Internship Report on LC Opening, Lodgement, Retirement Procedures and Performance of Prime Bank Ltd

From the inception of the civilization the banking sector has been dominating the economic development of a country by mobilizing the saving from the general people and channeling those saving for investment and thus economic development and growth. To satisfy the demand as well as to improve the commercial banking service in our country, Prime Bank Limited, a scheduled bank was incorporate to initiate its operation with the aim to play the vital role on the socio economic development of the country. At present Prime Bank Ltd (PBL) is one of the leading private sector banks in our country in terms of quality services to the customers & value addition for the shareholders. Financial Soundness of any financial institution is the prime concern for its survival in the competitive & changing business environment. This is more important in case of the banking
institutions. Prime Bank Limited is a fast growing bank and several times it occupies the first position in CAMEL rating.
I was assigned to PBL, SBC Tower Branch. I have studied "Import Section of Foreign Exchange Department''. While preparing this report I have tried to reveal the insight of the import banking services of the bank. Simultaneously efforts have been made to provide an in-depth analysis on L/C opening, lodgment, retirement procedure and performance of PBL. Finally some recommendations and suggestions were also prescribed based on observations and findings. The report is mainly divided into two Parts-Organization part & Project part. Organization part reveals an overview of PBL. Details of L/C and a performance analysis of PBL have been described in the project part. No doubt that the yearly growth of import L/C opened in PBL is satisfactory. But I think there are opportunities to earn more profit. PBL should carefully scrutinize the quarterly performance along with estimating the annual gross amount of L/C opened. No research cell is available here to work for this. I recommend taking some experienced marketing officers and executives in marketing division who has experience regarding bank product specially L/C. I do hope that my study will be helpful for the future operation of the import section of PBL.

The BBA program is designed to focus on theoretical and professional development of students
who are ready to take up business as a profession as well as service as a career. The course is
designed with an excellent combination of theoretical and practical aspects. Classroom
discussion can’t alone make a student perfect in handling the real job situation. Therefore it is an
opportunity for the student to know about real situation through internship program. The primary
goal of internship is to provide a job exposure to the student and an opportunity for translation of
theoretical conceptions in real life situation.
In this connection, after completion of four-year academic BBA program I was assigned to
Prime Bank Ltd, SBC Tower Branch, import section of foreign Exchange Department under the
guidance of my faculty advisor Md. Mehadi Masud, Lecturer, Department of Accounting &
Information System. The duration of my organizational attachment was, Three (3) months. As a
requirement for the completion of the program I needed to submit this report, which would
include an overview of the organization I was attached with and an elaboration of the project I
was supposed to conduct during the internship period.
1.2 Organization of the report:
The report is mainly divided into two major parts:
Ø The Organization part: This part includes the company profile, different products and
departments of PBL, i.e. an overall idea about the bank
Ø The Project part: The project part is based on the Foreign Exchange operations of PBL,
SBC Tower Branch. The report dictates about the procedures and methods followed by
PBL in handling of Letter of Credit and other foreign exchange transaction .The risk
associated with these transactions and the strategies followed by PBL to overcome those,
have also been included. Finally, a performance of Prime Bank Ltd has been analyzed.
1.3 Objectives:
1.3.1 General Objectives:
In this report I tried to find out all sorts of practical dealings that are conducted in case of
handling various types of commercial banking activities especially the import transactions. Here
the theoretical aspects hat is what should be the procedures and requirement maintained from first to
last, and actual practice as well as the ultimate gain for the bank in conducting financial activities are
mainly discussed. I tried to show various graphs by which data and information has been presented.
General objective of this report is to know about the management system of Prime Bank Ltd as a
private commercial bank as well as its formation, and its functional, operational and financial
1.3.2 Project Objectives:
Ø To present an overview off Prime Bank Ltd.
Ø To make a bridge between the theories and practices on banking operations.
Ø To be familiar with day to day functioning and service offered by a commercial bank.
