4. 4
• To analysis the performance of L/C operations of
Mercantile Bank Limited, Uttara Branch
Broad Objectives
• To complete the Internship as per the
requirement of BBA Program of IUBAT.
• To realize how to behave with customers in
different situations.
• To find out where the bank was and where the
bank is standing at present time.
• To present an overview of foreign exchange
division of MBL
• To know about different kinds of letter of credit
operations
• To identify the risk associated with the letter of
credit of this branch.
Specific
Objectives
5. 5
Time Duration of the report
Confidentiality
Lack of Communication
Lack of cooperation of clients
6. 6
Selection of the topic:
Identifying data sources:
Collection of data
Classification, Analysis, Interpretations and
Presentation of data
Findings of the study
Final report preparation
8. Head office 61,Dilkusha Commercial Area
Dhaka, Bangladesh
Legal Form Public Limited Company
Corporate Slogan “Efficiency is our strength”.
Catagory Commercial
Type Private
Date of Incorporation 20th May,1999
Inauguration of First Branch 2nd June,1999
Paid up Capital Taka 12000 million(2015)
Chairmen of the Board M. S. Ahsan
Name of Managing Director Kazi Mashiur Rahman
Number of Branches 119
Number of Employees 2017
E-mail it@mblbd.com
8
9. 9
Name – Mercantile Bank Limited
Incorporated in Bangladesh -May 20, 1999
Commenced commercial operation -June 02, 1999
Number of Branches -109 (10 new branches in 21st
December,2016)
Authorized Capital -Tk. 12000.00 million
Paid-up Capital -Tk. 7391.57million
Total assets -TK. 182800.17 million
Special emphasis -Export, Import, Trade Finance, SME
Finance, Retail Credit and Finance to women Entrepreneurs
10. Vision:
“Would make Finest Corporate Citizens”
Mission:
”Will become most caring, focused for equitable growth
based on diversified deployment of resources and
nevertheless will remain healthy and gainfully profitable
bank”.
10
11. 11
Strategic objectives –
To increase shareholders’ value
To achieve economic value addition
To be market leader in product innovation
To be one of the top three financial institutions in
Bangladesh in terms of efficiency
To be one of the top five financial institutions in
Bangladesh in terms of market share in all
significant market segments they serve
Financial Objectives-
To achieve 20% return on shareholders’ equity or
more, on average.
13. 13
Chairman
First Vice
President
Trainee Assistant
Officer
Assistant officer
Officer
Vice President
Executive Officer
Assistant Vice
President
Board of Director
Senior Executive
Officer
Principal Officer
First Assistant
Vice President
Managing
Director
Senior Executive
Vice President
Senior Vice
President
Deputy Managing
Director
Additional
Managing
Director
Executive Vice
President
14. 14
M.H Ahsan
Chairman
Md. Anwarul Haque
Vice Chairman
A.K.M
Shaheed Reza
Vice
Chairman
Dr Mahmood Osman
Imam
Independent Director
Dr. Md. Rahmat
Ullah
Independent
Director
Alhaz Akram
Hossain
(Humayun)
17. 17
•Satisfactory
operational efficiency
•Diversified product
lines
•Low human resource
turnover
•Experienced
Management Team
•Favorable reputation
in the banking
industry
•Don’t follow any
long-term
strategies
•Depends on
fixed deposit
•Lack of strong
promotional
sector.
•Limited branch
network
•SME business
•Real time
online banking
•Opportunity in
retail banking
•Can provide
more attractive
and deposit
facilities and
credit facilities
•Unfavorable
changes of
Government rules
and regulations
•Increasing
Interest Rate
•Increasing
Market Risk
•Market pressure
for Dollar crisis
Internal Factors External Factors
18. 18
Internal Factors Weight
(out of 1)
Rating
(out of 5)
Weighted
Score
Strengths
.10
.09
.20
.15
.11
.12
.10
.07
.06
1.00
3.00
3.00
5.00
4.00
3.15
3.00
3.00
2.90
3.00
.30
.27
1
.60
.35
.36
.30
.20
.18
3.56
•Satisfactory operational efficiency
•Diversified product lines
•Low human resource turnover
•Experienced Management Team
•Favorable reputation in the banking industry
Weaknesses:
•Don’t follow any long-term strategies
•Depends on fixed deposit
•Lack of strong promotional sector.
