Method of Determining Foreign Exchange Rate.

In which ratio the currencies between two countries are changed each other is called exchange rate. The exchange rate is fluctuated due to the difference of value standard of currency. Generally exchange rate is determined depending on the  demand & supply of currency. The determined methods of foreign  exchange rate are different according to the variation and differentiation of currencies. The methods of determining foreign exchange rate are divided into two categories are given below with detail :

1. Gold standard method.

2. Paper currency method.

1. Gold standard method :

The equal amount of golds are reserved or mixed gold in making currency against circulation or running the currencies of which countries are called gold standard area. The exchange rate in the countries of gold standard areas is determined by gold standard method or according to the ratio of consigned gold against the currencies between the two countries. In the ancient time the exchanged rate was determined by this method but at present this method isn't used to determine the exchange rate. The another name of this exchange rate determined by this method is called 'Mint per exchange ' also. It was a difficult method. Because every county itself determined gold standard according to its benefit and as a result the controlled of exchange faced the high difficulties.

2. Paper currency method :

There is running and continuing paper currency at about every county in the present world. The exchange rate is determined by the paper currency method in the paper currencies issuing countries. There are two theories of determining exchange rate according to the paper currency method. Such as-

i) Purchasing power parity theory.

ii) Balance of demand & supply theory.

I) Purchasing power parity theory :

By definition the PPP states that utilizing a unit of a coin, let us say one euro, which is the obtaining power that can buy  the same  merchandise around the world. The hypothesis is in view of the 'law of one value', which contends that ought to an euro cost of a decent be duplicated by  the conversion standard (€/US$) then  it will bring about an equivalent cost of  the positive qualities in US dollars. As it were, if  we expect  that  the trade  rate between the € and US $ states at 1/1.2, then  products that cost € 10  in the EU ought to cost US$ 12 in the United States. Something else, arbitrage 11 benefits will happen. Nonetheless, it is at long last  the business sector that through supply and interest will drive in like manner the euro and US dollar costs to  the harmony  point. Along these lines, the law  of one cost will be re-established, and additionally the  buy power equality between the euro and US dollar. Swelling differentials between nations will likewise be dispensed with regarding their impact on the costs of the products in light of the fact that the PPP will  acclimate to equivalent the  proportion of their cost levels 12. All the more particularly, as expressed in  their book (Lumby S. & Jones C. 1999) "the money of the nation with  the higher rate of swelling  will deteriorate against the other nation's coin by roughly the expansion respectful". All in all, it can  be contended that the hypothesis, despite the fact that it depicts in a sufficient manner the determination of the trade rates,  is not of good esteem, for the most part as a result of the accompanying two impediments. Firstly, not  all products are exchanged  universally (for instance, structures) and also, the transportation expense ought to speak to a little measure of the good worth.

ii) Balance of demand & supply theory :

This theory is modern & the most acceptable. In this theory exchange rate is determined at the balance point of demand & supply of currencies. The supply of foreign currency is increased through export of commodities. Because of increasing the supply of foreign currencies the demand of it is lessened and its value is drawn back more than indigenous currencies. As a result with the help of same amount of money more foreign currencies are gained than previous time and vice Versailles. On which point the demand & supply of foreign currencies of two countries are equal is called balanced point and on this point currency exchange rate is determined. It is also called balanced theory. In this theory, the exports imports of tangible & intangible goods are considered and the surplus of transaction is considered as balanced condition. But if the balanced condition of transaction is not controllable then the difficulties are seen in the determination of foreign exchange rate.

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Balance of Trade and Balance of payment.

Difference between Balance of Trade (BOT) and Balance of  Payment (BOP)

Essential Difference between Balance of Trade (BOT) and Balance of  Payment (BOP)  are given below with subtle element.

1. Definition :

Balance of trade may be characterized as distinction in the middle of fare and import of products and administrations.

Balance of payment is stream of money between residential nation and all other outside nations. It incorporates not just import and fare of merchandise and administrations additionally incorporates monetary capital exchange.

2. Formula :

BOT = Net Earning on  Export - Net payment for imports.

BOP = BOT + (Net Earning  on foreign investment - payment made to foreign investors) + Cash  Transfer + Capital Account +or - Balancing Item or  BOP = Current Account + Capital Account  + or - Balancing item ( Errors and omissions).

3. Favourable  or  Unfavourable :

In the event that export is more than  import, around then, BOT will be ideal. On the off chance that import is more than fare, around then, BOT will be unfavourable.

Balance of Payment will be  ideal, on the off chance that you have surplus in current record for paying your all  past credits in your capital record. Balance of payment will be unfavourable, on the off chance that you have current record shortage and you took more credit from outsiders. After this, you have to  pay high enthusiasm on additional advance and this will make your BOP  unfavourable.

4. Arrangement of unfavourable Problem : 

To Buy products and services  from domestic country. 

To quit taking of loan  from foreign countries.

5. Elements /factors : 

Taking after are fundamental factors  which influence BOT a) expense or costs of production b) availability of raw-materials c) Exchange rate d) Prices of commodities or goods produced at home.

Followings are fundamental factors  which influence BOP a) Conditions of foreign lenders. b) Economic arrangement or policy of Govt.  c) all the elements of BOT.

6. Significance of Debit and  Credit :

In the event that you see RBI' Overall  balance of payment report, it shows debit and credit of current account. Credit means total expenses of distinctive merchandise and administrations and charge means aggregate import of products and administrations in current account.

Credit intends to receipt and winning both present and capital record and charge means absolute surge of money both current and capital account and distinction between  debit and credit will be net balance of payment.

