QUESTIONS & ANSWERS
(c) Write about the formation of Central Bank of our country.
Formation
of Central Bank in Bangladesh: With a view to manage the monetary and investment/credit
system of Bangladesh to stabilizing domestic monetary value and maintaining a
competitive external par value of the Bangladesh Taka towards fostering growth
and development of country’s productive resources in the best national
interest, the Government of Bangladesh made a law named as ‘The Bangladesh Bank
Order, 1972’ (President’s Order no. 127 of 1972 dated 31.10.1972). As per
Clause 3(1) of Bangladesh Bank Order, 1972. The name of the Central Bank of
(d) Write briefly the functions of Central
Bank?
i)
Note issue
ii) Bankers’ Bank
iii) Governments’ Bank
iv) Clearing House maintenance
v) Supervision of the country’s foreign
currency
vi) Lender of last resort to Govt. & Banks
vii) Advisor to
the Govt. on financial matter
viii)
Supervisor of Banks & Financial Institutions
ix) Research
x) Statistics
xi) Formulation &
Implementation of monetary policy
xii) CAMELS rating of
Commercial banks.
xiii) Supervision and training for implementation of Anti Money
Laundering and Anti
Terrorism Acts.
(e) Describe the main functions of
Bangladesh Bank.
Main functions of Bangladesh Bank: (Article 7A of Bangladesh Bank Order, 1972)
a)
To formulate and implement monetary policy;
b)
To formulate and implement intervention policies in the
foreign exchange market;
c)
To give advice to the Government on the interaction of
monetary policy with fiscal and exchange rate policy, on the impact of various
policy measures on the economy and to attain its objectives and perform its functions;
d)
To hold and manage the official foreign currency
reserves of
e)
To promote, regulate and ensure a secure and efficient
payment system,
f)
To regulate and supervise Banking companies and
Financial institutions.
There are some
other major functions of Central Bank described in Bangladesh Bank Order
1972:
The main functions of Bangladesh Bank to control over scheduled Banks are:
1. Enlistment of
Banks:
2. Central Bank is
the Banker to the Commercial Banks:
3. Submission of
returns:
4. Management of
Clearing House:.
5. Lender of last
resort:
6. Audit &
Inspection:
7. Appointment of
MD/CEO:
8.
Investment/Credit Control:
9. Discount rate
policy:
10. Open market
operations:
11. Intervention in
the Foreign Exchange Market:
12. Monitoring of
non-performing investment/loans:
13. Risk
Management:
14. Foreign
Exchange Regulation Act:
15. CAMELS rating:
16. Anti Money
Laundering Act and Anti Terrorism Act:
Whereas
Bangladesh Bank is the guardian of all Commercial Banks, it is their prime duty
to supervise and monitor the banks and took control of all banks.
(g) Write briefly the justification of
supervision and control of scheduled banks by Bangladesh Bank.
The
justification of supervision and control:
• To limit the risk of depositors,
•
To maintain public confidence,
•
To protect the financial infrastructure,
•
To maintain stability of banking system,
•
To maintain investment/credit discipline,
• To maintain
healthy foreign exchange
• To protect money laundering,
• To protect terrorism, etc.
(h) What types of Monetary policy applied by
Bangladesh Bank to increase/decrease
money
supply?
i) Bank rate
ii)
CRR & SLR
iii)
OMO (Open Market Operation) of Gov’t securities.
(i) Write the names against which the
Central Bank of our country issue and circulate
notes
in the market?
i) Gold Bullion
ii) Approved foreign exchange
iii)
Taka Coin & Taka Securities
iv) Treasury bill
v) Inland bill
(j) What are the elements of Financial
system?
i) Financial Institution
ii)
Financial Instruments
iii)
Financial Market
(k) Write the difference between Banking
& Non-Banking Financial system.
Banking Financial System Non-Banking
Financial System
i) Bank has been formed &
run as per i) The
Financial Institution has been
‘The Bank Company Act-1991’ formed by ‘The Financial Institution
Act-1993’
ii)
The liabilities of Banking ii)
The liabilities of Non-Banking
Financial
System is Chequeable Financial System is not Chequeable
3. (a) What is Law?
‘Law
is a set of rules enforced by the Government’.
(b) What are the sources of Law?
General
Sources Islamic
Sources
i) Parliament i)
Quran
ii) Precedent ii)
Sunnah
iii)
Custom iii)
Ijma
iv)
Qyas
(c) Write the main names of laws relating to
Banking.
i)
Bangladesh Bank Order – 1972
ii)
Bangladesh Bank Nationalisation Order – 1972
iii)
The Bank Company Act – 1991
iv)
The Companies Act – 1994
v)
The Financial Institution Act – 1993
vi)
The Negotiable Instrument Act – 1881
vii)
The Contract Act – 1872
viii)
Anti Money Laundering Act – 2009
ix)
Artha Rin Adalat Ain – 2003
x)
Transfer of Property Act – 1882
xi)
Guidelines for Foreign Exchange Transactions – 1996.
xii)
Service rule
xiii)
Bankruptcy Act-1997
xiv)
Convertibility of our Currency-1993
xv)
Limitation Act-1908
xvi)
Civil law
xvii)
Criminal law
xviii)
Stamp Act-1998
xix)
Import & Export Act-1950
xx)
Import & Export Policy
xxi)
UCPDC- 600, URC-522, URR-725, INCOTERMS, URDG – 458 (ICC
Publications)
xxii)
Manuals of General Banking, Investment, Foreign Exchange, Internal Control
&
Compliance, Money Laundering, Asset Liability Management, Core Risk Management.
xxiii)
Anti-Terrorism Act-2009.
(d) What are the main contents of Memorandum
of a Company?
i)
Name Clause
ii)
Jurisdiction/Registered Office Clause
iii)
Object Clause
iv)
Authorised Capital
v)
Liability of members is limited.
(e) What are the minimum & maximum limitation of members of a partnership firm?
There
should be minimum 2 and maximum 20 members of a partnership firm.
(f) What are the minimum & maximum
limitation of members of a Company?
Minimum
– 2 and maximum 50 in a Private Limited Company. The Membership of a
Public Limited Company is determined by its shares, but minimum should be 7.
4. (a) What is
Contract?
‘An
agreement enforceable by law is Contract’.
(b) What are the essential elements of a
valid contract?
i)
Offer & Acceptance
ii)
Intention to create legal relationship
iii)
Lawful consideration
iv)
Capacity of parties
v)
Free consent without - (a)
Coercion (ejcÖ‡qvM/eva¨Zv)
(b)
Undue influence
(c)
Misrepresentation
(d)
Fraud
(e)
Mistake
vi)
Legality of the object
vii)
Possibility of performance
viii)
Writing
ix)
Certainty
x)
Registration and legal formalities.
(c) What are the methods of termination or
discharge of contracts?
i)
Termination by performance
ii)
Termination by mutual agreement
iii)
Termination by operation of law
iv)
Termination by material alteration
v)
Termination by breach of contract
vi)
Termination by subsequent or supervening impossibility
vii)
Termination by lapse of time
6. (a) When first Anti Money Laundering Act was introduced in our
country and what
was
the meaning of money laundering as per that act?
At
first Anti Money Laundering Law was introduced in our country on 30.4.2002.
The
meaning of ‘money laundering’ as per first Anti Money Laundering Act:
(K) A‰ea cš’vq cÖZ¨¶ ev c‡iv¶fv‡e AvnwiZ ev AwR©Z
m¤ú`,
(L)
ˆea ev A‰ea cš’vq cÖZ¨¶ ev c‡iv¶fv‡e AvnwiZ ev AwR©Z m¤ú‡`I A‰ea cš’vq n¯ZvšZi,
iƒcv¯Zi, Ae¯’vb †MvcbKiY ev D³ Kv‡R mnvqZvKiY|
(b) Write the number, effective date and
number of articles of Money Laundering Prevention Act, 2012.
Act no. – 5 of 2012.
Effective date: 16.1.2012
Number of articles: 31
(c) What is the meaning of Money Laundering
as per Money Laundering Prevention Act-2012?
ÔÔgvwbjÛvwisÓ A_©-
(A) wbgœewY©Z D‡Ï‡k¨ Aciv‡ai mv‡_ m¤ú„³ m¤úwË
ÁvZmv‡i ¯’vbvšÍi ev iƒcvšZi ev n¯ZvšZi t
(1)
Acivajä Av‡qi A‰ea cÖK…wZ, Drm, Ae¯’vb, gvwjKvbv I wbqš¿Y †Mvcb ev QÙve„Ë Kiv;
A_ev
(2) m¤ú„³
Aciva msMV‡b RwoZ †Kvb e¨w³‡K AvBbMZ e¨e¯’v MÖnY nB‡Z i¶vi D‡Ï‡k¨
mnvqZv Kiv;
(Av) ˆea ev
A‰ea Dcv‡q AwR©Z A_© ev m¤úwË wbqg
ewnf©~Zfv‡e we‡`‡k cvPvi Kiv;
(B) ÁvZmv‡i
Acivajä Av‡qi A‰ea Drm †Mvcb ev Avovj Kwievi D‡Ï‡k¨ Dnvi n¯ÍvšÍi, we‡`‡k †cÖiY
ev we‡`k nB‡Z evsjv‡`‡k †cÖiY ev Avbqb Kiv;
(C) †Kvb
Avw_©K †jb‡`b GBiƒcfv‡e m¤úbœ Kiv ev m¤úbœ Kwievi †Póv Kiv hvnv‡Z GB AvB‡bi
Aaxb Dnv wi‡cvU© Kwievi cÖ‡qvRb nB‡e bv;
(D) m¤ú„³
Aciva msNU‡b cÖ‡ivwPZ Kiv ev mnvqZv Kwievi AwfcÖv‡q †Kvb ˆea ev A‰ea m¤úwËi
iƒcvšÍi ev ¯’vbvšÍi ev n¯ÍvšÍi Kiv;
(E) m¤ú„³
Aciva nB‡Z AwR©Z Rvbv m‡ËI GB ai‡Yi m¤úwË MÖnY, `L‡j †bIqv ev †fvM Kiv;
(F) GBiƒc †Kvb
Kvh© Kiv hvnvi Øviv Acivajä Av‡qi A‰ea Drm †Mvcb ev Avovj Kiv nq;
(G) Dc‡i ewY©Z
†h †Kvb Aciva msNU‡b AskMÖnY, m¤ú„³ _vKv, Aciva msNU‡b lohš¿ Kiv, msNU‡bi
cÖ‡Póv A_ev mnvqZv Kiv, cÖ‡ivwPZ Kiv ev civgk© cÖ`vb Kiv;
(d) Where & when firstly Anti Money
Laundering law was passed and what was the
name
of that act?
‘Money
Laundering Control Act’.
(e) When & where first
international consensus was held on Money Laundering and what was the name of
that consensus?
In
1988, Viena city of
(f) When, number of states and number of
recommendations taken by the Financial Action Task Force (FATF) to prevent
money laundering?
In
1989, 130 states took 40 (forty) points recommended to prevent money
laundering.
(g) What is Egmont group? When it was formed?
In 1995 some
national Financial Intelligence Units (FIU) formed a forum to enhance
international co-operation among themselves. The name of the forum is called
Egmont group.
(h) When Asia Pacific Group
(APG) on money laundering was formed?
1997.
(i) How Wolfsberg Anti Money Laundering
principles were prepared? Why it is called Wolfsberg Anti Money Laundering
principles? Write the name of the participating Banks in Wolfsberg.
Large 13
(thirteen) banks of the world jointly prepared a set of guidelines for the
private banks of the world to prevent money laundering. Since the meeting was
held in Wilfsberg town of
(j) What are the
objectives of Money Laundering Prevention Act – 2012?
The
objective of Money Laundering Prevention Act – 2012 are:
- To prevent people from earn/acquire wealth/property through illegal means.
- To prevent illegal transfer of money to foreign countries or from foreign countries,
- To prevent extortion, kidnapping, ransom
- To prevent illegal business of arms
- To prevent fraud, forgery, cheating
- To prevent illegal business of drugs
- To prevent Hundi business from the society
- To prevent murder, serious injury of health
- To prevent theft, decoity, pirate, hijacking of plane.
- To prevent sexual exploitation.
- To establish a corruption free society
- To prevent dowry
- To prevent terrorism.
- To do justice to the people of the country.
- To prevent adulteration.
- To prevent trafficking of women and children
- To prevent insider trading and manipulation of capital market.
- To prevent counterfeit of currency notes and documents.
- To prevent environmental pollution.
- To prevent Tax evade and increase the revenue earning of the Gov’t.
- To prevent organized crime.
- To prevent transfer of power to the criminals.
- To check Over invoice/under invoice in Export Import business.
- To check transfer of foreign exchange through false import documents.
(k) What are the major ways of Money
Laundering?
The major
three ways of money laundering: (i) Placement, (ii) Layering and (iii)
Integration.
Placement:
Illegally earned/acquired money or black money when placed/entered/deposited
into a financial system is called placement.
Layering:
Complicated/difficult transfer of illegal/black money which was
placed/entered/deposited into financial system is called layering.
Integration:
After successful completion of layering, uses of the illegally earned/acquired
money or black money in a manner that it seems to be a legal money or white
money. In this stage the owner of the money purchase movable/immovable
properties.
(l) What are the
duties/ responsibilities of Bangladesh Bank to protect & prevent money
laundering as per Money Laundering Prevention Act?
The main duties & responsibilities of Bangladesh Bank are:
(article – 23 & 24)
|
(i) |
To examine &
analysis the reports of cash transaction and suspicious transaction which has
been submitted by the report submitting organization, collect additional
report for reexamination, preserve data of the report and ask the law
enforcing agency for necessary action. |
|
(ii) |
Order the report
submitting organization to freeze any account for a period of 30 days which
may be extended upto six months where justified reasons are believed that the
money deposited into an account are from any crime. |
|
(iii) |
Necessary
instructions to be given to the report submitting agencies from time to time
to prevent money laundering. |
|
(iv) |
Inspect the
report submitting agency, if necessary, to examine/verify on the spot whether
they are properly submitting the reports and complying the instructions. |
|
(v) |
To arrange
training/seminars of the Officers & Staffs of report submitting agencies
for proper implementation of the law. |
|
(vi) |
If any report
submitting organization failed to submit desired statement within the time
frame, they could impose penalty Tk.10,000/- for per day delay which may be
extended upto Tk.5.00 lac. They could suspend or cancel the license of any branch,
booth, agent or service center or they could recommend to take necessary
action or to suspend or to cancel the license to the registration/license
awarding authority if any organization fined three times within a year. |
|
(vii) |
If any report
submitting organization submit wrong/false/untrue information/statement to
Bangladesh Bank, they could impose penalty Tk.20,000/- which may be extended
to Tk.5.00 lac. They could take necessary action or suspend or cancel the
license of any branch, booth, agent or service center or they could recommend
to take necessary action or to suspend or to cancel the license to the
registration or license awarding authority if any organization failed three
times within a year. |
|
(viii) |
If any report
submitting organization failed to comply any instruction, they could impose
penalty Tk.10,000/- per day which may be extended upto Tk.5.00 lac for every
uncomplined instruction. They may take necessary action or suspend or
cancelled the license of any branch, booth, service center or agent or they
may recommend to take necessary action or to suspend or to cancel the license
of that organization if the organization failed three times within one year. |
|
(ix) |
If any report
submitting organization failed to freeze any account as per instruction of
Bangladesh Bank, that organization will be fined equal to the balance amount
of that account and which shall not exceeded the double of the balance amount
of that account. |
|
(x) |
Bangladesh Bank
may fine minimum Tk.10,000/- which may be highest Tk.5.00 lac or recommended
to take administrative action against the delinquent owner, director,
officer, staff or contractual appointed persons of that organization if they
failed as per above mentioned any point(s) (vi), (vii), (viii) or (ix). |
|
(xi) |
To comply the
duties & responsibilities as per article 23 of Money Laundering
Prevention Act there should be a separate unit of Bangladesh Bank namely
Bangladesh Financial Intelligence Unit (BFIU). |
|
|
|
|
|
|
|
|
|
(m) Who will enquire/investigate the crimes of
Money Laundering?
Crimes of money
laundering will be investigated by Anti-corruption Commission or their
authorized officer or officer of other investigating agency.
(n) Who are the report submitting
organizations?
|
(i) |
Bank, |
|
(ii) |
Financial
institution, |
|
(iii) |
Insurance
company, |
|
(iv) |
Money changer, |
|
(v) |
Money or Money
Exchange Company or Institution, |
|
(vi) |
Institutions as
per approval of Bangladesh Bank, |
|
(vii) |
Stock dealer and
Stock broker, |
|
(viii) |
Portfolio
Manager and Merchant Banker, |
|
(ix) |
Security Custodian, |
|
(x) |
Manager of
Wealth |
|
(xi) |
Non Profit
Organisation, |
|
(xii) |
Non-Government
Organisation, |
|
(xiii) |
Cooperative
society, |
|
(xiv) |
Real estate
developer, |
|
(xv) |
Valuable metal
or stone business institution, |
|
(xvi) |
Trust and
Company service provider, |
|
(xvii) |
Lawyer, Notary,
Other legal practitioner and Accountant, |
|
(xviii) |
Other
institutions approved by the Gov’t and announces by Bangladesh Bank. |
(o) What are the predicate offences as per
Money Laundering Prevention Act-2012?
(1)
Corruption & bribe,
(2) Counterfiet of currency notes,
(3)
Counterfiet of documents,
(4)
Extortion,
(5)
Cheating,
(6)
Forgery,
(7)
Illegal business of arms,
(8)
Illegal alcoholic and drugs businesses,
(9)
Stolen and illegal businesses of other goods,
(10)
Kidnapping, captivity and ransom,
(11)
Murder, serious injury of health,
(12)
Trafficking of women and children,
(13)
Smuggling,
(14)
Unlawful and smuggling of local & foreign currency,
(15)
Theft or Decoity or Robbery or acts as a pirate or Aircraft hijacker,
(16)
Manpower trafficking,
(17)
Dowry,
(18)
Smuggling and crimes relating to Gov’t duty,
(19)
Crimes relating to Tax,
(20)
Violation of intellectual proprietary right (†gav¯^Z¡
jsNb),
(21)
Terrorism and financing in terrorism,
(22)
Adulteration and production of goods violating patent right,
(23)
Environmental crime,
(24)
Sexual exploitation,
(25)
Insider trading and market manipulation of capital market,
(26)
Organised crime and participation in organised crime,
(27)
Money realization through threatening,
(28) Other
businesses declared by the Gov’t through Gazette notification as per
recommendation of Bangladesh Bank with the objective to fulfill the purpose of
Money Laundering Preventive Act.
(p) What are the
crimes/offences & punishments as per Money Laundering Prevention Act-2012?
4| gvwbjÛvwis
Aciva I `Ê| - (1) GB AvB‡bi D‡Ïk¨ c~iYK‡í, gvwbjÛvwis GKwU Aciva ewjqv MY¨
nB‡e|
(2) †Kvb e¨w³ gvwbjÛvwis Aciva Kwi‡j ev
gvwbjÛvwis Aciva msNU‡bi †Póv, mnvqZv ev lohš¿ Kwi‡j wZwb Ab~b 4 (Pvi) ermi Ges
AbwaK 12 (evi) ermi ch©šÍ Kviv`‡Û `wÛZ nB‡eb Ges Bnvi AwZwi³ Aciv‡ai mv‡_
mswkó m¤úwËi wظb g~‡j¨i mgcwigvb ev 10 (`k) j¶ UvKv ch©šÍ hvnv AwaK, A_©`‡Û
`wÛZ nB‡eb|
(3) Av`vjZ †Kvb A_©`Ê ev `‡Ûi AwZwi³ wnmv‡e `wÛZ
e¨w³i m¤úwË iv‡óªi AbyK’‡j ev‡Rqvß Kwievi Av‡`k cÖ`vb Kwi‡Z cvwi‡e hvnv cÖZ¨¶
ev c‡iv¶fv‡e gvwbjÛvwis ev †Kvb m¤ú„³ Aciv‡ai mv‡_ m¤ú„³ ev mswkó|
(4) GB avivi Aaxb †Kvb mËv gvwbjÛvwis Aciva Kwi‡j
mswkó m¤úwËi g~‡j¨i Ab~b wظb A_ev 20
(wek) j¶ UvKv, hvnv AwaK nq, Rwigvbv Kiv hvB‡e Ges D³ cÖwZôv‡bi wbeÜb
evwZj‡hvM¨ nB‡e|
(5) m¤ú„³ Aciv‡a Awfhy³ ev `wÛZ nIqv gvwbjÛvwis
Gi Kvi‡Y Awfhy³ ev `Û cÖ`v‡bi c~e©kZ© nB‡e bv|
5| Aei“×KiY
ev †µvK Av‡`k jsN‡bi `Ê| - †Kvb e¨w³ GB AvB‡bi Aaxb †Kvb Aei“×KiY ev †µvK
Av‡`k jsNb Kwi‡j wZwb AbwaK 3 (wZb) ermi ch©šÍ Kviv`Ê ev Aei“×K…Z ev †µvK
Av‡`kK…Z m¤úwËi g~‡j¨i mgcwigvb A_© `Ê ev Dfq `‡Û `wÛZ nB‡eb|
6| Z_¨
cÖKv‡ki `Ê| - (1) †Kvb e¨w³ Amr B‡Ï‡k¨ Z`šÍ m¤úwK©Z †Kvb Z_¨ ev cÖvmswMK
Ab¨ †Kvb Z_¨ †Kvb e¨w³, ms¯’v ev msev` gva¨‡g cÖKvk Kwi‡eb bv|
(2) GB
AvB‡bi Aaxb ¶gZvcÖvß †Kvb e¨w³,
cÖwZôvb ev G‡R›U KZ©„K PvKzixiZ ev wb‡qvMiZ _vKv Ae¯’vq wKsev PvKzix ev
wb‡qvMRwbZ Pzw³ Aemvq‡bi ci ZrKZ©„K
msM„nxZ, cÖvß, AvnwiZ, ÁvZ †Kvb Z_¨ GB AvB‡bi D‡Ïk¨ c~iY e¨ZxZ Ab¨ †Kvb D‡Ï‡k¨
e¨envi ev cÖKvk Kiv nB‡Z weiZ _vwK‡eb|
(3) †Kvb e¨w³ Dcaviv (1) I (2) Gi weavb jsNb
Kwi‡j wZwb AbwaK 2 (`yB) ermi ch©šÍ Kviv`Ê ev Ab~a© 50 (cÂvk) nvRvi UvKv ch©šÍ
A_©`Ê ev Dfq `‡Û `wÛZ nB‡eb|
7| Z`‡šÍ
evav ev Amn‡hvwMZv, cÖwZ‡e`b †cÖi‡Y e¨_©Zv ev Z_¨ mieiv‡n evav †`Iqvi `Ê| -
(1) †Kvb e¨w³ GB AvB‡bi Aaxb –
(K) †Kvb Z`šÍ Kvh©µ‡g Z`šÍKvix Kg©KZ©v‡K evav
cÖ`vb Kwi‡j ev mn‡hvwMZv cÖ`v‡b A¯^xK…wZ Ávcb Kwi‡j; ev
(L) hyw³msMZ KviY e¨wZ‡i‡K hvwPZ †Kvb cÖwZ‡e`b
†ci‡Y ev Z_¨ mieiv‡n A¯^K…wZ Ávcb Kwi‡j;
-
wZwb GB AvB‡bi Aaxb Aciva Kwiqv‡Qb ewjqv MY¨ nB‡eb|
(2) †Kvb e¨w³ Dc aviv (1) Gi Aaxb Aciv‡a †`vlx
mve¨¯Í nB‡j wZwb AbwaK 1 (GK) ermi ch©šÍ Kviv`Ê ev Ab~a© 25 (cuwPk) nvRvi UvKv ch©šÍ A_©`Ê ev Dfq `‡Û `wÛZ nB‡eb|
8| wg_¨v
Z_¨ cÖ`v‡bi `Ê| - (1) †Kvb e¨w³ ÁvZmv‡i A‡_©i Drm ev wbR cwiwPwZ ev wnmve
avi‡Ki cwiwPwZ m¤ú‡K© ev †Kvb wnmv‡ei myweav‡fvMx ev bwgbx m¤ú‡K© †Kvbi“c wg_¨v
Z_¨ cÖ`vb Kwi‡eb bv|
(2) †Kvb e¨w³ Dc-aviv (1) Gi weavb jsNb Kwi‡j
wZwb AbwaK 3 (wZb) ermi ch©šÍ Kviv `Ê ev Ab~a© 50 (cÂvk) nvRvi UvKv ch©šÍ A_©`Ê
ev Dfq `‡Û `wÛZ nB‡eb|
(q) What do you understand by
Transaction Profile (TP) of an account?
A
declaration for probable number & amount of transactions during a month
from the customers to be obtained by all Banks & Financial institutions to
identify & observe abnormal transactions. Abnormal/doubtful transaction
will be considered if the declared transaction limit exceeds and failed to
explain the justification. Justified exceeds of TP limit should be recorded and
preserved. This declaration of probable transaction limit during a period is
called Transaction Profile. This declaration form contains Name, A/C no,
Address, Postal address, highest amount of monthly transaction in
cash/transfer/clearing/on line deposit/withdraw, foreign exchange inward
amount, investment, business turnover etc. Fresh declaration of TP limit to be
obtained if the TP limit of a customer exceeds frequently for obvious reasons.
(r) Write the names of Profession or
business which are carrying high risk for Money laundering.
a) Jwellery/Gold, b) Money changer, c) Real estate, d)
Construction developer, e) Off
shore
corporation, f) Dealer of Fine art/Antique, g) Restaurent/Bar/Owner of night
club, h) Agent of Export/Import, i) Money lender (twenty five lacs in a month),
j) Share/Stock dealer, k) Travel agent, l) Non-Banking Financial institution,
m) Activities at different places.
(s) Briefly write how customers to be
segregated riskwise.
It is necessary to
asses the risk of money laundering of all accounts at the time of opening. This
type of assessment is called riskwise segregation of accounts.
As per Anti
money laundering guidebook of Bangladesh Bank, it is very easy to asses the
risk of money laundering through KYC of an account. There are rating scores on
the following seven points of a KYC form:
(i) Nature of
profession or business - - - score range 0 – 5
(ii) Net worth of
the business - - - - - - 0
– 3
(iii) Method of
account opening - - - - - 0 – 3
(iv) Expected
monthly transaction amount of the A/c holder - - 0
– 3
(v) Expected
monthly transaction number of the A/c holder - - 0
– 3
(vi) Expected
monthly cash transaction amount of the A/C holder - 0 – 3
(vii) Expected
monthly cash transaction numbers of the A/C holder - 0 – 3
If the total score
of a KYC form exceeds 14 then the account should be marked and treated as high
risk account.
(t) What is PEPs? What is the definition of
PEPs?
PEPs means Politically
Exposed Persons.
“Individuals who
are or have been entrusted with prominent public functions in a foreign
country, for example Heads of state or of government, senior politicians,
senior government officials, judicial or military officials, senior executives
of state owned corporations, important political party officials. Business
relationships with family members or close associates of PEPs involve
reputational risks similar to those with PEPs themselves.”
(u) What
enhanced due diligence should be exercised in relation to PEPs by the Banks and
Financial Institutions?
(a) Have the risk
management system to identify PEPs.
(b) Obtain senior
management approval for establishing business relationships with such
customers.
(c) Take reasonable
measures to establish the source of wealth and source of funds.
(d) Conduct ongoing
monitoring of the business relationship.
(v) Write some indicators through which a
banker could realize that the
existing/prospective account holder violating money
laundering rules.
a) Concealment of facts, avoiding tendency of giving required
informations.
b) Giving wrong address or address which are not
traceable/detectable.
d)
Business house/Residence is far away from the Bank branch, but apparently not
possible to realize the reason for open account.
e)
Unwillingness to declare whether any other account maintaining with other Bank.
f)
Declared transaction profile is not justified to his business.
gj)
Small cash deposits frequently and exceeded TP.
k)
Request for cash payment after transfer from other source.
l)
Show profit/interest for cash transaction without natural/normal reasons/rules.
m)
Without justified reason deposits by cheque of others.
n
Suddenly defaulted investment (loan) repaid without acceptable reason.
q)
Over invoicing in import and under invoicing in export.
t)
Direct or indirectly related with smuggling.
u)
Submission of fraud Bill of entry.
v)
Huge transaction, but minimum balance maintain in account.
w)
Frequently remit money in the border area.
x)
Remittance received from Drug produced/Drug transit countries.
y)
Remit money to different places, not related to customer.
z)
Huge securities sale/purchase exceeding legal source of income of the customer.
(w) What are the duties &
responsibilities of Banking & Non-Banking Financial
Institutions to protect & detect Money Laundering?
The duties &
responsibilities of Bank & Financial institution to protect & detect
money laundering are:
a)
To obtain & preserve KYC form very carefully and
duly verified.
b)
To obtain full particulars of remiter &
beneficiary, if he is not an account holder.
c)
To obtain Transaction Profile declaration from the account
holder and observe the transactions.
d)
To segregate the accounts considering risk ratings of
the nature of accounts and source of income/profession etc.
e)
To preserve the informations of account holder and
statement of account for atleast five years from the date of close of the
account.
f)
Preserved informations of closed accounts to be
submitted to Bangladesh Bank from time to time, as and when required.
g)
Abnormal and doubtful transacted money laundering
related informations to be submitted to Bangladesh Bank.
h)
Bangladesh Bank will ask the respective authority of
Bank, Non-Bank Financial Institution or organisation related to financial
activities to take appropriate action if anybody failed to preserve or failed
to supply the informations related to Money Laundering or negligence of duties
on the above issue.
i) Co-operation to be extended to Anti
Corruption Commission or Bangladesh Bank to protect and detect money
laundering.
(x) What do you mean by KYC, CTR, STR?
KYC means Know Your Customer. It
is a part of our account opening form printed by our Bank as per guidelines of
Bangladesh Bank. It is compulsorily to be filled duly signed by all the deposit
& investment clients. This part of account opening form contains the
particulars, i.e. Name, Present address, Permanent address, business/service
address, source of income, nature of business, Monthly/Yearly income,
Telephone/Mobile no of present/permanent/business/service addresses,
relationship with the introducer, expected amount & number of transaction in
cash & other modes in a month etc. Bankers could segregate the accounts
riskwise through KYC as per guidelines of Bangladesh Bank.
CTR means Cash Transaction
Report. It is a monthly statement form introduced by Bangladesh Bank if Tk. Ten
lac & above credited or debited by one or more vouchers in an account in a
day, to submit the same to them by the branches through the Head Office of
their Banks. This statement contains the date, Account no, name of the account,
number of debit/credit vouchers of the day, amount credited/debited etc. This
statement could generate by our computer. Anti Money Laundering unit of
branches should observe the CTR statements whether any doubtful transactions
are happened or not and they should put their comments upon the statement.
STR means Suspicious Transaction Report. As per
Bangladesh Bank Anti Money Laundering circular no.2 a quarterly statement
designed by Bangladesh Bank to detect Money Laundering crimes. Branches of all
Banks in
(b) From
where the Human relation problems arises?
Human relation problem arise from:
(1)
Lack of proper personnel planning
(2)
Lack of appreciation of personal problems by the
authority
(3)
Lack of appreciation for good performances
(4)
Discrimination in promotion, transfer and rotation of
duties.
(5)
Lack of co-operation among employees in different
grades
(6)
Lack of proper working environment
(7)
Lack of proper application of Service rule/rules of
discipline
(8)
Lack of proper accommodation, medical care, other
facilities for general welfare of the employees.
(9)
Lack of proper distribution of benefits &
facilities
(10) Showing
favour/disfavour to individuals or groups
(11)
Under rating or over rating of subordinates by their superiors.
(c) How to deal with Human relation problems
in Banks?
1) There should be proper personnel
planning
2) Right
man should be posted in right position
3) Management
should be sympathetic and should try to solve the genuine
problems/grievances of the employees.
4) Good performance should
be appreciated and recognition should be given when it is due.
5) Showing favour or disfavour to any
body/group should be avoided
6) Over rating or under rating of the
employees should be avoided
7) The annual confidential report should be
fair
8) All official and personal problems which
affect human relations should be
discussed
in staff meetings for creation of better understanding to solve the
problem.
9) Due
protection should be given to the employees against wrongful harassment.
10) Subordinates should be
treated as Junior members of the family and due respect should be shown to
them, so that they reciprocate the same in their behaviour.
11) In case of breach of discipline or
misconduct or offences committed by any
employee,
the employee should be given a chance to rectify himself and full
justice
to be done before any punishment is awarded to any employee.
12) Short-comings or lapses of any employee
should be pointed out personally or
confidentially
in writing with an advice to improve.
13) None should be taken into task in presence
of others.
13. (a) What is
Ethics?