•Limited branch network
Total
19. 19
External Factors Weight
(out of 1)
Rating
(out of 5)
Weighted
Score
Opportunities
.15
.20
.20
.10
.12
.08
.10
.05
1.00
3.00
5.00
4.00
4.00
3.00
3.00
2.75
4.00
0.45
1.25
0.80
0.4
0.36
0.24
0.28
.20
3.98
Opportunity in retail banking
SME business
Real time online banking
Can provide more attractive and deposit
facilities and credit facilities
Threats
Unfavorable changes of Government rules
and regulations
Increasing Interest Rate
Increasing Market Risk
Market pressure for Dollar crisis
Total =
20. 20
Internal Factor
(IFAS)
External Factors
(EFAS)
Strengths (S)
-Satisfactory operational
efficiency
-Diversified product lines
-Low human resource
turnover
-Experienced Management Team
-Favorable reputation in the banking industry
Weaknesses (W)
-Don’t follow any long-term strategies
-Depends on fixed deposit
-Lack of strong promotional sector.
-Limited branch network
Opportunities (O)
-SME business
-Real time online banking
-Opportunity in retail
banking
-Can provide more
attractive deposit facilities and credit facilities
SO
-As the bank has satisfactory operating efficiency
it can use it to improve retail banking
-The bank can use its good will to grasp the
opportunity of SME business.
WO
-As the branch network is limited it can grasp the
real time online banking opportunity to five better
service
-Can provide more attractive deposit and credit
facility which will automatically help to remove
the weakness of weak promotional sector.
Threats (T)
-Unfavorable changes of Government rules and
regulations
-Increasing Interest Rate
-Increasing Market Risk
-Market pressure for Dollar crisis
ST
-Diversified product line can be used to get rid of
the threat of market pressure for dollar crisis.
- Experienced management team can handle the
situation of increased interest rate and market risk.
WT
-Long term strategies should follow so that it can
help to find a alternative solution in time of
increased interest rate and market rate.
-Dependence on fixed should deposit can create
problem if there is sudden change in government
rules and regulations. So the
dependence should decrease
21. 21
Strategic Factors Weight
(out of
1)
Rating
(out of
5)
Weight
ed
Score
Duration
Short Inter-
mediat
e
Long
S- Diversified product lines
S-Low human resource turnover
W- Depends on fixed deposit
W- Lack of strong promotional
sector
O- SME business
O- Opportunity in retail banking
T- Increasing rates of interest
T- Market pressure for Dollar
crisis
Total
.15
.10
.17
.09
.10
.10
.12
.17
1
4.50
5.00
3.50
2.75
4.1
4.3
2.8
3.00
0.675
0.50
0.595
.2475
.41
.43
.336
.51
3.7035
*
*
*
*
*
*
*
*
22. 22
Political Factor
Unstable government
law
Opposition does not
cooperate with
government
Unstable political
Situation
Economical Factor
Slow implementation
of economic reforms
Low GDP
Low interest rate
Money supply decrease
Inflation rate high
Share market fall
Socio Cultural Factor
Overpopulation,
Poor infrastructure
Corruption
Public is not giving
TAX
Prohibition on
interest
Hall mark inland bill
corruption
Technological Factor
Automation
Internet is not available
to the people
ATM need to increase
Online Banking should
be smooth
23. Porters Five Forces :
23
Rivalry
among
existing
competitors
Threat of
new
entrants
Bargaining
power of
buyers
Threat of
substitutes
Bargaining
power of
Suppliers
High
High
Medium
Moderately
low
High
24. 24
Banks Name Established Year Logos
Eastern Bank Ltd. 1992
Al-Arafah Islami Bank Ltd. 1995
Primer Bank Ltd. 1999
EXIM Bank Ltd. 1999
Bank Asia Ltd 1999
Trust Bank Ltd. 1999
Standrad Bank Ltd. 1999
Shahjalal Islami Bank Ltd. 2001
37. 37
• Organizational Culture
• How to behave with the colleague
• How to behave with the clients
• How to behave clients in challenging situation
• Time management
Primary
• General Banking Depertment -
• Foreign Exchange Department of MBL
• Cheque Clearing Section
• Check book issue
• Observation
Secondary
38. 38
Customer Dealing
Assisting officer
Maintaining registry book
Cheque book related work
39. 39
Advising Registry entry
Preparing Forward Letter
Maintaining files and keeping records
Preparing monthly statement
Other Tasks
40. 40
Entry of Cheque number and deposited amount
Give entry in registry book.
