INTERNSHIP REPORT ON MODUS OPERANDI OF FOREIGN EXCHANGE DIVISION OF NATIONAL BANK LIMITED

INTERNSHIP REPORT ON MODUS OPERANDI OF FOREIGN EXCHANGE DIVISION OF NATIONAL BANK LIMITED MD... INTERNSHIP REPORT ON MODUS OPERANDI OF FOREIGN EXCHANGE DIVISION OF NATIONAL BAN

INTERNSHIP REPORT

ON

MODUS OPERANDI OF FOREIGN EXCHANGE DIVISION OF

NATIONAL BANK LIMITED

MD MOHIUDDIN KHAN

ID # 1806 REG # 36652 EXAMINATION ROLL # 130226 SESSION: 2012-2013 DEPARTMENT OF MANAGEMENT STUDIES (3rd Batch)

SUBMISSION DATE: MAY 18, 2017

FACULTY OF BUSINESS STUDIES

INTERNSHIP REPORT

ON

MODUS OPERANDI OF FOREIGN EXCHANGE DIVISION OF

NATIONAL BANK LIMITED

SUBMITTED TO

Mr Abu Sayef Md Muntaquimul Bari Chowdhuri

Assistant Professor Department of Management Studies Jahangirnagar University Savar, Dhaka -1342

SUBMITTED BY

Md Mohiuddin Khan

Id # 1806 Registration # 36652 Examination Roll # 130226 Department of Management Studies (3rd Batch)

Jahangirnagar University Savar, Dhaka -1342

SUBMISSION DATE: MAY 18, 2017

Department Of Management Studies Faculty of Business Studies Jahangirnagar University Savar, Dhaka-1342

Division of National Bank Limited

With due respect, I draw your kind attention to the fact that to prepare an “Internship Report”

and submitting the same to you is a partial requirement of BBA program of Department of Management Studies, University of Jahangirnagar It is a pleasure to present my report to you on

“Modus Operandi of Foreign Exchange Division of National Bank Limited” for the same

purpose

I have tried my best in preparing this report and left no stone unturned to make the report a vivid and comprehensive one in spite of having a number of limitations I sincerely believe that it will serve the required purposes I shall always be obliged to furnish any clarification regarding this report, if required

LETTER OF AUTHORIZATION

This is to certify that the Internship Report on “Modus Operandi of Foreign Exchange

Division of National Bank Limited” is the authentic record and the report is done by Md Mohiuddin Khan, based on reliable information under my d irect supervision as a partial

fulfillment of the requirement of Bachelor of Business Administration (BBA) degree from the Department of Management Studies, Jahangirnagar University

The report has been accepted and approved and it is a record of the bonafide work carried out

successfully by Md Mohiuddin Khan

I wish him every success in life with very best of luck

Abu Sayef Md Muntaquimul Bari Chowdhuri

Assistant Professor,

Department of Management Studies,

Faculty of Business Studies (FBS)

Jahangirnagar University

Savar, Dhaka-1342

DECLARATION

I, Md Mohiuddin K han, hereby declare that the report on “Modus Operandi of Foreign

Exchange Division of National Bank Limited” has been carried out by me after successfully

completion of 3 months of internship period in National Bank Ltd and has not been submitted to

any other educational Institute for academic purposes

I also confirm that the report is only prepared to meet my academic require ment not for any other purpose It will not act anything that will hamper the confidentiality and interests of National Bank Ltd It might not be used with the interest of opposite bodies of National Bank Ltd

The work I have presented does not breach any copyright

I further undertake to indemnify the University against any loss or damage arising from breach

of the foregoing obligations

Successful completion of any report of internship requires help from a number of persons and as

a student; I have also taken help from different people during preparation of this report First of all, I would like to thank Almighty Allah Then I express my sincere gratitude to my honorable

supervisor Assistant Professor Mr Abu Sayef Md Muntaquimul Bari Chowdhuri He

allowed me his precious time freely right from the very beginning of this internship work till the completion His experienced guidance, affectionate encouragement and critical suggestions provided me necessary help for the report and make the way for the meaningful ending of this report work in a short duration I have no hesitation to say that, without his constant supervision and valuable advices and suggestions from time-to-time, I would be failed to complete the whole thing

I am also grateful to the employees of National Bank Ltd Especially, more delightfully I would like to thank Mr Mahbub Anam Siddique (SAVP, HR Division), Mr Kamol Chandra Roy

