A Study on Foreign Exchange

Operations of Janata Bank Limited

Submitted to
The Chairman
4th Year Exam Committee
Department of Finance & Banking
Jahangirnagar University

Submitted by
Hafizul Islam
Exam ID 142082
Session 2013-2014, BBA Program
Department of Finance & Banking
Jahangirnagar University

Date of Submission
19th July, 2018

I
19 July, 2018

The Chairman
4th Year Exam Committee
Department of Finance & Banking
Jahangirnagar University
Savar, Dhaka

Through: Mahfuza Khatun, Internship Program Supervisor

Subject: Submission of Internship Report.

Dear Sir:

I solicit your attention that I have completed my internship report on the topic of “A Study on
Foreign Exchange Operations of Janata Bank Ltd” after the completion of 3 months’ internship
at Savar Corporate Branch, Janata Bank Ltd. In this report, I have intended to share the
experience, observation and learning during the internship to prepare the report on the foreign
exchange performance of the whole bank. Here I have shown the activities under the foreign
exchange department of the bank in different branches and also a comparison of the
performance of the bank with the competitor banks.

I would be grateful if you accept this report being kind enough to pardon the errors and mistakes
of the report.

Sincerely yours,

Hafizul Islam
Exam ID 142082
Session 2013-2014, BBA Program
Department of Finance & Banking
Jahangirnagar University

II
Acknowledgement
At beginning I will start my report by showing respect and give praise to our almighty Allah
who takes care about me to finished report successfully I give thanks to my supervisor Mahfuza
khatun, Assistant Professor, Department of Finance & Banking, Jahnagirnagar University who
has given me such an attractive prospect to a report on Foreign Exchange operation as well as
helped accomplish my report and try to provide me a faire practical .I also will not miser to
respect JBL that give me chance to obtain practical knowledge through their internship
program. I thank the branch manager Mr. Ramendra Chandra Halder, Assistant General
Manager of Janata Bank Ltd, Savar Corporate for letting me to do internship in his branch and
provide me a fear idea about practical knowledge of banking activities. I would also like to
express my gratitude to all the employees of Janata Bank Ltd, for their co-operation and
support.

III
Abbreviation & Elaboration
JBL : Janata Bank Ltd. ITC : International Trade control
CRR : Cash Reserve System IRC : Import Registration Control
CRAB : Credit Rating Agency of L/C : Letter of Credit
Bangladesh LIM : Loan against Imported Merchandise
STD : Short Term Deposit LTR : Loan against Trust Receipt
FDTE : Fixed Deposit Scheme OD : On Demand
DD : Demand Draft PC : Packing credit
IBC : Inward Bill for Collection PRC : Processed Realization Certificate
PO : Payment of Order PAD : Payment against Document
OBC : Outward Bills for Collection PI : Pro-form Invoice
A/C : Account No RMG : Readymade Garments
B/C : Bill for Exchange ROA : Return on Asset
B/L : Bill for Landing SWIFT : Society for World Inter Bank
BTB : Back to Back Financial Telecommunication
CIB : Credit Information Bureau UCPDC : Uniform Customs and Practice
CCI & I : Chief Controller of Import and for Document Credit
Export TR : Trust Receipt
CAD : Cash against Document TIN : Tax Identification Number
CFR : Cost and Fright
DA : Documents against Acceptance
DP : Document against payment
EXP : Export Form
ERC : Export Registration Certificate
EPB : Export Promotion Bureau
FDBP : Foreign Document Bill Purchase
FDBC : Foreign Document Bill Collection
FDD : Foreign Demand Draft
FC A/C : Foreign Currency Account
FOB : Fee on the Bond
FER : Foreign Exchange Regulation
FTT : Foreign Telegraphic Transfer
HO : Head Office
HP : Hire purchase
H.S. Code : Harmonized System Code
ID : International Division
IBDA : International Branch Debit Advice
IBCA : International Branch Credit Advice
IDBP : Inland Documentary Bill Purchase

IV
Contents
EXECUTIVE SUMMARY ....................................................................................................... VIII
1.0 INTRODUCTION ............................................................................................................... 2
1.1 ORIGIN OF THE REPORT .............................................................................................. 2
1.2 OBJECTIVE OF THE REPORT ......................................................................................... 2
1.3 IMPORTANCE OF THE REPORT ......................................................................................... 3
1.3 LIMITATIONS .............................................................................................................. 3
1.4 METHODOLOGY OF THE REPORT ................................................................................ 3
1.4.1 PRIMARY SOURCES ..................................................................................................... 3
1.4.2 SECONDARY SOURCES ................................................................................................ 3
2.0 ORGANIZATIONAL PROFILE.............................................................................................. 6
2.1 MISSION .......................................................................................................................... 7
2.2 VISION ............................................................................................................................. 7
2.3 ORGANIZATIONAL HIERARCHY OF JBL ............................................................................. 8
2.4 VALUES OF JBL ................................................................................................................. 8
2.5 STRATEGIC OBJECTIVES ................................................................................................... 9
2.6 FINANCIAL HIGHLIGHTS ................................................................................................... 9
2.7 OPERATIONAL PERFORMANCE ...................................................................................... 11
2.8 CSR ACTIVITIES OF JANATA BANK LIMITED .................................................................... 11
2.8.1 EDUCATION AND RESEARCH .............................................................................. 11
2.8.2 HEALTH AND TREATMENT .................................................................................. 11
2.8.3 POVERTY REDUCTION AND REHABILITATION ............................................... 12
2.8.4 NATURAL CALAMITY ........................................................................................... 12
2.8.5 HISTORY, CULTURE, TRADITION, SPORTS........................................................ 12
2.8.6 ENVIRONMENT PROTECTION .............................................................................. 12
2.8.7 EXPANSION OF INFORMATION TECHNOLOGY ................................................ 12
2.8.8 MISCELLANEOUS ................................................................................................... 12
2.9 SERVICES/PRODUCTS OFFERED BY JBL ........................................................................... 13
2.10 REWARDS & RECOGNITIONS........................................................................................ 13
3.0 LITERATURE REVIEW ..................................................................................................... 16
3.1 FOREIGN EXCHANGE ..................................................................................................... 16
3.2 IMPORT: ........................................................................................................................ 16
3.3 EXPORT ......................................................................................................................... 17

V
3.4 REMITTANCE ................................................................................................................. 17
3.5 CORRESPONDENT BANKING: ......................................................................................... 18
3.6 SWIFT: ........................................................................................................................... 18
3.7 LETTER OF CREDIT ......................................................................................................... 19
4.1 REGULATIONS FOR FOREIGN EXCHANGE DIVISION FOR JANATA BANK LTD ................... 21
4.2 FOREIGN EXCHANGE RATE IN JANATA BANK LTD........................................................... 22
4.3 FOREIGN EXCHANGE PRODUCT & SERVICES BY JBL........................................................ 22
4.3.1 IMPORT FINANCING SERVICES .................................................................................... 22
4.3.2 EXPORT FINANCING SERVICES .................................................................................... 23
4.3.3 REMITTANCE SERVICES ............................................................................................... 25
4.4 EXCHANGE OF FOREIGN CURRENCIES BETWEEN THE CLIENTS AND JBL ......................... 25
4.5 LETTER OF CREDIT ......................................................................................................... 26
4.6 FOREIGN EXCHANGE RISK MANAGEMENT ..................................................................... 29
5.1 COMPARATIVE ANALYSIS ............................................................................................... 32
5.1.1 COMPARATIVE ANALYSIS OF TOTAL INCOME & EXPENDITURE: .................................. 32
INTERPRETATION – ..................................................................................................................................... 32

5.1.2 COMPARATIVE ANALYSIS OF INCOME SEGMENTATION .............................................. 33

INTERPRETATION- ....................................................................................................................................... 33

5.1.3 COMPARATIVE ANALYSIS OF TOTAL IMPORT OF JBL: .................................................. 34

INTERPRETATION – ..................................................................................................................................... 34

5.1.4 COMPARATIVE ANALYSIS OF TOTAL EXPORT IN JBL: ................................................... 34

INTERPRETATION - ...................................................................................................................................... 35

