Introduction

Financial institutions are very much essential for the overall development of a country. Especially
banks play an important role in the field of promotion of capital, encouragement of entrepreneurship,
generation of employment opportunities etc. A Bank is a commercial or state institution that provides
financial services, including issuing money in various forms, receiving deposits of money, lending
money and processing transactions. Market economy or free economy is widely used-concept about
the present economy of Bangladesh. The country adopted the concept in the late seventies with the
privatization of significant number of enterprises. The practices of free market economy started from
the eighties with the changing of the world economy. A number of initiatives were taken from the
nineties to increase the competition and efficiency in money market, relaxation of unwanted rules
and regulations, improvement of loan related law and other situations and improve the financial base
of the banks of the country.
Sonali Bank PLC, Bangladesh's largest state-owned commercial bank, has made significant strides in
enhancing its remittance management systems to facilitate efficient and secure money transfers for
expatriates and their beneficiaries. Sonali Bank has developed an in-house, web-based software
called Remittance Management System Plus (RMS+). This system enables instant over-the-counter
payment of foreign remittances across all branches. A notable feature of RMS+ is its ability to send
confirmation messages to the mobile phones of both remitters and beneficiaries, ensuring
transparency and real-time updates.
The bank has computerized 1,175 of its branches, with 1,181 out of 1,198 branches integrated into its
automation network. This extensive network supports the efficient operation of RMS+ and other
digital services. Additionally, Sonali Bank offers online and SMS banking services, with 109
branches included in the Online Any Branch Banking (ABB) network and SMS banking services
running in 73 branches. The bank is actively working towards connecting all branches to a real-time
online banking network. As a member of the Q-Cash ATM network, Sonali Bank provides its
customers with access to 53 ATM booths. Its ATM cardholders can also utilize the ATMs and POS
terminals of Dutch Bangla Bank Ltd. and BRAC Bank Ltd., expanding the accessibility of banking
services. The bank has recently launched credit card services, further diversifying its financial
offerings. In November 2023, Sonali Bank launched the 'Sonali Exchange Mobile App' to facilitate
remittance transfers for Bangladeshi expatriates in the United States. This app allows users to send
money easily and quickly, free of charge, at any time. The initiative aims to promote cashless
banking and ensure that remittances are channeled through official, secure channels, thereby
supporting the national economy. Sonali Bank has implemented robust compliance and security
measures within its remittance management systems. The RMS+ software incorporates automated
secured test key modules, generating test keys for every transaction amount to ensure authenticity
and prevent fraud. Additionally, the system validates incoming remittance data packets, ensuring that
transactions are secure and reliable.
Bangladesh is a developing country with an impoverished banking system, particularly in terms of
the services and customer care provided by the government run banks. In recent times, private banks
are trying to imitate the banking structure of the more developed countries, but this attempt is often
foiled by inexpert or politically motivated government policies executed by the central bank of
Bangladesh, Bangladesh Bank. The outcome is a banking system fostering corruption and illegal
monetary activities/laundering etc. by the politically powerful and criminals, while at the same time
making the attainment of services or the performance of international transactions difficult for the
ordinary citizens, students studying abroad or through distance learning, general customers etc.
The first modern bank in Bengal was Bank of Hindustan, established in 1770 in Calcutta. It was an
offshoot of trading company Messrs. Alexander and Co. and operated until 1832 when the trading
company failed. The circulation of its notes was limited to Calcutta and its immediate environs. A
number of Calcutta-based banks followed, none which survived beyond the middle of the 19th
century: General Bank of Bengal and Bihar (1733–75); Bengal Bank (1784–91) (no relation to the
later Bank of Bengal); General Bank, later General Bank of India (1786–91); The Commercial Bank
(1819–33); The Calcutta Bank (1824–29); Union Bank (1829–48); Government Savings Bank
(1833–unknown); and The Bank of Mirzapur (c. 1835 – 1837).
The Bank of Calcutta, established in 1806, is the oldest still in existence in some form. It was
renamed Bank of Bengal in 1809, was merged into the Imperial Bank of India in 1921, and became
the State Bank of India in 1955. The first modern bank headquartered in Dhaka was Dacca Bank,
established in 1846. It did a very limited business and did not issue banknotes. It was purchased by
Bank of Bengal in [Link] of Bengal opened branches in Sirajganj and Chittagong in 1873, and in
Chandpur in 1900. In 1947, upon the Partition of Bengal, it had six branches in East Bengal, in
Dhaka, Chittagong, Chandpur, Mymensingh, Rangpur, and Narayanganj. Following the partition,
branches of the registered banks started shifting to India or close down their operations in East
Bengal. Resulting only 69 branches were left all over the East Pakistan in 1951. In 1959, Eastern
Mercantile Bank Limited was established and had 106 before independence. Consequently, in 1965
Eastern Banking Corporation was established and soon reached 60 just before the liberation war.
These two banks were established with the initiation of some renowned Bengali businessmen for
providing credit to the local entrepreneurs who had limited access to the
credit in those days from other financial institutions of West Pakistan. The development process of a
country largely depends upon its economic activities. Banking is a powerful medium among other
spheres of modern socio-economic activities for bringing about socio-economic changes in a
developing country like Bangladesh. Three different sectors like Agriculture, commerce, and
industry provide the bulk of a country’s wealth. The nourishment of these three is only possible
through an adequate banking facility. The banking service facilitates these three to be integrated in a
concerted way. For a rapid economic growth, a fully developed banking system can provide the
necessary boost. The whole economy of a country is linked up with its banking system. With the
passage of time the functions of the bank have got a multi-dimensional configuration. All the
functions of a modern bank, lending is by far the most important. They provide both short-term and
long-term credit. The customers come from all walks of life, from a small business a multi-national
corporation having its business activities all around the world. The banks have to satisfy the
requirements of different customers belonging to different social groups. The banking business has,
therefore, become complex and requires specialized skills. They function as catalytic agent for
bringing about economic, industrial and agricultural growth and prosperity of the country. The
banking can, therefore, be conceived as “a sector of Economy on the one hand and as a lubricant for
the whole economy on the other”. As a result, different types of banks have come into existence to
suit the specific requirements. Regardless of the numbers of banks and nature of their functions and
activities, a central bank exists to regulate the activities of other banks. All the commercial private
and/or nationalized, and specialized banks perform service-related activities within the jurisdiction of
the central bank. In our country, Bangladesh the role of the central bank is entitled to be executed by
Bangladesh Bank. After independence the Government of People’s Republic of Bangladesh was
formally to cover the charge of the administration of the territory now constitute Bangladesh. In an
attempt to rehabilitate the war - devastated banking Bangladesh, the government promulgated a law
called Bangladesh Bank (temporary) Order, 1971 (Acting President’s order No.2 of 1971). By this
Order, the state bank of Pakistan was declared to be deemed as Bangladesh Bank and offices,
branches and assets of said State Bank was declared to be deemed as offices, branches and assets of
Bangladesh Bank. On that date there existed 14 scheduled banks with about 3042 branches all over
the country. On the 16th December 1971, there existed the following 12 banks in Bangladesh,
namely:
1. National Bank of Pakistan
2. Bank Bahawalpur Ltd.
3. Habib Bank Ltd.
4. Premier Bank Ltd.
5. Commerce Bank Ltd.
6. United Bank Ltd.
7. Union Bank Ltd.
8. Muslim Commercial Bank Ltd.
9. Standard Bank Ltd.
10. Australasia Bank Ltd.
11. Eastern Mercantile Bank Ltd.
12. Eastern Banking Corporation Ltd.

