4.

Laws and Practice of General Banking (LPGB)

1. What Is Central Bank? Discuss the functions of Central Bank? Central bank is the lender of last Resorts-?
2. What is commercial bank? Discuss the functions of Commercial bank? How commercial bank can play vital role
to economic development?
3. Central bank is the banker of other banks explain? What are the main instruments of monetary policy of a Central
Bank? Or Central bank is the lender of last Resorts – Expian.
What principle is followed by the Bangladeshi bank in respect of issuing notes?

4. What should be the role or Composition and Mandate of the Board of Directors under Bangladesh Bank Order, 1972?
5. What is letter of credit? Explain different types of letter of credit? Briefly discuss the important features of a
documentary letter of credit.
6. What do you meant by paying banker? Discuss duties & responsibilities of paying banker? Explain the protection
offered by law to a paying banker?
7. What is loan syndication? discuss advantages & disadvantages of loan syndications?
8. What is remittance? Discuss the different types of remittance?
9. What is working capital? Explain how you will assess the working capital requirement of a Business?
10. What do you mean by CTR and STR? Write about suspicious transaction identifying tools (STR).
11. What do you mean by lead bank? Discuss the role played by lead bank in a loan syndication?
12. What is Cheque? Characteristics of Cheque?
13. What is KYC? Discusses the importance of KYC to prevent money laundering & terrorist finance? What are the
documents needed to verify KYC?
14. What is Customer Due Diligence (CDD)?) Enhanced Due Diligence (EDD).
15. What is 'endorsement'? What are the different types of endorsement? Give examples.
16. Discuss the impact of non-performing assets (NPA) on the profitability of a Commercial bank.
17. What is Limitation Act & Discuss the objective and scope of Limitation Act?
18. Types of Companies? Difference between Public Ltd. Company and Private Ltd.
19. What are the Account Opening Procedures and relevant documents required for opening of accounts?
Differences
a. Cheque VS Bill of Exchange?
b. Core Capital Vs Supplementary Capital
c. Fixed Charge Vs Floating Charge
d. Accommodation bill Vs Trade bill
e. Promissory Note Vs Bill of Exchange
f. Share Vs Debenture Vs Mutual Funds
g. Money market vs Capital Market (GFI)
h. Authorized capital vs paid of capital
i. Hardware Vs software
j. What do you mean by cash deposit ratio?
k. Bridge finance and Lease finance
l. Bank rate and Lending rate
m. Differentiate between credit card and Debit card)
n. Merchant Bank & Off-shore bank
o. Bad Debt Provision and Rese
p. Money market vs Capital Market (GFI)
 1. What is Central Bank? State the Objectives & Main functions of Central Bank as per Bangladesh Bank
Order, 1972.
A central bank is a supreme monetary & banking authority of a country. A central bank is a financial institution that
controls a country's currency, money supply, and interest rates. The central bank is the highest financial institution of a
country. It is named central bank because it controls the entire banking system of the country.

On 7 April 1972, after the Independence of Bangladesh, the Government of Bangladesh passed the Bangladesh Bank
Order, 1972 (P.O. No. 127 of 1972), reorganizing the Dhaka branch of the State Bank of Pakistan as Bangladesh Bank,
the country's central bank and apex regulatory body for the country's monetary and financial system. There are six chapters
and eighty-four sections in this order

Objectives to establish a central bank in Bangladesh to manage the monetary and credit system of Bangladesh with a
view to stabilizing domestic monetary value and maintaining a competitive external par value of the Bangladesh Taka
towards fostering growth and development of country’s productive resources in the best national interest.

The main functions of the Bank as per this order shall be as under:

The main functions of BB are (Section 7A of BB Order, 1972) –

1. to formulate and implement monetary policy;
2. to formulate and implement intervention policies in the foreign exchange market;
3. to give advice to the Government on the interaction of monetary policy with fiscal and exchange rate policy, on the
impact of various policy measures on the economy and to propose legislative measures it considers necessary or
appropriate to attain its objectives and perform its functions;
4. to hold and manage the official foreign reserves of Bangladesh;
5. to promote, regulate and ensure a secure and efficient payment system, including the issue of bank notes;
6. to regulate and supervise banking companies and financial institutions.

Bangladesh Bank is the central bank of Bangladesh and is a member of the Asian Clearing Union. It is fully owned by the
Government of Bangladesh. The bank is active in developing green banking and financial inclusion policy and is an
important member of the Alliance for Financial Inclusion

Core Policies of Central Bank

Monetary policy
The main objectives of monetary policy of Bangladesh Bank are:
1. Price stability both internal & external
2. Sustainable growth & development
3. High employment
4. Economic and efficient use of resources
5. Stability of financial & payment system

Bangladesh Bank declares the monetary policy by issuing Monetary Policy Statement (MPS) twice (January and July) in
a year. The tools and instruments for implementation of monetary policy in Bangladesh are Bank Rate, Open Market
Operations (OMO), Repurchase agreements (Repo) & Reverse Repo, Statutory Reserve Requirements (SLR & CRR).
Principle followed by the Bangladeshi bank in respect of issuing notes:

2. What is commercial bank? Objective & Functions of commercial bank?

A commercial bank is a financial institution that accepts deposits, issuing business loans, and providing basic investment
products, and provides basic financial transaction, these banks are profit-making institutions and do business only to make
a profit.

Functions of Commercial Banks Commercial banks are authorized to provide a variety of financial services. Functions
that a commercial bank performs may be divided into two categories - primary and secondary. The bottom-line objective
of commercial banks is to earn profit. Profit maximization or in other words shareholder’s wealth maximization is their
ultimate goal.

The primary functions of commercial banks are:

Accepting Deposits: Commercial banks accept deposits from people, businesses, and other entities in the form of:
• Savings deposits – The commercial bank accepts small deposits, from households or persons, in order to encourage
savings in the economy.
• Time deposits – The bank accepts deposits for a fixed time and carries a higher rate of interest as compared to savings
deposits.
• Current deposits – These accounts do not offer any interest. Further, most current accounts offer overdrafts up to a pre-
specified limit.
Lending of Funds
• Commercial banks lend funds to customers in the form of loans and advances like, Term loans, cash credit, overdraft,
discounting of bills, etc.
 • Loans and advances that a bank extends to his customers with or without security for a specified time and at an agreed
rate of interest.

The secondary functions of commercial banks are:

Agency services A bank acts as an agent to its customers for various services like:
• Collection of cheques bills, drafts, pay orders etc.
• Paying the insurance premium, rent, loan installments, professional fees, periodic subscriptions to clubs and societies.
• Remittance of funds through demand drafts or electronic transfer.
General Utility Services: There are several general utility services that commercial banks offer like:
• Issuing debit cards and credit cards
• Offering locker facilities for keeping valuables in safe custody
• Issue of commercial letters of credit, guarantees etc.
How commercial bank can play vital role to economic development?
1. Mobilization of Savings:
o Commercial banks encourage people to save money by offering various deposit accounts (such as savings accounts,
fixed deposits, etc.).
o When people save, banks can use these funds to provide loans to businesses and individuals for productive purposes.
2. Allocation of Credit:
o Banks allocate credit to different sectors of the economy, including agriculture, industry, and services.
o By providing loans, banks enable businesses to invest in new projects, expand operations, and create jobs.
o For example, a textile factory can borrow from a bank to buy machinery, hire workers, and produce textiles for export.
3. Financial Intermediation:
o Banks act as intermediaries between savers and borrowers.
o They collect deposits from savers and lend these funds to borrowers.
o This process ensures efficient allocation of resources and promotes economic growth.
4. Trade Facilitation:
o Banks offer trade finance services, such as letters of credit and export-import financing.
o These services help businesses engage in international trade by mitigating risks and ensuring smooth transactions.
5. Payment System:
o Banks provide payment services, including electronic fund transfers, checks, and credit/debit cards.
o A robust payment system is essential for economic activities to function smoothly.
6. Risk Management:
o Banks assess risks associated with lending and manage them through credit analysis, collateral, and risk diversification.
o By managing risks, banks contribute to stability in the financial system.
7. Infrastructure Development:
o Banks finance infrastructure projects (such as roads, bridges, and power plants) that are crucial for economic
development.
o Infrastructure investments enhance productivity and attract private investment.
8. Support for Small and Medium Enterprises (SMEs):
o SMEs play a significant role in economic growth.
o Banks provide loans and financial services to SMEs, helping them grow and create employment opportunities.
9. Financial Inclusion:
o Banks extend services to rural areas, promoting financial inclusion.
o Access to banking services empowers individuals and supports economic development.
10. Bangladesh Bank’s Role:
o Bangladesh Bank, as the central bank, regulates and supervises commercial banks.
o It ensures stability, transparency, and efficiency in the banking sector1.

