of Business in partial fulfillment of the
requirements for the award of degree
Of
Bachelor of Business Administration
Date of Submission: 16 April, 2015;

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Internship ReportApproval Form
Student Name ______________________________________________ ID No.____________________
Major: _____________________________________________________________ Year:_________
Local Phone: ____________________________ Email: _______________________________
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INTERNSHIP/PROJECT INFORMATION
Internship
Organization/Project:___________________________________________________________________
Internship /Project Report
Topic:___________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Semester (Tick one): □ spring 2015 □ summer 2015 □ fall 2015
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SUPERVISOR APPROVAL
(Please place a Tick)
□ Approved □ Not Approved □ Partial Re-write □ Full Re-write
Remarks (If Not Approved/Pretrial/Full Rewrite): _____________________________________________
_____________________________________________________________________________________________
______________________________________________________________________________
Signature: _________________________________________________ Date: _____________________
Name: _____________________________________________________ Title: _________________
E-mail: ____________________________________________________ Phone:_____________________

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PLAGIARISM DECLARATION
1. I know that plagiarism means taking and using the ideas, writings, works or inventions of
another as if they were one’s own. I know that plagiarism not only includes verbatim
copying, but also the extensive use of another person’s ideas without proper
acknowledgement (which includes the proper use of quotation marks). I know that
plagiarism covers this sort of use of material found in textual sources and from the
Internet.
2. I acknowledge and understand that plagiarism is wrong.
3. I understand that my research must be accurately referenced.
4. This assignment is my own work, or my group’s own unique group assignment. I
acknowledge that copying someone else’s assignment, or part of it, is wrong, and that
submitting identical work to others constitutes a form of plagiarism.
5. I have not allowed, nor will I in the future allow, anyone to copy my work with the
intention of passing it off as their own work.
Name __________________________________________________ (BLOCK LETTERS)
ULAB ID #____________________
Signature _____________________________ Date ___________________

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Letter of Transmittal
16 April, 2015
Dr. Milan Kumar Bhattacharjee
Professor
ULAB School of Business
University of Liberal Arts Bangladesh
Subject: Submission of internship Report.
Dear Sir,
I would like to submit this report titled ‘Foreign Exchange Operations of a Commercial
Bank: A Case study of Mutual Trust Bank Ltd.’ prepared as a part of the requirement for my
Internship at Mutual Trust Bank, Principal Branch under the BBA Program at University of
Liberal Arts Bangladesh.
I started my internship period at the organization on January 5, 2015 and have completed my
internship on April 7, 2015. During this period I have across different banking functions and
responsibilities undertaken at MTB Principal Branch. It has been an enlightening experience as I
learnt about various branch level functions in different departments such as General Banking,
Foreign Exchange Department and Clearing.
After learning about the profile of Mutual Trust Bank and considering the bank’s principal
business operations, I decided it would be appropriate to choose an area relating foreign
exchange performance of the bank because of its being one of the major business operation of
Mutual Trust Bank. As such, I have chosen to prepare my report on ‘Foreign Exchange
Operations of a Commercial Bank: A Case study of Mutual Trust Bank Ltd.’. In this report,
I have ventured to apply the knowledge and guidelines from my education span and to focus on
evaluating the foreign exchange performance and the overall foreign exchange management
activities of Mutual Trust Bank.
Despite several limitations faced while preparing the report, I have endeavored to make the
study thorough as possible. I sincerely expect that this report accomplishes the objectives and
requirements of my internship and that it finds your acceptance. Please accept my sincere thanks
and gratitude for the guidance, support and time and should you require any elaboration on any
issue, I shall be glad to pursue.
Yours Faithfully
Md. Sadid Al Saharea
ID No. 113011052
ULAB School of Business
University of Liberal Arts Bangladesh

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Acknowledgement
At the very beginning I would like to extend my sincere gratitude to all those who have bestowed
their assistance and cooperation upon the preparation of this report titled ‘Foreign Exchange
Operations of a Commercial Bank: A Case study of Mutual Trust Bank Ltd.’
I take this opportunity to thank everyone who took concern in the successful completion of this
internship. To put more specifically, I express my sincere gratitude to my Supervisor Dr. Milan
Kumar Bhattacharjee for his direction, prudent supervision and moral support on the ground of
which I have put effort to obtain knowledge on a new area.
I would like to thank the Human Resource Management (HRM) Department of Mutual Trust
Bank Limited for appointing me as intern in the bank, without the support of which I this report
couldn’t have come into existence. In particular, I would like to thank Mr. Kamruzzaman, the
Branch Head of MTB Principal Branch who cordially granted my access to branch specific
information and guided me through every step of difficulties I encountered during my internship
period.
I specially acknowledge the contribution of Mr. Mohiuddin Chowdhury, and Mr. Kamal
Uddin (First Assistant Vice President, Foreign exchange Department, MTB Principal Branch)
for providing precious information and in depth idea of the Foreign Exchange management
practices performed at different levels of Mutual Trust Bank Limited. I also express my sincere
gratitude to Mr. Anayet ullah (Vice President, GB Department) who acquainted me with the
different practical functions undertaken at the General Banking Department of the bank.
Finally, I would show my gratitude to all the individuals who helped me to prepare this report
during this time.
------------------------
Md. Sadid Al Saharea
ID No. 113011052
ULAB School of Business
University of Liberal Arts Bangladesh

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Executive Summary
Within its 15th year of operations, Mutual Trust Bank Limited has opened 101 branches across
the country and has been dealing with a wide variety of Foreign exchange Credit and Deposit
Products since its emergence. This study deals with the performance of foreign exchange and
the foreign exchange management practice of Mutual Trust Bank. The study is entitled as
‘Foreign Exchange Operations of a Commercial Bank: A Case study of Mutual Trust Bank
Ltd.’
In this report consist up with four individual parts. In here the First part is the Introduction part
& here briefly describe Rationale of the Study, Objective, Methodology, scope, Limitations and
My Experiences during the report. The Second part is Theoretical Aspects and here describe,
Concepts, principals, techniques, Legal aspects etc. The third part is practical issues of Mutual
Trust Bank (MTB), here described about the Overview of Mutual Trust Bank, financial
analysis, Foreign Exchange Operation analysis, SWOT analysis, and findings. The Final part is
Concluding Notes here describe Recommendations and Conclusion.
Foreign exchange is an important department of Mutual Trust Bank, which deals with import,
export and foreign remittances. It bridges between importers and exporters. This department is
playing an important role in enhancing export earnings, which aids economic growth and in turn
it helps for the economic development. On the other hand, it also helps to meet those goods and
service, which are most demandable and not adequate in our country.

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Contents
Chapter 01: Introduction
1.1 Rationale of the Study:...........................................................................................................10
1.2 Objectives:............................................................................................................................11
1.3 METHODOLOGY OF THE STUDY .....................................................................................11
1.1.1 Primary Data:.................................................................................................................11
1.1.2 Secondary Data:.............................................................................................................12
1.3.3 Data Analysis:....................................................................................................................12
1.4 Scope of the Study: .....................................................................................................................12
1.5 My Engagements with MTB Principal Branch:........................................................................13
1.5.1 Tasks in General Banking Department: ..................................................................................13
1.5.2 Tasks performed in foreign exchange Department:..................................................................16
1.6 Limitations:................................................................................................................................16
Chapter 02: Theoretical Aspects
2.1 Foreign Exchange .......................................................................................................................17
2.2 The History of Foreign Exchange.................................................................................................17
2.3 Foreign Exchange Market:...........................................................................................................18
2.4 Foreign Exchange Rates ..............................................................................................................19
2.5 Concepts ....................................................................................................................................20
2.6 Import Section:...........................................................................................................................24
2.7 Export Section:...........................................................................................................................30
2.8 Foreign Remittance:....................................................................................................................37

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Chapter 03: Practical Issues
3.1 Sample Enterprise at a Glance......................................................................................................41
3.1.1 Management Hierarchy of Mutual Trust Bank Limited:...........................................................42
Figure 1: Management Hierarchy of Mutual Trust bank (Source-MTB Corporate Intra-net)...........42
3.1.2 Present Board of Directors:...................................................................................................43
3.1.3 A Brief Overview of the Products of MTBL...........................................................................43
Table 1: Present Board of Directors............................................................................................43
3.1.4 Credit Rating of the Bank:.....................................................................................................44
3.1.5 Summary of Financial Performance:......................................................................................44
Table 2: Summary of Financial Performance...............................................................................45
3.2 Analysis of Findings....................................................................................................................46
3.2.1 Total Import:........................................................................................................................46
Figure: 02 .................................................................................................................................46
Table: 03 ..................................................................................................................................46
Figure: 03 .................................................................................................................................47
3.2.2 Total Export:........................................................................................................................47
Table: 04 ..................................................................................................................................48
3.2.3 Foreign Remittance:..............................................................................................................49
Table: 05 ..................................................................................................................................49
Figure: 06 .................................................................................................................................49
3.2.4 Comparative Analysis:..........................................................................................................51
Figure 07:.................................................................................................................................52
3.2.5 EARNINGS PER SHARE.....................................................................................................54
Figure: 08 .................................................................................................................................54
3.2.6 TOTAL ASSETS..................................................................................................................55
Figure: 09 .................................................................................................................................55
3.2.7 Compare of EPS to Others bank ............................................................................................56
Figure: 10 .................................................................................................................................57