5.1.5 COMPARATIVE ANALYSIS OF TOTAL FOREIGN REMITTANCE: ...................................... 35

INTERPRETATION – ..................................................................................................................................... 36

5.1.6 COMPARATIVE ANALYSIS OF BANKING SHARE OF JBL IN FR ........................................ 36

INTERPRETATION - ...................................................................................................................................... 37

5.1.7 COMPARATIVE ANALYSIS OF BANKING SHARE OF JBL IN IMPORT ............................... 37

INTERPRETATION - ...................................................................................................................................... 37

5.1.8 COMPARATIVE ANALYSIS OF BANKING SHARE OF JBL IN EXPORT ............................... 38

INTERPRETATION- ....................................................................................................................................... 38

5.2 TREND ANALYSIS ........................................................................................................... 38

5.2.1 TREND ANALYSIS OF TOTAL IMPORT: ......................................................................... 38
INTERPRETATION- ....................................................................................................................................... 39

6.5.2 TREND ANALYSIS OF TOTAL EXPORT: .......................................................................... 39

VI
 INTERPRETATION- ....................................................................................................................................... 40

5.2.3 TREND ANALYSIS OF TOTAL FOREIGN REMITTANCE: ................................................... 40

INTERPRETATION- ....................................................................................................................................... 41

6.1 RECOMMENDATIONS .................................................................................................... 43

6.2 CONCLUSIONS ............................................................................................................... 44

VII
Executive Summary

The forex market is the backbone of international trade and global investing. It is critical to
support imports and exports, which are necessary to gain access to resources and to create
additional demand for goods and services. Without the ability to trade in different currencies,
companies’ prospects would be limited and global economic growth would suffer. Banks are
one of the main element of the financial system of Bangladesh and have a huge impact on the
overall economic condition of the country. A banking organization has different department
and functional areas, all of which must operate holistically if the firm is to be successful and
one of them is Foreign Exchange Department.

Foreign exchange income in JBL is in decline as in 2010-2014 it used to perform much better
than now. As import and export market are growing very fast they should develop attractive
financing packages such as better Pre-Shipment and Post-Shipment Finance, Export Guarantee
facility etc at a law rate for exporters and importers, JBL should increase strong network with
overseas Exchange Companies and Banks in different part of the world to ensure better
remittance services for its customers and online Banking in every branch to promote
Remittance, In case of L/C opening, Bank should provide low margin facility to clients. More
Import and export item can be included JBL can provide Consulting facility by an expert group
of officials for foreign exchange, In case of payment of remittance, they should introduce debit
card so that customer can withdraw money within a second at anywhere.

VIII
 Chapter 1
Introduction

1
1.0 Introduction
This report has a certain purpose to focus on the operations of “Foreign Exchange” of Janata
Bank Limited. Without any doubt Foreign exchange catches the flash as it has great importance
in the balance of trade in economy. Banks plays a vital role in his discipline. This report is
prepared on the purpose to better understand about foreign exchange operation in perspective
of Janata Bank. Now a day’s international business has become very common activities in
business and day by day it got an integrated part for doing business. In this globalization era a
business organization faces worldwide competition so they have to compete for their existence
and profitability that require them to engage in export and import activities and remittance for
their financial transaction worldwide. Banks are the batter financial intermediaries to complete
those activities.

1.1 Origin of the Report

Although total B.B.A. program combines an excellent blend of theoretical and classroom
knowledge but aside this internship program facilitates a student to bring light on their
theoretical knowledge to apply this in practical ground. This report has been prepared as a
requirement of internship program. As a student of BBA program, assigned to the internship
period with a topic an Evaluation of Foreign Exchange Activities of Janata Bank a leading &
outstanding commercial based bank in the area of banking business, gives many fresh graduates
an opportunity to get a real taste of actual banking activities of various departments every year.
According to the needs & demands of the society & the country as a whole the bank invests
money to different update business sectors. The Bank participates different activities aiming at
creating jobs, implementing development projects taken by the Government and developing
infrastructure.

1.2 Objective of the Report

Objective of the study acts as a bridge between the starting point and the goals of the study.
The main purpose of the report is to get a clear idea about the management of and Foreign
Exchange of Bangladesh as well as Janata Bank limited, and make an elaborate industry
analysis on the banking sector activity of Bangladesh. In order to do that we need to specify
our objectives-
 To analyze the Foreign Exchange performance of Bangladesh.
 To find out critical problems of Foreign Exchange discipline of Bangladesh.
 To illustrate Foreign Trades of Janata Bank Limited.
 To find out how the import, export business works of the bank.
 To study how to achieve foreign remittance of JBL.
 To study on the rules and regulation of Foreign Exchange activities.
 To have SWOT analysis of the Foreign Exchange Activities of Janata Bank Ltd.
 To suggest some recommendations for the smooth operation of JBL.

2
1.3 Importance of the Report
Bangladesh is considered as a developing country in the world. The economy of this country
has a lot left to go further and there are lots of scopes for massive improvement. In an economy
like Bangladesh, Foreign Exchange can play a major role to improve the economic condition
of the country. The banks play the role of an intermediary that can mobilize the excess fund
from surplus sectors to provide necessary financing, to those sectors, which need a proper go
ahead for sound development of the economy. This report is a total effort to reflect a clear idea
about the strategies, activities, and performance of Bangladesh regarding Foreign Exchange
Business.

1.3 Limitations
Some data and information for obvious reasons that could be very much essential. From the
beginning to the end, the study has been conducted with the intention of making t as a complete
and truthful one. But there is some limitation for preparing this report.

 Difficulty in accessing latest data of internal operations.

 Some information has withheld to retain the confidently of the Bank.
 Very inadequate time to make an in-depth inference about foreign exchange business.
 Large-scale research was not possible due to constrains and restrictions posed by the
organization.
 Part of the original structure was written from individual perception and it may vary
from person to person.

1.4 Methodology of the Report

The report is descriptive in nature. The report would be based on a details discussion on Foreign
Exchange Activities of Janata Bank Limited. Throughout the report, the use different types of
research method to find out proper and correct information. I have used both primary and
secondary sources to collect necessary data.

1.4.1 Primary Sources

 Practical desk work.
 Face to face conversation with the respective officers and clients.
 Personal observation
 Relevant file study as provided by the officers concerned.

1.4.2 Secondary Sources

 Annual Reports of different years of Janata Bank Limited
 Annual Report of Bangladesh Bank

3
 Online data from JBL website
 Different journal regarding Janata Bank.
 Relevant journals, books, research papers and articles regarding the foreign exchange
operations of commercial banks, performance analysis and the regulations and risks
present in this sector of banking.

4
 Chapter 2
Organizational Profile
of Janata Bank

5
2.0 Organizational Profile
Janata Bank Limited is the 2nd largest state owned commercial
bank in Bangladesh. Immediately after the liberation of
Bangladesh in 1971, the erstwhile United Bank Limited and
Union Bank Limited were renamed as Janata Bank. The
established of Janata Bank was happened under the Bangladesh
Bank order 1972. It was incorporated as a public Limited
Company on 21, May 07, certificate of incorporation No-C66933
(4425)07 in the early era of privatization. The Bank has taken over the business of Janata Bank
at a purchase consideration of Tk. 2593.90 million as a going concern through a vendor
agreement signed between the Ministry of Finance of the Peoples’ Republic of Bangladesh and
the Board of Directors on behalf of Janata Bank Limited on 15th November 2007. The
operation of Janata Bank Limited works through 912 branches and including 4 overseas
branches at United Arab Emirates and a subsidiary company named Janata Exchange Company
SRL in Italy. It is linked 1202 foreign correspondents all over the world.

