,

2aXin Sin
equity divestments in companies and the placing of new share and bond issues , but do not offer usual banking
services to the general
Public.
A full fledged merchant bank provides diversified services for the capital market to investors. The offered services are •
06. Portfolio Management.
Issue Management.
08. Underwriting.
09. Corporate Advisory
10. Banker to the Issue
Export Processing Zone (EPZ) :
. Export Processing Zone have been established by an Act namely , Bangladesh Export Processing Zone Authority Act - 1980. The
following types of industrial units operate in the EPZs •
01. Type \A 100% foreign owned including Bangladeshi nationals resident abroad .
02. Type B
*
Joint venture projects between foreign and Bangladeshi entrepreneurs
residing in Bangladesh .
03. Type - C 100% Bangladeshi entrepreneurs resident in Bangladesh .
Exports from EPZ are subject to the usual requirement of declaration exports
of in EXP form and repatriation of export proceeds.
For identification , EXP forms for these exports should be rubber stamped or overprinted
with words 'EXPORT FROM EPZ’ in bold
letters.
-What is Dumping ?
Selling goods in overseas markets at cheaper
rate than in the home market is called dumping.
When a company of a country exports commodities to other counties less than
the market price or less than the production cost of the
commodities of his country , it is called Dumping .
.What is Anti Dumping ?
^ When an importer country taking protective measures against dumping by increasing Tax, VAT etc. on the said
called Anti Dumping. commodities, it is
International Company who provide PSI Report •
Whole country divided into 5 category. Block A, B, C, D, E .
*

01. SGS Societe General de Surveillance SA ., Switzerland .

02. BIVAC International SA, France
03. INTERTEK Testing Services International Ltd ., U .K .
04 . COTECNA Inspection , SA, Switzerland . Licence cancelled by NBR
on 20.03. 2008.
INCOTERMS : (International Commercial Terms) - 2000 w .e .f . 1st January. 2000.
These trade terms are key elements of international contract of sale , since they tell
the parties what to do with respect to •
carriage of goods from seller to buyer and
export and import clearance
They also explain the division of costs and risks between the parties
.
Force Maieure •

Banks assume no liability or responsibility for the consequences arising out of

the interruption of their business by Acts of God,
Riots, Civil Commotions, Insurrections, Wars or any other causes beyond their
control , or by any strikes or lockouts. Unless
specifically authorized , banks will not , upon resumption of their business, pay
, incur a deferred payment undertaking, accept
Draft(s) or negotiate under Credits which expired during such interruption of their
business.
Memorandum of Association & Articles of Association of a Company
Registered under Companies Act - 1994.
Memorandum of Association :
01. The name of the Company
OiLjiegistered office of the company
Objectives of the company /Functions of the company
04. Authorised capital of the company
Articles of Association •
01. Company means
02. The Chairperson
03. The Directors
04. The Managing Director
05. The Office
06. Share Certificate
07. Transfer & Transmission of Shares
08. Proceeding of General Meeting
09. Vote of Members
10. Directors
11. Remuneration of Directors
12. Board of Directors Meeting
13. Management of the company
14. Operation of Bank Account
15. Notice
16. Seal
17. Indemnity & Responsibility
18. Winding up
Letter of Credit Authorization Form -
If foreign exchange is intended to be bought from the Bangladesh Bank against
an LCAF, it has to be registered with Bangladesh
Bank ’s Registration Unit located in the concerned area office of the CCI &E. For such registration
the LCAF, duly filled in and singed
by the importer and authenticated by the Authorised Dealer , shall be
submitted by the Autohrised Dealer to the concerned
Registration Unit. The unit will put a registration number on all
the copies and emboss a security seal.
EXP Form :
All exports must be declared on EXP Form . These forms will be supplied by the
Authorised Dealers for use of the export. The A . D.
should , before certifying any export form , ensure that the exporter is registered
with the CCI & E under the Registration (Importers
.
& Exporters ) Order 1952 The registration number should be quoted
in the relative EXP forms .
Asian Clearing Union (ACU) -
The Central Banks of Bangladesh , India , Iran , Nepal, Pakistan , Sri
Lanka , Bhutan and Myanmar have an Agreement to settle
current transactions between these countries through the Asian Clearing Union (
ACU) mechanism . All such payments to the ACU
member countries excepting those covered by loan / credit agreements are accordingly
( ACU ) mechanism in Asian Monetary Unit ( settled through the Asian Clearing Union
AMU , also called ACU dollar) which is defined as equivalent to the US dollar .
The ACU Agreement referred to above provides for settlement of the following types ofpayments
01 . Payments from residents in the territory of one participating country -
to residents in the territory of another
participating country.

21

• .
i
 Payments for current international transactions as defined by the Articles of Agreement of the International Monetary
Fund .
()3 . Payments permitted by the country in which the payer resides.
/ ard Remittance •

st outward remittances are approved by the ADs, on behalf of the Bangladesh Bank following declaration of Taka as convertible
,t current accounts payments from March , 1994. Only a few remittances of special nature require Bangladesh Bank 's prior
approval.
All remittances from Bangladesh to a foreign country or local currency credited to on resident Taka accounts of foreign banks or
convertible Taka account constitute outward remittances of foreign exchange . ADs must exercise utmost caution to ensure that
foreign currencies remitted or released by them are used only for the purposes for which they are released, they should also maintain
proper records for submission of returns to Bangladesh Bank as also for the latters inspection from time to time .
In all cases of purchase of foreign currency an application must be made to an AD and , wherever necessary to Bangladesh Bank . For
payments against imports into Bangladesh , the prescribed application form is form IMP (Appendix 5/ 13) and for other types of
remittances form TM (Appendix 5/ 1). TM form must be used for reporting by the ADs even when remittance is approved by
Bangladesh Bank in any other manner , for instance by issuing a special permit. On receipt of the application in the prescribed form ,
the ADs may effect the sale of foreign exchange if they are empowered to approve the application. If the transaction requires prior
approval of the Bangladesh Bank , the form should be forwarded by the AD to the Bangladesh Bank for consideration .
Original copies of all IMP forms , TM forms covering remittances effected by the ADs must be submitted to the Bangladesh Bank
alongwith the appropriate Returns as laid down in Chapter 2 , Vol . 2 For the disposal of the remaining copies of the IMP forms (See
Para 28 (c), Chapter 15).
Inward Remittance •

The term " Inward Remittances" includes not only remittance by T.T., M .T., Drafts etc., but also purchases of bills, purchases of
drafts under Travellers' Letters of Credit and purchases of Travellers' Cheques. This Chapter does not , however , cover purchases of
foreign currency note and coins which are dealt with in Chapter 9.
The ADs may freely purchase foreign currencies or raise debits to non - resident Taka Accounts of the respective bank branches and
correspondents. Remittances equivalent to US$ 2000 and above should be reported oil Form C (See Appendix 5/3) attached to the
appropriate schedule (See Chapter 2, Vol. 2). However, declaration on Form C by the beneficiary is not required against remittances
sent by Bangladesh nationals working abroad . The purpose of remittances should be clearly stated on the Form C. Where the
country of origin of funds and currency in which remittances received are the same, the ADs may submit a consolidated Form C in
respect of those remittances attaching therewith a separate list showing details of remittances comprising the amount reported on
Form C. Remittances received against exports should be certified and reported on EXP Forms. In case of remittance received in
advance for exports the AD should obtain a signed declaration from the beneficiary on the back of the "Advance Receipt Voucher"
.
( See Chapter 2, Vol 2 ) certifying the purpose of remittance.
Marine Insurance Policy •