Ethics can be
defined as a set of moral standard practiced in a society. These standards
& principles of what is ‘right’ apply in every sphare of a society, nation
and country. The core standard of Ethics have striking similarities everywhere
irrespective of differences in language, culture, religion and social
developments. Ethical standards is written or un-written law introduced by
social leaders which have been observed for centuries as customs and practices.
In other words, Ethics is a set of Laws & Rules formulated by the State,
Society, Religion & family to abide by it’s members.
(b) Write the Code of Conduct for Bank
Employees.
Bank
employees including the Chief Executives are legally and morally responsible to
run their Banks for the best interest of depositors and share holders.
(1)
Every Bank employees should remain loyal to his Bank
and must work only for the best interest of the Bank, its depositors and share
holders.
(2)
Every Employees should faithfully obey the rules of the
bank and carry out orders of their superior officers.
(3)
Every employees should report to the management of any
irregularity or lapses that come to his knowledge, any time whether or not it
is in his department.
(4)
Every employees should ensure confidentiality of the
affairs of the Bank and must not divulge any information to anyone except under
written authority of a client or management or under the existing law of land.
(5)
Every employees must treat the clients of the bank with
utmost respect and must assist them in all manners, according to the rules and
procedures, promptly and courteously.
(6)
Every employees should apply as much diligence and
exercise as much care and caution for protection and security of the property
of the bank and that of its clients, as he would have done, had it been his own
money or property.
(7)
Every employees must live within his means and should
maintain the highest standards of honesty. None should take any gift or favour
in cash or kind or otherwise from any client of the Bank.
(8)
Every employees must not engage in any immoral and
unethical activities such as hard drinking, racing, gambling etc.
(9)
No employees should ever become a member of any
political party/association/organization except those engaged in purely
humanitarian activities.
(10)
No employees should undertake any extra job to earn money.
(c) ‘Bankers are Borrowers & Trustees’ –
Explain.
The borderline between
ethics and law is very thin. Though ethical violation in most cases may end up
in legal violations, yet some ethical violations may not punishable under the
law. Banks, which takes deposits from the public, are legally required to
return the money as and when they become due or on demand by the depositors,
but they are not legally bound to invest these public deposits as per desire of
the depositors. Banks are allowed the freedom to invest the money as they
please as per norms of Bangladesh Bank and Bank Company Act. The general belief
thus is that the Banks are both ‘borrowers’ and ‘trustees’ of the deposits of
public kept with them. It is due to these founding rules that the Banks
everywhere attach high importance to the ethical values such as honesty,
fairness, responsible citizenship and accountability in their dealings.
14. (a) What is
Etiquette?
Etiquette
means forms of behaviour demanded by good breeding or by convention (wkôvPvi, f`ª Av`e Kvq`v), the formal
rules of correct or polite behaviour in society or among members of a
particular profession. Etiquette is a code that influences the expectations and
behaviour of social behaviour, according to contemporary conventional norms
within a society, social class, business organization or Bank. Rules of
etiquette are usually unwritten, but aspects of etiquette have been codified
from time to time. A rule of etiquette may reflect an underlying ethical code,
or it may reflect a fashion or status. Etiquette includes common courtesy in
business environments like banking industry. The corporate world no longer
accepts people who do not care about their behaviour.
(b) What is Manner?
Manner is the
way that something is done or happens. In other words, manner is the method,
mode of action, habit, behaviour, style, politeness of an action (e¨envi, AvPiY, Af¨vm). It is the way that
somebody behaves and speaks towards other people. In other words, manner is a
way of doing something or the way in which a thing is done or happens or a way
of acting, bearing or behaviour. It involves a wide range of social
interactions within cultural norms.
(c) What is the difference between Etiquette
and Manner?
There is very
little differences between etiquette and manner. Etiquette is protocol. It
includes rules of behaviour, it seldom allows for personal variations,
individual concern and needs. Manners, on the other hand relate to kindness and
caring about others. Etiquette is dependent on culture; what is excellent
etiquette in one society may shock another. Etiquette evolves with culture.
Etiquette can vary widely between different cultures, religions and nations (GK †`‡ki Mvwj, Ab¨ †`‡ki eywj). While
manners are almost same for all the people in the world irrespective of
culture, religion and nation.
(d) What is Business Etiquette and Manner?
Business
etiquette is the art of knowing how to behave in a given situation and knowing
how to interact with people. Etiquette is the guideline for knowing how to
behave appropriately in all situations. Good manners make good business. It is
not enough to know your company and product well. You must also know how best
to meet people and make introductions, how to dress, how to use your business
card properly. Your knowledge encompasses your leadership style, your
communication and behaviour in different business settings. Good manners are
not optional, they are essential tools you must use every day.
Etiquette is
about being comfortable around people and making them comfortable around you.
Many potential businesses and profitable alliances have been lost by many
bankers because of unintentional breach of manners. Etiquette includes common
courtesy in business environments. The corporate world no longer accepts people
who don’t care about their behaviour.
(e) What is Employee etiquette?
Employee etiquette:
Attitude:
Bank is a service industry. It takes deposit from the surplus unit and deploy
it to deficit unit. Its main function is the intermediation of money. As such
first of all you have to set up your mind to extend service to the
people/firm/company of surplus and deficit areas. Here bureaucracy will not be
applicable. So, the first and foremost of etiquette is developing a positive
attitude. People will deposit their hard earned money with you with a confident
that he/they will get back these money in time without any hastle.
Dress: You should be clean well dressed as per culture of the
Bank.
·
Be on time for your job. Better still, be early.
·
Welcome your colleagues and customers by
Assalamu Alaikum/Adab/Good morning (as the case may be).
·
Be respectful to your employer.
·
Respect the Bank’s confidentiality of
information.
·
Respect the client’s confidentiality of
information.
·
Respect the business goals/targets and sincerely
try to achieve the goal.
·
Respect the Senior/junior colleagues and
co-operate them as and when needed.
·
Answer your phone pleasantly even if you are
having a bad day.
·
Always call back your phone calls.
·
Do not dominate the meeting. All communication
must take place through the Chairperson/President.
·
Do not interrupt another speaker.
·
Pay attention to the proceedings quietly.
·
Do not leave the meeting until it is closed by
the President.
·
Apologies for any mistake/wrong.
·
Don’t gossip with your colleagues/others keeping
pending works of the customers.
·
Submit all statements/returns to the competent
authority in time.
·
Write letters to your superiors or customers
simply, shortly and politely which creates a soft impression to the writer by
the receiver.
(f) What is Office etiquette?
Office etiquette (Office manners):
·
Office etiquette or Office manners is about
conducting yourself respectfully and courteously in the office – first
impression are important.
·
Always act with honesty, dignity, ethically.
·
Wear appropriate office attire.
·
Do not cough or sneeze in any one’s direction.
Use tissue, if possible, to contain the germs and then say “Excuse me”.
·
Treat your colleagues (whether senior or junior
even cleaners) with respect and courtesy.
·
Customers are king (whether big or small), show
respect to them.
·
Knock before entering into another’s
room/chamber.
·
Keep clean the workplace.
·
Express appreciation to others for successful
completion of their/his job/task.
·
Be helpful and co-operative with each other.
·
Speak clearly without shouting.
·
Say, ‘Please’, ‘Thank you’, ‘You are welcome’,
‘Good by’, Assalamu-alaikum’ (as the case may be) as part of your everyday
courtesy.
·
Don’t gossip about any colleagues’ private life.
·
Avoid slangy/provocative comments about a
colleague or customer or their dress.
·
Take responsibility for your mistakes, apologies
and go about correcting it.
·
Pay first attention to customers, serve them,
solve their banking needs.
·
The boss always gets the benefit of the doubt.
Don’t argue with the Boss.
·
Make new employees feel welcome and comfortable
around you.
·
Never pick your teeth, ears or nose in public.
·
Never joke or laugh at the expense of others
feelings.
·
Never flick, brush or play in your hair around
food in public.
·
Never take gifts from the customers.
(g) What are the benefits of business
etiquette?
Benefits of business etiquette:
·
Good manners make a positive impression.
·
A positive perception enhances credibility.
·
Knowing you are behaving appropriately helps you
feel relaxed and confident so you can focus on business.
·
Being polite shows you are a good banker.
·
People do business with you when you make them
feel comfortable.
(h) Write a conclusion on etiquette and
manner.
Conclusion:
Bankers must
acquire and enrich knowledge from Banking books, newspaper, magazine and other
books. Bankers should have clear idea and knowledge of current national and
international issues so that he could share his knowledge/information with the
interested topics of the customers, which creates a positive impression about
the banker. A Banker could not succeed if he fails to creates positive
attitude/impression about him and his Bank. So, knowledge, etiquette and manner
plays a vital role in the life of a Banker.
Since Bank is a
service industry through intermediation of money by collecting deposits from
the surplus unit which may be individual/firm/company and utilize these money
through extending investment/credit to the needy persons/firm/company/industry
and earn money. Submissive approach earns a lot. They should know and exercise
the proper etiquette for acquiring businesses from the depositors and
borrowers. An well mannered/well behaved banker will be able to secure deposits
at low cost and can invest these money at higher cost to the surplus unit. This
low cost of deposit and higher cost of lending is the price of proper application
of etiquette and manner. In addition to banking knowledge, bankers must acquire
the appropriate etiquette and manner. An well behaved banker could secure other
types of banking business, viz, export/import/merchant banking/remittance which
are fee/charge based income without any involvement of fund. If any investment
or loan become stuck up or classified for any justified or unjustified reason,
a good banker could realize/regularize the investment or loan through well
behave and well mannered. Proper mannered communication with the defaulter
borrower ultimately save the Bank from any loss or expensive & lengthy
legal battle. In any climate or situation well behaved/well mannered bankers
got recognition and rise in their service life.
15. (a) Who
is a Customer?
A customer
is one who have an account with the bank or one should deal with the bank in
its nature of regular banking business or one should have dealing with the bank
with an intention to continue the dealings frequently.
Customers again
divided into two groups: Internal customer and External customer. External
customers are three groups: (i) Corporate customers, (ii) Retail customers and
(iii) SME customers.
(b) What is Service?
Service is any
act or performance that one party can offer. Bank is a service industry.
It collects fund from surplus unit and deploy
to the deficit unit. The main function of Banking industry is intermediation of
money. So, service is its only product. Service is provided by people, not by
machine. Service is intangible, yet it provides satisfaction of the customer.
(c) What is Customers Service?
Customer Service: Customer service is
the service provided for the customers by the Bankers or by the sales man to
satisfy them and maximise their positive attitude towards the bank or the
products.
Every customer comes to bank with two agenda:
i) His functional agenda and ii) His ego
agenda. Functional agenda is satisfied when his problem is
identified and deal with. Customers ego agenda is satisfied when he feels
that he has received adequate attention.
(d) Which parties to be satisfied by Bankers?
They are: (i) Customer, (ii) Regulator, (iii)
Share holder and (iv) Employee.
(e) What
are the ways means of better customer service?
The ways & means for better customer
service are:
● Access: services are easy to access in
convenient location at convenient time.
● Communication: In customer’s language,
timely preparation & sending of
statement.
● Good environment: Clean & sound, best
sitting accommodation.
● Courtesy: √
Reception/ Welcoming
√ Respect
√ smiling
√ Entertainment
√ Patience hearing
√ Attention to
customer’s needs & requirements
√ Necessary action to
be taken as per requirement
√ Maintain contact
& follow-up, Greet with seasonal & festival cards.
√ Avoid back biting.
√ Farewell: Thanks
giving
●
Smartness: Which comes from Brain, not from Dress.
● Competence: Required knowledge & skill
●
Creditability: Consistency & accuracy
●
Commitments, Avoid false commitment.
● Talk
with the customers from same wave/language with eye contact.
● Motivation
●
Quick service
●
Secrecy
●
Trustworthy
●
Formalities
●
Information system: Latest technology to be used.
● Reliability
●
Security
●
Customers get together
● Know your customer (KYC).
●
Recognition/remembering the name & address of the customer and their family
members.
● To say ‘no’ earlier to the customer is
better than ‘yes’ in later.
16. Write the
number of days of (a) C.L, (b) SL, (c) EL, (d) Special leave, (e) Maternity
leave
17. What papers required to open an account
of : (a) Single account, (b) Joint account, (c) Partnership account, (d)
Proprietorship account, (e) Minor account, (f) Ltd. Company account, (g)
Association/Club/Trust/Society/Charity Organization/Educational
Institution/Masjid/Madrasha account, (h) FC account for Bangladeshi Wage
Earners, (i) FC account for Foreign nationals/Company/Firm.
(a)
Single account: (i) Passport size photograph
2 copies duly signed & attested by the introducer, (ii) one copy photograph
of the nominee duly attested by the intending account holder, (iii) Copy of
Passport/National ID Card/Driving License/Office ID/Word Commissioner’s
certificate/any ID card acceptable to the bank, (iv) TIN certificate (if
applicable) .
(b) Joint
account: (i) Two copies passport size photograph of each duly signed
& attested by the introducer, (ii) Joint account declaration form, (iii)
Photograph(s) of the nominee duly attested by the intending account holder (if
necessary), (iv) Copy of Passport/National ID Card/Driving License/Office
ID/Word Commissioner’s certificate/any ID acceptable to the bank, (v) TIN
certificate (if applicable).
(c) Partnership
account: (i) Two copies passport size photograph of each who will
operate the account duly signed & attested, (ii) Certified copy of valid
trade license, (iii) Certified copy of registered partnership deed,
(iv) Partnership account agreement form (Maximum 20 persons may form a
partnership firm.), (v) TIN certificate, (vi) List of partners alongwith their
full address and phone numbers, (viii) Resolution of the partners to open the
A/C and authorization for its operation duly certified by the Managing partner,
(viii) Copy of passport/National ID card/Driving License/Office ID/Word
Commissioner’s certificate/any ID card of the operators acceptable to the bank.
(d) Proprietorship
account: (i) Two copies passport size photograph duly signed &
attested, (ii) Certified copy of valid Trade license, (iii) Photo of
nominee duly attested by the proprietor of the firm, (iv) Proprietorship
declaration form, (v) TIN certificate, (vi) Copy of passport/National ID
card/Driving License/Word Commissioner’s certificate/any ID card acceptable to
the bank.
(e) Minor
account: (i) Two copies passport size photograph of the minor duly
attested by the legal guardian, (ii) Two copies passport size photograph of the
legal guardian who will operate the account duly attested by the introducer,
(iii) Attested Birth certificate of the minor, (iv) Attested copy of
Passport/National ID card/Driving License/Office ID/Word Commissioner’s
certificate/any ID card acceptable to the bank.
(f) Limited
Company account: (i) Attested two copies photographs of each persons
who will operate the account, (ii) Certified (by the MD/Chairman) copy of the
Memorandum & Articles of Association, (iii) Certified copy of Certificate
of Incorporation, (iv) Certified copy of Certificate of Commencement of
business (in case of Public Ltd. Co.), (v) Latest list of Directors with
designation, full address and phone nos, (vi) Certified copy of forms-XII
certified by the Register of Joint Stock Company (in case of change in
directorship), (vii) Resolution of the Board in Banks prescribed form, (There
should be minimum 2 and maximum 50 members in case of a Pvt. Ltd Company. But
in case of Public Ltd Company the members will be as per subscribed shares of
the company.), (viii) Board resolution for opening the account and
authorization for its operation duly certified by the Chairman/MD of the
company, (ix) Copy of updated Trade License, (x) Updated Tin certificate, (xi)
Certificate of Registration incase of Insurance companies, (xii) Copy of
Passport/National ID card/Driving License/Word Commissioner’s certificate/any
other ID acceptable to the bank of the operators of the A/C.
(g) Association/Club/Trust/Society/Charity
Organization/Educational Institution /Masjid/Madrasha account: (i) Certified copy of By-Laws/Memorandum and
Articles of Association/Trust deed, (ii) Certified copy of Certificate of
Registration/Permission from the concerned Department(s) of the Gov’t, (iii)
List of members of the Governing body/Executive Committee with their address
and phone nos., (iv) Resolution of the Board/Executive Committee/Governing body
for opening the account and authorization for its operation duly certified by
the Chairman/Secretary/President, (v) Registration certificate (if registered),
(vi) Permission letter from Bureau of NGO (incase of NGO A/C), (vii) Attested
two copies photographs of each persons who will operate the a/c, (viii) Copy of
Passport/National ID card/Driving License/Office ID/Word Commissioner’s
certificate/any ID card acceptable to the bank of the operator(s).
(h) Foreign
Currency account for Bangladeshi Wage earners: (i) Photocopy of valid
passport with valid visa, (ii) Photocopy of Employment contract/work
permit/appointment letter, (iii) Two copy passport size photographs of account
holder duly attested by the introducer, (iv) Two copies passport size
photographs of nominee duly attested by the account holder.
(i) Foreign
Currency account for foreign nationals/Company/Firm: (i) Two copies
passport size photographs of account holder(s) who will operate the account,
(ii) Photocopy of valid passport of the account holder (to be attested by the
dealing officer) and operators of other types of account, (iii) Copy of service
contract letter/work permit for individual, (iv) Copies of registration in
Bangladesh with Board of Investment/Bangladesh Bank for Foreign/Joint Venture
Firms, (v) Copies of Memorandum & Articles of Association- Bye Laws or
joint venture agreement (as the case may be), (vi) Copy of registered
partnership deed duly attested (incase of partnership) and other papers/documents
as per rule of our bank considering the type of a/c.
18. [ The Negotiable Instrument Act derived from “The English Common Law”
in the year 1881 and came into effect from March 01, 1882. It contains 17
Chapters and 141 Sections. This act has been enacted in our country vide P. O.
No. 127 in the year 1972. ]
(a) What is Negotiable Instrument?
The term
Negotiable Instrument literally means a written document which creates a legal
right in favour of some person and which is freely transferable. In the words
of Justice Willis, “a Negotiable Instrument is one, the property in which is
acquired by any one who takes it bonafide and for value notwithstanding any
defect in the title of the person from whom he took it”.
As per section
13 of the Negotiable Instrument Act, “ a negotiable instrument means a
promissory note, bill of exchange or cheque, payable either to order or to
bearer whether the words ‘order’ or bearer’ appear on the instrument or not”.
“When a
Promissory note, Bill of Exchange or Cheque is transferred to any person so as
to constitute that person the holder thereof, the instrument is said to be
negotiated”. (NI Act – Section – 14)
(b) Write the names of three Negotiable
instruments as per Negotiable Instrument Act
–
1881.
i) Demand Promissory note/DP
note/Pro note.
ii)
Bill of Exchange
iii)
Cheque
(c) Write the number of Act, Chapters &
Sections of Negotiable Instrument Act – 1881.
Negotiable
Instrument Act no. XXVI of 1881 which contains 141 Sections and came into
effect on the 1st day of March, 1882. Some amendments of the Act were made in
1972 and thereafter.
(d) Define DP note. Write the number of
parties involved in a DP note. Write the
essential
characteristics of a DP note.
A ‘Promissory note’
is an instrument in writing (not being a Bank note or currency note)
containing an unconditional undertaking, signed by the maker to pay on demand
or at a fixed or determinable future time, a certain sum of money only to, or
to the order of a certain person or to the bearer of the instrument. (NI
Act - Section – 4)
There
are two parties: Maker and Payee/(Holder)
Essential characteristics of a Promissory note:
(i) It
is an instrument in writting with date.
(ii)
It is a promise to
pay
(iii)
The undertaking to
pay is unconditional
(iv)
It should be
signed by the maker
(v)
The maker must be
certain
(vi)
The payee must be
certain
(vii)
The promise should
be pay only money
(viii)
The Amount should
be certain
(ix)
It should be
properly stamped.
Specimen of
a DP note:
|
|
DEMAND
PROMISSORY NOTE |
||||
|
Tk. …………………. Date …………. I/we
promise to pay Export Import Bank of Bangladesh Ltd or order, the sum of Taka
……………………….. for value received with profit thereon from this date and
compensation, if any, imposed by the Bank.
Sd/- x |
|||||
(e) Define Bill of Exchange. Who are the
parties of a Bill of Exchange?What are the
essential
characteristics of a Bill of Exchange?
A ‘Bill of Exchange’
is an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay on demand or at a fixed or
determinable future time a certain sum
of money only to, or to the order of, a certain person or to the bearer of the
instrument. (NI Act - Section – 5)
Parties:
i) Drawer, ii) Drawee, iii) Acceptor, iv) Payee, v) Indorser, vi) Indorsee,
vii) Holder, viii) Drawee in case of need, ix) Acceptor for honour.
Essential
characteristics of Bill of Exchange:
(i) It must be in writing with date
(ii)
It must be signed by the drawer (maker)
(iii)
The drawer, drawee and payee must be certain
(iv)
The amount should be certain
(v)
It should be properly stamped
(vi)
It must contain unconditional order
(vii)
The order should be pay only money.
Specimen of Bill of Exchange:
|
Take=10,000/- |
November
20, 2005 |
||
|
On
demand pay to Mr. Ahmed Ali or order a
sum of Taka Ten thousand only, value received.
Mr.
X 700,
Arambagh
1001, Mogbazar
|
|||
(f) Define cheque. Who are the parties of a cheque?What are the
essential
characteristics
of a cheque?
A ‘Cheque’ is
a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand (NI Act - Section – 6)
“A cheque is an
instrument in writing containing an unconditional order, signed by the maker,
directing the Bank to pay on demand or at a fixed or determinable future time,
a certain sum of money only to, or to the order of, a certain person or to the
bearer of the instrument”.
There
are three parties: Drawer, Drawee, Payee.
Essential
characteristics of a cheque:
(i) It must be in writing on specified form
(ii)
It must bears date
(iii)
The drawer, drawee and payee must be certain
(iv)
The amount must be certain
(v)
It should be drawn on a Banker
(vi)
It is payable on demand
(vii)
It must be signed by the drawer
Specimen of
a cheque:
|
|
X Bank Y branch |
Cheque no…………
|
||
|
|
||||
|
Pay ………………………..or bearer |
||||
|
Tk. ………………………………… only |
||||
|
Account no ………………………. Sd/- Z |
||||
(g) Explain: (i) Payment in due course, (ii)
Holder, (iii) Holder in due course
i) ‘Payment in due
course’ means payment in accordance with the apparent tenor of the instrument in good faith and without
negligence to any person in possession thereof under circumstances which do not
afford a reasonable ground for believing that he is not entitle to receive
payment of the amount therein mentioned. (NI Act - Section – 10)
ii) The ‘Holder’
of a promissory note, bill of exchange or cheque means the payee or endorsee
who is in possession of it or the bearer thereof but does not include a
beneficial owner claiming through a benamider. (NI Act - Section – 8)
iii) ‘Holder
in due course’ means any person who for consideration becomes the possessor
of a promissory note, bill of exchange
or cheque, if payable to bearer, or the payee or endorsee thereof, if payable
to order, before it become overdue, without notice that the title of the person
from who he derived his own title was defective. (NI Act - Section – 9)
(h) What is post dated & stale cheque?
Post dated cheque: To date
after the date of issue of the cheque.
Stale cheque:
It is also called ‘Out of date’ or ‘Ante-dated’. A stale cheque is that which
is presented after six months from the date of cheque or the date written in
the cheque is out of calendar.
(i) What are quasi negotiable instruments?
i) Payment order
ii)
Bill of Lading
iii)
Truck receipt/Railway receipt/Airway bill.
iv)
SDR/CDR
(j) What are the answers in case of
dishonoured cheque?
i) Insufficient fund
ii)
Amount in figure & word differs
iii)
Cheque out of date/post dated
iv)
Drawers’ signature differ
v)
Payment stopped by drawer
vi)
Crossed cheque to be presented through a Bank.
vii)
Payees endorsement required
viii)
Other specific reasons not mentioned above ….
19. (a) What is
Crossing?
A cheque is said to be crossed when
two transverse parallel lines with or without any
words are drawn
across its face. A crossing is a direction to a paying banker to pay the money
generally to a Banker or a particular banker, as the case may be, and not to
the holder at the counter.
(b) What are
the types of Crossing?
There are mainly two types of
crossing:
i) General
Crossing: Where a cheque bears across its face two transverse parallel
lines with or without any words, it is called General Crossing. Words such as
‘and company’ ‘& co.’ or any other abbreviation, may be written in between
these two transverse parallel lines, either with or without words ‘not
negotiable’ (NI Act - Section – 123). Absence of these words would not affect
the validity of the crossing. In this case, the banker upon whom the cheque is
drawn will make the payment only to some other banker.
Specimen of General
Crossing
 |
|||||
 |
|||||
 |
|||||
The addition of the words ‘& Co’ in a crossing
does not have any legal significance. But the addition of the words ‘not
negotiable’ has significant legal effect. Of course, these words do not take a
way the characteristics of transferability of the instrument, but they very
much restrict it. This is because a transferee of a cheque bearing words ‘not
negotiable’ will not get a better title than that of a transferor. In other
words, if the transferors’ title is defective, the title of the holder will
also be defective even if he happens to be holder in due course.
Where a cheque crossed generally bears across its
face an addition of the words “account payee” between the two transverse
parallel lines constituting the general crossing, the cheque, besides being
crossed generally, is said to be crossed “account payee”. (Section 123A
of N.I. Act). In such a case, it shall cease to be negotiable and it shall be
the duty of the collecting Banker of the cheque to credit the proceeds thereof
only to the account of the payee named in the cheque.
ii) Special
crossing: Where a cheque bears across its face two transverse parallel
lines an addition of the name of a banker with or without the words ‘not
negotiable’, it shall be deemed to be special crossing (Section 124 of NI Act –
1881). When a cheque has been specially crossed, the banker upon whom it has
been drawn will make the payment only to that banker in whose favour it has
been crossed.
Specimen of Special
Crossing
 |
|||
 |
|||
Besides the
above two types of statutory crossing, in recent years the practice of crossing
cheques developed. These are: Restrictive Crossing and Double crossing.
Restrictive
crossing: Restrictive crossing is only a direction to the collecting banker
that the proceeds are to be credited only to the ‘account of payee’ named in
the cheque. When a cheque is crossed ‘Account payee’, it shall cease to be
negotiable.
Specimen of
Restrictive crossing
 |
|||||
 |
|||||
 |
|||||
Double
crossing: When a cheque bears two separate special crossings, it is said to
have been double crossed. As per section 127 of NI Act – 1881, “where a cheque
is crossed specially to more than one banker, except when crossed to an agent
for the purpose of collection, the banker on whom it is drawn shall refuse
payment thereof”.
Specimen
of Double crossing
 |
20. (a) What is
Endorsement of cheque?
Endorsement or
Indorsement: Endorsement means assignment or transfer authority by a holder
of a negotiable or quasi-negotiable instrument. Endorsement is made by the
holder by signing on the back of negotiable or quasi-negotiable instrument with
an intention to assign or transfer the same to another.
As per
N.I. Act – 15 “ When the maker or holder of a negotiable instrument signs the same,
otherwise than as such maker, for the purpose of negotiation, on the back or
face thereof or on a slip of paper annexed thereto, or so signs for the same
purpose a stamped paper intended to be completed as a negotiable instrument, he
is said to endorse the same, and is called the endorser.”
As per N.I. Act
– 16 “If the endorser signs his name only, the endorsement is said to be ‘in
blank’ and if he adds a direction to pay the amount mentioned in the instrument
to, or to the order of, a specified person, the endorsement is said to ‘in
full’, and the person so specified is called the ‘endorsee of the instrument’.
The provisions of this act relating to a payee shall apply with the necessary
modifications to an endorsee”.
(b) What are the types of endorsement?
There are four types of
endorsement:
(i)
Endorsement in blank: If the endorser signs his name only on the
overleaf of the instrument – it is said to be blank endorsement.
(ii)
Endorsement in full: If the endorser put his sign on the instrument by
adding a direction to pay the amount mentioned in the instrument, or to the
order of, a specified person – the endorsement is said to be in full.
(iii)
Conditional endorsement: If the endorser of a negotiable instrument, by
express words in the endorsement, makes the right of endorsee to receive the
payment depending on happening of a specified event – is called conditional
endorsement.
(iv)
Restrictive endorsement: The restrictive endorsement prohibit further
endorsement as the endorser might have written ‘Pay the amount to X only’.
21. (a) What are the duties of a paying banker?
Section
31 of the Negotiable Instruments Act provides “the drawee of a cheque having
sufficient funds of the drawer in his hands, properly applicable to the payment
of such cheque must pay the cheque when duly required so to do, and in default
of such payment, must compensate the drawer for any loss or damage caused by
such default.”
(b) What
precautions to be taken by a paying banker?
1. Precaution
regarding ‘form of the cheque’: The cheque should be in proper form. The
Negotiable Instrument Act does not give the form of a cheque.
2.
Precaution regarding ‘date’: The banker should refuse to honour an undated
cheque which has been presented to it for payment. The date need not be filled
in by the drawer, it can be filled by the subsequent holder too.
Post-dated
cheques: In case a cheque is post dated i.e it bears a date which is yet to
come, the bank should honour it only on or after the date mentioned on the
cheque.
Stale
cheque: That is also termed as an ‘Out-of-date cheque’ or ‘Ante-dated
cheque’. It is the custom of the bankers not to pay cheques which are presented
after a certain period has elapsed since the apparent date of their issue. The
period varies from banks to banks. Generally the period of 6 months is more
popular.
3.
Precaution regarding amount: The banker should see that the amount
mentioned both in figures and words in the cheque are the same. In case they
differ, the amount stated in words may be taken as correct and the banker may
make the payment.
4.
Precaution regarding ‘funds’ of the customer: There should be sufficient
funds in the account of the customer for payment of the cheque.
5.
Precaution regarding drawer’s signature: A banker is expected to know the
signature of his customers and, therefore, if the drawer’s signature has been
forged, and the banker makes the payment it shall not be entitled to debit the
customer’s account with the payment. The loss will be borne by banker.
6.
Precaution regarding mutilated cheques: A cheque is said to be mutilated
when it is torn into two or more pieces. Such a cheque should not be paid
unless the banker is satisfied that mutilated was unintentional and it also
obtains confirmation of the drawer.
7.
Precaution regarding banking hours: The banker should make payment of only
such cheques which have been presented to it for payment during its banking
hours. Any payment of cheque which was presented after banking hours will not
be taken as a payment in due course.
8.
Precaution regarding crossing: If the cheque is a crossed one, it should
not be paid on the counter but through a collecting banker.
9.
Precaution regarding endorsement: The paying banker must observe very
carefully about the correctness of endorsement.
10.
Precaution regarding stop payment: Before making payment, banker should
confirm that the cheque is not marked as stop payment for any reason like
lost/fraud/theft/expired of a/c holder/garnishee order etc.
(c) When
a banker refuse to honour a customers’ cheque?
(i) When the balance to the investment/credit
of the customer is insufficient to meet
the cheque.
(ii)
When the funds are not properly applicable to the payment of a cheque e.g. when
the account was opened for a purpose other than that for which the cheque has
been drawn i.e. personal cheques cannot be paid out of trust accounts.
(iii)
After receiving the notice or information of death, the banker should stop
payment of all cheques drawn against his account. The account will cease to be
operative till his successor or legal representative produces to the bank the
succession certificate or probate of the will or a letter of administration.
(iv) When the customer has informed the bank about the
loss of the cheque.
(v)
When the bank comes to know the defect in the title of
the person presenting a cheque.
(vi)
When the bank comes to know that the customer is applying funds in breach
of trust.
(vii)
When the bank receives notice of an assignment by a customer of his investment/credit
balance.
(viii)
When the customer closes the account before the cheque is presented for
encashment.
(ix)
When the cheque is post-dated and is presented for payment before its
ostensible/apparent date.
(x) When the cheque is
out of date or stale or Ante-dated.
(xi) When the balance of
the account is blocked as per order of competent authority.
(d) What are the liabilities of a Banker
in case reply/reason of dishonoured cheque is
not
appropriate?
A
banker should take utmost precaution while sending its reply in respect of a
dishonoured cheque. In case the banker states an inappropriate reason which
injures the reputation of the drawer unnecessarily, the drawer can make the
banker liable for damage.
(e) What
is the duty of the payee of a cheque?
Duty
of the payee: It is expected that the payee of the cheque to present
it for payment to the bank at the earliest opportunity without any unreasonable
delay and before the relations between the drawer and the banker alter to the
prejudice of the drawer.
(f) When
a bank is discharged from liability as paying banker?
A bank
is discharged from liability by making payment of the amount of a bearer cheque
in due course to the holder thereof (Sec. 78 of N. I. Act).
No
Banks cannot be expected to know the signature of all the endorsers and
therefore, payment of the amount of a cheque, having forged or unauthorized
endorsements, if made in due course will discharge the bank from liability.
However,
a banker cannot be discharged from liability even for payments in due course of
those cheques where the signatures of the drawer (dipositor) were forged except
in two cases:
a) Where it
can show that forgery was intimately connected with the negligence of the
drawer and was the proximate cause of the loss.
b) Where
the customer is found to be guilty of unreasonable delay in informing
the
bank about the forgery of his signature after he comes to know of it.
