Chapter 01 Introduction

1.1 Statement of the problem

As a part of the BBA program completion this internship was done at Sonali Bank PLC, where
all the data and procedure was followed through that 12 weeks period. Internship lets a student
have an exposure of the current job sector and gets a push for the professional life. After the
completion of this three months program the report is made with secondary data as the data were
taken from Sonali Bank PLC, Ramna Corporate Branch.

I have joined Sonali Bank PLC, Ramna Corporate Branch on 1 st February 2024. From the very
beginning the foreign exchange department was my workplace and that is the place where I got
all the job exposure of Bangladesh’s foreign exchange policies and export and import scenario.
Every day I got new experience with the practical experience of how to open various types of
Letter of Credit.

There are various types of Letter of credit. A main contract and letter of credit has several sub
division where Back to Back LC (B2B LC) is also seen. This internship report is basically
focused on how the Back to back LC is opened and functioned.

1.2 Objective of the study

Primary objective:

The main objective of the report and the internship program is to gain practical knowledge of the
changing scenario of job sector and an idea about how foreign exchange department work

Secondary objective:

 Various types of letter of credit and their stages

 Analyze the entire process of how the L/C opening of Sonali Bank
 Income of Sonali Bank PLC through L/C opening
 The government rules and regulations regarding the changing situation of reserve of
foreign currency
 CBS and Bangladesh Bank entry of the letter of credit
1.3 Scope of the study

The report covers the details about the operations of Sonali Bank PLC. This report consists the
writer’s observation and job experiences during the internship period at Ramna Corporate
Branch. This report emphasizes on the all sequential activities involved and used by Sonali Bank
PLC for all transactions. It also impacts on the Foreign exchange activities upon clients. Finally,
it incorporates an evaluation of different aspects of the export import process and financial
performance of the Bank and recommends some measure which help to develop the quality of
the Bank. Though there are several operations of a bank but the writer’s main focus was solely
on foreign exchange.

1.4 Methodology of the study

Methods followed to perform a job or conducting activities to complete a task is called

Methodology. In conducting this study the following methodology was adopted in collecting
data and information, preparation of reports etc. The methodology of report is given below

1.4.1 Sampling techniques and sampling size

The sampling was done on convenient sampling method. Many of the data and information were
collected from my experiences and queries from the executives while doing the internship at
Sonali Bank PLC. To collect the information it was a great chance to know the Foreign
exchange operations very closely but it is not possible to publish all the data that disclose the
Bank’s secrecy. 1.4.2 Source of the data

The primary sources are-

 Practical desk work. 

 Face to face conversations with the officers

Collection of Secondary data

 Annual report of SBL 2018-2023

 Website
 Relevant books, research papers, journals etc.
 All the secondary data are attached in appendix part. Different types of computer software’s
are used to analyze collected data such as-

Microsoft Word, Microsoft Excel, Microsoft PowerPoint also analyzed by the trend analysis
and cross sectional analysis.

1.5 Limitations of the study

Banking sector is a very sophisticated sector where data and information is a very important
factor for the members of that organization. Though the annual report gives very much
information regarding the profit, credit, cash and other situation of the bank but there are also
many items such as secret documents, account holders information which is top secret and
confidential to the bank. Those can’t be disclosed. The main limitations were:

 Lots of confidential data were there which can’t be accessed.

 CBS ( Central banking software) which holds a lot of information is the main source of
communication for the officials of the banks but an intern can’t access them
 The officials were friendly but they are also pretty much busy all the time. The time
frame is a major limitation
 There are a lot of categories in foreign trade but this particular branch of sonali bank and
its customers are basically the garment exporter and importer.

There are continuous efforts to minimize the effect of this limitations.