Janata Bank Limited at a Glance

Features
Name
Genesis
Registered Address
Legal Status
Chairman
CEO & Managing Director
Company Secretary
Date of Incorporation
Authorized Capital
Paid up Capital
Face value per share
Values
Janata Bank Limited
Janata Bank Limited, the 2nd largest State Owned
Commercial Bank (SCB) in Bangladesh, is playing pivotal
role in overall financial activities of the country. The Bank
emerged as ‘Janata Bank’ by combining the erstwhile United
Bank Limited and Union Bank Limited under the Banks
Nationalization Order (President’s Order- 26) of 1972 and
was restructured as a limited company in November, 2007.
Since inception in 1972 the Bank has commendably
contributed to the socio-economic development of
Bangladesh and helped structuring solid financial ground of
the country as well. Janata Bank runs its business with 912
branches across the country including 4 overseas branches
in United Arab Emirates.
Janata Bhaban, 110, Motijheel Commercial Area Dhaka -
1000, Bangladesh.
Public Limited Company
Luna Shamsuddoha
Md. Abdus Salam Azad (F.F.)
Hussain Yeahyea Chowdhury
21 May 2007
BDT 30,000 Million
BDT 19,140 Million
BDT 100 per share

6
 Shareholding Pattern 100% Share owned by the Government of Bangladesh
Number of Employees 12,182 (As on 31.03.2018)
Banking license obtained 31 May 2007
from Bangladesh Bank
Phone +88 02-9560000, 9566020, 9556245-49, 9565041-45,
9560027-30
Fax 88-02-9554460, 9553329, 9552078
SWIFT JANBBDDH
Website www.jb.com.bd
E-mail md@janatabank-bd.com

2.1 Mission
Janata Bank Limited will be an effective commercial bank by maintaining a stable growth
strategy, delivering high quality financial products, providing excellent customer service
through an experienced management team and ensuring good corporate governance in every
step of banking network.

2.2 Vision
To become the effective largest commercial bank in Bangladesh to support socio-economic
development of the country and to be a leading bank in South Asia.

7
2.3 Organizational Hierarchy of JBL

2.4 Values of JBL

 Customer focus
 Integrity
 Teamwork
 Respect for the individual
 Quality
 Responsible citizenship

8
2.5 Strategic Objectives
 To ensure inflow of funds at combinations of least possible cost to maintain a discreet
credit policy.
 To extend financial assistance to the citizenry, living at dispersed locations by
expanding the network of branches.
 To practice stronger IT-driven initiatives that will meet the challenges and requirements
of the bank and its clientele.
 To improve administrative and organizational structures in order to prepare the platform
for best practices of corporate governance.

2.6 Financial Highlights

Table 1: Financial highlights of JBL from 2013 to 2017

SL Particular 2017 2016 2015 2014 2013

1 Authorized capital 30,000.00 30,000.00 30,000.00 30,000.00 20,000.00
2 Paid up capital 19,140.00 19,140.00 19,140.00 19,140.00 19,140.00
3 Total capital 44,596.31 43,189.82 37,128.33 36,468.38 34,301.04
(Tier-I+Tier-II)
4 Required capital 44,341.90 40,408.89 36,562.52 35,420.25 33,392.33
5 Surplus/(shortage) 254.41 2,780.93 565.82 1,048.13 908.71
of capital
6 Capital to Risk 10.06% 10.69% 10.16% 10.30% 10.27%
Weighted Asset
Ratio (CRAR)
7 Total assets 805,988.41 778,603.91 683,157.58 628,415.27 586,082.99
8 Total deposits 649,440.78 641,819.15 568,911.14 516,010.74 478,535.57
9 Total loans and 459,580.05 403,037.41 349,861.30 319,773.25 285,747.65
advances
10 Total contingent 120,881.92 105,174.55 121,570.94 72,495.16 99,726.43
liabilities and
commitments
11 Credit deposit 70.77% 62.80% 61.50% 61.97% 59.71%
ratio
12 Total classified 75,995.50 59,359.80 43,181.70 37,375.67 31,766.86
loans
13 Percentage of 16.54% 14.73% 12.34% 11.69% 11.12%
classified loans
against total loans
14 Import 143,582.20 126,650.00 147,181.80 144,556.80 176,671.00
15 Export 139,920.90 154,454.20 145,373.60 154,079.70 153,252.00

9
16 Foreign 72,022.00 90,081.80 106,336.30 106,677.10 103,982.00
remittance
17 Income from 14,414.82 16,597.90 18,260.44 16,742.67 13,736.50
investment
18 Operating profit 11,369.48 10,038.29 10,720.50 10,683.34 12,127.10
19 Profit after tax and 2,686.50 2,605.48 4,807.88 3,813.15 9,551.39
provision
20 Provision kept 29,614.04 24,869.90 21,661.71 25,454.54 23,418.22
against loans and
advances (G+S)
including OBS
exposures
21 Provision kept 23,910.51 19,914.24 17,670.80 21,688.26 19,345.33
against classified
loans and
advances
22 Provision 59.39 251.56 83.77 418.95 330.00
surplus/(deficit)
against loans and
advances
23 Cost of fund 7.28% 8.05% 7.94% 8.82% 9.23%
24 Cost of deposit 4.47% 5.49% 6.76% 7.34% 7.75%
(%)
25 Average return on 8.04% 8.54% 9.35% 11.44% 12.39%
loans and
advances
26 Interest spread 3.58% 3.05% 2.59% 4.10% 4.64%
27 Net spread 1.48% 1.77% 2.06% 2.45%
28 Earning assets 610,004.45 605,444.04 548,634.47 496,866.59 461,290.06
29 Non earning 195,983.96 173,159.87 134,523.10 131,548.69 124,792.92
assets
30 Return on 6.90% 7.19% 8.61% 8.47% 9.39%
investment (ROI)
31 Return on assets 0.33% 0.33% 0.70% 0.61% 1.42%
(ROA) after tax
32 Return on equity 5.23% 5.22% 11.44% 9.66% 30.09%
(ROE)
33 Earning per share 14.04 13.61 25.12 19.92 86.31
(EPS)
34 Net operating 59.40 52.45 56.01 55.82 63.36
income per share

10
 35 Net assets value 268.36 260.66 219.63 206.14 193.92
per share
(NAVPS)
36 Net operating cash (171.58) 103.13 165.93 89.18 396.80
flow per share
(NOCFPS)

2.7 Operational Performance Revenue

The 98% of the revenue comes from the

local branches of JBL and the rest 2%
from the overseas and subsidiaries
operation.

JBL JB Subsidiaries JBL Overseas

Fig 1: Revenue of JBL

2.8 CSR Activities of Janata Bank Limited

JBL sees CSR activities as a critical component of continuous improvement, like the overall
effort to be a more socially responsible and sustainable organization. Being one of the leading
state-owned commercial banks in Bangladesh, Janata Bank Limited, with its branches has also
realized its responsibilities to the society and is contributing to the amelioration of the social
life of the destitute people, infra-structure, environment etc. Not only that, it has stepped
forward to introduce interest-free loans to the poor and marginal farmers in the Aila-Sidr-
Monga unit areas. According to the CSR policy of Janata Bank Limited, the CSR activities are
performed in the following fields:

2.8.1 Education and Research

It is universally acknowledged that there is no alternative to education. So, keeping this in
mind, it has stretched its helping hands towards the financially deprived meritorious and those
who have great inclination to be benefited with education. Not only that, it is imparting in
different types of conferences, symposiums, workshops etc related to education and research.

2.8.2 Health and treatment

JBL has been treating this sector as the second most important one. In the last decade, diabetes,
heart diseases, cancer, liver syrocis etc. have taken an epidemic form. For building up a healthy
nation, as a bank of the people, JBL, both singly and cooperatively is playing an important role.
11
2.8.3 Poverty Reduction and Rehabilitation
To make the people free from the curse of poverty and lessen the gap between the poor and the
rich, JBL has considered street people, landless, handicapped etc. as its target field to develop.

2.8.4 Natural Calamity

Though our country is a gifted child of nature, it is not free from the calamities like flood,
cyclone, earth quack, cranes, road accidents etc. Considering the humanitarian traits, JBL
stands as a friend to the hopeless people.

2.8.5 History, culture, tradition, sports

Aiming at imprinting the consciousness of the war of liberation into the heart of the people,
JBL takes initiatives to uphold our glorious history, culture etc. by sponsoring related
organizations arranging different programmer on these subjects.

2.8.6 Environment Protection

Now-a-days, pollution of environment has become a burning issue. For sustainable
development, JBL considers the matter as an important issue and is devoting a handsome
amount in tree plantation, forestation and other environment friendly activities for better,
pollution free environment.