(g) What
are the consequences of a paying banker if any cheque is paid by mistake?
In case the
payment of a cheque has been made by the drawee bank under a mistake, it can
recover from the payee provided the payee’s position has not been altered to
its prejudice before detection of mistake.
According to section 72 of the
Indian Contract Act, a person to whom any money has been paid or anything
delivered by a mistake must repay or return it.
(h) What
are the liabilities of a paying banker on crossed cheques?
The
paying banker should make payment of a crossed cheque only through the
collecting banker. In case of special crossing the payment of cheque should be
done only to the banker whose name has been mentioned between the two
transverse parallel lines. In case the paying banker makes payment of a crossed
cheque in contravention of the above rules, its liability will be as follows:
(i) The
paying banker will have to reimburse the true owner for any loss that he might
have suffered on account of payment being made to a wrong person.
(ii) The
paying banker shall not be entitled to debit his customer’s account with the
amount of payment in case payment has been made to a wrong person since it has
not followed the mandate of the customer. Such payment will not be taken as a
‘payment made in due course’ (sec. 126 of N. I. Act).
22. (a) Who
is a collecting banker?
A
bank may undertake to collect a cheque either as a holder for value or merely
as an
agent
to the holder thereof. Banker shall continue to act as an agent of its customer
till the amount of the cheque has actually been paid off.
(b) Write
the protections given to a collecting banker by Negotiable Instrument Act.
Section
131 of N.I. act provides protection to a collecting banker who receives payment
of a crossed cheque or draft on behalf of his customer. In case the customer’s
title to the cheque is defective, the banker will not be liable to the true
owner of the cheque for receiving payment if the following conditions are
satisfied:
1.
The collecting banker acts in good faith and without
negligence. Examples of negligence are opening of account without proper
introduction, not verifying correctness of endorsements, no proper enquiry in
doubtful cases, failure to take note of ‘negotiable crossing’ collection of
‘account payee’ cheque for person other than payee mentioned therein etc.
2.
The collecting banker receives payment of the crossed
cheque for a customer. The protection under this section is not available if
the person for whom the banker collects payment is not its customer. Customer
means a person who has an account with the bank or some similar relations.
3.
The banker is acting as a mere agent for collection and
not in the capacity of a holder.
The
protection is available only in case of a crossed cheque and the crossing must
have been made before the cheque comes into the hands of the collecting banker.
(c) What
are the duties of a collecting banker?
A collecting banker has the
following duties towards its customers:
(i) Due-care
and diligence in the collection of cheque: A collecting banker should
exercise due care and diligence in collection of cheques entrusted to it for
collection by its customer. It must present them for payment within a
reasonable time to the drawee bank. According to a banking customs if the
collecting and paying bankers are in the same place, the collecting banker
should present it by the next day. In Case they are at different places, the
cheque must be dispatched for collection by the day next after the day on which
it was received by the collecting banker. In case the collecting bankers fails
to present the cheque within the reasonable time, and in the meanwhile the
drawee bank fails, the collecting banker will be responsible to the customer to
the extent of the damage.
(ii) Serve
notice of dishonour: In case the cheque is dishonoured, the collecting
banker must within a reasonable time give notice to the customer so as to
enable him to take action against the prior parties. In case the banker fails
to serve notice of dishonour to the customer, it will be liable to the customer
for any loss that the customer might have
suffered on account of such failure. In case a cheque is returned by the
drawee bank for confirmation of endorsement, it is not dishonour, but in such
case also the notice should be given to the customer.
(d) Who
is an agent of a collecting banker?
The
collecting banker may have to get a cheque or bill of exchange collected
through another banker. This happens in those cases where the cheque or the
bill of exchange is payable at a place where the collecting banker does not
have its own branch. In such a case, it will ask some other banker who has a
branch there. The bank who act on behalf of collecting banker is knows as
‘Agent of collecting banker’.
23. (a) What
is marking of cheque?
A
marked cheque means a cheque which is ‘marked’ or ‘certified’ by drawee banker,
to the effect that it is “good for payment”. Drawee bank thus intimates that it
had sufficient funds to the investment/credit of the drawer at the time when it
certified the cheque and the cheque was apparently alright in all other
respects.
Marking
of a cheque by the drawee bank is generally done by writing the words ‘good for
payment’ across one corner of the back of the cheque, with the bank’s stamp and
signature of bank’s authorized official and the actual amount of the marked
cheque blocked/reserved in the computer or ledger of the respective account to
honour the cheque when it will present for payment.
(b) Describe
the types of marking of cheques.
Marking
of cheque may be done at the request of (1) the drawer, (2) the holder and (3)
the collecting banker.
(1) Marking
at the request of drawer: When a cheque is marked by the drawee bank at the
request of the drawer, the latter cannot countermand or stop payment. In case
he does so, he shall be liable to indemnify the banker for any loss, the banker
may be required to pay because of refusing to make payment to a subsequent
holder of the cheque who took it on the faith of such marking.
(2) Marking
at the request of the holder: When the holder gets the cheque marked by the
drawee banker, it does not amount to the acceptance of the liability on the
cheque by bank. It simply indicates that drawee banker has sufficient funds to
the investment/credit of the drawer to meet the cheque at the time of marking
it. Drawee bank will not incur any liability for damages if subsequently, when
the cheque is presented for payment and dishonoured on account of insufficiency
of funds.
(3) Marking
at the request of collecting banker: When a cheque is received by a
collecting banker too late for inclusion in the day’s clearing, it may get it
marked from the paying banker to protect the customer from any loss that he may
suffer on account of delay in presentation. Marking of a cheque by bankers in
between themselves will amount to promise by one banker to the other to pay the
cheque when presented. Such a cheque is honoured when presented through the
next clearing on account of banking custom.
However,
in all cases, to avoid any litigation, Bankers always Block/reserve the amount of the marked cheque
in the computer or ledger of the respective account to honour the instrument on
presentation.
24. What are the formalities to be observed to mark stop payment
of a cheque?
(a) A written application to
be obtained from the account holder to mark stop
payment
of a cheque.
(b) Application to be received duly
mentioning time & date of receipt and affixing branch Receive seal and
entering Letter receive register.
(b)
Thereafter this application to be referred to deposit
in charge for verification of signature of the applicant.
(d) Then it should be referred to manager or
any other responsible officer who then immediately send it to Computer-in
charge.
(e) Computer-in
charge will verify that whether in the meantime the cheque has been paid or
not. If not paid, he will mark stop payment of the cheque in the computer and
note about the application in the ‘Stop payment register’ and thereafter steps
to be taken to file the application in the ‘Stop payment applications file’.
Sometimes
customer may request the Manager or any other responsible Officer of a branch
over phone or fax to mark stop payment of cheque. This type of request to be
honoured for temporary period, but this type of request must be confirmed in
writings or original application to be obtained and procedures to be maintained
as mentioned above.
25. What are the reasons for non-payment of profit to a Savings
account in a month?
Reasons
for non-payment of profit to a savings account in a month are:
(1)
If money not deposited in the account within 5th day of the month and not
retained the balance of the account till
the last day of the month.
(2)
If issued more than two cheques in a week
(3)
If withdraw more than 25% of balance of the account by a cheque.
(4)
If the account become as an unclaimed account.
26. (a) What is
dormant or Inoperative account and how it can be operated?
Twelve (12) months
non-transacted Alwadia Current deposit accounts and 24 months Mudaraba Savings
Deposit accounts are called & marked as Dormant or Inoperative accounts.
Manager will pass cheques of Dormant/Inoperative accounts. Manager may convert
a Dormant account into regular account after considering satisfactory
application of the account holder for making transaction in the account. Profit
will be credited into this account as usual.
(b) Write short notes on Unclaimed account.
Those Alwadia CD
accounts or Mudaraba SB accounts are continuously running as
Inoperative/Dormant accounts for five years are called unclaimed account.
Overdue
MTDR, DD payable, TT payable, Sundry deposit, Pay order for three years and
above are also called Unclaimed account. All unclaimed accounts AOF & SS
Card to be separated clearly and retained under Managers’ custody. Operations
in this type of accounts may be allowed by the Manager only after considering
the satisfactory application of the account holder.
All
unclaimed accounts will be treated as Alwadia CD accounts and no profit/interest
to be paid into this type of accounts. A statement (as per proforma) of
unclaimed accounts for ten years and above to be submitted to Bangladesh Bank
as on 31st December of each year.
27. Write shortly
about Late payment of cheque.
Late payment of
cheques means cash payment of a cheque after transaction hour. Banking law does
not allow any late payment. Bankers always try to discourage this type of
payment due to following reasons:
(i) Cheque may be stopped before next
working day.
(ii) Account holder may be expired.
(iii) Account holder may become Insane.
(iv) Account holder may be declared as
Insolvent.
(v) Account may be garnished/blocked.
However on
special cases the branch authority sometimes allow late payment if investment/credit
balance of the account exists after observing the following formalities:
(i) Manager must mark Late payment on the
cheque with his initial.
(ii) Cash of the late payment cheque must be
received by the account holder duly
putting his two signatures on the back side of the cheque, not by the
bearer.
(iii) Cheque should be posted,
to be passed by authorized Officer(s) and also to be entered into the payment
register.
(iv) This payment cheque must
be made as voucher on the following working day.
28. How an account
could be transferred from one branch to another branch?
An account of a
branch could be transferred to another branch of Exim Bank as per desire of the
account holder after observing following formalities:
(i) An application to be
obtained from the account holder duly signed showing the reason of transfer of
account (evidence of transfer to be obtained from the service holder) duly
noted the probable future address. The account holder must surrender the
un-used cheque leaves to the branch.
(ii) Signature of the
applicant to be verified alongwith the Specimen Signature Card (SS Card).
(iii) Manager of the branch
to be informed.
(iv) Account Opening Form
(AOF) and SS Card to be separated and one set of photocopy to be retained at
the branch for future record.
(v) Balance of the account
(after applying ad-interim profit) to be debited by a debit voucher and one
IBCA of the same amount to be prepared through a investment/credit voucher.
Note to be done in the computer and Account opening register about transfer of
the account.
(vi) Surrendered un-used
cheque leaves to be destroyed by an Authorised Officer of the branch duly noted
in the Account opening register.
(viii)
Original account opening form, Specimen Signature Card,
IBCA and application of the account holder alongwith a forwarding letter to be
despatched to the desired branch through Courier Service or Registered Post.
(ix)
Photocopies of the application, Account Opening Form,
Specimen Signature Card to be retained at the branch for record.
(x)
IBCA responding branch will intimate the account
holder, if address available in the application, after re-open the transferred
account.
29. (a) Who will retain
the important keys of a branch?
Important keys of a
branch includes Strong room, Iron safe, Locker, Almirah of Printed Security
paper, Almirah of the Security papers and documents of Investment & Foreign
Exchange divisions, Pledge/Murabaha Godown(s).
All important
keys to be recorded in the key register of the branch indicating about the
duplicate keys. Recipients of keys must put their signatures in the key
register. Normally Manager of a branch of Exim Bank hold the keys of Iron safe
and 2nd Officer hold the keys of strong room. The cash-in-charge as joint
custodian of cash holds the another set keys of strong room & Iron safe.
The In-charges of General Banking, Investment & Foreign Exchange
departments will hold the keys of the Almirahs of Printed Security papers,
Security & documents of their respective department. Any change during
transfer, training, leave must be noted in the key register followed by Office
Order duly acknowledged by the new recipient.
(b) How important duplicate keys of a branch
maintained?
All important duplicate
keys of a branch must be kept in main branch of same station and preferably
Sonali Bank in other places. There should be a note/list about the duplicate
keys in the safe deposit file duly signed by the Manager and 2nd
Officer. For better keeping, all keys to be kept in a box (steel or wooden) of
Greez and covered by white paper/cloth with specific numbers of Gala seal. A
safe deposit receipt of the duplicate key box to be obtained and retained at
the branch, not in the strong room, duly entered the particulars of the
receipts in the safe deposit register. For safety, long life & better
functioning duplicate keys to be rotated with the originals after six months
and before one year invariably.
30. (a) What is (i)
non-issue/Soiled, (ii) mutilated (iii)
Built up (iv) Re-issue notes?
i) Non-issue
note/Soil note: Those notes are very weak due to more use/dirty/cut/split
and not re-usable in the market. Bangladesh Bank receives non-issue/soiled
notes from Banks/public and destroyed this type of notes.
ii)
Mutilated note: Generally those notes are cut & split is called
mutilated notes.
iii) Build
up note: Technically fraud persons amalgate different parts of different
notes of one denomination into one piece of note to cheat.
iv)
Re-issue note: Those notes from old notes are sorted for re-issue in the
market.
(b) What are the processes if anybody comes
to the counter of our Bank to change the
soiled/non-issue,
mutilated, burned notes?
If anybody comes to the
cash counter of a bank branch to change the non-issue/soiled and mutilated
(not more than two pieces, not burn, three fourth exists of a note with number
& security symbols) notes, the cash officer immediately must give him
changed new or re-issue note. If the note is mutilated more than two pieces,
the banker may receive the note duly filled in & signed by the depositor a
prescribed form with a condition that the note will be send to Bangladesh Bank
as claim note at the cost of the depositor and equivalent amount will be
reimbursed, if they honour the note. In respect of any type of burned note,
Banker will not receive this type of note and they will advise the note
holder/customer to claim the change of the note directly from Bangladesh Bank
or Sonali Bank chest branch.
(c) What actions to be taken if any built up
note found in possession of a person?
Tactfully One signature
of the presenter to be obtained on the build-up note and another written statement to be obtained from him describing
how he got the note and thereafter the person to be immediately handover to the
law enforcing agency with an application addressed to the In-charge of local
police station, if any build up note found to anybody.
(d) Which types of note are compulsory to
stitch?
100 pieces ring of
Tk.1000/-, Tk.500/- & Tk.100/- re-issue notes are compulsory to stitch. 100
pieces of all denomination of non-issue notes are also compulsory to stitch.
(e) What actions to be taken if anybody
comes at the counter of a Bank with a fraud
note?
Tactfully one
signature of the presenter to be obtained on the fraud note and another written
statement describing how he got the note to be obtained from him and thereafter
he should be immediately handover to law enforcing agency with an application
addressed to the In-charge of local Police Station.
(f) What is Currency note & Gov’t note?
Those notes issued by
Bangladesh Bank duly signed by the Governor is Currency notes. Notes and
Coins of Tk.5/- and above in our country are Currency note.
Those notes
issued by Bangladesh bank on behalf of the ministry of finance of the Gov’t
duly signed by the finance secretary is Gov’t note. Notes and coins
below Tk.5/- in our country are Gov’t note.
31. Write about the treatment of excess & shortfall of cash in
Cash Counter.
Excess cash:
Sincere efforts to be taken by the cash officers and other officers of the
branch to find out the reason of excess cash than cash balance through checking
of all cash in hand and every debit & investment/credit vouchers of the day
and try to solve the problem on that day. If not possible, any excess in cash
balance must be credited to Sundry deposit (Excess cash) account through a investment/credit
voucher describing full particulars of the excess cash including the number of
counter and name of the officer where excess cash found. Any justified written
claim thereafter made for the amount by any client should be paid through
payment order after full satisfaction of the Manager of that branch. Long
unclaimed entries of excess cash in Sundry deposit account should be
transferred to Income account or any other account at the end of the year or
any other time as per instruction of the Authority/Head Office.
Shortfall
of cash: At the end of all transactions of a branch in a day, the
cash-in-charge receives money duly counted as per receive/payment register from
the Cash Officers. If any shortfall of cash detected at any counter of any Cash
Officer whether in receive or payment, the reason therefore shall be find out
immediately on that day. If it is detected that the shortfall is due to over
payment made to or short cash received from any client by the Cash Officer,
immediate steps to be taken by the Cash Officer, Manager and Officers &
Staff of the branch to recover the excess amount paid or short amount of cash
received from the client by all means on the same day. If not detected or
failure to recover, as the case may be, extreme pressure to be created to the Cash
Officer to replenish the shortages on the same day.
However,
failing detection the reason of shortfall of cash or failing recovery from the
client to whom related or shortfall amount not replenished by the concerned
officer, the amount to be debited from suspense a/c ‘Protested bill account’
after obtaining approval from Head Office on the same day before closing the
accounts of the branch to adjust the shortfall of cash balance. Whether police
action or other action to be taken against the delinquent official considering
the circumstances, amount involved or any other factors will be decided by the
Manager in consultation with appropriate authority/Head Office.
32. Write
shortly about Cash-in-safe, Cash-in-Counter and Cash-in-Transit Insurance
policy.
Cash-in-safe limit:
It means that the maximum amount of cash retain/kept by the branch at the end
of every day in the Iron safe of the vault room.
There
should be a cash-in-safe limit of a branch. The amount of the limit determined
considering the daily cash receive/payment amount of the branch. To protect the
interest of the Bank from decoity, fire etc. this cash-in-safe limit to be
secured with our head office against payment of premium to “Exim Bank
contingency Fund for cash mishap” normally for a year. Before closing the
transaction of the day, the branch authority will roughly calculate the cash-in
hand and remit the approximate excess cash to the feeding branch or arrange to
deposit into the Bank’s account with other bank in the same station, if exceed
the limit. When the excess cash could not remitted or failed to deposit into
the Bank’s account-permission to be obtained for temporary period
(one/two/three days) from GBD, Head Office for the excess over limit amount.
Cash-in-safe limit amount fixed by Head Office after discussion with the branch
authority.
Cash-in-Counter
limit: Cash-in-Counter limit means the maximum amount of cash to be
retained at the counter at a time considering the volume of daily cash receive
& payment.. Head Office determine the cash-in-Counter limit of a branch
after discussion with the branch Manager to protect the interest of the Bank
from any untoward incident / loss against payment of a premium / fees, as
determind by the authority, to investment/credit into the account “Exim Bank
Contingency Fund for cash mishap”maintained by FAD,Head Office.
Cash-in-Transit
limit: Head Office in consultation with the Branch manager determine the
amount of Cash-in-Transit limit (maximum every single carry and yearly total
amount) of a branch for a year to protect the bank from any hijacking or any
other type of loss during cash remittance of the branch.through payment of
premium / fees, as determined by the authority, to credit into the account
“Exim Bank Contingency Fund for cash mishap”maintained by FAD of our Head
Office.
Note:
For safety of cash the competent authority of our bank has created a security
fund named as ‘Exim Bank Contingency Fund for Cash Mishap’ vide General
Banking Division Circular no. GBD 951 dated 31.3.2008. Under this
arrangement branches of our Bank will contribute to the security fund a premium
as decided by the Fund Management authority by debit to their ‘Expenditure a/c
Contingency Fund for Cash Mishap’ for credit to ‘Exim Bank Contingency Fund for
Cash Mishap’ through an IBCA to FAD, Head Office. If any claim arises for
compensation against Cash-in-safe, Cash-in-counter and Cash-in-Transit, this
fund management authority will fulfill the claim. So, approval to be obtained
from the head of GBD, Head Office through letter or over fax or phone for cash
in safe limit, cash in counter limit and cash in transit limit or any amount of
excess cash over vault limit, counter limit or transit limit in any day for
temporary period to protect the interest of the bank from any untoward accident
of loss.
33. What is alert bell? Write the reasons to
set up alert bell and the minimum number of places to be set up the switches of
Alert bell at any branch of our Bank.
Alert bell
is a bell which to be set-up/fixed outside the premise of a bank branch and the
switches of which to be set-up inside the premise. If any body push any switch
of alert bell, it will ring loudly outside of a premise to attracts the
attention of people for help in a
dangerous time or accidental time. People come from far after listening the
sound of an Alert bell with the intention to help at any danger time: decoity,
hijacking or any other type of incident.
As per order of
Bangladesh Bank, Alert bell is compulsory to set up in every branches of Banks
in
As per circular
of our Bank switches of Alert bell to be set up at least four places of
each branch for security purpose. These places are nearest the foot of Manager,
2nd Officer, Cash-in –charge and any other hidden common place of the branch
known to all employees only.
34. (a) What is
remittance?
Fund/money transfer from one place
to another place through official channel is
called
remittance. When the money transfer from one place to another place within the
country is called inland remittance and when the money transfer from one
country to another country is called foreign remittance. Remittance again two
types: outward remittance and inward remittance.
(b) What are the types of Inland remittance?
i) DD
ii) TT
iii) MT
iv) PO
(c) Why people prefer remittance?
i) Riskless/Secured
ii)
Economic
iii)
Quick transfer
(d) Write the process & formalities to
be observed by a Banker to issue a duplicate DD
in
lieu of lost original DD.
i) Application to be received duly signed by the
purchaser/applicant regarding lost of DD (alongwith copy of FIR duly received
with seal by local police station) and to be recorded in the Letter Receive
register of the branch.
ii) Signature of the
purchaser to be verified with the DD application form and to be marked lost by red ink pen in the DD issue
register and DD application form.
iii) Confirmation about
non-payment of the DD to be obtained from the drawee branch.
iv) GBD, Head Office to be
informed through a letter alongwith photocopy of the application of purchaser
about the lost DD and they will circulate the issue to our all branches for precautionary measure
against any fraudulent attempt and to confirm the issuing branch.
v) After receiving confirmation letter
regarding non-payment from all branches a
duplicate DD to
be issued on a DD leaves (printed number
to be as it is) duly noted in red ink
‘Duplicate issued in lieu of original DD no……’
quoting Test no. etc. as original. Before issuing Duplicate DD branch
will obtain an Indemnity Bond duly stamped at the cost of the purchaser &
signed by him which to be preserved in a file.
vi) Duplicate DD printed
leaves no. to be noted in original application form, DD issue register and
counterfoil of original DD receipt.
vii) Drawee branch to be
informed through a letter to honour the duplicate DD in lieu of original one.
viii) Fee to be realized from the customer for
issue duplicate DD.
35. (a) What
are types of deposit account in our Bank?
(i)
Al-wadia Current (CD)
(ii)
Mudaraba Savings (MSB)
(iii)
Mudaraba Short Term deposit (MSTD)
(iv)
|
(v)
Mudaraba Monthly Savings Scheme (MSS)
(vi)
Mudaraba Monthly Income Scheme (MIS)
(vii)
Mudaraba Super Savings Scheme (SSS)
(viii)
|
(ix)
Mudaraba Hajj Scheme
(x)
Mudaraba Education Scheme
(xi)
Mudaraba Cash Waqfa deposit
(xii)
Mudaraba Denmohar/Marriage Savings Scheme
(b) What
do you mean by MTDR and MSDR of our Bank?
MTDR
means Mudaraba Term Deposit Receipt. It is a receipt issued by our Bank
branches against deposit of certain amount of money by
customer(s)/person(s)/organisation, after observing the rules of Anti Money
laundering, for a fixed period but not less than one month with a commitment to
return his/their deposited money with more or less certain percentage of profit
(Tax & Excise duty applicable) after expiry of the period. The minimum
amount of MTDR, rate, renewal procedure and premature encashment rules
determined & circulate by our Head Office from time to time.
MSDR
means Mudaraba Scheme Deposit Receipt: It is another types of receipts
issued by our branches against deposit of certain amount of money on
installment basis or single deposit, as the case may be, by
customer(s)/person(s), after observing the rules of Anti money laundering, for
a fixed period with a commitment to return his/their deposited money alongwith
more or less certain percentage of profit (Tax & Excise duty applicable)
after expiry of the period. There are different types of Scheme deposits in our
Bank. These are:
1.
Mudaraba monthly Savings Scheme (Five, Eight, Ten,
Twelve years)
2.
Mudaraba Three years Savings Scheme (Monthly Income
Scheme/MIS)
3.
Mudaraba Six years Scheme (Super Savings Scheme/MSSS)
4.
Mudaraba Ten years Scheme (Mudaraba Multiplus Savings
Scheme/MMPSS)
5.
Mudaraba Hajj Scheme
6.
Mudaraba Education Scheme.
The
depositors of Monthly deposit Scheme, Hajj Scheme and Education Scheme will get
counterfoil of deposit slips of each installment. The depositors of MIS, MSSS
and MMPSS will get a printed receipt of deposited money.
The
depositor of Monthly Income Scheme (MIS) will get profit on his principal
deposited amount from the following month till maturity date. Bank will return
the principal amount of the depositor alongwith profit after expiry of the
contract period.
The
opening procedure of scheme deposit accounts, rate, premature encashment rules
determined & circulate by our Head Office from time to time.
(c) What formalities to be observed for issue
a duplicate MTDR or Scheme deposit
receipts
against lost instrument?
Procedure
for issue a duplicate receipt against lost MTDR/MSDR:
(i) The depositor should submit an
application to the Manager of MTDR/MSDR
issuing
branch that the original has been lost from his possession/custody with request
to issue a duplicate receipt in lieu of lost one and original receipt will be
surrendered to the Bank if found later on. (In this respect a GD entry to be
done by the depositor in the local Police Station and copy of which to be
submitted alongwith the application.)
(ii)
Bank authority will verify the signature of the
applicant with their record and mark LOST by red ink pen in the lost MTDR/MSDR
issue register and MTDR/MSDR application form.
(iii)
Branch authority will write with details particulars to
General Banking Division (GBD) of our Head Office about the lost instrument.
(iv)
GBD, Head Office circulate the issue to our all
branches for precautionary measure against fraudulent attempt and to confirm
the issuing branch.
(v)
After receiving confirmation letters from branches,
issuing branch will obtain an Indemnity bond in our prescribed printed form
duly stamped & signed by the depositor. Thereafter, branch will issue a
duplicate MTDR/MSDR duly noted by red ink in the receipt “Duplicate issued in
lieu of original receipt no ……………” (Printed number to be as it is). Duplicate
receipt number also to be noted in the counterfoil of original receipt,
MTDR/MSDR issue register & opening form. Application, Indemnity bond etc to
be preserved very carefully.
(vi) Fee to be realized from the customer
for issue duplicate MTDR / MSDR.
36. (a) Discuss the procedure for disbursement
of balance amount from deceased account
where the nominee is mentioned and balance is not more
than Tk. 25,000/- (Twenty five thousand).
As per GBD
Circular No. 763 dated 28-05-2007, Branch Managers are authorized to disburse
balance of deceased account upto Tk. 25,000.00 (Twenty five thousand). But
following papers to be obtained before disbursement of balance if there is
nominee:
(i) Formal
request letter of the nominee/nominees as per “appendix-A” and declaration cum
indemnity bond as per “appendix-B” in the non-judicial stamp valuing Tk. 150/-
(changeable as & when applicable) duly signed by the nominee/nominees.
(ii) Death
Certificate of the deceased A/C holder given by the competent authority.
(iii) An
identification certificate given by the chairman of union porishad or
commissioner of pourashava/city
corporation certifying name(s) of nominee/nominees.
(iv) If the
nominee is minor, the natural guardian shall execute formal request letter and
indemnity bond on behalf of the minor nominee/nominees as at “appendix-A” and
“appendix-B” subject to take “Natural Guardianship Certificate” given by the
(Hon.) court/the chairman of union porishad or commissioner of pourashava/city
corporation.
Before
disbursement of balance of deceased A/C, the nominee(s)/natural guardian should
return unused cheque book (if there is any) to the respective branch. The
entire amount from the deceased account shall be disbursed through account
payee “Payment order” issued in the name of nominee(s)/natural guardian.
(b) Discuss the procedure for disbursement of balance amount from
deceased account where the nominee is not mentioned and balance is not more
than Tk. 25,000/- (Twenty five thousand).
As per GBD
Circular No. 763 dated 28-05-2007, Branch Managers are authorized to disburse
balance of deceased account upto Tk. 25,000.00 (Twenty five thousand). If there
is no nominee, payment of balance of deceased account has to be made to the
heir/heirs on production of following papers:
(i) Death
Certificate of the deceased A/C holder given by the competent authority.
(ii) Succession
Certificate/Letter of Administration, given by the (Hon.) court/the chairman of
union porishad or commissioner of Pourashava/city Corporation.
(iii)
Formal request letter as per “appendix-A” and declaration cum indemnity bond as
per “appendix-B” in the non-judicial stamp valuing Tk. 150/-(changeable as
& when applicable) have to be taken from the heir/heirs. If the number of
heir is more than one (minor/adult), any of the adult heirs may execute the
aforesaid papers having “Authorization Certificate” for the minor nominee(s)
given by the (Hon.) court/the chairman of union porishad or commissioner of
pourashava/city corporation and “Power of Attorney” given by the other adult
heirs (if there is any). If there is no adult heir, the natural guardian shall
execute formal request letter and indemnity bond on behalf of the minor
heir/heirs subject to take “Natural Guardianship Certificate” given by the
(Hon.) court/the chairman of union porishad or commissioner of Pourashava/city
Corporation.
(iv) A Guarantee
Bond, executed by a customer of bank (third party) having standing &
integrity as per “appendix- C” on
non-judicial stamp valuing Tk. 150/- (changeable as & when applicable).
Before
disbursement of balance of deceased A/C, the heir(s)/natural guardian should
return unused cheque book (if there is any) to the respective branch. The
entire amount from the deceased account shall be disbursed through account
payee “Payment order” issued in the name of heir(s)/natural guardian.
(c) What
procedure to be observed for disbursement above Tk. 25,000.00 (twenty five
thousand) from deceased account if the nominee is mentioned?
As per GBD
Circular No. 763 dated 28-05-2007, branch must forward the proposal along with following
papers to our Head Office for their approval for disbursement of balance of
deceased account if the amount is more than Tk. 25,000/-(Twenty five thousand)
and nominee is mentioned:
(i) Formal
request letter of the nominee/nominees as per “appendix-A” and declaration cum
indemnity bond as per “appendix-B” in the non-judicial stamp valuing Tk. 150/-
(changeable as & when applicable) duly signed by the nominee/nominees.
(ii) Death
Certificate of the deceased A/C holder given by the competent authority.
(iii) An
identification certificate given by the chairman of union porishad or
commissioner of pourashava/city
corporation certifying name(s) of nominee/nominees.
(iv) If the
nominee is minor, the natural guardian shall execute formal request letter and
indemnity bond on behalf of the minor nominee(s) as at “appendix-A” and
“appendix-B” subject to take “Natural Guardianship Certificate” given by the
(Hon.) court/the chairman of union porishad or commissioner of pourashava/city
corporation.
(v) Account
statement and photocopy of account opening form(s) duly attested by the
authorized officer of the branch.
Before
disbursement of balance of deceased A/C, the nominee(s)/natural guardian should
return unused cheque book (if there is any) to the respective branch. The
entire amount from the deceased account shall be disbursed through account
payee “Payment order” issued in the name of nominee(s)/natural guardian.
(d) What procedure to be observed for disbursement above Tk.
25,000.00 (twenty five thousand) from deceased account if the nominee is not
mentioned?
As per GBD
Circular No. 763 dated 28-05-2007, payment of balance of deceased account has
to be made to the heir/heirs if there is no nominee and branch must forward the
proposal along with following papers to our Head Office for their approval
where the amount is more than Tk.
25,000/-(Twenty five thousand):
(i) Death
Certificate of the deceased A/C holder given by the competent authority.
(ii) Succession
Certificate/Letter of Administration, given by the (Hon.) court/the chairman
of union porishad or commissioner of pourashava/city corporation.
If the amount is
more than Tk. 1.00 lac, succession certificate must be obtained from the (Hon.)
court.
(iii) Formal
request letter as per “appendix-A” and declaration cum indemnity bond as per
“appendix-B” in the non-judicial stamp valuing Tk. 150/-(changeable as &
when applicable) have to be taken from the heir/ heirs. If the number of heir
is more than one (minor/adult), any of the adult heirs may execute the
aforesaid papers having “Authorization Certificate” for the minor nominee(s)
given by the (Hon.) court/the chairman of union porishad or commissioner of
pourashava/ city corporation and “Power of Attorney” given by the other adult
heirs (if there is any). If there is no adult heir, the natural guardian shall
execute formal request letter and indemnity bond on behalf of the minor
heir/heirs subject to take “Natural Guardianship Certificate” given by the
(Hon.) court/the chairman of union porishad or commissioner of pourashava/city
corporation.
(iv) A Guarantee
Bond, executed by a customer of bank (third party) having standing &
integrity as per “appendix- C” on non-judicial stamp valuing Tk. 150/-
(changeable as & when applicable).
(v) Report on
financial standing of the guarantor by the Manager as per “appendix-D”.
(vi) Account
statement and photocopy of account opening form(s) duly attested by the
authorized officer of the branch.
Before
disbursement of balance of deceased A/C, the heir(s)/natural guardian should
return unused cheque book (if there is any) to the respective branch. The
entire amount from the deceased account shall be disbursed through account
payee “Payment order” issued in the name of heir(s)/natural guardian.
(e) What
procedure to be observed for payment of balance amount upon death of any
of the joint account holders?