In summary, commercial banks are essential for economic development by mobilizing savings, allocating credit,
facilitating trade, and supporting various sectors.
 3. What is monetary policy, Objective of monetary policy? Explain the tools used by central bank to achieve
these objectives:

Monetary Policy:
Monetary policy refers to the actions taken by a country’s central bank (such as the Bangladesh Bank) to manage the
money supply, interest rates, and credit availability in the economy. Its primary goal is to achieve macroeconomic
stability and promote sustainable economic growth.
Objectives of Monetary Policy:
1. Price Stability (Low Inflation):
o Controlling inflation is a crucial objective of monetary policy.
o High inflation erodes purchasing power, disrupts economic planning, and creates uncertainty.
o Central banks aim to keep inflation within a target range (e.g., 4-6% in Bangladesh).
2. Economic Growth and Employment:
o Monetary policy influences economic activity by affecting interest rates and credit availability.
o A balanced approach ensures growth without excessive inflation or deflation.
3. Exchange Rate Stability:
o Stable exchange rates promote international trade and investment.
o Central banks intervene in foreign exchange markets to prevent extreme currency fluctuations.

Tools of Monetary Policy:

Central banks use various tools to achieve their objectives:
1. Open Market Operations (OMOs):
o The central bank buys or sells government securities (bonds) in the open market.
o Buying securities injects money into the economy, while selling absorbs money.
o OMOs influence short-term interest rates (e.g., the repo rate).
2. Discount Rate (Lending Rate):
o The discount rate is the interest rate at which commercial banks borrow from the central bank.
o By changing the discount rate, the central bank influences other interest rates.
o Lowering the discount rate encourages borrowing and spending.
3. Reserve Requirements (Cash Reserve Ratio):
o Central banks mandate that commercial banks hold a certain percentage of their deposits as reserves.
o Adjusting reserve requirements affects the money supply.
o Lowering reserves increases lending capacity.
4. Interest Rate Policy:
o The central bank sets policy rates (e.g., the repo rate or policy rate).
o Changes in policy rates impact borrowing costs for banks and consumers.
o Lower rates stimulate economic activity.
5. Forward Guidance:
o Central banks communicate their future policy intentions to guide market expectations.
o Clear communication helps shape behavior and influences economic decisions.

In summary, monetary policy plays a critical role in shaping an economy by managing money supply, interest rates, and
credit availability. Central banks carefully use these tools to achieve their objectives and maintain stability.

4. What should be the Composition and Mandate of the Board of Directors under Bangladesh Bank Order,
1972?
Composition and Mandate of the Board of Directors:
Article 9 of the BB Order is a fairly comprehensive section dealing with the policy structure of the Bank. Article 9(2)
says: “The general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Board of
Directors which may exercise all the powers and do all acts and things that may be exercised or done by the Bank.” Article
9(3) says that the Board shall consist of –
(a) The Governor;
(b) A Deputy Governor to be nominated by the Bank;
(c) Four Directors who will not be Government officials to be nominated by the Government from amongst persons who,
in the opinion of the Government, have had experience and shown capacity in the field of banking, trade, commerce,
industry or agriculture;
(d) Three Government officials to be nominated by the Government.
Role of the Board of Directors under Bank Company Act,1991.
▪ Board of Directors will hold responsible for the formulation of policies and Implementation of the bank company, Risk
management, Internal control, internal audit and its review.
▪ Every Bank company will have to form an Audit committee comprising of the members of Board of directors who are
not the members of the executive committee of the Board of directors.
▪ Every Bank company will have to form a Risk management committee comprising of the members of Board of directors.