(SAVP, Manager, Mirpur Branch), M r Atiqur Rahman (SEO), Mr Imran Yus uf (FEO),

and Mr Shafiqul Islam (Officer) for their enormous supervision on me and giving me enough

support to work under different Senior Officers Moreover, I would also like to thank all those who contributed through their comments and suggestions to prepare this paper in a comprehensive manner

EXECUTIVE SUMMARY

An Internship program is indisputably crucial & essential for gathering experience through

learning and spreading the scope of Knowledge I have done my Internship program in National

Bank Limited, Mirpur Branch

The main purpose of this report is to provide a comprehensive picture to the arenas of Foreign Exchange operation of National Bank Limited This report has been divided into eleven flinders These are: Introduction, Corporate review of National Bank Limited (NBL), Foreign Exchange, and Documents Used in Foreign Exchange Business, Letter of Credit (L/C), Import, Export, Foreign Remittance, Findings and Analysis, References

Banks play a vital role in economy of a country Countries’ development greatly relies on the activities of the banks Commercial Banks take deposit and give away loans These banks help in savings Savings create investment Apart from these, Commercial Banks play a significant role

in import of country through opening of bank L/Cs These assist to earn foreign currency by helping the exporters in export The bank provides the customers with the safety, liquidity and profitability by means of different savings media offering different degrees of a mix of liquidity return and safety of savings The saving banks use as their key of business They invest the savings in higher degree of return and maximize their profit in business

National Bank Limited is one of the leading commercial Bank in Bangladesh It launched its` journey in 1983 The main objective of the Bank is to provide all of banking services at the doorsteps of the people This Bank also partakes in various social and development programs and in implementation of various government policies as well In preparing this report, miscellaneous primary and secondary data have been collected from Head Office and Mirpur Branch

National Bank Limited plays as harbinger in handling foreign trade and foreign exchange transactions with wide network of branches at home and a large number of correspondent banks worldwide It is handling the largest volume of import-export business including homebound remittances For this reason, Foreign Exchange of this Bank is very important But, now a day’s banking sectors of Bangladesh is suffering the disease of default culture which is the consequence or result of bad performance of most banks

There are three types of basic modes of foreign exchange market These are: Export Financing, Import Financing and Foreign Remittance Foreign Exchange Branch does these foreign exchange activities vastly In this report, the overall functions of foreign exchange of National

Bank Limited (NBL) has been mentioned including how to open L/C, types of L/C, Parties

involved in L/C, Exchange rates, currency conversion, offshore banking and so forth In operating Foreign Exchange activities, this renowned bank strictly follows rules of ICC,

Bangladesh Bank Guideline for Foreign Exchange (Vol 1, 2), Import- Export policy (Control),

1950, Foreign Exchange Regulation Act, 1947

NBL earns more from Import Business To open Import L/C, National Bank follows every rules

and take 5-9 days to justify the documents This bank opens various types of L/C for importer in accordance to their needs BTB L/C, Deffered L/C, Sight L/C and irrevocable L/C are the most common among those Importer needs insurance of the products and so, NBL offers them to make insurance in Shikdar Insurance If everything occurred properly, National Bank pays the amount to the Exporter`s Bank through SWIFT

Export is NBL`s another section of F/X Division In this case, NBL plays the role of Exporter`s Bank NBL delivers Exporter`s documents to Issuing Bank and makes arrangement to collect Exporters payment in time O ur Government encourages Business organizations to Export more From EDF Exporters can take loan NBL also provide financial opportunity to the Exporters

From 1994-2002 NBL was sole agent of Western Union NBL provides services of Inward/Outward Remittance Expatriates can send money to their relatives through NBL Nostro and Vostro account are used in Remittance This bank also opens Foreign Currency Account in it`s AD branches

NBL also has Offshore Banking Unit Offshore Banking is a unique solution for banks across the globe to carry out international banking business involving non-resident foreign currency denominated assets and liabilities taking the advantages of low or nonexistent taxes/ levies and higher return on investment

There are many barriers in this Division The problems occurred by new rules and regulations, government, environment, Importer or from Exporter In spite of the barriers, NBL has a great prospect in the relevant context