Upon death of
any of the joint account holders:
A. If the
balance is payable to survivor/survivors as per account opening form, the same
may be paid to survivor(s) on opening a new account in the survivor(s)’ name
obtaining the following papers:
(i) Formal
request letter as per “appendix-A” and declaration cum indemnity bond as per
“appendix- B” in the non-judicial stamp valuing Tk. 150/- (changeable as &
when applicable) duly executed by the survivor(s).
(ii) Death
Certificate of the deceased A/C holder given by the competent authority.
B. If the
balance is not payable to the survivor(s) only as per account opening form, the
same should be paid to the survivor(s) and legal heir(s) of the deceased A/C on
production of:
(i) Formal
request letter as per “appendix-A” and declaration cum indemnity bond as per
“appendix-B” in the non-judicial stamp valuing Tk. 150/- (changeable as &
when applicable) executed by the survivor(s) and legal heir(s) of the deceased
A/C. In case of minor heir(s), natural guardian may execute all required papers
jointly with the survivor(s) subject to have “Natural Guardianship Certificate”
given by the (Hon.) court/the chairman of union porishad or commissioner
of pourashava/city corporation.
(ii) Death
Certificate of the deceased A/C holder given by the competent authority.
(iii) Succession
Certificate/Letter of Administration for legal heirs given by the (Hon.)
Court/the chairman of union porishad or commissioner of pourashava/city
corporation. If the amount is more than Tk. 1.00 lac, succession certificate
must be obtained from the (Hon.) court.
If the balance
is more than Tk. 25,000.00 (twenty five thousand), branch must forward the
proposal along with aforesaid papers, account statement and photocopy of
account opening form(s) duly attested by the authorized officer of the branch
to our Head Office for approval.
Before
disbursement of balance of deceased A/C, the survivor(s)/heir(s)/natural
guardian should return unused cheque book (if there is any) to the respective
branch. The entire amount from the deceased account shall be disbursed through
account payee “Payment order” issued in the name of heir(s)/natural guardian.
(f) How
profit should be calculated & disbursed on the balance of deceased account?
Profit on the
balance of deceased account should be credited in accordance with the following
guidelines mentioned in our GBD Circular 763 dated 28-05-2007:
A) For
Mudaraba Savings Bank Accounts: Profit on the balance of Mudaraba
Savings Bank Accounts will be paid upto the date of withdrawal/closing of the
accounts as admissible under Mudaraba Savings Bank Account rules, irrespective
of the date of expiry of the depositor.
B) For
Mudaraba Term Deposit Accounts:
i) Premature
encashment: In such cases, deposit should be deemed have been made upto
the date of withdrawal and not upto the date of death. Profit should be paid
and recovery of penal profit made in accordance with prevalent instructions
regarding premature encashment.
ii) Encashment
at maturity: Profit should be paid upto the date of maturity at the
rate applicable for the relevant MTDR.
iii) Encashment
beyond maturity: Profit upto the period of maturity should be paid at
the rate applicable for the relevant MTDR. Profit for the period beyond the
date of maturity upto the date of withdrawal should be paid at the rate
applicable for Mudaraba Savings Bank Accounts with chequing facility.
C) For
Mudaraba Scheme Deposit Accounts:
In case of
Mudaraba Scheme Deposit Account, profit in the deceased account should be
disbursed in accordance with our prevailing guidelines inscribed in our Rate of
Profit Circulars issued from time to time.
37. (a) What is
Electronic Banking?
Electronic Banking provides banking
services to the customers:
(1)
At any time
(2)
From any where
(3)
Through any electronic device.
(b) Why we need delivery channels?
Reasons for delivery channels:
(i) These are cost effective
(ii) Increased customers’
satisfaction
(iii) Increased fee based income
(iv) Minimum space required for
branch
(v) Traffic can be spread through 24
hours
(vi) Product/service diversification
minimizes business risk
(vii)
Market trend
(c) What are the retail delivery channels?
Retail delivery channels are: (1) Internet Banking
(2)
Automated Teller machine (ATM)
(3)
Point of sales (POS) terminal
(4)
Tele Banking
(5)
Mobile Banking/SMS Banking
(6)
Banking Kiosk
(7)
Call center
(8)
PC banking/Home banking.
(d) What types of services can be provided
through ATM?
Services provided by Automated
Teller Machine (ATM):
(i) Cash
withdrawal/cash deposit
(ii) Balance
enquiry
(iii) Fund
transfer
(iv) Standing
instruction
(v) Utility
bill payment
(vi) Making payments of application for IPOs.
(e) What are the benefits of Internet
Banking?
Benefits of Internet banking are:
(i)
Global market reach
(ii)
Large traffic can be handled
(iii)
Cross selling opportunity
(iv)
Cost effective
(v)
Easy communication between Banker & Customer.
(f) What is Tele Banking services?
Tele Banking services are:
(i)
Balance enquiry
(ii)
Investment/Loan application processing
(iii)
Fund transfer
(iv)
Utility bill payment
(v)
Standing Instruction.
(g) What services can be render through call
center?
Services rendered through
(i)
Account related service
(ii)
Statement of accounts
(iii)
Fax of mini statement
(iv)
Request for cheque book
(v)
Information on fixed deposit/personal investment/loan
(vi)
Credit card balances
(vii)
Last five transaction details
(viii)
Utility bill payment
(ix)
Fund transfer
(x)
Lost card reporting.
(h) What services provide by
Mobile phone Banking/SMS banking?
The
following services provide by a bank to its customer’s through mobile
phone/SMS:
(i)
Pull services:
·
Account balance enquiry
·
Last three transactions
·
Cheque leaf status
·
Profit/Interest rate on deposits
·
Foreign currency exchange rates
·
Branch location/phone no.
·
ATM booths location
·
SMS registration information
·
Help list for key words to send SMS
·
Help message format to send SMS
(ii) Request Service:
·
Fund transfer
·
Mobile bill payment
·
Cheque book request
·
Account statement print request
·
Account statement request by courier/e-mail.
(iii) Execution
service:
·
Stop payment
·
Stopped cheque leaf reactivation
·
PIN change
(iv) Alert service:
·
Debit alert
·
Clearing cheque return alert
·
Investment/Loan expiry
·
Scheme deposit maturity alert.
38. (a) What is
Plastic money?
Plastic money is
a thin plastic card, usually 3''-1/8 inches by 2''-1/8 inches in size, that
contains identification, information such as signature and/or picture and
authorizes the person named on it to charge purchases or services to his
account – charges for which he will be billed periodically. Plastic money is
designed for cash less payments and getting cash from one’s bank account with
ATMs all over the world. Plaslic money is two types: one for local currency and
other for local & foreign currency.
(b) What are the types of Plastic Cards?
There
are mainly three types of Cards: (i)
Credit card
(ii)
Debit card
(iii)
Charge card.
(c) What are the different types of services
that can be provided by Plastic Cards,
Magnetic
strip smart card (chip based)?
Benefits
of plastic money/services provided by the plastic cards are:
(i)
It is very thin – so easily
carriable
(ii)
It is magnetic stripe card or smart
cards and bears photograph or signature or
both
of the Card holder – so safety.
(iii)
Cash can be withdraw from any ATM’s
all over the world. (as per types of
card)
(iv)
Goods can be purchased upto the
limit of the card from any merchants’ shop
through
POS terminal.
(v)
Card holder can pay utility bill
from ATMs.
(vi)
Risk of cash carrying avoid.
(vii)
Customer can pay bill to standard
Hotels, can buy Air/Bus/Train tickets
etc.
(d) Briefly discuss the payment procedure of
Credit card.
As per instruction
given in the application form or lateron in writing, the Credit card issuing
authority will dispatch the periodic bill to the card holder and realize the
bill amount from his account as instructed earlier. In other way, the card
holder may pay the periodic bill in cash or by cheque within specific period.
If not paid within the grace free specified period, profit/interest or service
charge on the bill amount will be charged before full payment of the bill
amount.
(e) How duplicate card will be issued
against lost card?
Immediately after loss
of Credit card – the holder must inform the Card issuer for marking stop
payment. If the message was passed over phone or e-mail or fax – it must be
confirm in writting immediately to the issuer company/bank. After performing
official formalities and payment of nominal fees, the card issuing authority
will issue duplicate card in lieu of lost.
(f) Who are the defaulters of Credit card?
Credit card
normally issued in favour of a solvent genuine person who have an account with
the Card issuing authority or not. As per instruction of Card holder – periodic
bill despatched from the issuer to the user who may authorize the Card issuer
to auto debit the bill amount from his account or he may deposit in cash or by
cheque after getting the bill within a specified period without profit/interest/service
charge. If sufficient amount not held in his account to meet the bill amount or
if he does not deposit in cash or by cheque the bill amount within specific
period with/ without profit/interest/service charge – then he (the Card holder)
become defaulter Card holder after expiry of three months from the bill payment
date.
(g) Explain the recovery procedure from a
defaulter Credit card holder.
Since Credit Card issued
to a valued client of the bank and if he become defaulter, persuation to be
made to recover the dues. If failed, security if any, to be encashed or his
account may be debited if fund available. If failed after exercising the above,
legal notice to be served and finally money suit to be filed in Artha Rin
Adalat for recovery of the money.
(h) What is Exim Visa Islamic Card? Write the
salient features of the Card.
Exim
Visa Islamic Card is a type of Credit Card for local, international and dual
currencies introduced by Exim Bank under the platform of Bai-murabaha concept.
This card should be used for payment against Halal products.
The
products are mainly three types:
(i)
Gold & Classic
(ii)
International – Gold & Classic (RQ, RFCD & TQ)
(iii)
Dual Currency.
Total
Transaction in each month cycle will be treated as an individual deal and
mark-up profit to be shown in card account against each month fresh deal amount
@ 16% for one year.
Papers to be submitted to the branch alongwith
the application of Local Card:
(i)
In case of service holder:
a)
Recent passport size 2 copies colour photograph duly signed on the back side.
b)
Bank statement for last six months.
c)
Attested original salary certificate or Pay slip.
d) Attested photocopy of
National ID Card.
e) Attested photocopy of
first seven pages of valid passport, if any.
f) Attested photocopy of
utility bills (as proof of own residence)
g) Visiting card.
h) TIN certificate,
i) Credit report,
j) Undertaking for
intimation of new/changed mobile number.
k) Any other documents
as desired by Credit Card Division.
(ii) In case of
Businessman:
a)
Recent passport size 2 copies colour photograph duly signed on the back side.
b)
Bank statement for last six months.
c) Attested photocopy of
National ID Card.
d) Attested photocopy of
first seven pages of valid passport, if any.
e) Photocopy of utility
bills (as proof of own residence)
f) Attested photocopy of
Trade license, Partnership deed/Memorandum and Articles
of Association.
g) Visiting/Business
card.
h) Profile of the
company/firm,
i) TIN certificate,
j) Trade license,
k) Undertaking for
intimation of new/changed mobile number.
l) Any other documents
as desired by Credit Card Division.
Charge documents to be obtained duly
stamped & signed by the client:
a) Demand Promissory
Note (DP note).
b) Letter of Guarantee.
c) Letter of Continuity.
Additional documents to be obtained for International/Dual
currency card:
(i) Travel Quota (TQ) Card:
a)
Personal Undertaking (by client)
b) Letter of Lien
mark (by client)
c) Letter of authority
to encash (by client)
(ii) Resident Foreign
Currency Deposit (RFCD) Card:
a) Letter of Lien
confirmation (by client)
b) Letter of declaration
to deposit FC amount with Debit authority (by client)
c) Branch confirmation letter.
(iii)
Retention Quota (RQ) card:
a)
Board resolution (by client)
b) Letter of Lien
confirmation with Debit authority (by branch to Card Division)
c) Letter of Lien mark
(by client to branch)
d) Letter of Corporate
Guarantee (by Company to Card Division)
(A) Fees
& other charges: (Changeable from time to time)
|
|
Local |
International/Dual |
||
|
|
Gold |
Classic |
Gold |
Classic |
|
Fees |
BDT |
BDT |
USD |
USD |
|
Annual Fee (Customers) |
1200 |
600 |
50 |
25 |
|
Annual Fee (Bankers) |
700 |
500 |
50 |
25 |
|
Supplementary Card (1st) |
FREE |
|||
|
Supplementary Card (2nd) |
800 |
600 |
N/A |
N/A |
|
Card Replacement Fee |
500 |
300 |
20 |
15 |
|
Excess Limit |
400 |
300 |
15 |
10 |
|
Late Payment |
300 |
200 |
10 |
8 |
|
Return Cheque |
300 |
250 |
5 |
5 |
|
Statement Retrieval Fee |
50 |
50 |
5 |
5 |
|
|
250 |
250 |
10 |
10 |
|
Outstation Cheque
Collection |
100 |
100 |
10 |
10 |
|
Pin Replacement Fee |
200 |
200 |
5 |
5 |
|
Mark-up |
20% i.e. Monthly 1.67% |
|||
39. (a) What
is Printed stationary & Security stationary in Exim Bank?
Bank is
an organization where large types/quantities of forms, registers are necessary
for day to day works, to keep records, to open and maintain accounts etc. Most
of these papers/forms/registers are different from one Bank to another. Those
forms/registers arrange to print by the bank are called Printed stationary.
There
are some printed papers which are necessary to withdraw money by the account
holders from their account (cheque), Bankers’ cheque (Pay order), Security
money receipt (CDR/SDR), Term deposit receipts (MTDR), Scheme deposit receipts
(SSS, MIS etc) which bears a serial number on specified security paper are
called Security stationary.
There
are two heads in our General Ledger and Daily Affairs as Printed stationary and
Security stationary.
(b) Who arrange to print stationary items?
General
Services Division of our Head Office arrange to print the Printed and Security
stationary items of the Bank.
(c) What is the procedure to receive printed
& security stationary?
To get
the Printed and Security stationary articles an indent/requisition form (GB-62)
duly filled in is necessary to submit to General Services Division (GSD) of our
Head Office. After receiving the requisition, the GSD will arrange to handover
the printed stationary to the peon or they will arrange to despatch these
through reliable Courier service. But requisitioned Security papers always
handover to an Officer of that Office/branch whose signature bears attestation
by the Manager/Authorised Officer on a letter.
(d) Write the accounting procedure after
received & consumed stationary items?
After
delivery of the Printed and Security stationary items by Head Office, they pass
a voucher as:
Dr. ………………..branch/office
Cr. ………………..Printed/security stationary (as
applicable)
Thereafter
GSD of Head Office dispatch the IBDA as cost of printed/security stationary
items separately to the branch/Office alongwith a copy of GB-62 quoting
quantity supplied, rate and amount. An Officer from receving point will verify
the quantity supplied by Head Office and then respond the IBDA duly posted the
items in the respective registers (itemwise in separate folio).
(1) Dr. Printed stationary a/c
Cr. IBDA of Head Office
(2) Dr. Security stationary a/c
Cr. IBDA of Head Office.
Every
Offices/branches of Exim Bank maintaining a stationary items consumed
katcha register. Entry to be passed datewise duly authenticated by an officer
whenever any pad of Printed stationary or Register or Security papers taken out
from the stationary room/ custody. At the end of each month prices of
consumption voucher of the printed and security stationary to be passed as per
katcha register as :
1. Dr. Expenditure a/c (Printed
stationary)
Cr. Printed stationary a/c
2. Dr. Expenditure a/c (Security
stationary)
Cr.
Security stationary a/c.
40. (a) What
is Dead stock and what are the types?
Dead
stock are generally comprises of (i) Furniture & fixture such as
Table, Chair, Almirah, Iron safe, Locker, Interior decoration etc. and (ii) Machine
& Equipment such as Computer, Aircooler, Car, Fan, Calculator, Gun etc.
Dead stock items and book value thereof are Asset of the Bank.
(b) Who purchased and supply Dead stock
articles to an Office/branch of Exim Bank?
Normally,
General Services Division (GSD) of our Head Office purchase and supply Dead
stock items as per justified indent/requirement from Offices/branches. But in
some cases Offices/branches may purchase Dead stock article(s) after obtaining
approval from Head Office.
(c) How Dead stock articles maintained in an
Office or branch of Exim Bank?
It is
convenient to maintain two registers one for Furniture & fixture and the
other for Machine & Equipment duly noted the date of purchase, rate,
quantity, value, size etc. itemwise in separate pages.
(d) Write the rates of depreciation of Dead
stock articles.
Normally
depreciation of Furniture & fixture and Machinary & equipment charged
on the items which were purchased/received before 30th November of the year. If
any item(s) purchased/received after 30th
November, it will be treated as purchased/received in the next year.
Depreciation
shall be calculated in such a manner that the written down value is rounded off
to the nearest Taka as under:
(i) Land @ NIL
(ii) Building @ 2.5% PA straight line on original
cost.
(iii) Furniture @ 10% PA straight line on
original cost.
(iv) Machinery & Equipment @ 20% PA
straight line on original cost.
(vi)
Books @ 20% straight line on original cost.
(vii)
Vehicle @ 20% PA straight line on original cost.
(vii) House hold
furniture @ 20% PA straight line on original cost.
(viii) Interior
decoration @ 10% PA straight line on original cost.
(e) What is the procedure of write off of a
Dead stock article after lost/stolen/damaged?
The
write-off of an article which has been damaged (not repairable) could be done
after obtaining approval from Head Office. But if anything stolen/lost, FIR to
be lodged to the respective Police Station in which jurisdiction it has been
stolen/lost and thereafter prayer for write-off to be submitted to Head Office.
(f) What is the accounting system of a Dead
stock article which is serviceable, but the
price is about to be NIL?
If the
book value of a particular item of Dead stock is about to be NIL due to
charging of depreciation where the item remain serviceable, the last entry of
depreciation should be charged leaving book value of Taka One for that
particular item for accounting control over the item.
41. (a) What
is Locker and what are the sizes of Locker?
Locker is a Stainless
Steel Almirah which have different sizes of chambers or drawers placed in a separate room which should not be
accessible to others as locker room and the keys of which to be retained by the
Manager & 2nd Officer of the branch. There is a master key for every
chambers which will remain with the branch authority and the same to be handed
over to a responsible Officer of the branch by issuing an Office Order who will
perform all locker related jobs with full responsibility. Every chambers has
separate keys for the customer or lessee. With a view to extend more services
to clients/people for safe keeping of Jewellery, Valuables, documents etc., but
not keeping any explosive or arms or perishable goods or items put under a ban
of the Gov’t, on yearly rent basis.
There are
three sizes of locker:
|
(i) |
Large |
- |
9" X 14" X 23.5" |
|
(ii) |
Medium |
- |
4.5" X 14" X
23.5" |
|
(iii) |
Small |
- |
4.5" X 7" X
23.5" |
(b) What is the procedure to allot a Locker
to an applicant and what is the operational
procedure of Locker?
A valued
client of the Bank may apply for hire a specific size of Locker drawer/chamber
in the prescribed printed form (GB-16A) alongwith signature card (GB-16B) duly
signed with attested one copy photograph. Allotment of Locker to an applicant
at the discretion of the Manager considering his/her relationship with the
bank, honesty, sincerity, reputation and observing Anti money laundering rules.
If his application approved, an agreement to be signed between the branch and
the locker holder(s) as per format provided by Head Office. As per suggestion
of Bangladesh Bank branch must provide the certified copy of agreement and
attested photocopy of Locker application form to the locker holder(s) at the
time of allotment. A locker holder may authorize a third person to operate the
locker by giving mandate. In such a case the signature on 16B of the authorized
person to be obtained duly attested by the locker holder and to be attached
with the locker holders signature card.
An amount of Tk.5,000/- to be deposited into Bank’s Sundry deposit account
(Security Deposit for Locker - refundable) and rent for the current and
preceding year (as the case may be) according to size to be deposited into
‘Income account-Rent for Locker’. Before allowing the locker holder or his
authorized agent to operate the locker, which must not more than thrice in a
week within Banking hour, he must sign in the appropriate column of the Locker
operation register (Locker ledger B-63) in presence of an authorized officer of
the bank who will attest the same duly verified with the specimen signature
card. Then the Manager or authorized officer of the branch will operate his
Master key towards open the locker and thereafter the locker holder will open
the locker by his key to keep or takeout his valuables and at the end he will
close the locker. Please note that the Master key is necessary only at the time
of open of the locker alongwith the key of the locker holder, while the lessee
alone close the drawer.
(c) Mention the rate of rent of the locker
according to size and realization procedure.
Small = Tk.2,200/-,
Medium = Tk.2,800/- and Large = Tk.3,500/- for a calendar year.
Rent for the
1st year will be received in full at the time of allotment and thereafter by
30th November of every preceding year on annual basis. If locker is allotted
during the 2nd half of the year, rent to be realized for half of that year and
also for the next year i.e, one and half year at a time. The rent so received
should be credited to the ‘Income a/c Rent on Locker’. Receipt for security deposit/rent
shall be given duly filled in and signed in GB-60.
(d) What will be the effect if any locker
holder lost his key?
As per our GBD
Circular letter no. 1020 dated 13/8/08, if any locker holder somehow lost
the key, he should immediately file a General Diary of the respective police
station and inform the bank. For breaking open of locker and repair thereof or
changing the lock & key, all charges shall be recovered from the locker
holder. In this regard, bank reserves the right to recover Tk.3,000/- (three
thousand) only per instance as replacement cost. All repairs required to be
done to the locker, door etc. shall be done exclusively by workmen appointed by
the Bank. In case of issuance of duplicate keys, branch must obtain an
undertaking from the locker holder on Non-judicial Stamp declaring that
issuance of duplicate key is absolutely at the risk of the locker holder and
Bank will not be held responsible in any manner for misuse of lost key(s).
(e) Who will Compensate for the contents of
lockers in any mishap?
As per
instruction of Bangladesh Bank, Banks must take necessary steps to obtain
Corporate group insurance to safeguard the contents of lockers. Normally bank
will obtain insurance cover for each locker at Tk.2.00 lac, Tk.2.50 lac and
Tk.3.00 lac respectively for small, medium & large of lockers at their own
cost. The locker holder(s) must bear the additional insurance premium if they
want to obtain insurance coverage exceeding the above mentioned normal limit.
(f) How the allotment of locker or the
Agreement of locker will be cancelled?
The allotment
of locker or agreement of locker will be cancelled on the following manner:
(i) Normally
allotment of locker will be expired by the end of December of every year. If
any locker holder wants to discontinue his/her allotment, he/she must inform
the bank 30 (thirty) days prior to the expiry.
(ii) If the
locker holder does not pay rent for next year before 30th November of preceding
year or does not notify the branch about his/her discontinuation of lease, the
branch is required to forward a notice to the locker holder at his last mailing
address through registered post before 30 (thirty) days of expiry of the
contract. A subsequent notice to be forwarded after 15 (fifteen) days of
previous one if rent is not paid after 1st notification.
(iii) If the
rent is not paid after notifying the locker holder for 2nd time, the bank
reserves the right to break open the locker after one month of the expiry
subject to prior approval of Head Office.
(iv) The Bank
or the client reserves the right to cancel the contract regarding allotment of
locker by forwarding a notice in writing to the respondent before 30 (thirty)
days of expiry.
42. What are the core risks in Banking as per Guide lines of
Bangladesh Bank?
As per guideline of
Bangladesh Bank for managing core risk, there are six core risk areas of
banking as follows:
(1)
Investment riskCredit risk
(2)
Asset-liability risk/Balance sheet risk
(3)
Foreign Exchange risk
(4)
Internal Control & Compliance risk
(5)
Money Laundering risk
(6)
Information & Communication Technology risk.
43. (a) What do you
mean by Internal Control & Compliance?
Banking is a
diversified and complex financial activity. Since its activity involve risk,
the issue of effective control system, corporate governance, transparency,
accountability has become significant to ensure smooth performance of the
Banking industry throughout the world.
Internal
control refers to the mechanism in place to control the activities in an
organisation. Internal control is the process, effected by a Company’s Board
of Directors, Management and other personnel, designed to provide reasonable
assurance regarding the achievement of objectives in the effectiveness and
efficiency of operations, the reliability of financial reporting and compliance
with applicable laws, regulations and internal policies.
According
to IMF (International Monetary Fund) publication, Internal control refers to
the mechanism in place on a permanent basis to control the activities in an
organization, both at a central and at a departmental / divisional level.
“Internal
control is an integral part of the daily activity of the Bank which identifies
the risk associated with the process and adopts a measure to mitigate the
same”.
“It is a
process developed by an organisation to provide safe and sound operations
within the organisation to help achieve its goal and objectives”.
(b) What are the objectives of Internal
Control?
(i) Performance/Operational
objectives: Efficiency and effectiveness of operation.
(ii) Information
objectives: Reliability and completeness of financial and management
information system.
(iii) Compliance
objectives: Compliance with applicable laws & regulations.
(c) What are the functions/Duties &
responsibilities of the Head of Internal Control & Compliance Division
(ICCD)?
Internal
Control & Compliance Division will report as under:
(i) To the
Managing Director
(ii) To
the Executive Committee of the Board of Directors and Audit Committee.
The Head
of ICCD shall ensure the following taskes:
a) Exim
Bank complies with all applicable laws and regulations and also with Exim
Bank’s own policies.
b)
Relevant audit & inspection is conducted as per schedule.
c) To
conduct special/surprise inspection of the branches/divisions as and when
required.
d)
Monitors the activities that are in place and effective.
e) To
propose recommendations/suggestions as regards systems development and business
promotion of the Bank.
f) To
verify and provide information reliably, timely & accurately.
g) The
division will continuously recognize and assess all the material risks that
could adversely effect the achievement of the goal of the Bank.
h) The
ICCD comply the queries of regulatory authorities.
i) The
ICCD must always take into account of the Bank’s internal process to meet the
regulatory requirement before conducting any operation.
(d) What are the departments of Internal
Control & Compliance Department (ICCD)?
The
departments of ICCD are:
(i)
Audit & Inspection operation department.
(ii)
Audit & Inspection compliance department
(iii)
Audit & Inspection monitoring department.
(e) What
are the functions of the departments of ICCD?
The functions of the
departments of ICCD are:
i) Audit and inspection Operation
Department:
a) The Audit &
Inspection Operation Department will arrange thorough and exhaustive inspection
of all AD branches of the Bank twice in a year, once on other than AD branches
and once on each Division of Head Office.
b) The inspection
team will report their findings on Inspection Report for General Banking,
Investment and Foreign Exchange portfolio.
c) Inspection team
on arrival at the branch will submit the introductory letter and will start
their function by checking Cash/Foreign Currency/Stamp/Prize bond etc. They
will check Branches/Divisions Attendance Register.
e) Inspection team
will verify and report on each and every outstanding investment/facility
accounts/deals of the branch quoting sanctioning authority, Security, Dates,
amount and documentation etc, highlighting the stocks, purpose, utilization,
recovery, prospected position, value of primary and collaterals securities,
marketability thereof etc. with proper documents/charge documents/records etc.
f) Inspection team
will provide necessary guidance/assistance to the officials of the Branches/
Divisions for regularization/rectification of the irregularities/lapses on the
spot as far as possible. Only the lapses/irregularities which cannot be
rectified/regularized on the spot should be noted in the inspection report.
g) On return of
inspection team to the Head Office after completion of the particular task of
inspection, the team will meet with the Head of Division and will brief him
regarding important issue, major lapses (if any) of the Branch/Divisions and
their views and comments etc. and on completion of the inspection of the
particular Branch/Division report will be submitted to the head of the Internal
Control and Compliance Division immediately.
ii) Audit
and Inspection Compliance Department:
a) On receipt of
Internal Inspection Report, the Department shall scrutinize each and every
report carefully and shall prepare a synopsis containing the lapses of major
nature for placing the same to the Managing Director/Audit Committee.
b) On receipt of
branch’s quarterly operation report, the department shall scrutinize each
report carefully & prepare synopsis of major lapses for placing the same to
the Managing Director/Audit Committee.
c) The department
will also scrutinize Bangladesh Bank inspection report immediately after
receipt of the same for the concerned authority/office, prepare synopsis of
major lapses for placing the same to the Managing Director/Audit Committee.
Follow-up shall be made by the division with the concerned Branches/Divisions
till to total rectification/regularization of all the lapses/irregularities.
iii) Audit
and Inspection Monitoring Department:
a) Ensure all
limits set internally or externally are properly followed and appropriate
reports are generated regularly.
b) Establish
monitoring mechanism/procedure to ensure high risks areas are regularly
reviewed.
c) Review
operational performance against key control issues of individual offices.
d) Analyze various
reports and assess key risk areas.
e) Recommend Head
of Internal Control & Compliance Division to send Inspection Team in areas
where regular deficiencies are identified.
f) Miscellaneous.
(f) What
are the impact of proper functions by ICCD of a bank?
Impact of proper
functions are:
(i)
To help proper administration of human resources.
(ii)
To maintain quality of assets viz
a)
Proper cash management
b)
Proper selection of borrower
c)
Proper documentation
d)
Proper nursing, control & monitoring of investment
portfolio.
(iii)
To operational activities properly
a)
Appropriate house keeping i.e., opening of accounts
correctly, maintaining of files, register, record etc.
b)
Maintenance of public deposit with trustworthiness
c)
To protect from fraud & forgery
(iv)
Others
a)
Improve the skillness of Manager & Officers.
b)
Increase internal routines & controls
c)
Improve corporate governance
d)
Protect of financial records
e)
Transparency of information.
44. Abbreviate MANCOM. What are the main
functions of MANCOM?
MANCOM means Management Committee.
Functions of MANCOM are:
(i)
MANCOM is responsible for overall management of the
Bank.
(ii)
The MANCOM puts in place the policies and procedures to
identify, measure, monitor and control the risks.
(iii)
The MANCOM puts in place an internal control structure
in the Banking organization which assigns clear responsibility, authority and
reporting relationship.
(iv)
The MANCOM monitors the adequacy and effectiveness of
the internal control system based on the bank’s established policy &
procedure.
(v)
The MANCOM reviews periodically the overall
effectiveness of the control system of the organization and provide a
certification to the Board of Directors on the effectiveness of Internal
Control Policy, practice and procedure.
45. What
has been suggested as per Guidelines of Bangladesh Bank Core Risk Management
for preparation of Statement & Compliance thereof?
As
per guidelines of Bangladesh Bank Core Risk Management, ICCD introduced the
following statements for meticulous compliance to establish internal control
system & culture:
i)
Calendar of returns has been introduced at branches
& divisions of Head Office level to send the statements at the proper place
in the right time.
ii)
Quarterly Operations Report (QOR) is being introduced
to maintain operational functions of different areas of each branch under
different heads statement of which is being sent to the Head Office at
quarterly basis.
iii)
Investment Documentation Checklist (IDC/LDC) is being
introduced to maintain operational functions of different areas of each branch
under different heads statement of which is being sent to the Head Office at
quarterly basis.
iv)
Introduced Departmental Control Function Checklist
(DCFCL) at divisions of Head Office & branch level at the prescribed
frequencies i.e. daily, weekly, monthly & quarterly.
46. (a) What
are the common factors for failure of a Bank?
The common factors for
failure of a Bank are:
(i)
Managerial Weakness
(ii)
Poor internal routines and controls
(iii)
Fraud & forgery
(iv)
Economic condition
(v)
Rapid growth and the use of high risk business model
(vi)
Lack of corporate governance
(vii)
Distortion of financial records
(viii)
Overpayment for assets & services
(ix)
Concealment of information.
(b) What
are the warning signs that indicates Bank’s failure?
The warning signs for
Bank’s failure are:
(i)
Weak management
(ii)
Frequent fraud & forgery
(iii)
Poor internal control
(iv)
Rapid growth and the use of high risk business
(v)
Lack of corporate governance
(vi)
Distortion of financial records
(vii)
Overpayment for assets & services
(viii)
Concealment of information.
(c) Write
the measures to protect Bank’s failure.
√ Provide skilled manpower.
√ Establishing an effective
organizational structure
√ Maintaining control over accounting
procedures
√ Provides for the protection of assets
√ Developing & using an effective
audit program
√ Maintaining quality information system.
(d) Mention
the causes of Barrings Collapse.
(i)
Poor educational background
(ii)
Poor internal control
(iii)
Overconfident to some one by the authority
(iv)
Lack of transparency
(v)
Concealment of information
(vi)
Lack of corporate governance
(vii)
Un-ethical activities/ lifestyle of Nick Leeson.
47. Write the rate of excise
duty to be realized by the banks against the services rendered by banks.
As per
Bangladesh Gazette June 11, 2009, Banks in
|
|
Services Rendered by Bank |
Rate of Duty |
|
(a) |
In cases where
the balance, whether credit or debit, does not exceed Taka Twenty thousand at
any time during a year. |
Nil |
|
(b) |
In cases where
the balance, whether credit or debit, exceeds Taka Twenty Thousand but does
not exceed Taka one lakh, at any time during a year. |
Taka one
hundred and twenty per deposit account per year. |
|
(c) |
In cases where
the balance, whether credit or debit, exceeds Taka One lakh but does not
exceed Taka Ten lakh, at any time during a year. |
Taka three
hundred fifty per deposit account per year. |
|
(d) |
In cases where
the balance, whether credit or debit, exceeds Taka Ten lakh but does not
exceed Taka One crore, at any time during a year. |
Taka one
thousand per deposit account per year. |
|
(e) |
In cases where
the balance, whether credit or debit, exceeds Taka Five crore, at any time
during a year. |
Taka five
thousand per deposit account per year. |
|
(f) |
In cases where
the balance, whether credit or debit, exceeds Taka Five crore, at any time
during a year. |
Taka ten
thousand per deposit account per year. |
What is Bank?
