P R E F A C E In the name of Almighty Allah This is my humble and maiden effort to make a brief presentation on what a commercial bank is, what qualities a professional banker should possess and what a commercial bank does. This book mainly focusses risk perspective of banking operation. It is mainly meant for practicing bankers, especially new entrants in banking profession. Others may also have a bird-eye-view on banking operation. I express my indebtness to bankers whose books, papers and presentations I have consulted. There might have been some short comings in this book. I would welcome and appreciate any suggestion for improvement of the book which shall be duly addressed in future edition, if any, Insallah. I shall consider my maiden and humble effort amply rewarded and successful, if it comes to any benefit to the readers in anyway. Md. Motior Rahman Former Managing Director Jamuna Bank Limited Bank Bankers Banking Table of Contents Part-One Banking - a dream profession for the young job seekers Part-Two I Bank - definition, origin of Bank Financial Sector of Bangladesh II Commercial Banks after liberation of Bangladesh Types of Banks in Bangladesh III Role of Commercial Banks in Socio-Economic Development of the Country Purpose of Central Bank's Stringent Regulations IV. The organizational structure of commercial banks Towards excellence in Performance of Commercial Banks Sources and Application of Funds of Commercial Banks V. Qualities of a sound and vibrant Commercial Bank VI Islamic Banking Part-Three I Definition of Banker Distinguished Qualities of a Banker Skill Development Professionalism Leadership quality Negotiation Skill Communication skill Ethics in Banking Motivational skill Customers Service II Knowledge related to Laws, Rules and Regulations III Responsibilities of Head of Branches IV Responsibilities of Senior Level Executives of Banks W Human Resources Management Part-Four I General Banking Account Opening II Fixed Deposit Current Account Savings Account Special Notice Deposit Account Other Scheme Deposit Account III The Negotiable Instrument Act, 1881 Crossing Endorsement IV Cheque Payment of Cheque Statutory protection of paying Banker Statutory protection of collecting Banker Types of cheques W Inland remittance of Funds VI Treasury operation of Banks VIIIT operation of Banks VIII Cash Management Part-Five I Importance of credit operation of Banks Forms of credit The Principles of Sound Lending II Judicious selection of borrowers Sources of credit information III Some Tips for credit handling IV Appraisal of Credit Proposals V Mode of Advances VI Loan decision Flow Chart VII Securities Attributes of good security Continuation of Part-Five VIII Creation of charge over securities Methods of creation of charge IX Documentation X Bank Guarantee XI Credit Flow Chart of Banks XII Credit Risk Mode-wise instances of credit risk identification XIII Review, Follow-up, Supervision and Monitoring of credits XIV Recovery of loans Part-Six I Foreign Exchange meaning Exchange control in Bangladesh II Foreign Exchange Market III Exchange Rate IV Balance of Trade and Balance of Payment V Foreign Remittances VI Foreign Currency Account VII INCOTERMS (International Commercial Terms) VIII Methods of Payment International Trade IX Documents used in Foreign Trade X Mechanism of Letter of Credit XI Types of Letter of Credit Back to Back L/C XII Scrutiny of Documents XIII Lodgement of Import documents Retirement of Import documents XIV Correspondent Banking relationship XV Off-shore Banking Unit (OBU) XVI UCPDC - 600 XVII Export Incentives XVIII Export Processing Zone (EPZ) Continuation of Part-Six XIX Asian Clearing Union (ACU) XX Export Procedures XXI International Financial Institutions International Monetary Fund (IMF) World Bank (IBRD) International Finance Corporation (IFC) International Development Association (IDA) Asian Development Bank (ADB) The Islamic Development Bank (IDB) XXIII Some Terminologies used in Foreign Exchange Part-Seven I Malpractices in Banking Instances of Malpractices in General Banking Instances of Malpractices in Credit Operation Instances of Malpractices in Foreign Exchange peration