At last, findings of the report have also been mentioned and analyzed in sapient manner To analyze the findings, various methods like SWOT, PESTAL Analysis, Fishbone diagram, Five forces model, VRIO framework, BCG Matrix, CATWOE Analysis and few calculation have also been made using SPSS The required recommendation has also been provided to overcome the limitation In my opinion, if the recommendations are properly followed, NBL can reach to its` goal surely

It is very necessary to attach few papers, documents, calculations which are not included in the main body So, few sample of documents like financial status of NBL, Proforma Invoice, Bill of Exchange, Form C, Letter of Authorization copy of Bangladesh Bank and Foreign Exchange charge sheet of National Bank Limited have been attached with the report in the appended part Reasonable care has been given to ensure the accuracy and quality to make the report standard and it is believed that this report is included all the necessary information to be relevant

Acronyms & Abbreviations

NBL National Bank Ltd

F/X, FX, FE Foreign Exchange

CRR Cash Reserve System

MANCOM Management Committee

STD Short Term Deposit

FDTE Fixed Deposit Scheme

IBC Inward Bill Of Collection

PO Payment Of Order

OBC Outward Bill Of Collection

A/C Account no

B/C Bill Of Exchange

B/L Bill of Lading

CCI Chief Controller of Import

CAD Cash against Document

CFR Cost & Freight

DA Document against Acceptance

DP Document against Payment

ERC Export Registration Certificate

EPB Export Promotion Bureau

FDBP Foreign Document Bill of Purchase

FDBC Foreign Document Bill of Collection

FDD Foreign Demand Draft

FC A/C Foreign Currency Account

CPT Carriage Paid To

CIP Carriage & Insurance Paid To

FCA Free Carrier

DAP Delivered At Place

DAT Delivered At Terminal

CIF Cost Insurance & Freight

FER Foreign Exchange Regulation

FTT Foreign Telegraphic Transfer

H.S code Harmonized System Code

HP Hire Purchase

ID International Division

IBDA International Branch Debit Advice

IBCA International Branch Credit Advice

IDBP Inland Documentary Bill Purchase

ITC International Trade Control

IRC Import Registration Control

L/C Letter of Credit

LIM Loan against Imported Merchandise

LTR Loan against Trust Receipt

PC Packing Credit

PRC Processed Realization Certificate

PAD Payment against Document

PI Pro-form Invoice

RMG Ready Made Garments

ROA Return on Asset

INCOTERMS International Commercial Terms

SWIFT Society for Worldwide Interbank Financial Telecommunication

UCPDC Uniform Customs and Practice for Documentary Credits

TIN Tax Identification Number

PPP Purchasing Power Parity

BB Bangladesh Bank

NCBs Nationalized Commercial Banks

PCBs Private Commercial Banks

Chapter Topic Page

Cover page Title page

TABLE OF CONTENT

2.3 Sample Size 11

3.16 Awards & Recignition 25

4.2 Fundamental injunctions of Foreign policy 29 4.3 Regulatory requirements of Foreign Exchange 30

4.5 Why Exchange should be controlled and monitored 32 4.6 Functions of Foreign Exchange Department 33

5.3 Customers of F/X division of Mirpur Branch 36 5.4 Functions of Foreign Exchange Division of NBL 36

6.1.7 L/C opening procedure 47

6.1.9 Procedure of Import & L/C transaction 50

6.2 Pecuniary condition of NBL`s Import Business 54

7.3 Export L/C open & Transaction process 56 7.3.1 Concise Representation of the Process 58

7.12 Pecuniary scenario of NBL`s Export Business 66

8.1 Remittance 68

Nine Foreign Exchange and Foreign Trade: Obstacles, Money

Laundering Risk Management, Prospects & Contribution to Economy of Bangladesh

75-77

9.3 Money Laundering and Terrorist Financing Risk Management

of National Bank Limited

10.5 Five Forces Analysis of NBL`s F/X Division 83

10.8 Herringbone Diagram of NBL`s Downward in FX Business 86

10.11 Statistical face of NBL`s Foreign Exchange Business 89 10.11.1 Statistical Description of NBL`s Import Business 89 10.11.2 Statistical Description of NBL`s Export Business 89 10.11.3 Statistical Description of NBL`s Remittance Business 90

List of Tables Page no.

