Chapter: One

Introduction

1
1. Background of the study
Todays economic policy is concerned to obtain the optimum economic
condition in an economy. Banking sector is playing the pioneer role to
achieve that optimum. The banking sectors channel resources through
deposit mobilization and providing credit for different business venture.
The successful running of bank business depends upon effective banks. FSIBL
as a new commercial bank in Bangladesh responsibility bestows upon it ensure
efficient banking operation in a sound manner.

A banking institution is indispensable in a modern society. It plays a pivotal

role in the economic development of a country and forms the core of the
money market in an advanced country. In recent times the banking sector over
the world has been undergoing a lot of changes due to deregulation,
technological innovation, globalization etc. Bangladesh banking sector is
lagging for behind in adopting these changes. Bank plays an important role in
the business sector and in the industrialization of a country. Basically the banks
take deposits form the customers against interest and lend it to the borrowers
against interest cessation period. To ensure safety of the depositors fund offer
different types of credit facility, which helps Consumers Credit Scheme (CCS)
is one of such kind of credit facility, which helps limited income people to bye
any household affect including car, computer, cookeries, air condition, motor
cycle and other consumers durable.

In our country there are govt. Banks, semi govt. Banks and private sector
Commercial banks of Bangladesh and also it is the third generation private
commercial bank in Bangladesh. It started its crucial moment when
Bangladesh economy was undergoing through massive economy reforms and
pursuing unilateral and multilateral trade liberalization with the backdrop of
the World Bank made International Monetary Fund (IMF) recommendations.
The First Security Islami Bank (one of the third generation Bank) with its
twenty nine branches is providing the best quality services to the customers
and client.

The Head office of the First Security Islami Bank Ltd. located in
Dilkusha. Motijheel.

1.1 Objective of the Study

A study based on First Security
The main objective is
Islami Bank Ltd to gather practical knowledge regarding banking system
and its operation. This practical orientation gives us a chance to Co-ordinate out
theoretical knowledge with practical experience. The following are the secondary
objective of the study:

2
 To achieve practical knowledge about banking sector.
Explain the meaning and concept of general banking
To help the students in taking up professional
Understand the need and object of general banking
To observe the working environment of bank
To known about the policy of general banking

1.2- Relation of the study:

Knowledge and learning become perfect when it is associated with theory and
practice. Theoretical knowledge gets its perfection with practical application.
The study is very much related to the BBA program in Banking. The study
helps to compare the knowledge gathered from the program and the real world
banking sector operation. I have come to know the product and procedure of
bank operation. The contribution of banks in the overall economy as financial
intermediary. Huge of knowledge can be gathered from the study of banking
sector operation.

1.3 Scope of the Study

This reports covers FSIBLs organizational overview, management and
organizational structure and functional performed by FSIBL. It also
covers overviews of credit division, identification of problems regarding
credit management types of credit extended and sectors of credit
allocation of FSIBL Dilkusha Branch, Motijheel.

1.4 Methodology of the Study

The data collection method of study consists of both of primary and

secondary sources, but majority of the information was collected from
secondary sources.

Primary sources

Observation
Personal interview
Oral & information with officers and employees of the FSIBL
Face to face conversation

Secondary Sources

Annual and other periodical reports of FSIBL

Various manuals

3
 Service rules
Many circular published by FSIBL
Files & folders
Memos & circulars
Product of services
Visit web site of FSBL
Many circular published by Bangladesh Bank

1.5 Limitations of the study

In course of my internship I have faced many problems that may be termed

as the limitation of the study. These were:

I could not spend sufficient time required to make an in-depth

study on such an important subject because of time constrain
It was very difficult to get the actual information
Sufficient records, publications were not available. The constraints
narrowed the scope of real analysis
Non availability of the most recent data & information of
different activities of First Security Islami Banks policy of not
disclosing some data & information for some reasons, which
could be very much useful.

4
 Chapter: Two
OVERVIEW OF THE BANK

5
2 Historical Background of FSIBL
First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29
August 1999 as a banking company under Companies Act 1994 to carry on banking
business. It obtained permission from Bangladesh Bank on 22 September 1999 to
commence its business. It started banking operation on 25 October 1999 with an
authorized capital BDT 1500 billion and paid up capital BDT 200 million. By the end
of 2007, Banks authorized capital and paid up capital reached to BDT 3600 million
and BDT 100 million respectively. In 2007 paid up capital grew by 11.11%. The bank
entered into IPO on July 20, 2008. The Bank carries banking activities through its
THIRTY FOUR (34) branches in the country. The commercial banking activities of
the bank encompass a wide range of services including accepting deposits, making
loans, discounting bills, conducting money transfer and foreign exchange transactions,
and performing other related services such as safe keeping, collections and issuing
guarantees, acceptances and letter of credit.
2.1 Mission of the Bank
First Security Bank Limited aims to become one of the leading banks in Bangladesh
by quality of operations in their banking sector. The bank has some mission to achieve
the organizational goals.
These are given bellow:
With a view to achieving commercial objectives of the bank, their sincere and
all out efforts stay put unabated. Respected clients are attracted to them for
their transparency, accountability, social commitments and high quality of
clientele services.

2.2 Vision of the Bank

First Security Bank Limiteds Vision is to have poverty free Bangladesh in
course of a generation in the new millennium, reflecting the national dream, our
vision is to build a society where human dignity and human right receive the
highest consideration along with reduction of poverty.

2.3 Objective of the Bank

The major objective of the FSIBL is:

The motto of the FSIBL is to explore a new horizon of innovative modern

banking creating an automated and computerized environment.
Providing one stop services and prepares itself to face the new horizon of
innovative modern banking creating an automated and computerized
environment.
Providing one stop services and prepares itself to face the new challenge of
globalization and competition.
One of the main objectives of the bank is to be a provider of high quality
products and services to its potential market.

6
 The bank also creates to the needs of its corporate clients
Provides a comprehensive range of financial services to national multinational
companies.

Corporate Governance

Corporate governance is about how corporation is running its operations to

achieve its corporate objectives. Bangladesh Bank (BB) gives emphasis
on implementing corporate governance among the financial institutions
and to do that, BB emphasizes implementation of the guidelines issued by
them for improving corporate governance in banking. Good Corporate
Governance practices enhance an entity's corporate image and market
credibility, which attract capital and increase its borrowing power. These
can be reflected in the quality of financial reporting and disclosures;
strength of internal control system and internal audit function induction of
professionally competent, independent non-executive Directors on
corporate Board; formation of Audit Committee; delegation of authority
to executives and staff; protection of corporate governance for
strengthening organizational strength. With a view to ensure effective
participation and deep interest in the affairs of the company and as per
Articles of Association of the Company and as per Bangladesh Bank
Circular No. 16 dated March 24, 2003 the bank has set up the
following 2 committees:
1. Executive committee
2. Audit Committee
Executive Committee:
FSIB has constituted 09 members executive committee of the board as per
Bangladesh Bank guidelines to ensure corporate governance in the
business of which managing director of the Bank is Ex-officio Member.
The executive committee of the board is responsible for developing policy
and strategy for smooth operations of business and business development
of the bank to ensure maximization of shareholders wealths protecting
other stakeholders interest in the company Mr. Alhaj Md. Saiful Alam,
Chairman of the board of Directors is the Chairman of the present
Executive Committee of the bank. He is very dynamic person and leading
the executive committee of the bank in a very manner.
Audit Committee:
FSIB has formulated an audit committee can play an effective role in
formulating an efficient and secured banking system. The Audit
Committee has been formed comprising three members of the Board of

7
 Directors. As per corporate governance guidelines the Chairman of the
Audit Committee should have sound knowledge and expertise in finance
& accounting or auditing. Mr. Hamidul Haq, who is also a Director of the
Bank, is Convener of the committee. He is associated in banking field
over long years.