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Meaning & Causes of Disequilibrium in Balance of payment

Meaning of Disequilibrium in Balance of Payment.

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Though the credit and debit are written balanced in the balance of  payment account, it may not remain balanced always. Very often, debit exceeds credit or the credit exceeds debit causing an imbalance in the balance of payment account. Such an imbalance is called the disequilibrium. Disequilibrium may take place either in the form of deficit or in the form of surplus. Disequilibrium of  Deficit arises when our receipts from the foreigners fall below our payment to foreigners. It arises when the effective demand for foreign exchange of the country exceeds its supply at a given rate of exchange. This is called an 'unfavourable balance'. Disequilibrium of Surplus arises when the receipts of the country exceed its payments. Such a situation arises when the effective demand for foreign exchange is less than its supply. Such a surplus disequilibrium is termed as 'favourable balance'.

Causes of Disequilibrium in Balance of Payment.

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1. Population Growth :

Most countries experience an increase in the population and in some like India and China the population is not only large but increases at a faster rate. To meet their needs, imports become essential and the quantity of imports may increase as population increases.

2. Development Programmes :

Developing countries which have

embarked upon planned development programmes require to import capital goods, some raw materials which are not available at home and highly skilled and specialized manpower. Since development is a continuous process, imports of these items continue for the long time landing these countries in a balance of payment deficit.

3. Demonstration Effect :

When the people in the less developed countries imitate the consumption pattern of the people in the developed countries, their import will increase. Their export may remain constant or decline causing disequilibrium in the balance of payments.

4. Natural Factors

Natural calamities such as the failure of rains or the coming floods may easily cause disequilibrium in the balance of payments by adversely affecting agriculture and industrial production in the country. The exports may decline while the imports may go up causing a

discrepancy in the country's balance of payments.

5. Cyclical Fluctuations :

Business fluctuations introduced by the operations of the trade cycles may also cause disequilibrium in the country's balance of payments. For example, if there occurs a business recession in foreign countries, it may easily cause a fall in the exports and exchange earning of the country concerned, resulting in a disequilibrium in the balance of payments.

6. Inflation :

An increase in income and price level owing to rapid economic development in developing countries,

will increase imports and reduce exports causing a deficit in balance of payments.

7. Poor Marketing Strategies :

The superior marketing of the developed countries have increased their surplus. The poor marketing

facilities of the developing countries have pushed them into huge deficits.

8. Flight Of Capital :

Due to speculative reasons, countries may lose foreign exchange or gold stocks People in developing countries may also shift their capital to developed countries to safeguard against political uncertainties. These capital movements adversely affect the balance of payments position.

9. Globalisation :

Due to globalisation there has been more liberal and open atmosphere for international movement of goods, services and capital. Competition has beer increased due to the globalisation of international economic relations. The emerging new global economic order has brought in certain problems for some countries which have resulted in the balance of payments disequilibrium.

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Foreign Exchange Rate.

Definition of foreign exchange rate .

In which rate a currency of a county is turned & converted into another is called foreign exchange rate.

"Foreign exchange rate is the price relationship between the currencies of two countries."(Dictionary of Banking and Finance)

"The price of particular currency in terms of other currencies will changes, is known as foreign exchange rate." (D G Luckett)

The foreign exchange rate is the rate at which one country's money can be turned into another." (John Black)

"The rate of exchange between two countries is the amount of one currency that will be exchanged for one unit of another currency." (K C Shekhar)

At last according to the above definition it is said that,

* Exchange rate is the exchange ratio of the currency of two countries.

* A unit currency of a county will be turned into How many currencies of other countries is determined by the exchange rate.

* Received-payment of currency  depends on exchange rate.

* Exchange rate is changed with the changing of economic condition of a country.

Causes of fluctuation in the rate of exchange.

The ratio of turning the currency value between two countries is called the rate of exchange. The exchange rate of two countries is fluctuated due to the difference of demand & supply of more than one country's currencies. There are  many causes of fluctuating the exchange rate which are given below with details.

1. Condition of foreign trade :

If export is increased then foreign trade becomes favourable, more foreign currencies come in country, exchange rate is climbed up and vice versa.

2. Flow of capital :

If capital comes in county then more foreign currencies are entered & vice versa that means with the increasing -decreasing of flow of capital the rate of exchange is fluctuated.

3. Stock exchange :

More translations & the attendance or foreign companies in share market create the enhancement of stock exchange and less of that create oppose of that, means if foreign & countries purchasers buy more share then more foreign currencies enter into market, bull position of share market is created, exchange rate is augmented and vice versa.

4. Currency condition :

If the inflation is run up then the currency value is lessen and if  deflation is available then currency value & exchange rate is incremented. Thus, more inflation and deflation waste the balance of fluctuation of exchange rate.

5. Bank rate :

If the bank rate of a country is raised then more deposits to bank is accumulated, foreign trade becomes favorable, more foreign currencies come in county, the rate of exchange is enhanced.

6. Government currency policy :

The countries currency value is fluctuated through currency policy. If the currency policy is favorable of country then increasing the country's currency value, the exchange rate is climbed up and opposite reaction is created in opposite situations of that.

7. Foreign investment :

Foreign investment depends on investment policy & environment of a country. So, if the foreign  investment is picked up then foreign currencies come into, exchange rate is elevated and vice versa.

8. Political stability :

If the political condition of a country is stable then in a country the foreign investment is lift up, more foreign currencies come into, exchange rate is increased and in opposition the opposite reaction is exercised.

9. Price level :

When the price level in market is declined then the currency value is run up, exchange rate is lift up and vice versa.