Table 2.1: Validity & Reliability of the sources……… 11

Table 4.1: Important Provisions of FER ACT, 1947……… 32

Table 7.1: Products subject to Export Subsidy/Cash ……… … 64

Table 7.2: Export Business of NBL……… 66

Table 10.1: VRIO Analysis of FX Department……… 82

Table 10.2: PESTLE Analysis of NBL`s F/X Business……… 85

Table 10.3: CATWOE Analysis of Foreign Exchange Division……… 87

List of Figure Page no

Fig 3.1: Industry Life Cycle of NBL……… 16

Fig 3.2: Core values of National Bank Limited……… 17

Fig 3.3: Products & Services of NBL……… 20

Fig 3.4: Organization Hierarchy……… 22

Fig 5.1: Types of Foreign Transactions……… 37

Fig 6.1: Parties of L/C……… 40

Fig 6.2: Product Exchange & Transaction process……… 51

Fig 6.3: Import Business condition of National Bank Limited (NBL)……… 54

Fig 7.1: Process of Export L/C and payment to Exporter by National Bank Limited… 57

Fig 8.1: Types of Remittance……… 68

Fig 8.2: Process of Inward Remittance……… 70

Fig 8.3: Remittance Business condition of National Bank Limited……… 73

Fig 10.1: Import- Export- Remittance Growth……… 80

Fig 10.2: BCG Matrix of F/X Division of NBL……… 81

Fig 10.3: Five Forces Model of National Bank`s Foreign Exchange Division………… 83

Fig 10.4: SWOT Analysis of F/X division……… 84

Fig10.5: Herringbone Diagram of NBL`s poor Business condition……… 86

Fig 10.6: Six Thinking Hates of National Bank……… 88

Fig 10.7.1: Statistical Description of NBL`s Import Business……… 89

Fig 10.7.2: Statistical Description of NBL`s Export Business……… 89

Fig 10.7.3: Statistical Description of NBL`s Remittance Business……… 90

List of Annexes Page no

CHAPTER ONE

INTRODUCTION

1.1 Introduction

Bangladesh is experiencing different types of banking amenities now-a-days like Interest based

banking, Non-interest banking, Foreign Exchange, Islamic banking, School banking even the

micro-credit banking system There are 56 scheduled banks in Bangladesh who operate under

full control and supervision of Bangladesh Bank which is empowered to do so through

Bangladesh Bank Order, 1972 and Bank Company Act, 1991 At present, there are 9 state owned

banks (including specialized and non scheduled banks) in our country Besides, 9 foreign banks,

8 Islami Shariah based banks, and 39 scheduled private commercial banks are operating in the

financial market of Bangladesh amongst which 31 are scheduled private conventional banks It

should be stated that 4 Non- scheduled banks like kormoshongsthan Bank, Ansar VDP Unnayan

Bank, Prabasi Kollyan Bank, Jubilee Bank are also operating their activities in our country

Every bank has Foreign Exchange division F/X is a process or system of conversion of one

national currency into another and of transferring money from one country to another This

division of a bank is very crucial as it helps in Import-Export, Currency conversion, and in

getting foreign remittance Exporters of our nation can export their goods and get the payment

through the bank F/X division plays a vital role in this purpose

Not everyone can undertake this function Only the authorized dealers, organizations, money

changers, offshore banking unit as defined by Foreign Exchange Regulation Act, 1947 can deal

foreign exchange and foreign securities This act confers power to the Bangladesh Bank to

appoint authorized organizations by issuing them licenses under the above Act

Foreign Exchange activities are very dodgy Any mistake, remissness or oscitation can harm not

only the bank itself but also the nation Therefore, banks arrange various types of training

programs for the employees of this section

1.2 Background of the Study

This Internship report is on ``Modus operandi of Foreign Exchange Division of National Bank

Limited`` generated based on my 11 weeks practical experience with National Bank Limited,

Mirpur Branch Practical knowledge has no substitute The perfect coordination between theory

and practice is of paramount importance in the context of the modern business world in order to

resolve the dichotomy between theoretical and practical knowledge Therefore, an opportunity is

offered by Department of Management Studies, FBS, Jahangirnagar University, for its potential

business graduates to get three months practical experience, which is known, as “Internship

Program” For the competition of this internship program the study I was placed in a bank

namely, “National Bank Limited, Mirpur Branch.” This paper is entitled “Modus Operandi of

Foreign Exchange Division of National Bank Limited” that originated from the fulfillment of the

internship program During my internship, I had to prepare the report under the supervision of