1.2 Origin of the report

The Internship is very helpful to bridge the gap between the theoretical knowledge and real-life
experience as the part of the BBA program. This report has been designed to have a practical
experience through the theoretical understanding. For the completion of the report, I have been
placed in Sonali Bank Limited, Koatbari branch, Cumilla.................I decided to work on the practices
of general banking activities of the bank. The report focuses on Remittance management activities of
Sonali Bank relation to general banking. I prepared the internship report under the supervision of our
honorable teacher Dr. Biswajit Chandra Deb, Professor Department of Accounting and Information
Systems, Comilla University. I have always tried my best to reflect my experience of the practical
incidence in this report.

1.3 Rational of the Study

Bank is a financial institution, which accepts money from its customers as deposits and gives money
as loan to the borrowers. Banking sector now-a-days plays an important role to develop the economy
of the country especially developing country. Modern banking system does not execute the normal
banking activities. The Bank should design their products in such a way that can cater to the needs of
people of different classes. Basically, this study is conducted to understand the performance of
Foreign Exchange related activities taken by the Bank. Foreign exchange department plays
significant roles through providing different services for the customers. Letters of credit is the key
player in the foreign exchange business. With the globalization of economies, international trade has
become quite competitive. Timely payment for exports and quicker delivery of goods is, therefore, a
pre requisite for successful international trade operations. As an internee for three months, they give
me the opportunity to gain practical knowledge and I work on General Banking System. I have
arranged my internship report on foreign exchange activities of the bank. My aspiration is to endow
the readers of this report with knowledge, tools and impeding, necessary to succeed in a banking
environment that is becoming increasingly and inevitably global.

1.4 Objective of the study

The report has been made on some basic objectives. The objectives of this report are to find out the
followings:
Broad Objectives:
To understand the Foreign Remittance Practices of Sonali Bank Limited
Specific Objectives:
 To discuss about foreign exchange banking.
 To highlight about Remittance Management System (RMS).
 To investigate the genuine Foreign Remittance execution of banking area in Bangladesh.
 To realize the Foreign Exchange Import and Export rule, police, tenets and control of
Bangladesh.
 To know the commitment of Sonali Bank Limited in remote settlement in Bangladesh.

1.5 Limitations of the study

From the beginning to the end, the study has been conducted with the intention of making it as a
complete and truthful one. But there are some limitations for preparing this report. These are:
 As the data, in most cases, are not in organized way, the bank failed to provide all
information due to security and other corporate obligations.
 Difficulty in accessing latest data of internal operations.
 Since the bank personnel were very busy, they could not pay enough time.
 Large-scale research was not possible due to constrains and restrictions posed by the
organization.
 Lack of experiences has acted as constraints in the way of meticulous exploration on analysis
of foreign exchange operations of Sonali Bank Limited.