The safe conduct of the goods from the time it leaves the exporter's godown and till it reaches the warehouse of the importer is what
all parties in the transactions pray for. It depends upon the safety of the goods during the voyage as well as the safety of the vessel
that carries the goods. The loss of or damage to goods during the voyage would affect any one or more parties involved in the
transactions viz. the importer, the exporter, the shipping company and the bank which has paid against the documents cover the
goods. Marine insurance offers the desired cover against loss or damage to the goods during the transit . It allows a free flow of
international trade by absorbing an important uncertainty connected with it .
Retention Quota •

New Exporters ’
Annual foreign exchange quota for business travel abroad for new exporters has been set at US$6000. Bonafide requirement beyond
US$6000 is accommodated by Bangladesh Bank upon written request submitted with supporting documentation.
Retention quota for service exporters •
Service exporters may retain 5% and Software and Data entry / processing exporters may retain 40 % of their repatriated income as
Retention Quota . Funds can be drawn from these accounts to meet expenses for bonafide business travel abroad . However , foreign
exchange earnings on account of indenting commission or agency commission for export from Bangladesh cannot be credited to such
accounts since these incomes originate from Bangladesh sources.
milEIGN EXCIL\ NGE RETENTION QUOTA FOR EXPORTERS
Merchandise exporters are entitled to a foreign exchange retention quota of 50% of repatriated f .o. b value of their exports. However ,
for exports of goods having high import content (low domestic value - added ) like POL products including naphtha , furnace oil and
bitumen readymade garments made of imported fabrics, electronic goods , etc. the retention quota is 10% of the repatriated f. o.b
,

Value.
Foreign exchange out of the retention quota may be maintained in FC accounts with the concerned ADs in US dollar, Pound
Sterling, Euro or Japanese Yen upon realization of the export proceeds. Balances in these accounts may be used by the exporters for
bonafide business purposes, such as business visits abroad , participation in export fairs and seminars, establishment and
maintenance of offices abroad, import of raw materials , machineries and spares etc. without prior approval of Bangladesh Bank , It
should be noted that since exporters will use foreign exchange from the retention quota for business visits abroad, no separate
business travel quota will be admissible (other than for new exporters as per Para 7, Ch . 19). Foreign exchange from the exporter's
retention quota cannot be used for investment abroad by the exporter.
Foreign exchange out of exporter s retention quota may also be kept as interest hearing renewable term deposits with the concerned
ADs in Bangladesh in US dollar , Pound Sterling, Euro or Japanese Yen , with minimum balances of US$ 2 , 000 or £ 1, 500 or
equivalent. Periods of such term deposits may be determined in accordance with normal banking practices / normal banking
considerations. Interest on such deposits may be allowed at rates comparable to the prevailing Euro deposit rates for the relevant
currency.
DECLARATION OF FOREIGN EXCHANGE ON FORM TMJ'
Incoming passengers may bring in amount of foreign exchange with declaration on form FMJ at the time of arrival. No declaration is
necessary for amounts up to US$ 3, 000. For non - residents , the entire amount brought in with declaration , or up to US$ 3, 000
brought in without declaration may be freely taken out at the at the time of departure. Up to US$ 3, 000 brought in without
declaration may also be retained and taken out freely by a person ordinarily resident in Bangladesh.
VISITS ABROAD
Booking of Passage -
No Bangladesh Bank approval is needed for booking of passage for Bangladesh nationals against payment in Taka . Prepaid Ticket
Advice ( PTA) in favour of foreign guests invited by Government , Semi - Government , autonomous organizations or bodies affiliated
with UN agencies or other internationally recognized agencies may be issued without prior approval of Bangladesh Bank .
Air tickets may be issued against payment in Taka to foreigners working in Bangladesh if they draw salaries in Bangladesh Taka
or if the cost of the ticket is to be borne by the employer, as per terms of the work permits approved by Bangladesh Government.
Private Travel -
The ADs may release foreign exchange upto US$ 1000 or equivalent per person during a calendar year to Bangladesh nationals
proceeding by air to destinations in SAARC member countries and Myanmar! within this annual limit , upto US$ 500 or equivalent
may be issued per person for overland travels to the aforesaid countries. For visits of Bangladesh nationals to destinations in
countries other than those mentioned above , upto US$ 3000 per person may be issued during a calendar year. The above limits are
indicative, Bangladesh bank will authorise release of foreign exchange for travel abroad beyond these indicative limits upon
22
 ji\ of documents regarding the bonafides of the expenses . Application for such authorisation should be sent to Foreign

/ Policy Department of Bangladesh Bank .

e
yS$ 6000 OF equivalent may be issued by an AD to a new exporter for business travel abroad , against recommendation letter
Export Promotion Bureau (EPB). Genuine requirements for hrher amounts will be considered by Bangladesh Bank on
yiications submitted through ADs with supporting documents.
tisiness travel quota for importers and manufacturers producing for domestic markets -
01. Subject to an annual upper limit of US$5000, importers are entitled to business travel quotas @ 1% of their imports settled
during the previous financial year .
-
02. Subject to an annual upper limit of US$5000, non exporting producers are entitled to business travel quotas @ 1% of their
turnover of the preceding financial year as declared in their tax returns.
The same business organisation engaged in imports as well as production shall , however , draw business travel entitlement only on
one count.
Agreement , Contract, Indemnity and Guarantee
Agreement -
Every promise and eveiy set of promises forming the consideration of each other is an agreement.
An agreement may be expressed or implied. When there i9 an offer coming from one party , which is accepted by the other , the
agreement is express. An agreement is called implied when the acts of offer and acceptance are not clearly expressed but have to be
gathered from the conduct of the parties or from surrounding circumstances. Let us take one illustration of each . A says to B “ will you
buy my watch for Rs.150” . B says “ yes” . The agreement thus made is express. But if ‘A’ mention a figure at an auction bid , he is deemed
is in law to have made an offer. If the auctioneer drops his hammer , his conduct implies that he accept the offer of A. There is at once an
implied agreement between them .
Void Agreement -
Void Agreement is an agreement which is not enforceable by law. It does not create any legal rights between the parties. All illegal or
immoral agreements are void .
Contract -
According to the contract Act 1872, a contract is "An agreement enforceable by law.
A contract is an agreement enforceable at law made between two and more persons by whom rights are acquired by one or more by to
act or forbearance on the part of the others.
Agreement vs. Contract. Differences Between Agreement and Contract.