Mr Abu Sayef Md Muntaquimul Bari Chowdhuri, Assistant Professor, Department of

Management Studies, Jahangirnagar University

1.3 Scope of the Study

This report has been prepared through extensive discussion with personnels of National Bank;

ergo it was a very good and comprehensive chance to adopt with corporate culture This

comprehensive report reveals a realistic view of foreign exchange scenario of National Bank Ltd

The documents provided by the branch office also helped a lot in preparing the report During

my working on the internship project and preparing the report, I had a great opportunity to have

an in depth knowledge of FER Act, Bangladesh Bank Foreign Exchange Guidelines, Foreign

Exchange activities, L/C, Exchange rate in NBL as well as PCBs in Bangladesh

1.4 Objectives of the Study

The first objective of writing the report is fulfilling the requirements of the BBA program The

primary objective of the study would be to meet compulsory requirements of submitting a report

which is an integral part of the BBA Program focusing on all the workings and understanding

I have gathered knowledge during my attachment in National Bank limited The document has

also been focused to capture an overall view of the current foreign exchange operations

performed by NBL In this report, I have attempted to give an overview of NBL in general The

major objectives of the report would encompass the following:

▪ To obtain an overall view of the current foreign exchange transaction performed by NBL

▪ To know Bangladesh Bank`s Foreign Exchange Guidelines, FER Act, 1947 in short

▪ To capture all types of existing procedures regarding L/C opening, L/C Advising, L/C

▪ Confirmation, Payment Instructions, Export Bill Collections, Negotiation etc

▪ To focus on the problems associated with the foreign exchange business in National Bank

▪ Limited

▪ To document the Schedule of charges in the case of foreign exchange business

▪ To highlight on various issues regarding the calculation of different rates

▪ To identify Strength and Weakness of NBL

▪ Barriers and prospects of F/X Division

▪ To recommend for further improvement of the proposed system

These are the basic purposes of the study Apart from these, there are other purposes For

example, to gather a brief knowledge about Import-Export Policy, Bangladesh Bank Foreign

Exchange Guidelines Vol1, Vol 2, strategy of NBL to improve its` F/X section and the like

1.5 Literature Review

Foreign Exchange activities of Banks have been the subject of study of many Agencies and

Researchers and even for the Academicians There`s a treasure of literature available on this

subject A careful selection of relevant material was a formidable task before starting the

research Efforts have been made to scan the literature highly relevant to the Context

Belk and Glaum (1990) reports the results of an empirical study on how UK MNCs try to

manage their F/X exposure This report was undertaken during 1988 The respondents were 17

major UK industrial companies Majority of the respondents feel transaction exposure

management was seen a centerpiece of their Forex Risk Management Despite the financial

literature demonstrating that accounting exposure is not a useful concept for foreign exchange

risk management, the study found that a majority of companies were inclined to manage their

accounting exposure actively Further surveyed MNC’s showed a lower degree of centralization

and the majority of respondents described their companies as ‘Totally risk averse’

According to The Economist, (Published by the International Business Times AU Retrieved:

February 11, 2011) foreign exchange market is arguably the world's largest market place It has

an average daily turnover of US$1.9 trillion, with some other sources such as Market’s

Introduction to Foreign Exchange estimating the market to have an average daily turnover in

excess of US$4 trillion The Bank for International Settlements says that average daily turnover

in global foreign exchange markets is estimated at $3.98 trillion as of April 2010, which is a

growth of more or less 20% over the $3.21 trillion daily volume in the same month back in 2007

Bottom line is foreign exchange has a huge turnover

Kashfia Ahmed and Chowdhury (April, 2009) opines that Banking system plays a very important

role in the economic life of the nation The health of the economy is inextricably related to the

soundness of its banking system In a developing nation like Bangladesh the banking system as a

whole play a vital role in the progress of economic development A bank in fact is just like a

heart in the economic structure and the Capital provided by it is like blood in it As long as blood

is in circulation, the organs will remain sound and healthy If the blood is not supplied to any

organ then that part would become useless Exim benefits provided by the banks works as an

incentive to the producer to increase the production Most of the banks carried on foreign

exchange trade Whether they import or export, it is through banks that money is transferred

from one country to another For example, bills of exchange and letters of credit are the regular

ways banks use to transfer money

Jain, Yadav and Rastogi examine and compare the policies of foreign exchange risk and interest

rate risk management followed by public sector, private sector and foreign controlled firms