5. What is Letter of Credit/ Documentary Credit & Types of LC?

A Letter of Credit is a conditional undertaking on behalf of importer to exporter for making payment under compliance
presentation.
A letter of credit (LC), also known as a documentary credit, or letter of undertaking (LoU), is a payment mechanism used
in international trade to provide a payment guarantee from an issuing /creditworthy bank on behalf of importer to an
exporter of goods.
Types of Letter of Credit?
Several categories of LCs exist which seek to operate in different markets and solve different issues. An example of these
include:
The same credit can be termed an import or export letter of credit depending on whose
perspective is considered. For the importer it is termed an Import LC and for the exporter of goods, an Export LC.
Whether a LC is revocable or irrevocable determines whether the buyer and the issuing bank
are able to manipulate the LC or make corrections without informing or getting permissions from the seller. According to
UCP 600, all LCs are irrevocable, hence in practice the revocable type of LC is increasingly obsolete. Any changes
(amendment) or cancellation of the LC (except when expired) is done by the applicant (buyer) through the issuing bank.
It must be authenticated and approved by the beneficiary (seller).
An LC is said to be confirmed when a second bank adds its confirmation (or guarantee) to
honor a complying presentation at the request or authorization of the issuing bank.
Either the one advising bank can purchase a bill of exchange from the seller in the case of a
restricted LC or; the confirmation bank is not specified, which means that the exporter can show the bill of exchange to
any bank and receive a payment on an unrestricted LC.
ce: A credit that is not paid/assigned immediately after presentation, but after an indicated period that
is accepted by both buyer and seller. Typically, seller allows buyer to pay the required money after taking the related
goods and selling them. Additionally, a letter of credit may also have specific terms relating to the payment conditions
which relate to the underlying reference documents. Some of these include
A credit that the announcer bank immediately pays after inspecting the carriage documents from the seller.
Before sending the products, seller can take the pre-paid part of the money from the bank. The first part
of the credit is to attract the attention of the accepting bank. The first time the credit is established by the assigner bank, is
to gain the attention of the offered bank. The terms and conditions were typically written in red ink, thus the name.
 A pair of LCs in which one is to the benefit of a seller who is not able to provide the corresponding
goods for unspecified reasons. In that event, a second credit is opened for another seller to provide the desired goods.
Back-to-back is issued to facilitate intermediary trade. Intermediate companies such as trading houses are sometimes
required to open LCs for a supplier and receive Export LCs from buyer.
Operates like a Commercial Letter of Credit, except that typically it is retained as
a "standby" instead of being the intended payment mechanism. In other words, this is a LC which is intended to provide a
source of payment in the event of no
Discusses the important features or Terminology of Letter of Credit
UCP 600 (2007 Revision) regulates common market practice within the letter of credit market. It defines a number of
terms related to letters of credit which categories the various factors within any given transaction. These are crucial to
understanding the role financial institutions play within. These include:
The Applicant (Importer)is the person or company who has requested the letter of credit to be issued; this will
normally be the buyer.
The Beneficiary (Exporter) is the person or company who will be paid under the letter of credit; this will normally be
the seller (UCP600 Art.2 defines the beneficiary as "the party in whose favor a credit is issued").
The Issuing Bank is the bank that issues the credit, usually following a request from an Applicant.
The Nominated Bank is a bank mentioned within the letter of credit at which the credit is available (in this respect,
UCP600 Art.2 reads: "Nominated bank means the bank with which the credit is available or any bank in the case of a
credit available with any bank")
The Advising Bank is the bank that will inform the Beneficiary or their Nominated Bank of the credit, send the original
credit to the Beneficiary or their Nominated Bank, and provide the Beneficiary or their Nominated Bank with any
amendments to the letter of credit.
Confirmation is an undertaking from a bank other than the issuing bank to pay the Beneficiary for a Complying
Presentation, allowing the Beneficiary to further reduce payment risk, although Confirmation is usually at an extra cost.
Confirming Bank is a bank other than the issuing bank that adds its confirmation to credit upon the issuing bank's
authorization or request thus providing more security to the beneficiary.
l of the
rules relating to letters of credit.
6. What do you mean by Paying banker? Discuss duties & responsibilities of paying banker?
Paying Banker
A Banker on whom a cheque is drawn should pay the cheque when it is presented for payment. This obligation has been
imposed on him by sec. 31 of the N.I Act, 1881.
• A banker is bound to honor his customer’s cheque, to the extent of the funds available and the existence of no legal bar
to payment.
• Again, for making payment the cheque must be in order and it must be duly presented for payment at the branch where
the account is kept.
• The paying banker should use reasonable care and diligence in paying a cheque, so as to abstain from any action likely
to damage his customer’s credit.
• If the paying banker wrongfully dishonors a cheque, he will be asked to pay heavy damages.
Paying Bank’s Responsibility,
A Paying Bank, by maintaining or using an Account with the Bangladesh Bank for settlement of items or by accepting an
item from the Bangladesh Bank:
a) agrees to comply with the applicable BACPS rules and agrees that those rules govern the relationships among the
Participating Banks;
b) agrees to process the item in accordance with these Rules;
c) authorizes the Bangladesh Bank to charge the amount of a payment item to the Paying Bank’s Settlement Account on
the Settlement Date, and
d) agrees to indemnify the Bangladesh Bank for any loss or expense (including attorneys’ fees and expenses of litigation)
incurred as a result of a breach of the foregoing agreements or of any action taken by the Bangladesh Bank in accordance
with these Rules.
e) The agreements, authorization and indemnity do not limit any other agreement, authorization or indemnity not
inconsistent with these Rules, made by a Paying Bank to a Presenting Bank, the Bangladesh Bank or another person
7. What is Loan Syndication? Advantages & Disadvantages of Loan Syndication?
Loan or Credit syndication is a process in the banking sector where multiple lenders come together to provide a borrower
with a large credit facility. It involves a lead bank that coordinates with other banks to form a syndicate, pooling their
resources to extend credit to the borrower. This approach allows the borrower to access substantial credit amounts that
may not be available from a single bank.
In Bangladesh, loan syndication is regulated by the Bangladesh Bank. The bank has set a limit on the amount of money
that any one bank can lend to a single borrower. This limit is in place to protect banks from taking on too much risk. Loan
syndication allows banks to comply with this limit while still providing loans to borrowers who need them.
Overall, loan syndication in Bangladesh facilitates collaboration among banks, mitigates risk, and ensures that borrowers
can access the necessary capital for their projects while maintaining regulatory compliance.
Advantages of Loan Syndication in the Banking Sector of Bangladesh:
1. Increased Financing Capacity: Loan syndication allows banks to pool their resources, enabling them to provide larger
loan amounts than they could individually. This benefits borrowers who require substantial funding for their projects.
2. Risk Diversification: Participating banks in a syndicate share the risks associated with the loan. By spreading the risk
among multiple lenders, each bank's exposure is reduced, enhancing risk management in the banking sector.
3. Competitive Terms: Syndicated loans often offer competitive terms due to the involvement of multiple banks. Borrowers
can benefit from favorable interest rates, fees, and repayment terms, resulting from the negotiation power of the syndicate.
4. Expertise and Knowledge Sharing: Banks in a syndicate bring their expertise and knowledge to the table. This
collaborative approach allows borrowers to tap into a broader range of banking professionals, gaining insights and
guidance throughout the loan process.
Disadvantages of Loan Syndication in the Banking Sector of Bangladesh:
1. Complex Coordination: Syndicating loans involves multiple parties, which can lead to complexity in terms of
coordination, communication, and decision-making. It requires efficient management by the lead bank to ensure smooth
operations.
2. Potential Delays: Due to the involvement of multiple parties, syndicated loans may experience delays in the approval
and disbursement process. The need for consensus and coordination among the banks can slow down the loan timeline.
3. Increased Administrative Burden: Loan syndication involves additional administrative tasks, such as documentation,
legal agreements, and monitoring of the loan. This can increase the workload for both banks and borrowers.
4. Potential Disagreements: Disagreements among syndicate members regarding loan terms, conditions, or borrower
performance can arise. These disputes can affect the loan process and require resolution through negotiation or arbitration.
Overall, loan syndication in the banking sector of Bangladesh offers advantages such as increased financing capacity, risk
diversification, competitive terms, and knowledge sharing. However, it also presents challenges in terms of coordination,
potential delays, administrative burden, and the possibility of disagreements.
8. What is remittance? Discuss the different types of remittance?
Remittance refers to the transfer of money from one individual or entity to another, typically across international borders.
It plays a crucial role in the global economy, especially in developing countries where it often serves as an important
source of foreign currency and income for households.
In Bangladesh, remittance plays a significant role in the economy as well. The country receives a substantial amount of
remittances from its expatriate population working abroad, particularly in the Middle East, North America, and Europe.
These remittances contribute to the overall economic development of Bangladesh by boosting consumption, improving
living standards, and supporting various industries.
There are different types of remittance methods available, including:
1. Bank Transfers: This is the most common method where individuals use banking channels to transfer money from one
country to another. It involves using wire transfers, online banking platforms, or mobile banking services to send funds to
the recipient's bank account.
2. Money Transfer Operators (MTOs): MTOs are non-bank financial institutions that specialize in remittance services.
Companies like Western Union, MoneyGram, and Ria are well-known examples of MTOs. They have physical locations
or partnerships with local agents to facilitate cash pickups in the recipient's country.
3. Mobile Money: Mobile money services have gained popularity, especially in regions with limited banking
infrastructure. It allows individuals to send and receive money using mobile devices. Examples include M-Pesa in Kenya
and bKash in Bangladesh.
4. Informal Channels: Informal remittance channels refer to the transfer of money through informal networks such as
friends, relatives, or hawala systems. Although less regulated, these channels are still prevalent, particularly in areas with
limited access to formal financial services.
The banking sector in Bangladesh plays a critical role in facilitating remittances. Banks offer various services to both
remitters and recipients, including foreign currency accounts, remittance processing, and distribution channels. They work
closely with MTOs and other remittance service providers to ensure the smooth flow of funds.
In recent years, the Bangladesh government has taken several initiatives to promote formal remittance channels and reduce
costs associated with remittance transfers. These efforts include providing incentives to remittance recipients, encouraging
partnerships between banks and MTOs, and implementing digital solutions to enhance the efficiency and transparency of
remittance transactions.
Overall, remittance inflows have significantly contributed to Bangladesh's economy, acting as a key driver of poverty
reduction and economic growth. The country continues to focus on leveraging its strong diaspora network and improving
the infrastructure for remittance transfers to further harness the potential benefits of remittance inflows.
9. What is Working Capital? Explain how will assess the working capital requirement of a business?
Working Capital is the measure of cash and liquid assets available to fund a company's day-to-day operations. The capital
of a business that is used in its day-to-day trading/production operations, calculated as the Current Assets minus the
Current Liabilities. Finally: Short Term Funds Required to Acquire Current Assets to Enable the Business/Industry to
Operate at The Expected Level.
Sources of Working Capital
Own
Fund/Sh
are Investme
LC/
nt from
Guarant
Bank/NB
ee
FI

Factorin Advance
Workin
g/Bill from
g
Discount Custome
Capital
ing r

Commer Credit
cial From
Papers Suppliers
Sales of
Assets

METHODS OF WORKING CAPITAL ASSESSMENT

Current Asset & Current Liability Method
Current Asset is considered as the Gross Working Capital
 Difference between Current Asset & Current Liability is considered as the Net Working Capital.
Tied-up Period & Operation Cycle/Cash Conversion Cycle Method
After obtaining information on CCC, Raw Materials, Other expenses, amount required in different stages is
multiplied by the required Tied-up periods to assess the requirement of the Business.
Annual Turnover Method
If collection of authenticate data on CCC/Raw Materials and if the Target of Production could not be determined
due to nature of the business, the Annual Turnover Method is used to ascertain the Requirement of Working Capital.
During this calculation, margin of error may be higher.