10. Industrialization :

The value of currency is also climbed up due to industrialization and as a result being the favourable industrial environment of country, the supply of foreign currencies and exchange rate is incremented in a country.

11. International trade policy :

If the International trade policy come in a favorable position of country the foreign currencies are entered into. As a result the rate of exchange is elevated.

12. Interest rate :

In the increment of interest rate, huge foreign capital is invested due to more profit, exchange rate is  also enhanced and vice Versa.

13. Natural condition :

At the stability of natural condition the industry, business & commerce of a country is developed, entrance of foreign currencies is occurred and as a result exchange rate is drawn up also.

14. Sudden incidence :

Any sudden incidence is occurred or happened in country or at international stage, then exchange rate is climbed up. If such incidence isn't happened then economic development & stability will be run up, income will be enhanced and exchange rate will be lifted up.

15. International event :

If any International event goes on favorable position of a country then exchange rate is affixed and vice versa.

At last it is said that, the exchange rate can be increased & and; decreased in various reasons. But speculative businesses of currency, conditions of commodities market, international politics, various economic causes etc except the above described facts can impact & fluctuate to the exchange rate or foreign exchange rate.

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Definition & Importance of Foreign Exchange

Definition of Foreign Exchange.

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Foreign exchange means converting  the money or coin of a country to the money or coin of another country. The coin of a country is invalid to another country. But in foreign trade the payment must be with foreign currency. So, in which mechanism, system & process the currency of a country is needed to be converted in foreign currency is called foreign exchange.

"The mechanism, through which payments ate effected between two countries having different currency systems is turned as foreign exchange." (M N Mishra)

"Foreign exchange is bought and sold in foreign exchange markets." (Oxford Dictionary of Finance and Banking)

"Foreign Exchange is the mechanism by which commercial, investment and other transactions between countries are settled." (C J Woelfel)

At last it is said that, foreign exchange means-

* converting coin of a country to the coin of other countries.

* a recognized system to settle foreign payment.

* such exchange is performed through various transferable documents.

* Bank and other approved financial institutions perform the foreign exchange activities. 

Importance / Objectives /Causes of foreign Exchange.

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There are many causes to create debt-owe of a county with another countries. such debt- owe are paid with foreign currency. In this way one county uses foreign currency to pay the owe of another country. The process of converting the currency of a country to the currency of other countries is called foreign exchange. The importance of foreign exchange in the development of a country are given below with detail.

1. Completion of foreign trade :

Foreign exchange is very important and obligatory to settle the the debt-owe created from foreign trade. The import - export trading is easily performed with foreign exchange.

2. Foreign investment :

Foreign exchange is performed with foreign currency. So, the importance of foreign exchange is compulsory to increase the foreign trade.

3. Foreign remittance :

The persons working in abroad sends their earnings to their native land with foreign currency which raises the foreign reserve in country.

4. Foreign aid :

Many countries also financially aids to another county. Such aid given by various foreign organizations & government is paid with foreign currencies.

5. Machinery purchase :

The machineries of large & small scale of industries are to be imported from abroad. Such machineries are to be purchased with the help of foreign currencies. 

6. Foreign tour :

To visit into abroad the foreign currency of that country where you will make a tour, is very needed. such tour is easy and extended through foreign currency.

7. Credit payment :

The credit obtained from foreign countries are to be compulsorily paid with interest through foreign currency which is the result of foreign exchange.

8. Salary of foreigners :

There are many specialized foreigners & foreigner officers doing their jobs in a county. The salaries, bills, arrears & opportunities are to be paid with foreign currencies.

9. Payment of foreign tuition fees :

Foreign tuition fees of those person who are studding in abroad are to be paid with foreign currency.

10. Import improved technology :

To import the improved & modern technology from abroad the foreign currency is to be needed.

At last it is said that, a country is to pay the due money to other countries for various reasons. With the help of foreign currency such debts- owes is to be settled.

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Different Types / Classification of Security.

Security is what the borrower puts up to guarantee payment of the loan. Moreover security means immovable & chattel or personal asset or assets to which a lender can have recourse if the borrower defaults in the loan payment. 

There are two types of banks security.

A. Personal Security.

B. Non-personal security.

A. Personal security :

If any banks client himself or third party is considered as security is called personal security. without receiving the immovable & chattel assets as security, if bank can receive any client himself or any person own self on be half of that client as security is considered as personal security. Bank will consider the person or third party only for then when he has enough social dignity and goodwill or a scope of applying law against himself in future or he is engaged in renowned business, government or recognized non government organization.

B. Non-personal security :

without receiving any client himself or any person own self on be half of that client as security , if bank can receive the immovable & chattel assets as security is considered as non-personal security. There are four types of non-personal security. such as-

1. Lien.

2. Pledge.

3. Mortgage.

4. Hypothecation.

The above four categories of non-personal security are given below with detail.

1. Lien :

The right of retain foods is known as lien. The lawful right of a lender to offer the guarantee property of an account holder who neglects to meet the commitments of an advance contract. A lien exists, for instance, when an individual takes out a vehicles advance. The lien holder is the bank that allows the advance, and the lien is discharged when the credit is forked over the required funds. Another kind of lien is a repairman's lien, which can be appended to genuine property if the property proprietor neglects to pay a foreman for administrations rendered. In the event that the account holder never pays, the property can be sold to pay the lien holder. there are two types of lien.

i) General lien.

ii) Special lien.

i) General lien :

Here, Bank has the possess of the assets have been kept as security and bank can't transfer the possession to another until the loan amount is being paid.

ii) Special lien :

Here, Bank has the possess of the assets have been kept as security and bank can transfer the possession to another on conditions is called special lien.