_ "Every promise and every set of promises forming the consideration for each other is an agreement" - Sec 2(e ) . It means whenever one or
more persons promise to each other to do or not to do something that is an agreement.
On the other hand according to the contract act 1872 a contract is, " An agreement enforceable by law." Sec 2 (h).
'T’ t
-
SI Agreement Contract
Agreement is emerged from willingness of both parties to do or
not to do something. As no legal obligation is required here so
1.
just any two parties can mutually dispute on any matter .
But all true contracts begin with an agreement .
Agreement is emerged this way.
An agreement may be legal or illegal. As it is not bound by the On the other hand only legally enforceable agreement is
2.
law it needs not to follow the rules. contract. So it can never be illegal.
Agreement may be against of human rights. It will create no
3.
problem because the parties will not seek help from the law. A contract can never be against of human rights.
4. Purpose of an agreement can be illegal. But purpose of a contract can never be illegal .
An agreement can be with an impossible matter. As it is not
5. Contract cannot be with any impossible matter .
banded by the law people can make agreement on any matter .
Agreement between two parties does not create any legal As contract is enforceable by law its obvious purpose is to
6.
obligation or relationship. create a lawful relationship.
But a contract must be expressed and clear that no
7. An agreement may be expressed or implied . ambiguity can occur .
8. An agreement is not dependent on contract . But a contract is dependent on any agreement.
9. There is no obligation to write or register an agreement. Each and every contract must be written and registered.
10 Any two parties can make an agreement. But the parties of contract must be capable of contracting.
11 All agreements are not contract. All contracts are agreement.
Contract of Indemnity -
A Contract of Indemnity is a contract by which one party promises to save the other from the loss caused to him by the conduct to the
promiser himself , or by the conduct of a third party.
When Bank taken Letters of Indemnity?
The letters of Indemnity are obtained by the banks in a number of situations. Some of them are being given below :
l. Loss of term deposit receipt
li Issue of Duplicate Draft
in . Loss of travellers Cheques
IV . Loss of Safe Custody Receipt &
v. Loss of gift cheque
Contract of Guarantee:
A Contract of Guarantee is a contract to perform the promise or discharge of liability of a third person in case of his default. The person
who gives the guarantee is called the Surety/ Guarantor, the person in respect of whose default the guarantee is given is called the
Principal Debtor and the person to whom the guarantee is given is called the Creditor. The contract of guarantee may be either written
or oral .
The contract of guarantee may be Valid and Invalid.
• In a contract of guarantee, the creditor and surety (guarantor) must be competent to enter into a contract but principal
debtor may be a minor or a person incapable of entering into a contract. In such a case the surety will be taken as principal
debtor and will be liable to pay.
• In a contract of guarantee , the liability of the surety is conditional. It arises only when the principal debtor makes a default .

Difference between a contract of indemnity and a contract of guarantee:

1. Nature of Liability: The person giving an indemnity is primarily liable where as the Guarantors liability is secondary.
2. -
Number of Parties A contract of indemnity is a single contract between two parties only i.e . indemnifier and indemnified . On the
'

-
other hand , in a contract of guarantee , there are three parties the creditor, principal debtor and surety and three contracts -
one between the creditor and the principal debtor, second between the surety and the creditor and the third between the surety
and the principal debtor by means of which the surety is entitled to recover from the principal debtor whatever sums he may
have rightfully paid under the contract of guarantee to the creditor .
3. Purpose of Contract: A contract of guarantee is to provide necessary security to creditor against his advances but a contract of
indemnity is made for the reimbursement of loss.
4. Rights of parties - In a contract of guarantee surety becomes entitled in law to proceed against the principal debtor in his own
'

23
 ,/it after he has discharged the debt payable by the principal debtor to the creditor. But in the case of a contract of indemnity
ddemnifier can bring the suit against third party only.
-
Exercise of risk or Liability Indemmfier promises to save the indemnity holder from a contingent risk. But the surety agrees to
discharge the liability of the principal debtor which is not contingent but subsisting.
-
Parties Interest The person giving the guarantee should have no other interest in the transaction apart from his guarantee. A
person giving an indemnity may have some other interest in the contract.
Special types of Guarantors:
1. Minors, lunatics etc.: Contracts made with minors and persons of unsound mind are absolutely void . The banker should not,
therefore, accept guarantee from such persons.
11 . Undischarged insolvent: The undischarged insolvent is also incompetent to enter into a contract and , therefore, the
guarantee given by such an insolvent is void and unenforceable .
in . Married Woman - A married Hindu Woman can give a valid guarantee which will bind her separate property called Stridhan .
IV. Limited companies: In case of a guarantee executed by a limited company , a banker has to be extra cautious. The banker
must verify from company’s memorandum and articles of association , whether the company has been expressly given such
power.
v. Partnership firms - A partner of a partnership firm cannot bind his co- partners by giving Guarantees for loans given by a
'

bank to other parties.

Consideration:
A contract enforceable by law must also be supported by consideration . Consideration means ‘something in return’. This implies that
the parties entering into an agreement should get something in return for the promises they are making to make such promises a valid
contract.
All illegal agreements are void but not all void agreements are illegal - explain ?
All illegal agreements are void but all void agreements are not necessarily illegal , i.e . a wagering agreement is void but not illegal or an
agreement with a minor is void but not illegal. An illegal agreement is destitute of legal effects from the beginning but a contract may
become void subsequently on the happening of an event which makes it illegal. Illegal agreement need not necessarily be criminal in
nature . When the contract is illegal, the court will, of its own motion , refuse to enforce it even though the illegality has not been pleaded
by the defendant .
What is General Banking ?
General Banking is an important operational function of a Bank besides Credit & Foreign Trade . In broad terms, General Banking
consists of Management of Branches and functions related to management of Deposits, Cash , Remittance, Bills , Clearing Accounts,
House Bonds & Certificates and other ancillary services of the Bank.
Branch Manager -
qBranch Manager is the Chief Executive of the branch and representative of the Bank in the area . He is responsible for management of
the affairs of the Branch and to get things done by the employees working under him . Depending upon the rank of the incumbent and
grade of the Branch , he has administrative, financial and business powers which are to be exercised in the interest of the Bank .
Duties and Responsibilities of Branch Manager as Relationship Manager -
As per Core Risk Management Guidelines “ Relationship Manager” is the key person to select and analyse new borrowers, business,
type, size, purpose of loan , security arrangements and to report Head of Corporate Banking. In IFIC Bank the responsibilities of
Relationship Manager has been entrusted upon the Manager of the Branch .
What is Deposits?
Deposits are the main source of investable funds of the Bank and also the main contributor of interest cost of the Bank .
What is Dematerialisation ?
The process of conversion of physical shares into electronic form is called Dematerialisation. A BO who wants to dematerialise his
shares needs to approach his Depository Participant (DP) with the physical share certificates.
Types of Deposit Accounts:
The Branches of IFIC Bank may accept deposits from the public in the following types of accounts:
l. Current Deposits
n Savings Bank Deposits
in . Short Term Deposits
iv . Fixed Deposits
v. Pension Savings Scheme (PSS)
vi. Monthly Income Scheme
i. The main features of Current Deposit Accounts:
1. Who may open a Current Deposit Account: A Current Deposit Account may be opened by any adult individual, firm , company,
club , association , corporate body. Bank may, however, refuse without assigning any reasons to open a Current Deposit Account of
anybody.
2. Minimum amount to be deposited as initial deposit: Current Deposit Account shall be opened with an initial deposit of a
minimum amount as prescribed by Head Office from time to time.
3. Opening with Cheque not allowed: No Current Deposit Account will be opened with a Cheque as initial deposit .
4. Payment on Demand Funds available in Current Deposit Account shall be payable on demand .
5. Interest: No interest is payable on the balance of Current Deposit Account
6. Closure of Account : The Bank reserves the light to close any Current Deposit account with prior notice.
ii. The mam features of Savings Bank Deposit Accounts:
1. Who may open a Savings Bank Deposit Account: Savings Bank Deposit Account may be opened in the name of an adult individual
or jointly in the names of two or more persons the balance of which may be payable to either or both or all of them or to the survivor or
survivors. Savings Bank Account may be also opened in the names of Club, Associations and similar Institutions/ Organizations.
2. Initial Deposit: Savings Bank Account shall be opened with a minimum amount as prescribed by Head Office for urban branches
and for rural branches
3. Opening with Cheque not allowed : No Savings Bank Account will be opened with a Cheque as initial deposit .
4. One Person One Account: No person will be allowed to open more than one account in his/ her name. But this is not applicable in
case of any parent opening more than one account in his/ her name in respect of each minor child.
5. Deposit in Account: An account- holder may deposit cash, cheques, drafts, payment orders etc. in his/ her Savings Bank account as
often as he/ she wishes in accordance with Transaction Profile (TP) submitted by him/ her.
6. Withdrawal: Withdrawal can be made by cheque duly signed as per specimen signature card recorded with the Bank. However ,
depositors will be allowed to withdraw twice in a week without notice or as prescribed by Head office from time to time .
7. Notice for Withdrawal - Withdrawal beyond two times in a week will require 7 days notice. Withdrawal of more than two time in a
week without notice will be allowed, but no interest will be allowed for that month in which such withdrawal occur.
8. Interest: Interest of Savings Bank Account will be allowed on a six monthly basis at the rates prescribed by Head Office from time
to time. Interest will be applied half yearly on 30th June & 31st December.
lii. The mam features of Fixed Deposit Accounts:
1. What is FDR? FDR mean Fixed Deposit Receipt . Fixed Deposits are stable/ time deposits of the Bank which usually bedr higher
rates of interest than other forms of deposits. A Receipt is given by the Bank for such deposits which is called a Fixed Deposit Receipt or
FDR. FDR is not a negotiable / transferable instrument.
2. Who may open Fixed Deposit Account: Fixed Deposit Account may be opened by one adult individual singly or by more than one
24
 ,/ viduals jointly or in the name of any company or any other corporate body either singly or jointly under company’s/ corporate
jeal.
/inor’s FDR - FDR may be opened in the name of a minor jointly with the guardian .
Payment of Interest: Interest of FDR at prescribed rate shall be payable only after maturity of the FDR .
Payment of FDR Payment of FDR will be made on demand after the expiry of the maturity period on presentation of FDR duly
/ischarged by the depositor (s).