Bank is a Govt.
approved Financial Institution which collect/receive fund from surplus unit, repayable on demand
or otherwise and deploy to the deficit unit duly observed some rules &
regulations.
“Banker means a person transacting the business
of accepting, for the purpose of lending or investment, of deposit of money
from the public, repayable on demand or otherwise and withdrawable by Cheque,
Draft, Order or otherwise” (Section 3b, NI Act – 1881)
(b) What are the functions of Commercial
banks?
Functions of Commercial Banks:
the functions
may be divided into five categories, such as (1) General functions, (2)
Functions related to foreign trade and foreign exchange, (3) Agency functions,
(4) Welfare functions and
(5) Other
functions
General functions are: a)
Maintain account of the clients,
b) To receive deposits of various
types,
c) To make advance/investment
against with or without securities,
d) To create deposits,
e) To create medium of exchange
through cheque, Draft, Pay –
order etc.
f) To issue guarantees (local)
g) To discount Bills.
Functions related to Foreign trade & Foreign exchange:
a)
To make correspondent banking with overseas banks,
b)
To place foreign currency funds with correspondents
abroad,
c)
To issue Letter of Credit (LC),
d)
To issue Back to Back Letter of Credit (BTB L/C),
e)
To amend L/Cs,
f)
To extend investment/credit facilities to the importers
through creating PAD/MIB, MTR/LTR, LIM/LAM/MPI etc,
g)
Issuing guarantees (foreign).
Agency functions:
a)
To transfer money,
b)
To collect funds and makes payment for the clients,
c)
To maintain confidentiality of customers,
d)
To sale and purchase of shares and securities,
e)
To receive rent, dividend, premium etc.
f)
To work as trustee,
g)
To work as representative of Central Bank.
Welfare functions:
a)
Social welfare functions/Corporate Social
Responsibility (CSR),
b)
Functions related to the welfare of the
employees/retired employees such as
•
Establishment of institution,
•
Establishment of Trust,
• Pensions
and allowance.
Other functions:
a)
Underwriting,
b)
Work as safe custody through Locker service,
c)
Advices the clients on business matters,
d)
Repo,
e)
Customer financing,
f)
Leasing,
g)
Income sharing,
h)
Syndication, arrangement of funds,
i)
Issuance of Sanchay Patra, ICB Unit Certificate, Bond,
j)
k)
Any other functions approved by the Gov’t/Bangladesh
Bank.
l)
Merchant banking.
Mode of Charging on Securities:
Security
is obtained by the bank as an additional cover against default by the borrower
in repayment of bank's dues. Charging of security means making such security
available to the bank and involves certain formalities. Charging should be
legal and perfect so that it is possible to realise the security if such a need
arises. There are six different modes of charging a security as under:
1 Mortgage:
A
mortgage is the transfer of an interest in specific
immovable property as a security for repayment of a debt. The banker is usually
concerned with English mortgage or equitable mortgage or registered or legal
mortgage for the purpose of making advances where the ownership of the property
is transferred to the mortgagee by registration of the mortgage deed. Uttara
Bank encourages only Registered Mortgage.
2 Hypothecation:
Pledge
takes away control over the goods from the borrower which may not be
practicable as the borrower would require certain goods under his control to
continue its manufacturing and/or trading activities. An equitable charge in
favour of the bank over the goods is created in such cases without parting with
the possession of the
goods. A charge on a property for a debt where neither ownership nor possession
is passed on to the creditor is known as ‘hypothecation charge’ Hypothecation
agreements obtained by banks generally have a clause under which hypothecation
can be converted into a pledge at, a later date.
3 Pledge:
Pledge is bailment of goods by the debtor to the
creditor with an intention to create a charge thereon as security for the debt.
In pledge the ownership of the goods remain with the borrower whereas physical
control over these goods will be exercised by the bank. The borrower has a
right to get the goods returned to him after payment of debt created here
against. In case of default by the borrower the bank can sell the goods after giving a reasonable
notice of sale as required under Section 176 of the Contract Act,1872. Notice
must clearly indicate the intention of the pledgee to sell the security and is
compulsory before the sale can be effected. If the bank realises more than its
dues by such sale, the excess realised will have to be returned to the
borrower. However, if there is any shortfall, the bank can proceed against the
borrower in a court of law for recovery of the balance.
4 Lien:
Lien
means the right of the creditor to retain the goods or securities of the
debtor, which are in his possession until the debt due from the debtor is paid.
It does not require any specific agreement to support this right. The lien may
be general which confers the right to retain any goods for a general balance of
account or it may be particular lien where goods can be retained by the
creditor for a particular debt only. The person exercising general lien has only
a right to retain the goods till the dues are paid and may not be able to sell
those goods.
5 Assignment:
Assignment
means transfer of a right, property or debt by one person to another person.
The person transferring the right is known as assignor and the person to whom
the right is transferred is known as assignee. The assignment may be legal in
which case the assignor must give a written notice of the assignment stating
the name and address of the assignee to the debtor or may he equitable where no
such notice is sent. This form of charge is generally adopted for charging of
book debts, monies due from Government (supply bills) and life insurance
policies etc. Banks generally go in for legal assignment and insist for
obtaining an acknowledgement of assignment from the debtor.
6 Set Off:
Set off is the right of combining of accounts
between a debtor and a creditor so as to arrive at a net balance payable to one
or the other. Set off in relation to bank means his right to apply the credit
balance in customer's account towards liquidation of debit balance in another
account of the customer provided both the accounts are maintained by him in the
same capacity. The right may not be considered as absolute and the bank may be
required to give a notice for exercising his right of set off. The right of set
off can be applied by the bank only if the following conditions are met:
(a) The liability of the borrower is for a
sum which is certain,
(b) The repayment of debt is due, and
(c) Both the accounts are held by the
customer in the same capacity.
Q. What is ACU?
A. ACU stands for Asian
Clearing Union. The central of Banks of Bangladesh,
Q. What is Agency Bank?
A. A form of
organization/company commonly uses by foreign Banks to enter the U.S market. An
agency Bank cannot accept deposits or extends loans in its own name; it can act
as agent for the parent or correspondent bank.
Q. What is Correspondent
Bank?
A. A bank in one country
which acts as agent for a bank of another country by signing/establishing
agency agreement/arrangement. By establishing correspondent relationship both
banks exchanged their control documents, namely Test Key, Authorized Signature
Booklet, Tariff conditions etc. for authenticating their banking transaction to
be routed as per arrangement
Q. What is Black Monday?
A. The 19th October, 1987 was Monday
when world stock markets crashed due to the collapse of the
Q. What is Boilerplate?
A. Standard terms and
conditions.
Q. What is Bridge Finance?
A. Purely short
term credit/advance extended to a person on a concern pending the receipt of
fund from another sources. It is nothing but stop-gap arrangement to avail a
temporary credit line by a customer from his banker. It is also called “ Swing
loan” made in anticipation of long-term financing.
Q. What is Contingent
Liability?
A. Potential
liability arising from a past transaction or a subsequent event. A liability
may happen in due course, but not certain.
Q. What is Consumer Price
Index?
A. It measures the prices of
consumer goods and services and is a measure of the pace of inflation of any
country.
A. The term applied to the
liberalization in 1986 of the
Q. What is Incoterms?
A. The
interpretation of various shipping terms/commercial terms published by
International chamber of commerce and adopted/accepted/used by all trading
nations in the world.
Q. What is Red Clause in
documentary Credit?
A. A
clause typed in red letter inserted in a documentary letter of credit
authorizing the advising bank to grant the pre-shipment credit facility to the
exporter upto 100% of the credit amount to enable him to purchase the goods and
subsequently bank can reimburse the amount by negotiating the shipping
documents plus interest for the accrued period.
Q. What is Green Clause?
A. A clause appearing in the irrevocable
documentary credit which not only authorizes the advising bank to grant
pre-shipment advances but also storage costs for storing the goods prior to
shipment.
Q. What is Kite Flying?
A. Raising funds by discounting accommodation
bills.
Q. What is Lame Duck?
A. Company which is in
financial difficulties.
Q. What are the parties of Cheque ?
Answer:
Drawer: Drawer is the account holder
Drawee: Drawee is the bank who is to pay
the money
Payee: Payee is the beneficiary who is
to receive the money.
Q. What is Negotiable Instrument ?
Answer:
A transferable,
signed document that promises to pay the bearer a sum of money at a future date
or on demand.
o Cheques
o Bills of Exchange
o Promissory notes.
Q. Who is Holder in due course?
Answer:
Ø All holder in due
course are holder are holder but all holder are not holder in due course.
Ø Transferee title
is not affected by the defective title of the transferer
Ø Person who receive
the money for value without knowing the defective title of the previous owner.
Q. What is Crossing?
Answer:
Ø It gives direction
to the banker for payment.
Ø To give more
protection for the payment
Ø It will not be paid over the counter.
Q. Who can cross a Cheque?
Answer:Drawer / Any
holder / Banker
Q. What are the differences between Private Limited
Company & Public Limited Company?
Answer:
Private Limited Company
Ø Number of members
between 2 –50.
Ø Number of
directors/shareholderes at least 2
Ø Can commence
business immediately
Ø Has restriction on
transfer of share
Ø Private Limited
Company must add the words “Pvt Ltd.”
Public Limited Company
Number of members between 7 –Any number.
Ø Number of
directors at least 3
Ø Certificate of Commencement
is must to commence business immediately
Ø Has no restriction
on transfer of share
Ø Public Offering
. What is credit?
Credit is the confidence of the lender
(Bank) on the ability & willingness of the Borrower to repay the debt as
per terms & conditions of sanction advice.
Q. What are different types of Credit?
Answer:
01. Funded Credit
v Loan (G)/ Term
Loan
v Hire Purchase
v Lease finance
v Cash Credit (Hypo)
v Loan against Trust
Receipt (LTR)
v Payment against
documents (PAD)
v Packing Credit
(PC), etc.
02. Non Funded Credit
v Letter of Credit
(L/C)
v Guarantee (BG, PG)
Q. What is Difference between Loans & Advance ?
Loan
Ø A credit made in
lump sum for a specific period and repaid by specific repayment schedule. Once
repayment is made in part or full loan can’t be withdrawn by the borrower. For
example. Hire Purchase
Advance
Ø Borrower can
withdraw as many times as he wants upto the limit within the validity. For
example, CC(Hypo).
Q. What is Principles of Sound Lending ?
Answer:
1. Safety
v Credit should be
given at right person at right time at right quantity.
v It must be come
back.
2. Liquidity
v Bank should not
have negative Duration Gap or Asset Liability Mismatch.
3. Profitability
v Lending must
reflect costs+earnings+ long term goal of a bank.
4. Purpose
v Purpose must be
productive & generates adequate cash for repayment.
5. Security
v Security means
things deposited as a guarantee of undertaking a loan to be forfeited in case
of default.
6. National Interest
v It should play a
role for the economic development of the country.
7. Diversification
v Don’t put all of
your eggs in one basket
v It reduces risks
SME Definition:
|
|
Small |
Medium |
||
|
Category |
Fixed Assets excluding
land and building |
No. of Manpower |
Fixed Assets excluding
land and building |
No. of Manpower |
|
Service |
Tk 5.00 Lac- Tk. 1.00 Crore |
10-25 |
Tk 1.00 Crore – Tk. 15.00 Crore |
50-100 |
|
Trade |
Tk 5.00 Lac- Tk. 1.00 Crore |
10-25 |
Tk 1.00 Crore – Tk. 15.00 Crore |
50-100 |
|
Manufacturing |
Tk 50.00 Lac- Tk. 10.00 Crore |
25-99 |
Tk 10.00 Crore - Tk. 30.00
Crore |
100-250 |
Q. How can you determine borrowers Creditworthiness?
Answer:
By 5 Ps
1. Person
2. Purpose
3. Products
4. Place
5. Profitability
5 Cs
1. Character
2. Capacity
3. Capital / Cash
4. Collateral
5. Conditions (Current Business
condition, Performance, Sensitivity of changes)
Q. What are the different components of
Credit Risk Grading (CRG) ?
Answer:
CRG: Principal risk component
1. Financial Risk
(50%)
· Liquidity
(10%)
· Profitability (20%)
· Leverage (10%)
· Coverage (10%)
2. Business Risk
(18%)
· Size of the business (5%)
· Age of the business (3%)
· Business Outlook (3%)
· Competition (2%)
· Entry/Exit Barrier (2%)
· Growth
(3%)
3. Management
Risk (12%)
· Experience (5%)
· Succession (4%)
· Team Work (3%)
4. Security Risk (10%)
· Security Coverage (4%)
· Collateral Coverage (4%)
· Support (2%)
5. Relationship
Risk (10%)
· Account Conduct (5%)
· Utilization of limit (2%)
· Covenants (2%)
· Personal Deposits (1%)
Risk Grading as per CRG
|
Number |
Grading |
Short
Name |
Aggregate
Score |
|
01 |
|
SUP |
100 |
|
02 |
Good
|
GD |
85+ |
|
03 |
Acceptable |
ACCPT |
75-84 |
|
04 |
Marginal/Watchlist
|
MG/WL |
65-74 |
|
05 |
Special
Mention |
SM |
55-64 |
|
06 |
Substandard
|
SS |
45-54 |
|
07 |
Doubtful |
DF |
35-44 |
|
08 |
Bad
& Loss |
BL |
<35 |
Q. What is Risk?
A. Risk is the
uncertainty of future outcome.
Q What is Credit Risk ?
A. The
risk of loss of principal or loss of a financial reward stemming from a
borrower's failure to repay a loan or otherwise meet a contractual obligation.
Question. What are the 6
Core Risk Guidelines provided by Bangladesh Bank?
Answer:
1. Credit Risk Management
2. Foreign
Exchange Risk Management
3. Asset Liability Management
4. Internal Control & Compliance
3. Prevention of Money Laundering
4. Information & Communication Technology Risk
Q. What is Systematic risk ?
A. The portion of an individual’s asset’s total
variance i.e., the attributable to the variability of the total market
portfolio.
Q. What is Unsystematic risk ?
Ø Individual assets have
variance i.e., not related to the market portfolio due to unique features.
Ø It is eliminated by
diversified portfolio.
Q. What is Security?
A. Security means things deposited as a guarantee of
undertaking for loan to be forfeited in case of default
Q. What is Charges?
A. Charges means taking the
security lawfully so that it can be encashed/sold for the adjustment of bank
dues.
Q. What are Classification of Charges?
Fixed Charge
A charge is said to be fixed if it is made specially
to cover definite and ascertained assets of permanents nature or assets capable
of being ascertained, e.g. Charge on land and building or Heavy Machinery.
Floating Charge:
It is a charge on property
which is constantly changing , e.g stock, other assets.
The other classification of charge are:
Pari- Passu Charge
Pari-passu charge
is created in favor of several creditors , with the condition that they have
equal priority.
Second Charge:
A. A creditor holding a second charge by of mortgage,
is entitled to the proceeds after the first charge is met. He must inform the
prior mortgage of his charge because the first mortgagee can not part with the
proceeds or title of the property if he has notice of the second charge
Q. What
are Common Methods of charging securities ?
Answer:
Charging of securities means making it available as
a cover for an advance.
The common methods of Charging of securities are
q Pledge
q Hypothecation
q Lien
q Assignment
q Set off
q Mortgage
Question. What is mortgage?
Answer. Mortgage is a method of charging. This type of
charging is done in case of immovable property. Immovable property includes
land & things attached to the earth like trees, buildings & fixed
machineries.
Question. What are the differences among Mortgage,
Pledge and Hypothecation?
Answer:
Ø Mortgage is made as a security for the repayment of a
debt- present or past, an interest of the owner in the property. Mortgaged
is to some extent parted or transfer. The physical possession of the property
may or may not be parted.
Ø Pledge is the bailment of goods (under the possession of
the Bank) as security for payment of a debt. Title & ownership is not
transferred but the pledgee has a right to sell the pledged item if the
condition of the pledge is violated.
Ø Hypothecation is a floating charge
against stock of goods. It is used in case of advance against movable goods.In
case of hypothecation neither ownership nor possession is transferred.
Question. What is Lien?
Answer:
A lien is the right of a
creditor in possession of goods, securities or any other asses belonging to the
debtor to retain them until the debt is repaid
Question. What are the
Different Type of Lien?
Answer:
i) Particular Lien
ii) General Lien
iii) Banker’s Lien
iv) Negative Lien
v) Equitable Lien
vi) Maritime Lien
Question. What is Set-Off?
Answer. Set of is the right of a creditor to the total or
partial merging of a claim against the counter claim of the debtor.
Question. What is
Assignment?
Answer. An assignment means a transfer of right property or
debt(existing or future) by one person to another person.
Question. What are the types of Assignment?
Answer:
a) Legal Assignment
b) Equitable Assignment
Question. What is Asset and Liability Management
(ALM) ?
Answer:
Ø Asset and Liability
Management is the practice of managing risks that arise due to mismatches
between the assets and liabilities (debts and assets) of the bank.
Ø Asset Liability management
(ALM) is a strategic management tool to manage interest rate risk and liquidity
risk faced by banks.
Question. What are 03
pillars in
Answer:
1. Minimum capital requirement (Based on Credit Risk,
Market Risk, Operational Risk)
2. Supervisory review process (Additional capital
charge based on market risk)
3. Market disclosure (Public Disclosure)
Question. What is Loan
Syndication ?
Answer:
Two or more banks
contract with a borrower to provide long term loan on common terms &
conditions governed by a common document.
Question. What are the
Participants in Loan Syndication ?
Answer:
01. Lead Arranger: Responsible for placing the
syndicated loan with other banks & ensuring that the syndication is fully
subscribed.
02. Agent: Take care of the
administrative arrangement, i.e., repayment, compliance etc.
03. Participating Bank: Those banks who participates
to give the principle amount
04. Underwriting Bank: Commits to supplying the
funds to the borrower, underwriter & agent takes fees for their
performance.
Question. What is Leasing?
Answer:
Leasing is a
contract between two parties lessor & lessee that conveys the right of
possession & use of specific assets to the lessee for a specific span of
time & in return the lessee pays predetermined rentals to the lessor.
Question. What is Difference
between financial leasing & operating leasing ?
Answer:
Financial Leasing
Ø Lessor transfer all kinds of
risks & rewards incident to the lessee
Ø Lease is not cancelable
prior to the expiry date.
Ø Title may or may not be
eventually transferred.
Operating Leasing
Ø Lessor provides maintenance,
repair & technical advice
Ø Lease is cancelable prior
to the expiry date.
Question. What is
Answer.
Question. What are the
different types of Foreign Currency Account?
Answer:
1. Foreign Currency(FC)
Account.
2. Non- Resident Foreign
Currency Deposit Account(NFCD).
3. Resident Foreign Currency
Deposit Account (RFCD)
4. Exporter’s Retention
Quota Account(ERQ)
Question. What are the different types
Non-Resident Taka Account?
Answer:
1. Convertible Taka Account
2. Non-Convertible Taka
Account
3. Non Resident Investor’s
Taka Account(NITA)
4. Non-Resident Taka Account
5. Foreign National’s Taka
Account
Question. Who can open
Foreign Currency Account ?
Answer:
Ø Bangladeshi Nationals
residing abroad(including dual nationality)
Ø Foreign nationals residing
abroad or in
Ø Foreign firms registered
abroad and operating in
Ø Foreign missions and their
expatriate employees.
Ø Diplomatic Warehouse(Duty
free shops) licensed by the Custom Authority(subject to some terms and
conditions)
Ø Local and Joint Venture
contracting firms employed to execute projects by foreign/ International donor
agencies as per terms of the approved contract.
Ø Resident Bangladesh national
who are working with foreign/international organizations operating in
Question. What are required
paper/documents required for opening Foreign Currency Account?
Answer:
Ø Application as prescribed by
Bangladesh Bank (Account Opening Form)
Ø Photographs of the account
holder.
Ø Specimen signatures of the
opener.
Ø Work permit/appoint letter
for Bangladeshi nationals.
Ø Copy of Password.
Bangladeshi Mission in abroad will duly verify above all papers or by any other
reputable bank or by any other person who is known to Authorized Dealer (AD) in
Ø Bond license issued by
Custom Authorities for Diplomatic Bonded Warehouse.
Question. What are the
eligible currencies for opening Foreign Currency?
Answer:
Ø US Dollar
Ø GBP
Ø Euro
Ø JP Yen
Question: Who can open Open
Non-Resident Foreign Currency Deposit(NFCD) Account?
Answer :
Ø Bangladeshi national
residing abroad(including dual nationality)
Ø Foreign nationals residing
abroad or in
Ø Foreign firms registered
abroad, banks, other than financial institution including institutional
industrial units in the EPZ Bangladesh
Ø Foreign missions and their
expatriate employees
Ø
Ø Bangladeshi national work
with Govt./semi Govt. Dept. nationalized bank and employee s of body corporate
posted abroad.
Ø
Ø All eligible persons are
also allowed to open NFCD A/C within six months of their return to
Question. What is the
initial deposit required for NFCD A/C?
Answer:
Ø In case of eligible
Bangladeshi National, minimum deposit should be USD 1,000.00 or GBP 500.00 or
equivalent
Ø In case of foreign nationals
or companies, minimum deposit should be USD 25,000.00 or equivalent other
eligible currency
Question: Who can open
Resident Foreign currency Deposit (RFCD) Account?
Ø Answer:
Ø Persons ordinarily resident
in
Ø
Ø Question: What is the
minimum deposit required in RFCD Account?
Ø Answer:
Ø Minimum deposit in the RFCD
account is USD 100.00 or GBP 500.00 or equivalent
Ø
Question: Who can open Exporter’s Retention Quota (ERQ) Account ?
Ø Answer. Exporter can open this type
of FC account in the name of concern export unit/company.
Question.
What is the additional documents required for ERQ Account ?
Answer. Copy of Export Registration
Certificate(ERC).
Q. What are the sources of
fund/Quota Entitlement for ERQ Account?
Answer:
Ø Merchandise exporters can
retain upto 50% of repatriated FOB Value of their export.
Ø Export goods having high
import content(low domestic value-added) like POL product including naptha,
furnace oil, butimin, Ready made Garments made of imported fabrics, electronics
goods etc the exporter can retai up to 10% of repatriated FOB value of export
instead of 50% (Garments exporter can retain up to 10% realized FOB value of
their export instead of 50%. (Garments exporter can retain up to 10% realized
FOB value of their export).
Ø Service exporter can retain
up to 5% of their repatriated income (Indenters/buying House can not open ERQ
A/C)
Ø Soft wear and Data entry
/processing exporter can retain up to 40% of their repatriated income.
Ø Deemed exporter can retain
50% or 10% of repatriated export proceed subject to sharing of direct exporter.
(If direct exporter retain 40% or 6%, then the deem exporter will retain
balance 10% or 4% of reptriated export proceed. In this case, the
negotiating bank of direct exported will which amount of export proceeds they
have retained in ERQ Account.)
Ø A type industrial unit in
EPZ may retain upto 10% of export proceeds
Ø B & C type industrial
unit may retain upto 80% if export proceeds other than garments industry.
Ø C type industrial unit in
EPZ may retain upto 75% of export proceeds for garments industry
Question. What are the prohibited goods for export
from
Answer:
Ø Petroleum and petroleum
products
Ø Jute seed, Wheat Seed,
pulse, Onion
Ø Living animals and their
limbs and skins of wild lives of all species described in the Wild Life
Conservation Ordinance 1973
Ø Fire arms, ammunitions and
related materials
Ø Radioactive materials
Ø Archeological relics
Ø Human skull, blood plasma
Ø Raw and wet blue leather
Ø All kind of bamboo,
wood , cane
Question: What is HS Code?
Ø
Answer: Harmonization Code.
Question : What is LCAF
stand for?
Ø Answer: Letter of Authorization
Form.
Question: What is UCPDC?
Ø Answer: Uniform Customs and Practice for Documentary
Credits
Question: What is URDG?
Ø Answer: Uniform Rules for Documentary Guarantee.
Question: What is International Monetary Fund (IMF)
?
Answer:
Ø The International Monetary
Fund (IMF) is the international organization that oversees the global financial
system by following the macroeconomic policies of its member countries; in
particular those with an impact on exchange rate and the balance of payments.
Question: What is the
International Chamber Of Commerce (ICC)?
Ø Answer:
Ø
Question:
What is NOSTRO Account?
Ø Answer:
Ø Our Account with You. It is
a banking term to describe an account home bank holds with a bank in a foreign
country, usually in the currency of that foreign country.
Question. What is VOSTRO ACCOUNT ?
Answer: Your Account with us. It is
a local currency account maintained with a bank by another bank. The term is
normally applied to the counter party account from which funds may be paid into
or withdrawn, as a result of a transaction.
Question: What is Bill of exchange ?
Answer:
An unconditional order issued
by a person or business which directs the recipient to pay a fixed sum of money
to a third party at a future date. A bill of exchange must be in writing and
signed and dated.
Question: What is Bill of Entry?
Answer:
A detailed statement
prepared by a merchant or his agent (C&F) provides description, nature and
value of goods to submit the same to custom authority for signature.
Question: What Does Bill Of Lading Mean ?
Answer:
Ø A legal document between the
shipper of a particular good and the carrier detailing the type, quantity and
destination of the good being carried.
Ø The bill of lading also
serves as a receipt of shipment when the good is delivered to the predetermined
destination.
Ø This document must accompany
the shipped goods, no matter the form of transportation, and must be signed by
an authorized representative from the carrier, shipper and receiver.
Question: What Does Spot Exchange Rate Mean?
Answer:
The rate of a
foreign-exchange contract for immediate delivery. Also known as "benchmark
rates", "straightforward rates" or "outright rates",
spot rates represent the price that a buyer expects to pay for a foreign
currency in another currency.
Question: What is Soft currency?
Answer:
Soft currency indicates a type of currency whose value may depreciate rapidly
or that is difficult to convert into other currencies. It is generally less
desirable than hard currency to users. For example , Taka
Question: What is Hard currency?
Answer:
A stable currency, well
supported by reserves, which is in demand in world markets and therefore easily
convertible into other currencies.
Ø A currency in which
investors have confidence, such as that of an economically and politically
stable country. For example, Euro, USD , Pound Sterling etc.
Question: What is Letter of Credit (L/C) ?
Answer:
Ø It is a commitment of making payment by a bank on
behalf of importer to the exporter upon fulfillment of certain terms &
conditions.
Ø According to the UCPDC-600
L/C means any arrangement, however, named or described i.e., irrevocable
& there by constitute a definite undertaking of the issuing bank to honour
a compiling presentation.
Question. What are Parties involved in L/C?
Answer:
Core Parties
01. The issuing Bank
02. The confirming Bank (If any)
03. The Beneficiary
Other Parties involved in L/C
01. The applicant
02. Advising Bank
03. The Nominated bank
04. The reimbursing Bank
05. The presenter
06. The transferring Bank
Issuing Bank
Issuing Bank means the bank
that issues a credit at the request of an applicant or on its own behalf.
Confirming Bank
Ø Confirming Bank means the bank that adds its
confirmation to a L/C upon the request of the issuing Bank.
Ø Confirmation means a definite undertaking of the
confirming bank in addition to the issuing bank to honour or negotiate a
compiling presentation.
Beneficiary
Beneficiary means the party in whose favor a L/C is
issued.
Applicant
Applicant means the party on whose favor a L/C is
issued.
Advising Bank
Ø Advising Bank gives the
proof of apparent authenticity of the L/C to the seller.
Ø Forwards the original L/C to
the beneficiary
Nominated Bank
Nominated bank means the bank with which L/C is
available
Reimbursing Bank
Reimbursing Bank means the bank, appointed by the
issuing bank to reimburse the claims of payment of the claiming Bank.
Claiming Bank
Claiming bank means the
nominated bank which claims the payment from the reimbursing bank.
Presenter
Presenter means a beneficiary or bank or other party
that makes presentation of documents.
Transferring Bank
Transferring Bank means nominated bank that transfer
the L/C which is authorized by issuing bank
Question: What is Back to Back L/C?
Answer:
One credit backs another. The seller/beneficiary of
mother L/C stands as security to advising bank for opening second credit.
Question: What is the Operational Procedure in L/C?
Answer:
01. Issuing
02. Advising
03. Confirmation & Amendment
04. Presentation
05. Settlement
a) Settlement by Payment
b) Settlement by acceptance
c) Settlement by Negotiation
(Bank will purchase documents/drafts)
Question: What are the different form of Export
Finance?
Answer:
Exporters requires financial services at different
stages
1. Pre-shipment Credit
a) Export Cash Credit (Hypo)
b) Export Cash Credit (pledge)
c) Export credit against Trust
Receipt
d) Packing Credit (PC)
e) Back to Back Credit
f) Advance against Red clause
L/C
2. Post Shipment Credit
i. Negotiation of Document
under L/C
ii. Purchase of D/P & D/A
Bills
iii. Advance against Bills for
collection
Q. What is Export Development Fund (EDF)?
A. EDF is required to assure continued availability
of fund to meet import requirement of nontraditional manufactured items
particularly for new exporters.
Q. What are the Different shipping documents in
Exports?
Answer:
A. Major Documents
i) Bill of exchange
ii) Bill of lading
iii) Shipping Invoice
iv) Insurance policy(In case of CIF Shipment
B. Subsidiary Documents
i) Certificate of origin
ii) Pre-shipment Inspection Certificate
iii) Packing and Weight List
iv) GSP Certificate
v) Phyto-Sanitary Certificate
vi) Quality Control Certificate
vii) Visa or Consular invoice
viii) A declaration regarding the goods are not
shipped Israeli Flag Vessel
ix) Any other documents specially asked in the credit
Question: What are the Sources of Fund for a Bank ?
Answer:
Ø Paid- Up capital
Ø Reserve fund & undistributed profits
Ø Deposits from public in various accounts
Ø Borrowing from Bangladesh bank & other financial
institutions.
Question: How many Specialized Development Banks in
Answer:
· Bangladesh Development Bank
Ltd (Bd. Shilpa Bank+Bd. Shilpa Rin Sangstha)
· Karmasangstan Bank
· Bangladesh Krishi Bank
· Rajshahi Krishi Unnayan Bank
· Basic Bank Ltd (Bank of
Small Industries and Commerce)
· Bangladesh Somobay Bank
Limited(Cooperative Bank)
· Grameen Bank
· Ansar VDP Unnyan Bank
Question: What is CAMELS ratings?
Answer:
The CAMELS ratings is
a supervisory rating of the bank's overall condition used to classify the
nation’s banks. This rating is based on financial statements of the bank and
on-site examination by regulators. The scale is from 1 to 5 with 1 being
strongest and 5 being weakest.
The components of a bank's condition that are
assessed
· (C) Capital adequacy,
· (A) Asset quality,
· (M) Management,
· (E) Earnings,
· (L) Liquidity and
· (S) Sensitivity to market
risk
Question. What is SWIFT?
Answer:
Ø The Society for Worldwide
Interbank Financial Telecommunication ("SWIFT") operates a worldwide
financial messaging network which exchanges messages between banks and other
financial institutions.
Ø The majority of
international Interbank messages use the SWIFT network.
Ø SWIFT transports financial
messages in a highly secure way, but does not hold accounts for its members and
does not perform any form of clearing or settlement.
Question: What is Repo with
Bangladesh Bank?
Answer:
Ø Commercial bank gives it’s
securities to the Bangladesh bank & takes funds.
Ø Funds are injected into the
market
Question. What is Reverse
Repo with Bangladesh Bank ?
Answer:
Ø Bangladesh bank gives it’s
security paper to the banks & takes fund from commercial banks
Ø Funds are withdrawn by
Bangladesh Bank from the market.
Question. What are the Ingredients of Core Capital
(Tier I) in Bank?
Answer:
Ø Paid up Capital
Ø Statutory reserve
Ø Dividend equalization A/C
Ø Retained Earnings
Question: What are the Ingredients of Supplementary
Capital (Tier II) ?
Answer:
Ø General provision on Unclassified loans
Ø General Provision on Off balance sheet exposure
Ø Exchange Equalization Account
Question: What is LIBOR (London
Inter Bank Offer Rate) ?
Answer:
The interest
rate that
the banks charge each other for loans (usually in Eurodollars). The LIBOR is officially
fixed once a day by a small group of large
Question. What is Cost of Goods Sold?
Answer:
Cost of goods sold for Trading concern:
Cost of Goods Sold = Beginning Inventory + Purchase
– Ending Inventory
Cost of goods sold for Manufacturing concern:
Cost of Goods Sold = Beginning finished goods
Inventory + Cost of goods manufactured – Ending finishing goods
Question. What it Gross Profit?