With all this limitation I tried my best to make this report as best as possible. So, readers are
requested to consider these limitations while reading justifying any part of my study. However,
omitting the limitations, the report will help to understand the Foreign Exchange Operations of the
Bank.

1.6 Methodology of the Study

1.6.1 Research Design
A research design is a framework or blueprint for conducting the marketing research project. It
details the procedures necessary for obtaining the information needed to structure or solve marketing
research problems. Although a broad approach to the problem has already been developed, the
design specifies the details of implementing that approach. A good research design will ensure that
the marketing research project is conducted effectively and efficiently. Typically, this research
design involves the following components or tasks:

 Classify the nature of research

 Define the information needed
 Specify the measurement and scaling procedures
 Construct a questionnaire for data collection
 Specify the sampling process and sample size
 Develop a plan for data analysis
Descriptive Research
The descriptive research assumes that the researcher has much prior knowledge about the problem
situation. The major objective of descriptive research is to describe something, usually market
characteristics or functions. In general, descriptive research is marked by a clear statement of the
problem, specific hypotheses, and detailed information needs. As a result, descriptive research is
preplanned and structured. It is based on large, representative samples, and the data obtained are
subjected to quantitative analysis.

1.7 Data Collection

Data collection is a term used to describe a process of preparing and collecting data for example as
part of a process improvement or similar project. The purpose of data collection is to obtain
information to keep on record, to make decisions about important issues, to pass information on to
others. Primarily, data is collected to provide information regarding a specific topic. The planning of
data collection for research work is generally developed in early stage of the research for its
importance and impact on the research work. For this research, the data is collected from the
respondents through a survey questionnaire.

1.7.1 Methods of Data collection:

This report is based on mainly secondary data, and observation that I experience during the
internship period. Data required for this report were collected from annual report. Apart from these,
helpful information will be collected from online resources.
Secondary sources:
Without the secondary sources it was so hard for me to collect all of the information and get a brief
knowledge of the company. Comparing to the primary sources, these secondary sources were more
effective, less time consuming. Therefore, the combination of two sources has enabled me to prepare
the report.
 Annual reports of the Sonali Bank Ltd.
 Web site of Sonali Bank Ltd.
 Periodicals published by Sonali Bank Ltd.
 Different types of published research reports.
 Books: Research Methodology- C. R. Kothari.
 After collection of data, a list of tables was prepared on the basis of objectives of the study
and processing, editing and coding of the data were done simultaneously.
 Literature Review
Remittance inflows into Bangladesh are an important source of foreign cash, contributing
significantly to the country's economy. According to the World Bank (2023), remittances accounted
for nearly 6% of Bangladesh's GDP, placing the country among the top remittance-receiving
countries in the world. These money, supplied by Bangladeshi expatriates, are critical to eliminating
poverty, raising living standards, and promoting economic progress (Rahman and Hossain, 2021)
Banks, particularly state-owned institutions such as Sonali Bank PLC, are leading the way in
managing remittance inflows. Sonali Bank's broad branch network and agreements with major
financial institutions ensure that monies are sent efficiently and securely to beneficiaries across the
country.

Sonali Bank PLC is a leading player in the remittance sector in Bangladesh. It acts as a bridge
between Bangladeshi expatriates and their families, facilitating the smooth transfer of funds.
According to the Sonali Bank Annual Report (2022), the bank operates an advanced Remittance
Management System (RMS+), which automates the process, reducing transaction times and ensuring
accuracy. The bank's network includes more than 1,200 branches across the country and international
agreements with major financial institutions. This vast network allows Sonali Bank to penetrate rural
and remote areas, making it one of the most reliable channels for remittance delivery in Bangladesh
(Khan et al., 2022).

Technological integration has been a game-changer in the remittance sector. The adoption of digital
platforms and mobile applications has streamlined processes, reduced transaction costs, and
improved customer satisfaction. Alam et al. (2020) emphasize that banks using modern technology
have gained competitive advantages in the global remittance market. Sonali Bank’s RMS+ platform
represents a significant advancement in its operations. This system provides real-time processing and
tracking of remittance transactions, ensuring transparency and efficiency. Additionally, the bank’s
collaboration with mobile financial services (MFS) providers like bKash has expanded access to
formal remittance channels, especially for unbanked populations in rural areas (Sonali Bank Annual
Report, 2022).

Despite its achievements, Sonali Bank faces several challenges in managing remittances effectively.
High transaction fees, delays in fund disbursement, and limited digital literacy among rural
populations are significant obstacles (Hossain, 2019). Moreover, informal remittance channels like
hundi remain prevalent due to their lower costs and ease of use. This undermines the formal banking
sector's efforts to channel remittances securely and transparently. Addressing these challenges
requires continued investment in technology, public awareness campaigns, and policy interventions
to incentivize the use of formal channels (Rahman & Uddin, 2021).The socio-economic impact of
remittances on Bangladesh cannot be overstated. Remittances are often used for essential
expenditures such as food, education, and healthcare, directly improving household living standards
(Siddique et al., 2021). At a macroeconomic level, remittances contribute to foreign exchange
reserves, stabilize the balance of payments, and support the local currency's value. Sonali Bank’s role
in ensuring secure and efficient remittance flows aligns with national development goals, particularly
in reducing reliance on informal remittance channels (Bangladesh Bank, 2023).