Bernard et al (2007) draw attention to the strong correlation 14 (0.87) between industries with

high shares of importing firms and those with high shares of exporters They find that 79% of

importers also export Their descriptive analysis shows that both types of firms show many

similarities in their performance measures Both exporters and importers are more productive,

larger, capital and skill intensive than firms that do not have any trading relationships with the

rest of the world However, they don`t split firms into separate schools to show how firms that

perform both activities differ from the other group of firms Moreover, they do not analyze how

firms in different trade groups differ in growth performances

Huchet-Bourdon and Korinek (2011) have conducted a study to examine the effects of exchange

rate volatility on international trade flows in some selected countries like China, the Euro area

and the United States in two specific sectors, agriculture and manufacturing & mining The study

has found that the exchange volatility impacts trade flows slightly Exchange rate levels, on the

other hand, affect trade in both agriculture and manufacturing and mining sectors but do not

explain in their entirety the trade imbalances in the three countries examined

Kunst & Nuroğlu (2012) have reviewed a study on “The effects of exchange rate volatility on

international trade flows: evidence from panel data analysis and fuzzy approach” to find out the

impact of exchange rates and their volatility on bilateral trade flows among European countries

from 1964 to 2003 with the help of panel data analysis and a fuzzy approach They have shown a

hypothesis in the study that the effects of exchange rate volatility on trade flows can be

approximated by the fuzzy logic and it can be used as a complement to statistical models

Especially in some cases where there is no data or the data is missing If there is some

background, information about the topic studied then the Fuzzy Foreign Exchange Dealings;

Bangladesh Perspective 157 logic can give the user an approximate results

Clark Tamirisa and Wei with Sadikov and Zeng (2004) have a study on Exchange Rate Volatility

and Trade Flows to examine the effect of exchange rate and their volatility on trade flows on

behalf of IMF In the study, there is no robust evidence of a large negative effect of exchange

rate volatility on trade This suggests that, from the perspective of enhancing trade, exchange rate

volatility is not likely to be a major policy concern This doesn`t rule out the probability that

large exchange rate volatility could affect an economy through other channels

Hodge (2005) has shown a comparative study on The Effect of Exchange Rate Volatility on

Trade and Employment: A Brief Review of the Literature

Rahman and Barua (2006) attempted to analyze the underlying causes and impact of the recent

developments in the foreign exchange and money markets of Bangladesh using the data of FY05

and FY06 They observed that depreciation and volatility of exchange rate depends on various

components of foreign exchange market For instance, when the gap between the monthly flow

of imports and exports widens or the demand for opening import LCs rises, the exchange rate

tends to depreciate On the other hand, there is high positive correlation between volatility of

exchange rate and that of call money rate The above survey indicates that a systematic and

comprehensive study on recent sharp exchange rate fluctuations in Bangladesh is necessary for

adapting future policy options

Former Federal Reserve and US Treasury official Truman (2003) opines that the evidence on the

short-run effectiveness of exchange market intervention is sufficient in their view to aid the

judicious use of intervention by the US as a supplementary policy instrument as long as it

generally used in a manner consistent with other economic policies but that same evidence falls

substantially short of demonstrating that intervention is a separate policy instrument that can be

used to manage exchange rates with any lasting effect Cheong, Mehari, Pattichis and Williams

(2002) have their study on Exchange rate volatility and UK Exports: Implication for EMU

Membership The findings of the study indicate that, exchange rate uncertainty depresses

international trade for the major manufacturing categories analyzed The recommends from the

finding ends support to the proposition that adoption of the euro by the UK would enhance the

export performance of the country

According to Brain (2000) there is a variety of currency risk management strategies namely

currency risk transfer, currency risk reduction and control or currency risk retention The

pecuniary performance of export ventures can be examined basing on profitability and sales

growth (Lages&Mantgomery,, 2004, Eatwell, 1971) Allayannis (2001), revealed a relationship

between FERM and financial performance by noting that exporting firms that carry out Foreign

Exchange Risk Management have been attaining higher returns than other firms have.