Chapter 2 Organization overview

Sonali Bank Limited, the biggest commercial bank in Bangladesh, was constituted in 1972 by
uniting 3 banks: The National Bank of Pakistan, The Premier Bank, and The Bank of Bhawalpur
under Presidential Order No.26. The government of Bangladesh owns the bank wholly. The bank
now has a paid-up capital of Tk. 4530.00 crore, with the deposit ratio of 51.61 and loans and
advances of Tk. 69,317.00 crore. Sonali Bank Limited is run by a Board of Directors comprised
of ten members. It is directed by a well-known banker and a reputable professional, the CEO and
Managing Director. The banks corporate headquarter is in Motijheel, Dhaka, Bangladesh, which
is the capital's main business sector.
The bank's primary goal is to deliver all forms of banking services to customers at their doorstep.
The bank also invests in a variety of social and development programs, as well as the execution
of numerous government policies and pledges.

Sonali Bank Limited's Vision and Mission:

Vision: Socially committed leading banking institution with a global presence.

Mission: Dedicated to extending a whole range of quality products that support divergent needs
of people aiming of the country at enriching their lives, creating value for the stakeholders, and
contributing towards socio-economic development

2.2ORGANIZATIONAL STRUCTURE

Sonali Bank Limited has a tall organizational structure that starts at the top, with the Board of
Directors. Board, Head Office, GM Office, Regional Office, Branch, and Booth are the seven
levels. There are currently 6 GM offices, 41 Principal Offices, and a total of 6 GM offices, 1200
branches, 21 regional offices, and 36 booths.

2.3. STRUCTURE OF MANPOWER

The manpower structure is highly remarkable of Sonali Bank, starting with the Chairman. There
are a total of eleven levels in this game. The several levels of management are Chairman,
Managing Director, Directors, Deputy Managing Director, General Manager, Deputy General
Manager, Assistant General Manager, Senior Executive Officer, Executive Officer, Senior
Officer, and Officer. The Chairman and Directors are appointed by the government because the
corporation is owned by the government. General Managers are statutorily designated
individuals who can be transferred between NCBs. There are a total of seven levels in the
workforce hierarchy. The Head Clerk is at the start, and the messenger is at the end. In addition,
the administrative hierarchy is really quite tall. The total number of employees has been 21839 to
date.
2.3.2SONALI BANK LTD'S MANAGEMENT STRUCTURE: The top level of the
organization is the board members, which was constituted by Bangladesh Bank's Import
Substitution Order 1972. The existing system of Sonali Bank has been shattered:

 Board of Directors (BOD)

 CEO & Managing Director

 Deputy Managing Director (DMD)

 General Manager (GM)

 Deputy General Manager (DGM)

 Assistant General Manager (AGM)

 Senior Principal Officer (SEO)  Principal Officer (EO)

 Senior Officer

 Officer
 Name Position

Ziaul Hasan Siddiqui Chairman

A. B. M. Ruhul Azad Director

A. K. M. Kamrul Islam Director

Ishtiaque Ahmed Chowdhury Director

Daulatunnaher Khanam Director

Molla Abdul Wadud Director

Mohammad Kaykobad Director

Md. Matiur Rahman Director

Abul Kalam Azad Director

Md. Afzal Karim Chief executive officer and Managing Director

Transactional Network: Bangladeshi Corporation Inc., a wholly-owned subsidiary firm based

in New York, will serve as an international money remitter, allowing Bangladeshi citizens in the
United States to send money to their home country with ease. In the Middle East, Sonali Bank
Limited maintains representative offices in Jeddah and Riyadh, Saudi Arabia, as well as Kuwait,
where they encourage Bangladeshi ex-pats to transmit money through banking channels.
Customers can use the bank's 1196 branches to access banking services, with 1194 being
domestic and two being international (in India's Kolkata and Siliguri). Rural areas account for
702 of the 1196 branches, while metropolitan areas account for 491. In addition, at various
places, 25 booths under various divisions provide unique services. 70 administrative offices
supervise and monitor the overall performance of the company's branches. Seven General
Managers' Offices (two in Dhaka and one each in Chittagong, Barisal, Sylhet, Khulna, and
Rajshahi), thirty Principal Offices, and 32 Regional Offices are spread across the nation. Sonali
Bank (UK) Ltd. (which is a collaboration business of Bangladesh's Sonali Bank) managing
transactional activities beyond Europe since December 10, 2002. The bank has also launched the
Sonali Exchange