6. Payment of FDR in Joint names before maturity: If payment of FDR in the names of two or more persons is demanded before
maturity by one of the depositors, consent, of the other depositor must be obtained even if it is marked ‘either or survivor’.
7. Duplicate FDR Duplicate FDR may be issued if requested by the customer only on submission of Indemnity Bond. If FDR is in joint
'

names, Indemnity Bond from all the depositors are to be obtained.

8. Change in names in FDR:
a . If an FDR is issues in the names of an unmarried lady, after her marriage, the surname of the lady may be changed.
b. If an FDR is issued to one individual, at his request, another name (s) may be added in the FDR.
c. If FDR is in joint names and request for adding another name comes from one of the depositors, such change cannot be made
without the written consent of all other DRS holders.
9. FDRs are not negotiable: Fixed Deposit Receipts are neither negotiable nor transferable .
Gross Domestic Product (GDP) '

The value in money at market prices of all goods and services produced within a country but excluding net income from abroad for a
particular period , generally one year .
Gross National Product (GNP):
The total output of an economy. Total final value of goods and services produced in a national economy over a period , usually one year
plus net income from abroad and without any depreciation. The GNP growth rate is the primary indicator of the economic status of a
country.
Who can introduce for opening of Current Account?
Introduction of the person intending to open the current account should be obtained from a Current Account holder or a respectable
person known and acceptable to the Bank . Introducer will sign the Account Opening Form in appropriate column and give other
particulars as required in the form .
Introduction by Officers to be discouraged : Introduction for opening of Current Accounts by Officers of the Bank may be allowed but
such case should be discouraged as far as possible . Introduction by members of Staff other than Officers shall not be accepted .
Introduction by Savings Bank Account holder restricted -
'

Introduction by Savings Account holders shall not be accepted for opening a new Current Account unless the introducer has been
. maintaining his account for a long time and keeps a good average balance or such an accountholder is personally known to any officer or
q
the Manager of the Branch.
Record of initial deposit in Account opening Form : The amount of initial deposit shall be mentioned in the Account Opening Form
Letter of Thanks to Introducer and Account holder: A letter of thanks shall be sent to the introducer as well as the account holder on
Bank’s Standard Form .
Who is a Minor?
A person who has not attained the age of 18 years is considered to be a minor. In case where guardian to person or property of a minor is
appointed by the Court of Wards during the period of his / her minority the person shall become major upon completion of 21 years.
Special care is to be taken while opening account of Minor .
Executors/ Administrators: Executors are appointed by a deceased himself before his death by “ Will” to settle the accounts of the
persons after his death . Administrators are appointed by the court of law in the absence of the deceased’s “ Will” .
Joint Ventures: Joint Ventures are association of 2 or more companies of local as well as foreign origin which are formed to undertake
large projects. Permission for such Joint Venture companies needs to be obtained from appropriate government office .
Individuals: Individuals must be adult persons 18 years of age or more who are competent to enter into contracts.
Joint Accounts: More than one adult jointly or adult(s) with minor (s) may constitute joint accounts.
Sole Proprietorship Concerns: A business or trading concern owned by a single adult person is a sole proprietorship concern.
Partnership Firms: A business concern owned and managed by more than one person under a partnership deed which may be
registered is a partnership firm . Persons who have entered into partnership with one another are called individually partners.
Private Limited Company: A corporate body formed and registered under the Companies Act , 1991 with limited Lability of the
shareholders having certificate of incorporation given by the Registrar of Joint Stock companies and need a Memorandum of Association
and Articles of Association .
Public Limited Company : A corporate body formed and registered under the Companies Act, 1991 with limited liability of the
shareholders and with no upper ceiling of shareholders having both certificates of incorporation and certificate of commencement of
business given by the Registrar of Joint Stock Companies. It must also have a Memorandum of Association and Articles of Association .
-
Company Limited by Guarantee ' When the liability of the shareholders for the debts of the company is limited/ encountered to the
amount they (shareholders) guarantee to pay in the event of the company being wounding up is called Company Limited by Guarantee .
Banker must extra cautious while granting loan to such companies and should obtain personal guarantee of all Directors of the
company.
Company Limited by SharesAVhen the Lability of the shareholders for the debts of the company is limited to the amount of their share -
holding then it is called Company Limited by Shares. Bankers are to be very careful while sanctioning/ granting any credit line to such
company.
Compound InterestWhen an interest earned on Principal plus interest which was earLer earned. Interest may be compounded daily,
quarterly , half -yearly, yearly or other basis.
Dividend WarrantAn order or warrant issued by a company who already declared dividend and drawn on its bankers, authorizing them
to pay the dividend mentioned thereon to the shareholder.
Main Functions of a Bank :
a ) Accept of Deposits from the public
b) Lending money to the people
c) Investment
Banks also function of various works ’
a ) Collection and payment of cheques
-
b) Payment on behalf of customers
c.) Purchase and sale of stock
d) Acting as trustee , acting as correspondents
e) Opening letter of credit
f ) Safe custody
g) Dealing in foreign exchange
h) Complete service in foreign trade
i) Providing credit reports
j) Providing remittance facilities
k ) Providing advisory services
What is Clearing House ? '•
Clearing House is an organization of the member banks which settle their interbank claims/ Labilities due to transfer of deposits by the
25
 .8 from one bank to another.
g house is an arrangement for the member banks to mutually settle their claims over each other arising out of deposit transfer
,

jne bank to another by their respective customers.