41. 41
The working environment was very comfortable
The employees of the bank from top to bottom
were very cooperative and helpful.
44. 44
Parties of L/C-
Mandatory Parties are:
Importer/ Buyer/ Applicant
Opening Bank/ Issuing bank
Advising Bank/ Notifying Bank
Exporter/ Seller/ Beneficiary
Optional Parties (In case of need) are:
Negotiating Bank
Confirming Bank
Paying/ reimbursing bank
Import Procedure
45. 45
Requirement for Import
An account with MBL, Uttara Branch
Valid Import Registration Certificate (IRC), annual import
number is mentioned
here.
Tax Paying Identification Number (TIN)
Pro-forma Invoice
Membership Certificate
LCAF (Letter of Credit Authorization form) properly
attested
One set of IMP Form
Insurance Cover note with money receipt
DP note
Letter of arrangement.
Others
46. 46
L/C Application
Advising the Import L/C
Presentation of Documents
Retirement of Documents
Payment Procedure of Import Documents
Date of Payment
Preparing Sale Memo
Requisition for the Foreign Currency
Transmission of Message
Loan against Trust Receipt (LTR)
47. 47
Formalities Required For Export L/C
Export Registration Certificate (ERC)
The EXP Form
Securing the Order
Signing of the Contract
Procuring the Materials
Registration of Sale
Shipment of Goods
48. 48
Back-to-Back Letter of Credit
Payment of Back-to-Back L/C
Inland Letter of Credit (ILC):
Local Bill Purchase
51. 51
To know why some L/C are not operating as fast as others
Documentation Process
Payment Delay
Credit Limit
52. Primary Sources:
Face to face conversation,
Interview with the account holders, bank manager, executives and clients
Data collected through the questionnaire.
Secondary Sources:
Secondary data are collected from the following sources:
Annual reports of MBL
Published documents
Official files
Data available with the website of MBL.
Different publication of Bangladesh bank and Bangladesh economic reviews.
Outlets of Bangladesh Institute of Bank Management.
52
56. 56
H1: The documentation process while opening a
L/C is complex.(need minimum 13 documents)
H2: MBL provides the list of necessary
documents to customer before opening a L/C
H3: Difference between the deposit amount and
L/C amount in MBL is high (25%)
H4: MBL provides the facility to adjust the credit
limit of L/C.
H5: The process of renewing a L/C is
complicated.
H6: The balance transfer procedure of payment of
MBL is fast.
58. 01. HA: Documentation process while opening L/C is complex
(need minimum 13 documents)
H0: Documentation process while opening L/C is simple
enough.
I want to test the null hypothesis
Ho: μ = 2.5
HA: μ > 2.5
n = 50
Since the sample size n > 30 so, I may use Z - test.
Here ,
=3.32
σ = 1.26
Zcal = ( –μ)/ (σ/√n) = 4.55
At 5% level of significance, follows Z distribution Z 0.05= 1.645
Since Z cal> Z tab,the null hypothesis is not accepted. So at 5% level of significance,
it can be said that Documentation process while opening L/C is complex .
58
60. Cont..
02. HA : MBL provides the list of necessary documents before opening a L/C.
H0: MBL does not provide the list of necessary documents before opening a L/C.
I want to test the null hypothesis
HO: μ = 2.5
HA: μ > 2.5
n = 50
Since the sample size n > 30 so, I may use Z - test.
Here
= 3.60
σ = 1.22
Zcal = ( –μ)/ (σ/√n) = 5.23
At 5% level of significance, follows Z distribution Z 0.05= 1.645
Since Z cal> Z tab,the null hypothesis is rejected. So at 5% level of
significance, it can be said that : MBL provides the list of necessary
documents before opening a L/C.
60
62. Cont…
03. . HA: Difference between the deposit amount and the L/C amount in high
(25%).
H0Difference between the deposit amount and the L/C amount in Low.
I want to test the null hypothesis
HO: μ = 2.5
HA: μ > 2.5
n = 50
Since the sample size n > 30 so, I may use Z - test.