2.4 Corporate Strategy (At a Glance):

Name of the Company First Security Islami Bank Ltd.
Chairman Alhaj Md. Saiful Alam
Vice Chairman Alhaj Md. Abdul Maleque
Managing Director A.A.M. Zakaria
Company Secretary (Current Charge) Abdul Hannan Khan
Legal Status Public Limited Company
Date of Incorporation 29 August1999
Date of Commencement of Business 29 August 1999
Date of Permission from Bangladesh22 September 1999
Bank
Date of Opening of First Branch 25 October 1999
Registered Office 23, Dilkusha Commercial Area,
Dhaka-1000, Bangladesh
Line of Business Banking
Authorized Capital Tk.4,600 Million
Paid up Capital Tk.2,300 Million
Date of consent of IPO 04 June 2008
Phone 9560229 (Hunting),9550334,7171029-30
Fax 880-02-9561637
E-mail bcs@fsblbd.com
Website www.fsblbd.com
SWIFT FSEBBDDH

8
Management System
FSIBL is functioning with professional management team headed by the Managing
Director Mr. A. A. M. Zakaria. Among other senior executives currently two DMD,
One Principle(Training Center), two SEVP, eleven SVP, ten VP, five FVP, twelve
SAVP, five AVP and eight FAVP are discharging their services in progression of the
banks business.
Managing Director
Mr. A. A. M. Zakaria, Managing Director of the bank is an eminent banking
personality having long 30 years of experience in banking industry. After successful
completion of his B.A. (Hons) M.A. in Economics from Dhaka University, Mr. A. A.
M. Zakaria has started his banking career in 1977 as Senior Officer of Rupali Bank.
Before the current responsibility, Mr. A. A. M. Zakaria was the Deputy Managing
Director of Dutch-Bangla Bank Limited. In his multi-greeted banking service, Mr. A.
A. M. Zakaria participated in many courses, training program and workshops on
banking at home and abroad. Mr. A. A. M. Zakaria joined in FSIBL in 7th August
2005 as Managing Director in a crucial moment when the bank had fallen into
Problem Bank with lots of great complex situations. Within a short span of time FSIB
under his proper guidance recovered from the Problem Bank.
Top management of the bank is supported by human resource strength of 421
executives and officers. For smooth functioning of the Bank, following committees
have been formed:
Management committee (MANCO) comprises of senior members of the
management headed by Managing Director of the bank. All divisional heads are the
member of the committee. MANCO meets on regular basis to discuss relevant
agenda.
Asst Liability Management Committee (ALCO) headed by the Managing Director,
is responsible for balance sheet risk management. The committee participate is the
monthly ALCO meeting and review the liquidity position, review rate of interest on
deposit and lending, and review the ALCO papers on presentation by treasury back
office on the position of profit, deposit, advance, cost analysis, maturity bucket of
deposit & advance, balance sheet, profit and loss account and many other issues
relating to banks business and assets-liability management. Five relevant divisional
heads including DMD are the members and FVP & Head of Treasury of the Bank is
the member secretary of the committee

9
2.5 Organizational Hierarchy:
Organizational Hierarchy of FSIBL of Head Office is given below :

MANAGING DIRRCTOR

10
 DEPUTY MANAGING DIRECTOR
SENIOR EXECUTIVE VICE PRESIDENT

11
EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

12
 SENIOR ASSISTANT VICE PRESIDENT

SENIOR PRINCIPAL OFFICER

PRINCIPAL OFFICER

SENIOR EXECUTIVE OFFICER

OFFICER

ASSISTANT OFFICER

TRAINEE ASSISTANT OFFICER

Figure: Organizational Hierarchy of FSIBL of Head Office

Financial Information (At a glance)
Particulars 31 Dec 2007 31 Dec 2006
Paid up Capital Total Capital 1,000,000,000 900,000,000
Total Capital Fund 1,347,916,019 1,147,285,290
Capital Surplus / (deficit ) (125,708,856) 92854020
Total Assets 26,941,780,871 20,448,667,971
Total Deposits 23,504,045,031 17,591,996,452
Total Loans and Advances 18,616,225,315 13,646,387,225
Total Contingent Liabilities and Commitments 5,114,783,363 3,058,703,340
Credit Deposits Ratio (in %) 79.20% 77.57%
Percentage of Classified Loans against total Loans 6.50% 9.75%
and Advances (in % )
Profit before tax & provision 128,530,728 202,623,523
Amount of Classified Loans 1,210,643,000 1,330,787,000
Provision kept against Classified Loans 707,694,000 707,694,000
Provision Surplus/( deficit ) 136,733,917 16,630,400
Cost of Fund 9.06% 8.52%
Interest Earning Assets 23,803,097,996 18,326,209,803

13
Non-Interest Earning Assets 3,138,682,875 2,121,458,168
Return on Investment ( ROI ) ( in % ) 7.11% 5.97%
Return on Assets ( ROA) ( in % ) 0.47% 0.99%
Income from Investment 177,752,561 123,256,585
Earning per Share (TK.) 3.20 ( 16.28 )
Net Income per Share (TK.) 3.20 ( 16.28 )
Price Earning Ratio ( Times ) NA NA

Table-1: Financial Information

14
Branch Expansion
At present the bank has 29 (twenty nine) Branches. Alone term program has been
proposed to Bangladesh to open more branches in phases in important locations in
Bangladesh of which 13 branches in Dhaka,08 branches are in Chittagong,02
branches are in Sylhet, 01 branch is Rangpur, 01branch in Khulna, 01 branch in
Moulovi Bazar, 01 branch in Tongi & 01 branch in Gazipur. All the 29 branches are
computerized under distribution sever environment. FSIBL has already started their
online and SMS banking facilities for their clients.
Dhaka Branches: Chittagong Branches: Sylhet Branches:
1) Dilkusha Branch 1) Khatungong Branch 1) Sylhet Branch
2) Mahakhali 2) Agrabad 2) Bishanath
3) Bangshal 3) Keraihat 3) Ambarkhanan
4) Dhanmondi 4) Jubilee Road
5) Gulshan 5) Probortok Mor
6) Mirpur 6) Naju Miah
7) Topkhana Road 7) Dobashi Bazar
8) Banani 8) Bohaddar Hat
9) Biswa Road
10) Cantonment
11) Dhonia Khulna Branch: Rangpur Branch :
12) Mokshudpur
13) Bishanath 1) Khulna Branch 1) Rangpur Branch
14) Motijheel
15) Islampur
Moulovi Bazar Branch : Gazipur Branch :

1) Moulovi Bazar Branch 1) Shafipur Branch

Maintaining Procedure: The Maintaining Procedure of FSIBL Depart ways

Account Opening / Local Remittance:
1) Applications fill up the relevant application from in the prescribed manner.
2) She/he is required to fill up the specimen signature card.
3) For individual introduction is needed by an account holder.
4) The authorized officer scrutinizes the introduction and examine the document
submit.
5) Issuance of deposit slip and the deposit must be made in cash. No cheque or
draft is acceptable to the bank.
6) After depositing the cash one cheque book is issued.
7) Account is opened.
Clearing Department:
1) The date, amount both in words and figures and the name is cheeked.
2) Received seal is stamped on the count foil of the pay-in-slip.
3) Special crossing in favor of cheque receiving branch is affixed on the

15
 4) NIKASH supplied by Bangladesh Bank posting is made and gives code
number.
5) Segregate cheque from pay-in-slip and give respective endorsement.
6) Get total from NIKASH and get total from pay-in-slip.
7) If both are same, sort the cheque according to banks
8) Get all the schedules from NIKASH
9) Affix schedules to the corresponding banks cheques.

Account Section:
1) Before End Of The Day:
Recording the daily Transaction in the cash book
Recording the daily Transaction in general and subsidiary ledgers
Preparing the daily position of the branch comprising of deposit and
cash
Preparing the statement of originating and responding
Making payment of all the expenses of the branch
Making Trial balance
Taking Backup through computer.

