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CHAPTER

1

Introductory Part

Content1.1 1.2 1.3 1.4 1.5 1.6 Background of the Study Rationale of the Study Objectives of the report Scope of the report Limitations of the study Methodology

1.1 Background of the StudyFOREIGN EXCHANGE ACTIVITIES OF ABBL

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This report is originated as the academic requirement of the BBA program under the Business Administration Department of Stamford University Bangladesh. Under this program student have to participate in internship program of three month duration toward the fulfillment of the Degree. As practical orientation is an integral part of the BBA degree requirement, I was sent by the department to AB Bank Limited to take real life exposure of the activities of financial institutions. The Human Resource Division of ABBL arranges my internship program to Islampur Branch from February 18, 2009 to May 18, 2009. At the end of the internship period the student have to prepare a report on the organization and this report titled Foreign Exchange Activities of AB Bank Limited is the outcome of my three months practical knowledge at AB Bank Limited.

1.2 Rationale of the StudyTheoretical knowledge is not enough for a student. There is a gap between theoretical knowledge and practical field. So, these two should be synchronized. Our internship program is launched mainly for this purpose. The practical orientation program in banks enable a student to take a closer look at WHAT a bank does and HOW. Another purpose that may be is to know about the rules, regulation, and organization environment before getting a job.

1.3 Objectives of The ReportThe initial objective of this report is to obey with the topic that I have selected. But the objective is not limited; behind this study is something broader. However, Objectives of the study are briefly summarized in the following manner: a) To apply the theoretical knowledge in die practical field. b) To make a bridge between the theories & practical procedures of banking. c) To observe the working environment in the private bank. d) To Study the existing banker-customer relationship. e) To know the overall functioning of AB Bank Ltd.2

FOREIGN EXCHANGE ACTIVITIES OF ABBL

1.4 Scope of the ReportThe study was limited to the Islampur Branch of AB Bank Limited. I have tried my best to learn most of the functions that a banker perform and prepare this report based on the knowledge acquired through the internship program. The report covers the functions performed by the Islampur Branch of AB Bank Limited rules and regulations related to foreign exchange Procedure of opening L/C, Sanctioning Credit, Monitoring, Various analyses related to this particular arena etc.

1.5 Limitations of the studyAB Bank Ltd is a large financial institution, therefore it is not possible to fund out the true picture within a short period. To prepare the report I have to face some problems & limitations. Those limitations are unavoidable for me. That may causes reduction the quality of my report. Those are: Difficulty in accessing data of its internal operations. Non-Availability of some preceding and latest data. Some information was withheld to retain the confidentiality of the bank. I was placed to this department for only 12 weeks of time & working like a regular employee hindered the opportunity to put the effort for the study. Employees are so much busy with their regular activities and can not provide enough time for us. There was fear of disclosure in bank personnel about their some confidential activities, which is a constraint in the way to make a good report. Bank has no formal guidelines for internship. Bank does not have sufficient collection of banking related books, journals, manual etc.

FOREIGN EXCHANGE ACTIVITIES OF ABBL

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1.6 MethodologyAnalysis has been made on the basis of the objectives mentioned before in the context of Foreign Exchange Activities of AB Bank Limited. Mainly time series analysis and trend analysis (2004-2008) has used to compare the foreign exchange performance of ABBL. Besides this SWOT analysis has also used in the study.

Sources of InformationIn order to prepare the report more comprehensive, meaningful & presentable, I have been used widely two sources of data & information. The sources are: 1. Primary Sources. 2. Secondary Sources. How I used those sources for collecting information are briefly discussed bellows: The primary sources are as follows:

Face-to-face Conversation with the respective officers, executives & also with the staff of the Branch. Informal conversion with the clients. Practical work exposures form the different desks of the departments of the Branch covered. Relevant file study as provided by the officers concerned at each desk of the departments I have worked. The Secondary Sources of the data & information are follows:

Annual Report of the AB Bank Ltd The Published materials as such; various books, articles regarding General Banking Functions, Foreign Exchange Operations, & also Credit Policies. Different Procedure Manual Published by ABBL. Different Circular Sent by the Head office of ABBL & Bangladesh Bank. In order to Collect the data I usually used informal questionnaires which was the combination of both open ended & Close ended. Group discussion & Personal interview also used as a means to collect the data. From their website I also collected their updated financial position.FOREIGN EXCHANGE ACTIVITIES OF ABBL

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CHAPTER

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Background of ABBL Content2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 An overview of ABBL Mission, vision, strategy statement Ownership structure Composition of the Board of Directors Capital and reserves Milestones in the development of ABBL Management structure Risk management Division-wise Branch distribution Balance sheet Profit and loss account (Income Statement) Cash flow statement

FOREIGN EXCHANGE ACTIVITIES OF ABBL

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2.1 An overview of AB Bank LimitedAB Bank Limited, the first private sector bank under Joint Venture with Dubai Bank Limited, UAE incorporated in Bangladesh on 31st December 1981 and started its operation with effect from April 12, 1982. Dubai Bank Limited (name subsequently changed to Union Bank of the Middleast Limited) decided to off-load their investment in AB Bank Limited with a view to concentrate their activities in the UAE in early part of 1987 and in terms of Articles 23A and 23B of the Articles of Association of the Company and with the necessary approval of the relevant authorities, the shares held by them in the Bank were sold and transferred to Group "A" Shareholders, Shareholders. As of December 31, 2007; the Authorized Capital and the Equity (Paid up Capital and Reserve) of the Bank are BDT 2000 millionFOREIGN EXCHANGE ACTIVITIES OF ABBL

i.e.

Bangladeshi

Sponsor

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and BDT 4511.59 million respectively. Authorized Capital of the Bank has been increased to BDT 3000 million in the Extra Ordinary General Meeting held on July 16, 2008. As of December 31, 2008 the equity (Paid up Capital and Reserve) of the bank is BDT 6722.51 million. Since beginning, the bank acquired confidence and trust of the public and business houses by rendering high quality services in different areas of banking operations, professional competence and employment of the state of art technology. During the last 27 years, AB Bank Limited has opened 74 Branches in different Business Centers of the country, one foreign Branch in Mumbai, India and also established a wholly owned Subsidiary Finance Company in Hong Kong in the name of AB International Finance Limited. To facilitate cross border trade and payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of the World. AB Bank Limited, the premier sector bank of the country is making headway with a mark of sustainable growth. The overall performance indicates mark of improvement with Deposit reaching BDT 53375.35 million, which is precisely 26.85% higher than the preceding year. On the Advance side, the Bank has been able to achieve 30.76% increase, thereby raising a total portfolio to BDT 40915.35 million, which places the Bank in the top tier of private sector commercial banks of the country.

2.2 Vision & MissionVision Statement "To be the trendsetter for innovative banking with excellence & perfection" Mission Statement "To be the best performing bank in the country" Goal of the Bank To exceed customer expectations through innovative financial products & services and establish a strong presence to recognize shareholders expectations and optimize there rewards through dedicated workforce. Long term Goal: Keeping ahead of other competitors in productivity and profitability.FOREIGN EXCHANGE ACTIVITIES OF ABBL

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Short Term Goal: To attain budgetary targets fixed in each areas of business.

2.3 Ownership structureAs per 2008 the authorized capital of ABBL was BDT 6000 million. The total paid up capital was BDT 2,229.79 million. 1,500,000 ordinary shares of Taka 100 each issued for cash 20,797,854 ordinary shares of Taka 100 each issued as bonus shares So the total number of share of ABBL is 22,297,854 150,000,000 2,079,785,400 2,229,785,400

Percentage of ShareholdingThe shareholder of ABBL divided into two units. One is Sponsors and public another one is government. The status of share holding of these units is shown belowParticulars Sponsors and public Government Total No. of shares 22,169,889 127,965 22,297,854 99.43 0.57 100 %

2.4 Composition of the Board of DirectorsBoard of directors consists of Chairman, Vice Chairman, Directors and President & Managing Director and Company Secretary. Chairman Vice-