Almekinders (1995) & Edison (1993) survey empirical work on the determinants of

intervention The approach that is generally followed in the literature consists of specifying and

estimating a reaction function for central banks The objectives being considered include

“leaning against the wind”, minimizing deviations of exchange rates from some implicit target

levels and reducing uncertainty

Many columnists, bankers published articles on Foreign Exchange scenario of Bangladesh that

are available in web world Besides, many students have also worked on National Bank`s

Foreign Exchange activities and published their research paper

Several studies have suggested the factors of competitiveness of international banks in foreign

exchange market The study is in an attempt to supplement the findings of these easier studies

1.6 Limitation of the Study

To provide current information and to make the report the report read-worthy, support from

various sources is essential In spite of having my wholehearted effort, I could not collect some

information required at the time of the study So this study is not free from the following

limitation:

▪ Due to unavailability of previous years` annual report, i have prepared this report on the

basis of annual report 2015 As a result, analysis, presentation of data may not show the

existing position or the present condition of National Bank Ltd

▪ For the whole internship, I have got only 10-11 weeks because of early submission of

internship report

▪ Foreign exchange division follows Uniform Customer and Practice for Documentary

Credits (UCPDC), but within this short period, I was totally stunned to understand

▪ Learning all the banking function within 10-11 weeks is really difficult

▪ Sometimes the officers of National Bank Limited were very busy; ergo they did not get

time to cooperate me albeit the wished

▪ NBL did not provide me any kind of pecuniary support for this internship program

▪ Most of the working days in NBL, I have to work in cash department to help in IPO

subscription collection, so I get limited time work in other departments to have practical

knowledge

▪ Every organization has their own secrecy that is not revealed to others While collecting

data i.e interviewing the employees, they did not disclose much information for the sake

of the confidentiality of the organization

▪ As some of the fields of banking are still not covered by our courses, there was difficulty

in understanding some activities

The limitations really created crux in preparing the report, but it was a nice journey in working

there nonetheless

CHAPTER TWO

METHODOLOGY OF THE STUDY

2.1 Methodology

This report is equipped with several information and practical work experience The sources of

data of this report can be furcated into two categories One is primary and the other is secondary

sources The primary data gathered through discussing informally with National Bank Limited`s

employees, mostly of FX division Some secondary data also have been used to make the report

more concrete These data are collected from different brochures, documents, Annual Reports of

NBL and websites Then data are analyzed and required recommendation has been provided

a) Primary data sources/way

Primary data was collected by the following way-

▪ Practical desk work

▪ Face to face conversation with the respective officers

▪ Sharing practical knowledge of officials

▪ Questionnaire

▪ Personal observation

▪ Relevant file study provided by the concerned officers

b) Secondary data sources

▪ Annual Report of NBL

▪ Foreign Exchange Guidelines of Bangladesh Bank

Official & National Bank Training and Research Documents,

▪ Foreign Exchange Regulation Act, 1947

Information provided by analyzing the secondary sources is medium and high in terms of

validity and reliability

Prior research report Moderate Moderate

Table 2.1: Validity & Reliability of the sources

In the first instance, Data are collected through primary and secondary sources Afterward, the

data are compiled and analyzed Later on, proper explanations of the data are made ready for the

research paper There were few data that need not to be explained, rather have been used directly

in this paper

2.6 Data Analysis

Simple descriptive nature of data analysis has been applied in this report and my observation has

been expounded in quantitative manner

2.7 Tools & Techniques

The main Tools used for analyzing the data are –

1 SPSS

2 MS Word & Excel

Besides, other techniques have also been used here

2.8 Method of Strategic analysis

▪ BCG Matrix

▪ VRIO Framework Analysis

▪ Five Forces Model

▪ Cause & Effect Diagram

▪ SWOT Analysis

▪ CATWOE Analysis

▪ De Bono's Six Thinking Hats

▪ Preceding years analysis and Statistical analysis

Besides, I have also used other techniques to analyze the data and to recommend I have used

MOSCOW and other method along with my cogitation

2.9 Gantt Chart

First 25 days Second 25 days Last 25 days Day 1-11 Day 12-25 Day 26-38 Day 39-50 Day 51-63 Day 64-75