xer’s clearing house is a common place usually located at the Central Bank or any other designated bank where officials of different
-
nks settle their inter bank claims daily through their accounts maintained by the Central Bank. This happens because each bank
eceives many cheques, drafts etc. drawn on other banks. Collection of those by sending officials to those bank is costly. So
clearing /settling mutual claims and debts is done through clearing. In absence of Bangladesh Bank , Sonali Bank acts as the clearing
house in our country.
What is Merchant Bank ?
Merchant Bank is a traditional term for an Investment Bank. Merchant Banks work as a financial intermediary , offering such services
as takeover - merger - acquisition advice/ assistance, financial restructurings & associated finance (raising necessary funds), equity
investments in companies and the placing of new share and bond issues, but do not offer usual banking services to the general public.
A full fledged merchant bank provides diversified services for the capital market to investors. The offered services are -
1. Portfolio Management
2. Issue Management
3. Underwriting
4. Corporate Advisory and
5. Banker to the Issue
What is Demand Draft ? •
A Demand Draft is a Bill of Exchange drawn by one branch of a Bank on another of the same bank or of another bank (subject to
arrangement) instructing the letter to pay a specified sum of money to a named payee or to his order.
Bank Draft / Demand Draft: It is also called Demand Draft . A Bank Draft/ Demand Draft is drawn by one branch of a bank on another
of the same bank instructing the letter to pay a specified sum of money to a named payee or to his order. It is payable on demand and its
payment can not be countermanded or stopped . Neither it is payable to bearer, because of these advantage, this instrument is used by
the customers to make secured payment.
What is Negotiable Instrument?
A negotiable instrument means a Promissory Note. Bill of Exchange and Cheque, payable either to order or to the bearer, whether the
word order or bearer appear on the instrument or not.
The conditions of a negotiable instrument are
l.
—
The instrument should be freely transferable by the custom of the trade and
li . The person who obtains in good faith and for value gets it free from all defects and thus , is entitled to recover the money of
the instrument in his own name.
° BilI of Lading, Bank Note , Treasury Bill Debenture etc. also known as Negotiable Instrument.
Inchoate Instrument: The term inchoate instrument means an incomplete instrument.
Ambiguous Instrument: An instrument, which in form or terms is such that it may either be treated as Bill of Exchange or Promissory
Note , is an Ambiguous Instrument.
What is Escrow ?
A bill , endorsed or delivered to a person subject to the understanding that it will be paid only if certain conditions are fulfilled , is called
Escrow.
What is Payment in due course?
Payment in due course , means payment, in accordance with the apparent tenor of the instrumenyin good faith and without negligence,
to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitle to
receive the payment thereof.
What is Promissory Note?
As per NI Act 1881, a Promissory Note is an instrument in writing containing an unconditional undertaking, signed by the maker, to
*

pay a certain sum of money only to, or the order of, a certain person , or to the bearer of the instrument. There are two parties.
Parties to a Promissory Note -
1. Maker: Maker is the person who promises to pay the amount stated in the note. He is the debtor.
2. Payee: Payee is the person to whom the amount of the note is payable i.e . the Creditor.
What is Bill of Exchange?
As per NI Act - 1881, a Bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a
certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. There are
three parties.
Parties to a Bill of Exchange -
1. Drawer: The maker of a Bill of Exchange is called the Drawer .
2. Drawee: The person directed to pay the money by the drawer is called the Drawee.
3. Payee: The person named in the instrument, to whom or to whose order the money is directed to be paid by the instrument is
called Payee. He is the real beneficiary under the instrument.
-
4. Indorser ' When the holder transfers or indorses the instrument to any one else , the holder becomes the indorser.
5. Indorsee: The person to whom the bill is indorsed is called an Indorsee.
6. Holder: The person in possession of the negotiable instrument is called the Holder , or
A person who is legally entitled to the possession of the negotiable instrument in lus own name and to receive the amount thereof is
called a Holder.
Holder means the person who has got the possession of the instrument legally or the bearer .

What is Cheque? How an Order Cheque can be converted into Bearer Cheque and a Bearer Cheque converted into Order Cheque ?
Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand (an instrument in
,

vriting containing an unconditional order , signed by the maker, directing a certain person to pay a certain sum of money only to, or to
he order of, a certain person or the bearer of the instrument).
\ n Order Cheque can be converted into a Bearer Cheque by cutting the word Order and writing the word Bearer. In this case the
:utting must be authenticated by the drawer with his/ her signature.
K Bearer Cheque can be converted into an Order Cheque by striking off the word Bearer and writing the word Order . No authentication
»f the drawer is necessary for such changes.

’arties to Cheque: :
1. Drawer The maker of a Cheque is called the Drawer i .e . the depositor of money in the bank .
2. Drawee - The person directed to pay the money by the drawer is called the Drawee. (Drawee is the drawers banker on whom
'

the Cheque has been drawn) .

3. Payee : Payee is the person who is entitled to receive the payment of a Cheque.
Vho is Drawer , Drawee and Payee?
-
’lie maker of a bill of exchange or cheque is called the Draw er. The person thereby directed to pay is called the drawee .
’he person named in the instrument , to whom or to whose order the money is, by the instrument , directed to be paid is called the payee.
OR
ayee is the person to whose order a bill of exchange, promissory note or cheque is made payable .
Maturity of the Negotiable Instruments
26
 •ie instruments, except cheques, may be made payable either on
' demand or on a specified date or after a specified period of
, Jieques, however, are always payable on demand .
/ate on which a negotiable instrument
falls due for payment is called the date of maturity of the instrument.
/land instruments fall due for payment
the moment they are presented to the acceptor of drawee for payment .
. me instruments i. e . instruments which are payable on
a specified date or after a specified period are given 3 days of grace and should
jepresented for payment on the last day of grace.
Example -
A bill dated 30, h November is made payable 3 months after date . It falls due on 3rd March .
li. A promissory note dated 1st January is payable one month after date. It falls due on 4 th February.
In case of Public Holiday’•
a. A bill of exchange dated 23rd December is payable one month after date. The instrument shall fall due for payment on 25th
January (26th January being a public holiday).
b. A bill of exchange falh due for payment on 25th January. The Government declares that day as a holiday on account of the
death of an important leader. The instrument shall fall due for payment on 27 th January as because 26th January is a Public
Holiday.
Liability of the Maker of a Promissory Note or Acceptor of a Bill of Exchange The liability of the Acceptor of a Bill or Maker of a
-
Promissory Note is absolute and unconditional. Since his liability is primary , he does not require any notice for payment. Death or
insolvency of the drawee shall have no effect on his liability.
Liability of the Bank as Drawee of Cheque: Bank as drawee of cheque is bound to honour all cheques of the customer till there is any
credit balance left in the customer’s account . The relation between the banker and the customer is that a Debtor and a Creditor.
However, the Bank cannot be held liable for any damage which the drawer might have suffered due to the fault of the payee in
presenting the cheques for payment.
Bank is liable for damages caused to the drawer by its wrongful dishonour of the cheque, but it is the drawer only who can claim these
damages. Holder or Payee of a Cheque cannot claim these damages for there is no privity of contract between the holder and the Bank .
Presentment of Negotiable Instrument: Presentment means placing before the drawee a negotiable instrument for any of the following
three purposes’ -
I. For Acceptance
u For Sight
m. For Payment
Presentment of the Bills for acceptance - It is only a bill that can be presented for acceptance. It is, of course not necessary that every bill
should be presented for acceptance . Bills payable on demand and those payable on fixed date, such as payable 30 days after date, or on
the date of the happening of a certain event, need not be presented by the holder for acceptance . But the following bills must be
presented for acceptance in order to charge the parties with liability:
a. Bills payable after sight require presentment for acceptance in order to fix the date of the maturity of the bill.
b. Bills in which there is an express stipulation that they shall be presented for acceptance before they are presented for
payment.
Though , bills payable on demand and those payable on a fixed date , or on the day of happening of a certain event need not be presented
by the holder for acceptance .
Presentment for Payment: A Promissory Note, a Bill of Exchange and a Cheque must be presented for payment to the maker , acceptor
and drawee thereof respectively . In case of death or insolvency of the maker , acceptor or drawee , presentment should be made to his
legal representative or assignee .
Negotiation
The ownership of a negotiable instrument can be transferred in two ways:
1. By negotiation
2. By assignment
What is Negotiation ?
The terms negotiation means transfer of an instrument from one person to another person so as to constitute that person the holder of
the instrument.
What is Assignment ?
The terms assignment means transfer of ownership of an article by means of a written and registered document under the provisions of
the Transfer of Property Act.
Modes of Negotiation
Modes of negotiation may be two ways; these are (i) Mere Delivery and (ii) Indorsement
' i. Delivery: Delivery is the voluntary transfer of the possession of the instrument. It should be given voluntarily and with the
intention of transferring ownership of the instrument to the person to whom it is delivered ,