2. Pledge :

Here the possess of assets is to bank or loan provider, but the ownership is to borrower. After payment,  bank transfers the possession of security assets to borrower. When  a customer takes loan against jewels he pledges the jewel to the bank.  Similarly a customer availing loan on key cash credit basis pledges the  goods to the banker by keeping them in a godown under lock and key  control of the bank. Pledged goods are to be insured and the pledgee  (banker) has to take reasonable care to protect the property pledged.

3. Mortgage :

It is an interest in property created as security for a loan or payment of debt and terminated on payment of the loan or debt. A mortgage is a contract that permits a loan provider partially or fully to foreclose that security when a borrower is unable to pay the loan amount. Mortgage is applicable only for immovable assets and this is why it is called immovable property mortgage. There are many types of mortgage have been described below.

i) Simple mortgage :

If the loan amount isn't paid by borrower and legal step is taken against him or lender can purchase which security assets on the opinion of borrower  is called simple mortgage.

ii) Fixed mortgage :

The borrower gives which property  in black & white or in registering to the lender and if the loan is not paid in time, then legal possession of that security is gained by lender is called fixed mortgage.

iii) Conditional mortgage :

If the loan amount isn't paid in time and without fulfilling the determined conditions,  the which security is not sold or transfered is called conditional mortgage.

iv) Floating mortgage :

The possession right of which mortgage properly is belonged to borrower and only documents are submitted to loan provider is called floating mortgage.

v) Equitable mortgage :

The documents of which mortgage property is kept to bank for a specific time period and possession is belonged to borrower and after exceeding the payment period bank try to gain the legal possession is called equitable mortgage.

vi) Registered equitable mortgage :

The ownership documents of which mortgage property is kept to lone provider with registration for a specific time period and possession is belonged to borrower is called registered equitable mortgage.

vii) Use fructuary mortgage :

The  possession & consumption of which mortgage property is given to loan provider as loan providing till a specific time period and after exceeding that time period the belongingness of that property is leaved to borrower is called use fructuary mortgage.

viii) English mortgage :

The ownership of which mortgage property is to loan provider and possession or belongingness of that property is to borrower is called English mortgage. If borrower is fail to pay the loan amount  then the possession power is automatically gone to loan provider.

4. Hypothecation :

It is pledge to secure an obligation without delivery of title or possession.

At last we can say that, at the modern banking sectors a great changes has been occurred in the categories of categories of mortgage.

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Considering Factors / Features / Elements of Good Security.

The  immovable & chattel assets that are received by bank as certainty is called Security of Credit.

Considering Factors / Features / Elements of Good Security of credit are given below with two senses  :

1. Qualities of Personal Security.

2. Non - Personal Security.

1. Qualities of Personal Security :

Bank considers which Qualities of Personal Security are ad follows -

a) Financial solvency :

It means financial capabilities of clients. If the financial capability of personal guarantor is better then loan can be easily got. So, bank also considers the financial condition or solvency of personal guarantor.

b) Ability of credit using :

Bank considers whether the person may take loan is certainly capable to use that possible credit in profitable & developed sectors or not. Bank also gives credits to the person who has highly capabilities of credit using .

c) Social Status :

A personal  security Provider is to be a social recognized & prestigious person. Because, against personal security bank only provides credits to the person who has a great status & recognition.

d) Good Relation :

Bank feels comfort to provides loan against personal security only to such persons who have more excellent & better relation to bank.

e) Honesty :

All persons in this society like an honest individual. The persons who can prove honesty in financial translations are highly acceptable to bank as personal security.

2. Non - Personal Security :

Bank also considers which qualities as non-personal security are given below with described form.

a) Liquidity :

Deposits  are the life blood of a bank. Investors are repayable on interest or after expiry of a certain period. Everyday  investors either store or withdraw money. To fulfill the demand for cash, all banks need to keep certain measure of trade in for spendable dough their custody. This is why, bank receives such wealth as security which have highly Converted power to liquidity.

b) Acceptability :

Bank will consider whether the assets are kept as security is legally acceptable or not.

c) Ownership :

Bank is to think whether the loan receiver has complete ownership on the  immovable & chattel assets that are received by bank as certainty or not.

d) Price of Assets : 

Bank is to be conscious to the value of assets. The value of assets must be higher then the loan amount.

e) Marketability :

It is favourable for bank if the asset will be kept to bank as mortgage is convertible in cash after easily selling. So, bank considers that asset is better which has easy selling power.

f) Liability free:

The mortgage property must be free from liability. So, bank will consider as though the security may not be liable to any people or organization.

g) Price stability :

The price of which security assets is not highly unstable may be considered by bank as perfect or better security.

h) Possession :

Bank should considered who is the possessor of the assets will be kept to bank as security.

I) Transferability :

The  security asset is easily transferable will be better for bank to keep it as security.

j) Determinability of price :

The price of which security assets is easily determined should be considered by bank as better security.

k) Easy Store ability :

Bank likes those products which have easy store ability.

l) maintenance cost :

Bank considers that assets as perfect security of which maintenance costs is less and bank should receive that assets as security or mortgage.

At last it is said that, bank also try to receive mortgage which is more secured & favourable for itself by following a few facts beside the above described facts.

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International Banking of agricultural bank

Import Finance

Agricultural bank deals in all kinds of Documentary Credit operation under different credit Lines/Aid/Loan/Grants/cash etc. Agricultural bank  finances the following import sectors of the economy:

Products and Services:

All kinds of Capital Machineries for the development of economy giving special emphasis on Agro based industries / Ready made Garments industries and imports substitute industries.