Answer: Gross profit = Net sales – Cost of goods
sold
Question. What is Net Profit ?
Answer : Net Profit = Gross profit – Total operating expenses
Question: What is the difference between
Financial Accounting & Management Accounting ?
Answer:
Financial Accounting
Ø Financial Accounting is the process of
summarizing financial data taken from an organization's accounting records and
publishing in the form of annual (or more frequent) reports for stakeholder
of the organization
Management accounting
Ø Management Accounting is concerned with the
provisions and use of accounting and other information to managers within
organizations, to provide them with the basis in making informed business
decisions.
Question:
What is Finance?
Answer:
Mobilization of funds from
surplus economic unit & deployment of funds to deficit economic units
Question: What is Cash Flow?
Answer:
A measure of a company's
financial health, equals cash receipts minus cash payments over a given period
of time.
Question:
What are the different types of Ratios?
Answer:
· Profitability
ratios (Gross Profit Margin, Net profit margin, Operating
profit margin, ROA, ROE)
· Liquidity
ratio (Current ratio, Quick ratio)
· Asset
Utilization Ratios (Inventory Turnover, Account Receivable
Turnover)
· Debt
Utilization Ratios (Debt to equity, Debt to total assets)
· Coverage
Ratios (Debt Service Coverage ratio, Interest service
Coverage Ratio)
Question: What is Interest Coverage
Ratio?
Answer:
Ø A measure of ability to meet
interest expense from the organization earnings. It is calculated as :
Earning Before Interest & Taxes (EBIT)
Interest Coverage Ratio = -------------------------------------------------
Interest Payments
Question: What is Debt Service Coverage
Ratio?
Answer:
Ø A measure of ability to meet
interest expense and current matured debt under 01 year from its EBIT and
Depreciation. It is calculated as :
EBIT+ Depreciation
Debt Service Coverage Ratio = ---------------------------------------------
Interest Payments + Amortization Amount
Question: What is Earnings per Share (EPS)?
Answer:
Net Income – Preferred dividends
Earning
Per Share = --------------------------------------------------------
Average number of Common Shares outstanding
Question: What is Price/Earnings Ratio?
Answer:
Net Income – Preferred dividends
Price/Earnings
Ratio = -------------------------------------------------------
Average number of Common Shares outstanding
Companies with high P/E ratios are more
likely to be considered "risky" investments than those with low P/E
ratios.
Question: What is Accounts Receivable Turnover ?
Answer:
The accounts receivable
turnover is a rough measure of how many times a company’s accounts receivable
have been turned into cash during the year.
Sales on Account
Accounts
receivable turnover = -------------------------------------------------
Average accounts receivable balance
Question: What is Inventory Turnover ?
Answer:
The Inventory turnover measures how many
times a company’s inventory has been sold and replaced during the year. It is
calculated as follows
Cost of goods sold
Inventory
turnover = ------------------------------------
Average inventory balance
Question: What is Return on Assets (ROA) Ratio?
Answer:
This measures how efficiently profits are
being generated from the assets employed in the business when compared with the
ratios of firms in a similar business. The Return on Assets Ratio is calculated
as follows:
Net Profit before Tax
Return on
Assets = ------------------------------
Total Assets
A low ratio in comparison with industry averages indicates an inefficient
use of business assets.
Question: What is Return on Investment (ROI) Ratio?
Answer:
It is the percentage of return on funds
invested in the business by its owners. The ROI is calculated as follows:
Net Profit
before Tax
Return on
Investment = -----------------------------
Net Worth
Question: What is Leverage Ratio?
Answer:
This Debt/Equity or Leverage Ratio indicates the extent to which the
business is reliant on debt financing (creditor money versus owner's equity):
Total Liabilities
Debt/Equity
Ratio = --------------------------
Equity
Generally, the higher this ratio, the more risky a creditor will
perceive its exposure in your business, making it correspondingly harder to
obtain credit.
Q. What is Interest?
A. Interest is the Cost paid by the Borrower to
the lender for the use of money that they borrow from a lender. It is the price
of the loan, expressed as percentage
Question. What is Effective Rate of Return(ERR)?
Answer:
Interest Income + Non Interest
Income
Effective Rate
of Return = --------------------------------------------
Average Utilization of Fund
Question:
What is Authorized Capital?
Answer:
The amount of equity
capital, measured at par value, that a company is allowed to raise by issuing
shares, as set out in its memorandum of association. A company does not
necessarily issue shares to the limit of its authorized capital
Question: What is Paid up
Capital ?
Answer:
The total amount of
shareholder capital that has been paid in full by shareholders. The proportion
of a company's issued capital that has been paid for by its shareholders.
Q. What Net Present value in Finance?
A. The Net Present Value (NPV) is the difference
between the present value future cash inflows and the initial investment which
determines whether the project is an acceptable investment.
Q. What Internal Rate of Return(IRR) in
Finance?
Ø The internal rate of return
on an investment or project is the discount rate that makes the net present
value of all cash flows (both positive and negative) from a particular
investment equal to zero.
Ø An investment is considered
acceptable if its internal rate of return is greater than an cost of capital.
Q. What is Sensitivity
Analysis ?
Answer
Ø Sensitivity analysis is done
to know what will happen to the viability of the project when variable is
changed from its expected value at a time.
Ø Variables are not
interrelated.
Q. What is Gross Domestic
Product (GDP)?
Answer:
The value in money at market
prices of all goods and services produced within a country but excluding the
income form abroad for a particular period, generally one year.
Gross Domestic Product (GDP) = Market prices of
all goods and services produced within a country – Income from abroad
Q. What is the difference between price and value?
Answer:
Price is the quantity of payment
or compensation given from one party to another in return for goods or
services. Price is set by the intersection of demand and supply.
Value is the innate worth of a
commodity, which determines the normal ('equilibrium') ratio at which two
commodities exchange. This is the measure of worth that is based purely on the
utility derived from the consumption of a product or service. Value drives
demand. Price is what customers spend; value is what they receive.
Q. What is ADP ?
A. Annul Development
Programme
Q. What is WTO?
A. World Trade Organization.
Q. What is FOB?
A. Free on Board
Q. What is BGMEA?
A. Bangladesh Garments
Manufactures & Exporters Association.
Q. What is BAPEX?
A. Bangladesh Petroleum
Exploration Corporation
Q. What is ADB?
A. Asian Development Bank
Q. What is IMF?
A. International Monetary
Fund.
Q. What is present name of GAAT?
A. World Trade
Organization(WTO)
A. Federation of
Q. What is BIMSTEC?
A.
Q. What is OPEC?
A. Organization of Petroleum
Exporting Countries.
Q. What is UNHCR?
A. United Nations High
Commission for Refugees.
Q. What is OIC?
A. Organization of Islamic
conference.
Question: What is ASEAN stands for?
Answer:
Association of South East
Asian Nations.
Question: What is CIRDAP stands for?
Answer:
Center on Integrated Rural
Development for
Question: What is APEC stands for?
Answer:
Asia-Pacific Economic
Cooperation.
Question: What is WHO stands for?
Answer:
World Health Organization.
Question: What is NATO stands for?
Answer:
Question: What is IFC stands for?
Answer:
International Finance Corporation.
Q. What is SAARC?
A. South Asian Association
for Regional Co-operation. It is established on December 08,1985. It has 8
member countries. Member courtiers are 1.
Q. What is CARE?
A CARE means Cooperative for
Assistance and Relief Everywhere. It was founded in 1945 by Wallace Campbell.
Q. What is IDB?
A. Islamic Development Bank.
It is located in
Q. What is IRRI?
A. International Rice
Research Institute. It was established in 1960. Head quarter located in
Laguna,
Q. What is GSP?
Generalized System of
Preference. EU countries allow GSP facility in different rates to
Q. What is Back-to-back L/C:
An import L/C opened against
an Export L/C in order to execute the export is called Back-to-Back (BTB)
L/C.
Q. How many Export
Processing Zones (EPZ) in
Answer:
There are 08 nos of EPZ in
i)
ii) Adamjee EPZ, Narayangonj
iii) Comilla EPZ, Comilla.
iv)
v) Mongla EPZ,
vi) Ishwardi EPZ, Pabna.
vii) Karnaphuli EPZ,
viii) Uttara EPZ, Nilphamari.
Q. What are the Types of factories in EPZ?
Answer:
There 03 (three) types of factories in EPZ
A type - 100% foreign
ownership
B type - joint venture
C type - 100% local venture
Q. What is CM?
C-M means Cutting and
Making. The margin as obtained by an exporter after mitigation of costs of raw
materials is called CM earnings.
Q. What is BATEXPO?
Q. What is EDF (Export
Development Fund)?
EDF came into being in 1989
to facilitate access to finance in foreign exchange for input procurements by
manufacturers and exporters. Authorized dealer banks can borrow US dollar funds
from the EDF against their foreign currency loans to the parties.
Q. How many EXP form
involved for execution of export?
Answer:
04 Nos of EXP forms issued to execute export
formalities as under:
EXP Form 01: Original copy. It is
submitted to Custom Authority with other copies of shipping documents of export
during shipment of goods and thereafter custom authority sends it to Bangladesh
Bank.
Exp Form 02: Duplicate Copy: Customer deposits it
to the respective bank’s counter after 15 days of shipment and the bank sends
it to B.B.
Exp Form 03: Triplicate Copy: It is deposited to the
bank by the customer at the time of proceeds realization and Bank sends it to
B.B.
Exp Form 04: Office Copy for the Bank: It is kept with
the Bank.
A) BTB L/C: It may be
foreign or local L/C
Conditions to be followed:
i) Total finance including PC will not exceed 90.00%.
But in case of 100% value addition (if total raw materials procured from local
origin), total finance may be upto 100% if required.
ii) Expiry of Local BTB L/C will be 30 days ahead of
expiry of Export L/C to ensure timely shipment.
iii) Expiry of Foreign BTB L/C will be 30 days ahead of
expiry of Export L/C to ensure timely shipment
B) EDF (Export Development Fund) L/C:
It is also a Back to Back
L/C opened at sight basis against Export L/C. Payment at maturity is made
primarily by the L/C issuing bank. And then, it is reimbursed by Bangladesh
Bank upon submission of documents. It facilitates the exporter to procure goods
from overseas sources at reduced price as payment is made at sight basis.
C) Accepted Bills for Payment (ABP):
Within the stipulated
period, the beneficiary/supplier (if local, they are called “Deemed Exporter”)
of the above BTB L/C submit shipping documents as per terms of BTB L/c to
the counter of BTB L/c issuing Bank. The issuing bank gives acceptance to the
documents if it is found in order as per stipulated terms and created a
contingent liability giving an specific payment maturity called Accepted Bills
for Payment (ABP).
D) Packing Credit (PC):
After making the exportable
goods, for payment of factory overhead expenditures, salary, wages, procurement
of Packing Materials to make shipment viable, the banks usually extends a
credit to the exporters namely Packing Credit (PC) against and specific Export
L/C and disburse @ 10-15% of ABP / BTB L/C figure @7.00% p.a. rate of interest.
Basel II is the second of the Basel Accords, (now extended and partially superseded[clarification needed] by Basel III),
which are recommendations on banking laws and regulations issued by the Basel Committee on Banking
Supervision.
Basel II, initially published in
June 2004, was intended to amend international standards that controlled how
much capital banks need to hold to guard against the financial and operational
risks banks face. These rules sought to ensure that the greater the risk to
which a bank is exposed, the greater the amount of capital the bank needs to
hold to safeguard its solvency and economic stability. Basel II attempted to
accomplish this by establishing risk
and capital management requirements to ensure that a bank has adequate
capital for the risk the bank exposes itself to through its lending,
investment and trading activities. One focus was to maintain sufficient
consistency of regulations so to limit competitive inequality amongst
internationally active banks.
Basel II was implemented in the
years prior to 2008, and was only to be implemented in early 2008 in most major
economies;[1][2][3] that year's Financial crisis intervened before
Basel II could become fully effective. As Basel III
was negotiated, the crisis was top of mind and accordingly more stringent
standards were contemplated and quickly adopted in some key countries including
in Europe and the
Basel II uses a "three
pillars" concept – (1) minimum capital requirements (addressing risk),
(2) supervisory review and (3) market
discipline.
The Basel I accord
dealt with only parts of each of these pillars. For example: with respect to
the first Basel II pillar, only one risk, credit risk, was dealt with in a
simple manner while market risk was an afterthought; operational risk was not
dealt with at all.
The first pillar:
Minimum capital requirements [edit]
The first pillar deals with
maintenance of regulatory capital calculated for three major components of risk
that a bank faces: credit risk, operational
risk, and market risk. Other risks are not considered fully
quantifiable at this stage.
- The credit
risk component can be calculated in three different ways of varying
degree of sophistication, namely standardized approach, Foundation
IRB, Advanced IRB and General IB2 Restriction. IRB
stands for "Internal Rating-Based Approach".
- For operational risk, there are three different
approaches – basic indicator approach or BIA, standardized approach
or TSA, and the internal measurement approach (an advanced form of which
is the advanced measurement approach or
AMA).
- For market
risk the preferred approach is VaR (value
at risk).
As the Basel II recommendations
are phased in by the banking industry it will move from standardised
requirements to more refined and specific requirements that have been developed
for each risk category by each individual bank. The upside for banks that do
develop their own bespoke risk measurement systems is that they will be rewarded
with potentially lower risk capital requirements. In the future there will be
closer links between the concepts of economic and regulatory capital.
The second pillar:
Supervisory review [edit]
This is a regulatory response to
the first pillar, giving regulators better 'tools' over those previously
available. It also provides a framework for dealing with systemic
risk, pension risk, concentration risk, strategic risk, reputational
risk, liquidity risk and legal risk,
which the accord combines under the title of residual risk. Banks can review
their risk management system.
The Internal Capital Adequacy
Assessment Process (ICAAP) is a result of Pillar 2 of Basel II accords.
The third pillar:
The Market Discipline [edit]
This pillar aims to complement
the minimum capital requirements and supervisory review process by developing a
set of disclosure requirements which will allow the market participants to
gauge the capital adequacy of an institution.
Market
discipline supplements regulation as sharing of information facilitates
assessment of the bank by others, including investors, analysts, customers,
other banks, and rating agencies, which leads to good corporate governance. The
aim of Pillar 3 is to allow market discipline to operate by requiring
institutions to disclose details on the scope of application, capital, risk
exposures, risk assessment processes, and the capital adequacy of the institution.
It must be consistent with how the senior management, including the board,
assess and manage the risks of the institution.
When market participants have a
sufficient understanding of a bank's activities and the controls it has in
place to manage its exposures, they are better able to distinguish between
banking organizations so that they can reward those that manage their risks
prudently and penalize those that do not.
What do
you mean by KYC, CTR, STR?
KYC means Know Your Customer. It
is a part of our account opening form printed by our Bank as per guidelines of
Bangladesh Bank. It is compulsorily to be filled duly signed by all the deposit
& investment clients. This part of account opening form contains the
particulars, i.e. Name, Present address, Permanent address, business/service
address, source of income, nature of business, Monthly/Yearly income,
Telephone/Mobile no of present/permanent/business/service addresses,
relationship with the introducer, expected amount & number of transaction
in cash & other modes in a month etc. Bankers could segregate the accounts
riskwise through KYC as per guidelines of Bangladesh Bank.
CTR means Cash Transaction
Report. It is a monthly statement form introduced by Bangladesh Bank if Tk. Ten
lac & above credited or debited by one or more vouchers in an account in a
day, to submit the same to them by the branches through the Head Office of
their Banks. This statement contains the date, Account no, name of the account,
number of debit/credit vouchers of the day, amount credited/debited etc. This
statement could generate by our computer. Anti Money Laundering unit of
branches should observe the CTR statements whether any doubtful transactions
are happened or not and they should put their comments upon the statement.
STR means Suspicious Transaction Report. As per
Bangladesh Bank Anti Money Laundering circular no.2 a quarterly statement
designed by Bangladesh Bank to detect Money Laundering crimes. Branches of all
Banks in
a) Write the meaning and functions of Merchant Bank.
Merchant Bank
means Investment Bank or a bank which deals with large businesses as admissible
by the law of the land.
“A
merchant banker is a person (legal) who buys & sells securities, manages
fund on
behalf of the
clients, underwrites public issue of securities, is associated with securities
as underwriter, portfolio manager and issue manager and renders corporate
advisory services with regard to issue of securities.”
Merchant
Banking rules & laws issued by the Security & Exchange Commission (SEC)
as per power empowered by the Gov’t of Bangladesh through Security and Exchange
Ordinance 1969. They issue licenses after observing formalities and supervise
the operations of Merchant Banks.
Functions of
Merchant Banking are as follows:
(i) Issue Management:
(ii) Underwriting:
(iii) Portfolio Management:
(iv) Corporate Counseling:
(v) Project Counseling:
(vi) Pre-investment Studies:
(vii) Capital Restructuring Services:
(viii) Investment/Credit Syndication:
(ix) Merger and Acquisition:
Merger: In business or economics a
merger is a combination of two companies into one larger company.
Acquisition: Acquisition is the process
through which one company takes over the controlling interest of another
company and thereby bringing about change in the management of the acquiring
company.
(x)
Foreign currency Financing: The finance provides to fund foreign trade
transactions is called ‘Foreign currency Finance’. The provision of foreign
currency finance takes the form of export-import trade finance, euro currency investment/loans,
foreign collaborations etc.
(ii)
Mutual Funds:
(xii) Project Appraisal: Financial
appraisal:
Technical appraisal: Economic appraisal:
(b) What is money market and what is capital
market?
(i) Money market:
Money market is a mechanism through which short term funds are loaned and
borrowed and through which a large part of financial transactions of a
particular country or of the world are cleared. A money market includes only
dealings in more or less standardized types of investments/loans, such as, call
investments/loans and in investment/credit instruments, such as acceptance of
treasury bills. Money market is distinct from, but supplementary to the
commercial banking system. It meets the short term requirements of borrowers
and provides liquidity to the lenders. Normally money market deals with the
transaction of maximum period of one year. The Central Bank occupies a
strategic position in the money market.
(ii)
Capital Market: Capital market is a market in which long term securities
like shares, debentures and other financial instruments are traded or
exchanged. securities relates to the secondary market. In
Primary
market: It is the market for new issue securities. This is done through
initial public offering (IPO) after obtaining permission from Security &
Exchange Commission (SEC) and the involvement of intermediaries such as broker,
merchant bankers and other financial institutions.
Secondary
market: It is the market for trading existing securities after they have
been created in the primary market. Shares, Bonds, Mutual funds are trading in
DSE and CSE are called secondary market. It consists of the followings:
·
The public who are buyers and sellers of
securities,
·
Brokers (members of DSE and CSE),
·
The Stock exchanges where the trading takes
place.
What is Mutual Fund?
A Mutual Fund can be defined as ‘a
Collective Investment Scheme that pools money from many investors and invests
it in stocks, bonds, short-term money market instruments, and/or other
securities under strict professional management.
i) What are the types of mutual fund?
Mutual
funds are mainly two types:
Open end mutual fund: An open-end mutual fund is a collective
investment scheme which can issue and redeem shares at any time. An investor
will generally purchase shares in the fund directly from the fund itself rather
from the existing shareholders. It contrasts with a closed-end fund, which
typically issues all the shares it will issue at the outset.
Closed-end mutual fund: A closed-end mutual fund or closed-ended
fund is a collective investment scheme with a limited number of shares. New
shares are rarely issued after the fund is launched; shares are not normally
redeemable for cash or securities until the fund liquidates. Typically an
investor can acquire shares in a closed-end fund by buying shares on a
secondary market from a broker, market maker, or other investors.
ii) What are the key features of a
Mutual Fund?
t A mutual
fund can be of Closed End type with usually limited number of irredeemable
shares or Open End type with usually unlimited number of redeemable shares.
t Mutual funds are usually of limited time
span (five years or ten years mostly), but there are some exceptions.
t The prices of a mutual fund is usually
determined by the Net Asset Value per share and/or the sector/type of
investment of the fund.
t The Net Asset Value (NAV) of a Mutual fund
is usually calculated daily after the end of trade in the Secondary Market. But
in the developed countries NAV of most of the mutual funds are calculated
hourly or bi-hourly.
t Mutual fund is managed by professional fund
managers and professional custodians.
What
papers required to open an account of : (a) Single account, (b) Joint account,
(c) Partnership account, (d) Proprietorship account, (e) Minor account, (f)
Ltd. Company account, (g) Association/Club/Trust/Society/Charity
Organization/Educational Institution/Masjid/Madrasha account, (h) FC account
for Bangladeshi Wage Earners, (i) FC account for Foreign nationals/Company/Firm.
(a) Single
account: (i) Passport size photograph 2 copies duly signed &
attested by the introducer, (ii) one copy photograph of the nominee duly
attested by the intending account holder, (iii) Copy of Passport/National ID
Card/Driving License/Office ID/Word Commissioner’s certificate/any ID card
acceptable to the bank, (iv) TIN certificate (if applicable) .
(b) Joint
account: (i) Two copies passport size photograph of each duly signed
& attested by the introducer, (ii) Joint account declaration form, (iii)
Photograph(s) of the nominee duly attested by the intending account holder (if
necessary), (iv) Copy of Passport/National ID Card/Driving License/Office
ID/Word Commissioner’s certificate/any ID acceptable to the bank, (v) TIN certificate
(if applicable).
(c) Partnership
account: (i) Two copies passport size photograph of each who will
operate the account duly signed & attested, (ii) Certified copy of valid
trade license, (iii) Certified copy of registered partnership deed,
(iv) Partnership account agreement form (Maximum 20 persons may form a
partnership firm.), (v) TIN certificate, (vi) List of partners alongwith their
full address and phone numbers, (viii) Resolution of the partners to open the
A/C and authorization for its operation duly certified by the Managing partner,
(viii) Copy of passport/National ID card/Driving License/Office ID/Word
Commissioner’s certificate/any ID card of the operators acceptable to the bank.
(d) Proprietorship
account: (i) Two copies passport size photograph duly signed &
attested, (ii) Certified copy of valid Trade license, (iii) Photo of
nominee duly attested by the proprietor of the firm, (iv) Proprietorship
declaration form, (v) TIN certificate, (vi) Copy of passport/National ID
card/Driving License/Word Commissioner’s certificate/any ID card acceptable to
the bank.
(e) Minor
account: (i) Two copies passport size photograph of the minor duly
attested by the legal guardian, (ii) Two copies passport size photograph of the
legal guardian who will operate the account duly attested by the introducer,
(iii) Attested Birth certificate of the minor, (iv) Attested copy of
Passport/National ID card/Driving License/Office ID/Word Commissioner’s
certificate/any ID card acceptable to the bank.
(f) Limited
Company account: (i) Attested two copies photographs of each persons
who will operate the account, (ii) Certified (by the MD/Chairman) copy of the
Memorandum & Articles of Association, (iii) Certified copy of Certificate
of Incorporation, (iv) Certified copy of Certificate of Commencement of
business (in case of Public Ltd. Co.), (v) Latest list of Directors with
designation, full address and phone nos, (vi) Certified copy of forms-XII
certified by the Register of Joint Stock Company (in case of change in
directorship), (vii) Resolution of the Board in Banks prescribed form, (There
should be minimum 2 and maximum 50 members in case of a Pvt. Ltd Company. But
in case of Public Ltd Company the members will be as per subscribed shares of
the company.), (viii) Board resolution for opening the account and
authorization for its operation duly certified by the Chairman/MD of the
company, (ix) Copy of updated Trade License, (x) Updated Tin certificate, (xi)
Certificate of Registration incase of Insurance companies, (xii) Copy of
Passport/National ID card/Driving License/Word Commissioner’s certificate/any
other ID acceptable to the bank of the operators of the A/C.
(g) Association/Club/Trust/Society/Charity
Organization/Educational Institution /Masjid/Madrasha account: (i) Certified copy of By-Laws/Memorandum and
Articles of Association/Trust deed, (ii) Certified copy of Certificate of
Registration/Permission from the concerned Department(s) of the Gov’t, (iii)
List of members of the Governing body/Executive Committee with their address
and phone nos., (iv) Resolution of the Board/Executive Committee/Governing body
for opening the account and authorization for its operation duly certified by
the Chairman/Secretary/President, (v) Registration certificate (if registered),
(vi) Permission letter from Bureau of NGO (incase of NGO A/C), (vii) Attested
two copies photographs of each persons who will operate the a/c, (viii) Copy of
Passport/National ID card/Driving License/Office ID/Word Commissioner’s
certificate/any ID card acceptable to the bank of the operator(s).
(h) Foreign
Currency account for Bangladeshi Wage earners: (i) Photocopy of valid
passport with valid visa, (ii) Photocopy of Employment contract/work
permit/appointment letter, (iii) Two copy passport size photographs of account
holder duly attested by the introducer, (iv) Two copies passport size
photographs of nominee duly attested by the account holder.
(i) Foreign
Currency account for foreign nationals/Company/Firm: (i) Two copies
passport size photographs of account holder(s) who will operate the account,
(ii) Photocopy of valid passport of the account holder (to be attested by the
dealing officer) and operators of other types of account, (iii) Copy of service
contract letter/work permit for individual, (iv) Copies of registration in
Bangladesh with Board of Investment/Bangladesh Bank for Foreign/Joint Venture
Firms, (v) Copies of Memorandum & Articles of Association- Bye Laws or
joint venture agreement (as the case may be), (vi) Copy of registered partnership
deed duly attested (incase of partnership) and other papers/documents as per
rule of our bank considering the type of a/c.
18. [ The Negotiable Instrument Act derived from “The English Common Law”
in the year 1881 and came into effect from March 01, 1882. It contains 17
Chapters and 141 Sections. This act has been enacted in our country vide P. O.
No. 127 in the year 1972. ]
(a) What is Negotiable Instrument?
The term
Negotiable Instrument literally means a written document which creates a legal
right in favour of some person and which is freely transferable. In the words
of Justice Willis, “a Negotiable Instrument is one, the property in which is
acquired by any one who takes it bonafide and for value notwithstanding any
defect in the title of the person from whom he took it”.
As per section
13 of the Negotiable Instrument Act, “ a negotiable instrument means a
promissory note, bill of exchange or cheque, payable either to order or to
bearer whether the words ‘order’ or bearer’ appear on the instrument or not”.
“When a
Promissory note, Bill of Exchange or Cheque is transferred to any person so as
to constitute that person the holder thereof, the instrument is said to be
negotiated”. (NI Act – Section – 14)
(b) Write the names of three Negotiable
instruments as per Negotiable Instrument Act
–
1881.
i) Demand Promissory note/DP
note/Pro note.
ii)
Bill of Exchange
iii)
Cheque
(c) Write the number of Act, Chapters &
Sections of Negotiable Instrument Act – 1881.
Negotiable
Instrument Act no. XXVI of 1881 which contains 141 Sections and came into
effect on the 1st day of March, 1882. Some amendments of the Act were made in
1972 and thereafter.
(d) Define DP note. Write the number of
parties involved in a DP note. Write the
essential
characteristics of a DP note.
A ‘Promissory note’
is an instrument in writing (not being a Bank note or currency note)
containing an unconditional undertaking, signed by the maker to pay on demand
or at a fixed or determinable future time, a certain sum of money only to, or
to the order of a certain person or to the bearer of the instrument. (NI
Act - Section – 4)
There
are two parties: Maker and Payee/(Holder)
Essential characteristics of a Promissory note:
(i) It
is an instrument in writting with date.
(x)
It is a promise to
pay
(xi)
The undertaking to
pay is unconditional
(xii)
It should be
signed by the maker
(xiii)
The maker must be
certain
(xiv)
The payee must be
certain
(xv)
The promise should
be pay only money
(xvi)
The Amount should
be certain
(xvii)
It should be
properly stamped.
Define
Bill of Exchange. Who are the parties of a Bill of Exchange?What are the
essential
characteristics of a Bill of Exchange?
A ‘Bill of Exchange’
is an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay on demand or at a fixed or
determinable future time a certain sum
of money only to, or to the order of, a certain person or to the bearer of the
instrument. (NI Act - Section – 5)
Parties:
i) Drawer, ii) Drawee, iii) Acceptor, iv) Payee, v) Indorser, vi) Indorsee,
vii) Holder, viii) Drawee in case of need, ix) Acceptor for honour.
Essential
characteristics of Bill of Exchange:
(i) It must be in writing with date
(xi)
It must be signed by the drawer (maker)
(xii)
The drawer, drawee and payee must be certain
(xiii)
The amount should be certain
(xiv)
It should be properly stamped
(xv)
It must contain unconditional order
(xvi)
The order should be pay only money.
Specimen of Bill of Exchange:
|
Take=10,000/- |
November
20, 2005 |
||
|
On
demand pay to Mr. Ahmed Ali or order a
sum of Taka Ten thousand only, value received.
Mr.
X 700,
Arambagh
1001, Mogbazar |
|||
(f) Define cheque. Who are the parties of a cheque?What are the
essential
characteristics
of a cheque?
A ‘Cheque’ is
a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand (NI Act - Section – 6)
“A cheque is an
instrument in writing containing an unconditional order, signed by the maker,
directing the Bank to pay on demand or at a fixed or determinable future time,
a certain sum of money only to, or to the order of, a certain person or to the
bearer of the instrument”.
There
are three parties: Drawer, Drawee, Payee.
Essential
characteristics of a cheque:
(i) It must be in writing on specified form
(viii)
It must bears date
(ix)
The drawer, drawee and payee must be certain
(x)
The amount must be certain
(xi)
It should be drawn on a Banker
(xii)
It is payable on demand
(xiii)
It must be signed by the drawer
Specimen of
a cheque:
|
|
X Bank Y branch |
Cheque no…………
|
||
|
|
||||
|
Pay ………………………..or bearer |
||||
|
Tk. ………………………………… only |
||||
|
Account no ………………………. Sd/- Z |
||||
(g) Explain: (i) Payment in due course, (ii)
Holder, (iii) Holder in due course
i) ‘Payment in due
course’ means payment in accordance with the apparent tenor of the instrument in good faith and without
negligence to any person in possession thereof under circumstances which do not
afford a reasonable ground for believing that he is not entitle to receive
payment of the amount therein mentioned. (NI Act - Section – 10)
ii) The ‘Holder’
of a promissory note, bill of exchange or cheque means the payee or endorsee
who is in possession of it or the bearer thereof but does not include a
beneficial owner claiming through a benamider. (NI Act - Section – 8)
iii) ‘Holder
in due course’ means any person who for consideration becomes the possessor
of a promissory note, bill of exchange
or cheque, if payable to bearer, or the payee or endorsee thereof, if payable
to order, before it become overdue, without notice that the title of the person
from who he derived his own title was defective. (NI Act - Section – 9)
(h) What is post dated & stale cheque?
Post dated cheque: To date
after the date of issue of the cheque.
Stale cheque:
It is also called ‘Out of date’ or ‘Ante-dated’. A stale cheque is that which
is presented after six months from the date of cheque or the date written in
the cheque is out of calendar.
(i) What are quasi negotiable instruments?
i) Payment order
ii)
Bill of Lading
iii)
Truck receipt/Railway receipt/Airway bill.
iv)
SDR/CDR
(j) What are the answers in case of dishonoured
cheque?
i) Insufficient fund
ii)
Amount in figure & word differs
iii)
Cheque out of date/post dated
iv)
Drawers’ signature differ
v)
Payment stopped by drawer
vi)
Crossed cheque to be presented through a Bank.
vii)
Payees endorsement required
viii)
Other specific reasons not mentioned above ….
19. (a) What is
Crossing?
A cheque is said to be crossed when
two transverse parallel lines with or without any
words are drawn
across its face. A crossing is a direction to a paying banker to pay the money
generally to a Banker or a particular banker, as the case may be, and not to
the holder at the counter.
(b) What are
the types of Crossing?
There are mainly two types of
crossing:
i) General
Crossing: Where a cheque bears across its face two transverse parallel
lines with or without any words, it is called General Crossing. Words such as
‘and company’ ‘& co.’ or any other abbreviation, may be written in between
these two transverse parallel lines, either with or without words ‘not negotiable’
(NI Act - Section – 123). Absence of these words would not affect the validity
of the crossing. In this case, the banker upon whom the cheque is drawn will
make the payment only to some other banker.
Specimen of General
Crossing
|
|||||
|
|||||
|
|||||
The addition of the words ‘& Co’ in a crossing
does not have any legal significance. But the addition of the words ‘not
negotiable’ has significant legal effect. Of course, these words do not take a
way the characteristics of transferability of the instrument, but they very
much restrict it. This is because a transferee of a cheque bearing words ‘not
negotiable’ will not get a better title than that of a transferor. In other
words, if the transferors’ title is defective, the title of the holder will also
be defective even if he happens to be holder in due course.