ii . Indorsement: The term indorsement of a negotiable instrument means writing of a person’s name on the back of the instrument for
the purpose of negotiation . According to Section - 15, when the maker or holder of a negotiable instrument signs his name , otherwise
than such maker, for the purpose of negotiation , on the back or face thereof or on a slip of paper annexed thereto he is said to have
indorsed the instrument.
The main rules regarding Indorsement:
l. The Payee must sign his name in the exact spelling as appearing on the negotiable instrument.
u Indorsement in pencil or by a rubber stamp are usually not accepted .
in . In case of a married woman , the name of her husband must also be mentioned in the indorsement.
IV. Indorsement must be completed by delivery of the instrument.
Kinds of Indorsement
Endorsement may be of any of the following kinds:
I. General or Blank: In case of an endorsement in blank or general, the person making it signs on the back of the negotiable
instrument his name only . When the person does not make any mention of the name of the endorsee , then it is called
Blank or General Endorsement.
u. In Full or Special Indorsement: It is an indorsement in full, when the person signing adds direction to pay the amount to
or to the order of a specified person . A blank indorsement can easily be converted into a special indorsement by any holder
of the negotiable instrument.
in . Partial Indorsement: A negotiable instrument cannot be indorsed for a part of its value . A partial indorsement is invalid .
IV. Restrictive Indorsement: It prohibits the indorsee from further negotiating the instrument or restricts the indorsee to deal
with the instrument as directed by the indorser.
v. Conditional Indorsement: Conditional endorsement limits or negatives the liability of the indorser.
Material Alteration
Material alteration is that change in the negotiable instrument which causes it to speak a different language in legal effect from that
which it had originally spoken .
Following are some of the alterations which have been held to be materialalt£iatians:
l.
n
m.
Alteration in the date of the instnmrent.
Alteration of the sum payable v
Alteration in time of payment .
,
'
" 1
—
27
 Alteration in the place of payment. Even when a place of payment is added without the acceptor’s consent, it will also be
taken as a material alteration.
Alteration in the rate of the interest.
vi . Alteration by the addition as a new party.
i the following cases alterations are not material and they will not affect the validity of the instrument:
l. Conversion of an instrument payable to bearer into an instrument payable to order.
li Alterations for rectifying mistakes.
in . Additions of the words ‘on demand ’ in an instrument where not time of payment is stated .
IV. Alterations made before the issue, delivery or negotiation i.e. completion of the instrument .
V. Alteration made at any time with the consent of the party.
VI . Alterations which have resulted from an accident.
vu. Alterations of any note on the margin of the instrument which is not a part of the instrument and is not covered by the
signatures.
The following alterations have been specially permitted by the Act:
1. Completion of an inchoate instrument.
11 Conversion of a blank indorsement into indorsement in full .
111. Qualified acceptance.
IV. Crossing of Cheques.
Bearer Cheque: Cheques in which the word ‘Bearer’ appears after the payee’s name are called Bearer Cheque.
These kinds of cheque are likely cash since they are freely transferable from one person to another without any bar and it can be
encashed by anybody from the bank over the counter.
Order Cheque: A cheque in which the word ‘Order’ appears after the name of the payee is called Order Cheque. An order cheque can be
paid to the payee or to any person according to payee’s order . Instructions are written on the back of the cheque.
Stale Cheque: A cheque, after 6 months from its date of issue is regarded as ‘Stale’ and such a cheque is not paid by a bank . Stale
cheques are also called ‘out of date’ cheque.
Postdated Cheque: When a cheque bearing a future date is called postdated cheque . Post dated cheque is not paid by a bank . Post
dated Cheque means advance date cheque . A cheque will have to bear date. A bank can not pay cheque before date of cheque. If a
cheque is drawn on 15th September and bears the date of 15th December , the cheque is post dated.
Alots ' Frequent issue of post dated cheques by a dra wer indicate the financial weakness of a client.
In case a Banker honours a Post Dated Cheque , what risks can be raised in future?
In case of honour of a post dated cheque, the following risks can be raised in future - *

1. The drawer may countermand the payment before the date mentioned on the cheque and then the banker will not be entitled
to debit the customer 's account with the amount of the cheque.
n. The drawer may make the banker liable for dishonouring of other cheques on account of insufficiency of funds resulting
because of payment of the post dated cheque.
ni . In case of insolvency or death of the drawer before the date mentioned on cheque , the bank shall not be entitled to debit the
customer’s account, if it has already made payment of the cheque .
IV. The payment of a post dated cheque shall not be considered to be a payment in due course . In this case , banker will not get
any statutory protection .
What is Mutilated Cheque?
A Cheque is said to be mutilated when it is torn into two or more pieces. Such a cheque should not be paid unless the banker is satisfied
that mutilation was unintentional and it also obtains confirmation of the drawer .
Ante dated Cheque: A cheque bears a date earlier to the date on which the cheque is drawn . For example • a cheque drawn on January
*

15 bearing date January 10 is an ante dated cheque . Bank generally pay an ante - dated cheque .
Blank Cheque: A cheque without any details bearing only the signature of the drawer. This is also called inchoate (incomplete)
instruments.
Cancelled Cheque - This is a cheque that has been paid . Paid cheques can be cancelled by the Bank , for instance by perforation or a
stamp, or by crossing out the signature of the drawer (maker) of the cheque.
Conversion: Conversion is another word for wrongful payment of a customer cheque . All cheques are drawn by the account holders to be
payable to the intended person . If the bank pay it to any person other than the intended person, the payment will be wrongful payment
or conversion .
-
Crossed Cheque When two parallel lines are drawn across the face of a cheque, it is called crossed cheque . A crossed cheque can not be
*

paid at the counter. It can be paid only through an account .