Factors to Be Considered for Measuring Working Capital

CREDIT
• Credit availed from Supplier [More credit they avail from the suppliers, less will be the WC requirement]
• Credit allowed to off-takers /buyers [Less credit they provide to the buyers, less will be the WC requirement]
Raw Materials
• Price of tradable items or the raw materials [more the price more the WC]
• Number of tradable items or the raw materials [more the number more inventory required]
• Quantity required per day
• Availability [seasonal/non-seasonal, seasonal will required more WC]
• Sources [Single or Multiple/ Local or Foreign] & procurement process
Competition
• May not get supplier’s credit, may require to provide advance for raw materials
• Price of raw materials may rise due to bulk purchase of the competitor [it is not necessary to be a competitor by
producing the same goods but one can be competitor by purchasing the same raw materials from same source]
• Need to sell the goods on credit as the competitors
• Wages/Salaries may vary due to turnover rate of labors to the competitors
• Advertisement expenses may require/rise

10. What do you mean by CTR & STR? Write down identifying tools of STR?
CTR (Cash Transaction Report) in Bangladesh Banking:
A Currency Transaction Report (CTR) is used by US financial institutions to help prevent money laundering. A bank
employee must complete this form whenever a customer asks to deposit or withdraw money totaling more than $10,000.
It limits the value of transactions and is a component of the banking sector's anti-money laundering (AML) responsibilities.
Banks in the US use this form to add paperwork and protection to high-value transactions.
Key Takeaways
Any currency transaction that exceeds $10,000 must be reported to regulators using a Currency Transaction Report (CTR).
The CTR is a component of anti-money laundering measures to ensure that the money isn't being utilized for illegal or
wrongful purposes.
CTRs are not required when banks, public businesses, or other governmental entities make significant transactions.
CTR refers to Cash Transaction Report, a crucial document in the banking sector of Bangladesh. It is a report that financial
institutions must submit to the Bangladesh Bank for any cash transactions exceeding a specified threshold. The purpose
of CTR is to monitor and track large cash transactions, aiding in the detection of potential money laundering or other illicit
activities. This regulatory measure helps ensure the transparency and integrity of financial transactions, contributing to
the overall stability of the banking system in Bangladesh.
STR (Suspicious Transaction Report) in Bangladesh Banking:
STR stands for Suspicious Transaction Report, an essential component of the anti-money laundering framework in
Bangladesh's banking sector. Financial institutions are obligated to file an STR with the Bangladesh Financial Intelligence
Unit (BFIU) when they encounter transactions that raise suspicions of money laundering or other illegal activities. This
reporting mechanism is crucial for identifying and preventing financial crimes, as it allows authorities to investigate and
take appropriate actions. By requiring the submission of STRs, Bangladesh's banking system aims to maintain the integrity
of financial transactions and protect against illicit activities that could undermine the stability of the financial sector
Definition of Suspicious Transaction
As per Section 2(z) of MLPA 2012 Suspicious Transaction means such transactions

, any other transaction or attempt of transaction

Identification or Keya features of STR/SAR
Identification of STR/SAR may be started identifying unusual transaction and activity. Such unusual transaction may be
unusual in terms of complexity of transaction, nature of transaction, volume of transaction, time of transaction etc.
Generally, the detection of something unusual may be sourced as follows:
explanation;
oring customer transactions;

11. What do you mean by Lead Bank? What roles banks play in the loan syndication process
A lead bank is a bank that oversees the arrangement of loan syndication. The lead bank receives an additional fee for this
service, which involves recruiting the syndicate members and negotiating the financing terms. In the Eurobond market,
the lead bank acts in an agent capacity for an underwriting syndicate.
What roles banks play in the loan syndication process?
Loan syndication refers to a system that involves various lenders to fund specific portions of a loan for a single borrower.
A lead bank is a bank overseeing the arrangement of a loan syndication or securities underwriting, recruiting syndicate
members and negotiating terms.
Responsibilities of a Lead Bank in Loan Syndication
In the complex world of loan syndication, the role of a lead bank is of utmost importance. Acting as the orchestrator and
facilitator of the entire process, the lead bank shoulders numerous responsibilities to ensure the successful execution of
the syndicated loan. From initiating the transaction to coordinating with various parties involved, the lead bank plays a
crucial role in bringing together lenders and borrowers. Let us delve into the responsibilities of a lead bank in loan
syndication and understand the significance of each task.
1. Origination and structuring: The lead bank takes the lead in originating and structuring the syndicated loan. This
involves identifying potential borrowers, assessing their creditworthiness, and determining the loan amount and terms.
The lead bank's expertise in analyzing market conditions and understanding the borrower's requirements is vital in crafting
a suitable loan structure.
2. Syndicate formation and negotiation: Once the loan structure is finalized, the lead bank takes on the responsibility of
forming the syndicate. This entails identifying potential participating banks and inviting them to join the syndication. The
lead bank then negotiates the terms and conditions of the loan agreement with the syndicate members on behalf of the
borrower.
3. Documentation and due diligence: The lead bank is responsible for preparing the loan documentation and conducting
thorough due diligence. This involves drafting the loan agreement, coordinating with legal teams, and ensuring compliance
with regulatory requirements. Additionally, the lead bank conducts detailed due diligence on the borrower's financials,
business operations, and collateral to assess the risks associated with the loan.
4. Administration and disbursement: Once the loan is successfully syndicated, the lead bank assumes the role of the
administrative agent. It manages the loan facility, collects interest and principal payments from the borrower, and
distributes these funds proportionally among the syndicate members. The lead bank also handles any amendments or
waivers to the loan agreement during the tenure of the loan.
The responsibilities of a lead bank in loan syndication are multifaceted and critical to the success of the syndicated loan.
From origination and structuring to administration and disbursement, the lead bank's expertise, negotiation skills, and
attention to detail are instrumental in orchestrating a seamless loan syndication process. By fulfilling these responsibilities
diligently, the lead bank plays a pivotal role in facilitating financing opportunities for businesses and fostering growth in
the economy.

12. What is Cheque? Characteristics of Cheque?

Cheque:
A 'Cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
So, it can be said that a check is a written, dated, and signed instrument by the account holder that contains an unconditional
order directing a bank to pay a definite sum of money to a payee.
The maker of the cheque is called the ‘Drawer’. He is the account holder or the customer of the bank. The person thereby
directed to pay is called the ‘Drawee” i.e., Drawer’s banker on whom the cheque has been drawn. The 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’.
Features of a cheque/ Characteristics:
• The instrument must be in writing.
• The instrument must be signed by the drawer.
• The instrument must contain an order to pay, which is express and unconditional.
• The amount of money to be paid must be certain.
• The payment must be legal tender money.
• A cheque may be payable to bearer or to order but in either case must be payable on demand
Parties of Cheque
A cheque transaction involves three parties: the drawer, the drawee, and the payee. The drawer is the issuer of the
cheque, the drawee is the financial institution, and the payee is the recipient of the cheque.
Types of Cheque:
1. Bearer Cheque : A bearer cheque is the one in which the payment is made to the person bearing or carrying the
cheque. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued
the payment to.
2. Cross Cheque : A crossed check is any check that is crossed with two parallel lines, either across the whole check or
through the top left-hand corner of the check. This double-line notation signifies that the check may only be deposited
directly into a bank account.
3. Order Cheque : An order cheque is the one that has the words “or bearer” cancelled out. It means that only the
individual whose name is mentioned as the payee can receive the specified sum of money. In this case, the bank does not
check the bearer's identity before making the payment.
4. Travelers Cheque: A cheque which bears a date prior to the date on which the cheque is drawn is called an antedated
cheque. Example: A cheque is drawn on 10th April, 2022 but bearing the date 5th April, 2022 is an ante-dated cheque.
5. Post-dated cheque.: A post-dated cheque is one which bears a date subsequent to the one on which it is drawn. As
the mandate of the of the customer is to pay the cheque on or after the ostensible date and such a refusal does not amount
to dishonor of the cheque. Example: A cheque is drawn on 10th April, 2022 but bearing the date 5th may, 2022 is an
example of post-dated cheque
6. Anti-Dated Cheque:This cheque has a date before it is presented in the bank. This cheque can be encashed till the
completion of three months from the last date
7. Stale cheque : If a cheque is not presented within a reasonable time, it becomes stale. A cheque becomes stale after
the expiry of 6(six) months from the date of the cheque. Such cheques are returned unpaid to have confirmation of the
drawer.
1. Traveler's checks: Traveler's checks are a form of payment issued by financial institutions such as American Express.
These paper cheques are generally used by people when traveling to foreign countries. They are purchased for set amounts
and can be used to buy goods or services or be exchanged for cash.