After End of the Day:

Preparing Statement of Affairs
Statement of back page of affairs
Statement of provisional income
Statement of provisional expenditure
Loan and Advance:
Type of loan is identified
Borrower is selected weather loan will be given or not
Application from borrower is taken and sent to surveyor & to lawyer
for legal advice
Then prepare a proposal
Proposal is sent to Head Office Credit section then sent to Md. & Board
for section
If loan sanctioned then a credit sanction letter is sent to credit
administration
A bank employee goes for credit monitoring after fulfilling terms and
condition
After checking all things the loan will be disbursed
Then open a loan A/C and disburse the money to the borrower.

16
CHAPTER-THREE
GENERAL BANKING

17
 3.1 First Security Islami Bank Ltd
Bank is nothing but an intermediary between lender (surplus unit) and borrowers (deficit
unit). Savings and deposits are the main strength of the banks to provide loan. And the
interest earned from the difference borrowing and lending is the major portion of banks
income. Banks also earns from variety of operation. Branch banking includes four
operational divisions in First Security Bank Limited. They are:
1. General Banking
2. Accounts Division
3. Loan And Advance
4. Foreign Exchange

General Banking:
General banking is the side where banks offer different alternatives to the clients to deposit
and remit their money. Accounts division is also included in general banking. To encourage
the clients, bank offers different options in front of their clients. Most of these options are
very much similar between the banks, but the customer services and facilities may not be the
same. First Security Bank Limited has variety of services provided to the retail as well as for
corporate clients.
The services provided under general banking include the following:
Account opening
Account closing
Cheque book issue
Remittance
Clearing
Crossing
Endorsements
Dispatch

Account Opening:
Initially all the account is opened through deposits money by the customer and these
accounts are called deposits account. Normally a person needs to open an account to take
service from the bank. Without opening an account one cannot enjoy variety of services from
the bank. Thus the banking usually beings through the opening of the account with the
bank .Bank account are mainly of three (3) types:
1. Current Deposits Account
2. Savings Bank Account
3. Fixed or Time Deposit
There are also some other types of account facilities provided by the bank. These are:
I. Short Term Deposit (STD)
II. Monthly Saving Schemes (MSS)
III. Monthly Benefit Saving Scheme (MBSS)
IV. Double Benefit Deposit Scheme (DBDS)
1. Current Deposit Account:
A current account is a running and active account, which may be operated upon any
number of times during a working day. It is purely demand deposit account because

18
 the bank is bound to pay the amount to the accountholder on demand at any time
within the banking hour. There is no restriction on the number and the amount of
withdrawals from a current account. Generally the minimum amount to be deposited
initially is tk. 1000/- for opening a current account.
2. Saving Bank Account:
A saving account is meant for the people of the lower and middle classes who wish to save a
part of their incomes to meet their future need and intend to earn an income from their
savings, it encourages savings of non-trading persons, institutions, society and clubs etc. The
deposits are mostly small amounts. Frequently withdrawals are not allowed.

Opening of Current and saving Account

Account could be opened through the following steps :
Step: 1 Application on the Prescribed form: the person willing to open a current
account with the bank has to apply in the prescribe form and KYC form. The from
must be filled up and signed accordingly by the applicant (s).

Step: 2 Documentation: The documents that must be provided by the party/parties

willing to open a current account are mentioned according to different aspects:
i) Individual
Two copies of passport size photograph
Introducers signature in the A/C opening Card & photograph
Nationality Certificate/passports photocopy (duly attested)
Nominees Photograph
Mothers name
Date of Birth & age
TIN
ii) Proprietorship
Two copies of passport size photograph
Introducers signature in the A/C opening Card & photograph
Nationality Certificate/passports photocopy (duly attested)
Up-to-date copy of trade license
Nominees Photograph
Mothers name
Date of Birth & age
Seal
TIN
iii) Partnership
Passport size photograph A/C Operator authorized by partners) Two copies
(each)
Introducers signature in the A/C opening Card & photograph
Nationality Certificate/passports photocopy (duly attested)
Up-to-date copy of trade license
Seal
TIN

19
 Partnership deed (from Notary public), partnership letter

20
iv) The Limited Company
Passport size photograph A/C Operator (authorized by Board) Two copies
(each)
Introducers signature in the A/C opening Card & photograph
Company resolution/Constitution
Common seal of Company
Memorandum & Articles of association (Certified by Joint Stock
Company)
List of Directors with sign
Certificate of Incorporation
Up-to-date copy of trade license
Seal
TIN
v) Societies, Clubs, etc
Passport size photograph A/C Operator (authorized by Board) Two copies
(each)
Introducers signature in the A/C opening Card & photograph
Nationality Certificate/passports photocopy (duly attested)
Up-to-date copy of Office Bearers/ Governing Body/ Managing
Committee
Memorandum & Articles of association
Seal

Incase of saving account opening the following documents are required:

Two copies of passport size photograph
Introducers signature in the A/C opening Card & photograph
Nationality Certificate/passports photocopy (duly attested)
Nominees Photograph
Employer certificate

After observation of all the formalities /documents mentioned above, the application is of all
the deposit minimum BDT for opening a saving bank account and BDT for opening a current
account. This is called initial deposit. As soon as this money is deposited the bank opens as
account in the name of the application. It should be noted that the permission of competent
authority for opening of an account is necessary. The Banker then supplies the following
books to the customer to operate the accounts:
Pay in-slip book /Cheque book /Pass book
Step: 3 Introduction s to the Applicant: The applicant required to furnish in the
application form the name of the referees from whom the banker may make requires
regarding the character integrity and respectability of the applicants. In most cases,
the customer of the bank does the introduction or some other person known to the
bank by signing on the application from with the account number.

Step: 4 Specimen Signatures: Every customer is required to supply to his banker with
one or more specimens of his /her signature. This signature is taken on cards, which

21
 are preserved by the banker, and his signature of the account holder on the cheque is
compared with specimen signatures.

Final Step: After the above formalities are over, the banker opens an account in the
name of applicant. Then the bank provides the customer with:
A pay in slip/deposit book: To facilitate the receipt of credit items paid in by a
customer, the bank will provide the customer a pay in slip either loose or in a book forms.
The customer has to fill up the pay in slip at the time of depositing the money with the bank.
The casher with his/her initials and stamps will return the counter foil to the customer on the
receipt of the money.
Cheque Book: To facilitate withdrawals and payments to third parties by the
customer, the bank will also provide a cheque book to the customer. But it is noted that to get
a cheque book, the customer has to dully fill up the cheque requisition slip to the banker.

3.2 Closing of Current or Saving Account:

A customers account with a bank may be closed for the following circumstances:
1. upon the request of a customer, an account can be closed.
The customer may inform the bank in written of his/her intention to close
the account. The customer has to apply to the branch in charge for closing
the account. Then the in charge will remark on the account closing
application for closing the account.
By drawing a cheque of the whole amount and a nil balance confirmation
to be taken from the account holder.
Recover the unused cheque leaves and enter into the Broken cheque
book Register
Remove the account opening form, specimen signature card and all other
papers relating to the closed account.
Remarks of account closing at the ledger folio should be authenticated by
the manager of supervising officials

2. The bank may itself ask the customer to close the account when the banker finds that
the account is not been operated for a long lime.
If the account is not operated upon for 6 months the banker will try to do
the bilateral communication with the account holder, but if the banker
does not then the account becomes Dormant account get any response
from the account holder
If this not the operated upon for 2 years then the account becomes
inoperative account.
If the current account lying in inoperative current account for many
years then the account will be transferred to the unclaimed deposit
account.
A new register for unclaimed deposit account will be maintained called
unclaimed deposit account.