Sonali Bank’s Initiatives to Improve Remittance Services To enhance its remittance services, Sonali
Bank has implemented several initiatives: Partnerships with International Banks and Exchange
Houses: Collaboration with global institutions ensures secure and swift fund transfers. Expansion of
Digital Platforms: Investments in digital technologies like RMS+ improve transaction efficiency and
customer satisfaction. Community Outreach Programs: Awareness

campaigns aim to educate customers about the benefits of using formal remittance channels.
Collaboration with Mobile Financial Services (MFS): Partnerships with platforms like bKash extend
remittance services to remote areas, making them more accessible (Sonali Bank Annual Report,
2022). The remittance management system of Sonali Bank PLC plays a vital role in Bangladesh’s
economy by facilitating the secure and efficient transfer of funds. While the bank has made
significant strides in leveraging technology and expanding its network, challenges such as high
transaction costs and competition from informal channels persist. Addressing these challenges
requires a multi-pronged approach, combining technological advancements, policy interventions, and
customer education.

The literature on remittance management systems primarily focuses on their role in facilitating
economic growth, financial inclusion, and the reduction of transaction costs. However, significant
gaps remain in the understanding of how remittance systems are implemented and managed within
state-owned commercial banks in developing countries like Bangladesh, specifically institutions like
Sonali Bank PLC. The following gaps are identified:

Technological Integration in Traditional Banking Systems: Existing studies, such as Rahman et al.
(2022), emphasize the adoption of digital remittance platforms in private and multinational banks but
lack insights into how state-owned banks integrate modern technology into their legacy systems.
Sonali Bank PLC, being a government-owned entity, faces unique challenges in this area, including
outdated infrastructure and bureaucratic hurdles.

Customer Experience in Rural Areas: While studies (e.g., Alam & Chowdhury, 2021) highlight the
role of remittances in rural financial inclusion, they do not adequately address the user experience or
operational challenges faced by beneficiaries in remote areas when interacting with traditional banks
like Sonali Bank PLC.

Compliance with International Standards: Literature such as that by Khan (2020) discusses the
importance of compliance in remittance processing under international regulations, but it overlooks
how institutions like Sonali Bank PLC manage compliance while catering to a significant unbanked
population.

Efficiency and Fraud Prevention: Research often focuses on private sector advancements in fraud
detection and operational efficiency in remittance systems (Hossain, 2019). However, there is little
exploration of how public sector banks like Sonali Bank PLC are adapting to combat fraud while
maintaining low transaction fees for rural customers.

Sustainability and Scalability of Remittance Platforms: Studies (e.g., Ahmed & Rahman, 2021)
discuss the scalability of fintech platforms but do not evaluate how banks like Sonali Bank PLC are
preparing their systems for increasing remittance volumes while maintaining service quality.
 Theoretical Background

3.1 What is a Remittance Management System?

A remittance management system (RMS) refers to an integrated framework used by financial

institutions, money transfer operators (MTOs), and banks to facilitate, monitor, and manage the
transfer of money from senders to recipients, typically across international borders. This system
encompasses various components, including operational processes, technology platforms, regulatory
compliance measures, and customer service mechanisms.

1. Transaction Processing: Facilitates the seamless transfer of funds through online and offline
channels.
2. Security Protocols: Includes encryption, fraud detection, and anti-money laundering (AML)
measures.
3. Compliance Management: Adheres to local and international regulations, such as Know Your
Customer (KYC) and AML laws.
4. Multi-Channel Accessibility: Allows transfers through banks, mobile apps, web portals,
ATMs, and agents.
5. Real-Time Tracking: Provides updates on transaction status for both senders and receivers.
6. Integration with Partners: Collaborates with global payment gateways and MTOs like
Western Union and MoneyGram.

3.2 Relevant Theories and Standards in Remittance Management Systems

1. Transaction Cost Theory (Williamson, 1975):

This theory highlights the need to minimize costs associated with transactions, such as fees,
delays, and inefficiencies. A robust RMS aims to lower these costs while maximizing
efficiency and reliability.
2. Technology Acceptance Model (TAM) (Davis, 1989):
TAM explains how users adopt and utilize technology, emphasizing the importance of
perceived ease of use and usefulness. This theory is crucial in understanding the adoption of
digital remittance platforms by customers.
3. Diffusion of Innovation Theory (Rogers, 2003):
This theory explains how innovations like mobile wallets or blockchain-based remittance
systems spread among users. It highlights the role of early adopters and the importance
of education and awareness campaigns.
4. Stakeholder Theory (Freeman, 1984):
In remittance systems, stakeholders include banks, customers, government agencies, and
MTOs. This theory underscores the importance of building trust and transparency among all
stakeholders to ensure system effectiveness.
5. Service Quality Theory (SERVQUAL Model, Parasuraman et al., 1988):
This model evaluates the quality-of-service delivery based on dimensions like reliability,
responsiveness, assurance, empathy, and tangibles. These dimensions are critical for
assessing customer satisfaction in remittance services.