Where a cheque crossed generally bears across its
face an addition of the words “account payee” between the two transverse
parallel lines constituting the general crossing, the cheque, besides being
crossed generally, is said to be crossed “account payee”. (Section 123A
of N.I. Act). In such a case, it shall cease to be negotiable and it shall be
the duty of the collecting Banker of the cheque to credit the proceeds thereof
only to the account of the payee named in the cheque.
ii) Special
crossing: Where a cheque bears across its face two transverse parallel
lines an addition of the name of a banker with or without the words ‘not
negotiable’, it shall be deemed to be special crossing (Section 124 of NI Act –
1881). When a cheque has been specially crossed, the banker upon whom it has
been drawn will make the payment only to that banker in whose favour it has
been crossed.
Specimen of Special
Crossing
|
|||
|
|||
Besides the
above two types of statutory crossing, in recent years the practice of crossing
cheques developed. These are: Restrictive Crossing and Double crossing.
Restrictive
crossing: Restrictive crossing is only a direction to the collecting banker
that the proceeds are to be credited only to the ‘account of payee’ named in
the cheque. When a cheque is crossed ‘Account payee’, it shall cease to be
negotiable.
Specimen of
Restrictive crossing
|
|||||
|
|||||
|
|||||
Double
crossing: When a cheque bears two separate special crossings, it is said to
have been double crossed. As per section 127 of NI Act – 1881, “where a cheque
is crossed specially to more than one banker, except when crossed to an agent
for the purpose of collection, the banker on whom it is drawn shall refuse
payment thereof”.
Specimen
of Double crossing
|
20. (a) What is
Endorsement of cheque?
Endorsement or
Indorsement: Endorsement means assignment or transfer authority by a holder
of a negotiable or quasi-negotiable instrument. Endorsement is made by the
holder by signing on the back of negotiable or quasi-negotiable instrument with
an intention to assign or transfer the same to another.
As per
N.I. Act – 15 “ When the maker or holder of a negotiable instrument signs the
same, otherwise than as such maker, for the purpose of negotiation, on the back
or face thereof or on a slip of paper annexed thereto, or so signs for the same
purpose a stamped paper intended to be completed as a negotiable instrument, he
is said to endorse the same, and is called the endorser.”
As per N.I. Act
– 16 “If the endorser signs his name only, the endorsement is said to be ‘in
blank’ and if he adds a direction to pay the amount mentioned in the instrument
to, or to the order of, a specified person, the endorsement is said to ‘in
full’, and the person so specified is called the ‘endorsee of the instrument’.
The provisions of this act relating to a payee shall apply with the necessary
modifications to an endorsee”.
(b) What are the types of endorsement?
There are four types of
endorsement:
(i) Endorsement in blank: If
the endorser signs his name only on the overleaf of the instrument – it is said
to be blank endorsement.
(ii)
Endorsement in full: If the endorser put his sign on the instrument by
adding a direction to pay the amount mentioned in the instrument, or to the
order of, a specified person – the endorsement is said to be in full.
(iii)
Conditional endorsement: If the endorser of a negotiable instrument, by
express words in the endorsement, makes the right of endorsee to receive the
payment depending on happening of a specified event – is called conditional
endorsement.
(iv)
Restrictive endorsement: The restrictive endorsement prohibit further
endorsement as the endorser might have written ‘Pay the amount to X only’.
21. (a) What are the duties of a paying banker?
Section
31 of the Negotiable Instruments Act provides “the drawee of a cheque having
sufficient funds of the drawer in his hands, properly applicable to the payment
of such cheque must pay the cheque when duly required so to do, and in default
of such payment, must compensate the drawer for any loss or damage caused by
such default.”
When a
banker refuse to honour a customers’ cheque?
(i) When the balance to the investment/credit
of the customer is insufficient to meet
the cheque.
(ii)
When the funds are not properly applicable to the payment of a cheque e.g. when
the account was opened for a purpose other than that for which the cheque has
been drawn i.e. personal cheques cannot be paid out of trust accounts.
(iii)
After receiving the notice or information of death, the banker should stop
payment of all cheques drawn against his account. The account will cease to be
operative till his successor or legal representative produces to the bank the
succession certificate or probate of the will or a letter of administration.
(iv) When the customer has informed the bank about the
loss of the cheque.
(w) When
the bank comes to know the defect in the title of the person presenting a
cheque.
(vi)
When the bank comes to know that the customer is applying funds in breach
of trust.
(vii)
When the bank receives notice of an assignment by a customer of his investment/credit
balance.
(viii)
When the customer closes the account before the cheque is presented for
encashment.
(ix)
When the cheque is post-dated and is presented for payment before its
ostensible/apparent date.
(x) When the cheque is
out of date or stale or Ante-dated.
(xi) When the balance of
the account is blocked as per order of competent authority.
How an account could be transferred from one branch to another
branch?
An account of a
branch could be transferred to another branch of Exim Bank as per desire of the
account holder after observing following formalities:
(i) An application to be
obtained from the account holder duly signed showing the reason of transfer of
account (evidence of transfer to be obtained from the service holder) duly
noted the probable future address. The account holder must surrender the
un-used cheque leaves to the branch.
(ii) Signature of the
applicant to be verified alongwith the Specimen Signature Card (SS Card).
(iii) Manager of the branch
to be informed.
(iv) Account Opening Form
(AOF) and SS Card to be separated and one set of photocopy to be retained at
the branch for future record.
(v) Balance of the account
(after applying ad-interim profit) to be debited by a debit voucher and one
IBCA of the same amount to be prepared through a investment/credit voucher.
Note to be done in the computer and Account opening register about transfer of
the account.
(vi) Surrendered un-used
cheque leaves to be destroyed by an Authorised Officer of the branch duly noted
in the Account opening register.
(xvii)
Original account opening form, Specimen Signature Card,
IBCA and application of the account holder alongwith a forwarding letter to be
despatched to the desired branch through Courier Service or Registered Post.
(xviii)
Photocopies of the application, Account Opening Form,
Specimen Signature Card to be retained at the branch for record.
(xix)
IBCA responding branch will intimate the account
holder, if address available in the application, after re-open the transferred
account.
What is Money Laundering?
Money laundering
is the generic term used to describe the process by which criminals disguise
the original ownership and control of the proceeds of criminal conduct by
making such proceeds appear to have derived from a legitimate source.
The processes by
which criminally derived property may be laundered are extensive. Though
criminal money may be successfully laundered without the assistance of the
financial sector, the reality is that hundreds of billions of dollars of
criminally derived money is laundered through financial institutions, annually.
The nature of the services and products offered by the financial services
industry (namely managing, controlling and possessing money and property
belonging to others) means that it is vulnerable to abuse by money launderers.
If you’re
considering developing your career in anti money laundering, find out more
about joining
How is the offence of money laundering committed?
Money laundering
offences have similar characteristics globally. There are two key elements to a
money laundering offence:
1.
The necessary act of laundering itself i.e. the provision of
financial services; and
2.
A requisite degree of knowledge or suspicion (either subjective
or objective) relating to the source of the funds or the conduct of a client.
The act of
laundering is committed in circumstances where a person is engaged in an
arrangement (i.e. by providing a service or product) and that arrangement
involves the proceeds of crime. These arrangements include a wide variety of
business relationships e.g. banking, fiduciary and investment management.
The requisite
degree of knowledge or suspicion will depend upon the specific offence but will
usually be present where the person providing the arrangement, service or
product knows, suspects or has reasonable grounds to suspect that the property
involved in the arrangement represents the proceeds of crime. In some cases the
offence may also be committed where a person knows or suspects that the person
with whom he or she is dealing is engaged in or has benefited from criminal
conduct.
Are all crimes capable of predicating money laundering?
Different
jurisdictions define crime predicating the offence of money laundering in
different ways. Generally the differences between the definitions may be
summarized as follows:
1.
Differences in the degree of severity of crime regarded as
sufficient to predicate an offence of money laundering. For example in some
jurisdictions it is defined as being any crime that would be punishable by one
or more years imprisonment. In other jurisdictions the necessary punishment may
be three or five years imprisonment; or
2.
Differences in the requirement for the crime to be recognized
both in the country where it took place and by the laws of the jurisdiction
where the laundering activity takes place or simply a requirement for the
conduct to be regarded as a crime in the country where the laundering activity
takes place irrespective of how that conduct is treated in the country where it
took place.
In practice almost
all serious crimes, including, drug trafficking, terrorism, fraud, robbery,
prostitution, illegal gambling, arms trafficking, bribery and corruption are
capable of predicating money laundering offences in most jurisdictions.
Can Fiscal Offences such as tax evasion predicate Money Laundering?
The answer depends
upon the definition of crime contained within the money laundering legislation
of a particular jurisdiction.
Tax evasion and other
fiscal offences are treated as predicate money laundering crimes in most of the
worlds most effectively regulated jurisdictions.
Why is money laundering illegal?
The objective of
the criminalisation of money laundering is to take the profit out of crime. The
rationale for the creation of the offence is that it is wrong for individuals
and organisations to assist criminals to benefit from the proceeds of their
criminal activity or to facilitate the commission of such crimes by providing
financial services to them.
How is money laundered?
The processes are
extensive. Generally speaking, money is laundered whenever a person or business
deals in any way with another person’s benefit from crime. That can occur in a
countless number of diverse ways.
Traditionally
money laundering has been described as a process which takes place in three
distinct stages.
Placement, the stage at which
criminally derived funds are introduced in the financial system.
Layering, the substantive stage
of the process in which the property is ‘washed’ and its ownership and source
is disguised.
Integration, the final stage at which
the ‘laundered’ property is re-introduced into the legitimate economy.
This three staged
definition of money laundering is highly simplistic. The reality is that the so
called stages often overlap and in some cases, for example in cases of
financial crimes, there is no requirement for the proceeds of crime to be
‘placed’.
Short
Question:
·
The Basel
The Basel
·
The Basel
Policy development
Balancing
simplicity, comparability and risk sensitivity across the regulatory framework
Monitoring and assessing implementation of
the
Improving the effectiveness of supervision
The core of the work undertaken by the
- Exchanging information on developments in the
banking sector and financial markets to help identify current or emerging risks for
the global financial system
- Sharing supervisory issues, approaches and
techniques to
promote common understanding and to improve cross-border cooperation
- Establishing and promoting global standards for the regulation and supervision of banks,
as well as guidelines and sound practices
- Addressing regulatory and supervisory gaps that pose risks to financial stability
- Monitoring the implementation of BCBS
standards in
member countries and beyond to encourage their timely, consistent and
effective implementation.
- Consulting with central banks and bank
supervisory authorities which are not members of the BCBS to benefit from their input into the BCBS
policy formulation process and to promote the implementation of BCBS
standards, guidelines and sound practices beyond BCBS member countries.
- Coordinating and cooperating with other
financial sector standard setters and international bodies, particularly those involved in promoting financial
stability.
Basel II is the second of the Basel
Accords, (now extended and partially superseded by Basel III),
which are recommendations on banking laws and regulations issued by the Basel Committee on Banking
Supervision.
Basel II, initially published in June 2004, was intended
to amend international standards that controlled how much capital banks need to
hold to guard against the financial and operational risks banks face. These
rules sought to ensure that the greater the risk to which a bank is exposed,
the greater the amount of capital the bank needs to hold to safeguard its solvency and
economic stability. Basel II attempted to accomplish this by establishing risk
and capital management requirements to ensure that a bank has adequate
capital for the risk the bank exposes itself to through its lending,
investment and trading activities. One focus was to maintain sufficient
consistency of regulations so to limit competitive inequality amongst
internationally active banks.
Basel II was implemented in the years prior to 2008, and
was only to be implemented in early 2008 in most major economies;[1][2][3]
that year's Financial crisis intervened before Basel
II could become fully effective. As Basel III
was negotiated, the crisis was top of mind and accordingly more stringent
standards were contemplated and quickly adopted in some key countries including
in Europe and the
The
accord in operation: Three pillars :
(i)
Minimum capital requirements (addressing risk),
(ii)
Supervisory review and
(iii)
Market
discipline.
The Basel I accord dealt with only parts of each of these
pillars. For example: with respect to the first Basel II pillar, only one risk,
credit risk, was dealt with in a simple manner while market risk was an
afterthought; operational risk was not dealt with at all
The first pillar: Minimum capital requirements
The first pillar deals with maintenance of regulatory
capital calculated for three major components of risk that a bank faces: credit
risk, operational risk, and market
risk. Other risks are not considered fully quantifiable at this stage.
- The credit
risk component can be calculated in three different ways of varying
degree of sophistication, namely standardized approach, Foundation
IRB, Advanced IRB and General IB2 Restriction. IRB
stands for "Internal Rating-Based Approach".
- For operational risk, there are three different
approaches – basic indicator approach or BIA, standardized approach
or TSA, and the internal measurement approach (an advanced form of which
is the advanced measurement approach or
AMA).
- For market
risk the preferred approach is VaR (value
at risk).
As the
The second pillar: Supervisory review
This is a regulatory response to the first pillar, giving
regulators
better 'tools' over those previously available. It also provides a framework
for dealing with systemic risk, pension risk, concentration risk, strategic risk, reputation
risk, liquidity risk and legal risk,
which the accord combines under the title of residual risk. Banks can review
their risk management system.
The Internal Capital Adequacy Assessment Process (ICAAP)
is a result of Pillar 2 of
The third pillar: The Market Discipline
This
pillar aims to complement the minimum capital requirements and supervisory
review process by developing a set of disclosure requirements which will allow
the market participants to gauge the capital adequacy of an institution.
Market
discipline supplements regulation as sharing of information facilitates
assessment of the bank by others, including investors, analysts, customers,
other banks, and rating agencies, which leads to good corporate governance. The
aim of Pillar 3 is to allow market discipline to operate by requiring
institutions to disclose details on the scope of application, capital, risk
exposures, risk assessment processes, and the capital adequacy of the
institution. It must be consistent with how the senior management, including
the board, assess and manage the risks of the institution.
When
market participants have a sufficient understanding of a bank's activities and
the controls it has in place to manage its exposures, they are better able to
distinguish between banking organizations so that they can reward those that
manage their risks prudently and penalize those that do not.
These
disclosures are required to be made at least twice a year, except qualitative
disclosures providing a summary of the general risk management objectives and
policies which can be made annually. Institutions are also required to create a
formal policy on what will be disclosed and controls around them along with the
validation and frequency of these disclosures. In general, the disclosures
under Pillar 3 apply to the top consolidated level of the banking group to
which the
·
BASEL
(ii) Supervision
and
(iii) Risk management
within the banking sector.
The
Basel III (or the Third Basel
Basel III" is a comprehensive set of reform measures, developed
by the Basel Committee on Banking Supervision, to strengthen the regulation,
supervision and risk management of the banking sector.
These measures aim to:
·
Improve the banking sector's ability to absorb shocks
arising from financial and economic stress, whatever the source
·
Improve risk management and governance
·
Strengthen banks' transparency and disclosures.
The reforms target:
- Bank-level,
or microprudential, regulation, which will help raise the resilience of
individual banking institutions to periods of stress.
- Macroprudential, system
wide risks that can build up across the banking sector as well as the
procyclical amplification of these risks over time.
Basel
|
|
2015 |
2016 |
2017 |
2018 |
2019 |
|
Minimum
LCR requirement |
60% |
70% |
80% |
90% |
100% |
Common capital ratios :
- CET1 Capital Ratio = Common Equity Tier 1 / Credit
risk-adjusted asset Value ≥ 4.5%
- Tier 1 capital ratio = Tier 1 capital / Credit
risk-adjusted assets value ≥ 6%
- Total capital (Tier 1 and Tier 2) ratio = Total
capital (Tier 1 + Tier 2) / Credit risk-adjusted assets ≥ 8%
- Leverage Ratio = Tier 1 capital / Average total
consolidated assets value ≥ 5%
Basel
Capital requirements
|
Date |
Milestone: Capital
requirement |
|
2014 |
Minimum
capital requirements: Start of the gradual
phasing-in of the higher minimum capital requirements. |
|
2015 |
Minimum
capital requirements: Higher minimum capital
requirements are fully implemented. |
|
2016 |
Conservation
buffer: Start of the gradual
phasing-in of the conservation buffer. |
|
2019 |
Conservation
buffer: The conservation buffer is
fully implemented. |
Leverage ratio
|
Date |
Milestone: Leverage ratio |
|
2011 |
Supervisory
monitoring: Developing templates to
track the leverage ratio and the underlying components. |
|
2013 |
Parallel
run I: The leverage ratio and its
components will be tracked by supervisors but not disclosed and not
mandatory. |
|
2015 |
Parallel
run II: The leverage ratio and its
components will be tracked and disclosed but not mandatory. |
|
2017 |
Final
adjustments: Based on the results of the parallel run period, any final adjustments to
the leverage ratio. |
|
2018 |
Mandatory
requirement: The leverage ratio will
become a mandatory part of |
Liquidity requirements
|
Date |
Milestone: Liquidity
requirements |
|
2011 |
Observation
period: Developing templates and
supervisory monitoring of the liquidity ratios. |
|
2015 |
Introduction
of the LCR: Initial introduction of the
Liquidity Coverage Ratio (LCR), with a 60% requirement. This will increase by
ten percentage points each year until 2019. In the EU, 100% will be reached
in 2018.[28] |
|
2018 |
Introduction
of the NSFR: Introduction of the Net
Stable Funding Ratio (NSFR). |
|
2019 |
LCR
comes into full effect: 100% LCR is expected. |
·
Cash
Flow Statement :
The cash flow
statement is a combination of both the income statement and the balance sheet.
For some analysts, the cash flow statement is the most important financial
statement because it provides reconciliation between net income and cash flow.
This is where analysts can see how much the company is spending on stock
repurchases, dividends and capital expenditures. It also provides the source
and uses of cash flow from operations, investing and financing.
·
Profit
Margin :
Profit margin
is part of a category of profitability ratios calculated
as net income
divided by revenue, or net
profits divided by sales. Net income
or net profit may be determined by subtracting all of a company’s expenses, including operating costs,
material costs (including raw materials)
and tax costs, from
its total revenue. Profit margins are expressed as a percentage and, in effect,
measure how much out of every dollar of sales a company actually keeps in earnings. A 20% profit margin,
then, means the company has a net income of $0.20 for each dollar of total
revenue earned.
·
Suspense account :
A suspense account is an account in the
general ledger that temporarily stores any transactions for which there is
uncertainty about the account in which they should be recorded. Once the
accounting staff investigates and clarifies the purpose of this type of transaction,
it shifts the transaction out of the suspense account and into the correct
account(s). An entry into a suspense account may be a debit or a credit.
A suspense account is an account in the general ledger in which amounts
are temporarily recorded. The suspense account is used because the proper
account could not be determined at the time that the transaction was recorded.When
the proper account is determined, the amount will be moved from the suspense
account to the proper account.
·
Equitable mortgage :
There are times when something goes wrong with a mortgage. For instance,
the lender might have forgotten to fill in the legal description blank on the
mortgage. Alternately, you and your spouse might have signed on the wrong
lines. Technically speaking, the mortgage you signed (or forgot to sign) isn't
a valid document. However, most courts will look at your intent and decide that
it's an equitable mortgage, since calling it a mortgage would be the fair
(equitable) decision based on what your intent appeared to be.
·
Other Equitable
Mortgages :
Equitable mortgages can be created in some other, more arcane legal
situations. For instance, if the lender makes you give it an actual deed that
it holds in escrow so that it can take your property without foreclosure, a
court would probably roll it back to an equitable mortgage. Vendor and vendee
liens, which are sometimes used in contract for deed transactions, can also
turn into equitable mortgages.
·
Equitable
Mortgage Priority :
Equitable mortgages are mortgages that have to be honored, just like legal
mortgages. However, there is one key difference: A legal document can jump
ahead of an equitable one in priority. If you sign an incorrectly drafted
mortgage in 2012, then put a second legal mortgage on your property in 2013,
that second mortgage would actually become your first mortgage. However, your
ability to do this will depend based on the laws in your community.
·
Registered mortgage and equitable mortgage:
When a borrower purchases a new mortgage, the debt is registered with
the local government by the closing agent to record a legal debt. This lists
the debt on the deed to the property. This means that the debt must be paid in
full or released by the lender before the property can be transferred.
Significance, registering a mortgage protects the current lien holder
and any future owners of the property. It prevents another buyer from
purchasing the property without knowing that there is a debt secured by it.
Function, registering the mortgage also gives the lender the legal right
to take the property as payment if the mortgage should go into default.
Time Frame, the mortgage deed is usually filed the day of closing,
unless it is a cash-out refinance or home equity line of credit. In those two
cases, there is a three-day waiting period, known as the "right of
rescission" period that must pass prior to legally filing the debt.
Considerations, if a mortgage is not properly registered, it may cause
legal consequences for the lender and future property holders that could alter
the ability to buy or sell the land for future uses.
Misconceptions, if the mortgage debt is procured through an individual,
instead of a financial lender, the deed must be recorded to reflect the
mortgage debt.
Mortgage
is a transfer of interest in a specific property to the mortgagee by the mortgagor. In case of default by the mortgagor,
mortgagee can take possession of the mortgaged property for realization of the
dues or loan amount granted to the mortgagor.
Any lender will
like to have repayment of loan within a stipulated period with interest.
Mortgage of property thus is considered as a secured option by the lender.
Hence mortgage is obtained as a collateral security for repayment of loan.
As per transfer
of property act, there are various types of mortgaged.
There is a
difference in registered mortgage and an equitable mortgage.
Both these
mortgages have their own importance, but equitable mortgages are preferred by
banks due to following reasons.
The
mortgagor makes available the Original Title deed of the property. He is owner
of the property and his ownership and possession is proved. He is having
original title deed with him and you can verify the possession by actually
visiting the said property. Hence as a lender or a banker you confirm that a
property which is being mortgaged to you is valued asset, marketable and
without any encumbrances.
Secondly,
mortgagor hand over you the Original Title deeds with an intention to create
mortgage as a security for the advance. This gives you additional benefit that,
since original title deed is with you, the owner of the property will not be in
a position to dispose off the property.
Hence in case of
equitable mortgage handing over original title deed to the mortgagee is main
condition. When original title deed is not available, lost or otherwise or
property which is to be mortgaged is an ancestral one, and title deed is not at
all available, then registered mortgage of the property is created.
Under
equitable mortgage, you need not visit the Sub-registrar for creation of
equitable mortgage. It can be created at
notified places. Stamp duty and charges are comparatively less than registered
mortgage. There is only oral assent for creation of equitable mortgage. It is
simple and found convenient by both borrowers and bankers/lenders.
At the time of satisfaction of charge you need not visit Sub-registrar office.
Original title deed is returned to you once you repay entire dues to bank.
Hence equitable mortgage is preferred over registered mortgage.
Cash
Dividend :
A cash dividend is money paid to stockholders, normally out of the
corporation's current earnings or accumulated profits. All dividends must be
declared by the board of directors, and they are taxable as income to the
recipients.
Collateral :
Collateral is a property or other asset that a borrower offers as
a way for a lender to secure the loan. If the borrower stops making the
promised loan
payments, the lender can seize the collateral to recoup its losses. Since
collateral offers some security to the lender should the borrower fail to pay
back the loan, loans that are secured by collateral typically have lower
interest rates than unsecured loans.
A lender's claim to a borrower's collateral is called a lien.
With the pace of life on the up and up and our society becoming
more and more cash-less, it can be hard for kids to grasp the concept of money,
where it comes from and how it’s used. School Banking can help address
this in a number of ways:
Cash deposits
provide the opportunity for children to build familiarity with Australian
currency and to practice counting money.
Saving regularly offers the chance for the next generation to
build a life-long habit of saving money in a savings account.
Participation in the program opens the doors for discussions
about money; where we get it, how we can use it and why it’s important to save
it?
Statutory
Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) :
Cash Reserve Ratio (CRR): Each bank has to keep a certain percentage of its
total deposits with RBI as cash reserves.
Statutory Liquidity Ratio (SLR): Amount
of liquid assets such as precious metals (Gold) or other approved securities
that a financial institution must maintain as reserves other than the cash.
Formula: SLR rate = (liquid assets / (demand + time
liabilities)) × 100%
Time liabilities are liabilities which the banks are liable to pay after a
certain period of time. E.g. A 1 year fixed deposit
Demand
liabilities are liabilities which the banks are liable to pay on being demanded
by the customer. E.g. A savings account
CRR limits the ability of the banks to pump more money into the economy. SLR is
used to limit the expansion of bank credit, for ensuring the solvency of banks
(even if all the loans by the bank go bad, the bank can still retrieve a part
of it by selling the gold/govt securities.
As of now, the CRR and SLR rates are 4% and 23% respectively. Hence, the bank
can only use 100-4-23= 73% of its total deposits for the purpose of lending.
Liquid assets :
Liquid assets are those assets which can be sold very easily in open
market without affecting its prices. We can easily consider Liquid assets same
as cash. For example, Gold is most liquid asset, you can buy or sell as much as
gold you want but this will not increase or decrease price of gold. You can
sell gold any time you need, not bothering to find buyers. But if you want to
sell Flat/House if have to wait till some intrigue person doesn’t come so
Flat/House is not liquid assets. Simply liquid assets can flow in market like
liquid without bothering about anything.
Off
Balance Sheet Items:
Off balance sheet
items are those assets or liabilities which do not appear on the balance sheet
of a company and that is the reason why they are called off balance sheet items
as they are not visible in the balance sheet of a company.
Off balance sheet
items are quite controversial because many companies try to hide the real
liabilities by showing those liabilities as off balance sheet items and thus
hiding the real financial position of a company from the investors. Guarantees
which are given by the banks to the company, letters of credit issued by banks
to company, any expenses related to litigation when the company is sued by
third parties for damages, contingent liabilities etc…, are some of the
examples of off balance sheet items.
Off balance sheet
items are of particular significance when company is applying for loans from
the banks as banks tend to see debt equity ratio before granting loans to a
company and if the debt equity ratio of company is not favorable then company
may show real liabilities as off balance sheet items which will make the debt
equity ratio of company favorable and therefore it will help the company in
taking loan from bank. It is due to this reason bank pay particular attention
to off balance sheet items before giving loans to companies.
·
Credit Risk Grading (CRG) :
Credit risk refers to the risk that an issuer of debt securities
or a borrower may default on his or her obligations or that the payment may not
be made on a negotiable instrument.
Credit risk grading is the process which helps the sanctioning
authority to decide whether to lend or not to lend, what should be the lending
price, what should be the extent of exposure, what should be the appropriate
credit facility, what are the various facilities, what are the various risk
mitigation tools to put a cap on the risk level.
It provides detailed and formalized credit evaluation process
for risk identification, measurement, monitoring and control, risk acceptance
criteria, credit approval authority, maintenance procedures and guidelines for
portfolio management.
CRG is an important tool for credit risk management as it helps
the banks and financial institutions to understand various dimensions of risk
involved in different credit transaction. It provides a better assessment of
the quality of credit portfolio of a bank.
Bank Rate :
A bank rate is the interest rate at which a nation's central bank
lends money to domestic banks, often in the form of very short-term loans.
Managing the bank rate is method by which central banks affect economic
activity. Lower bank rates can help to expand the economy by lowering the cost of funds
for borrowers, and higher bank rates help to reign in the economy when
inflation is higher than desired.
·
Loan
:
A loan is the act of giving money, property or other material
goods to another party in exchange for future repayment of the
principal amount along with interest or other finance charges.
A loan may be for a specific, one-time amount or can be available as an
open-ended line of credit up to a specified limit or ceiling
amount.
·
Loan
performance pricing :
Performance pricing provisions in bank loans
link the interest rate to a measure of the company's credit risk. Provisions
may be either tied to the group's credit rating (rating triggers) or to an
accounting measure of risk, such as the leverage or the debt-to-EBITDA ratio.
Performance pricing therefore allows to
reduce interest payments whenever the borrowing company's credit quality
improves and to increase the interest if the credit quality deteriorates.
Example
Currently, more than half of all loans drawn
down by listed
·
Write-Off :
A write-off is a deduction in the value of earnings by the
amount of an expense or loss. When businesses file their income tax return,
they are able to write off expenses incurred to run the business and subtract
them from their revenue
to determine their taxable income. For example, if you spent money on dinner to
take out a client, a portion of that expense acts as a write-off against your
business income because the cost of the dinner is a business-related expense.
·
Earnings
Per Share – EPS :
Earnings per share (EPS) are the portion of a company's profit
allocated to each outstanding share of common stock. Earnings per share
serves as an indicator of a company's profitability.
·
Credit
Rating :
An assessment of the creditworthiness
of a borrower in general terms or with respect to a particular debt or
financial obligation. A credit
rating can be assigned to any entity that seeks to borrow money – an
individual, corporation, state or provincial authority, or sovereign
government. Credit assessment and evaluation for companies and governments is
generally done by a credit rating agency such as Standard & Poor’s, Moody’s or Fitch. These
rating agencies are paid by the entity that is seeking a credit rating for itself
or for one of its debt issues.
·
Money
Laundering :
Money laundering is the process of creating the appearance that
large amounts of money obtained from serious crimes, such as drug trafficking
or terrorist activity, originated from a legitimate source.
·
Money
Laundering :
There are three steps involved in the process of laundering money:
placement, layering, and integration. Placement refers to the act of
introducing "dirty money" (money obtained through illegitimate,
criminal means) into the financial system in some way;
"layering" is the act of concealing the source of that money by
way of a series of complex transactions and bookkeeping
gymnastics; and integration refers to the act of acquiring that money in
purportedly legitimate means.
One of the more common ways that laundering takes place is when a
criminal organization funnels their illegally obtained cash through a
cash-based business, slightly inflating the daily take. These organizations are
often referred to as "fronts." In the popular television series
"Breaking Bad," the methamphetamine dealer funnels his earnings from
selling illicit drugs through a series of car-wash businesses.
Other common forms of money laundering include smurfing, where a
person breaks up large chunks of cash and deposits them over an extended period
of time in a financial institution, or simply smuggles large amounts of cash
across boarders to deposit them in offshore accounts where money laundering
enforcement is less strict.
·
Debt/Equity
Ratio :
Debt/Equity Ratio is a debt ratio used to
measure a company's financial leverage,
calculated by dividing a company’s total liabilities by its
stockholders'
equity. The D/E ratio indicates how much debt a company is using
to finance its assets
relative to the amount of value represented in shareholders’ equity.
The formula for
calculating D/E ratios can be represented in the following way:
Debt - Equity Ratio
= Total Liabilities / Shareholders' Equity
The result may
often be expressed as a number or as a percentage.
This form of D/E
may often be referred to as risk or gearing.
This ratio can be applied to personal financial statements as well
as corporate ones, in which case it is also known as the Personal Debt/Equity
Ratio. Here, “equity” refers not to the value of stakeholders’ shares but
rather to the difference between the total value of a corporation or
individual’s assets and that corporation or individual’s liabilities. The
formula for this form of the D/E ratio, then, can be represented as:
D/E = Total
Liabilities / (Total Assets - Total Liabilities)
·
Promissory
Note :
A written,
signed, unconditional promise to pay a certain amount of money on demand at a
specified time. A written promise to pay money that is often used as a means to
borrow funds or take out a loan.
The individual who promises to pay is the maker, and the person to whom payment
is promised is called the payee
or holder. If signed by the
maker, a promissory note is a negotiable instrument. It contains an
unconditional promise to pay a certain sum to the order of a specifically named
person or to bearer—that is, to any individual presenting the note. A
promissory note can be either payable on demand or at a specific time.
Certain types of promissory notes, such as
corporate bonds or retail installment loans, can be sold at a discount—an
amount below their face value. The notes can be subsequently redeemed on the
date of maturity for the entire face amount or prior to the due date for an
amount less than the face value. The purchaser of a discounted promissory note
often receives interest in addition to the appreciated difference in the price
when the note is held to maturity.
West's Encyclopedia of American Law,
edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
·
Promissory note :
a written promise by a person (variously
called maker, obligor, payor, promisor) to pay a specific amount of money
(called "principal") to another (payee, obligee, promisee) usually to
include a specified amount of interest on the unpaid principal amount (what
he/she owes). The specified time of payment may be written as:
a) Whenever there is a demand,
b) On a specific date,
c) In installments with or without the
interest included in each installment,
d) Installments with a final larger amount
(balloon payment).
A promissory note may contain other terms such as the right
of the promisee to order payment be made to another person, penalties for late
payments, a provision for attorney's fees and costs if there is a legal action
to collect, the right to collect payment in full if the note is secured by real
property and the property is sold ("due on sale" clause), and whether
the note is secured by a mortgage or deed of trust or a financing statement (a
filed security agreement for personal collateral). The promissory note is
usually held by the party to whom the money is owed. There are legal
limitations to the amount of interest which may be charged. Charging a rate in
excess of the legal limit is called "usury," and this excess is
legally uncollectible. When the amount due on the note, including interest and
penalties (if any) is paid, the note must be cancelled and surrendered to the
person(s) who signed it. A promissory note need only be signed and does not
require an acknowledgement before a notary public to be valid. (See: interest, obligor, obligee, usury)
·
Core
Risk in Banking :
(i)
CREDIT/INVESTMENT
RISK :
Credit / Investment Risks are associated with
Credit activities of the bank. Credit risk arises from the potential that a
banks borrower will fail to meet its obligations in accordance with agreed
terms. Credit risk also refers the risk of negative effects on the financial
result and capital of the bank caused by borrower’s default on its obligations
to the bank.