22
 For withdrawal at any amount from the account, permission from head
office or controlling office wins is required.
3. Fixed Deposit Receipt:
These are the deposits, which are made with the bank for fixed period specified in advance. It
is purely a time deposit account. The bank doesnt maintain cash reserves against deposits
and therefore the bank offers higher rates of interest on such deposits. A FDR is issued to the
depositor acknowledging receipt of the sum of money mentioned there in.
Procedure of Opening Fixed Deposit Account:
Before opening a Fixed Deposit Account a customer has to fill up an application form, which
contains the following:
Amount in figures
Beneficiarys name and address
Period
Rate of interest
Date of issue
Date o of maturity
How the account will be operated (singly or jointly)
Signature (s)
F. D. R. no
Special instruction (if any)

After fulfilling the above information and deposit the amount, FDR account is opened. A
FDR receipt is issued and it is recorded in the FDR Register, which contains the following
information:
FDR account no.
FDR no.
Name of the FDR holder with address
Maturity period
Maturity date
Interest rate

At present the rate of interest for Fixed Deposit Receipt (FDR) in the First Security Bank
Limited are as follows:
For 1 month Interest rate for < 1core is 8.00%, for >1 core is 8.00%
For 3 month Interest rate for < 1core is 9.50%, for >1 core is 9.50%
For 6 month Interest rate for < 1core is 9%, for >1 core is 9%
For 1year Interest rate for < 1core is 9%, for >1 core is 9%

Figure: Rate of interest for FDR

Other Types of Deposit Accounts:

There are also some other types of account facilities provided by the bank. These are:
i. Short Term Deposit (STD)
ii. Monthly Saving Schemes (MSS)

23
iii. Monthly Benefit Saving Scheme (MBSS)
iv. Double Benefit Deposit Scheme (DBDS)

24
i. Short Term Deposit (STD)
It is also a time deposit account. The formalities for opening is of this account are to those
required for current account. The only difference is that, frequent withdrawal is discouraged
and 7 days notice is required for withdrawal of any sum and interest is paid.
In Short Term Deposit Account, interest offered is less than of savings deposit, 7% interest is
paid on this deposit.

ii. Monthly Saving Schemes (MSS)

The prime objectives of this scheme are to encourage building up a habit of saving. In this
scheme, one can save a fixed amount of money every month and get a lucrative lump sum
amount of money after five, eight, and ten years.

Interest Rate of MSS

Amount in BDT
Tenure 100 250 500 1000 1500 2000 2500 5000

5 Year 7220 19300 38600 77200 115800 154400 193000 386000

8 Year 14460 36150 72300 144600 216900 289200 361500 723000

10 Year 20160 50400 100800 201600 302400 403200 504000 1008000

Table:2 Interest Rate In MSS

25
The objectives of this scheme are:
Building the habit of saving
Attract small savers
Saving for rainy days
Ensure regular income flow

So this scheme is introduced to attract depositors and encourage saving (mainly the smaller
earner people).

iii. Monthly Benefit Saving Scheme (MBSS)

Under this scheme one has to deposit a fixed amount for five years and he will receive
benefits on Monthly basis in return. Benefits start rights from the first month of opening an
account under the scheme and continue up to five years when the depositors will get refund
of this deposit.
Amount In BDT

Deposited Amount Monthly Benefit Amount

Tk. 25,000/- Tk. 250/-
Tk. 50,000/- Tk. 500/-
Tk. 100,000/- Tk.1,000/-
Tk. 500,000/- Tk. 5,000/-
Tk. 10,00,000/- Tk. 10,000/-
Table:3-MBSS
The objectives of this scheme are:
Help the retired persons for investing their retirement benefits
Create investment opportunities for non resident Bangladeshi
Explore investment opportunities for school, college, university etc.

iv. Double Benefit Deposit Scheme (DBDS)

In this scheme, a fixed amount of money, say tk. 50,000 or its multiply for 6 and years has
to be deposited. After 6 and years deposited amount will be doubled.
Deposit amount to be doubled in 6 and years, details are as under:
Period Deposited Amount Interest with deposit Payable amount
with interest at
maturity
6 and years BDT. 10,000/- Double BDT. 20,000/-
6 and years BDT. 25,000/- Double BDT. 50,000/-
6 and years BDT. 50,000/- Double BDT. 1,00,000/-
6 and years BDT. 1,00,000/- Double BDT. 2,00,000/-
6 and years BDT. 2,00,000/- Double BDT. 4,00,000/-
6 and years BDT. 5,00,000/- Double BDT. 10,00,000/-

Table-4: DBDS
The objectives of this scheme are:
Give maximum profit

26
 Help in meeting specific needs like education, marriage etc.
3.3 Local Remittance
With a network of their branches spread over the entire economy banks are eminently
suitable institution for the remittance of funds from one to another. Bank remittances are safe,
swift, inexpensive and simple. The main instruments for transfer of funds in case of First
Security Islami bank Ltd are in below:

A) Payment Order (P/O):

Unlike an MT or TT the bankers P/O is meant for affecting any remittance to an outstation.
In a sense the payment order is used for making a remittance to the local creditor. The Pos are
in the form of receipt, which are required to be discharged by the beneficiaries, where
applicable on revenue stamps of appropriate value against payment in cash or through an
account. The Po is negotiable instrument and cannot be endorsed or crossed like a bankers
draft.

Accounting Entry: Cash A/C ----------------------Dr

Bills payable (PO) A/C --------------Cr
Income A/C Commission -----------Cr
Income A/C Postage ------------------Cr
B) Demand Draft (DD):
Demand draft is an order of issuing bank on another branch of the same bank to pay
specified sum of money to the payee on demand that is the named person or order of the
demand. It is generally issued when customer wants to remit money in any place, which is
out side of the clearing-house area of issuing branch. Payee can be purchaser himself or
another mentioned in the DO. It is a negotiable instrument and it can be crossed or not.
C) Issue of Bank Draft:
The person intending to remit the funds through a bank draft has to deposit the money to be
remitted together with the commission depends on the amount to be remitted. On receipt of
the required amount along with duly filled in prescribed form the banker issues a draft and
hand over it to the purchaser. Account Entry:
Cash / Customer A/C Dr
HO A/C ------------Cr
Income A/C Commission Cr
D) Telegraphic Transfer:
This methods transfers money to one place to another place by telegraphic message. The
sender branch will request another branch to pay required money to the required payee on
demand. Generally for such kind of transfer payee should have account with the paying
bank. Otherwise, it is very difficult for the paying bank to recognize the exact payee. When
sending money is urgent then the bank uses telephone for remittance. This service is only
provided for valued customers, who is so reliable and with which banks have long -
standing relationship.
Accounting Entry:
Cash / Respective Account (Issuer) Dr
HO A/C paying branch (principal branch)Cr
Income A/C (Commission)-Cr
D) Mail Transfer Advice (MTA):

27
When the remitter desires the banker does it through a mail Transfer Advice. The payee
must have an account the paying office as the amount remitted in such a manner is meant
for credit to the payee's account and not cash payment.
3.4 Cash Section:
Cash section is the very important and busy section of FSIBL, Dilkusha branch and handle
with extra care. This branch uses several moving cameras in cash section to identify the
movement of unauthorized person or miscreants. I was not authorized to deal in this section
because of its sensitivity. Time factor is also vital for not to deal in this section. Operation of
this section begins at the start of the banking hour. Cash officer begins his /her transaction
with taking money from the vault, known as the opening cash balance. Vault is kept in a
much incumbent. The amount of opening cash balance is entered into a register. After whole
day's transaction the surplus money receipts the cash counter is put back in the vault and
know as the closing balance. Money is received and paid in this section.