Relevant Standards and Guidelines

 1. Basel Framework:
The Basel Committee on Banking Supervision provides guidelines for risk management,
including operational risks in remittance systems.
2. ISO 20022 Standards:
A global standard for financial messaging, enabling seamless communication between banks
and payment systems.
3. Financial Action Task Force (FATF) Recommendations:
These guidelines focus on anti-money laundering (AML) and combating the financing of
terrorism (CFT), which are essential for remittance management.
4. Know Your Customer (KYC) Standards:
Banks and MTOs must adhere to KYC norms to verify the identities of senders and
recipients, reducing fraud risks.
5. General Data Protection Regulation (GDPR):
Ensures data privacy and protection for customers using digital remittance platforms,
especially within the European Union.
6. SWIFT Messaging Standards:
Used for secure cross-border transactions, SWIFT plays a vital role in ensuring the reliability
and transparency of remittance transfers.

3.3 Remittance Facilities

Private remittances Official & Business travel Commercial remittances

Family remittance facilities Official visit Opening of branches or

subsidiary companies abroad

Remittances of membership Business travel quota for new Remittances by shipping,

fees exporters airlines and courier services

Education Business travel quota for Remittances for royalty and

importers technical fees

Remittances of consular fees Exporter retention quota Remittance on account of

training and consultancy

Remittances of evaluation fees Remittances of dividends

Travel Subscription of foreign media

services

Health and medical purpose Fees for return monitors

Seminar and workshops Advertisement of Bangladeshi

products in mass media in
abroad
Foreign nationals Bank charges

Remittances for Hajj Sundries

Other private remittances

3.4 Types

There is main two types of Foreign remittance: -

 Foreign Inward Remittance.

 Foreign Outward Remittance.

Foreign inward remittance

The remittance of freely convertible foreign currencies which we are receiving from abroad against
which the Authorized Dealers making payment in local currency to the beneficiaries may be termed
as Foreign Inward Remittance.

Foreign outward remittance

The remittances in foreign currency which are being made from our country to abroad be known as
foreign outward remittance.

3.5 Main four parties of Remittance

 Sender/Remitter

 Receiver/Beneficiary/Recipient

 Sending Agent

 Receiving Agent

3.6 The benefit of Remittance for Country

 Helps in positive GDP. As a result, it increases economic growth .

 It narrows down the social unrest and crimes .

 Remittance has a direct impact on individual householders Individual householders are

directly benefited from the remittance as they are getting money from another country.
  Remittance increases the recipient household’s resources, smooth consumption, provide
working capital.

3.7 Risks/Disadvantages of Remittance

 If the remittance is large, the recipient country could face the risk of real exchange rate
appreciation. It may make its economy less competitive internationally.

 The remittance, especially from the skilled manpower is brain-drain which means due to the
export of skilled manpower, country face the shortage of skilled manpower. Which ultimately
affect the entire development of the country.

 Remittance also creates dependency.

 Migrant workers have to be far away from their family.

3.8 General Banking activities of SBL

 Cash department

 Account opening

 Bill and clearing

 Foreign Remittance

 Account and reconciliation

 Card division

 Investment department

From these above actives we see that foreign active one of the important department of general
banking at Sonali bank.

Major works of this department. The following works are done in this department-

 Issuing & Payment of Demand Draft

 Payment Order

 All related correspondence with other Branches & Banks.

 Compliance of Audit & Inspection.

 Balance of D.D. & P.O. payable & D& P.O. Paid with advice.

 Payment of Incoming TT
  Issuing encashment of Pay Order and maintenance of record and proof sheet.

 Issuance of Local Drafts

 Issuing and encashment of BCD

 All related correspondences

 Issuing of Outgoing TT

 IBCA & IBDA

 Inward foreign remittance collection.

 Outward foreign remittance activities.

3.9 Sonali Bank Ltd.’s Remittance Activities

SBL has its branches in the major cities of the country and therefore, it serves as one of the best
mediums for remittance of funds from one place to another. This service is available to both
customers and non-customers of the bank. SBL perform both Inward and Outward remittance
activities. We can divide remittance activities of Sonali Bank Ltd. By the following way-

Remittance Activities at SBL

 Local Remittance

 Inward

 Outward

 Foreign Remittance

 Inward

 Outward

3.10 Demand Draft (D.D.)

Demand Draft is an instruction payable on demand. It is negotiable instrument issued by the branch
Bank containing an order to another branch of the same Bank to pay a certain sum of money to a
certain person or order on demand. This instrument can be purchased by a customer from a particular
Bank branch for himself or for beneficiary and can handed over to the purchaser for delivery to the
beneficiary. The payee or beneficiary will claim the proceeds of the instrument by producing the
same to the concerned paying branch. Demand Draft maybe paid in cash to the payee on proper
identification or the proceeds may be credited to his account. Banks issue drafts for a nominal
commission. The commission depends upon the amount to be transmitted. The purchaser of the draft
needs not to be a customer or accountholder of the Bank. Draft can be crossed also.
3.11 Procedure of Payment

Proceeds of Demand Draft is received by the paying bank as and when it responds the relative advise
on the receipt of DD Advises from different branches, the paying banker will verity the genuineness
of the Advice by way of verifying the number and signature. Beside this, Drafts payable can be made
without the Advice of issuing Bank and on that time the payment is called Acceptance Payment.
Before making payment of the DD, the branch will ascertain the genuine of its issuance as well as
the genuine of the payee. Open Drafts may be paid on proper identification of the payee and crossed
Drafts can never be paid in cash over the counter.