2.8.7 Expansion of Information Technology

With a view to building "Digital Bangladesh" within 2021, JBL has been trying to bring all
organizations irrespective of types, by providing computers and other scientific equipments for
expansion of Information Technology.

2.8.8 Miscellaneous
Apart from these, sovereignty of the country, protection, discipline, economic freedom,
ensuring justice etc. are also been considered in CSR activities practiced by the bank. Least but
not the last, for the amelioration of the economic condition of those great-hearted freedom-
fighters who laid their lives for the sake of this independent Bangladesh. JBL is committed to
remain by their side always.

12
2.9 Services/Products Offered by JBL

Janata Bank Ltd provides all commercial banking services to its clients focusing on the national
interest and sustainable growth. The major fields of its activities may be represented as below:

Deposit Products

 Current Deposit Account  Janata Bank Deposit Scheme

 Short Term Deposit Loan
 Fixed Deposit
 Foreign Currency Deposit
 Monthly Savings Scheme
 Janata Bank Double Deposit
Scheme
 Monthly Profit Based Savings
Scheme
 Janata Bank Savings Pension
Scheme
 Education Deposit Scheme
 Medical Deposit Scheme
 Janata Bank Monthly Savings
Scheme
 Janata Bank Special Deposit
Scheme
 Savings Bank Deposit Account
 Janata Bank School Banking
Savings Karjakram

Credits Products E-Service

 Term Loan  Speedy Remittance Western Union

 Trade Finance Money Transfer
 Import Finance  Automated Clearing
 Export Finance  Internet Banking
 SME Financing Micro Credit  ATM Banking
 Agriculture & Rural Credit
ATM Operation
Consumer Credit
 Home loan
 Debit Card Operation
 Loan for Merchant Banking
 Salary Card

2.10 Rewards & Recognitions

 Best Bank in Bangladesh Awards by New York based Financial Magazine "Global
Finance" in 2006,2007,2008,2009
 Best Bank in Bangladesh Awards by London based Financial Times Group’s
magazine, The Banker from 2001 to 2008
 ICMAB Award-2017

13
 ICAB National Award-2016
 Best Tax Payer Award : 2015-2016
 ICMAB Best Corporate Award – 2014
 SAARC Anniversary Awards for Corporate Governance Disclosures 2013
 14th ICAB National Award 2013
 The Asian Banking & Finance Awards – 2014 by Asian Banking and Finance (ABF)
Magazine
 Foreign Remittance Award 2014
 Performance Excellence Award-2013 by Citi Bank N.A.
 Business Asia Most Respected Company Awards-2012 by Business Asia.
 ICMAB Best Corporate Award in 2011,2012,2014
 Productive Location Champion 2010 award by Western Union
 Quality Recognition Award 2009 by ICIC Bank, Hong Kong
 Asian Banking awards 2004 by the Asian Bankers Association (ABA)

14
 Chapter 3
Literature Review

15
3.0 Literature Review
A literature review or narrative review is one of the two main types of review articles, the other
being the systematic review. A literature review is a scholarly paper, which includes the current
knowledge including substantive findings, as well as theoretical and methodological
contributions to a particular topic. Literature reviews are secondary sources, and do not report
new or original experimental work.

3.1 Foreign Exchange

Foreign exchange is the exchange of one currency for another or the conversion of one currency
into another currency. Foreign exchange also refers to the global market where currencies are
traded virtually around the clock. Foreign Exchange is a process which is converted one
national currency into another and transferred money from one country to another country
(Smith, Walter and DeLong, 2012). Foreign exchange refers to the process or mechanism by
which the currency of one country is converted into the currency of another country (Fatemi
and Salvatore, 2012). According to foreign exchange regulation act 1947, “Anything that
conveys the right to wealth in another country is foreign exchange”. The foreign exchange
regulation Act 1947 (Article 2d) states that foreign exchange means foreign currency and it
also includes any instrument drawn, accepted, made or issued all deposits, credits and balances
payable in any foreign currency and any draft, traveller’s cheque, letter of credit and bill of
exchange expressed or drawn in Bangladesh currency but payable in any foreign currency.
Foreign trade gives rise to foreign exchange and modern banks facilitate trade and commerce
by rendering valuable services to the business community. In banks, foreign exchange means
the general mechanism by which a bank converts currency of one country into that of another
(Ghosh, 2012). In a simple form, Foreign exchange Market is a place in which foreign exchange
transactions take place.

3.2 Import:
An import is a good or service brought into one country from another. The word "import" is
derived from the word "port" since goods are often shipped via boat to foreign countries. Along
with exports, imports form the backbone of international trade. If the value of a country's
imports exceeds the value of its exports, the country has a negative balance of trade. Countries
are most likely to import goods that their domestic industries cannot produce as efficiently or
cheaply as the exporting country. Countries may also import raw materials or commodities that
are not available within its borders. For example, many countries import oil because they
cannot produce it domestically or cannot produce enough to meet demand. Free trade
agreements and tariff schedules often dictate which goods and materials are less expensive to
import. Bangladesh imports many products from other countries every year and it is increasing
Imports in Bangladesh increased to 364.60 BDT Billion in March from 362.31 BDT Billion in
February of 2018. Imports in Bangladesh averaged 72.91 BDT Billion from 1976 until 2018,

16
reaching an all-time high of 413.88 BDT Billion in January of 2018 and a record low of 0.57
BDT Billion in November of 1976.

3.3 Export
An export is a function of international trade whereby goods produced in one country are
shipped to another country for future sale or trade. The sale of such goods adds to the producing
nation's gross output. Exports are one of the oldest forms of economic transfer and occur on a
large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies.
Most of the largest companies operating in advanced economies derive a substantial portion of
their annual revenues from exports to other countries. The ability to export goods helps an
economy grow. One of the core functions of diplomacy and foreign policy
between governments is to foster economic trade for the benefit of all trading parties.

Exports are a crucial component of a country’s economy. Exports facilitate international trade
and stimulate domestic economic activity by creating employment, production and revenues.
As of 2017, the world’s largest exporting countries in terms of dollars are China, the United
States, Germany, Japan and South Korea. China has exports of approximately $2.2 trillion in
goods, primarily electronic equipment and machinery. The United States exports
approximately $1.6 trillion, primarily capital goods. Germany has exports of approximately
$1.4 trillion, primarily motor vehicles. Japan has exports of approximately $683 billion, also
primarily motor vehicles. Finally, South Korea has exports of approximately $552 billion,
primarily electronics, machinery and motor vehicles. Exports in Bangladesh increased to
232.60 BDT Billion in March from 212.01 BDT Billion in February of 2018. Exports in
Bangladesh averaged 42.96 BDT Billion from 1972 until 2018, reaching an all time high of
240.22 BDT Billion in August of 2017 and a record low of 0.05 BDT Billion in February of
1972.

3.4 Remittance
A remittance is the funds an expatriate sends to his or her country of origin via wire, mail, or
online transfer. These peer-to-peer transfers of funds across borders are economically
significant for many of the countries that receive them.
Remittances have played an increasingly large role in the economies of small and developing
countries. Since the late 1990's, remittances have exceeded development aid, and in some cases
make up a significant portion of a country's gross domestic product (GDP); for example,
remittances from overseas workers back to Nepal amounted to 25% of the nation’s GDP in
2014.Remittance payments also comprise a substantial amount of the flow of capital between
countries. In 2014, $583 billion in USD was transferred between countries – $436 billion of
which was received by developing countries. The countries receiving the largest share of
remittances are the BRIC nations China and India. Those countries received $69.97 and $59.49
billion dollars in 2013 by 2015 estimates.

17
Remittances in Bangladesh increased to 1482.85 USD Million in May from 1331.33 USD
Million in April of 2018. Remittances in Bangladesh averaged 1195 USD Million from 2012
until 2018, reaching an all-time high of 1491.36 USD Million in July of 2014 and a record low
of 856.87 USD Million in September of 2017.

3.5 Correspondent Banking:

A correspondent bank is a bank that provides services on behalf of another, equal or unequal,
financial institution. It can facilitate wire transfers, conduct business transactions, accept
deposits, and gather documents on behalf of another financial institution. Correspondent banks
are most likely to be used by domestic banks to service transactions that either originate or are
completed in foreign countries, acting as a domestic bank's agent abroad.