I) Receipt:
Receiving Cash Officer should draw his attention to avoid from this type of Notice when he
/she taken money from the customers:
O A Mutilated Note
o A Mismatched Note
o A Discolor Note
O A Soiled Note
o A Forged Note
o A Un-current Note
o A Burn Note
Actually, there are three types of currency notes which should not be accepted namely
forged, defective and on currency notes.
The officer should enough care when he /she make payment of a cheque, some of the
important check points are given below:
Amount of the cheque
Who is the drawer of the cheque
Verifying the signature (in case of bearer cheque )
Posted $ /TK cash paid sale on the cheque
Name of the branch
Is it a fraud cheque
After payment the cheque the officer should maintain or noted account number, name or the
drawer and withdrawal amount in a register book.
Clearing Section:
A clearing house is such kind of house where all members bank settled their inter bank
transaction through their Bangladesh Accounts .As the Central Bank Bangladesh Bank is the
Leader of the Clearing House in Bangladesh . There are 53 members Bank in Bangladesh
under Central Bank There arc two parties in clearing house i.e. First House (Cheque
Delivery ) and Second (Return Delivery ). There are mainly two types of clearing system in
Bangladesh, such as:
Internal clearing or inter branch clearing or inward clearing
External clearing or inter banks clearing or outward clearing

28
The entire number banks representative daily conducts two meetings at a fixed time. In
their first meeting they handover cheque, drafts etc. passed, which has drawn upon them. In
case there are certain cheques, which could not be honored are returned to the presenting
banks with the reason of non-payments in the second meeting at he clearing-house.

I ) Inward Cheque Clearing : Inward cheque are those , which are issued by our account
holder to their debtors . Inter Branch Transaction Account (IBTA) makes the payment of
those of inward cheque. Generally, the following precaution are to be taken by the FSIBL,
for payment of inward cheques:
1) Printed & proper form of the cheque
2) Date of the cheque
3) Amount of the cheque
4) Clearing seal and endorse
5) Posting in the register book
6) Computer Posting
7) A credit advice bearing CA number and properly sealed in sent to the IBTA.
8) A credit voucher is written for sending credit advice
9) A dishonored cheque is sent with a cheque return memo which specifies the reason
of dishonor.
II) Outward Cheque Clearing: Collection of cheques, bills of exchange and other
instruments on behalf of a customer is an indispensable service rendered by a modern
banker has two options before him-
1) Either to receive its payment personally or through his agent at the drawee bank.
2) To send it to his banker for the purpose of collection from the drawee bank.
a. Operating Procedure:
Clearing operations are completed in three stages:
Operation at branch level
Operation at internal clearing house
Operation at the clearing house in Bangladesh Bank
Bangladesh Bank clearing their house sites twice in a day. In its first meeting
Bangladesh Bank clearing-house received instruments and distributes the same
among the representatives comes with returned instruments and distributing among
the representatives.

29
 b. Software:
Software called NIKASH supplied by Bangladesh Bank is used in clearing of the
cheques and other instruments. The in-charge of clearing section makes clearing slip
for each cheque through computer using NIKASH and finally these cheques are
sending to the Bangladesh Bank Clearing-House sorting bank wise.
Crossing:
Crossing cheque is written across the face of the cheque within two parallel lines.
This practice becomes common even outside of clearing house, as an element of
safety.
a. Purpose of crossing:
To avoid possible loss that may occur by open cheques getting into the hands of
wrong parties
Crossing is a direction to the paying bank to pay the money generally to a bank or a
particular bank; so that it can be easily traced out for whose use the money was
received.
b. Forms of crossing:
General Crossing:
Not negotiable
And company and co
Not transferable
Special Crossing:
Payee A/C only
Not negotiable
Endorsements:
An endorsement is the mode of negotiating, a negotiable instrument.
Dispatch:
Dispatch includes all correspondence, letter, statements, returns, and telegrams. This
dispatch is also known as Mail. Dispatch is primarily divided into two types:
Inward: It means what are receives from the outside.
Outward: It means what sent to the outside.
It is also divided into (a) Ordinary. (b) Registered and (c) Local.
III ) Parties to a Cheque :
a) Drawn a person who orders the bank to pay money form his account
b) A person who pays the amount of the cheque
c) Payee
d) A person who receives the amount of the cheques.
Payment procedure of a Cheque:
1) The cheque should be written in the bank's supplied printed cheque form
2) The cheque should be presented for payment only to the branch of this bank on which
it drawn
3) The cheque should be submitted with a date
4) The amount in words and figure must be same
5) The account holder signs the cheque
6) There should be sufficient balance /fund in the account of the customer to meet the
cheque
V ) Refuse conditions to a cheque :

30
 I. Whether the cheque is post dated
II. Whether the cheque is out of dated
III. Whether the fund is insufficient
IV. Whether drawer does not sign the cheque
V. On receipt of customer's stop payment instruction
VI. On receipt of notice of a customer's death
VII. On receipt of notice of customer's insanity
VI ) Answer generally give in case of Dishonored Cheque :
i. Refer to drawer
ii. Not arranged for
iii. Exceeds arranged
iv. Endorsement irregular
v. Effects not cleared
vi. Drawer deceased
vii. Words and figures differ
viii. Drawer's signature differs
ix. Payment stopped by the drawer
x. Cheque are multilateral
xi. Cheque is not of date /post dated requires revalidation
xii. Crossed cheque-pleased present through a bank

31
VII) Punishment of Bouncing of Cheque:
If the drawer is found guilty of a criminal offence under section 138 he would be punished
with a
Imprisonment of one year of a fine to the extend of twice the amount of the cheque dishonor
or both
VIM ) Clearing House :
A clearing house is such kind of house where all members bank settled their inter bank
transaction through their Bangladesh Accounts .As the Central Bank Bangladesh Bank is the
Leader of the Clearing House in Bangladesh . There are 53 members Bank in Bangladesh
under Central Bank .There are two parties in clearing house i.e. First House (Cheque
Delivery ) and Second (Re turn Delivery )
IX) Closing of Accounts
The relationship between banker and customer is a contractual relationship .Like any other
contract, therefore it may be terminated as and when the parties so desire. Moreover the
banker is under a statutory obligation to suspend form customer's account certain legislative
provision; however, customer account with a banker may close in the following
circumstances:
a) The customer may request /directs the banker in writing to close the account.
b) The banker may itself ask the customer to close his account when the account has
not been operated for a long time.
c) In case the banker finds that the customer should is not desirable .In the following
case the banker that the customer should suspend all payment from the account till
the matter is finally settled.
d) When banker receives notice of customer's death or insanity / lunacy
c) When the customer becomes insolvent or in case of a company it goes into
liquidation.
f) When the banker receives a Garnishee Order
g) When the banker receives notice from the customer regarding assignment of the
balance standing to the credit of his account by him to a third party .The banker in
such is bound to pay the money to the third party.
3.5 The Services offered by FSIBL:
First Security Islami Bank Ltd. has on offer a board array of innovative financial services
specially designed to match the specific requirement of our clientele ranging from large
corporate houses, small and medium enterprises to private individuals. The team of
professional assists the clients in finding the most appropriate financing package making use
of the Banks own recourses and /or organization loan syndications to help the clients realize
short-term goals and long-term aspirations. They are committed to design the best possible
financing package for our clients that best fit their individual requirements, covering the
entire spectrum of banking. Commercial banking is the core activity of First Security Islami
Bank Ltd. The Banks serves all types of customers ranging from individual to corporate
entities, both private and public.

32
 Online any Branch Banking
FSIB have set up Wide Area Network through Radio, Fiber-Optics & other available
communication media systems to provide any branch banking to our customers.

Customer of one branch is now able to deposit and withdraw money at any of our
branches. All Branches are included in our Wide Area Network.

No TT/DD or cash carrying will be necessary.

SMS Banking
First Security Islami Bank Ltd. has officially launched SMS banking service from
December 17, 2007.
Locker Service
For safekeeping of customer's valuables like important documents and goods like
jewelries and gold ornaments, FSIB Locker Service is available in most of the Branches
in urban areas.

Nature of Service Custody of Locker / Safe

Nature of Charges Rent

Locker Available Branches

Dhaka Division Chittagong Division
Dhanmondi Probartak Mor
Banani Agrabad
Mirpur
Gulshan
Khulna Division Sylhet Division
Khulna Branch Sylhet
Biswanath
Utility Bills
The utility bill's received following Branches
Branch Name Bill's Type
Mohakhali, Dhaka DESCO
Topkhana, Dhaka Under process (Electric bill)
Gulshan , Dhaka Titas Gas
Shafipur , Gazipur Dhaka Pally Biddut Shumitty
Keranihat, Chittagong Pally Biddut Shumitty
Biswanath , Sylhet Pally Biddut Shumitty

33
 ATM Banking

First Security Islami Bank Ltd. has implemented successfully Automated Teller Machine
(ATM) /DBDIT card transaction from June 25, 2008. Through Automated Teller Machine
(ATM ) /Debit card, customer can avail the facilities like withdrawal money, balance
inquiry and purchase goods from Point of sale (POS) using Dutch Bangla Bank Ltd. ATM
Booth and POS.