The process of entry D.D. Payment-

If the payment is to be If the payment is to be

made after receipt of the made before receipt of the
Advice Advice

If the amount of draft is Dr.: Bills Payable A/C, D.D. Dr.: Sundry Assets A/C. D.D.
pain in cash Payable Paid W/A

Cr.: Cash A/C Cr.: Cash A/C

If the amount of draft is Dr.: Bills Payable A/C, D.D. Dr.: Sundry Assets A/C, D.D.
pain by clearing House Payable paid W/A

Cr.: CIBT A/C– Local Office Cr.: CIBT A/C–Local Office

If the amount of draft is Dr.: Bills Payable A/C, D.D. Dr.: Sundry Assets A/C, D.D.
pain by transfer (from Payable paid W/A
Account)
Cr.: Party ‟s A/C or CIBT Cr.: Party ‟s A/C or CIBT
A/C A/C

3.12 Payment Order (P.O.)

Bank's payment order is an instrument which contains an order for payment to the paid to effect local
payment whether on behalf of the Bank or its constituents. In the beginning stage, PO was issued
only to effect local payments of Bank own obligations. But, at present, it is also issued to the
customers whom they can purchase to deposit as security money or earnests money. The Bank's
payment orders are in the form of receipts and issued by joint signature of two officials. It ensures
payment to the payee as the money deposited by the purchaser of PO is kept in the Bank's own A/C
named "Payment Order A/C". Payment of this instrument to be made from the branch it has been
issued. It is not transferable and, therefore, it can only be paid to: -

 The payee on identification.

  The payee's Banker, who should certify that the amount would be credited to payee's A/C.

 A person holding the letter of authority from the payee whose signature m

 Be authenticated by the payee.

 The purchaser by cancellation provided the original PO is surrendered by him to the Bank.

3.13 Issuance of Payment Orders

Against Cash:

1. The client shall fill up the Payment Order Application Form and deposit the cash over the counter.

33. In case of Issuance of Payment Order against Cheque or by debiting client account, signature of
the authorized person should be verified before debiting the account.

After issuing the payment order concern officer should do the followings:

a) Description of payment order should be recorded in the Register.

b) Payment order number (both receipt & Micro bank) should be written in the application and the
voucher.

c) Ensure that the Branch seal is given on the top of the payment order & protector graph and the
amount is written in figure & in words.

 Payment Order will be signed jointly by the GB Head along with another authorized
Signatory.

 Beforehand over to the customer, concern officer must ensure that acknowledgement is
obtained from the client or his authorized representative on the counter folio and issuing
Register & vouchers are sent to Accounts Department at the end of the day.

3.14 Mail Transfer (M.T)

The facility of transforming money by Mail is available to customers having some sort of an account
with the Bank. The remitter deposits the amount to be transferred with small commission with the
remitting Branch. It is an Advice issued by a Branch to another Branch for crediting the specified
amount to the account of the payee maintained with them. It is a non-negotiable instrument and
generally is not handed over to the customer rather sent through Post Office to the concerned Branch
for credit to the respective amount. In some cases, proceeds of MT. may be paid to the beneficiary by
issuing Payment Order (PO) if he maintains no account with that branch. In such cases, Full Address
of the beneficiary requires to be mentioned by the applicant. On that time, MT itself treated Advice
as well as credit voucher also of the paying branch; no separable advice is issued by the issuing
branch. On receipt of the MT genuineness is determined by means of verification of signature and
test number (if any payment is made by debit to issuing branch through PBG A/C and reported to
Head Office for reconciliation. Remittance or money by Mail Transfer is relatively cheaper, quite
safer and convenient. Mail Transfer is affected not only for remittances within the country but also
for international remittances. MT for local transfer (say, within the area of. Normally the Mail is
given Tk. 25/- for the amount Tk. 50,000/- and above. Below 50,000/-there is no any Mail Charge.
The commission charged for MT is given below Tk. 1 up to Tk. 49,000/- Tk. 15/-Tk. 50,000/- and
above Tk. 49.

3.15 Telegraphic Transfer (T.T)

Telegraphic transfers are affected by telegram, telephone, or telex as desired by the remitter. Transfer
of funds by telegraphic transfer is the most rapid and convenient but expensive method. For this,
telegraphic technologies need to be available in all the areas. In this case, the issuing branch sends a
message telegraphically to credit the specified amount to the beneficiary through his A/C maintained
with them or by issuing TT, PO, if A/C is not maintained by the beneficiary, Telegraphy message
may be codes but must be tested. Paying branch will decode the TT being satisfied on the contents
will make payment by debit to issuing branch entering the TT into TT Register and preparing a credit
voucher for credit to the payees A/C. But, for big amount of TT or in case of any doubt, confirmation
must be obtained before making payment.