2.4 BRANCH EXPANSION

Sonali Bank Limited is expanding its network of branches around the country. This bank built
branches in locations where other banks would not even consider doing so. Sonali Bank
Limited's Banking Activities in General. 14th -page branch. However, Sonali Bank Limited is
having difficulty maintaining its branches. Sonali Bank Limited has been reducing its branch
count since 2002 for a variety of reasons and issues. In 2000, it had 1293 branches, but presently
it has 1196. The following is a list of resources from 2013 to 2017, a graph depicting the number
of branches was created.

2.5 Main Products of Sonali Bank PLC

Microcredit

Reducing poverty appears to be at the heart of the country's policymaking and development
issues. As a result, it has gained widespread acceptance at the global level. Sonali Bank Limited's
General Banking Activities. On the one hand, this is an effective method for poverty reduction
and job development; on the other hand, there really are opportunities. As part of its aim to
eradicate impoverishment in rural, non-rural, and semi-urban locations, Sonali Bank Limited
began operating a fully pledged microcredit business in its main office in 2003. 32 projects with
programmers are currently being developed. Others include goat keeping, lamb rearing, fruit, and
other projects in Dhaka City, as well as the Bank-NGO Connection Project and Credits for Urban
Women Micro-enterprise Development (CUMED). Moulavibazar is a district of Moulavibazar
and the 'Unmesh' micro-enterprise program in the nursery, medicinal, and herbal projects. The
financial channeling of funds into the multiple potential microfinance pathways should be
highlighted in particular. This division is responsible for the operations and supervises them.
Sonali Bank Limited has invested substantially in the country's various Upazillas in partnership
with Swanirvar Bangladesh, the Bangladesh Rural Development Board (BRDB), and the Asian
Development Bank (ADB). 152 Upazillas have benefited from the Rural Livelihood Program
(RLP). Furthermore, as part of its well-known Bank-NGO Linkage Program, this division has
provided 179.09 crore to 68 Taka NGOs on a whole sale basis, with a 100% recovery efficiency.
The Disable Loan Program was created exclusively for disabled people in order to bring the
disabled community under the microcredit umbrella. This division's goat-rearing program has
had a substantial effect in lowering the rate at which broad poverty in rural areas. Sonali Bank
had given 46.47 crores as of December 31, 2013. In addition, two loan programs were introduced
in 2004 under the titles and forms "Rural Small Farming Loans Scheme" and "Rural Small
Business Loan" in an effort to grow employment opportunities and generate cash for rural
people. Both programs include a no-collateral loan provision of up to TK 50,000. In 2006, a new
project named "Daridra Bimochane Sahayta Karmasuchi" was established for the severely
"Monga" afflicted rural populace. In addition, in 2013, a one-of-a-kind program for SIDR-
affected 12 areas was created, which included an investment credit of up to TK.20000. Up till
December 2013, Tk. 3299.47 crore was already granted under numerous projects of this region,
although this payment amount was Tk. The corporation has accumulated a maximum of 3056.63
crores as of December 2006. Some of the key components of many existing microcredit projects
and programs are as follows: SME Banking SMEs continue to be the economic engine of almost
all developing economies. Because of their importance to economic growth, risk mitigation
through diversity, job creation, and long-term development, SMEs are a critical mode of
operation in virtually every economic system .To serve this immensely promising sector, Sonali
Bank Limited has placed a special emphasis on SME banking. Numerical data from surveys
conducted in a variety of industries can be used to get a sense of SME operations in 2015. The
bank currently operates 52 branches nationwide, with professional team members devoted to
training SME people in order to help them grow. The banks offer cash flow and fixed asset
finance to firms in the industry, trading, and industrial industries under the SME category.
Merchant Banking Today, merchant banking is by far the most potential branch of a bank in
today's globe. The sector is already booming, but there's still an opportunity for more growth. A
lot of merchant banks are presently engaged in Bangladesh's capital market. Merchant banks deal
with a diverse range of goods and services. In Bangladesh, merchant banks typically provide the
three following services:

1. Issue Resolution Services

2. Services for Underwriters

3. Service for Portfolio Management

Sonali Bank Limited, based in Bangladesh, has a very good merchant banking section that gives
its clients the most effectively developed portfolio management plan, minimizing risk and
optimizing profit. When it relates to the bank's transactional operations, the management of
Sonali Bank is especially cautious. Page 19 to their customers It provides frequent portfolio
reports to its clients and organizes for buyers to learn about the capital market in all of its facets.
The bank's MB additionally performs underwriting services for IPOs and right issues by various
companies. It also intends to provide issue management services

Islamic Banking

Sonali Bank Limited has been providing Islamic banking services since June 29, 2016. Five
branches deal with Islamic banking. The five windows are as follows:

1. Fakirapool Branch, Dhaka

2. Agrabad Corporate Branch, Chittagonj

3. Dargagate Corporate Branch, Sylhet

4. Khulna Corporate Branch, Khulna

5. Bogra Corporate Branch, Bogra

Computerization:

To stay up with the rapid global market economy and pave the way for the application of
numerous requirements in internal banking activities, Sonali Bank entered the sector of office
automation technologies. In order to fulfill these goals, Sonali Bank installed an IBM
Minicomputer at the head office in December 1989. After that, the IBM RISC System was
installed. Inter Branch reunification, Loan categorization, Wage bill of Head Office staff,
Financial function, preservation of Provident Fund transactions of the bank's employees and
officers, preservation of individual profiles of all bank officers, preparation and execution of CIB
data to Bangladesh Bank such as through floppy disk, maintenance of information of special
healing cell, preparedness of currency exchange rate on a regular basis, preservation of credit
card information of big lenders are all current. The band has been allowed to execute banking
transactions in the global arena since adopting the SWIFT system, bringing it up to date.
Furthermore, the arrangements for the bank's official website launch have been completed.
Foreign remittances are made immediately to the SEC in Dhaka via 7 booths of SECI, a branch
of Sonali Bank Ltd. in the United States, utilizing EFT. Similarly, Sonali Bank (UK) Ltd.
provides remittances to the Wage Earners' Corporate Branch in Dhaka, 6 branches in Sylhet, 2
branches in Moulavibazar, 2 branches in Hobigonj, and 2 branches in Hobigonj through its five
UK branches. Thanks to a partnership with Sonali Bank, many Malaysian banks are using the
EFT system to transfer remittances to the Wage Earners Corporate Branch of Dhaka. As part of
the branch computerization procedure in 2005, twenty-six branches have been computerized.
Moulavibazar Branch of Moulavibazar, Tazpur Branch and Golapgonj Branch of Sylhet and
Habigonj Branch of Sonali Bank (UK) Ltd., Moulavibazar Branch of Moulavibazar, Tazpur
Branch and Golapgonj Branch of Sylhet and Habigonj Branch of Sonali Bank (UK) Ltd. A
retransmission system has been built between both the Maijdee Court Branch in Noakhali and
the Wage Earners Corporate Branch in Dhaka using the SECI network. Furthermore, Internet
connectivity has been installed in 69 branches and offices, covering various head office
divisions, administrative offices (GMO/PO/RO), commercial branches, and also other branches.
As a result, communication has improved both domestically and overseas. It should be
mentioned that in 2006, an IT consultant was hired to expedite and streamline the bank's
computerization program. In that year, a data transfer method was established between the bank's
main office and its principle offices/regional offices in order to send government transaction
statements to Bangladesh in 7 (seven) days. Training Sonali works at a bank. To give training to
Sonali Bank Ltd.'s officers and personnel, the Staff College in Dhaka and 4 training centers in
Bogra, Khulna, Chittagong, and Rajshahi have already been providing training courses covering
all aspects of banking. Banking Actions of Sonali Bank Limited in General Staff College, one of
the aforementioned training schools, trained 8,430 staff in 383 batches of different courses,
workshops, and seminars in 2014. Library Facilities Sonali Bank Ltd does have a central library
with both the purpose of broadening the knowledge of its executives and staff and of boosting
their efficiency. The company's headquarters has a library on the seventh floor. It has now been
changed into such a modern library as a result of the expansion of its facilities. New volumes on
banking, management, computers, accounting, finance, literature, religion, economics, foreign
exchange, and literature, among other areas, have been added to the collection. A wide range of
international publications on world economics and politics, as well as other issues, are also
available to fascinate and inspire readers.