Ø To know about the international trade financing activities
Ø To acquaint me with the techniques, laws, principles and procedures adopted in
financing foreign trade off Bangladesh.
Ø To know about the functions of the Foreign Exchange Department especially the opening
of LC & the procedure of lodgment & retirement of import bills.
Ø To observe and analyze the performance of the specific branch and the bank as a whole.
Ø Finally, to identify problems of PBL and provide subsequent recommendations.
1.4 Literature Review:
Import Policy directs Import Procedure, which administers the whole activity. Due to organized
and specific prescribed rules and standards set by the government very few worked with the
procedures of L/C opening, lodgment and retirement. Some works have been done about the
performance of PBL’s import section. Kaysar Joseph (2006) finds L/C margin discriminations
among the customers is the main constraint of less import L/C customer. He also says e-mail
should be used side by side of SWIFT to reduce the cost of taking L/C services. Nowrin Sabrina
(2006) in her study describes how manually maintained works hampers the overall operating
efficiency of the bank. She finds the signatures; either of the bank officer's or the importers are
verified manually. For this purpose the signature handbooks that are given by the head office are
followed. Sometimes the needed sign are not present then it takes a long time. Again sometimes
the officer may be misguided. Ronjon Nihar (2005) says there are intranet facilities available in
Prime Bank Limited. The officers have to give extra time to adjust the On-line Transaction. He
recommended Intranet should be implemented to make the on--line service smooth and to
increase the efficiency of work.
1.5 Scope of the report:
This report covers the details of Prime Bank’s practices about foreign exchange activities
emphasizing” LC opening , Lodgment, Retirement Procedures and Performance of Prime
Bank Lt- An Analysis”. This report consists of my observations and on the job experiences
during the internship period in the import section, Foreign Exchange Department of SBC Tower
branch. This report emphasizes on the activities of Prime Bank Ltd in the Foreign Exchange
Department especially details procedures of L/C related activities.
1.6 Methodology:
This report is based on the primary and secondary data. This report also bears the practical
knowledge of individual worked during the internship period. So the methodology is the mixing
of primary and secondary data with practical knowledge. Most of the necessary information has
been collected by face to face interview with the people working in different departments,
personal investigation, several documents, and files in which most of the activities of the bank
are recorded. Observational method and experience has been employed to complete this report.
1.6.1 Primary Sources:
Ø Major source of information were discussions with the officers of Foreign exchange
Ø Informal conversation with the clients.
Ø Practical work exposure from the different desk of Foreign Exchange Department of the
1.6.2 Secondary Sources:
Ø Annual Report of Prime Bank Limited.
Ø Foreign Exchange Manual.
Ø UCPDC Articles, ICC Articles.
Ø Periodicals published by Bangladesh Bank.
Ø Training material collected from the bank.
Ø Daily diary (containing my activities of practical orientation in PBL) maintained by me.
Ø Various books, articles, compilations etc regarding Foreign Exchange Operations.
1.7 Limitations:
There were certain limitations regarding the study that is summarized below:
§ Sometimes I was assigned to do some jobs without explaining why this work was to be
done. This situation has created a lot of problems to understand why a specific function is
being performed.
§ Large-scale research was not possible due to constraints and restrictions imposed by the
organization. For example, the bank does not care about seasonal fluctuation of the
amount of L/C opening of a particular sector rather it cares the total amount of L/C
§ Deficiencies in data in a systematic way (sector wise data of L/C opening) required for
the study. Moreover I had to work with two year’s data, which I think is not sufficient for
this type of study.
§ In many cases, up to date information is not published.
§ Large-scale research was not possible due to time constraints.
§ The tenure of the Internship program is only three months. Since Foreign Exchange is a
vast area, after doing the regular office works from 9 AM to 7 PM it is not possible to go
through in depth within this short span of time.
§ Relevant date and document collection were difficult due to the organization
§ For the restrictions imposed by the bank I could not go for details survey on the
§ SBC Tower Branch is a new branch. It launch at the end of 2006.So it is not possible for
me to go through details research because of lack of details data for a longer period of