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3.2.8 Findings of the study.............................................................................................................58
3.3 SWOT Analysis ..........................................................................................................................59
Chapter 04: Concluding Notes
4.1 Recommendations .......................................................................................................................61
4.2 Conclusion: ................................................................................................................................62
References:......................................................................................................................................63

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Chapter: 01: Introduction
One of the largest businesses carried out by the commercial bank is foreign trading. Foreign
trade can be easily defined as a business activity, which crosses national boundaries. These may
be between parties or government ones. No country can produce all kinds of goods. From this
sense; this is the origin of foreign trade. When two countries exchange goods or services between
them we can call it foreign trade. The trade among various countries falls for close link between
the parties dealing in trade. The situation calls for expertise in the field of foreign operations. The
bank, which provides such operation, is referred to as rending international banking operation.
Mainly transactions with overseas countries are respects of import; export and foreign remittance
come under the preview of foreign exchange transactions. International trade demands a flow of
goods from seller to buyer and of payment from buyer to seller. In this case the bank plays a vital
role to bridge between the buyer and seller.
In the Mutual Trust Bank Limited, Principal Branch, there are nine peoples are working
continuously with great effort and teamwork. They are quite efficient and skilled at what they do.
There are more than 300 clients and 25 countries they are dealing with. They believe in
teamwork and extreme hard work.
1.1 Rationale of the Study:
Internship program, being a core academic requirement of the 4 year BBA program, involves
receiving a realistic training through attending practical work at an organization. The program
facilitates an intern to have a close look into the real-life practice of what are theoretically learnt
in the whole period of his/her study. As a Student of a faculty of business studies majoring in
finance, I was appointed to Mutual Trust Bank Limited, Principal Branch under the supervision
of Dr. Milan Kumar Bhattacharjee, Professor, School of Business, at University of Liberal Arts
Bangladesh. As per the academic rule, my supervisor required me to prepare a report on the basis
of the experience gathered during my tenure as an intern and additional studies on Foreign
Exchange Operations of a Commercial Bank: A Case study of Mutual Trust Bank Ltd.

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1.2 Objectives:
The main objective is to get a clear-cut idea about procedures of foreign exchange department,
how its run its operations step by step every day. Along with the main objective other objective
of report are following:
 To Know the Foreign Exchange operation guideline of MTBL.
 To find out the contributions of foreign exchange business of a bank in its overall
earnings.
 To determine the factors that influences the choice of a bank by the customers.
 To identify the problems faced by the customers and the bankers.
 To evaluate whether the customer service provide by MTBL is good enough for its
congenial existence and growth.
 To evaluate the performance of sanction, disbursement and recovery of foreign trade of
MTBL.
1.3 METHODOLOGY OF THE STUDY
This study is based on a blended mix of primary and secondary sources of data. However, since
one of the core objectives of the study involves a number of analyses of the Foreign Exchange
performance of MTBL, the dependence on secondary data has been naturally to a greater extent.
Again, for the qualitative analysis of the overall Foreign Exchange management practices at
different level of MTBL, the author’s observation as an intern in the bank has been used as the
primary data. For the quantitative analyses, different secondary data in internal and external
forms have been used.
1.1.1 Primary Data: Primary data used in this study have chiefly been gathered through
observations of the activities as performed at the Foreign Exchange department of MTB
Principal Branch. The author of this study has been facilitated to undergo a close
interaction with the foreign exchange department officers that resulted in the disclosure
of the foreign exchange managing tasks through the author’s informal interviews and
inquisitions. The data collected at this stage served the qualitative analysis of this study.

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1.1.2 Secondary Data: In order to quantitatively evaluate MTBL’s performance of foreign
exchange through analyzing ratios and showing their trend, this study had to take inputs
from a wide number of secondary sources. These secondary data can be subsumed into
two following categories:
a. Secondary Data from Internal Source: Internal secondary data have been
gathered from the bank’s own publications. Such data include the Audited Annual
Reports of the Mutual Trust Bank Limited (Up to 2013), the bank’s website
(www.mutualtrustbank.com), forms, brochures and other documents used in the
credit department and overall branch operations of the Principal branch.
b. Secondary Data from External Source: These documents include different
regulatory guidelines issued from Bangladesh Bank such as BRPD circulars,
BASEL accords, Investopedia definitions, books, articles, blogs and journals and
other publications available on the internet on foreign exchange related issues.
Bangladesh Bank website has been used as an important source of the industry
performance the banking industry. Helps have also been inferred from economic
updates of Bangladesh from Websites like www.unnayan.org. A detail of the
secondary data would be available at the end of this study under the section titled
‘References’.
1.3.3 Data Analysis: The Foreign Exchange data of Mutual Trust Bank Ltd. will be analyzed in
a descriptive manner.
1.4 Scope of the Study:
The scope of the study is limited to the international Division of Mutual Trust Bank Limited.
This report is a descriptive study which tries to focus on the theories and practices of foreign
exchange operations in the context of the financial institutions in Bangladesh. It will not focus on
the comparable Foreign Exchange practices of other banks. In connection with this effort, a case
study has been conducted on Mutual Trust Bank Limited giving more emphasis on the foreign
exchange side of the institution compared to the other sides.

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1.5 My Engagements with MTB Principal Branch:
Since the appointment letter of MTB bore no formal directions as to my appointment into any
specific department, I enjoyed kind of an informal freedom regarding my work. But my
organization supervisor, Mr. Mohiuddin Chowdhury, the branch head wanted me to work in
General Banking department as an assisting hand to the respective officer. Later, I was asked to
work in the Foreign exchange Department of the Branch. So my experiences are gathered around
mainly these two departments.
Followings are the activities I performed at the Principal Branch. Efforts have been made to
highlight the discrepancy of practice from the theory in the observation of each task.
1.5.1 Tasks in General Banking Department: Almost two-thirds of my internship time
was spent in the GB department. I had come across the opportunity to solely handle the front
desk, while a responsible officer was out in mandatory leaves for 15 days. In this department, I
performed the following tasks:
A. Opening Accounts: Although the Account Opening form is a deed between a bank and a
client and should be filled up by the client’s own hand, in our branch, the front desk
officers have to do this task. I had to fill in the account forms as per the customers’
documents i.e National ID card, Birth Certificate, Passport, Drivers License etc.
Followings are some special features and documents that are necessary to be attached to
the Account forms:
 Transaction Profile: Usually savings, current and MTB Inspire accounts are
termed as the Transaction account whereby customer regularly makes to and
receives money from the bank. Transaction profile is the speculation of the
amount of the money he is likely to transact on a monthly basis. This profile is a
special requirement for the corporate Head Office audit committee to analyze how
risky a customer is. This profile is also audited by the Bangladesh Bank authority
to check and verify the money laundering activities in Bangladesh. The profile
seeks three information which are:
i. The ceiling of the amount of cash a client can deposit or withdraw at a
time and in a month

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ii. The ceiling of the amount of cheque transaction of the customer at a time
and in a month
iii. The ceiling of amount of money that a customer expects to receive from a
foreign country and the amount of money he wants to send overseas (this
is strictly regulated)
Observation regarding Transaction Profile: According to my observation, although this has to
be filled by the customer him/herself, most of the customers can hardly perceive the gist of it.
Therefore, we, people who are in charge, have to speculate and fill the profile and get it signed
by the customer. The point I want to make is that, by such practice, the main purpose of
maintaining Transaction Profile is getting hampered. Although signed by the customer, the
profile always doesn’t say what it needs to say.
B. Issuing Cheque books: Cheque Books are maintained with much sensitivity in Principal
Branch. The GB officer herself unlocks the Cheque Books to be issued every day. When
a client comes and claims, the Cheque Book lot entry is posted in the computer using
Flora Banking Software. Since special cautions have been made by the Central Bank
authority as per Cheque forgery issues, Cheque issuing task is handled with considerable
attention. Interns are not usually allowed to handle the Flora Banking Software in case of
Cheque Book lot entry. But I performed this task of issuing Cheque Book under the
careful guidance of the GB officer I assisted. After the lot entry is posted, the registry
book is signed by the customer and the Cheque Book is handed over to him.
 Observations: Once a Cheque Book is lost, the formality to retrieve a new one is
much lengthy process. The client claiming to lose a Cheque needs to file a General
Diary in the police station. The copy is then verified and kept by the branch
manager and the proceedings are done only after then. I have seen two clients who
were businessmen and their transactions were seriously hampered due to losing of
Cheque Books.
C. Customer Dealing: I had to demonstrate the features of different deposit products before
a prospective account holder of the company. Followings are the most sold products of
MTB Principal Branch, according to my observation:

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 Savings Accounts: Savings accounts pay interest on the deposits on a monthly
basis. But there is another savings account product named MTB Inspire that
counts interest on a daily basis and pays in an accrual manner monthly. It is
usually opened on the name of an individual. This product is not available for
business institutions. The current interest rate on savings accounts paid by MTB is
5%.
 Current Accounts: Typically current accounts are opened by people conducting
businesses in the neighboring area. Institutions generally use this product. No
interest is paid by MTB on this deposit product. For institutions to open this
account, some additional documents along with the Identity documents (NID,
Passport, Birth Certificate etc) are needed such as Trade License issued by the
local government authority, TIN certificate, seal of the institution etc.
 Fixed Deposit Scheme: Like all other bank MTB is providing Fixed Deposit
Scheme. The rate has fluctuated between 8.50% to 8.75% during my working
period at the bank for the three months deposits. The deposits can be, however, of
6 months, 1 year and other maturity periods, but typically 3 months is the most-
sold and standard Fixed Deposit benchmark rate according to observation.
Looking at the previous records of the performance of the bank in the case of
FDR, it makes me believe that the sale of this deposit product has considerably
decreased due to interest rate plunge.
 Other Deposit Schemes: Among deposit schemes like Brick by Brick, MTB
Kotipoti, MTB Millionaire etc. Brick by Brick the most popular scheme sold by
the branch. It pays approximately 11% return on the savings made by the party.
The installment can be of 500 taka to any amount of its multiple.
Observations about the deposit products: One remarkable observation that the special savings
and other deposit schemes centrally designed by the MTBL are very much popular. Only a few
deposit schemes like Savings, Brick by Brick, FDR are sold and the rest rigorously designed are
hardly familiar to clients. I think proper marketing initiatives are should be taken to adapt
products like MTB inspire, MTB Probaho, MTB Education Plan, MTB Millionaire etc to
customers. In my tenure, I have hardly sold any of these deposit products to any client.

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1.5.2 Tasks performed in foreign exchange Department:
The foreign exchange department is one of the most confidential and sensitive departments of
this branch. In this department, I was performed-
 C-Form entry
 Document endorsing
 Attaching L/Cs to the documents
Throughout my foreign exchange period, I have made some critical observations. Most of the
observations are positive in nature. All the employees are very wise and responsible. My
observations are-
 Work is never left pending for the next day unless it is absolutely necessary.
 The operation can be more efficient.
 A good performance is always praised by the fellow employees.
 The employees hardly get any free time because of the huge workload.
Every employee has his own set of work. But still, if anyone needs any help, the employees
come forward in helping him with his work despite having a huge workload.
1.6 Limitations:
Audited Annual reports, as available till date, up to 2013 have been used in the analysis, while
the audited financial statements of 2014 and 2015 could have given a sharper update insight of
the foreign exchange performance. The unaudited and incomplete financial statements were not
considered, as they lack notes to the foreign exchange related particulars necessary for the
calculations of this study. A detailed insight of the in-practice approval and appraisal system
performed at the Head Office level could not be possible because of lack of access to necessary
files due to the bank’s concern of its confidentiality policies. The personal observation of the
author and some secondary data has been considered as the basis for the qualitative analysis for
lack of access to primary files, while listening from the horse’s mouth could reflect better
insights.

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Chapter 02 Theoretical Aspects
2.1 Foreign Exchange
By Foreign Exchange we mean foreign currencies or, more commonly, claims to foreign money
balances. It includes all monetary instruments which give residents of one country a financial
claim on another country. The use of foreign exchange is a country‘s principal means of settling
its transactions with other countries. (T.T. Sethi, 2010)
In the broader sense, the foreign exchange is related to the mechanism of foreign payments. It
refers to the system whereby one currency is exchanged for or converted into another Foreign
exchange also refers to the global market where currencies are traded virtually around-the-clock.
The term foreign exchange is usually abbreviated as "forex" and occasionally as "FX."
2.2 The History of Foreign Exchange
The Forex trading history started in 1875 with the birth of the gold standard monetary. Prior to
1875, countries primarily used gold and silver as a form of international payment. Payment using
gold and silver were hampered by their devaluation according to external factors such as an
increase in the discovery of new deposits, which would lead to a change in supply and demand.
This factor would change the Forex trading history forever.
The aim of the implementation of the gold standard was to guarantee any currency, to set amount
of gold. Currency was now backed by gold, measured in ounces. Countries needed large gold
reserves to back the demand for currency. The price difference of an ounce of gold between two
different currencies now became the foreign exchange rate for those two currencies. This History
of Forex was changed by the birth of an international standard by which foreign exchange could
take place between countries. The gold standard monetary broke down during the start of the
First World War Political turmoil with Germany forced the larger European powers to focus on
military projects. This financial drain on Europe gave way to a lack of gold to back the excess
printing of currency and would determine a new change in the FX trading history.
The abolishment of the gold standard monetary system left a void in the method of foreign
exchange, and changed the path of Forex history. This matter was a concern to the Allied
countries and a convention were held at Bretton Woods, New Hampshire, in July 1944, to solve
this problem. This convention led to the inception of the Bretton Woods monetary system.

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This new Bretton Woods monetary system defined the new Forex market history:
 A new method of obtaining a fixed foreign exchange rate.
 The gold standard to be replaced with the US Dollar as the ultimate exchange currency.
 The US Dollar to be the only currency backed by gold.
 The inception of three international authorities to guard over all foreign transactions.
The Bretton Woods monetary system only lasted about 25 years and failed primarily on the basis
of making the US Dollar the only currency to be backed by gold. The U.S announced the end of
the exchange of gold for US Dollars by foreign banks on 15 August 1971
2.3 Foreign Exchange Market:
The foreign exchange market (Forex, FX, or currency market) is a form of exchange for the
global decentralized trading of international currencies. Financial centers around the world
function as anchors of trading between a wide range of different types of buyers and sellers
around the clock, with the exception of weekends. EBS and Reuters' dealing 3000 are two main
interbank FX trading platforms. The foreign exchange market determines the relative values of
different currencies.
The foreign exchange market is unique because of the following characteristics:
 Its huge trading volume representing the largest asset class in the world leading to high
liquidity
 Its geographical dispersion
 Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT
on Sunday until 22:00 GMT Friday
 The variety of factors that affect exchange rates

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2.4 Foreign Exchange Rates
A country‘s demand for foreign exchange and the supply of foreign exchange available to it
provide a convenient basis for the determination of foreign exchange rate.
There are as many exchange rates as there are currencies traded. At any given moment it may be
regarded as the price of one currency in terms of another. It is more enlightening, however to
look upon the exchange rate as the price not of foreign money but of documents representing
claims to foreign money. There is, thus, a cluster of rates in the exchange market and not one rate
between any two currencies. Each rate shows some slight variation from the other rate.
Spot Rate and Forward Rate:
The spot rate of exchange is quoted for the immediate delivery of foreign exchange. It is
distinguished from the forward rate which is quoted for the delivery of foreign exchange at a
future date. The spot rate refers to the rate or quotation prevailing at a particular time, the foreign
exchange required being made available on spot. The forward rate, on the other hand, refers to
the rate at which a future contract for foreign currency to buy or to sell is made on the basis of
the spot rates.
Buying rates and selling rates:
Under the exchange control system, when the government or the central bank of the country hold
full control over the purchase and sale of foreign exchange, two different rates may be fixed for
buying and selling foreign currencies.
Single rate and multiple rates:
Ordinarily, the government of a country adopts a single rate vis-à-vis the currency of another
country. But in certain circumstances it may adopt more than one rate- two or even three rates
vis-à-vis another currency. This is known as the system of multiple exchange rates. There may
be one rate for exports, one rate for imports and still another for capital transactions.
Fixed, Flexible and Floating rates:
Fixed exchange rate refers to that rate which is fixed in terms of gold or is pegged to another
currency which has a fixed value in terms of gold. Flexible exchange rate involves keeping the
exchange rate fixed over short periods but allowing it to change from time to time according to
the changed conditions of demand for and the supply of foreign exchange. Floating exchange
rate is that which finds the natural price of the currency in accordance with the demand and
supply conditions in relation to a foreign currency.

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2.5 Concepts
Foreign Exchange Department of Principal Branch has two sections. They are-
I. Import Section and
II. Export Section.
Before discussing the Import and Export section, some concepts related to foreign trade should
be clarified.
Important concepts of foreign trade as per UCPDC 600 are discussed below:
Importer / Buyer/ Opener/ Applicant:
Applicant means the party on whose request the credit is issued.
Issuing/ opening bank:
Issuing bank means the bank that issues a credit at the request of an applicant or on its own
behalf.
Exporter/ seller/ beneficiary:
Beneficiary means the party in whose favor a credit is issued.
Advising / notifying bank:
Advising bank means the bank that advises the credit at the request of the issuing bank.
Confirming bank:
Confirming bank means the bank that adds its confirmation to a credit upon the issuing bank‘s
authorization or request.
Confirmation:
Confirmation means a definite undertaking of the confirming bank, in addition to that of issuing
bank, to honor or negotiate a complying presentation.
Complying presentation:
Complying presentation means a presentation that is in accordance with the terms and conditions
of the credit, the applicable provisions of these rules and international standard banking practice.
Negotiating bank:
The bank that negotiates the bill (draft) of exporter drawn under the credit is known as
Negotiating bank. If the advising bank is also authorized to negotiate the bill (draft) drawn by the
exporter then it becomes the negotiating bank.