Import of all kinds of industrial Raw Materials for the industries. Any other improved items and specially items directed by the government.

Export Finance

Agricultural bank supports exports of any kind giving special emphasis on the following :

Financial assistance to all kinds of export oriented industry and other products specially export of fruits & vegetables.

Offers Concessional rate of interest for Export Finance.

Does all activities in exports, such as:

Export bill negotiation /Purchase/Collection.

Helps the export firms for getting export incentive.

Financial support for materializing the export order.

Foreign Remittance

Agricultural bank plays an important role in the field of foreign remittances. Most of the agricultural bank  branches located at the remote areas of rural Bangladesh. The Bangladeshi people working abroad and their relatives in the country maintain bank accounts with agricultural bank branches. Bank has an arrangement to allow Bangladeshi people working abroad to send their foreign currencies to their relatives at home. Necessary steps have been taken to widen this sector so that the Bank can serve more people and collect more remittances.

S.W.I.F.T.(Society for Worldwide Interbank Financial Telecommunication).

Bangladesh Agricultural bank is now a proud member of SWIFT. It is connected with modern international financial telecommunication system. L/C advising/transferring and quick transfer of remittances as well as other financial correspondences have become very easy & speedy with the installation of SWIFT. Bangladesh agricultural bank s SWIFT BIC IS "BKBABDDH"

Dealing Room

Agricultural bank is actively operate treasury operation i.e. dealing room operation in its International Department, Head Office, Dhaka to transact foreign currency trading in Inter Bank FC market both at home and abroad

Foreign exchanges activities

Agricultural bank extends its service to the travellers by endorsement of cash FC/TC in passports. Bangladesh Agricultural bank renders Hajj services to the pilgrims which is 3rd highest in the banking sector. Bangladesh Agricultural bank deals in spot and forward sale and purchase of foreign currency in local inter-bank market.

International Banking

Import Finance

Export Finance

Foreign Remittance

Foreign exchanges activities

Branches dealing in Foreign Exchange Transactions are :

1. Bangladesh Agricultural bank Local Principal Office, Dhaka83-85 Motijheel Commercial area, Dhaka-1000, Bangladesh.

Tel: 88-02-9550325, 9551067, 9552996

Fax: 88-02-9556903 

SWIFT: BKBABDDH

2. Bangladesh Agricultural bank Kawran Bazar Corporate Branch, Dhaka50, Kazi Nazrul Islam Avenue, Dhaka-1215 Bangladesh. 

Tel: 88-02- 9111048.

3. Bangladesh Krishi Bank Chawk Bazar Branch, Dhaka16 Water Works Road RahamatGanj (Dalpatty) Dhaka, Bangladesh. 

Tel: 88-02-7316588.

4. Bangladesh Agricultural bank, Narayanganj Branch,

Narayangonj 159 B B Road, Narayanganj 1400, Bangladesh. 

Tel: 88-02-7634715 

Fax: 88-02-7634717

5. Bangladesh Agricultural bank

Agrabad Corporate Branch, Chittagong Noor Mansion(1st Floor) 15 Agrabad Commercial Area Chittagong, Bangladesh. 

Tel: 88-031-810038, 88-031-810070, 88-031-723600 

Fax: 031-715729

6. Bangladesh Krishi Bank Chittagong Corporate Branch, Chittagong 61, Jubilee Road, Chittagong 4000, Bangladesh. 

Tel 88-031-614088, 88-031-614628, 88-031-2852319 

Fax: 88-031-626477.

7. Bangladesh Agricultural bank, Chalpatty Branch, Chittagong New Chaktai Chittagong, Bangladesh. 

Tel : 88-031-637651.

8. Bangladesh Krishi Bank,

Khulna Corporate Branch, 

Khulna16 Sir Iqbal Road Khulna 9000, Bangladesh. 

Tel: 88-041-723617, 88-041-723282 

Fax: 88-041-721495.

9. Bangladesh Agricultural bank

Kushtia Branch, Kushtia Bangabandhu Market 65, 

NS Road Kushtia 7000, Bangladesh. Tel 88-071-62070.

10. Bangladesh Agricultural bank Sylhet Corporate Branch, Sylhet Zindabazar Sylhet 3100, Bangladesh. 

Tel: 88-0821-714464 

Fax: 88-021-713520.

11.Bangladesh Agricultural bank Haluaghat Branch, MymensinghHaluaghat Mymensingh 2260, Bangladesh. 

Tel: 88-09026-56020.

12. Bangladesh Krishi Bank Sharsha Branch, JessorPO. Sharsha Jessore, Bangladesh.

Tel: 88-0421-75204

13. Bangladesh Agricultural bank Tea Board Branch, ChittagongBayezid Boistami Road, Bayezid Chittagong, Bangladesh. 

Tel: 88-031-2580112, 2580202, 

Fax: 031-682549.

14. Bangladesh Agricultural bank Banani Corporate Branch, Dhaka46 Kemal Ataturk Avenue Banani, Dhaka .

Tel: 88-02-9888913 

Fax: 88-02-9862529.

15. Bangladesh Agricultural bank Sholo Shahar Branch, Chittagong.Krishi Bank Bhavan CDA Avenue, Sholo Shahar Panchlaish Chittagong-4203, Bangladesh. 

Tel: 88-031-653646 Fax:88-031-654374

16. NalitaBari Branch, Sherpur PO &; PS: Nalitabari, Dist: Sherpur, Manager: 09324-73013, 

E.mail: mgrnalitabari@krishibank.org.bd

Nostro Accounts are maintained with the following Banks:

1. USD: Al Rajhi Banking and Investment Corp, Riyadh, 

SWIFT/BIC: RJHISARI, 

Account No:0407520067161.