Generally speaking, the reasons domestic banks employ correspondent banks include the
limited access to foreign financial markets and the inability to service client accounts without
opening branches abroad. Correspondent banks can act as intermediaries between banks in
different countries or as an agent to process local transactions for clients when they are
traveling abroad. At the local level, correspondent banks can accept deposits, process
documentation, and serve as transfer agents for funds. The capability to execute these services
relieves domestic banks of the need to establish a physical presence in foreign countries.

Janata Bank Limited always aims at increasing its foreign exchange business. The bank has
been doing international banking with all major banks of the world. It has been, however,
handling bulk of the international businesses with the following five multinational banks:

 Citibank N. A.
 American Express Bank Ltd.
 Standard Chartered Bank
 HSBC
 The Chase Manhattan Bank
 Belfius Bank
 First Gulf Bank

3.6 SWIFT:
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications.
SWIFT means High-value payment market infrastructures focus primarily on security and
resilience to support time-critical payments, efficiency to have the right trade-off between risks
and cost. Liquidity cost reduction by early finality, easy collateral coverage and better liquidity
management through real-time interactive services Balancing cost, efficiency and risk are your
key requirements, and SWIFT meets them with a reliable, secure and reusable messaging
infrastructure, supporting international and proprietary standards. More than 62 high-value
payments clearing and settlement systems covering more than 90 countries and carrying more

18
than 240 million payments a year, rely on SWIFT for secure messaging services and common
message standards essential to their smooth operation. The Bank has become the member of
SWIFT Alliance Access, a multi-branch secure financial messaging system provided by the
Society for Worldwide Inter-bank Financial Telecommunication [SWIFT], Belgium. With the
activation of the SWIFT system the Bank enjoys instant, low-cost, speedy and reliable
connectivity for L/C transaction, fund transfers, message communication and other worldwide
financial activities.

3.7 Letter of Credit

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be
received on time and for the correct amount. In the event that the buyer is unable to make
payment on the purchase, the bank will be required to cover the full or remaining amount of
the purchase. Due to the nature of international dealings, including factors such as distance,
differing laws in each country, and difficulty in knowing each party personally, the use of
letters of credit has become a very important aspect of international trade.

19
 Chapter 4
Foreign Exchange
Management of Janata
Bank Limited

20
Mainly transactions with overseas countries in respect of import, export and foreign remittance
dealings are under the preview of foreign exchange department. 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. Foreign exchange department plays
significant roles through providing different services for the customers. Opening or issuing
letters of credit is one or the important services provided by the banks.

The foreign exchange activities of Janata Bank have two aspects:

 Trading of foreign currencies.

 Helping in foreign trade operation that means import and export using foreign
currencies as a media of exchange.

The activities can be clearly shown in the following diagram:

Trading of foreign currency

(Purchase and sell of
different currencies or
exchange of one currency
in to other)
Foreign Exchange Service needed for foreign
activities trade.
Foreign trade operation
(cross border transaction
i.e. import and export of
goods and services).
Financing foreign trade
(import and export
finance)

Fig 2: Foreign Exchange Management of JBL

4.1 Regulations for Foreign Exchange Division for Janata Bank Ltd
Foreign Exchange transactions are being controlled by the following rules and regulations:
Foreign Exchange Act 1947.

Bangladesh bank issues Foreign Exchange Circular from time to time to control the
export, import and remittance operation.

21
 
Ministry of commerce issues export and import policies giving basic formalities for
import and export

Sometimes CCI issues public notices for any kind of change in Foreign Exchange
transaction.

Bangladesh bank published two volumes of foreign exchange regulations in 1996.
These comprise the complete instructions to be followed by the authorized dealers in
transactions related to Foreign Exchange.

4.2 Foreign Exchange Rate in Janata Bank Ltd

The foreign exchange rate regime in application in Bangladesh is the “Dirty Float regime”
whereby the exchange rates are determined according to the market forces of demand and
supply with intermittent interventions by the Bangladesh Bank. The Bangladesh Bank usually
declares the daily exchange rates for different currencies. Using this exchange rate as a
guideline, the individual commercial banks and other authorized dealers determine their
respective exchange rates.
The exchange rate at which JBL buys and sells different foreign currency is extremely
important since this rate has a direct impact upon the bank’s profitability from foreign exchange
trading. The exchange rate is determined by the back office of the bank and the underlying
strategy is to maximize the spread between the bid rate and the ask rate.
In JBL, the exchange rate offered to customers is determined through a semi-automated
process. The back office of JBL continually monitors the foreign currency movements and
exchange rates in the major international markets and generates a particular exchange rate. The
officials at the back office then apply their judgment in line with company policies and
strategies to adjust the system generated exchange rate to match local market needs. The
management committee of the bank sets a “Ceiling” and a “floor” for the extent to which any
upward or downward revisions can be made to the system generated rate.

4.3 Foreign Exchange Product & Services by JBL

The bank mainly provides three broad types of products and services under their foreign
exchange management as follows:

 Import financing services

 Export Financing services
 Remittance Services

4.3.1 Import Financing Services

The treasury department of JBL, provides import financing solutions to its customers. The
common products offered by the bank are as follows:

22
Payment Against Document (PAD)
JBL provides PAD to its customers seeking to import goods. The importer must submit the
following documents in order to avail this financing:

 Original (Non-negotiable) Bill of lading

 Commercial Invoice
 Certificate of Insurance
 Certificate of Origin
 Bill of Exchange
 Pre-shipment inspection certificate
 Packing list

These documents are carefully scrutinized and verified for authenticity. Payment is made only
when the bank is certain about the genuineness of the documents and thus the underlying
transactions.

Loan against Trust receipt (LTR)

Under LTR, JBL provides import financing to highly credit worthy first class importers without
any significant documentation. Thus, this product is provided based on trust and is usually
available for the old customers of the bank. The importer is allowed 60-90 days for payment.

Loans against imported merchandise (LIM)

This is a Facility allowed for the retirement of shipping documents by adjustment of PAD
liability. The bank effectively takes control of the imported goods and pledges it under its own
lock and key.

4.3.2 Export Financing Services

Financing exports constitutes an important part of a bank’s activities. Exporters require
financial services at four different stages of their export operation. During each of these phases
exporters need financing. JBL provides different types of financial assistance depending on the
nature of the export contract. These products are as follows:

Pre-shipment credit
Pre-shipment credit, as the name suggests, is given to finance the activities of an exporter prior
to the actual shipment of the goods for export. JBL provides different type of Pre-shipment
credit to its worthy customers for the following purposes:
 Cost of production or purchase
 Packing including any special packing for export
 Cost of special inspection or tests required by the exporter
 Internal transport cost
 Port, customs and shipping agent’s costs
 Freight and insurance charges if the contract is either C&F contract or a CIF contract
and Export duty or tax etc.

The most common form of pre-shipment credit provided by JBL are as follows:
23
  Export cash credit (Hypothecation): Here JBL only gets charge documents and lien
on exports L/C or contract. The bank normally insists on the exporter in furnishing
collateral security. The letter of hypothecation creates a charge against merchandise in
favor of the bank but neither the ownership nor the possession is passed to it.
 Export cash Credit (Pledge): JBL provides such credit facility to exporter by pledge
of exportable goods or raw materials. Here pledged goods are kept in the bank’s control
and upon failure of the exporter to honor his commitment, the bank can sell the pledged
merchandise for recovery the advance
 Export Cash Credit Against Trust Receipt: In this case, JBL provides credit limit
sanctioned against trust receipt (TR). In contrary to the pledge facility, here the
exportable goods remain in the custody of the exporter. This facility is allowed only to
the first class customers and collateral security is generally obtained in this case.
 Packing Credit: Packing Credit is essentially a short-term advance granted by the bank
to an exporter for assisting him to buy, process, manufacture, pack and ship the goods.
The highest limit of providing PC to a first class exporter by JBL is 10% of total export
value.