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Reimbursing bank:
If the issuing bank does not maintain any account with a bank who will be negotiating
documents under a L/C, then arrangement is made to reimburse the negotiating bank for the
amount to be paid under credit from some other bank with which the issuing bank maintains his
account. The latter bank is termed as reimbursing bank. An authority to debit his account is sent
to the bank where he holds balance advising to honor claims placed by a negotiating bank.
Paying bank:
The bank that effects payment to the beneficiary (as named in the latter of credit) is known as
paying bank/drawee bank.
Letter of Credit:
Credit means any arrangement however named or described, whereby a bank (issuing bank)
acting at the request and the instructions of a customer (the applicant) or of its own behalf.
1). is to make payment to or to the order of a third party (beneficiary), or is to accept and pay bill
of exchange (drafts) drawn by the beneficiary.
2) Authorizes another bank to effect such payment, or to accept and pay such bill of exchange.
3). Authorizes another bank to negotiate.
Against stipulated documents, provided that the terms and conditions of the credit are complied
with.
Types of L/C or Documentary Credit
Documentary Credits may be either:
(i) Revocable
(ii) Irrevocable.
Revocable credit: A revocable credit is a credit that can be amended or cancelled by the issuing
bank at any time without prior notice to the seller. In case of seller (beneficiary), revocable credit
involves risk, as the credit may be amended or cancelled while the goods are in transit and before
the documents are presented, or although presented before payments has been made. The seller
would then face the problem of obtaining payment on the other hand revocable credit gives the
buyer maximum flexibility, as it can be amended or cancelled without prior notice to the seller
Up to the moment of payment buy the issuing bank at which the issuing bank has made the credit
Available, in the modern banking the use of revocable credit is not widespread.

22. 22 | P a g e
Irrevocable credit: An irrevocable credit constitutes a definite undertaking of the issuing bank
(since it cannot be amended or cancelled without the agreement of all parties thereto), provided
that the stipulated documents are presented and the terms and conditions are satisfied by the
seller. This sort of credit is always preferred to revocable letter of credit. Sometimes, Letter of
Credits is marked as either 'with recourse to drawee or 'without recourse to drawer'.
Some Important Documents of L/C or Documentary Credit
Forwarding: Forwarding is the letter given by the advising bank to the issuing bank. Several
copies are sent to the issuing bank. All copies including original should be kept in the bank.
Bill of Exchange: According to the section 05, Negotiable Instruments (NI) Act-1881, A "bill of
exchange" is an instrument in writing containing an unconditional order signed by the maker,
directing a certain person to pay [on demand or at fixed or determinable future time] a certain
sum of money only to or to the order of a certain person or to the bearer of the instrument. It may
be either at sight or certain day sight. At sight means making payment whenever documents will
reach in the issuing bank.
Invoice: Invoice is the price list along with quantities. Several copies of invoice are given. Two
copies should be given to the client and the other copies should be kept in the bank. If there is
only one copy, then its photocopy should be kept in the bank and the original copy should be
given to the client. If any original invoice contains the custom's seal, then it cannot be given to
the client.
Packing List: Packing list is the letter describing the number of packets and size. If there are
several copies, then two copies should be given to the client and the remaining should be kept in
the bank. But if there is only one copy, then the photocopy should be kept in the bank and the
original copy should be given to the client.
Bill of Lading: Bill of Lading is the bill given by shipping company to the client. Only one copy
of Bill of Lading should be given to the client and the remaining copy should be kept in the bank.

23. 23 | P a g e
Certificate of Origin: Certificate of origin is a document describing the producing country of
the goods. One copy of the certificate of origin should be given to the client and the remaining
copy should be kept in the bank. But if there is only one copy, then the photocopy should be kept
in the bank and the original should be given to the client.
Shipment Advice: The copy mentioning the name of the insurance company should be given to
the client and the remaining copies should be kept in the bank. But if only one copy is given,
then the photocopy should be kept in the bank and the original copy should be given to the bank.
IMP-Form
This form is prepared for maintaining account of the money, which goes outside the country for
the purpose of payment. This form is required by Bangladesh Bank. It is an application for
permission under 4/5 of the Foreign Exchange Regulation Act, 1947 to purchase foreign
currency for the payment of import.
IMP - FORM has four copies:
1. Original copy for Bangladesh Bank.
2. Duplicate copy for authorized dealers. It is issued for processing Exchange Control
Copy of bill of entry or certified invoice.
3. Triplicate copy for authorized dealers' record.
4. Quadruplicate copy for submission to the bank in case of imports where documents
are retired.
Following documents are sent with FORM-IMP:
a) Letter of Credit Authorization Form,
b) One copy of invoice,
c) Indent copy / Pro-forma invoice.

24. 24 | P a g e
The following Information is included in the FORM-IMP:
i. Name and address of the authorized dealer,
ii. Amount of foreign currency in words and figures,
iii. Names and address of the beneficiary,
iv. L/C Authorization Form number and date,
v. Registration number of L/C Authorization Form with Bangladesh Bank, and
vi. Description of the goods.
2.6 Import Section:
Import may be defined as bringing of visible item to the country from abroad through letter of
credit or the Authorization form (LCAF) paying foreign Currency to that of exporting country.
Import Mechanism
To import, a person should be competent to be Importer‘. According to Import and Export
Control Act, 1950, the Office of Chief Controller of Import and Export provides the Import
Registration Certificate (IRC) to the importer. After obtaining this, person has to secure a Letter
of Credit Authorization (LCA). And then a person becomes a qualified importer. He is the
person who requests or instructs the opening bank to open an L/C. He is also called opener or
applicant of the credit.
Parties of L/C or Documentary Credit The parties are:
 The Importer
 The Issuing Bank,
 The Confirming Bank, if any, and
 The Beneficiary.
Other parties that facilitate the Documentary Credit are:
 The Applicant,
 The Advising Bank,
 The Nominated Paying/ Accepting Bank, and
 The Transferring Bank, if any.

25. 25 | P a g e
Things Are Done In Import Mechanism
In broader aspect the major responsibilities that are performed here are —
 L/C Issuing. 
 L/C Amendment (if necessary) 
 Lodgment. 
 Retirement of documents. 
 Import Financing. 
L/C Issuing:
This is the first thing to be done for import. Already the definition of L/C is discussed. Now, the
important types of L/C are discussed below:
There are three types of L/C offered by Principal Branch, Mutual Trust Bank. They are:
1. Sight L/C: Payment must be made within five (5) working days after the documents have
been received from the exporter.
2. Deffered / Usance L/C: Payment must be made on or after the due date i.e. shipment
date or Bill of Lading date. Deffered L/C usually opened for 90 days.
3. Back -to -Back L/C: Usually, this L/C is opened by the exporter. If exporter needs to
import goods or equipments to manufacture the ordered goods, then he may import those
goods or equipments by opening a L/C against this mother L/C. The value of the back-to-
back L/C can be 80 percent of the mother L/C.
Classification of Back-to-Back Letter of Credit
Back to back L/C can be divided into four categories. These are:
 Local (04) 

 EDF(05) 

 EPZ foreign (12) 

 Foreign (06) 
Procedure to open an L/C
Usually, Principal Branch, Mutual Trust Bank issues import L/C for both the regular and for new
importers.

26. 26 | P a g e
An importer is required to have the following to import through PBL--
i. Applicant has to apply for opening LC by a prescribed form.
ii. Applicant has to submit the Letter of Indent or Letter of Pro-forma Invoice.
Letter of Indent: Many sellers have their agent in seller‘s country. If the contract
of buying is made between the buyers and the agent of the sellers then Letter of
Indent is required.
Letter of Pro-forma Invoice: If the contract is made directly between the buyer
and the sellers then Letter of Pro-forma Invoice is needed.
iii. Applicant has to submit IRC (Inventors Registration Certificate). It is a
certificate being renewed every year. This certificate is necessary if the contract is
made between the buyers and the agents of the sellers. IRC is of two types -
COM and IND. COM is given for commerce purpose and IND is given for
industrial purpose.
iv. Applicant has to submit LCAF (Letter of Credit Authorization Form).
v. Applicant has to submit insurance document.
vi. Applicant has to prepare FORM-IMP.
vii. Recently, there has been made a provision to give a certificate named TIN (Tax
Payers Identification Number).Taxation department issues this certificate.
viii. Then after proper scrutiny bank will open an L/C.
Considerations for issuing bank
i. He must have an account in PBL.
ii. He must have Importers Registration Certificate (IRC)
iii. Report on past performance with other bank. PBL collect this report from Bangladesh
Bank.
iv. CIB (Credit Information Bureau) report from Bangladesh Bank.
v. A proposal approved by the meeting of executive committee of the bank. It is
necessary only when the L/C amount is small or there is no limit.