3.16 Remittance through the direct arrangement with Sonali Bank Ltd.

Sonali Bank has arrangement with some foreign bank and transfer agencies in various countries.
When transfer is made from those countries and through any of those financial institutions, they
transfer it directly to the Sonali Bank. This transfer is made through online. Generally Sonali Bank
wage Earners Branch receives all these remittance and then sends it to the respective branches of the
bank. This is transferred by filling up a TTPO (Telegraphic Transfer Pay Order) form or FTT
(Foreign Telegraphic Transfer) form.

When there is no arrangement between the foreign financial institution and Sonali Bank, the foreign
institution transfer it to any other bank in Bangladesh with whom it has arrangement. Then the bank
transfers it to the Sonali Bank. When the transferor and transferee bank are within the same clear
house area, the transferor uses P0 (Pay Order). And if the two banks are in different clearing house
area, the transferor uses DD (Demand Draft).

3.17 Main flow of foreign remittance SBL

 Saudi Arabia

 Kuwait

 Qatar

 Oman

 Iraq
  Libya

 Bahrain,

 Iran

 Malaysia

 South Korea

 Singapore

 Hong Kong

 Brunei

These are some of the major countries of destination. Saudi Arabia alone accounts for nearly one-
half of the total number of workers who migrated from Bangladesh. Labor market of Bangladeshi
workers is not static. During the 1970s Saudi Arabia, Iraq, Iran and Libya were some of the major
destination countries. While the position of Saudi Arabia remains at the top, Malaysia and UAE
became important receivers. In mid-1990s, Malaysia became the second largest employer of
Bangladeshi workers. However, since the financial crisis of 1997, Bangladeshis migrating to
Malaysia dropped drastically. Now UAE has taken over its place.

Over the past 25 years labor migration from Bangladesh has registered a steady increase. From 1990
onwards on an average 3, 25,000 Bangladeshis are migrating on short-term employment, mostly to
13 countries. In the past the bulk of the migrants consisted of professional and skilled labor.
However, the recent trend is more towards semi- and unskilled labor migration. Due to increase in
the flow of unskilled and semi- skilled labor, remittance is increasing at a much lower rate than the
labor flow. Remittance is crucial for Bangladesh’s economy. It constitutes almost one-third of the
foreign exchange earnings. About 25 percent of remittance senders were students when they went
abroad and another 25 percent were living off their own land. A large segment of them were working
as construction laborers overseas, another group worked as agricultural laborers. UAE, Saudi Arabia
and Singapore constituted the most of important destinations of these migrants.

One survey comment that if the migrant workers’ total income abroad and the present family income
from other sources is combined and then compared with the pre- migration family income, it
registers an increase in total income by 119 percent. On an average, the interviewee households
annually received about Tk.72,800 as remittance. This means that a typical migrant remits 55.65
percent of his income. Remittance constitutes 51.12% of the total income of these families. Transfer
of remittances takes place through different methods. 46% of the total volume of remittance has been
channeled through official sources, around 40% through hundi, 4.61% through friends and relatives,
and about 8 percent of the total was hand carried by migrant workers themselves when they visited.

3.18 Significance of remittance income for Bangladesh economy

Remittances have been continuously playing an increasingly large role to the economic growth and
the livelihoods of people in Bangladesh. Remittance income is more valuable for any developing
country like Bangladesh. Puri and Ritzema (2001) tell that remittance is the portion of international
migrant workers’ earnings sent back from the country of employment to the country of origin, play a
central role in the economies of many labor sending countries. Osmani (2004) tells those remittances
have been identified as one of the three factors that have been responsible for reducing the overall
incidence of poverty in Bangladesh. The demand of migrant workers remittances has now increased
tremendously in Bangladesh in a number of reasons. These are as follows

1. Remittance contributes to our national economy is a large scale by increasing foreign

exchange reserve, per capita income and employment opportunities.

2. It has been continuously lifting-up the GDP (Gross Domestic Product) of Bangladesh. In
2012, the remittance which has sent by the migrant workers is the 11 percent of the total GDP
of Bangladesh.

3. Remittance has been continuously keeping the contribution to alleviate the poverty of
Bangladesh through micro-enterprise development, generating substantial employment and
income.

4. The government has been paid various government and non-government import bills and
installments of different foreign debt & donation from the remittance income.

5. Remittance income helps the government of Bangladesh to reduce dependency on foreign

aid.

6. Remittance helps to improve the balance of payment position of Bangladesh.

7. Remittance also contributes to the expansion of financial market activities and the
development of payment systems through enhancing direct capital flows and distributing
those funds to users end and for investment or finance consumption purposes.

8. The government of Bangladesh is using remittance income to build schools, colleges,

universities hospitals, roads, & highways, bridges, culverts, etc.

