BILLS and Remittance:

      Remittances of funds one of the most importance aspects of commercial private banks is rendering service to its customers. Among various service rendered by a commercial bank to its customers, remittance facilities are very well known and popular. The word remittance means sending of money from one place to another through past and telegraph. Bank expands this facility to its customers by means of receiving money from one branch of bank and making arrangement for payment to another branch with in the country. In general there are two types of bank remittance

ð         In ward remittance

ð         Out ward remittance

Bank takes the risk and ensures payment to the beneficiary by charging the customer commission. Mercantile bank branch gives their customers the opportunity to different kinds to billing and to remit fond from one place to another the instruments which are used to remittance and billing are, D. TT. SDR and pay order.

Demand Draft (DD):

Demand draft is a negotiable instrument issued by a particular branch of a bank containing an order to another branch of the same bank to pay a fixed sum of money to a certain person or order on demand. This instrument can be purchased by a customer from a particular bank’s branch for himself or for beneficiary and can be handed over to the purchase for delivery to the beneficiary bank issue drafts for a nominal commission. The commission depends upon the amount to be transmitted mercantile bank charges the commission on DD 0.1% and minimum charge is TK 25.

Telegraphic transfer (TT):

        Telegraphic transfers quicker than a transfer of amount by DD. TT is the most rapid and con veining but expensive method. Telephone, Telex, Fax is different made of TT. If an applicant wants to remit the amount urgently to the payee is another city or district he/ she may request the banker to send it by TT. The Branch generally recovers from the telex charge in addition to usual service charges.

Security Deposit Recite (SDR):

SDR is one kind of bill which use the government tender, From SDR Bank earns a big amount. Mercantile Bank Rajshahi branch give credit facility against on SDR.

Pay order (PO):

Payment order is a written document. This pay order can be enacted on that Branch from where it is insured. Several suppliers, organizations use this P.O. it is issued locally.

Services provided for depositors:  

Rajshahi branch provides there services that are as follows:

ð         Collection of out station Cheques / bills (Clean / Documentary)

ð         Collection of local Cheques.

ð         Collection of pour water bill

ð         Bills of exchange and promissory

The charges of various types of services are as follows.

Mercantile Bank Limited

Head Office

61, Dilkusha C/A, Dhaka

Schedule of Charges for Inland Transaction:

	Types of service	Nature of Charges	Charges
1.	Current Account	a) Service Charges	@ Tk. 50/- half yearly on each account irrespective of Balance
		b) Closing Charges	Tk. 100/-
2.	Savings Account	a) Service Charges	@ Tk. 25/- half yearly on each account irrespective of Balance
		b) Closing Charges	Tk. 50/-
3.	Collection
	a) Collection of local Cheques	Commission	i) Where there is a clearing house free. ii) Where there is no clearing house…. Actual conveyance min. Tk. 10/-
	b) Cheque returned unpaid from clearing house.	Commission	Tk. 50/- (Flat) per instance from the account of the Depositor of Cheques.
	c) Bounced Cheque drawn on us(cash, Clearing or transfer)	Commission	Tk. 50/- (Flat) per instance from the account of the Drawer of Cheques.
	d) Collection of outstation Cheques/ bills(clean / documentary)	Commission	i)                    Upto TK.25,000=TK (a) 0.15% min 15=
			ii)                  From TK., 25,000/= 161 lac (a) 15% min 50
			iii)                From Tk=1,00,001/= to Tk 5 lac @  15% Min, Tk. 1000/-
			iv) Over Tk. 500001 0.10%, Min, Tk. 500/=, Max, Tk. 2500/-
	e) Postage (Regd.)	Postage Charges	Actual, Min. Tk. 20/=
	f) Telegram	Telegram Charges	Actual, Min. Tk. 30/=
	g) Telex	Telex Charges	Tk. 30/= per minute, Min. Tk. 30/=
	h) Telephone	Telephone Charges	Actual, Min. Tk. 30/=
4.	Issuance of Cheque Books
	a)  Current Account	i) For 10 leaves ii) For 20 leaves iii) For 50 leaves	Tk. 12.50/= Tk.25/= Tk.  62.50/=
	b) Savings Account	Cheque Book of 10 leaves	Tk. 12.50/=
5.	Remittance (inland)
	a) DD/TT/MT issuance	Commission	@0.010%, Min. Tk. 10/=
	Telegraph charge for T. T. issued	Telegraph Charges	Actual, Min. Tk. 25/=
	Telex Charges for T. T. issued	Telex Charges	@ Tk. 30/= per minute.
	Telephone Charges for T. T issued	Telephone Charges	Actual, Min. Tk. 30/=
	b) Cancellation of DD/TT/MT	Commission	Tk. 20/=
	c) Cancellation of P.O.	Commission	Tk. 10/=
	d) Issuance of duplicate instrument	Commission	Tk. 50/=
	e) Pay- order issuance	commission	i)   Up to Tk. 100000/= Tk. 15/=
			ii)From Tk. 100001/= to Tk. 1000000 Lac, Tk. 25/=
			iii)                From Tk. 1000000/= and above Tk. 50/=
6.	Discounting of bills & instrument	commission	i) Upto Tk. 1.00 Lac @ 1.00%m Min. Tk. 25/= ii) From Tk. 100001 to Tk. 5.00 Lac @1.00%, Min. Tk. 1000/= iv) Over Tk. 5.00 Lac @ 1.00%, Min. Tk. 2500/-
	Postage	Postage Charges	Actual, Min. Tk.20/=
	Telegram	Telegram Charges	Actual Min. Tk. 30/=
	Telex	Telex Charges	Tk. 30/= per minute
	Telephone	Telephone Charges	Actual. Min. Tk. 30/=
7.	Standing instruction	Commission	Tk. 20/= for compliance of each instruction.
8.	Issuance of guarantee	Commission/ service Charges	@ Tk. 0.50% per quarter or part thereof, Min. Tk. 250/= When 100% margin is provided @ 0.25% per quarter or part thereof with a minimum of Tk. 200/=
9.	Locker	Rent	a) Small Tk. 500/= yearly.
			b) Midium Tk. 1000/= yearly.
			c) Large Tk. 1500/= yearly.
10.	Inland letter of credit other than inland back to back letter of credit
	a) Advising	Advising Charges	Tk. 150/=
	b) Opening	i) Commission	For 1st quarter @ 0.05% For each subsequent quarter or part thereof @ .030% Min. Tk. 150/=
		ii) Postage Charge	Tk. 150/=
		iii) Telex Charge (Full operative)	At actual plus 10%, Min. Tk. 500/=
		iv) Telex charge (Short & non operative)	At actual plus 10%, Min. Tk. 200/=
	c) Amendment
	i) By mail	Postage Charges	Tk. 100/=
	ii) By Telex	Telex Charges	At actual plus 10%, Min. Tk. 150/=
	iii) Increase in value or extension of time.	Commission, postage, telex, etc.	As mentioned ‘b’ above.
	d) Negotiation Documents	i) Commission	i) 0.20%, Min. Tk. 100/=
		ii) Postage Charges	ii) Tk. 50/=
	e) Any other service not mentioned above.	Necessary Charges	To be realized at actual.

Credit policy of Mercantile Bank:

Mercantile Bank, like other private sector banks, is sponsored by the private industries that are strongly motivated by profit motives. So being a private sartor Bank Mercantile Bank has sat its credit operation and management functions keeping in view the objectives of its sponsors. Despite these acts, it has the objectives of operating as a partner of development by extending credit facilities to the intending borrowers in the field of trade commerce and industry.

Mercantile Bank is functioning mainly in the city areas of the country. The rural people are almost outside the credit network of Mercantile Bank. Its credit operations are dominated to short term cash credit. Secured overdraft etc. and short terms trade financing. The long- term credit operation of this Bank is not significant, as the Bank is eager to expend short term rather than long term risky investment. It is important to mention that Mercantile has no prescribed and written credit policy. It sanctions loans and advances within the scope of instructions and guidelines of Bangladesh Bank. It can sanction loans and advances up to their loan able fund. Loan able fund indicates 80% of their total deposits (20% is the statutory requirement). Statutory requirement consists of:

 - 5% cash (minimum) with Bangladesh Bank

 - 15% in the form of:

 - Cash in hand

 - Balance with Bangladesh bank.

 - Treasury bill

 - Other approved securities.