13. What is KYC? Importance of KYC? What are the documents needed to verify KYC?

Know Your Customer (KYC)

It is a process by which banks obtain information about the identity, address of the customers and their financial dealings
that to be able to serve them better and manage its risk prudently. This process helps to ensure that banks' services are not
misused. KYC is a regulatory and legal requirement. Know your customer (KYC) policy is an important step developed
globally to prevent identity theft, financial fraud, money laundering and terrorist financing. Thus, the objective of KYC is
to enable banks to know and understand their customers better and help them manage their risks prudently. KYC is
required to ensure appropriate customer identification, monitor transactions of suspicious nature and that he/she would
not deceive the bank. The KYC procedure is to be completed by the banks while opening accounts and also periodically
update the same. KYC profile form to be prepared by account opening officer/Relationship manager. Thereafter this should
be reviewed and confirmed by BAMLCO.

Why need to KYC?

KYC is required for banks and other financial institutions to establish the legitimacy of a customer's identity and identify
risk factors. KYC procedures help prevent identity theft, money laundering, financial fraud, terrorism financing, and other
financial crimes.
Money Laundering Prevention Act, 2012 requires all reporting agencies to maintain correct and concrete information with
regard to identity of its customer during the operation of their accounts. KYC is a regulatory and legal requirement. KYC
is required to establish the identity of the client, verifying the client’s identity by using reliable, independent source
documents, data or information.

Electronic Know Your Customer is a digital process which deals with electronic customer onboarding, identification
and verification of customer identity, creating of customer digital KYC profile as well as risk grading of customer in a
digital means. e-KYC guideline issued by Bangladesh Bank contains a set of instructions for the financial institutions to
enable them to conduct customer due diligence in a digital means.

Therefore, the basic objectives/ Important of implementing e-KYC are as follows:

• Establish good governance within the financial industry;
• Enhancing the growth of financial inclusion;
• Protect financial sector from abuse of criminal activities;
• Ensure integrity and stability of the financial sector;
• Manage ML/TF risks;
• Reduction of cost related to customer on boarding and managing CDD;
• Promote fintech services; and
• Participate in the national level well-being.

Required Documents for KYC?

The traditional KYC process requires to be filled in the KYC form and collect photo ID and signature of the customers
along with required documents. All the way it's a manual process. However, e-KYC is a digital process where financial
institutions can open a customer account by filling up a digital form, taking photograph on the spot, and authenticate the
customer’s identification data (ID No., biometric information, address proof) instantaneously. Such bio metric information
or digital signatures or electronic signatures may be used for transaction authentication as well. The banks/financial
 institutions shall conduct paper-based customer onboarding and simplified or regular KYC and CDD measures if any
customer unable to onboard with this e-KYC mechanism.

14. What is Customer Due Diligence & Enhanced Due Diligence?

Customer Due Diligence (CDD)
CDD is a process, where relevant information about a customer is collected and subsequently evaluated to determine the
risk of money laundering. In practice, this means obtaining a customer's name, photograph on an official document which
confirms their identity and residential address and date of birth. Banks apply CDD checks to verify their clients' identities
and ensure that none of the clients are involved in financial crimes.
Customer Due Diligence (CDD) is the act of assessing customers’ background to determine their identity and the level of
risk they possess. This is done by assessing a customer’s name, photograph on an official document and residential address.
Upon completion of CDD, the customer may be given a risk rating in accordance with the risk he or she may present to
the company. Risk ratings can be in the form of a category, such as “low risk” or “high risk”, or a numeric value derived
from a risk matrix based on a pre-defined set of criteria.

Enhanced Due Diligence (EDD)

EDD is an in-depth customer due diligence check for difficult or suspicious cases. Enhanced due diligence (EDD) is a
KYC process that provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be
detected by customer due diligence. EDD goes beyond CDD and looks to establish a higher level of identity assurance by
obtaining the customer’s identity and address, and evaluating the risk category of the customer.
Enhanced due diligence is specifically designed for dealing with high-risk or high-net worth customers and large
transactions. Because these customers and transactions pose greater risks to the financial sector, they are heavily regulated
and monitored in order to ensure that everything is on the up and up.

15. What is Endorsement? Types of endorsement?

An endorsement is completed by the delivery of the instrument to the endorsee. “An endorsement means an endorsement
completed by delivery.”
Types of Endorsement is given under
1. Blank of General endorsement: If the endorser signs his name only, the endorsement is said to be “Blank’. Cheques
endorsed in blank can be negotiated by mere delivery. Thus, a cheque, originally payable to order, becomes payable to
bearer by anyone
2. Endorsement in full or special endorsement: If the endorser adds a direction to pay the amount to the order of a certain
person, then, the endorsement is said to be full. An instrument, with a blank instrument can be converted into a special
instrument by any holder by specifying the name of an endorsee and putting his signature. A cheque, originally a bearer
cheque, can be converted into an order cheque, by means of a full endorsement. Example: A cheque is payable to 'X’ or
order. He adds a direction to pay the amount to Mr. ‘Y’ or order and puts his signature below.
3. Partial endorsement –
4. Restrictive endorsement: The endorsement may express the words which restricts or excludes the right to negotiate or
nearly constitute the endorsee as an agent to receive its contents for the specified person.
5. Conditional endorsement: If the endorser of a Negotiable instrument expresses any words which is the liability of the
endorsee to receive amount therein & depends on any events that type of endorsement is conditional endorsement.
6. Sans recourse endorsement: An endorser for Negotiable instrument may express words in the endorsement and exclude
his liability thereon
7. Facultative endorsement: Here in this case the endorsee must give notice of dishonor of the instrument to the endorser.