2. USD: 

Habib American Bank USA NA,

New York, 

SWIFT/BIC:HANYUS33, 

Account No: 20729204.

3. USD :

JP Morgan Chase Bank National Association, New York, 

SWIFT/BIC:CHASUS33, 

Account No:001-1-041894

4. USD :

Mashreq Bank PSC, New York, SWIFT/BIC:MSHQUS33, 

Account No:70002574

5. USD :

Standard Chartered Bank, New York, SWIFT/BIC:SCBLUS33, 

Account No:3582-021618-001.

6. USD:

Sonali Bank (UK) Ltd. 29-33 Osborn Street London E 6TD, London,  SWIFT/BIC:BSONGB2L, 

Account No:02000 00424600.

7. ACUD :

Arab Bangladesh Bank Limited, Mumbai, 

SWIFT/BIC:ABBLINBB, 

Account No:5001-000010-155.

8. ACUD:

Summit Bank Limited, 

23 – M.T. Khan Road, Karachi, 

SWIFT/BIC:SUMBPKKA, 

Account No:1-2-1-20315-931-120549

9. ACUD :

Habib Metropolitan Bank Ltd, Karachi, 

SWIFT/BIC:MPBLPKKA, 

Account No:6-1-52-20110-931-1

10. ACUD :

ICICI Bank Limited, Mumbai, 

SWIFT/BIC:ICICINBB, 

Account No:000 406 000 306

11. ACUD :

Sonali Bank Limited, Kolkata (Calcutta), SWIFT/BIC:BSONINCC, 

Account No:ACUD-06.

12. ACUD :

Standard Chartered Bank, Kolkata (Calcutta), SWIFT/BIC:SCBLINBB, Account No:22205381878.

13. ACUD:

Standard Chartered Bank Nepal Ltd, Kathmandu, SWIFT/BIC:SCBLNPKA, Account No:15-1390236-51

14.GBP :

Sonali Bank (UK) Ltd. London,  SWIFT/BIC:BSONGB2L, 

Account No:01000 00424600.

15. YEN :

The Bank of Tokyo-Mitsubishi UFJ Ltd, Tokyo,  SWIFT/BIC:BOTKJPJT,

Account No:653-0411248.

16. EUR :

CommerzBank AG, Frankfurt am Main, SWIFT/BIC:COBADEFF, 

Account No:400 8714628-01.

17. EUR :

BAYERISCHE HYPO-UND VEREINSBANK AG-HYPOVEREINS MUENCHEN DE,  

SWIFT/BIC:HYVEDEMM, 

Account No:69103723.

18. CAD :

Bank of Montreal, Toronto, 

SWIFT/BIC:BOFMCAT2, 

Account No:31691-1057197.

19. CHF :

Habib Bank AG Zurich, Switzerland, SWIFT/BIC:HBZUCHZZ, 

Account No:1-1-1-20110-1-144601.

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Credit Programs.

Crop Loan

Out of total annual allocation of Loan portfolio, 60% is earmarked for Crop financing. The Credit program covers all the seasonal crops produced in the country. The loan is disbursed as per norms set by the Bangladesh Bank. The rate of interest for this sector is 10%. The rate of interest may however, vary from time to time. Both the landowner and share croppers are normally the target group for this loan. Marginal farmers are also eligible for the loan.

Crop loan is sanctioned on annual basis.

Credit passbook is issued to each borrower.

Fisheries Loan

To accelerate fish production BKB provides loan for excavation and re-excavation of ponds, development of marshy lands, establishment of fish hatcheries and new fisheries projects. The Loans are given in the following sub sectors:

White Fish

Fish culture in existing pond/tank

Fish culture by re-excavation of old/derelict tank/tank

Fish culture by excavation of new tank/tank

Shrimp culture (Marine, Brackish water and sweet water Culture )

Shrimp culture in traditional system (Bagda or Tiger Shrimp)

Shrimp culture in scientific system

Shrimp culture in semi-intensive method

Prawn culture in sweet water(Galda)

This loan is given mainly in coastal areas for developed technology based shrimp culture.

Fish & Shrimp hatchery (fingerlings production)

Fingerlings production in sweet water

Shrimp fingerlings production (fingerlings of commercially profitable technology)

Live Stock Loan

Live stock sector plays an important role in the development of agriculture. BKB provides loan for Bullock, Milch Cow, Goatery, Beef fattening and other draft animals. It is basically Medium Term Loan.

Beef Fattening Program :

With a view to creating self employment for the poor and un-employed people of the country the bank has introduced a new program titled "Beef Fattening".

Objectives of the program

Create self-employment opportunity for poor and un-employed people.

Meet national deficit of animal protein.

Bring positive change in the attitude of the people through training.

Ensure participation of bank officials in the program and increase their sense of duty and consciousness.

Main Aspects

Purely supervised credit.

The bank officials giving guarantee are responsible for recovery of loan.

Each borrower will get maximum Tk. 25,000/-for 5 calves ( each Tk. 5,000/-)

Loan is collateral free.

Repayable within one year.

Continuous Loan:

The bank is providing continuous loan for different types of activities as cash credit/working capital loan on short term basis. Continuous loan is given for processing, preservation and marketing of agricultural products.

Agro Equipment & Farm Machinery Loan

With the Changing scenario the traditional agricultural system is being replaced by mechanized one. In order to meet up the changing demand of this sector, BKB offers credit facilities both for production and marketing of different agricultural equipment and farm machinery including irrigation equipment. All sorts of irrigation equipments like LLP, HPTW, STW, DTW are eligible under the sector.