Loan and Advance Division

Its very important department and a major side of the bank. This department mainly deals
with loans that are provided to different parties. There are two major parts of this department:

a. Funded Part:
Over draft and loans comes under this section. By taking collateral from the borrower bank
allows to take overdraft facility is a continuous process borrower has to pay interest for the
withdrawn money. There are two types of loan:
Time loan
Term loan

Funded credits are as follows:

I. Overdraft: When a current account holder is permitted by the bank to draw more than
what stands to his credit, such advance is called an overdraft. The banker may take
some collateral security or may grant such advance on the personal security of the
borrower. FSIBL gives this overdraft facility to its reputed clients.
II. Consumer credit: Consumer credit is relatively new field of micro credit activities.
People with limited income can avail this facility to buy household products such as
Furniture, TV, Refrigerator, Car, etc.
III. General loan: When a advance is made in a lump sum, repayable either in fixed
monthly installment or in lump sum and no subsequent deduction allowed except by
way of interest or incident charge etc. is called a general loan. The whole amount of
loan id debited to the customers name on a loan account to be opened by the bank and
is paid to the borrower either in cash or in his/her CD/SD account.
IV. Payment Against Documents (PAD): A PAD facility is provided by the bank to
customer against the banks to documents/bill, like bill of leading, warehouse keeper
certificate, delivery receipt, dock warrant. In other word, payment made by bank

34
 against lodgment of shipping documents of goods imported through L/C facility under
this head.
V. Packing credit: Packing credits is essentially a short-term advance granted to an
exporter for assisting him to process, pack, and ship the goods.

Other funded credits are as:

I. Staff loan
II. Term loan
III. Cash credit hypothecation
IV. Loan Against Trust Receipt (LTR)
V. Small loan

b. Non-funded Part:
There is no cash amount involved in this kind of loan. L/C and Bank Guarantee fall in this
kind of loan. In case of L/C foreign exchange department mainly deals with it.
Non-funded credits are as follows:
I. L/C
II. Bank guarantee
Categories of Loan: All loans advances will be grouped into three categories for the
purpose of classification. This are-

Continuous Loan
Term Loan
Demand Loan

Types of Credit: FSIBL offer following types of the Credit (loans an Advances)

Cash credit (Hypo)

Continuou Lim
Cash Credit (Pledge)
s Loan Loan Against Trust Receipts (LTR)
Import
SOD (FO)
PAD
SOD (General), Bid Bond
SOD Import Investment)
PC (Shipment
IDBP Export
Loan (General)
Honse Building Loan (HBL) Figure: Type of Credit Cash Incentives
Continuous Loan:
Transport Term SOD export
The loan Accounts
Hire Purchase Scheme in which transaction may be made within Bill
Foreign certain limit and have an expiry
Purchase
date for full adjustment will beLoan
treated as continuous loan.
Consumer Finance Scheme
StaffTerm
Loanloan:
Loans which are repayable within a specific time period under a specific repayment
schedule will be treated as Fixed Term Loans
Demand Loan :
The loan that becomes repayable on demand by the bank will be treated as Demand Loans .
If any contingent or any other liabilities are turned to forced loans ( i.e. without any prior
approval as regular loan ) those too will be treated as Demand loans.

35
Such as : Forced LIM , PAD , FBP and IBP etc .

Different Case:
1) SOD Against FDR 13% interest than SOD Loan increase 2% interest
2) PC Shipment Investment Loan 7% interest

Finally other all Loan Scheme are 16% interest

Amount In Million (TK)

Loan of FSIBL
Source: Annual Report

Foreign exchange:
Refers to the process or mechanism by which the currency of one country is converted into
the currency of another country. Foreign exchange is the means and methods by which rights
to wealth in a countrys currency are converted into rights to wealth in a countrys currency,
in bank when we talk of foreign exchange; we refer to the general mechanism by which a
bank converts currency of one country into that of another.

Foreign exchange is divided in three parts.

Export
Import
Foreign Remittance

Import & Export Business Internal control System :

It refers to the process or mechanism by which the currency of one country is converted into
the currency of another country . Import & Export is the part of the Foreign Exchange
department.

Import Section
Import is the flow of foreign goods and services purchased by firms , customer and
government in Bangladesh . Hence, import of merchandise essential involves two things :
bringing of goods physically into the country and remittance of foreign exchange towards the
cost of the merchandise and services connected with this to the importer . An importer must
have Import Registration Certificate (IRC) given by Chief Controller Of Import & Export to
import any thing from other country.

36
Letter of Credit (L/C)
Letter of Credit (L/C) is an arrangement between an importer and the bank (Issuing bank )
The bank provides L/C in order to purchase goods from the exporter . The bank acts on the
behalf of the clients to deals with exporter and the clients make the payments after receiving
the goods accordingly .
Requirement of Opening a L/C :
Current Deposits Account Holder
IRC (Import Registration Certificate )
Import Policy
L/C authorizing from duly registered
L/C application duly fill up and sign
Contract/Indent
Insurance Coverage
Income Tax document
Contingency Liability Voucher
L/C registration

Bank as a Party of Documentary Credit:

Parties to the document credit are
1) An Issuing Bank
2) An advising Bank
3) A Confirming Bank
4) A reimbursing Bank
5) A negotiating Bank.
Import Mechanism:
The exports and imports Act, 1950 regulate the countrys import trade. The chief controller of
import and export provided the registration to the importer. Then the person secures a letter
of credit Authorization from Bangladesh bank. And then a person becomes a qualified
importer.

The import mechanisms are discussed bellow:

To have an import L/C limit, an importer submits an application to the import
department. An officer scrutinizes this application and accordingly prepares a
proposal and forwards it to the head office. If the MD satisfies, he sanctions the
limit and returns to the branch.
After sanctioning the limit, an officer of FSBL makes a L/C application.
After making the L/C application, must be scrutinized by the authority.
The transmission of L/C is done through tested telex or fax or mai9l to advise the
L/C to the beneficiary.
After receiving all documents, the negotiating bank checks the documents against
the credit. It the documents are found in order, the bank will pay accept or negotiate
to FSBL.

The officials have to very much careful while making payment. This task constitutes the
following--

37
 Usually payment is made within seven days after the documents have been
received.
A sale memo is prepared at B.C. rate to the customer. As TI and 00 rate is paid to
the ID, the difference between these two rates is exchange trading. Finally, an inter
Branch Exchange Trading credit advance is sent to ID.
For arranging necessary fund for payment, a requisition is sent to the ID
Telex is transmitted to the correspondent bank ensuring that payment is being
made.
Remittance means to sent or transfer money worth from one place to another In this case, the
bank acts as the media to transfer or remit the money. Against the service it charges some
commissions from the client.
Drawing arrangements:
Drawing arrangements is made to facilitate remittance through concluding accounting
relationship between a bank and corresponding, which may exist in the following three forms
of accounts.
NOSTRO A/C:
A foreign currency account that a local bank maintains that account with another bank in
abroad.
VOSTRO A/C:
An account, which a foreign bank maintains with a local bank, is called VOSTRO A/C.
LORO A/C:
An account, which a third party maintains with a foreign bank, is called LORO A/C.
Types of Remittance: There are two types of Remittance:
A. Foreign inward remittance:
The remittance in foreign currency, which is received from outside the country to our
country, is known as foreign inward remittance. The remittance can be performed in two
proceeds:
Visible inward remittance: e.g. export proceeds.
Invisible inward remittance: e.g.; family maintenance consultant fee. Cash is
remitted through TT, DO, etc.