16. Discuss the Impact of non-performing assets (NPA) on the profitability of a commercial bank?
One of the most serious problems of the banks and financial institutions in Bangladesh pertains to ‘classified loans’ (non-
performing loans) caused by default in repayment by the borrowers, particularly large borrowers. This is not a new
problem; rather it has been created over the years because of many reasons. Whatever may be the reasons, the net effect
of the NPL or NPA on the banks is disastrous. Bank has to keep a huge provision out of the profits against those classified
loans and advances. As a result, profitability remains low adversely affecting deposit and lending rates, capital adequacy
ratio and management efficiency of the banks including NCBs and DFIs. There had been no separate law for loan recovery
other than “The Civil Procedure Code-1908” as Money Suits and Public Demand Recovery Act-1908.It took huge time
for settlement of loan recovery suits as the civil courts were overburdened with other business suits.
After introduction of Loan Classification and Provisioning vide BCD Circular No.34/1989 and subsequent BCD circular
No.20/1994, BRPD Circular No.16/1998, master Circular No. BRPD-05/2006, BRPD Circular No.07 dated June 14,2012
and Master Circular No.14 dated 23/11/2012 the increased NPL became growing concern for the industry and considered
major challenge to the bank- based economy.
With a view to helping the banks and financial institutions in recovery of such classified loans, the Money Loan Court Act
was enacted as early as in 1990 with the objective of speedy disposal of loan cases.
Artho Rin Adalat Ain-2003 (Act No. 8 of 2003) assented to by the President on march 10, 2003 has been made effective
from May 1, 2003 excepting the Sections-46 and 47. Those two sections made effective from May 1, 2004.
17. What is The Limitation Act-1908? Enactment and objectives of Limitation Act.
Enactment and objectives

(1) This Act may be called the Limitation Act, 1908 (ACT NO. IX OF 1908) dated 7th August, 1908. (2) It extends to the
whole of Bangladesh. This Act may be called the Limitation Act, 1908 and is enacted to consolidate and amend the law
relating to the limitation of suits, appeals and certain applications to Courts. Bankers and the readers are strongly advised
to follow the original law in this regard.
This Act provides that no legal proceeding shall be initiated after the expiration of time, which is given in the Act. The
first schedule describes the limitation period for different suits.
It prescribes certain periods after the expiry of which the suit and the proceedings cannot be maintained. Law of Limitation
ensures that the parties do not resort to dilatory tactics and avail the remedy promptly.
An Act specifying the period of time within which a legal proceeding must be brought into court for action, otherwise the
suit or proceeding with regard to a particular violation of legal right is not maintainable in a court of law. The period of
time for such action varies from country to country and one action to another. A limitation period is the amount of time
the law permits an individual to bring an action, or “claim”, against another party in court.
In Bangladesh, the legal action against a default borrower should be brought into court for action generally within three
years after the accrual of the cause of action.
If the case is not brought into court for legal action within this specified period, the case is then termed as time-barred and
is not maintainable in a court of law.

The Limitation Act – 1908 contains 29 Sections. The main sections of this Act are given below:
Section 3: Dismissal of Suits after period of Limitation.
Section 4: When the court is closed, when period expires. (When the court is closed, the Suits/appeals/applications may
be instituted on the day the court re-opens).
Section 5: Extension of period in certain cases: - Any appeal or application of revision or a review of judgement or for
leave to appeal or any other application to which the section made applicable by or under any enactment for the time being
in force may be admitted after the period of limitation prescribed thereof, when the appellant or applicant satisfies the
court that he has sufficient cause for not preferring the appeal or making the application within such period.

18. Types of Companies? Difference between Public Ltd. Company and Private Ltd.
There are two types of Companies-Public and Private. Private company:
The Companies Act 1994 has been enacted by the parliament on 11 September, 1994 and published by Notification No.
SRO 177-law dated 1-10-95 of Ministry of Commerce.
A Private company A private limited company is a type of company that has limited liability and shares that are not
freely transferable, by its articles, (a) restricts the right of the members to transfer their shares, if any; (b) limits the number
of its members from 2 to 50; and (c) prohibits any invitation to the public to subscribe for any shares in, or debentures of,
the company. —Sec.3 (1) (iii). Where two or more persons hold one or more shares in a company jointly, they shall, for
the purposes of this definition, be treated as a single member.
Public Company: All companies other than private companies are called public companies, Which Minimum number
of members is 7 and the maximum number is unlimited
Companies Limited by Shares – In these companies there is a share-capital, and each share has a fixed nominal value, a
shareholder enjoys a limited liability in the company and receives yearly dividends from any profits made
Companies Limited by Guarantee – In these companies, each member promises to pay a fixed sum of money in the
event of liquidation of the company. This amount is called the guarantee.
Difference between Public Ltd. Company and Private Ltd.

SL. No Private Limited Company Public Limited Company

1 Minimum number of shareholders is 2 and Minimum number of shareholders is 7 and the
maximum number is unlimited. maximum number is unlimited
2 At least 2 directors. At least 3 directors
3 Cannot issue IPO Can issue IPO
4 Statutory meeting and report is not required Statutory meeting and report are mandatory
5 Audit report is not mandatory. An audit firm must audit financial statement
6 It is not open for public disclosure. Its financial statement is open for public disclosure
7 It restricts to transfer of shares. It has no restriction in transferring of shares.
8 Certificate of incorporation is sufficient to start Certificate of commencement is required to start
business operation. business operation

Unlimited Companies- In these companies the liability of the shareholder is unlimited, as in partnership firms. Such
companies are permitted under the Companies Act but are not known.
Tax and Excise duty
All the banks operating in Bangladesh are bound to deduct Excise Duty from each of the customer accounts (savings,
current, loan or other accounts) held with the bank as per the instruction of National Board of Revenue (NBR) according
to NBR’s circular. This means, for example, if a customer maintains a savings account with a bank and also has a loan
358 account; Excise Duty will be applicable on both the accounts separately. The latest SRO (Statutory Regulatory Order)
No. 143-Law/2020/104-Excise Dated 11 June 2020 has been applicable from 01 July 2020 (Subject to change from time
to time).
19. Account Opening Procedures and relevant documents required for opening of accounts
A bank opens accounts for various types of customers. While opening the accounts, the banker has to keep in mind the
various legal aspects involved in opening and operation of these accounts, and also the practices followed in conducting
these accounts. As the bankercustomer relationship is a contractual relationship, all the essential features of a valid contract
required to be present when a banker opens an account. Every person who is at least of 18 (eighteen) years old is competent
to enter into a contract and as such can open an account with the bank. Persons of unsound mind cannot enter into a
contract and they cannot open an account with the bank. To open an account, one must be capable of understanding the
contract and of forming a rational judgment as to its effects upon his interest.
Partnership Account:
Partnership firm’s account cannot be opened in the name of an individual partner. A banker should get a written request
from all the partners for jointly opening an account. Letter of partnership and partnership deed duly notarized or registered
with the Registrar of Joint Stock Companies and Firms will be required.
The following papers and documents also to be required:
• Latest & valid Trade License issued by the Municipal Authority in the name of partnership firm.
• The partners should give clear instruction as to the operation of the accounts of the Firm i.e., partnership resolution.
• Specimen signatures of the authorized persons to operate the account duly attested by all the partners.
• Latest e-TIN/VAT registration certificate to be obtained.
• Proper KYC/TP/RP to be obtained.
Any partner has the right to stop payment of a cheque issued by any of the partners. If there is any dispute among the
partners regarding the operation of the account, the operations should be stopped and fresh instructions to be obtained. A
partner has no authority re-delegate his/her authority or to give a guarantee on behalf of the firm without the written
consent of all other partners.
ADDITIONAL Required document for Private limited & Public Limited Company

Attested by the company.

Certificate of commencement of Business (in case of public Ltd.)