Agro Processing Industries

As an agricultural country different types of crops and fruits are produced here. Moreover recently sectors like poultry, dairy, fisheries have flourished enormously. There is enough scope for export of these items through processing mechanism and value addition. The agro based industries are – Poultry farm, Dairy farm, Food processing plant, Fish freezing/Processing Industries etc. Reputed local businessmen and prospective foreign investors are highly acceptable and encourage to the bank for establishment of any sorts of agro-processing industries in Bangladesh. Project under joint venture as well as direct foreign investors are specially taken care of.

Poultry farm

Poultry broiler farm

Poultry layer farm

Poultry (broiler/layer) hatchery

Poultry farm related/dependent project

Dairy farm

Milk production

Milk collection, milk processing (ghee, butter, pasteurized milk etc production) and marketing

Food processing project

Fruit based food preparation, processing, preservation & marketing

Flour, bread & biscuit vermicelli, noodles, chips., chanachur, corn flakes, potato flakes, French fry, popcorn, baby food, starch etc

Juice, jam, jelly, tomato ketchup, sauce, pickle etc production & marketing

Spices processing

Different types oil mill, dal mill etc

Small processing industry at farm level Dehydrated fruit canning, packaging, preservation & marketing

Exportable items

Fish processing

Freezing plant

Dehydration plant (for dry fish processing)

Salting and Dehydration of Jew fish.

Leather process & leather based products item

Vegetables

Import substitutes

Leather and Leather Goods

Fish net/net thread production

Garments accessories (garments allied industry like washing plant, packaging etc)

Organic fertilizer, mixed fertilizer, urea super granules etc production & marketing

Insecticides production

Bio-pesticide, neem based pesticide production.

SME financing by Bangladesh Krishi Bank

Bangladesh Krishi Bank has introduced the SME policy strategies and financing norms in accordance with the industrial policy and Bangladesh Bank's Prudential Regulation to assist in the achievement of Millennium Development Goals (MDGs) set by the government. BKB started SME financing since October, 2007.

Interest Rate:

Term Loan : 15.00%

Cash Credit/Working Capital Loan : 15.50%

Women Entrepreneur : 15.00%

Repayment:

EMI (equal monthly instalment) maximum for 5(five) years and working capital for 1(one) year.

Other Program

* Ghore fera kormoshusi.

* Green Banking Policy.

* BKB SME policy.

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Security of Credit .

Definition:

Bank wants the certainty of getting back the loan amount. So, bank takes such step to get back loan amount so that there shouldn't have any problem and this is why bank receive mortgage from expected borrower as certainty of loan. The  immovable & chattel assets that are received by bank as certainty is called Security of Credit.

"Security is what the borrower puts up to guarantee payment of a loan."

(Dictionary of banking & finance)

"Security is meant to be an insurance against an emergency." (Bedi & Hardikar)

" Security means an asset or assets to which a lender can have recourse if the borrower defaults in the loan payment " (Oxford dictionary of business)

At last it's said,  loan or advance made on the security of assets the market value of which isn't any time less than the amount of such loan or advance.

Necessity / Importance / Objectives / Advantages of Security.

Bank wants the certainty of getting back the loan amount. So, bank takes such step to get back loan amount so that there shouldn't have any problem and this is why bank receive mortgage from expected borrower as certainty of loan. The  immovable & chattel assets that are received by bank as certainty is called Security of Credit. The objectives & importance of security of credit are given below with detail :

1. Confirmation of loan recovery :

Bank receives security as confirmation of loan recovery. There is no problem at all to getting back the loan amount even in bankruptcy & great losing of business man that means borrower.

2. Increasing funds flow :

If the assurance of loan recovery is got the bank disburses more loan. As a result, the flows of fund in business is ensured and raised.

3. Development of trade-commerce :

The flows of fund is increased in trade - commerce due to security and that sectors are developed.

4. Industrialization :

The force of industrialization is continued because of providing loan by bank against security in placement & expansion of industry.

5. Advising :

Bank also gives an advice to its clients about which sectors is better for investment or from where more outcome will be gained.

6. Loan security :

Mortgage creates the security of credits recovery. If borrower fails to pay the loan amount then selling that mortgaged properties  bank collects its providing loan amount.

7. Creating the responsibilities of borrower :

keeping security bank provides loan. This is why the borrower feels stress to pay the loan.

8. Free from bad debts :

The uncertainty of getting bank the loan amount is lessen due to prove loan against security that means the possibility of creating bad debts is absent.

At last it is said that, bank receives security or mortgages as  the certainty of getting back the loan amount. Moreover, the credits and advances through mortgage increase so profits as goodwill of bank is raised.

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Classification of Letter of Credit. (L/C)

Letter of Credit (L/C) means a loan document or instrument where bank, importer & exporter concerns, are  issued by bank on behalf of importer to ensure payment to exporter on specified written condition. L/C is an important element of foreign trade. On the basis of using condition,  certainty of financial payment L/C may be various categories or types are given below with detail :

1. Documentary L/C :

There are such conditions in which L/C that, bank will recognized to the bill only then when various documents like insurance policy, bill of lading, invoice etc will be placed with the bill is called documentary L/C.

2. Clean L/C :

There are no such conditions of  various documents will be attached  with the bill and bank pay the bill of which L/C is called clean L/C.

3. Confirmed L/C :

In which L/C bank gives an assurance and confirmation of recognizing the bill of exporter is called confirmed L/C. Bank can't cancel such letter of credit before expired of due date.