General Banking

General banking is at the heart of the transactional industry. Customers are introduced to the
bank by the bank's own department. Sonali Bank Limited's local office has all the essential parts
for banking in general, and all of these sections are managed via personnel with extensive
banking experience.GB sections of Local Office are:

• Section on the TT problem

• Section regarding TT payments

• The PO section

• Section for account opening and cheque issuance

• Section regarding TT payment

• DD issue & payment section

• Section for MT issuance and payment

• Section on the FDR issue and payment

• SND Govt. chalan section

• TRA section SC-LSC section

• Clearing section of

• Accounts section

• GL sector, clean cash

• Reconciliation section

• Locker section

Telegraphic Transfer (TT) Telegraphic Transfer (TT) is another popular method for sending
money. A TT takes less time than DD or MT transfer. The customer makes a deposit at the
branch where the money will be sent. Customers are given cash.TT serial number is written in a
note. The process for receiving incoming TT is as follows: When a telex is received, it is first
decrypted. After the serial number of TT and test number have been verified, a credit voucher is
issued and delivered to the beneficiary's account.

Payment Order (PO) While completing a local clearance on behalf of the business or its
component, a Payment Order (PO) would be a record that provides authorization for payments to
the payee. Customers may purchase something to use as a deposit or earnest cash. A PO is issued
in the form of invoices with the signatures of two authorities. The branch where this instrument
was issued is responsible for paying for it. The payee's banker is responsible for certifying that
the funds will be credited.

Account opening & cheque issue section

To open an account, the customer must first fill out an application with the bank. The following
are the bank's account opening requirements:

1) A proposal for establishing a bank account

2) Full name, as well as current and permanent addresses

3) Profession

4) Introduction Letter

It is a message from a new client who may have an account with the branch or the other branch
and is a valid customer. The introduction of a new client procedure could be shown as positive
on the form. In a section provided on the application, the introducer would write his or her bank
details and address and verify it as his or her authorized signature. A letter of reference always
protects a banker in the following manner:

1. Anti-fraud protection.
2. Protection from being charged with being a bankrupt

3. Overdraft protection in the event of an unintentional overdraft

4. Section 131 of the Northern Ireland Act provides protection against carelessness.

5. Protection against supplying the wrong information to the banker who is following you.

The person who wants to create an account, on the other hand, can submit up to 3
recommendations, with at least one and a maximum of three. The application will make a
declaration in the space provided on the account form, beginning with the name, percentage of
share, age, and relationship (if more than one). The account owner could charge the suggestion at
any time, but it won't go into effect until the account holder passes away. In addition, the
candidate would sign the petition and be given an extra piece of paper to sign three signatures on,
which he or she would have to maintain until the bank is closed. Allowing a new customer to
open a cash-only account is typical practice among bankers. Customers can also open the
following accounts through the branch's account opening section:

• Personal Account.

• Accounts shared

• Account for the Ownership Issue

• Partnership Firm's account.

• Keep track of a Limited Liability Company's finances (LLC).

• Keep track of a Limited Liability Company's finances

• Club/Association/Society account.

• Accounts of Government.

• Accounts of Corporation.