27. 27 | P a g e
Desk Work
a. RegisterEntry
 Then the particulars of L/C are recorded in the L/C opening register - Date and L/C
number 
 Name of the party 
 Amount in Tk. And foreign currency 
 Name of advising bank 
 Expiry dates. 
 Percentage of margin and amount of margin 
 Amount of commission, handling charge, postage charges, SWIFT charges. 

b. Bangladesh Bank Entry
Another entry is made to L/C Monitoring cell of Bangladesh Bank through its web site.
Transmitting L/C
After securitization of the L/C application and authorization L/C is transmitted to the advising
bank. Letter of credit can be transmitted to the advising bank through three methods. They are in
Telex, Courier, or SWIFT (Society for Worldwide Inter Telecommunication Network).
Amendment:
Parties involved in a L/C, particularly the seller and the buyer cannot always satisfy the terms
and conditions in full as expected due to some obvious and genuine reasons. In such a situation,
the credit should be amended. Bank transmits the amendment by SWIFT or by post to the
advising bank. If the L/C is amended, service charge and telex charge is debited from the party
account accordingly.
Lodgment:
Lodgment means payment of import bills or transfer of funds for import bills. Here L/C issuing
bank will arrange to make payment against L/C through reimbursement bank or any other way.
Through SWIFT a telex message is transmitted to the correspondent bank ensuring that payment
is being made.
Steps involved in Lodgment
When the scrutiny of import bills is over the steps should be taken for lodgment:
 At first all the particulars of the document are entered in PAD register. PAD No. Seal is
given on all the copies of the received document. 
 Convert the foreign currency into Bangladeshi currency. 
 Prepare Lodgment voucher 
 Send IBCA to the Head Office 
 Entry is made to L/C Monitoring cell of Bangladesh Bank through its web site. 

28. 28 | P a g e
 Make initiation to the import 
Retirement of Documents:
After lodgment the issuing bank will send the importer an intimation regarding the document
arrival notice. On intimation the importer calls on the bank‘s counter requesting retirement of the
shipping documents against payment to the debit of their account by the bill amount and other
charges payable.
Shipment of Goods and Lodgment of Documents by Exporter
Then exporter ships the goods to the destination of the importer country Sends the documents to
the L/C opening bank through his/her negotiating bank. Generally the following documents are
sent to the Opening Banker with L/C:
 Bill of Exchange 

 Bill of Lading 

 Commercial Invoice 

 Certification of Origin 
 A certificate stating that each packet contains the description of goods over
the packet.
 Packing List 

 Advice Details of Shipment 

 Pre-shipment Inspection Certificate 

 Vessel Particular 

 Shipment Certificate 
Payment against Documents (PAD)
Payment made by bank against lodgment of shipping documents of goods imported though
Letter of credit falls under this head. It is an interim advanced with import and it is generally

29. 29 | P a g e
liquidated against payments usually made by the party for retirement of the documents for
release of imported goods from the customer‘s authority. It falls under the category of
commercial loan.
Loan against Imported Merchandise (LIM)
Advances allowed for retirement of shipping document and release of goods imported though
LIM taking effective control over the goods by pledge fall under this type of advance. When the
importer failed to pay the amount payable the exporter against import LIM, then Mutual Trust
Bank gives loan against imported merchandise to the importer. The importer will bear all of the
expenses.
Import against Trust Receipt (LTR)
Advance against a LTR obtained from the customer is allowed when the documents covering an
importer shipment are given without payment. The customer holds the goods or their sale
proceeds in trust for the bank until the LTR are fully paid off. LTR is a document that creates the
bankers line on the goods. The period of LTR may be 30, 45, 60 or 90 days.
Payment Procedure of Import documents
This is the most sensitive task of the Import Department. The officials have to be very much
careful while making payment. This task constitutes the following:
Date of Payment
Usually payment is made within seven days after the documents have been received. If the
payment is become deferred, the negotiating bank may claim interest for making delay.
Preparing Sale Memo
A sale memo is made at BC rate to the customer. As the TT & OD rate is paid to the ID, the
difference between these two rates is exchange trading. Finally, an Inter Branch Exchange
Trading Credit Advice is sent to ID.
Requisition for the Foreign Currency
For arranging necessary fund for payment, a requisition is sent to the International Department.

30. 30 | P a g e
Transmission of Message
Message is transmitted to the correspondent bank ensuring that payment is being made.
Kind of Import Business Relatedto L/C
 Food 

 Chemical(Textile) 

 Medical Instruments 

 Electric Device( IPS, UPS cables etc) 

 Computer accessories 

 Others 



2.7 Export Section:
The goods and services sold by Bangladesh to foreign households, businessmen and Government
are called export.
Things Done in Export
In broader aspect the major responsibility that re performed here are —
 L/C Advising 
 Documents Collection 
 Documents negotiation 
 Export financing 
Parties Involves In Export L/C
1. L/C issuing Bank
2. Importer
3. Exporter L/C advising Bank
4. Negotiation Bank
5. The Paying / Reimbursing Bank
Documents Required for Export Letter of Credit
These documents should be submitted to the bank for negotiation:
 Export L/C EXP form 

 Pro-forma invoice 

31. 31 | P a g e
 Bill of Exchange 

 Certificate of origin 

 Bill of Lading 

 Packing list 

 Inspection certificate Insurance document 

 Any other document as per L/C 
Procedure for Export Letter of Credit
There are a number of formalities that require to procedure of Export Letter of Credit:
ERC (Export Registration Certificate)
For export from Bangladesh unless he is registered with CCI & E and holds valid Export
Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number
is to be incorporated on EXP forms and other documents connected with exports.
Obtaining EXP
After having the registration, the exporter applies to First Security Bank Limited with the trade
license, Export Registration Certificate and the Certificate from the concerned government
Organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter. An EXP-From
contains the following particulars:
 Name and address of Authorized Dealer 

 Particulars of the commodity to be exported with code 

 Country of destination 

 Port of destination 

 Quantity 

 L/C value in foreign currency 

 Terms of Sale 

 Name and address of Importer / Consignee 

32. 32 | P a g e
 Bill of Lading/ Railway Receipt! Airway Bill/ Truck Receipt/ Post Parcel
Receipt no. and date
 Port of Shipment 

 Land Custom Post 

 Shipment Date 
 Name of the Exporter with address CCI & EI‘s Registration number and
Date of the Exporter
 Sector (Public or Private) under which the Exporter falls 
Securing the Order
Upon registration, the exporter may proceed to secure the export order. Contracting the buyers
directly through correspondence may be done. Some buyers of goods like jute and jute goods
maintain liaison office. Representative of local agents who can be contacted to the secure a deal.
Signing of the Contract
The following points are to be mentioned in terms of signing of the contract:
 Quantity of the commodity 

 Price of the commodity 

 Shipment 

 Insurance and marks. Inspection 

 How can solve any kind of conflicts between the contract parties. 

 The terms of the L/C are in conformity with those of the contract 
Procuring the Materials
After making the deal and on having the L.C opened in his favor, the nest step for the exporters
to set about the task of procuring or manufacturing the contracted merchandise.

33. 33 | P a g e
Shipment of Goods
The following are the documents normally involved at the stage of shipment:
 EXP Form 

 Photocopy of registration certificate 

 Photocopy the contract 

 Photocopy of the L/C 
 Freight certificate from the bank in case of payment of the freight at his
port of loading is involved.
 Railway Receipt, Berge Receipt or Truck Receipt. 

 shipping instructions 

 Insurance policy 
Settlement of Local Bill to Back to Back
The settlement of local bills is done in the following ways:
 The customer submits the LIC to First Security Islamic Bank Limited along
with the documents for negotiate 

 First Security Islamic Bank Limited official scrutinizes the documents to
endue the conformity with the term and conditions. 

 The documents are then forwarded to the to the L/C opening bank. 
Preparation of the Export Document:
Substantive Document
Substantive document are those which are normally required to be furnished under almost all the
contracts for sale of goods to overseas buyers and they include:
 Draft or bill exchange 

 Commercial invoice 

 Bill of lading or airway bill 

 Marine insurance policy 

34. 34 | P a g e
Auxiliary Document
In substantive document, the exporter may be required to prepare other document, called
auxiliary document. The number and type of those documents depends on the terms of the
contract and /or the L/C, but they mainly include:
 Packing list 

 Consular invoice 

 Certificate of origin 

 Inspection certificate 

 Quality control certificate 

 Photo- sanitary certificate 

 GSP certificate 
Negotiation of Documents under Letter of Credit
Under this arrangement, after the goods are shipped, the exporter submits the concerned
document to the negotiating bank for negotiation. The documents should be negotiated strictly in
accordance with the terms and conditions and within the period mentioned in the letter of credit.
After shipment, exporter submits the following documents to the Bank for negotiation.
 Bill of exchange 

 Bill of Lading 

 Invoice 

 Insurance Policy/Certificate 

 Certificate of Origin 

 Inspection Certificate 

 Consular Invoice 

 Packing List 

 Quality Control Certificate 

 G.S.P. certificate. 

35. 35 | P a g e
Mode of Payment of Export Bill under Letter of Credit
As per UCPDC 500, 1993 revision there are four types of credit. These are as follows:
 Sight Payment Credit 

 Deferred payment Credit 

 Acceptance credit 

 Negotiation Credit 
Export Financing
Export financing can be two types:
Pre- Shipment
Pre- shipment, as the name suggest, is given to finance the activities of an exporter prior to the
actual shipment of goods. Pre-shipment credit is essentially a short-term credit and liquidated by
negotiation or purchase of export bills covering the merchandise.
Export Cash Credit (Hypothecation)
Under this arrangement, a credit is sanction against hypothecation of the raw materials or
finished goods for export. Such facility is allowed only to major exports. As the bank has no got
security, in this case, except change documents and line of export L/C or contract, the bank
normally insists on the exporter furnishing collateral security.
Export Cash Credit (Pledge)
This credit facility is allowed against a pledge of exporter goods or raw materials. In this case,
cash credit facilities are extended against pledge of goods to be stored in the go down under
banks control by signing the letter of pledge and other documents.
Packing Credit
In this case, the credit facilities are extended against security of railway receipt or steamer receipt
or barge receipt or truck receipt evidencing transportation of goods to the port for shipment of
the goods in addition to the usual charge document and lien of export letter of credit.