Prepare Final Paper,

Revision of the paper,

Submit the final report

CHAPTER THREE ORGANIZATIONAL SYNOPSIS

3.1 Introduction

In the present world, the importance of bank is unlimited In the respect of business, it is

doubtlessly admitted At present, Bank is considered as lifeblood of a nations` economy Bank

does not only help for giving loan even help in kinds of financial transactions, but also involve in

foreign transaction, offshore banking and other types of import-export oriented business That's

why it said, “Bank is the compass of modern business” As a result the importance of banking

activates increasing gradually and progressively In the 1980's banking industry in Bangladesh

achieved significant expansion with the entrance of private banks and National Bank has a great

contribution in that expansion

3.2 Background of NBL

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

processing projects and activities Established as the first private sector Bank fully owned by

Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the

passage of time after facing many stress and strain The member of the board of directors is

creative businessman and leading industrialist of the country To keep pace with time and in

harmony with national and international economic activities and for rendering all modern

services, NBL, as a financial institution automated all its branches with computer network in

accordance with the competitive commercial demand of time Moreover, considering its

forth-coming future the infrastructure of the Bank has been rearranging The expectation of all classes

of businesspersons, entrepreneurs and general public is much more to NBL Keeping the target in

mind NBL has taken preparation to open new branches by the year 2007 The expectation of all

class businessman, entrepreneurs and general public is much more to NBL Keeping the target in

mind NBL has taken preparation to open new branches by the year 2007

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

Banking arena of Bangladesh When the nation was in the grip of severe recession, Govt took

the farsighted decision to allow in the private sector to revive the economy of the country

Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize

the economy of the country National Bank Limited was born as the first hundred percent

Bangladeshi owned Bank in the private sector From the very inception, it is the firm

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

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

serve each one promptly and with a sense of dedication and dignity

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

inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha

Commercial Area, Dhaka started commercial operation on March 23, 1983 The second Branch

was opened on 11th May 1983 at Khatungonj, Chittagong

At present, NBL has been carrying on business through its 191 branches spread all over the

country Besides, the Bank has drawing arrangement with 415 correspondents in 75 countries of

the world as well as with 32 overseas Exchange Companies NBL was the first domestic bank to

establish agency arrangement with the world famous Western Union in order to facilitate quick

and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi

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

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

Bank has in its use the latest information technology services of SWIFT and REUTERS NBL

has been continuing its small credit programmed for disbursement of collateral free agricultural

loans among the poor farmers of Barindra area in Rajshahi district for improving their lot

Alongside banking activities, Now NBL is on line to establish trade and communication with the

Prime International banking companies of the world As a result, NBL will be able to build a

strong root in international banking horizon Bank has been drawing arrangement with well

conversant money transfer service agency "Western Union" It has a full time arrangement for

speedy transfer of money all over the world

A team of highly qualified and experienced professionals headed by the Managing Director of

the Bank who has vast banking experience operates bank and at the top there is an efficient

Board of Directors for making policies

Moto : A Bank for performance with potential

Type of Bank : Private Commercial Bank (Scheduled)

Head office : 18 Dilkusha Commercial Area, Dhaka

Branches : 191

ATM booths : 12

Total revenue : BDT 28167822419 (As of March, 2016)

Total profit : BDT 384147170 (As of March, 2016)

3.4 Industry Life Cycle

National Bank Limited is at the mature stage of its life cycle

Fig 3.1: Industry Life Cycle of NBL

3.5 Mission & Vision

Mission

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

banking services are being continued unabated Alongside, we are also putting highest priority in

ensuring transparency, account ability, improved clientele service as well as to our commitment

to serve the society through which we want to get closer and closer to the people of all strata

Winning an everlasting seat in the hearts of the people as a caring companion in uplifting the

National Bank Limited

national economic standard through continuous up gradation and diversification of our clientele

services in line with national and international requirements is the desired goal we want to reach

Visions

Ensuring highest standard of clientele services through best application of latest information

technology, making due contribution to the national economy and establishing ourselves firmly

at home and abroad as a front ranking bank of the country are our cherished vision

3.6 Core values

NBL has core values toward the four parties Regarding values are –

Fig 3.2: Core values of National Bank Limited

Alongside, NBL ensures all compliant issues, higher degree of motivation and dignified working

environment for their human capital and respect optimal work-life balance and Committed to

protect the environment and go green

Shareholders

By ensuring fair return on their

investment through generating stable

Profit/Dividend

Customer

To become most caring bank by providing the most courteous and efficient service in every arena of their business and give paramount importance to them

Employee

By promoting the well being of the

members of the staff

Community

Assuring our socially responsible corporate entity in a tangible manner through close adherence to national policies and objectives

Core values