A demand draft (DD) seems to be an instruction that allows you to make a payment on the spot.
It's a promissory note delivered by a local bank that includes an addition to paying a certain
amount of funds to a particular person or an addition to paying a particular sum of money to
another bank branch on demand. A consumer can buy this product for themselves or for a
recipient at a certain bank branch, and it can be handed over to the buyer for distribution to the
beneficiary. By submitting the document to the appropriate payment branch, the payee or
recipient will be eligible to collect the sum of money contained in it. The demand draft might
well be paid in cash to the payer upon presentation of correct identification, or the payment may
be deposited into his account. For a modest price, banks will issue drafts. The amount being sent
determines the commission. The DD buyer is not always a bank customer or account holder.

FOREIGN EXCHANGE

The process of changing one country's money into another country's currency, as well as the
technique of changing claims to property in one currency into claims to wealth in another
country's currency, is referred to as the foreign exchange. When we speak about foreign currency
in banks, we're referring to the general process through which financial institutions convert one
currency into another. International trade generates foreign currency. A Modern Bank fosters
trade and commerce by delivering critical infrastructure to the business community. Banks help
businesses run smoothly, especially in international trade, by serving as a vital link between
buyers and sellers who are frequently far apart and unfamiliar with one another. The foreign
exchange department at Sonali Bank appears to be playing an important role in the lives of its
customers by offering a wide range of services. SBL provides a number of services, including a
letter of credit issuance. Some domestic and international legislation governs the work of this
department. One of the laws that oversee foreign exchange transactions is the Foreign Currency
Act of 1947. The Exports and Imports Systemic Interventions of 1950, which oversees
documentary receivables, is also a major rule that governs the terms of service of world
commerce between exports and imports. The government's export and import policies are
another important concern for lenders' import and export operations. The function of foreign
exchange: The SBL acts as a conduit for the mechanism of foreign exchange policy. As a
consequence, any bank employee who works with foreign currency, especially in that network,
should be aware of the following functions

:  Exchange Rates

 The forward and spot rates of exchange

 Exchange rate quoting method

 Discounts and Premiums

 Exchange rate risk

 Exchange control

 Fixed exchange rates

 Switch positions

 Money for intervention Transactions in foreign currency

 Trading with foreign currencies

 Letters of credit for export and import

 Non-commercial L/C

 Foreign trade financing

 The foreign currency market's nature and purpose

 International trade rules and regulations

 Substitute arithmetic The Product:

Letter of Credit (LC) Letter of Credit (LC): L/ c is a contract with an original lender and a
recipient to pay in a certain period of time in consideration for the submission of papers that
strictly follow the credit terms. Sonali Bank offers a variety of letter of credit types. Sonali Bank
issues two different forms of letters of credit (L/C). The following are some of them: a.
Traveler’s letter of credit. b. Commercial letter of credit. Traveler’s letter of credit: A circular of
L/C is delivered to the issuing bank's correspondents, allowing them to honor the bearer's drafts
up to the credit limit. Whenever the bank's correspondent discusses the drafts, they sign the
payments on the letter of credit's opposite side. This type of credit is usually used to pay for
travel expenses, and the user typically pays in advance. A commercial letter of credit: A
quantifies wherein a bank replaces a customer's credit with its own in order to enable the
customer to pay for products or take on some other commitments. On behalf of its client, the
bank writes a letter (or documents) to the supplier, pledging to reimburse them upon submission
of solid evidence that the provider has complied with the terms of the note of credit. A
commercial loan or credit is an instrument in which a bank replaces its reputation with that of a
client in order to allow the customer to finance the purchase or to undertake other commitments.
More types of commercial letters of credit at Sonali bank An L/C can be classified into different
types depending on the mechanism of settlement. In all credits, all major categories must be
appropriately mentioned.

• Revocable letter of credit.

• Irrevocable letter of credit

• Confirmed and unconfirmed Credits

• Restricted Letter of Credits.

• Sight or payment credit.

• Deferred payment credit.

• Acceptance credit.

• Negotiation credit.

• Red close credit.

• Green Clause letter of credit

• Revolving credit.

• Specific or fixed or Non-revolving credit

• Stand by or guarantee credit.

• Transferable credit and Non-transferable credit

• Back to back credit

• Omnibus Credits

• Transit or Reimbursement credit

• Credit “With” or “Without Recourse”