36. 36 | P a g e
Payment of Back-To-Back Letter of Credit
In case back to back as 60-90-120 days of maturity period, deferred payment is made. Payment is
given after realizing export proceeds from the L/C issuing bank.
Post-Shipment
Post shipment credit refers to the credit facilities extended to the exporter by the bank after
Shipment of the goods against export documents. Necessary of credit arises, as the exporter
cannot afford to wait for a long time without paying manufacturers/ suppliers.
Purchase of DP& DA Bills
In such a case, the bank purchased/discount the DP (document against payment) and DA
(document against acceptance) bills operated under the payment method of documents
separately, and clear instructions have to be obtained from the drawer of the bills in regard to all
important issues related to the negotiation of the bills.
Advances against Bills for Collections
Banks generally accept export bills for collection of proceeds when they are not drawn under
against an L/C contain some discrepancies. The bank generally negotiates bills drawn under L/C,
without any discrepancy in the documents and the exporter gets the money from the bank
immediately.
The goods and services sold by Bangladesh to foreign households, businessmen and Government
are called export. The export trade of the country is regulated by the Imports and Exports
(control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before
and after shipment of goods. The exports from Bangladesh are subject to export trade control
exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CCI
& E). No exporter is allowed to export any commodity permissible for export from Bangladesh
unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The
ERC is required to be renewed every year. The ERC number is to be incorporated on EXP forms
and other documents connected with exports.

37. 37 | P a g e
Payment Procedure for FDBP
 After purchasing the documents, Bank gives the following entries: 
o FDBP A/C ---------------------------------------------------- Dr. (at OD sight rate)
o Customer A/C ------------------------------------------------ Cr.
(Before realization of proceeds)
Bank would realize only postage charges from the exporter.
 Subsequently, Bank will send the documents to the L/C opening Bank for payment with a
forwarding letter detailing the enclosures. Upon realization of proceeds the Negotiating
Bank would pass the following vouchers: 
o Head Office A/C -------------------------------------------- Dr. (at T.T Clean rate)
o FDBP A/C --------------------------------------------------- Cr.
o Income A/C Profit on Exchange Trading --------------- Cr.
(Adjustment after realization of proceeds)
A FDBP Register is maintained for recording all the particulars
Kind of Export Business Relatedto Letter of Credit
 Garments 

 Shrimpfish 

 Jute 

 Others 
2.8 Foreign Remittance:
MTB, Principal Branch is an authorized dealer of foreign exchange. Their dealing in foreign
exchange involves buying and selling of foreign exchange covering inward remittances received
from abroad and outward remittances sent abroad.

38. 38 | P a g e
The basic functions of this department are outward and inboard remittance of foreign exchange
from one country to another country. In the process of providing this remittance service, it sells
and buys foreign currency. The conversion of one currency into another takes places at an agreed
rate of exchange, in where the banker quotes, one for buying and another for selling. In such
transactions the foreign currencies are like any other commodities offered for sales and
purchases, the cost being paid by the buyer in home currency, the legal tender.
Working of this Department
 Foreign TT payment & purchase of F. Drafts, preparations of FBP (Foreign Bill
Purchase)
 Issuance of outward TT & FDD 

 Issuance of proceed responding certificate (PRC) 

 Foreign collection, Bangladesh Bank Clearing Check Collection, that comes from all
branch of FSBL 

 Withdrawal from F.C. A/C 

 Encashment of T.C & Cash Dollar and Sterling Pound 

 Deduction of Tax and VAT. On behalf of Bangladesh Bank 

 Preparation of related statements including convertible Take Accounts 

 Preparation of IBCA & IBDA and balancing of collection and other special assignment
as desired by department in charge 

 Balancing of account statement 

 Compliance of audit & inspection 

 Statement of all related works submitted to Bangladesh Bank 
There are two types of remittance:
1. Inward remittance
2. Outward remittance

39. 39 | P a g e
Inward Foreign Remittance
Inward Foreign Remittance covers purchase of foreign currency in the form of foreign TT, DD,
MT, Bills etc. sent from aboard favoring a beneficiary in Bangladesh. Purchase of foreign
exchange is to be reported to exchange control department of Bangladesh Bank prescribing two
forms:
 EXP from: Remittances received against export of goods from Bangladesh are done by
this. 

 From C: Inward remittances equivalent to US$ 2000/- and above are done by this. 
Outward Foreign Remittance
Outward Foreign Remittance covers sales of foreign currency though issuing foreign T.T, Drafts,
Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills
retired. Two forms are used for outward remittance of foreign currency are:
 IMP Form: All Outward Remittance on account of imports 

 TM: For all other Outward Remittances 
Remittance Facilities:
Private Remittances
 Family remittances facilities 

 Remittances of membership fees 

 Education 

 Remittances of consular fees 

 Remittances of evaluation fees 

 Travel 

 Health & medical 

 Seminars & workshops 

 Foreign nationals 

 Remittances for Hajj 

 Other private Remittances 

40. 40 | P a g e
Official and Business Travel
 Official visit 

 Business travel quota for new exporter 

 Business travel quota for importer 

 Exporter retention quota 
Commercial Remittances
 Opening of branches or subsidiary companies abroad. 

 Remittances by shipping, airlines and courier services. 

 Remittance for royalty and technical fees. 

 Remittance on account of training & consultancy. 

 Remittance of dividends. 

 Subscription of foreign media services. 

 Fees for return monitors. 

 Adv. of Bang. Products in mass media abroad. 

 Bank charges. 

 Sundries. 
The bank also gives service to the customer through-
 Wall Street Finance 
 Prabhu Money Transfer 
 KMB Money Transfer 
 Dollex Dollar Express 
 Money Gram 
 X-press money. 

41. 41 | P a g e
Chapter: 03: Practical Issues
3.1 Sample Enterprise at a Glance
Mutual Trust Bank is one of the five oldest private commercial banks operating in Bangladesh
that were issued permission during the early ‘90s. The other contemporary banks were Dutch-
Bangla Bank, Al Arafa Islami Bank, Prime Bank, Dhaka Bank and Eastern Bank. These banks
are known as the second generation banks in the country as they have come out of bad loan
culture for the first time in the history of banking in Bangladesh. Mutual Trust bank limited is
licensed as a Scheduled Bank in the private banking sector. The bank has recently opened its
101th branch and in a period of 15 years, it has conspicuously shown a growth through meeting
its capital adequacy requirement of the central bank of Bangladesh. Following information
regarding the commencement of the bank have been adopted from the bank’s website
(www.mutualtrustbanklimited.com):
Mutual Trust Bank was incorporated as a Public Limited Company in 1999, under the
Companies Act 1994. The company had an Authorized Share Capital of BDT 1,000,000,000
divided into 10,000,000 ordinary shares of BDT 100 each during its incorporation. Currently, the
Authorized Share Capital of the company is BDT 10,000,000,000 divided into 1,000,000,000
ordinary shares of BDT 10 each. The Company was also issued Certificate for Commencement
of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank
under the Banking Companies Act 1991 and started its banking operation on October 24, 1999.
According to the Memorandum of Association and as licensed by Bangladesh Bank under the
provisions of the Banking Companies Act 1991, the Company started its banking operation.
Currently Mutual Trust Bank Limited conducts the following banking operations:
 Wholesale Banking
 Retail Banking
 International Trade Financing
 Small and Medium Enterprises (SME) Banking
 NRB Banking
 Privilege Banking
 Card Services and
 Treasury Operations
MTB operates through its Head Office at Dhaka and the bank carries out international
business through a Global Network of Foreign Correspondent Banks.