Post Shipment Credit:

This type of credit refers to the credit facilities extended to the exporters by the banks after
shipment of the goods against export documents. Before extending such credit, it is necessary
for JBL to look into carefully the financial soundness of exporters and buyers as well as other
relevant documents connected with the export in accordance with the rules and regulations in
force. JBL provides following post shipment credit to the exporters through:

 Foreign Documentary Bill Purchase (FDBP): Most of the client submits the bill of
export to bank for collection and payment of the BTB L/C. In that case, the bank
purchases the bill and collects the money from the exporter. The bank subtracts the
amount of bill for PC and BTB payment and gives the rest amount to the client in cash
or by crediting his account or by the pay order. For this purpose, JBL maintains a
separate register named FDBP Register. This register contains the following
information: Date, Reference number (FDBP), Name of the drawee, Name of the
collecting bank, Conversion rate, Bill amount both in figure & in Taka., Export form
number, Export L/C number,
 Advances against Export Bills surrendered for collection: JBL also accept bills for
collection of proceeds when they are not drawn under an L/C or when the documents,
even though drawn 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. However, if the bill is not eligible
for negotiation, the exporter may obtain advance from JBL against the security of
export bill. In addition to the export bill the bank generally asks for collateral security
like a guarantee by a third party and equitable/registered mortgage of property.

24
4.3.3 Remittance Services
JBL allows inward and outward remittance services to its customers. The term "Inward
Remittances" includes not only remittance by T.T., M.T., Drafts etc., but also purchases of
bills, purchases of drafts under Travellers’ Letters of Credit and purchases of Travellers’
Cheques. JBL, as an Authorized Dealer of the Bangladesh Bank is allowed to freely purchase
foreign currencies or raise debits to non-resident Taka Accounts of the respective bank
branches and correspondents. Outward remittance refers to all remittances from Bangladesh to
a foreign country or local currency credited to on resident Taka accounts of foreign banks or
convertible Taka account. The conservative policy of the Bangladesh Bank has resulted in less
scope for commercial banks to offer outward remittance services.
JBL Bangladesh offers different type of foreign currency account to facilitate its inward
remittance services. These accounts are as follows:

 Resident Foreign Currency Deposit (RFCD): This is a foreign currency denominated

account. Those who domicile in Bangladesh but have to remit money to abroad because
of various reasons.
 Non-Resident Foreign Currency Deposit (NFCD): This is a foreign currency
denominated account. Those who doesn’t domicile in Bangladesh but have to remit
money to Bangladesh for various purposes.

4.4 Exchange of foreign currencies between the clients and JBL

In the import and export process JBL involves in the exchange of currencies with its customers.
The actual exchange process of foreign currencies between JBL and its clients prior to and on
the date of settlement can be illustrated as follows:

Clients

Fund Transfer
Unit
Cash •Transfers the
Management foreign currency to
Trade Operation clients account
operation •Asses the position
•Notify the of foreign currency
settlement status and takes actiion
accordingly

Fig 3: Exchange Process of Foreign Currencies

25
4.5 Letter of Credit
Letter of Credits are the most important foreign exchange product for JBL. Thus, it is important
to evaluate the management process of L/C within the bank. The process is described below:

 Interview of probable L/C opener: An oral interview must be given to the responsible
officers to open an L/C in the bank. If the officers are satisfied with applicants motive
of import, type of import goods, quality of imported goods and marketability of goods
than they will give approval to application to proceed to further steps.

 Application for L/C limit: An L/C limit is given to every importer before opening
L/C. To have an import L/C limit, an importer submits an application to the bank
furnishing the following information:

 Nature of Business
 Required Amount of Limit
 Payment Terms & Conditions
 Description of goods to be imported
 Description of offered security
 Repayment Schedule

 The L/C Application: After getting the limit, the importer applies to the bank to open
a letter of credit on behalf of him with required papers. The information that must be
provided in the documentary credit application form are as follows:

 Tax Identification Number Certificate

 VAT registration certificate
 Membership certificate of recognized Trade association
 Proforma Invoice
 Completed L/C Form
 L/C authorization form duly signed by the importer
 Insurance Cover Note
 Forwarding letter for Pre-Shipment inspection

 Time limit for opening L/C: L/C (s) shall be open within 180 days from the date of
issuance of LCAF or from the date of registration of LCAF with Bangladesh Bank.

 Terms of L/C: The importer must give full description of the goods along with
quantity and unit price to be incorporated in the L/C and shall take all precautions to
quote the correct H.S. Codes of the goods. Prices to be quoted on CER or FOB basis
according to the P/Invoice or Indent. No import shall be made on CIF basis without

26
 prior approval from the Ministry of Commerce. All L/Cs should provide for payment
to be made against full sets of on board (shipped) transport documents drawn and/or
endorsed to cover by the credit to a destination in Bangladesh. All L/Cs must specify
submission of signed invoices, certificates of origin & pre-shipment Inspection
Certificate. L/Cs shall also incorporate any other documents, which are mandatory
specified for those commodities in the IPO/Public Notices/Bangladesh Bank Circulars.
It is not permissible to open import L/Cs in favor of beneficiaries or to use shipping
carriers of the countries from which import into Bangladesh are banned by the
competent authority.

 Shipment Validity & Expiry: All L/Cs must specify shipment validity as per terms of
the P/Invoice or indent or L/C application. However, shipment validity under any
circumstances shall not exceed 9 (nine) 56 months from the date of issuance of LCAF
or registration LCAF with Bangladesh Bank excepting capital machinery and spare
parts shipments of which shall be made within 17 (seventeen) months. All L/Cs must
stipulate an expiry date and a place for presentation of documents for
payment/acceptance.

 Amendments: The various branches of JBL may allow amendments to the L/Cs only
upon requests of the L/C applicants that do not violate foreign exchange regulations
and import control regulations. Necessary charges and/or margin (where L/C value is
increased by subsequent amendments) also to be realized/recovered from the customer
before amending the L/Cs.

 Transmission of L/C to Beneficiary through Advising Bank: In this step the

transmission of L/C is done through tested telex or fax to advise the L/C by JBL to the
advising bank. The advising bank verifies the authenticity of the L/C. JBL has
corresponding relationship or arrangement throughout the world by which the L/C is
advised.

 Presentation process of the Documents:

 The exporter being satisfied with the terms and conditions of the credit
makes shipment to the goods as per L/C terms.
 After making shipment of the goods in favor of the importer, the exporter
submits the documents to the negotiating bank. The main documents are the
bill of exchange, invoice, Bill of Lading, Certificate of Origin, Packing list,
Weight List, Shipping Advice, Shipment Certificate etc.
 The negotiating banks checks all the documents. If they are found in order
then the bank pays, accepts or negotiates.
 JBL then receives the seal to be affixed on the forwarding schedule and
crosses the bill of exchange & transport documents so as to reduce risk of
fraudulent loss.

27
 Lodgement of Documents: If the documents are found in order or the discrepancies in
the document if any, are subsequently accepted by the applicant, the branch will record
the particulars of the documents in the PAD Register.
 Retirement of Documents: JBL then advises importers about the date of lodgment of
documents with full particulars of shipment to retire the documents against payment or
to dispose the import documents as per prearrangement, if any. Subsequent reminders
are also to be issued every week till retirement of the bill. Such bills will be considered
and be reported as overdue if the importer fails to retire the documents within 21 days
of arrival of the relative import consignments at the port of destination.

 Endorsement of Non-Negotiable Copy Documents:

o For Clearance of Cargo: In the event of non-receipt of import documents
relating to goods, which have already reached the port, the importer may ask the
bank to provide a Shipping Guarantee/NOC to enable them to clear the goods.
The Shipping Guarantee may be given on the basis of a written undertaking
from the clients. The S/G should state, inter alias, 58 that the client will in due
course accept the original documents in spite of discrepancies, if any and bear
the exchange loss on account of fluctuation of exchange rates between the dates
of guarantee to actual date of lodgment of original documents, when received.
o For Customer Assessment Purpose: At the request of the importer, JBL may
endorse Non-negotiable copy documents for custom assessment purpose. The
branch will certify the value of F.C on the copy invoice and also certify the copy
transport documents under single authorized signature. Endorsement charge is
to be realized as per schedule of charges of the bank.