School Banking Account
A savings Account for those kids who aspire to be more responsible from a young age.
Eligibility
• Nationality - Applicant must be a Bangladeshi Citizen
• Age - Below 18 years of age
• This is a Minor account opened jointly with Parent/Legal Guardian
Documents Required
• Photocopy of Parent’s NID
• Photograph of the applicant duly attested by the parents/ legal guardian
• Photocopy of Student’s School ID Card and Birth Certificate
• Resident address verification document (e.g., Utility Bill, etc. Supporting Documents of Legal Guardians who are
Salaried
• Proof of Income document (e.g., Letter of Introduction/ Appointment letter/ Salary Certificate/ Bank Statement
reflecting salary, etc.)
• Proof of occupation document (e.g., Employment contract / Business Card/ employee photo ID, etc.)
Minor Account Age below 18 years of a person is regarded as a minor. But if a guardian is appointed by the court before
attainment of 18 (eighteen) year in respect of the person or property of the minor, the period of minority is extended till
completion of 21 years.
The Minor Account can be opened in any one of the following ways:
1. By a natural guardian, i.e., father or mother in circumstances approved by the Bank, on behalf of the minor;
2. By a natural guardian, i.e., father or mother in circumstances approved by the Bank, in the joint names of himself/herself
and the minor, payable to either or survivor;
3. By a person in the name of any minor of whom he or she is the guardian appointed by a competent Court under any
enactment for the time being in force;
Only the savings account may be opened in the joint names of a minor to be operated upon by the natural guardian of the
minor or guardian appointed by the competent court

Differentiate
1. Core Capital Vs Supplementary Capital
Core capital is the minimum amount of capital that thrift banks must maintain to comply with Federal Home Loan Bank
regulations. In combination with risk-weighted assets, core capital is used to determine Common Equity Tier1 (CET1)
ratios that regulators rely on to define a bank's capital requirements
Tier 1 capital is the core capital a bank holds in its reserves and exists as the primary source of funds, Tier 2 capital, or
supplementary capital, includes several important and legitimate elements of a bank's capital requirements. These forms
of banking capital were originally standardized in the Basel I Accord, issued by the Basel Committee on Banking
Supervision, and left untouched by the Basel II Accord.
2. Fixed Charge Vs Floating Charge
The main difference between a fixed charge and a floating charge is that a fixed charge is attached to specific assets, as
like Mortgage payments., Rent deposits, Leases, Bill of sale (a document that transfers ownership of goods from one
person, or company, to another), Goodwill payment in administration, while a floating charge is attached to a company's
assets in general.
Floating charge on assets provides you with much more freedom than a fixed charge because you don't need to seek
approval from your lender before transferring, selling, or disposing of the assets. Floating charge examples include stock,
inventory, trade debtors, and so on.
3. Accommodation bill Vs Trade bill
Where a bill of exchange is drawn and accepted for mutual help, it is called accommodation bill. This bill is for mutual
benefit without a trade transaction. These bills are drawn to help the other party.
A trade bill is a bill of exchange drawn and accepted for a trade transaction.
4. Promissory Note Vs Bill of Lading Vs Bill of Exchange Vs Bill of Entry
Promissory notes is an instrument in writing, a loan agreement, or just a note. It's a legal lending document that says the
borrower promises to repay to the lender a certain amount of money in a certain time frame. This kind of document is
legally enforceable and creates a legal obligation to repay the loan.
promissory note” According to sec. 4 of the Negotiable Act-1881 is an instrument in writing (not being a bank-note or a
currency note) containing an unconditional undertaking, signed by the maker, to pay on demand or at a fixed or
determinable future time a certain sum of money only to, or to the order of, a certain person, or to the bearer of the
instrument.
A bill of exchange is a written order used primarily in international trade that binds one party to pay a fixed sum of money
to another party on demand or at a predetermined date.
A bill of lading (BL or BoL) is a legal document issued by a carrier (transportation company) to a shipper that details the
type, quantity, and destination of the goods being carried. A bill of lading also serves as a shipment receipt when the
carrier delivers the goods at a predetermined destination.
A bill of entry is a legal document that is filed by importers or customs clearance agents on or before the arrival of imported
goods. It's submitted to the Customs department as a part of the customs clearance procedure.
5. Share Vs Debenture Vs Mutual Funds
Shares are the company-owned capital. Debentures are the borrowed capital of the company. Holder. The person who
holds the ownership of the shares is called as Shareholders. The person who holds the ownership of the Debentures is
called as Debenture holders.
Share is the capital of the company, but Debenture is the debt of the company. The shares represent ownership of the
shareholders in the company. On the other hand, debentures represent indebtedness of the company. The income earned
on shares is the dividend, but the income earned on debentures is interest.
6. Authorized capital vs paid of capital
The maximum value of shares that a company can issue to its shareholders is authorized capital. The total value of the
shares issued to the public is called paid-up capital
Paid-up capital is the amount of money received by the company when it sells its shares to the shareholders and investors
directly through the primary mark
7. Hardware Vs software
Computer hardware is any physical device used in or with your machine, whereas software is a collection of codes installed
onto your computer's hard drive.
Hardware refers to the physical and visible components of the system such as a monitor, CPU, keyboard and mouse.
Software, on the other hand, refers to a set of instructions which enable the hardware to perform a specific set of tasks.
1. Bank rate & Libor Rate
Bank rate also known as discount rate, refers to the interest rate at which the central bank lends to scheduled commercial
banks. Bank rate is known by different names in different countries.
LIBOR represents a benchmark rate that leading global banks charge each other for short-term loans. Unlike the federal
funds rate, LIBOR is determined by the equilibrium between supply and demand on the funds market, and it is calculated
for five currencies and different periods ranging from one day to one year.
LIBOR, the acronym for London Interbank Offer Rate, is the global reference rate for unsecured short-term borrowing in
the interbank market. It acts as a benchmark for short-term interest rates.
Short Note:
1. Current Ratio & Liquidity Ratio:
The current ratio, also known as the acid-test ratio, is a type of liquidity ratio that measures how quickly a business
can pay off its current liabilities with its cash or near-cash assets. It is defined as the ratio between quick or liquid assets
and current liabilities
A liquidity ratio is a measurement which is used to indicate whether a debtor will be able to pay their short-term debt
off with the cash they have readily available, or whether they'll need to raise additional capital to cover the amount.
2. Macro & Micro Finance
Macro finance aims for economic development more broadly, working on a larger scale to achieve widespread benefits
that involve entire populations and multiple entities.
Micro Finance is a category of financial services aimed at individuals and small businesses who lack access to
conventional banking and related services. Microfinance includes the provision of small loans to poor clients; savings
and checking accounts; micro insurance; and payment systems, among other services.
Macro Economics is a branch of economics that deals with the overall performance, structure, and behavior of a national
or regional economy. Macroeconomics is one of the two general major areas of economics
Micro Economics is a fundamental branch of economics that deals with the regulation of consumption and utility,
production, prices, profits, etc. by individuals and firms. In a market economy, goods and services are exchanged in the
market. Individuals or consumers derive utility from goods and services
3. Core Risk Management
Core risk refers to the risk involved with smooth operation of the core banking activities. In other words, core risk is the
risk which affects the business of a bank.
4. Mutual Fund:
A mutual fund is an investment fund that pools money from many investors to purchase securities. A mutual fund is a
pooled collection of assets that invests in stocks, bonds, and other securities. When you buy a mutual fund, you get a more
diversified holding than you would with an individual security, and you can enjoy the convenience of automatic investing
if you meet the minimum investment requirements.
5. SME, CAMEL Rating
SME finance is the funding of small and medium-sized enterprises, and represents a major function of the general business
finance market – in which capital for different types of firms are supplied, acquired, and costed or priced.
Answer: CAMELS rating is a technique to evaluate the safety and soundness of a bank. It provides meaningful and concise
information about the condition of banking companies. In other words, CAMELS rating diagnose the financial health of
each individual banking company.
The word CAMELS is an acronym for Capital Adequacy, Assets, Management Capability, Earnings, Liquidity, And
Sensitivity. So, quite understandably, the rating system is based upon an evaluation of six crucial dimensions of a banks
operation that reflects in a comprehensive fashion the financial condition, compliance with baking regulations, status and
overall operating soundness.
Components:
* Capital adequacy: How well a bank can cope with the demand made by their clients.
* Assets quality: Ratio between classified Loans and Total loans.
* Management capability: Management’s capacity to point out, measure, look after and control risks of the institution’s
daily activities.
*Earnings: bank’s ability to produce earnings to ensure sustainability. Its assess by determining ratio of a bank’s Return
on Assets (RoA) and Return on Equity (RoE). ****
* Liquidity position of a Bank: Availability of Assets to meet liabilities.
* Sensitivity to Market risk:
The CAMELS rating is a supervisory rating system originally developed to classify the overall condition of a bank in
the United States
CAMELS is an international rating system used by regulatory banking authorities to rate financial institutions, according
to the six factors represented by its acronym. The CAMELS acronym stands for "Capital adequacy, Asset quality,
Management, Earnings, Liquidity, and Sensitivity.
6. ATM: An automated teller machine (ATM) is a specialized computer that allows you to complete bank
transactions without the need to see a bank representative. A customer can withdraw & transfer money anytime, anywhere.
7. KYC: KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC check is the
mandatory process of identifying and verifying the client's identity when opening an account and periodically over time.
In other words, banks must make sure that their clients are genuinely who they claim to be.