(ii)
ASSET
AND LIABILITY / BALANCE SHEET RISKS :
Asset and liability management is the most important
function of Bank management. Asset Liability Management ensures balanced fund
mobilization and their deployment with respect to their maturity profile, cost,
yield as well as risk exposure.
(iii)
FOREIGN
EXCHANGE RISK MANAGEMENT :
Foreign Exchange Risk Management in Banks has become
inevitable because: Change
in regulatory policies in 1993
where Taka was
declared convertible in the current account.
Commercial Banks were given responsibility to
ascertain genuineness of the transactions following withdrawal of Central
Bank's prior approval requirements.
The responsibility of exchange rate quotation
has been left to the commercial Banks under floating exchange rate.
To adapt to the changed environment many banks
established dealing rooms.
Burdened with non-performing assets and shortfall in
capital adequacy banks are now exploring the possibilities of earning from off
balance sheet activities. This led to the emergence of new profit centre
Treasury Dealing Room. This is not also
free from risk. So, risk management becomes inevitable.
(iv)
INTERNAL
CONTROL & COMPLIANCE RISKS MANAGEMENT:
According to IMF publication, Internal Control refers to
the Mechanism in place
on a permanent basis to control the activities in an organization, both at a central and at a departmental/divisional
level.
Objectives of Internal Control and Compliance
(ICC):
The primary objective of internal control system in a bank
is to help the bank perform better through the use of its resources. Through
internal control system, bank identifies its weaknesses and takes appropriate
measures to overcome the same.
(v)
MONEY LAUNDERING
RISK MANAGEMENT:
Money laundering risk is the risk of loss of reputation of
the Bank. It is the process by which
proceeds from a criminal activity are dis-guised to conceal
their illicit origins. Basically, money laundering involves the proceeds of criminally derived property rather than
the property itself. Money launderers send illicit funds through legal channels
in order to conceal
their criminal origins.
(vi)
IT
RISK MANAGEMENT :
Information technology (IT) plays a critical role in many
businesses. IT risks include hardware and software failure, human error, spam,
viruses and malicious attacks, as well as natural disasters such as fires, cyclones
or floods.
If our business uses information technology (IT), it's
important to understand the key steps that we can take to minimize IT risk.
Risks include hardware and software failure, human error, spam, viruses and
malicious attacks, as well as natural disasters.
·
Managing Core Risk in Banking:
- Investment Risk Management Guidelines.
Banking Industry is vulnerable to risks of diverse
dimension due to:
- Banks direct exposure to many sectors of the
economy
- Cross border implication inherent
in its activities.
There are numerous risks in banking activities. The key
risks areas in banking industry are broadly categorized:
(i)
Credit Risk/
Investment Risk
(ii)
Market Risk
- Liquidity Risk
- Price Risk
(iii) Operational
Risk
·
Credit
Risk/Investment Risk arises when transactions are made with other
parties/Banks. The financial position of the counterparts is the considering
point whether they are capable to settle the Exchange transaction on agreed
date i.e value date
·
Market
Risk : Bank earns generally in two ways:
(1) Net Revenue from Funds (NRFF)
-Difference
between interest/profit earned on assets and interest paid on
Liabilities.
(2) Non Funds Revenue (NFR)
-Earning from trading income and fees.
Market
risk includes liquidity and price risk.
- Liquidity risks arise from an organization’s
inability to meet its obligations. When due i.e. invalidity to make
payment of any financial obligation to customers or counterparties in any
currency.
- Price risk arises from changes in the value of
trading positions in the interest rate, foreign exchange, equity and
commodities markets. This arises due to changes in the various market
rates and/or market factors.
- Operational Risk is the risk of financial and
reputation losses due to failure or
inadequacy of internal controls and procedure or information
systems.
As per Bangladesh Bank guidelines there are seven core
risks in banking sector.
These are:
(i)
Credit
Risk/ Investment Risk
(ii)
Asset-Liability
/Balance Sheet Risk
(iii)
Foreign
Exchange Risks
(iv)
Internal
Control and Compliance Risks
(v)
Money
Laundering Risk
(vi)
IT
Security Risks &
(vii)
Environmental
Risks
1. CREDIT RISK/INVESTMENT RISK :
Credit
/ Investment Risks are associated with Credit activities of the bank. Credit
risk arises from the potential that a banks borrower will fail to meet its
obligations in accordance with agreed terms. Credit risk also refers the risk
of negative effects on the financial result and capital of the bank caused by borrower’s
default on its obligations to the bank.
The
assessment of credit risk involves evaluating both the probability of default
by the borrower and exposure or financial impact on the bank in the even the
default. To manage the credit/investment risks the following guidelines are
recommended:
2. ASSET AND LIABILITY / BALANCE SHEET RISKS:
Asset
and liability management is the most important function of Bank management.
Asset Liability Management ensures balanced fund mobilization and their
deployment with respect to their maturity profile, cost, yield as well as risk
exposure.
ALM
policy statement through ALCO paper Indicates as follows:
i.
Investment
Deposit Ratio
ii.
Whole sale Borrowing Guidelines
iii.
Commitments
iv.
Medium
Term Funding Ratio
v.
Maximum
Cumulative Out- flow
vi.
Liquidity
Contingency Plan
vii.
Investment Regulatory Complain
ALM
also discusses the following issues:
i.
Balance
sheet Risk
ii.
Liquidity
Risk
iii.
Interest Rate Risk and
iv.
Capital
Adequacy Risk
3. FOREIGN EXCHANGE RISK:
MANAGEMENET REQUIRES THREE AREAS TO ADDRESS:
- Policy
- Organizational Structure
- Process.
► POLiCY: Areas to
Develop
- Dealing Limit
- Mandatory Leave
- Position Reconciliation
- Nostro Account Reconciliation
- After hours dealing
- Off-premises Dealing
- Stop Loss Limit
- Mark to Market
- Valuations
- Model Control Policy
- Internal Audit
►
ORGANISATINAL STRUCTURE:
In performing
all the above
listed functions in an
appropriate manner the Organizational Structure requires :
- A clear demarcation between different dealing and all
settlement and support functions.
- Treasury Front Office be involved in dealing
activities and the Back Office be responsible for support functions.
- To monitor and manage balance Sheet Risk there should
have an additional unit, "Treasury Mid Office".
►
Centralized Foreign Exchange and Money Market Activates:
Foreign Exchange and Money Market are required to be
housed in the same area.
Foreign
Exchange and money
market activities are
to be unified
in the same department/control.
► Separate
Trading and Risk Management Units:
·
Traders
Risk-taking Units should be separated from Market Risk
·
Management
Unit.
·
Major
Responsibilities of Traders/Risk Taking Units
·
Remain
within the approved independent Market Risk Unit
·
Framework.
·
Ensure
no limit breaches.
·
Inform
the Market Risk Management Unit of any shift in strategy or
·
product
mix.
·
Major
Responsibilities of Market Management Unit :
·
Review
policy at least annually and update as require.
·
Independently
identify all relevant market risk factors.
·
Ensure
that limits/triggers are appropriately established. Review and approve any temporary limit
requirements.
·
Recommend
corrective actions for any limit excesses.
►
PROCESS:
► In a
Proper Treasury set-up, a Dealer -
·
Strikers
a deal in the market.
·
Maintains
his own record for monitoring the exchange position.
·
Passes
on detailed information of the deal to the back-office in time.
► The Back Office –
·
Arranges
for deal confirmation with counter party.
·
Arranges
settlement.
·
Reconciles
exchange positions.
·
Advises
to the treasury.
·
Runs the valuation on a periodic basis.
► Rate Appror[privation :
·
This
exercise is carried out by the treasury back-office to check for whether all
deals have been dealt at market rates.
► Deals Outstanding
Limit:
·
Treasury
back-office requires checking against any unusual volumes of activity. The
management may decide to set a limit for all outstanding FX contracts at any
given point of time.
► Deals
Treasury Risk Report
The back-office is required to summarize all daily
positions on a report. Report should contain :
·
Outstanding
open position against limit.
·
different
currency-wise outstanding exchange position. - Outstanding FX forward gaps in different tenors.
·
Interest
rate exposure of balance sheet.
·
Counter
party credit limit usage.
·
Day's
P & L against trigger and stop loss limit, etc.
► Code
of conduct:
Dealers are expected to act in a professional and ethical
manner:
They must keep dealing activities within the
responsibilities authorized by the management and observe the instruction given by the
management or supervisors in each
dealing section.
►
Conversation language
·
All
dealing related conversations taking place in the Treasury must be in an
acceptable language for operational clarity.
·
All
conversations on Reuters Dealing System must be in English.
·
All
conversation over telephone must be restricted to either in Bengali or in
English.
4.
INTERNAL CONTROL & COMPLIANCE RISKS MANAGEMENT:
According to IMF publication, Internal Control refers to
the Mechanism in place
on a permanent basis to control the activities in an organization, both at a central and at a departmental/divisional
level.
Objectives
of Internal Control and Compliance (ICC):
The
primary objective of internal control system in a bank is to help the bank
perform better through the use of its resources. Through internal control
system, bank identifies its weaknesses and takes appropriate measures to
overcome the same. The major objectives of internal control are as follows:
- Efficiency and effectiveness of activities: Performance objective
- Reliability, Completeness and timelines of financial and management information: Information Objective.
- Compliance with applicable laws and regulations : Compliance
Objective
Structure
of the ICCD:
Organizational
structure plays a vital role in establishing effective internal control system. The essence of the ideal
organizational structure that will facilitate effectiveness of the internal control and
compliance system is the segregation
of duties. The bank should, depending on the structure, size, location of its
branches and strength of its manpower, try to establish an organizational structure which allows segregation of duties
among its key functions such as marketing,
operations, audit, financial administrations etc. Extent of this
segregation will
depend on an individual bank; that is small or big branch operations.
The Head of Internal Control and Compliance Department (ICCD) should have a reporting
line with the bank's Board while the Audit Committee (AC) of the board will be the "Contact Point" for
this deptt. This deptt. also has a reporting line with the MD/CEO of the Bank.
Functions
of ICCD:
The head of the internal control will be responsible for
the both compliance and control related tasks which include compliance with
laws and regulation, audits and inspection, monitoring activities and risk
assessment. The head of internal control will report directly to the MD and
also have an indirect reporting line to the Audit Committee of the Board.
Monitoring Unit:
·
Monitor
the operational performance of branches/deptt.
·
Collect
relevant data and analyze these to assess the risks of individual
units.
·
Recommend
the Head of ICC for sending audit and inspection tea in case of major deviation.
·
Prepare
an annual health report of the bank.
Audit and Inspection Unit:
·
Conduct
Risk Based Annual Audit
·
Conduct
special audit
·
Surprise
audit
·
Prepare
a summary report on audit findings
·
Make
sure that prompt action is taken in rectification of deficiencies pointed out in the DCFCL
Compliance Unit:
·
Ensure
that bank complies with all regulatory
·
Requirements
while conducting
its business.
·
Maintain
liaison with the regulatory bodies.
·
Maintain
liaison with the regulators at all level and notify the other units about regulatory
changes.
5. MONEY LAUNDERING RISK
MANAGEMENT:
Money
laundering risk is the risk of loss of reputation of the Bank. It is the process by which proceeds from a
criminal activity are dis-guised to conceal their illicit origins. Basically, money laundering
involves the proceeds
of criminally derived property rather than the property itself. Money
launderers send illicit funds through legal channels in order to conceal their criminal origins.
Laundering
is not a single act but a process accomplished in 3 basic stages, which may
comprise numerous transactions, by the launderers that could alert a financial
institution to criminal activity-
Placement-
the physical disposal of the initial proceeds derived from illegal activity.
Layering-
separating illicit proceeds from their source by creating complex layers of financial transactions designed to
disguise the audit trail and provide anonymity.
Integration-
the provision of apparent legitimacy to wealth derived
criminally. If the layering process has succeeded,
integration schemes place
the laundered proceeds back into the economy in such a way that they re-enter the financial system appearing
as normal business funds.
The
three basic steps may occur as separate and distinct phases. They may also occur simultaneously or, more
commonly, may overlap.
The Money Laundering
Prevention activities in banking include:
• Obtention of KYC, TP forms & maintenance
• Record keeping
• Reporting STR, CTR, Quarterly report etc.
• Staff training regarding AML activities
• Communication with regulatory Authority
• Compliance of AML guidelines by Bank Authority
• Bank
BOD commitment towards AML guideline
6. IT RISKS MANAGEMENT:
Information technology (IT) plays a critical
role in many businesses. IT risks include hardware and software failure, human
error, spam, viruses and malicious attacks, as well as natural disasters such
as fires, cyclones or floods.
If our business uses information technology
(IT), it's important to understand the key steps that we can take to minimize
IT risk. Risks include hardware and software failure, human error, spam,
viruses and malicious attacks, as well as natural disasters.
A code of conduct can provide staff and
customers with clear direction and define acceptable behaviors in relation to
key IT issues, such as protection of privacy and ethical conduct.
7. ENVIROMENT RISK
MANAGEMENT
Why add
environmentally derived risks:
·
Every
business activity has some inherent environmental, health & safety risks.
·
If
clients don’t properly manage those inherent environmental health & safety
risk, they can create environmentally derived financial, legal and reputational
risks and liabilities for our clients.
·
Environmentally
Derived Risks for the Bank:
·
Inability
of the client to make payments due to unexpected environmental costs.
·
Over
valuation of assets offered for security
·
Decrease
in the value of security due to environmental impairment during the term of the
investment.
·
Legal liability for clean-up
·
Environment
Risk Management Procedures
·
Identify
Environmentally derived , potential liabilities for the bank in transaction
·
Assess the
awareness, commitment and resources of the client manage the environmental risk
creating those potential liabilities.
·
Manage
& control the bank’s exposure to environmentally derived liabilities
Required
papers of a new importer for Import Registration Certificate (IRC).
After submission of the application by the intending importers
for IRC alongwith the papers in mentioned above (a) and deposit of requisite fees,
on being satisfied the Chief Controller of Import & Export (CCI&E)
issue IRC to the Industrial Consumers or Commercial importers with their half
yearly/yearly entitlement mentioning item of commodities.
Requirements:
Application in a prescribed form.
Valid Trade license.
Membership certificate of the respective trade organization or Membership from
the Chamber of Commerce & Industry.
Registered partnership deed/Memorandum and Articles of Association alongwith
Certificate of Incorporation.
Two copies attested photograph of the applicant(s).
Regular Bank Account.
Affidavit from 1st class Magistrate.
Asset Certificate of the applicant(s).
Ownership deed or Lease deed of the office premises along with rent receipt.
Bank solvency certificate.
Tax Identification Number (TIN) Certificate.
Money receipt of requisite fee.
Any other document as required.
INCOTERMS
2010 published by The International Chamber of Commerce (ICC).
INCOTERMS mean International Commercial Terms. These
terms prepared by "The International Chamber of Commerce (ICC)".
First the INCOTERMS were published by the ICC in 1936. These terms are accepted
and used throughout the world as simple and reliable terminology for avoiding
misunderstanding between buyer and seller. The purpose of INCOTERMS is to
provide a set of International rules for the interpretation of the important
terms used in Foreign Trade Contracts i.e. Export & Import. It is a set of
uniform rules codifying the interpretations of trade terms defining the rights
and obligations of both the buyer and seller in an international transaction.
It defines the commercial, legal and insurance responsibilities of the exporter
& importer during an international trade. The INCOTERMS 2010 publication
came in to effect on 1st January, 2011.
There are mainly 13
(thirteen) INCOTERMS. These are:
1. EXW = Ex Works
Seller’s duties: i. Only deliver the goods at his factory
premises.
ii. If the parties wish the seller to be responsible for the loading of the
goods on departure and to bear the risks and all the costs of such loading,
this should be made clear by adding explicit wording to this effect in the
contract of sale.
Buyer’s duties: i. Take delivery of the goods at the seller’s factory.
ii. All cost & risk at his own.
2. FCA = Free Carrier
Seller’s duties: i. Deliver the goods at the named point into
the custody of the carrier mentioned by the importer.
Buyer’s duties: i. Contract for the carriage and pay the freight.
A. FOR = Free on Rail
Seller’s duties: i. Responsibility up to loading the wagon.
Buyer’s duties: i. Pay the freight.
ii. Delivered the goods from Railway.
B. FOT = Free on Truck
Seller’s duties: i. Deliver the goods to the truck.
ii. Truck receipt prepared and advance copy despatch to the buyer.
iii. Pay loading cost according to the custom of the port not include in the
freight.
Buyer’s duties: i. Nominate Carrier, Pay the freight, Pay un-loading cost.
ii. Freight paid upto destination point.
iii. Delivered the goods from the truck.
C.
Seller’s duties: i. Deliver the goods to the Air Carrier at the
Air port of departure.
Buyer’s duties: i. Accept delivery of the goods at the Air port of departure.
ii. Pay the Air Freight.
3. FAS = Free Alongside Ship
Seller’s duties: i. Deliver the goods alongside the ship.
ii. Provide on “alongside” receipt.
Buyer’s duties: i. Contract for the carriage.
ii. Pay the freight.
4. FOB = Free on
Board:
Seller’s duties: i. Deliver the goods on board.
ii. Provide a clean on board receipt.
Buyer’s duties: i. Accept delivery of the goods at the Airport
of arrival.
ii. Pay the freight.
5. CFR = Cost & Freight :
Seller’s duties: i. Contract for the carriage.
ii. Pay the freight to the named destination.
iii. Deliver the goods on board.
iv. Pay loading costs.
v. Provide clean on board bill of lading.
vi. Pay unloading cost.
Buyer’s duties: i. Receive the goods at the port of destination.
ii. Pay the duty, sale tax, DSC & I.P. Fees etc.
iii. Pay the load conveyance/carrier charge upto buyers’ godown.
6. CIF = Cost Insurance and Freight
:
Seller’s duties: i. Contract for the Carriage.
ii. Pay the freight to the port of destination.
iii. Contract for the insurance of the goods.
iv. Pay the insurance premium.
v. Provide clean on board Bill of lading and cargo insurance policy or
certificate.
vi. Pay loading cost.
vii. Pay un-loading cost.
Buyer’s duties: i. Accept delivery and receive the goods as per
B/L, invoice and insurance policy.
ii. Pay the duty & sale taxes etc.
iii. Pay the local carriage charges.
7. CPT = Freight Carriage paid to
:
Seller’s duties: i. Contract for the carriage and pay the all
freight to the final destination.
ii. Deliver the goods into the custody of the first carrier.
iii. Furnish to the buyer the usual transport documents.
Buyer’s duties: i. Accept delivery and receive the goods.
ii. From that named point pay local conveyance Charges upto his custody.
8. CIP = Freight Carriage and Insurance paid
:
Seller’s duties: i. Contract for the carriage.
ii. Pay the freight to the named point of destination.
iii. Deliver the goods into the custody of the first carrier.
iv. Pay export taxes and fees.
v. Contract for insurance of the goods and pay the insurance
premium.
Buyer’s duties: i. Take delivery of the goods.
9. DAF = Delivered at Frontier :
Seller’s duties: i. Deliver the goods upto custom border.
ii. Up to this point sellers will pay all freight.
Buyer’s duties: i. Take delivery of the goods from that point.
ii. Pay duty and other taxes.
iii. Pay for carriage.
10. DES = Delivered Es Ship :
Seller’s duties: i. Deliver the goods on board the ship at the
port of destination.
Buyer’s duties: i. Take delivery of the goods from the ship at
the port of destination.
ii. Pay un-loading costs.
iii. Pay duty and others taxes.
11. DEQ = Delivered Ex Quay :
Seller’s duties: i. Deliver the goods on the quay at the port of
destination.
ii. Pay unloading costs.
iii. Pay duties, Taxes and other charges if required.Buyer’s duties: i. Take
delivery of the goods from the quay at the port of destination.
12. DDU = Delivered Duty Unpaid :
Seller’s duties: The sellers has to bear the costs and risks
involved in bringing the goods there to excluding duties, taxes and other
official charges payable upon importation as well as the costs and risks of
carrying out customs formalities.Buyer’s duties: The buyer has to pay any
additional costs and to bear any risks caused by his failure to clear the goods
for import in time.
13. DDP = Delivered Duty Paid :
Seller’s duties: i. Deliver the goods to the named place.
ii. All freight paid by the seller.
iii. Pay the duty, Taxes & other charges.
iv. Clear the goods from the port of destination.
Buyer’s duties: i. Receive the goods at the named place of their
godown.
Export
Development Fund (EDF)
As per request of Bangladesh Government to promote
non-traditional manufactured items export business of
Objectives for creating EDF and
preconditions for avail EDF:
The objectives for creating Export Development Fund (EDF) and
pre-conditions for avail EDF are as follows:
The main objectives of creating an Export Development Fund (EDF) at the
Bangladesh Bank is assure a continued availability of foreign exchange to meet
the import requirements of non-traditional manufactured items. This facility is
available to the non-traditional exporters, particularly new exporters,
exporters diversifying into higher value exports and exporters diversifying
into new markets. An exporter identify above is eligible to avail of EDF
facilities on the conditions stated below:
(i) He must be an exporter of non-traditional manufacturing items.
(ii) The value added of these products could be 20% except in the case of
garments where it has to be 30% and above.
(iii) The loan should be utilized in the case of importing raw-materials for manufacturing
the exportable products.
(iv) The exporter must have an Export L/C.
(v) He must create a Back to Back L/C for importing raw materials.
(vi) The period of loan is 180 days.
(vii) The exporter can borrow as many times in a year on revolving basis.
(viii) The interest rate of EDF is LIBOR + 1%.
(ix) An exporter can borrow an amount not exceeding US$5,00,000/- in a single
case, but outstanding should not be more than US$10,00,000/-
(x) He has to have an Export Credit Insurance through Export Credit Guarantee
Scheme (ECGS).
Purposes of EDF:
(i) To make the payment of import bill against Back to Back
sight L/Cs. For export of goods Bangladesh Bank arrange pre shipment credit by
EDF.
(ii) To increase the working capacity of Export administration and financial
institutions.
(iii) To encourage the motive of the foreign supplier. Foreign guarantee
conferring institutions and foreign commercial banks who provide short time
loan to the Bangladeshi exporters.
Modes
of Export Finance in Islamic Banking.
(i) Bai-Muajjal (Export): Under this arrangement a Credit is
sanctioned against hypothecation of raw materials or finished goods intended
for export. Such facility is allowed to first class exporters. As the bank has
got no security in this case, except charge documents and lien of export L/C or
contract, bank normally insists on the exporter in furnishing collateral
security. The letter of hypothecation creates a charge against the merchandise
in favour of the bank.
(ii) Bai-Murabaha (Export) : Such Credit facility is allowed against pledge of
exportable goods or raw materials. In such cases, Lien of export L/C or Firm
contract and Murabaha facilities are extended against pledge of goods to be
stored in godown under Bank’s control by signing letter of pledge documents.
The exporter surrenders the physical possession of the goods under bank’s
effective control as security for payment of bank dues. In the event of failure
of the exporter to honour his commitment, the bank can sell the pledge merchandise
for recovery of the credit.
(iii) Murabaha Trust Receipt (Export): In this type, Credit limit is sanctioned
against Trust Receipt and lien of export L/C or firm contract. In this mode the
exportable goods remain in the custody of the exporter. He is required to
execute a stamped Export Trust Receipt in favour of the bank, wherein a
declaration is made that goods purchased with financial assistance of Bank are
held by him in trust for the bank. This type of Credit is granted when the
exporter wants to utilize the Credit for processing, packing and rendering the
goods in exportable condition and when it seems that exportable goods cannot be
taken into bank’s custody. This facility is allowed only to the 1st class
party of the bank and collateral security against this type of investment may
be obtained.
(iv) Musharaka Pre-shipment (ECC): It is a type of investment provided by a
bank to an exporter for purchase of raw materials, Cost of processing the same
to finished goods against lien of specific L/C or firm contract. Collateral
security may be obtained against this type of investment considering banker –
customer relationship and reputation/track record of the exporter. This type of
investment must be adjusted out of the export proceeds within 180 days.
(v) Musharaka Pre-shipment (PC): Investment allowed to a customer against
specific L/C or firm contract for packing and despatching of goods to be
exported is called Musharaka Pre-shipment (PC). This type of investment allowed
against lien of export L/C or firm contract and collateral security may be
obtained on the basis of Banker-Customer relationship. This type of investment
must be adjusted from the export proceeds within 180 days.
(vi) Foreign Documentary Bill Purchased (FDBP): Payment made to a customer
through purchase/negotiation of a Foreign Documentary Bill is FDBP. Temporary
investment is adjustable from the proceeds of shipping/export documents.
(vii) Local Documentary Bill Purchased (LDBP): Payment made against documents
representing sell of goods to export oriented industries that are deemed as
exports and which are denominated in local currency/foreign currency is called
LDBP. This temporary liability is adjustable from the proceeds of the bill.
(viii) Back to Back Letter of Credit (BTB L/C): Under the
arrangement of Back to Back L/C, the bank finances export business by opening
Letter of Credit on behalf of the exporter who has received export L/C from the
Overseas buyer. To execute the export order, the exporter has to procure raw
materials from outside or inside the country by making lien of the master
export L/C. This type of financing is called Back to Back Letter of Credit. BTB
L/C must not exceed 75% of the FOB value of the master export L/C and this type
of investment to be adjusted from the export proceeds.
Bill of
Exchange
Bill of Exchange is one of the important negotiable instruments
in the mercantile world and used as a vital document facilitating settlement of
payments between buyer/importer and seller/exporter at home and abroad.
As per Section 5 of Negotiable Instrument Act, 1881 defines Bill of Exchange
as, “A Bill of Exchange is an instrument in writing containing an unconditional
order, signed by the maker, directing a certain person to pay on demand or at a
fixed determinable future time a certain some of money only to, or to the order
of a certain person or to bearer of the instrument.”
Essential characteristics of a Bill
of Exchange:
(i) It must be writing with date.
(ii)
It must contain an order to pay on demand or at fixed or determinable future
time.
(iii)
The order must be on unconditional.
(iv)
It must be signed by the drawer.
(v)
The drawer, drawee and payee must be certain.
(vi)
The amount must be certain.
(vii)
It should be properly stamped.
Parties of a Bill of Exchange:
There
are usually three parties of a Bill of Exchange. They are Drawer, Drawee and
Payee. But sometimes additional two parties Acceptor and Endorser includes in a
Bill of Exchange.
(i)
Drawer: The maker of a Bill of Exchange (B/E) is called the drawer. The
drawer is the person to whom debt is due. The drawer of a B/E by drawing it
engages that on due presentment it shall be accepted and paid according to its
tenor and if it is dishonoured, he shall compensate the holder or any endorser
who is compelled to pay it.
(ii) Drawee: The person thereby directed to pay is called the drawee. He is
to accept the B/E to make it a legal one and he is not liable until and unless
he has accepted it.
(iii)
Payee: The payee is the person or to whose order the amount of
instrument is payable. When the payee is the same as the drawer and his rights
and objections as payee are merged with his rights and obligations as drawer.
But if the payee is a person other than the drawer, the payee has the right of
recourse to the drawer until the bill is paid by the drawee.
(iv)
Acceptor: After the drawee of a Bill has signed his assent upon the bill,
or, if there are more parts thereof than one, upon one of such parts, and
delivered the same, or given notice of such signing to the holder or to some
person on his behalf, he is called the Acceptor.
(v)
Endorser: The endorser is a person who endorses the Bill by signing his name
usually on the back of it. He may be the payee or a subsequent endorser to whom
the payee has assigned the bill. The endorser is liable to subsequent endorser
or to any future holder of the bill and his obligations are the same as those
of the drawer.
Classification of Bills:
(i) Inland and
Foreign bills
(ii) Time and Demand bills
(iii) Trade and accommodation bills
(iv) Clean bill and Documentary bills
(v) Domiciled bill
(vi) Maturity/Due date of bill.
Inland bill: As per section 11 of N.I. Act, “A promissory note or bill
of exchange or cheque drawn or made in
Foreign bill: As per section 12 of N.I. Act, “Any such instrument not so
drawn, made or made payable shall be deemed to be a foreign instrument.” For
example, a bill drawn in
Time bill: A bill is said to be time bill which is payable at a
determinable future time. It is also termed as Document against acceptance (D.A
bill). Time bill also called Usance bill.
Demand bill: A bill is said to be demand bill which is payable on demand
or at sight or on presentation and when no time for payment is specified in it.
Demand bill also termed as Sight bill.
Trade bill: A bill drawn and accepted for a genuine trade transaction is
termed as trade bill.
Accommodation bill: A bill drawn and accepted not for a genuine trade
transaction but only to provide financial help to some party is termed as an
accommodation bill.
Clean bill: A bill which has no documents attached is called clean bill.
Documentary bill: A bill which has documents attached is called
Documentary bill.
Domicile Bill: A domicile bill is one which is payable at a place other
than the acceptors usual residence or business place.
Maturity or Due date of bill: Maturity date is the date on which a Bill
of Exchange is payable. In calculating the due date of a bill calendar months
are reckoned.
Proforma
Invoice
After negotiation over phone/fax/letter/e-mail or any other mode
between exporter and importer offer directly issued by the exporter to importer
is called Proforma Invoice. It includes the specifications of the product,
price, quantity, delivery period and other terms of sale of a particular
product.
Commercial
Invoice
Invoice
means a list of articles containing particulars and prices. There is no
prescribed form of Commercial invoice. Each exporter designs his own Commercial
invoice forms. Commercial invoice is a set of five papers or as desired by the
importer which should bear the date, full address of exporter (beneficiary) and
importer, currency, quantity and amount as per credit, description of the
goods, name of the vessel/carrier, port of shipment, port of destination,
shipping marks, L/C and Indent or Proforma invoice references, freight,
Insurance, origin of goods etc. Normally exporter signed the copies of
Commercial invoice. As per Article 18 a(iv) of UCP-600, Commercial invoice need
not be signed by the exporter.
Consular
Invoice
This
is a special type of invoice which is required by some countries. It is a
invoice made out in a specially printed form and is sworn as, being correct in
all respect before the Consul of importing country stationed in the exporters
country. A consular invoice may also contain a declaration about the place of
origin of the goods. The consul of the importing country then certifies the
invoice. The principal function of the consular invoice is to enable the
authorities of the importing countries to have an accurate record of the types
of merchandise shipped to that country, their quantity, grade and value, both
for the purpose of fixing and for assessing import duties and for general
statistical purposes. It helps in clearing of the goods through the customs of
the importing country without undue delay. Any false declaration in the
consular invoice involves heavy penalty.
Modes
of Import financing by Islami Bank.
(i) Import of goods by Letter of
Credit: A Letter of Credit (L/C) is a conditional undertaking to the exporter
(Seller) by a bank on behalf of his customer (Importer/buyer) to pay the bill
amount, if all the terms & conditions of the L/C are fulfilled. By issuing
a L/C, a bank undertakes the full responsibility of payment, if otherwise in
order. Since bank takes the liability of payment against some percentage of
margin from the importer, which may be in cash or collateral or both cash &
collateral depending upon banker customer relationship – so it is an Import
financing.
(ii) Murabaha Import Bill (MIB): Payment made by the bank against lodgement of
transport documents of goods imported through L/C is called MIB. It is an
interim investment for a maximum period of 21 days connected with import and is
generally liquidated against payment usually made by the party for retirement
of the documents for release of imported goods from the customs authority. In
conventional banking this type of investment is called Payment Against Document
(PAD).
(iii) Mudaraba Post Import (MPI): Normally importer pay the duty & sales
tax of the impoted goods after arrival at the port. Due to shortage of fund or
some other reasons, sometimes importer approach the L/C opener bank to assist
him for retirement of the imported goods. In some cases importer do not come
forward to retire the goods. In these cases the L/C opener bank themselves
arrange to retire the goods by pledge in Godown under bank’s lock & key.
This type of payment (forced loan) is called MPI. This is a temporary
arrangement for a maximum period of 90 days. Within this time limit, the
importer borrower will release the goods at a time or gradually after making
payment to the bank. In traditional banking this type of investment is called
LIM (Loan against Imported Merchandise) or LAM (Loan Against Merchandise)
(iv) Murabaha Trust Receipt (MTR): It is a type of investment allowed by a bank
on trust to his experienced, reliable & reputed importer for retirement of
shipping documents and release the imported goods. Under this arrangement the
importer borrower will deposit the sale proceeds of imported goods which are
under his control at a time or gradually within a maximum period of one year.
In traditional banking this type of facility is called Trust Receipt (TR).