 - Procedure of loan sanctioning

Loan sanctioning does not depend on a particular credit committee, rather being empowered by the Board offices at different level, sanction loans and advances the sectors presided.

Discretionary power of Loan Sanctioning:

Branch Marriages can sanction loans and advances against financial obligations like Bangladesh Sanchay Patra, FDR etc. Sanctioning power of Loans and advances varies sector to sector for the officials of Mercantile Bank.

Branches receive loan application and then forwarded to the Head office in the cases chare head office approved is required. After scrutinizing and filling a prescribed from where emphasis is given on the following point.

-         Name of loans and advances

-         Purpose of loans and advances

-         Amount sought

-         Particular to securities offered and their value.

-         Mode of repayment

-         Existing friability position in case of old barrows.

Consideration factors

Consideration is given on business volume, security, goodwill. If it is a renewal case, last one year performance is obtained and strongly considered. For a new loan sanctioning, the applicant for borrowing should have and account with the bank for at least six month to be an eligible applicant. This six months cash flow in addition to the considerations given on renewal given case is strongly monitored for sanctioning new loan.

     Loan proposal for one crore end about requires lend ding risk analysis (LRA) as directed by Bangladesh Bank. But banks may go for LRA for loan proposals of any amount at their discretion.

      It the loan proposal is accepted i.e. loan is sanctioned then a sanction advice is forwarded to the borrowers though branch points are mentioned.

                    -Amount at limit

                    - Purpose at limit

                    - Margin equity

                    - Rate of interest

                    - Disbursement schedule                     

                    - Repayment schedule

                    - Expiry date of the limit

                    - Security details with value

                    - Other terms and conditions

Foreign Exchange transactions:

Foreign trade financing is an internal part of banking business. With the globalization of economies internal trade has become quite competitive timely payment for exports, quicker delivery of goods is a therefore a prerequisite for the success of international trade operation.

The MBL, Rajshahi brunch works as an ‘Authorized Dealer’ for the financing of foreign trade and dealing with foreign currency. This branch has a good reputation with the importers and exporters. In MBL, Rajshahi branch ‘Foreign Exchange Department’ is mainly active on import Function. This branch operates Export Function. But export business of this branch is not mentionable.

Import section:

Import of merchandise involves two things brings of goods physically into the country and remittance of foreign exchange towards the cost of merchandise and services. In case of import, the importers are asked by their exporters to open a letter of credit. So, that their payment against goods is ensured. Documentary credit has emerged as a vital system of trade payment. It is a key player of foreign trade.

Letter of Credit is (L/ C):

Letter of Credit is a payment guarantee to seller by the buyer’s Bank. It is a credit contract whereby the buyer’s bank of behalf of the buyer is committed to pay and agreed amount of money to the seller under some agreed conditions. If the conditions of the credit do not require for presentation of specified documents, it is called ‘Clean Credit’. On the other hand, if the presentation of specified document is obligatory, the credit is called a ‘Documentary Credit’. Documentary Credit is an assurance of payment by the Bank. It is an arrangement to make the payment to the seller provides documents are submitted. Buyer and seller enter into contracts for buying and selling of goods/ service and the buyer instructs his Bank to issue L/C in favor of the seller. Here the Bank assumes fiduciary function between the buyer and seller.

Import Procedure:

An importer is required to fulfill some conditions/criteria to be eligible as an importer as per provisions of Import policy order and guidelines for foreign exchange transaction. An importer is required to submit the following documents along with L/C application to get a license to import goods through MBL Bank Limited.

  An account with MBL Rajshahi Branch

  Import Registration Certificate

  Performa Invoice/ Indent

  Tax paying Identification Number

  Membership Certificate from recognized Chamber of Commerce & Industry

  Letter of Credit Authorization Form duly attested

  L/C Application duly signed by the importer.

  One set of IMP Form

  Insurance cover note with money receipt.

The Charges of L/C are as follows:

Name of Charges                                                            Commission

L/C: total L/C Value                                                            0.4%

Vat: On L/C Commission                                               15%

Foreign Commission Charge                                          Tk. 1000

Postage Charge                                                               Tk. 300

Handling Change                                                            Tk. 900

Stamp                                                                             Tk. 150