 Cancellation of L/Cs: An irrevocable L/C cannot be cancelled without the agreement

of the beneficiary and the confirming bank, if any. The bank at the request of the
importer may approach the L/C advising bank for cancellation of the L/C and such
cancellation will only be effective upon consent of the beneficiary advised to the
branch through the L/C advising bank. The branch should send a message to the
concerned bank advising such cancellation and closure of L/C file due to expiry of the
same. The Bank then cancels the Reimbursement Authorization, which has been
provided to the 59 Reimbursement Bank while opening the L/C. The branch will
reverse L/C contra liabilities, refund margin and recover charges from the L/C
applicant as per schedule of charges.

28
4.6 Foreign Exchange Risk management
Foreign exchange risk is a risk that a bank may suffer losses as a result of adverse movement
in either spot or forward rate or combination of the two, in individual foreign currency. This
risk is associated with the transaction involved in import, export, remittance and foreign
currency in hand and bank.
To mitigate the risk involved in foreign exchange business, the foreign exchange dealing
operation in Janata Bank Limited is performed through Dealing Room(Front Office) ,Mid
Office and Back Office. The dealers manage market risk, avoid adverse exchange fluctuation,
look for better investment of funds, maintain sound liquidity and protect the Bank from any
unforeseen loss in the situation of any market volatility. The Mid Office and Back Office are
assigned the responsibility of related support functions. Dealing room is restricted for all
excepting dealers and authorized executives.

The dealing room is equipped with modern facilities i.e. Reuters’s information, SWIFT,
receptors monitor, telephone, voice recorder etc. Moreover stop/ loss limit, trading limit,
overnight limit is given by the concerned authorities. The daily blotter and mark to market
revaluation report is placed to management for their review.
The departmentation of the foreign exchange dealing operation of Janata Bank Ltd. is shown
in the following diagram:

Fig 4: Foreign Exchange departmentation

The foreing exchange dealing room controls the foreing exchange risks of the banks in the by
involving in various activities, such as:

29
 Forming market views through fundamental and technical analysis.
 Preparing the foreign exchange rate circular and quotation of various foreign exchange
rates using two way quotation of exchange rates.
 Taking different cross-currency trading positions and squaring profitability in
accordance with prevalinign guidance.
 Selling surplus foreign currency in the local inter-bank market including central bank.
 Buing shortfall currencies from the local inter-bank market
 Monitoring exchange position
 Maintenance of all internal and regulatory limits
 Maintenace of conter-party credit limits
 Maintenance of all delaing records
 Maintenance of intraday limits, dealer’s individual limits, stop-loss limits
 Engaging in foreing exchange market activities as permitted by the Exchange Control
Authorities

30
 Chapter 5
Data Analysis

31
5.1 Comparative Analysis
The item-by-item comparison of two or more comparable alternatives, processes, products,
qualifications, sets of data, systems, or the like. In accounting, for example, changes in a
financial statement's items over several accounting periods may be presented together to detect
the emerging trends in the company's operations and results.

5.1.1 Comparative analysis of Total Income & Expenditure:

Table 2: Total Income & Expenditure of (2013-2017) (BDT,million)

Year 2013 2014 2015 2016 2017

Total 55071.85 56393.00 55678.82 54347.06 52471.97

Income

Total 42944.75 45709.66 44958.32 44308.78 41102.49

Expenditure

Graphical representation of Total Income and Expenditure (2013-2017) (BDT,million)

TOTAL INCOME AND TOTAL EXPENDITURE

Total Income Total Expenditure Linear (Total Income)

2013 2014 2015 2016 2017

Fig 5: Total Income & Expenditure of Janata Bank Ltd (in million)

Interpretation – Total income has been decreasing since 2014 and it is lower in 2017 than 2016
but as total expenditure is also lowering that’s why JBL managed to earn net profit of BDT
2686.50 million which is slightly higher than 2605.48 million in 2016.

32
5.1.2 Comparative Analysis of Income Segmentation

Table 3: Comparative analysis of Segmentation of Operating Income of JBL from 2013 to

2017 (in million BDT)

year Net Interest Investment Commission Foreign Other

Income Income & Brokerage Exchange Operating
Income Income
2013 13985.4 740.9 1029.2 4389.9 2180.00
2014 2,344.27 16,949.54 767.55 3,423.15 1,796.63
2015 3,506.86 18,371.05 810.6 4,212.48 1,778.92
2016 544.6 16,704.86 875.4 3,361.05 1,830.67
2017 4,105.31 14,604.61 961.76 3,991.26 1,998.97

Graphical representation

Segmentation of Operating Income of JBL

20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
2013 2014 2015 2016 2017

Net Interest Income Investment Income

Foreign Exchange Income Commission & Brokerage
Other Operating Income Linear (Foreign Exchange Income)

Fig 6: Segmentation of Operating Income of Janata Bank Ltd (in million)

Interpretation- From this representation we see that Foreign Exchange Income was highest in
2015 registering 4212.48 million BDT but from then decreased in 2016 but again in 2017 it
increased to 3991.26 million BDT.

33
5.1.3 Comparative Analysis of Total Import of JBL:

Table 4: Comparative Analysis of Total Import (2013-2017) (In million)

Year 2013 2014 2015 2016 2017

Total Import 176,671.00 144,556.80 147,181.80 126,650.00 143,582.20

Graphical representation:

Total Import
200,000.00

150,000.00

100,000.00

50,000.00

0.00
2013 2014 2015 2016 2017
Total Import Linear (Total Import)

Fig 7: Comparative Analysis of Total Import (2013-2017)

Interpretation – Overall import in FY2017 stood at USD 43491 million which is record high
because of higher amount of wheat import along with increase in other food grain as a result
of flood in 2017 but JBL failed to catch the market here. We see that amount of import was
high in 2013 but from then it has been gradually decreasing though it took a rise in 2017.

5.1.4 Comparative Analysis of Total Export in JBL:

Table 5: Comparative Analysis of Total Export (2013-2017) (In Million BDT)

Year 2013 2014 2015 2016 2017

Total Export 153,252.00 154,079.70 145,373.60 154,454.20 139,920.90

34
 Graphical Representation:
Total Export
160,000.00
155,000.00
150,000.00
145,000.00
140,000.00
135,000.00
130,000.00
2013 2014 2015 2016 2017
Total Export Linear (Total Export)

Fig 8: Comparative Analysis of Total Export (2013-2017)

Interpretation - Export of Bangladesh has now geographically diversified in more than 200
countries around the world. In FY17, 55.50 percent of exports were destined for the EU bloc
while 20.30 percent entered into the NAFTA bloc. Export also destined to OIC, SAARC,
ASEAN and other countries. Total export of Bangladesh increased by slightly 1.70% but again
JBL failed here to perform with market competitor. Amount of export income took a nose dive
in 2017 from the stellar rise in 2016.JBL needs to increase income in this sector.

5.1.5 Comparative Analysis of Total Foreign Remittance:

Table 6: Comparative Analysis of Total Foreign Remittance (in Crore BDT)

Year 2013 2014 2015 2016 2017

Foreign 10398 10668 10633 9008 7202

Remittance

35
 Graphical Representation:

Foreign Remittance (in Crore BDT)

12,000.00
10,000.00
8,000.00
6,000.00
4,000.00
2,000.00
0.00
2013 2014 2015 2016 2017
Foreign Remittance (in Crore BDT)
Linear (Foreign Remittance (in Crore BDT))

Fig 9: Total Foreign Remittance (2013-2017)

Interpretation – Foreign Remittance performance is not up to the mark as it decreased from

2014 and since it has been decreasing gradually up to 2017. Highest income from remittance
in history if JBL was from 2014. The foreign remittance in Bangladesh registered an amount
of USD 12591 million in FY17 which was 14.50 percent lower compared to USD 14717
million in FY16. The shortfall of remittance was mainly due to the decrease of oil revenues
and fiscal tightening in the GCC countries.

5.1.6 Comparative Analysis of Banking Share of JBL in FR

Banking Share of JBL in FR

9.8
9.61
9.6 9.48
9.4
9.21 9.17
9.2
9
8.8 8.63 8.61
8.6
8.4
8.2
8
2012 2013 2014 2015 2016 2017

percentages Linear (percentages)

Fig 10: Banking Share of JBL in Foreign Remittance (2012-2017)

36
Interpretation - The remittance of JBL had been contributing to almost 9% of the whole
remittance of the banking industry with an increasing trend but last year it decreased because
of the increasing competitiveness of the industry and the emergence of the private commercial
bank.