4. Unconfirmed L/C :

In which L/C if bank gives an assurance and confirmation of recognizing the bill of exporter and can cancel such letter of credit before expired of due date is called unconfirmed L/C.

5. Fixed L/C :

The L/C which is opened for specified amount  of money in a particular time period and is considered as void after a fixed duration,  is called fixed L/C. After payment of a bill of specific amount, the mechanism of such L/C is automatically finished.

6. Revolving L/C :

A L/C opened for a total amount up to which bills drawn may remain outstanding at a time is known as revolving L/C.

7. Open / Revocable L/C :

The issuing bank can cancel which L/C in any time is called  Open / Revocable L/C. Moreover bank is bound to give recognition of if the bill is prepared and placed before dismissing the bill.

8. Irrevocable L/C :

The issuing bank can't cancel which L/C in any time even at the death and insolvency of client, is called irrevocable L/C.

9. Marginal L/C :

The bill form is available on the margin side of which L/C is called marginal L/C. Filling up the bill form, it is placed on the bank for recognition.

10. Anticipatory L/C :

The L/C which is issued for advance payment of the receivable money of exporters or sellers is called Anticipatory L/C. There are two types of Anticipatory L/C. Such as -

i) Red Cause Anticipatory L/C.

ii) Green Caused Anticipatory L/C.

i) Red Cause Anticipatory L/C :

By which L/C, bank manage the advance payment of shipment costs, insurance, customs, carrying cost of products to exporters is called Red Cause Anticipatory L/C. Such L/C is written with red coloured ink or paper.

ii) Green Cause Anticipatory L/C :

By which L/C, bank manage the advance payment of warehouse costs of products to exporters is called green cause anticipatory L/C. Such L/C is written with green coloured ink or paper.

11. Travellers Letter of Credit :

Travellers Letter of Credit is a L/C which a bank issues travellers for the convenience of the persons who want to travel with in the country or abroad. It is two types. I) Direct Letter of Credit ii) Circular Letter of Credit.

12. Back to back L/C :

Agreement in which one unavoidable letter of acknowledge serves as the insurance for another; the educating bank concerning the first letter of credit turns into the issuing bank of the second letter of credit. As opposed to a transferable letter of credit, authorization of a definitive purchaser (the candidate or record gathering of the first letter of credit) or that of the issuing bank, is not needed in a back to letter of credit. It is utilized mainly by middle people to shroud the personality of the genuine supplier or maker. It is also called counter credit or complementary letter of credit.

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Definition & Importance of Letter of Credit (L/C)

Definition of Letter of Credit (L/C)

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No direct cash translation isn't practised in foreign trade. Exporter can't be pre-known to importer. So, the certainty of cash payment is needed to it. Bank ensures the exporter to pay the value of exported goods & services on behalf of importer by Letter of Credit (L/C) which is an important bank document in foreign trade.

"Letter of Credit (L/C) is a letter from a bank allowing someone credit and promising to repay at a letter date." (A Ivanovic)

"Letter of Credit (L/C) is an instrument by which a bank substitutes its own credit for that of an individual, firm, or corporation to the end that domestic & foreign trade may be more safety." (The Dictionary of Banking)

"Letter of Credit (L/C) is a document issued by a bank on behalf of a customer authorizing payment to a supplier when the conditions specified in the document are met." (Dictionary of Business)

"An instrument or document issued on behalf of a buyer by a bank on another banker bank or banks or on itself." (M Rosenberg)

At last it is said that, Letter of Credit means-

a loan document or instrument where bank, importer & exporter concerns, are  issued by bank on behalf of importer to ensure payment to exporter on specified written condition.

Objectives / Importance /Advantage of Letter of Credit (L/C).

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Letter of Credit (L/C) is an important credit document used in foreign business or trade. Bank ensures the payment to exporter up to predetermined amount of money with foreign coins on behalf of importer. Without letter of Credit exporter isn't agree to sell his products, goods & services. The Objectives / Importance /Advantage of Letter of Credit are given below with detail :

1. Development of foreign trade :

By issuing letter of credit exporter sells product and importer becomes capable to purchase that commodities. As a result foreign trade is organized, expanded & developed.

2. Confirmation of payments :

Bank ensures the payment to exporter if importer becomes failure through letter of credit. As because exporter can sell his products without any hesitation.

3. Development of home trade :

The using of Letter of credit is practiced for domestic trade and commerce. As a result unknown traders can direct their trade and business & commerce are improved also.

4. Creating Relationship :

The relation among the domestic as well as foreign traders is created and build-up also by using letter of credit.

5. Risk Reduction :

The traders between the two countries are not acquaintance. So, their payment become risky. Bank lessens the risk introducing the traders of the two countries each other through letter of credit.

6. Settlement of transaction :

According to the condition of letter of credit if the importer don't pay the price of imported goods & services then bank settles the transaction by paying money in favour of importer.

7. Increasing Income / national income:

Letter of credit helps to increase the export of domestic. The income of seller, trades & industrialists is increased by export. As a result his capital & business is expanded.

8. Employment :

If bank issues letter of credit more then the county becomes capable to export more, the business & commerce is expanded as well as more employment opportunity is created.

9. Development of tourism industry :

Bank issues letter of credit to traveller. This is why, The tourists can make more journey and tourist industry is developed.

10. Market Creation :

In the continuity of issuing more letter of credit the foreign importers of various countries import more commodities and new markets are created.

11. Development of living standard :

Letter of credit helps to Increase the  exports of a county. As a result increasing per head income & national income bank improves the living standard of mass.

At last we can say that, foreign trades are impossible without letter of credit. The more used of letter of credit creates the balance of trade the country becomes self-sufficient.

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