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3.1.1 Management Hierarchy of Mutual Trust Bank Limited:
As the figure depicts, MTBL has a standard organization structure which has compliance and
consistence with the guideline as prescribed by the Bangladesh Bank.
As per their detailed organizational structure relevant with the credit management process, Board
of directors is the source of all power which is delegated by the Managing Director and CEO of
the Bank. Every Divisions and Departments has a divisional and departmental heads, sufficient
manpower is employed under these departmental heads. Officers has to report to their line
managers, Line Mangers has to report to their divisional heads, Divisional heads are accountable
to Deputy Managing Directors, Deputy Managing Director has to report to Managing Director
and CEO. CEO is accountable for his actions to the Board of Directors.
It is relevant to articulate that the MTBL restructured its banking system from Branch Banking to
Centralized Banking in the year 2007. A corporate intra-net is used to centrally control the
branch banking operations from the Head Office.
Figure 1: Management Hierarchy of Mutual Trust bank (Source-MTB Corporate Intra-net)

43. 43 | P a g e
3.1.2 Present Board of Directors:
Sl. Name Designation
1 Mr. Rashed Ahmed Chowdhury Chairman
2 Mr. M.A Rouf, JP, Vice Chairman
3 Mr Syed ManzurElahi
4 Dr. ArifDowla
5 Mr. Md. Hedaytellah
6 Mr. Md. Abdul Malek
7 Mr. Md. Wakiluddin
8 Mrs. KhwajaNargisHossain
9 Mr. AnjanChowdhury
10 Mr. Q.A.F.M Serajul Islam
11 Mr. Anwarul Amin
12 Dr. Sultan HaffezRahman
13 Mr. Anis A. Khan Managing Director &
CEO
Source: www.mutualtrustbank.com
3.1.3 A Brief Overview of the Products of MTBL
MTB’s products are broadly classified into four categories, namely:
1. Retail banking products
a. Deposit products
b. Loan Products
Retail products are enjoyed by individuals and institutions. MTB has a wide variety of deposit
products, mainly dividing into 4 categories: Current Deposit (no interest paid), Savings Deposit
(interest paid on a monthly basis), Fixed Deposits and other specific deposit plans that offer
different interest earnings depending on the maturity. Retail Loan Products include Personal
Loan, Auto Loan, Home Loan, Home Equity Loan and Professional Loan. MTB levies different
interest rates (floating) on these credits issued.
2. Wholesale banking products-MTB’s wholesale banking includes:
a. Term Finance
b. Working Capital Finance
c. Trade Finance
d. Offshore Banking
e. Syndication and Structured Finance.
Table 1: Present Board of Directors

44. 44 | P a g e
MTB often term these financing activities as ‘Corporate Finance’ and the interest rate earned on
these credits amount a greater amount of earnings for MTB.
3. SME Banking: Followings are MTB’s SME banking products:
 MTB Bhagyobati
 MTB Krishi
 MTB Moushumi
 MTB Revolving Loan
 MTB Small Business Loan
 MTB Digoon
 MTB Green Energy Loan
The Revolving Loan, in the suburb areas is a popular credit scheme.
4. NRB
 NRB Savings A/C
 NRB DPS A/C
 NRB FDR
5. Treasury
 Dibor
 Money Market
 Foreign Exchange
 Primary Dealers Business
Apart from these MTB provides other services such as taking Electricity Bills, Telephone Bills,
Gas Bills etc, though these services are subject to branch specifications.
3.1.4 Credit Rating of the Bank: Mutual Trust Bank was last rated by CRAB, one of the
leading credit rating agencies of the country, in May, 2010 which expired on June 30 2011. The
agency didn’t rate it further, as per their website suggests. (http://crabrating.com/index.php)
3.1.5 Summary of Financial Performance:
The following summary has been prepared by taking inputs from the annual report of Mutual
Trust Bank Limited 2010-2013. Since the audited financial statement for the year 2014 is yet to
be published, this study had to depend on the audited reports that were published up to 2013. For
this, some facts, such as total branches have reached 101 in number, total number of employees
has increased to a considerable amount etc couldn’t be included in this table.

45. 45 | P a g e
Particulars 2013 2012 2011 2010
Authorized Capital 10000 10,000.00 3,800.00 3,800.00
Paid up Capital 2543 2,119.58 1,766.32 1496.88
Shareholders’ Equity 4719 4,378.81 3,684.51 2,483.09
Total capital 6695 6,225.56 3,969.33 2,888.33
Total Assets 65,683 58,246.03 52,774.77 38,964.97
Total Deposits 53778 45,846.31 42,354.07 33,820.41
Total Loan & Advances 44,506 39,676.12 33,883.92 28,529.35
Total Investment 20,149 9,216.33 9,537.97 5,606.49
Export 26,596 16,842.85 19,676.38 19,463.24
Import 36,945 27,652.80 29,720.99 30,381.62
Total contingent Liabilities 15857 15,498.87 10,061.04 11,467.71
Operating Income 1488 3,398.65 2,544.02 1,839.57
Operating Expenditure 848 1,396.93 917.1 644.49
Profit before provision & tax 303 2,001.72 1,626.92 1,195.09
Profit after provision & tax 404 988.36 820.61 305.03
Total provision maintained 1483 1,283.15 1,139.82 1,236.07
Earning asset 66,665 51,184.77 46,075.04 33,944.60
Price earnings ratio 20.84 15.18 10.64 22.23
Number of Branches 76 68 44 36
Number of Employees 1291 1,050 841 739
[Source: Annual reports of MTB, 2010-2013]
Table 2: Summary of Financial
Performance

46. 46 | P a g e
3.2 Analysis of Findings
Some general observations of the performance Mutual Trust Bank, Principal Branch of last FIVE
years (2009-2013) of the bank are as follows.
(All data collected from Annul report and internal document)
3.2.1 Total Import:
As, All the businesses located near the principal branch are related to trading of cast iron
products, commercial ply woods, papers, paper boards etc. Due to the nature of the businesses
located near the branch, all the import LCs opened here for importing industrial purpose. Besides
cast iron products, Back to Back LCs against export LCs is also opened here. Major products for
which BTB LCs are opened are Fabrics and Accessories of Ready Made Garments.
Raw Cotton Accessories Of RMG Machinery Items Others
10%
15% 40%
35%
Figure: 02
Figure 02: show that in 2009 the import L/C was opened 6732.21 lac and in 2013 was 33542.20
lac respectively. Import L/C increased to TK 33542.20 Lac from TK 6732.21 Lac during the five
year period. The growth rate of this is 51%.
Table: 03
Year 2009 2010 2011 2012 2013
Total Import (in lac) 6732.21 8623.56 10944.21 18832.38 33542.20

47. 47 | P a g e
IMPORT (IN LAC)
40000.00
35000.00
30000.00
25000.00
20000.00
TOTAL IMPORT
15000.00
10000.00
5000.00
0.00
2009 2010 2011 2012 2013
Figure: 03
3.2.2 Total Export:
Export volume of the Principal branch reached Tk. 5615.04 LAC which is 26.35% higher than
that of FY 2012. Major export items involved with the bank‘s foreign trade activities were
readymade garments and non-traditional items.
Foreign Trade Accessories Of RMG Machinery Items Others
10%
30%
Figure: 04
18% 42%

48. 48 | P a g e
Table 4 shows that in 2009 exports were 2186.89 lac and in 2013 was 5615.04 lac respectively.
Export L/C increased to TK 33542.20 Lac from TK 6732.21 Lac during the five year period, and
yearly growth rate of export is 51%.
Year 2009 2010 2011 2012 2013
Total Export (in lac) 2186.89 1830.24 2625.38 4443.73 5615.04
Table: 04
EXPORT (IN LAC)
6000
5000
4000
3000
EXPORT(IN
LAC)2000
1000
0
EXPORT(IN LAC)2009 2010
2011
2012
2013
Figure: 05

49. 49 | P a g e
3.2.3 Foreign Remittance:
During the year 2013, the inflow of inward foreign remittance was TK. 92.10 LAC where in the
previous year 2012 the amount was TK.86.63 LAC which is TK.6 LAC higher than the previous
year.
Year 2009 2010 2011 2012 2013
Foreign remittance (in lac) 7.31 25.50 57.20 86.63 92.10
Table: 05
REMMITTANCE (IN LAC)
100
90
80
70
60
50 INWARD
REMMITTANCE(IN
LAC)
40
30
20
10
0
2009 2010 2011 2012 2013
Figure: 06

50. 50 | P a g e

51. 51 | P a g e
3.2.4 Comparative Analysis:
Comparative Analysis of the Mutual Trust Bank Ltd. with Islami Bank Bangladesh Ltd. (IBBL)
The Mutual Trust Bank Ltd.
(Million in Taka)
Year 2010 2011 2012 2013
Import 28048.00 36213.00 49496.00 65737.00
Export 13505.00 23268.00 31081.00 39038.00
Source: Annul report and internal document
Islami Bank Bangladesh Ltd
(Million in Taka)
Year 2010 2011 2012 2013
Import 59804.00 74525.00 82702.00 89788.00
Export 29151.00 36169.00 36682.00 41092.00
Source: annul report
Import Comparison of MTB with IBBL:
Million in Taka
Year 2010 2011 2012 2013
MTBL 28048.00 36213.00 49496.00 65737.00
IBBL 59804.00 74525.00 82702.00 89788.00

52. 52 | P a g e
100000
90000
80000
70000
60000
MTB
50000
IBBL
40000
30000
20000
10000
0
2010 2011 2012 2013
Figure 07: Import Comparison of MTB with IBBL.
Interpretation:
The trend of import business of the MTBL is increasing from 2009 to 2010 on the other hand
IBBL also increasing but they are now standing in initial point. The growth of MTBL in 2012 to
2013 was Tk.16241 million and the growth of IBBL in 2012 to 2013 was Tk.7086 million. So
the growth of IBBL is lower than MTBL.
Export Comparison of MTBL with IBBL
Million in Taka
Year 2009 2010 2011 2012
MTBL 13505.00 23268.00 31081.00 39038.00
IBBL 29151.00 36169.00 36682.00 41092.00
45000
40000
35000
30000
25000 MTBL
20000 IBBL
15000
10000
5000
0
2009 2010 2011 2012