General Crossing : When a cheque bears two parallel lines across its face, it is called a general crossing. A cheque bearing a general
crossing can be paid only through an account. General crossing is usually put either at the top left corner or in the middle of the cheque.
Features of a cheque.
01. It must be an unconditional order.
02. Cheque must be a written order.
03. For certain sum of money
04. Drawn on a specific bank
05. Payee of a cheque to be certain
06. Cheque must be payable on demand .
Kinds of cheque.
01. Bearer cheques
02. Order cheques
03. Crossed cheques
04 . Not negotiable cheques
Quasi Negotiable Instrument: The instrument which has some characteristic that a negotiable instrument has but not all. Such as Bill
of Lading which has some characteristic of negotiable instrument but not all as Bill of Exchange or a cheque has.
DD is a negotiable instruments ? :
DD is not a negotiable instruments as per N.I . Act 1881 but usually DD is a negotiable instruments.
*

Difference between Demand Draft and Pay Order

Demand Draft Pay Order
01 . It is a negotiable instrument 01. It is not a negotiable instrument.
02. It is payable to same bank with other branch 02. It is payable on the issuing branch .
03. It is the mode of remittance . 03. It is not a mode of remittance.
04. Payment in one place to another place. 04. General payment is locally.
One Stop Banking: Modern concept of banking services offered by most merchant banks. Under this concept complete range of banking
services viz. corporate advice , all foreign exchange transactions, project finance , fund management, house mortgage , various saving
schemes etc. are available at one place.
Current Deposit Account: A Current Deposit Account is a running and active account. Holder of such account can freely deposit or
withdraw money as many times as he feels necessary in any working day . The banker undertakes to repay these deposits anytime
within the banking hours. In fact, unlimited cheque facilities are it’s special feature. Account can be drawn upon by cheque without any
notice, without obtaining any permission and without any penalty. Loan sanctioned on CD A/c.
28
 deposits are parts of Demand Deposit.
,5 Deposit Account* Savings bank deposit accounts are intended for individual savers who want to save for meeting the future
i, economic, educational or religious needs. Generally these deposits are of comparatively smaller amounts and are accepted
by the
.KS to encourage persons of small means to make savings.
is observed that the Central Bank currently treats only 10% of Savings deposit as demand liabilities and rest 90% is treated as time
liabilities.
Dormant Account Savings or Current accounts which become inoperative for a period of one year generally are marked as ‘Dormant
Account ’. After one year of ‘dormant’ marked it transferred to the ‘Dormant Account Ledger’.
Deceased Account - In the event of death of an individual account holder , the contract of the account holder with the bank is ceased and
all operations in his account are stopped . A caution mark ‘deceased account’ is drawn just below the balance of the account.
As soon as the information of death of any account holder is received by the banks either through newspapers or some reliable source ,
the date of death and source of information are noted on the ledger folio of the relevant account.
Payment of balance of deceased account •
02. However, if there is any nominee of the account, bank’s are fully discharged in paying him the balance of the account .
03. Probate or letter of administration or succession certificate from court.
Types of Account Holder *

a) Individuals (Having 13 years old any person)

b) Joint Accounts
c) Sole proprietorship concern ( Business trading firm)
d ) Partnership firms
e) Hindu joint families
f ) Private Limited Company (Memorandum & Articles of Association , Certificate of Incorporation)
)
g ) Public Limited Company (Memorandum & Articles of Association, Certificate of Incorporation, Certificate of Commencement
h ) Corporations (Corporation , autonomous bodies)
i) Local Bodies (Municipal Corporation , District Council)
Special Types of Accounts Holders •
a ) Non - government organizations ( NGO)
b) Co- Operatives (Samity)
c) Club/Associations/Societies
d) -
Non Trading Concerns ( Non profit organization )
e) Liquidators (Appointed by Court)
D Executors/Administrators (Appointed by Court)
g) Trustees
h) Attorney Holders
0 Minors
j) Married Women
k) Illiterate persons
l) Pardanashin Lady
m ) Lunatics (This are not allowed to open accounts)
What is Certificate of Commencement?
This certificate is issued by the Registrar of Joint Stock Companies permitting a public limited company to commence its business. This
certificate is not required by the private limited company. Banker must ensure proper recording of such certificates along with other
documents while opening of bank account of a Public Limited Company.
What is Certificate of Incorporation?
This certificate issues by Registrar of Joint Stock Companies to a newly formed company who filed the articles of incorporation properly
and observed other formalities as required . The certificate states that the company has been duly registered and is now incorporated
under the Companies Act. This certificate is the conclusive evidence of the company’s authority to commence business. Before issuance
of this certificate by the authority , the company has no legal power to conduct business or to maintain a banking account .
However, banker bay allow a valued client to open the account on a very special consideration without the Certificate of Incorporation!
but operation in the account remains suspended till the certificate is fled with the Dank .
What is Dead Money ?
Dead Money means costly money which can only be borrowed at a high rate of interest.
Days of Grace: Extra benefit of period given to usuance bill . Three days grace period 19 added on to the maturity date of a usance bill for
the benefit of acceptor.
What is Demand Deposit?
The deposit which can be withdrawn on demand by the depositor at any time without any notice , it is called Demand Deposit. A portion
of total deposit of a bank 19 payable on demand . The total deposits in current account plus portion of savings deposit determining
Demand Deposits.
Are Deposits Money ?
We know that the cash deposited into the accounts of the banks by the account holders are termed as deposits. We also know that the
deposits are the borrowings of the banks from the people. These are repayable on demand. As and when depositors will make demand
properly through cheques, banks are bound to make payment in cash. In this sense deposits are money (bank money).
Deposits into two types •
g ) Demand Deposits
h) Time Deposits
Money is also 2 categories •
a ) Narrow Money Ml (Currency Outside Bank + Demand Deposit + Deposit with B. Bank)
b) Broad Money M 2 (Currency Outoide Bank + Demand Deposit + Deposit with B. Bank + Time Deposit).
Safety of Depositors Money ’
0 Deposit Insurance ^ All types of deposit/depositors are insured upto a maximum of Tk .1.00 lac per account/depositor irrespective
of whether one has one or more account .
>) Liquidity : The scheduled banks are required to maintain a certain percentage of their deposits as liquidity (cash /near
cash). Currency such liquidity 18% (13% SLR & 5% CRR).
) Capital Adequacy Ratio: Currency the Capital Adequacy Ratio is 9% of the nsk weighted assets.
0 Provision against Classified Loans •
*

) Good Governance: In addition , the central bank also ensures good governance of the banks through restrictions on
directorship, sanction of large loans, loans/interest waiver and various other means.
lovernment Deposit : Restriction on Private Ranks :
0% of Annual Development Programme fund may be placed with the private banks which are engaged in banking in Bangladesh for
le last 10 years or above.
5% of the funds of the government , semi government bodies, autonomous and semrautonoraous bodies may be placed with the private
anks which are engaged in Bangladesh for last 5 years or more ,

fho can open an Account ?

nybody ( natural or legal person) who are completed to enter into contract, are eligible to open bank accounts. Insolvents, lunatics
29
 / d minor are not eligible to open an account . A minor may . however, be allowed to open an account jointly with the legal
ms .
al person like married or unmarried man and woman , literate or illiterate persons, pardanshin ladies and even a blinds man can
/
. an account either singly or jointly
1 ,

pening of Accounts • Common Formalities •

a) Application on the prescribed form duly filledin
b) Photograph /Identity
c) Specimen signature
d) Mandate for operation of the account
e) Nomination
f*) Introduction
g ) KYC (Transaction profile & source of fund) .
Why Introduction need to an Account?
(1) Proper introduction serves as precaution against any fraud.
( ii ) It is a safeguard in case of inadvertent overdraft .
( iii) Banker can get help to be satisfied on a proposed account opener about the identity, character , integrity and respectability .
(iv) Real reason for obtaining introduction by the banks is to get legal protection from the courts (Sec 131 , N . I . Act)
*