Here,
= 3.88
σ = 0.87
Zcal = ( –μ)/ (σ/√n) = 11.5
At 5% level of significance, follows Z distribution Z 0.05= 1.645
Since Z cal> Z tab,the null hypothesis is rejected. So at 5% level of
significance, it can be said that Difference between the deposit amount and the
L/C amount in high (25%).
62
64. Cont..
04. HA: MBL provides the facility to adjust the credit limit of L/C.
H0: MBL does not provide the facility to adjust the credit limit of L/C.
I want to test the null hypothesis
HO: μ = 2.5
HA: μ > 2.5
n = 50
Since the sample size n > 30 so, I may use Z - test.
Here
= 3.60
σ = 1.17
Zcal = ( –μ)/ (σ/√n) = 4.44
At 5% level of significance, follows Z distribution Z 0.05= 1.645
Since Z cal> Z tab,the null hypothesis is rejected. So at 5% level of
significance, it can be said that MBL provides the facility to adjust the credit
limit of L/C.
64
66. Cont..
05. HA: The process of renewing a L/C is complicated.
Ho: The process of renewing a L/C is not that much complicated.
I want to test the null hypothesis
HO: μ = 2.5
HA: μ > 2.5
n = 50
Since the sample size n > 30 so, I may use Z - test.
Here ,
= 3.82
σ =0.82
Zcal = ( –μ)/ (σ/√n) = 3.39
At 5% level of significance, follows Z distribution Z 0.05= 1.645
Since Z cal> Z tab, the null hypothesis is rejected. So at 5% level of significance,
it can be said that The process of renewing a L/C is complicated.
66
68. Cont..
06..HA: The balance transfer procedure of payment of MBL is fast.
Ho: The balance transfer procedure of payment of MBL is not that much fast.
I want to test the null hypothesis
HO: μ = 2.5
HA: μ > 2.5
n = 50
Since the sample size n > 30 so, I may use Z - test.
Here
= 4.84
σ =0.42
Zcal = ( –μ)/ (σ/√n) = 39.40
At 5% level of significance, follows Z distribution Z 0.05= 1.645
Since Z cal> Z tab,the null hypothesis is rejected. So at 5% level of significance, it
can be said that The balance transfer procedure of payment of MBL is fast.
.
68
70. 70
H1: The documentation
process while opening a
L/C is complex.(need
minimum 13 documents)
44% are agreed, 14% respondents are strongly agreed
that the documentation process while opening a L/C id
complex.
12% respondents remain neutral
20%respondents are disagreed, and another 10%
strongly disagreed.
H2: MBL provides the list
of necessary documents
to customer before
opening a L/C
48%respondents are agreed, 24% respondents are
strongly agreed,
10% respondents are neither agreed nor disagreed, 8%
respondents are disagreed, and
12% respondents are strongly disagreed in statement
that MBL provides the document list.
71. 71
H3: Difference between
the deposit amount and
L/C amount in MBL is
high (25%)
According to 60% clients the gap between the deposit
amount and L/C amount is high and 20% strongly
agreed the fact.
8% respondents remained neutral,
12% said that difference is not that much hampering
H4: MBL provides the
facility to adjust the
credit limit of L/C.
Here 48% clients accepted that MBL provides the
facility to adjust the L/C limit and 20% strongly goes
with the statement.
12% clients were moderate ; and only 8% disagreed.
72. 72
H5: The process of
renewing a L/C is
complicated.
60% respondents identified that The process of
renewing L/C is complicated.,16% respondents are
strongly agreed,
14% respondents were remained neutral.
10% respondents are disagreed. So most of the
respondents
H6: The balance transfer
procedure of payment of
MBL is fast.
86% respondents strongly agreed that the balance
transfer procedure of payment of MBL is fast. 12%
agree the statement
2% were moderate, they neither agree nor disagree the
fact.
73. Should maintain proper transparency in the documentation process so
that the clients does not get disturbed.
Should make sure that each and every client are getting the List of
necessary documents and should be more sincere in providing the
documents as some are not agreeing with the statement.
Should re-think about the difference between the deposit amount and
L/C amount if they can make the gap reasonable as majority are
unsatisfied and may even switch the bank which will incur a huge
loss.
Bank should think about bringing some packages about L/C where
client would have the chance to choose as per their need.
Need to be more cooperative while renewing a L/C and should inform
the client if any documents need to be changed.
Should bring some attractive and innovative payment procedure
which is faster than other banks.
73