53. 53 | P a g e
Interpretation:
The above graphical presentation shows comparison exports between The Mutual Trust Bank
Ltd. (MTBL) and the Islami Bank Bangladesh Ltd (IBBL). The trend of export business of the
MTBL and IBBL is increasing and experiencing from 2010 to 2013. The growth of MTBL in
2012 to 2013 was Tk.7957 million and the growth of IBBL in 2012 to 2013 was Tk.4410
million. So the growth of export business of MTBL is higher than IBBL in 2013.
Comparison of Foreign Exchange Business:
(Amount in Million)TK
Year MTBL FSIBL IBBL EXIM
2009 41553 14327 88955 49313
2010 59481 15684 110694 72940
2011 80577 14979 119384 96175
2012 104775 50983 130880 115683
Total 286386 95973 449913 334111
Amount
Comparison of Different Banks
140000
120000
100000
80000 MTB
60000 FSIBL
40000 IBBL
20000 EXIM
0
2010 2011 2012 2013
Years

54. 54 | P a g e
3.2.5 EARNINGS PER SHARE
Information per Share 2011 2012 2013
Earnings per share (BDT)
(Share value BDT)
3.9
33.8
1.6
27.7
1.3
26.1
EPS
4
3.5
3
2.5
2
EPS
1.5
1
0.5
0
2011 2012 2013
Figure: 08
In 2011 to 2012 the banks earning per share decreases dramatically 3.9 to 1.6. Again in 2013
EPS decreases 1.6 to 1.3 and it reflects that the growth decreases -18.8%. It‟s not a good sign for
the bank and the shareholder.

55. 55 | P a g e
3.2.6 TOTAL ASSETS
At the year-end (BDT in millions) 2012 2013
Total Assets 76331 93162
Loans and Advances 47005 56511
Investments 19756 23251
Fixed Assets 1553 2385
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2012 2013
Fixed assets
Investments
Loans/Advances
Total Assets
Figure: 09
The banks total assets posted a 22.0% increase in 2013, raising form BDT 76.3 billion to BDT
93.2 billion. The major contributor to this growth was the increase in Investments, which jumped
by 18.0%, or from BDT 19.8 billion to BDT 23.3 billion and in loans and advances, which
jumped by 20.2%, or from BDT 47.0 billion to BDT 56.6 billion. Fixed assets of the Bank also
increased remarkably raised to BDT 2.4 billion from BDT 1.6 billion, an increase of 53.6%.

56. 56 | P a g e
3.2.7 Compare of EPS to Others bank
2012 2013 Average
AB Bank Ltd. 3.78 3.32 3.55
Bank Asia Ltd. 3.89 1.35 2.62
BRAC Bank Ltd. 5.54 1.74 3.64
Dutch-Bangla Bank Ltd. 10.77 11.57 11.17
Dhaka Bank Ltd. 6.25 1.69 3.97
Eastern Bank Ltd. 5.59 3.91 4.75
IFIC Bank Ltd. 3.00 1.20 2.1
Jamuna Bank Ltd. 3.71 2.47 3.09
Mercantile Bank Ltd. 3.53 2.24 2.89
Mutual Trust Bank Ltd. 1.59 1.29 1.44
NCC Bank Ltd. 3.76 2.09 2.93
National Bank Ltd. 7.11 1.01 4.06
ONE Bank Ltd. 3.99 2.70 3.35
Prime Bank Ltd. 4.77 2.89 3.83
Southeast Bank Ltd. 2.33 1.89 2.11
Standard Bank Ltd. 3.19 2.73 2.96
The Premier Bank Ltd. 1.34 1.30 1.32
The City Bank Ltd. 4.07 1.26 2.67
Trust Bank Ltd. 3.51 .55 2.03
Uttara Bank Ltd. 5.76 3.76 4.76
United Commercial Bank Ltd. 4.19 1.89 3.04
Rupali Bank Ltd 7.94 7.37 7.66
Total EPS 79.94
Mean 3.63
EPS
Mutual Trust Bank 1.44
Commercial Bank Average 3.63

57. 57 | P a g e
EPS
3.5
3
2.5
2
EPS
1
0.5
0
MTBL Commercial Bank
Figure: 10
Earnings per share of Mutual Trust Bank are 1.44, where commercial Bank average EPS
3.63. In 2012 to 2013 MTB EPS is decreasing and compare to commercial Bank EPS is
lower by 2.19 which is not good for MTB.

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3.2.8 Findings of the study
The main objective of Mutual Trust Bank Ltd. is to maximize profit by utilizing its resources at
the optimum level and to ensure the best possible service towards the customers. Mutual Trust
Bank always tries to uphold its social commitment, so it fixes the terms and conditions for
getting loan under Foreign exchange activities in a most flexible fashion and reveal the actual
interest rate it charges against the credit to be offered.
Mutual Trust Bank Limited disburses all loans through the bank stuffs and all bank stuffs
emphasize on the bank‘s goals and objectives.
MTB foreign exchange department is doing well and it shows the growth compare to
previous year.
 Export, Import, Foreign Remittance growth rate increasing in 2013 compared to
previous year.
 For the effectiveness of the foreign exchange department, MTB has divided the
whole department into three major parts, which are Export, Import, and Remittance.
 The monitoring system of the foreign exchange department of MTB 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.
 MTB financial growth rate is not good in 2013 compare to 2012 and 2011.
 MTB earning per share is decreasing and EPS is lower than average commercial
Bank EPS.
 Some rules and regulations of government work as barrier for the free flow of
remittance, export and import of profitable goods.
Customers’ View
 Most of the clients are satisfied with the management philosophy of the Bank. 

 They diverse modern technology in banking service. 

 Customers doing their business with the bank because of relationship and also for good
communication. 

 Customers not doing their business with the bank because of lack of relationship and also
for not good communication. 

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3.3 SWOT Analysis
SWOT analysis basically as follows:
Internal:
 Strength
 Weakness
External:
 Opportunities
 Threats
Strength:
 Strong non interest earning
base.
 Wide Branch network among the 2nd generation banks.
 Low infection in loan exposure.
 Wide product line.
 Competency development & performance-management processes were good enough.
 Profits have increased.
Weakness:
 High cost of fund.
 Highly exposed to volatile garment business.
 Inadequate delegation of power.
 Inadequate IT infrastructure.
 Excessive dependency on term deposits.

60. 60 | P a g e
Opportunities:
 Scope of market penetration through diversified products and wide banking network.
 Regulatory environment favoring private sector development.
 Trade and Investment Framework Agreement (TIFA)
Threats
 Increased competition in market for public deposits.
 Market pressure for lowering the interest rate.
 Deteriorated export, import and guarantee due to indecent competition as well as economic
slump.
 Foreign currency quick fluctuation.
 New regulations.

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Chapter 04 Concluding Notes
4.1 Recommendations
As per earnest observation some suggestions for the improvement of the situation are given
below:
 To attract more clients MTB has to create a new marketing strategy, which will increase
the total export import business.
 Attractive incentive packages for the exporter will help to increase the export and
accordingly it will diminish the balance of payment gap of MTB.
 Long term training very much required for the foreign exchange officers.
 Bank can provide foreign market reports, which will enable the exporter to evaluate the
demand for their products in foreign countries.
 New investment sector is booming rapidly. MTB should identified those untapped areas
of business and invest in those sector such as Gas plant, condensed milk project, ship
breaking etc.
 Effective Management Information System must be evolved by MTB so that correct
decisions may be taken at correct time at policymaking level.
 Proper communication needs to establish with clients.
 Arrangement of monthly /quarterly training courses /workshops for the selected by the
authority in order to promote employee to their desired level
 It is noted that “delay in service” is one of the problems faced by the clients. Attempts
should be made to straighten the banking procedure.

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4.2 Conclusion:
This report is prepared to fulfill one of the requirements of BBA program to submit
internship report under Business students. It is an effort to cover the foreign exchange
activities in general which has been observed during the internship period in the
Mutual Trust Bank Ltd. The activities of the foreign exchange department are much
broader. Everything may not be covered here due to time constraint. However, the report
includes enough information to get an overall idea about the foreign exchange department
of Mutual Trust Bank.

63. 63 | P a g e
References:
1. Rana, Nasrin and Islam (2014), External Sector: Current Trends, Bangladesh Economic
Update Vol-5, September 2014 [online] Available from :
http://www.unnayan.org/reports/meu/Meu_September_2014/MEU_September_2014.pdf
[Accessed: 15th December, 2014]
2. Mahmud (2013), Banking Sector: Current Status, Bangladesh Economic Update Vol-4,
December 2013 [online] Available from :
http://www.unnayan.org/reports/meu/December-2013/MEU%20December%202013.pdf
[Accessed: 15th December, 2014]
3. Accounting for Management (2014): Horizontal (Trend) Analysis of Financial
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2014]
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http://www.investopedia.com/terms/l/lossgivendefault.asp [Accessed: 10th December,
2014]

64. 64 | P a g e
10. Investopedia (2014): Foreign exchange; Available from:
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2014]
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Banking Statistics Returns (SBS-1, SBS-2 & SBS-3)-5th Edition.
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[Accessed: 13th November, 2014]
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http://mutualtrustbank.com/information_financial_statements.php [Accessed: 13th
November, 2014]
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Components, Rating Analysis, Models, Economic and Regulatory Capital. Oxford
University Press, Oxford.