B. Foreign outward remittance: Funds remitted to overseas on behalf of the client:

FSBL FOREIGN TARNSACTIONS:
Great Britain pound
U.S Dollar
EURO
YEN

EXPORT SECTION:
The term exports means carrying out of anything from one country to another, as banker we
define export as sending of visible things outside the country for sale. In a word export
means goods are outwards and foreign currencies are inward. Export trade plays a vital role
in the development process of an economy.

38
In order to export any goods or services to overseas the exporter must have attested
photocopies of the following documents with the up to date ERC. The documents are as
follows-
Bill of exchange
Commercial invoice
Certificate of origin
Packing list
Insurance coverage
Insurance coverage
Beneficiary certificate
If the bank authority satisfies with all the information provided by the exporter, steps are
taken to smooth out the process of export.

Procedure of Export:
The Exports Act, 1950 regulate the countrys export trade. There are a number of formalities,
which an exporter has to fulfill before and after shipment of goods. These formalities or
procedures of export mechanism are enumerated as follows:
Registration:
The exports from Bangladesh are subject to export trade control exercised by the ministry of
commerce through chief controller of imports and exports. No exporter is allowed to export
any commodity permissible for export from Bangladesh unless he or she is registered with
CCI & E and holds valid export registration certificate (ERC). The ERC number is to be
incorporated on EXP forms and other documents connected with exports.
Obtaining EXP:
After having the registration, the exporter applies to the bank with trade license and ERC for
getting EXP. If the bank satisfied an EXP is issued to the exporter. Securing the order after
having the registration, the exporter may proceed to secure the export order. Contracting the
buyers directly through correspondence can do this.
Signing of the Contact: The following points are to be mentioned while making a contract-
Description of the goods
Quantity of the commodity
Price of the commodity
Shipment
Insurance and marks
Inspection

Procuring the Materials:

After making the deal and on having the L/C opened in this favor, the next step for the
exports is to set about the task of procuring the contracted merchandise.
Shipment of Goods:
The following the documents normally involved at the stage of shipment
EXP form
Photocopy of registration certificate
Photocopy of the contract
Photocopy of the L/C

39
 Freight certificate from the bank
Railway receipt, barges receipt or truck receipt
Shipping instructions
Insurance policy
After those, exporter submits all those documents along with a letter of indemnity to the bank
for negotiation; an officer scrutinizes all the documents. If the document is a clean one, FSBL
purchases the documents on the basis of banker-customer relationship. This known as foreign
documentary Bill purchase (FDBP).
Procedure for FDBP:
After purchasing the documents, FSBL takes FDBP charges from customers A/c. a FDBF
register is maintained for recording all the particulars.
Foreign Documentary bills for Collection: FDBP signifies that the exporter will receive
payment only when the issuing bank gives payment. The exporter submits duplicate EXF
form and commercial invoice, an FDBP register is maintained where first entry is given,
when the documents are forwarded to the issuing bank for collection and the second one is
after realization the proceeds.
]Advising L/C:
When L/C export) is transmitted to the bank for advising the bank sends advising letter to the
beneficiary depicting that L/C has been issued. The procedure of L/C advising is as
follows---
Verify the signatures
Given entry in the L/C advising register.
Issued voucher for L/C advising commission

Letter of Credit (L/C):

Letter of Credit (L/C) is an arrangement between an importer and the bank (issuing bank).
The bank provides L/C in order to purchase goods from the exporter. The bank acts on the
behalf of the clients to deal with exporter and the clients make the payments after receiving
the goods accordingly.

Requirement of Opening a L/C:

Current deposit account holder
IRC (Import registration Certificate)
Import policy
L/C authorizing form duly registered
L/C authorizing form duly registered
L/C applications duly fill up and sign
L/C applications duly fill up and sign
Contract/indent
Insurance coverage
Income tax document
Contingency liability voucher
L/C registration
Back-to-Back Letter of Credit (BTB L/C):

40
A back-to-back letter of credit is a new credit. The banks main security is the original credit.
Bank to back L/C is opened under a master L/C one or more L/C is opened against one
master L/C.
Requirements of Opening a Back-to-Back L/C:
Master L/C
Valid import registration certificate and Export Registration certificate
L/C Application and LCA form duly filled in signed
Pro-forma invoice or indent
Insurance cover note.
IMP form duly signed.
Types of BTB L/C:
There three types of BTB L/C they are
Local BTB L/Cs
Foreign BTD L/C
EPZ
Opening Process of a L/C:
a) Approach by the applicant with submission of under mentioned documents:
Approach letter
L/C agreement
L/C authorization form
IMP form
Pro forma invoice
Insurance

b) Preparation of proposal by the branch. Parts of proposal are stated bellow:

Name and address of the applicant
Nature of constitution with name of owners
Nature of business
IRC # TIN #
Commodity to be imported
Beneficiarys name and address
Beneficiarys credit report
Country of origin Liability
Security
Other Conditions
Recommendation 3 on receipt approval from the competent authority, branch issues
L/C.
c) On the issuance of L/C, Branch may use the printed copy as prepared by the
individual bank or developed by the concerned official. Related copies are stated
bellow:
Original copy
Applicant copy
Advising bank copy
Issuing bank copy

41
 CCI and E copy (only for foreign L/C)
d) Parts of a L/C are discussed bellow:
The L/C may be irrevocable document
L/C opening date must be mentioned
L/C number
Beneficiarys name with address
Applicants name with address
Advising bank
Amount
Date of shipment
Sight
Date and place of expiry
Pro-forma invoice with date that had been sent by the Beneficiary
Signature of authorized officials
Other terms and conditions
Documentation:
At first prepare forwarding. Then arrange the following documents----
Bill of exchange
Commercial invoice
Packing list
Certificate and other documents

Retirement:
This means wait for payment. When the beneficiary sends the goods, they send related
documents for payment to the bank. The bank starts the retirement procedure. At first
checking these documents with the L/C, L/C time, date number, invoice, terms and
conditions, beneficiaries.

Foreign Payment:
The issuing banks prepares voucher, then entries in the IBTA register, ETDA, and then send
to the ID. Id informed the bank, which maintains liaison between the issuing bank and
advising bank. Then the bank pays to the beneficiary after checking the authentication code.
Payment:
Then they pay in local payment and foreign payment. In case of back to back L/C for 30, 60,
90, 120 & 180 days of maturity period, deferred payment is made. Payment is given, term
and condition, beneficiaries.

42
CHAPTER: FOUR
SWOT ANALYSIS

43
4.1 SWOT Analysis:
SWOT analysis is an easy technique through which managers create quite overview of
company's strategic situation . It is based on the assumption that an effective strategy derives
from a sound Til' between a firm's internal capability ( strengths and Weakness ) and its
external situation (opportunities and Threats ) .A good fit maximizes a firm's strengths and
opportunities and minimizes its weakness
and tlireats.
Strength of the organization
strength is a resources skill or other advantage relative to competitors and the needs of the
markets a firm se4rves or expects to serve .
FSBL has adequate physical facilities and equipment's to provide better services to
the customers . The bank has computerized banking operation Counting machine in
the teller Counter has been installed for speedy and secured services at Ihc cash
counter.
The top management of the bank is also a major strength for the FSBL and
contributed heavily towards the growth and development of the bank . The top
management officials all have reputed of banking experience skill and expertise .
Computerized statement for the customers as well as for the internal use of the banks
are also available.
All the branches of FSBL are equipped with telex , fax and internet facilities .
Many jobs are performed in grouped of two or three in order to reduce the workload
and enhance the process of completion of the job .
First Security Bank Limited developed smooth relationship with their clients and
corporate business banking activities through out the country .
Regarding contribution toward country's GDP they contributed a handsome amount
per year
The environment within the organization is very helpful .positive and informal.