5.1.7 Comparative Analysis of Banking Share of JBL in Import

Banking Share of JBL in Import

8

7 6.67
6.28
6
5.13
5 4.51 4.63
4.27
4

0
2012 2013 2014 2015 2016 2017

Percentages Linear (Percentages)

Fig 11: Banking Share of JBL in Import (2012-2017)

Interpretation - The contribution of JBL in the import and export sectors are only 5.13% and
4.63% respectively in 2015 and 2016 and in 2017 it went more lower at 4.27%, the rates are
decreasing continously in each year considering the contribution rates of 2010 when they were
10.36%.

37
5.1.8 Comparative Analysis of Banking Share of JBL in Export

Percentages
10
9 8.6
8 7.59 7.62 7.43
7
6 5.3
4.69
5
4
3
2
1
0
2012 2013 2014 2015 2016 2017

Percentages Linear (Percentages)

Fig 12: Banking Share of JBL in Export (2012-2017)

Interpretation- The contribution of JBL in export was better in 2012 but with time it has been
gradually falling to only 5.3% in 2016 and in 2017 it was only 4.69% which is the lowest ever.
They failed to grab the increasing market here.

5.2 Trend Analysis

Method of time series data (information in sequence over time) analysis involving comparison
of the same item (such as monthly sales revenue figures) over a significantly long period to (1)
detect general pattern of a relationship between associated factors or variables, and (2) project
The future direction of this pattern.

5.2.1 Trend Analysis of Total Import:

Table 7: Trend Analysis of Total Import

Year 2013 2014 2015 2016 2017

Trend -6.168% -18.1774% 1.815895% -13.95% 13.36929%

Analysis of
Total Import

38
 Graphical Representation:

Total Imprt
15.00%
13.37%
10.00%
1.82%
5.00%
0.00%
2013 2014 2015 2016 2017
-5.00%
-10.00%
-6.17%
-15.00%
-13.95%
-20.00% -18.18%

Total Imprt

Fig 13: Trend Analysis of Total Import

Interpretation- We see from trend analysis that total import income of JBL was decreasing in
2013 and 2014 again it rose in 2015 but again in 2016 it collapsed but last year it took a 13.37%
increase than 2016. Though it still needs to improve a lot more as market is moving faster.

6.5.2 Trend Analysis of Total Export:

Table 8: Trend Analysis of Total Export

Year 2013 2014 2015 2016 2017

Trend -2.09% 0.540091% -5.65039% 6.246389% -9.40946%

Analysis of
Total Export

39
 Graphical Representation:

Percentage Change in Total Export

8.00% 6.25%
6.00%
4.00%
0.54%
2.00%
0.00%
2013 2014 2015 2016 2017
-2.00%
-4.00% -2.09%

-6.00%
-5.65% -9.41%
-8.00%
-10.00%
-12.00%
Percentage Change in Total Export

Fig 14: Trend Analysis Total Export

Interpretation- We see that total export was high in 2016 but it decreased drastically in 2017
by a whopping 9.40%. JBL seriously need to improve in this sector as overall export is
increasing every year in our country.

5.2.3 Trend Analysis of Total Foreign Remittance:

Table 9: Trend Analysis of Total Foreign Remittance

Year 2013 2014 2015 2016 2017

Trend of -28.04% 2.591891% -0.31947% -15.286% -20.0482%

Foreign
Remittance

40
 Graphical Representation:

Trend of Foreign Remittance

5.00% 2.59%
-0.32%
0.00%
2013 2014 2015 2016 2017
-5.00%

-10.00%
-15.29%
-15.00%
-20.05%
-20.00%

-25.00% -28.04%
-30.00%
Trend of Foreign Remittance

Fig 14: Trend Analysis of Foreign Remittance

Interpretation- Amount of foreign remittance decreased by almost 29% in 2013 and from that
period JBL still haven’t been able to perform well and in this context the matter of lower
amount of remittance in Bangladesh played a vital role.

41
 Chapter 6
Recommendations &
Conclusions

42
6.1 Recommendations

 JBL should accelerate the rate of technology adoption, along with investing in
training bank employees in appropriate use of technology In particular, all bank
employees should be trained on basic cyber-security precautions.
 SWIFT service should be introduced in each and every branch of the bank,
which will help to smoothen the foreign exchange operation of the bank.
 Charges should be more transparent, by providing details breakup of the charges
stamp, postage, processing fees, etc.
 Bank should provide emphasis to make the documentation and filing process of
foreign exchange operation user friendly.
 User interface of JBL website should be improved and it should be updated in
daily basis.
 Attractive incentive packages for the exporter will help to increase the export
and accordingly it will diminish the balance of payment gap of JBL.
 International division of the bank should be focused to make relationship with
the renowned foreign banks.
 An efficient Management and Information System is a must for JBL. Bank can
introduce more advanced MIS to mobilize its day to day activities. It will help
the employees to do their works more quickly and at the same time maintaining
their quality of work.
 Mass online banking service should be implemented in the bank and the bank
should go for mass on-line banking to meet the demand of the next century.
 The management should give more emphasis on the advertisement of the bank
about their operations and for this purpose the bank should set up query
desk/information booth for better customer services.
 JBL should promote their services in countries where most our remittances are
generated like middle east countries.

43
6.2 Conclusions

A strong banking sector is critical to economic growth and development in a developing

country. A robust and well-functioning banking system facilitates the efficient allocation of
resources to individuals, organizations, and projects that can use those resources effectively.
The value of General Banking is immense. It‘s the core tool of banking as well as the base of
banking. Other sections depend mostly in this section. Janata Bank Ltd. has an established and
most importantly a reliable foreign exchange section. It fulfills the consumer needs in almost
every case with its dignity and honor. The company itself is well-organized as well as its
officers. JBL is developing its services to give a hard competition to other banks. Bank is a
very important and vital for economic development in mobilizing capital and other resources.
JBL is also contributing to the advancement of the socioeconomic condition of the country. To
keep pace with the current market and demand, JBL is following several strategies and taking
new initiatives, offering new products and services to the customers. The bank should maintain
well-structured communication from upper level to lower level. JBL have a strong position in
the competitive market. As the economy of Bangladesh is increasing so is the foreign trade and
JBL always have played its role in making sure that things go smoothly. The bank is doing its
best to provide better Import, Export and Remittance services to the customers. Export, Import
is showing positive trends even after the global challenges that we are facing today. However,
the bank needs to improve its remittance and export as they were better before.

44
 References

Text Books

 Smith, R., Walter, I. and DeLong, G. (2012). Global banking, New York: Oxford
University Press.
 Fatemi Khosrow and Salvatore Dominick, Foreign Exchange Issues, Capital
Markets and International Banking in the 1990s, Abingdon: Routledge
 Ghosh Dilip k.,Arbitrage, Hedging, and Speculation: The Foreign Exchange
Market, London: Praeger
 Kate L. Turabian, 1972, A Manual for Writers of Term Papers, Theses and
Dissertations. Chicago: University of Chicago Press
 Islam Nurul, 1976, Foreign Trade and Economic Controls in Development,
Connecticut: Yale University Press
 Rodriguer R.M. and Carter, 1981, International Financial Management, New
Jersey: Prentice Hall

Instructional Publications

 Bangladesh Bank, 1996, Guidelines for Foreign Exchange Transactions, Vol-1,

Page: 429.
 Janata Bank Limited, 2010, 2011, 2012, 2013, 2014, 2015,2016 Annual Reports
and 2017 Audit Report.

Websites

 Razee, Alimur (2014, December 23). Foreign Exchange Operation of Janata Bank.
Retrieved from https://www.scribd.com
 Rahman, Md. Hafizur (2014, November 12). An internship report on foreign
exchange activities of Janata bank limited: an evaluation. Retrieved from
http://dspace.library.daffodilvarsity.edu.bd
 Investopedia.com
 Statista.com
 Ceicdata.com
 Tradingeconomics.com

Newspaper

 Ahmed, Syed Abu Naser Bukhtear, (2017,Feb 23), Better Banking for Economic
Success , The Daily Star

45