Components of KYC Program Financial institutions in the process of designing the KYC program need to maintain
certain key elements. Such essential elements should include –
1) Customer acceptance policy,
2) Customer identification,
3) On-going monitoring of high-risk accounts, and
4) Identification of suspicious transactions.

8. Clearing House: A clearing house is a designated intermediary between buyers and sellers in the financial market.
It is a specific room or system of the central bank where inter-banking debts are settled. A clearing house is an intermediary
between buyers and sellers of financial instruments. It is an agency or separate corporation of a futures exchange
responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery,
and reporting trading data.

9. CIB & ACU?: CIB is a credit report is a statement that has information about your credit activity and current credit
situation such as loan paying history and the status of your credit accounts.
Credit Information Bureau (CIB) was set up in Bangladesh Bank (BB) on 18 August 1992 with the objective of minimizing
the extent of default loans. CIB has been providing its online services since 19 July, 2011.
Asian Clearing Union (ACU) is a payment arrangement whereby the participants settle payments for intra-regional
transactions among the participating central banks on a net multilateral basis.
The foundation of the Asian Clearing Union (ACU), with headquarters in Tehran, Iran, was laid on December 9, 1974.
10. Dormant Account:
A savings as well as a current account is classified as 'inoperative/ 'dormant' if there are no transactions in the account for
over a period of two years. No Interest credited by the bank on the balance in the account and any charges debited by the
bank is not considered as transactions for this purpose.

11. World Bank & IMF?

The World Bank is an international financial organization that provides loans and grants for development activities in
developing countries. The World Bank's official mission is to eradicate global poverty. It is an international organization
consisting of 189 member states around the world. Its headquarters are located in Washington, D.C., USA in 1944.
The International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its 190 member
countries. The IMF has three critical missions: furthering international monetary cooperation, encouraging the expansion
of trade and economic growth, and discouraging policies that would harm prosperity.
Sec. 10 “Payment in due course”
“Payment in due course” means payment in accordance with the apparent tenor of the instrument in 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 entitled to receive payment of the amount therein mentioned.
12. Mudarabah & Musaraka?: Mudarabah is a type of contract and Islamic financing instrument which allows for funds
to be provided to a party seeking an investment. One party provides labour or expertise (Mudarib) and the other (Rab El
Mal) provides capital (derived from Sharia compliant means).

Under Islamic law, Musharaka refers to a joint partnership where two or more persons combine either their capital or
labor, forming a business in which all partners share the profit according to a specific ratio, while the loss is shared
according to the ratio of the contribution.
Schedule of Charges: Banks charge fees for the services they provide to their customers. These fees may be charged on
a one-time or ongoing basis. Bank charges make up a big portion of bank revenue in addition to their interest income. A
service charge is a fee charged to customers for rendering services as account maintenance fee, account transfer charge,
activation of dormant account, account Closing, premature encashment fee, issuance of cheque book, remittance (Inland),
fee/charge for miscellaneous services, cheque collection charges, issuance of duplicate instruments, issuance of guarantee
and e-GP system, standing instruction, locker service, loan application fee, loan processing fee, loan rescheduling and
restructuring fee, early settlement of loan installment fee etc. Banks also charge service fees for things such as falling
below a minimum required balance, receiving a paper statement, making a foreign transaction or replacing a debit card.

Beneficial owner(s) A beneficial owner is a person who enjoys the benefits of ownership even though the title to some
form of property is in another name.
It is crucial to know who the beneficial owner(s) are so that one can make appropriate decisions about the level of money
laundering and terrorist financing risk associated with customer. Some criminal enterprises deliberately try to hide the true
owners and controllers of their business and its assets. Sometimes identifying and verifying can be difficult which
customers are beneficial owner(s). This could be because the ownership structure is complex but legitimate. However,
someone should remain alert to the possibility that it may be because there is an attempt to conceal the beneficial owner(s).
BACH Operation Management Clearing and Collection is a process within the banking system that allows banks to
collect or pay out for items drawn on or paid into accounts within their institution. This process enables banks to accept
cheques and bank drafts from other financial institutions for deposit. Clearing is the process of interbank fund collection
by using Bank instruments through some systematic procedures with the involvement of the Central Bank (Bangladesh
Bank). Clearing means the settlement of accounts or exchange of financial instruments especially between banks.
Bangladesh Electronic Funds Transfer Network (BEFTN) The Bangladesh Electronic Funds Transfer Network
(BEFTN) operate as a processing and delivery center providing for the distribution and settlement of electronic credit and
debit instruments among all participating banks. This Network operate in a real‐time batch processing mode. All payment
transactions are calculated into a single multilateral netting figure for each individual bank. Final settlement takes place
using accounts that are maintained with Bangladesh Bank.
Real Time Gross Settlement (RTGS) RTGS is an electronic settlement system where transfer of funds takes place from
one account of a bank to that of another bank on a real-time and on gross basis. Real-time refers transactions that do not
need any waiting period. Transactions are settled as soon as they are executed.
National Payment Switch Bangladesh (NPSB) Operational since 2012, NPSB is meant for establishing interoperability
among participating banks for their account and card-based transactions. Currently, it caters interbank Automated Teller
Machines (ATM), Point of Sales (POS) and Internet Banking Fund Transfer (IBFT) 377 transactions.
Demand and time liabilities (TDL) Demand liabilities are customer deposits which are repayable on demand. Time
liabilities refer to the liabilities which the banks are liable to repay to the customers after an agreed period.
The Prize Bond, a public savings plan, was established by the Bangladesh government in 1974 with the purpose of pooling
local resources and providing incentives to small savers. The holders are recognized as the bond's owners because the
bonds generated under this scheme are 'bearer' in nature. These bonds are actually government debt, and Bangladesh Bank
manages the entire plan on the government's behalf.
What is Bank? : A bank is a financial institution licensed to receive deposits and make loans. Banks are regulated by the
central bank of the country i.e., Bangladesh Bank. Banks act as financial intermediary which mobilize fund from surplus
units of economy and deploy the same to the deficit units. Surplus units are those units who receive more money than they
spend. They can be termed as investors. On the other hand, deficit units are those units who spend more money than they
received. They are also termed as borrowers
Scheduled Banks
State-owned commercial banks (SOCBs) State-owned commercial banks (SOCBs) that are fully or majorly owned by the
Government of Bangladesh. • Agrani Bank Limited • Bangladesh Development Bank • BASIC Bank Limited • Janata
Bank Limited • Rupali Bank Limited • Sonali Bank Limited
Non-scheduled banks Non-scheduled banks are licensed only for specific functions and objectives and do not offer the
same range of services as scheduled banks. They do not get the privileges of clearing system and re-discounting of bills.
These banks clear their cheques through any scheduled bank. • Ansar VDP Unnayan Bank • Grameen Bank • Jubilee Bank
• Karmashangosthan Bank • Palli Sanchay Bank.
Garnishee Order: It is issued by a court in favor of the judgment creditors for a debt due from the judgment debtors
(bank customer), upon a third party (bank), so as to attach the money so owing for the purpose of satisfying the decree.
The order is issued under the Civil Procedure Code on the banker.
More precisely, when a debtor fails to repay his creditor, the latter (creditor) may apply to the court for the issue of a
Garnishee Order on the banker of his debtor. By Garnishee Order, the debtor’s account with the banker stands suspended
and the debtor (customer) will not be allowed to draw, though he has a credit balance. The creditor at whose request, the
order is issued is called ‘the judgement Creditor’, the customer is called judgement debtor, and the banker (debtor of the
judgement debtor) is called Garnishee’.