Weakness of the organization :

A weakness is a limitation of deficiency in resources skills or capabilities that seriously
impedes a firm's ctYcctivc performance .FSBL's weakness are as follows :
To open an account some times people have given incomplete information which
will become a very acute when any dispute arises .
Because of good relationship some time branch manager authenticated the accounts
with introducer , sometime it is very different for the employee to void such
circumstances which in turn brings question .
There are not available card services
There have error regarding advice
Sometimes the process of information transferring to the management is
lengthy .
In cash department because of in frequent promotion output decreased
Maximum parties have no financial strength
Most of the time parties are creating sort of pressure to get the loan
In term of law & order situation sometimes it is very for the bank

44
Opportunity of the organization
Debit Curds and Tele Banking are the new retail banking services provided by the
foreign banks . FSBL can evaluate the option of launching Debit Cards and Tele
banking system.
SMS Hanking First Security Bank Ltd. has officially launched SMS banking service
from December 17,2007 .It may bring opportunity for the Bank .
Online Banking : FSBL should move towards the online banking operations .it is
high time to go for , because some banks are already in to online banking operation .

Threats of the organization :

Multinational Bank : The rapid expansion of multinational bank poses a poetical threat
to the new private commercial Banks . Due to the booming energy sector , more
foreign banks are expected to operate in Bangladesh . Since the foreign banks have
tremendous financial strength , it will pose threat to local banks to a certain extent in
terms of grabbing the lucrative clients .
Upcoming Bank : The upcoming private local banks can also pose a threat to the that
Bank . It is the expected that in the next few year ,many of the local private banks
may emerge . If that happens the intensity of competition will rise further and banks
will have to develop strategies to compete these banks .
Contemporary Banks : The contemporary banks of FSBL like SIBL , MTBL , DBBL ,
Prime Bank , Southeast Banks are its major rivals . They arc carrying out aggressive
comparing to lucrative , corporate clients as well as long time depositors , FSBL
should require vigilant absent the step taken by these banks as these will in turn affect
FSBL Strategies .

45
Organizational Structure of FSIBL:
Corporate Structure is about how corporate is running its operation to achieve its corporate
objective Bangladesh Bank gives emphasis on implementing corporate government among
the financial institution and to do that , BB emphasizes implementation of the guidelines
issued by them for improving corporate structure in banking . Good Corporate Structure
practices enhance an entity's corporate image and market credibility , which attract capital
and increase its borrowing power . These can be reflect in the quality of financial reporting
and disclosures , strength of internal control system and internal audit function induction of
professionally competent , delegation of authority to executives and staff, protection of
corporate Structure for strengthening organization strength .
Ownership Structure :
In 2007 total number of shareholders of the Bank was 26 . 100 % share are owned by the
shareholders .There are no shares owned by the officers of the bank . Top 10 shareholders of
the bank are holding 79.31% of the total shareholding . The bank did not issue any debt
securities and has no plan to issue debt securities within months.
Composition of the Board :
FSBL's Board of Directors comprise 13 members headed by Alhaj Md. Saiful Alam
Chairman of the board . Mr. Alam is a well - known business personality of the country . Ms
Sarwar Jahan Maleque , a sponsor shareholder is the vice - chairperson of the board.

46
Capital and Reserves
First Security Bank Limited (FSBL ) is one of the third generation private banks in
Bangladesh . FSBL commenced its commercial operation October 1999 with authorized
capital BDT 1500 million and paid up Capital BDT 200 million . By the end of 2007 bank's
authorized capital and paid-up capital reached to BDT 3600 million and BDT 1000 million
respectively . In 2007 paid -up capital grew by 11 .11 % . The bank entered into IPO on July
20 , 2008 .
Function of FSI11L Head office :
A Bank plays a vital role for developing economic growth in any country and money
circulation . It function in different ways , FSBL function are as :
* Control all branch banking activities .
* Advice / Guidelines through the branch
* Function as trustee', executor , Administrator of an estate of the branch / customer .
* Acts as correspondent and representative of its customers , other banks and
financial institution
* Conduct stock exchange transaction , i.e. Purchase and sale of shares and securities
for the customer
* Accepted valuables for safe custody
* To conduct foreign exchange business
* Lease financing
* Merchant Banking
* Factoring
* Provide the rules and regulation to branch
* Dealing the employee's salaries , allowance & benefits

47
Chapter: Five
Conclusion

48
5.1 Findings:
In spite of inflexible competition among Banks operating in Bangladesh, both foreign and
local, First Security Islami Bank Ltd. has achieved satisfactory progress in areas of its
operation and earned an impressive operating over the previous years. From this internship
work, several issues are found which needs to be emphasized for First Security Islami
Bank Ltd. greater success. From both the observation and in-depth informal interview, it has
been found that there is a gap indeed between what the economy expect (expectation level)
and what actually it is getting (satisfaction level). In other words, many
Customers were dissatisfied due to some areas of incompetent services. So in order to sustain
in the highly competitive banking industry First Security Islami Bank Ltd. might take
this issue under serious consideration. Besides if competitors could identify these gaps of
FSIBL, then there is a possibility that they could use this as their advantage by not having
such gaps in their services. Thus FSIBL should focus on increasing its market share by
providing quality service as promised and at the same time, providing new products/ services
that would satisfy customer need even more, creating a competitive advantage over its
competitors. As per as my working experience is concern, it cannot be spelled out with in few
words. It really gave me a tremendous experience of working in a congenial atmosphere. My
experiences with FSIBL prove that putting corporate interest before individual interest and a
sense of responsibility can lead and organization to its desired goal.

49
Following suggestions are very essential to adhere for effective Banking
Administration:
1. HR functions to be linked to corporate goals.
2. Shift from Industrial relations manager to Business manager or Commercial manager.
3. Team work is another important and essential soft skill that is necessary in this industry.
4. The HR Professionals have to introduce &improve the adaptability of their structure that
will be able to absorb, draw and retain the best.
5. As people are primary asset, it is essential not only to invest in them, but also to ensure
that the supporting elements for this asset are such that it can provide the maximum value
on a sustainable basis.
6. HRD is to be regularly reviewed against business outcomes as part of strategic and
operational planning.
7. To overcome the public sector's hierarchical structure, which gives preference to seniority
over performance, is not the best environment to attract the best talent from among the
young.

50
5.2 RECOMMENDATIONS:

1. It is worthwhile to consider broad-basing the courses conducted in these institutions

among other higher level educational institutions, so that specializations in the area of
banking and financial services becomes an option in higher education curricular.
2. This calls for greater transparency more effective communication, and a high degree of
professionalism in the bank's staff, are the need of the hour.
3. There is a pressing need to develop work practices which encourage efficiency in this
banking sector.
4. Incentive structures need to be conceived, supported by appropriate training and
motivations, which aligns the employee's goals and orientations with the core
competencies and strategic advantages of the institution
5. This service sector has to explore the feasibility of entering into collaborative
arrangements with universities and other institutions in India and abroad to identify and
provide specialized training in the financial services industry with an ongoing flow of
emerging training packages.

51
5.3Conclusion:
The profit destroying intra industry rivalry in the banking industry makes a banks operation
challenging to squeeze out any abnormal profit. In such situation, with an enormous financial
strengths and brand image, FSIBL is serving the local people of Bangladesh by offering
diversified banking services. Doing outstanding performance and being the dominant among
the industry in this cut throat competitive situation depends not only on the internal strengths
but also on the external opportunities. Considering this, efficient, timely and updated
corporate strategy makes a way out for an organization to reach the desired position. FSIBL
is such a bank which was able to grow its size in banking industry of Bangladesh through
consistent performance. Though FSIBL has established image as one of the best service
provider for its potential customers; yet FSIBL is not the market leader. The consistent
performance of the bank over the last few years is the evidence of the strengths of the bank,
efficiency of management team, and uphill struggle of employees. Despite the existence of
deficiencies in some areas, the overall performance of FSIBL was outstanding among the
banking industry in Bangladesh. The bank has to overcome the shortcomings in the near
future and offer new innovative services in order to retain its position as a leader amongst
banks year after year

Reference
www.fsiblbd.com

52