(v) It helps the banker to give proper and correct confidential opinion regarding the standing and creditability of the customer.
Why Introduction to an Account?
In case any fraudulent transaction takes place in the account, the banks may get some relief since it is the moral responsibility of the
introducer at least to help the bank in finding out the customer or tracing him out.
A banker is found to be vefy careful in selecting his customers . Before opening an account, he is to be satisfied himself about the
identity , character, integrity and respectability of the proposed account opener . To this end he talks to the proposed customer informally
to gather as much information as possible to satisfy himself about his bonafide . Not only that, a banker is also now required to obtain
information about the possible transaction needs of the customers and maintain those in the customer profile . Most importantly the
banks are to compulsorily obtain introduction as well .
Who can Introduce an Account - Anybody acceptable to a bank may introduce an account such as existing account holders , government
high official and respectable person .
Near Money (Quasi Money) ' The assets which can be easily converted into cash . As for examples government securities , bank’s
*

demand deposits , money at call , bills and cheque etc .

Do you think that Cheque is Cash?
Yes, I think Cheque is Cash as because Cheque like other negotiable instruments i . e . bill of exchange and promissory note transferable
n
from one person to another seems as Cash .
Who is Transferor and Transferee?
The Person who transfer a cheque is called transferor and the person to whom it is transferred is call a transferee .
What is Petty Cash?
Petty Cash means a small amount of cash fund which is used for small items of expenditure .
Right Issue - A new issue of company’s securities offered first to the existing share - holder at a face value . The shareholders who do not
come forward to take up their rights, make their shares available to the general public .
Secondary Market - The resale or retail , market for bonds and other debt securities after they have been issued on the primary market .
The secondary stock market is the market for share outside the organized exchanges or primary markets (an example would be the
over - the - counter market in unquoted shares)
Stock Exchange A market or a house where stocks , all kinds of commercial and industrial shares , bonds and securities are bought and
sold through the approved brokers. Only members of the house are authorized to conduct the transaction according to prescribed set of
rules . Anyone wishing to sale or buy shares must do through the approved broker .
Stock Dividend ^ A dividend distributed in the form of additional shares instead of in cash .
Suspense Account; A heading on the assets side of the statement of affairs . This account is temporarily used to carry receipts ,
disbursements, advance payment for ultimate expenditures pending final debit to respective expense accounts .

CAMELS ; For examining financial conditions of a company , the following 6 things are needed to cheque ;
• . C = Capital Adequacy
1
• A = Asset Quality n
• M = Management Quality
rV
• E = Earnings
• L = Liquidity
• S = Sensitivity to Market Risk
Important terms related to cheques .
01 . Apparent tenor
02. Stale cheque
03 . Ante dated and post dated cheques
04 . Countermanding (stopping ) payment of cheques V
05 . Conversion/wrong payment of cheques
When Banks must refuse payment of cheque . 4. \ \ 1
01. On customer countermanding payment
02. On receipt of a notice of customer death
03. On customer becoming insolvent
vf
riV \ ' \

04 . On receipt of a notice of the customer insanity

05 . On receipt of Garnishee Order
06 . On notice of Assignment
07 . Trust account u >/

08 . Stolen cheques / v
Dishonour / *
A negotiable instrument may be dishonoured either by non - acceptance or by non - payment .
Other reason for dishonour of cheques .
01 . Post - dated
02 . Short of fund in the account
03 . Cheque presented after business hours
04 . Joint account hut cheque are not signed by joint account holders / - •
)
05 . The cheque is irregular and ambiguous L J
06 . The cheque presented after 6 months from the date it bears fr
When may a banker refuse to honour a customer’s cheque?
A banker can refuse to honour a customer’s cheque in the following causes;
a. When the balance to the credit of the customer is insufficient to meet the cheque .
b. A personal cheque cannot be honoured against Trust Account .

30
 After receiving the notice or information of death of the customer, the banker should stop payment of all cheques drawn
against his account.
^ of Crossing .
01. General Crossing
02. Special Crossing
statutory protection to Collecting Banker.
02. Crossed cheque only
03. Collection as an Agent
04. Good faith and without negligence
Who is Collecting Banker ?
The banker who collects the proceeds of bills, cheques, drafts etc. on behalf of his customer is called Collecting Banker. In order to get
the protection of Negotiable Instruments Act , a banker should act purely as an agent for collection of an instrument and not as a holder
in due course i.e . should not purchase the item . The collecting banker will not get protection under the act unless
he acts in good faith ,
without negligence , and for a customer purely as an agent.
Duties of Collecting Banker
08. Presentation of cheques for payment within reasonable time
09. Notice of dishonour
Responsibility of Paying Banker.
01. Cheques drawn on Branch
02 . Presentation within validity needed
03. Presentation within banking hours
04. Sufficient balance
05. Must be valid instrument
Statutory protection to paying banker.
01. Protection in case of order cheque
02. Endorsements must be regular
03. Payment must be made in due course
04. Protection in case of crossed cheque
05. Protection in case of bearer cheque
Double Entry Book Keeping - A system of book - keeping where transaction is divided into debit and credit. Both of these are recorded in
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the books of accounts. Each debit has a corresponding credit and vice versa .
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y LSpread - Cost of fund and administrative cost deducted from the yield on fund is called spread. More , the yield , more is the
profit.
Yield on Fund - Return on the invested fund . In case of the bank it is the interest received on loans and advances and other interest.
More the, yield , more is the profit.
Equity • It is the shareholders total interest in the company. Equity represents share holders capital plus reserves.
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Debt- Equity Ratio Share holders equity to total liabilities is called debt equity ratio.
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Voucher Voucher is the evidence of the transaction authenticated by the authorised officer(s). This is a documents of the bank for
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reference.
Currency Note : Such notes in Bangladesh include all notes and coins ranging from Tk .5 to Tk.500 notes issued by Bangladesh Bank .
Other notes are Tk . 2 , Tk .1 and coins and other coins issued by Government of Bangladesh.
Bank Notes - Banks notes are promissory notes issued by a bank and payable to bearer on demand. These include all bills, draft , and
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notes other than Central Bank notes (DD. P.O. Cheque).

Money at Call and Short Notice: Money at call is money that must be paid on demand and money at short notice is money borrowed for
say 24 hours. This is also called near money .
Call Money: Money of overnight nature borrowed from the call money market repayable on call . Bank’s having surplus cash lends
temporarily to other bank’s suffering from liquidity problem in the call money market .
How much time needs to keep old records/ documents as per MLA , 2002?
As per Money Laundering Act, 2002 under Section - 19 (ka) all banks, financial institutes and organizations connected with financial
activities are required to keep record upto 5 years even after the termination of relationship of the customers
Punishment against Money Laundering - If anybody engages with money laundering then he will be treated as Money Launderer and he
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will be punished under Money Laundering Act , 2002 for that activities minimum 6 months and maximum 7 years imprisonment and
also double fine of the laundered money.
-. Note Punishment for institutions under this Act is minim um Tk . 10,000.00 and maxim urn Tk.1.00 lac.
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