9. Remittance income is positively the socio-economic condition of migrant families.

10. Remittance income makes more strong local currency (Bangladesh) against US dollar.

3.19 Determinants of remittance income in Bangladesh

Bangladesh has been continuously received robust remittance because migrant workers are working
hard and earning huge money in abroad. With these remittances, the government has been
compensating trade deficit. The determinants of remittance in Bangladesh include employment in
abroad, GDP growth, exchange rate and oil price. These determinants are strongly influencing on the
level of remittance inflow of Bangladesh. Hussain and Naeem (2009) point out the following things:
 1. Each additional migrant worker brings in $ 816 in remittances annually;

2. Every dollar increase in oil price increases annual remittance by nearly $ 15 million;

3. Depreciation of exchange rate by one taka increases annual remittance by $ 18 million; and

4. Remittances are higher during periods of low economic growth.

3.20 Migration process in Bangladesh

The process of migration in Bangladesh is shown in the following figure:

Recruiting Agency in
Migrant
Bangladesh

Broker in Employer in
Host country Host country

In the above figure we can see that recruiting agencies are playing a very significant role in the
migration of Bangladesh. These agencies must be licensed by the government of Bangladesh. They
collect information about the demand for jobs in abroad from the brokers in the host countries who
are directly related with the prospective employers. The prospective migrants are facilitated by the
recruiting agencies in securing passports, making travel arrangements and obtaining clearance from
the Bureau of Manpower, Employment and Training (BMET). The recruiting agencies had organized
themselves under the Bangladesh Association of International Recruiting Agencies (BAIRA) to
enhance their interest and interact with the government in 1984. The government of Bangladesh had
established the Bangladesh Overseas Employment Services Limited (BOESL) to compete with
private agencies in operating direct recruitment.

3.21 Challenges facing by Bangladeshi migrants

The migrant workers of Bangladesh have been contributing immensely to the economy with strong
positive impact on growth, employment, foreign reserve and balance of payments. The country’s
imports would have to be drastically cut down or its current account deficit rose to highly
unsustainable levels without foreign remittance. But these migrant workers are regularly facing
various types of problems within and outside the country. The following problems are facing by
Bangladeshi migrants within and outside the country:
 1. The people who want to go to abroad for job are suffering from information problem because
most of these people are illiterate and they don’t know from where they can collect more
authentic information in this regard.

2. The people who want to go to abroad for employment are suffering from financial problem
because most of these people are poor and they don’t have ample resources. However, the
non-government cost of migration is very high in Bangladesh and it is almost impossible to
bear by these poor people.

3. The people who want to go to abroad for doing job are suffering from efficiency problem
because most of the migrant workers of Bangladesh are unskilled and low-skilled. That is
why, they can’t perform their assigned task & duties with effectively & efficiently like the
migrant workers of other countries in the world.

4. Bangladeshi migrants are suffering from training problem. They don’t get any training from
the private and government recruiting agencies before pre-departure.

5. The migrant people of Bangladesh are regularly facing passport collection problem because
with the introduction of machine-readable passport people are compelled to travel all the way
from their village and wait a week to get their passport.

6. Migrant workers of Bangladesh often face emergency problems like cheating, frauds and so
on within and outside the country.

7. Migrant workers of Bangladesh are regularly encountering various problems in sending

remittances, especially to the remote areas of the country, through formal channels because
the process of sending remittance through banks is slow and complicated.

8. Bangladeshi migrants are regularly harassed and sometime physically oppressed in the
various airports of the country.

9. Migrant workers of Bangladesh are regularly facing investment problem because of chaotic
political environment.

10. The present pre-departure legislation of Bangladesh is quite vague and complicated and it
creates tremendous problems for migrants.

3.22 Policy Recommendations

The remittance is the second largest income sector of Bangladesh, next to the export sector (Ministry
of Expatriates’ Welfare and Overseas Employment, Bangladesh and Bangladesh Bank Report, 2012).
The government of Bangladesh has been paying the various government and nongovernment import
bills and the installments of various foreign debts & donations from the remittance income.

The remittance income has also contributed to boost up the foreign exchange reserve, per capita
income and employment opportunities. Thus, the government should take the following necessary
measures to save the significant income generating sector of Bangladesh:
I) The government should establish information booth or center in Union, Upzila and Zila Parished
throughout the country so that the people can collect relevant necessary information from these
booths/ centers. The government of Bangladesh should also establish these opportunities & facilities
in abroad where migrant workers are employed. If the government could establish these
opportunities

& Facilities for the migrant workers within and outside the country then the people would be able to
reduce their problems and it will create trust & confidence on government.

II) The government should set-up the certain amount as expenditure that have to be submitted by the
migrant workers to the recruiting agencies and it must be applicable for both the private & public
recruiting agencies. In addition to that the government may provide financial subsidy & bank loan to
migrant workers. However, the government should eliminate additional taxes to workers.

III) The government should establish different training & learning centers so that the migrant
workers could learn about language, behavior, culture, norms, values, behavior, working &
geographical environment and so on before going to abroad. The private recruiting agencies have
also to establish different training & learning centers in order to train –up their sending people before
pre-departure.

IV) The government and private recruiting agencies should send the trained people abroad so that
they can fight & survive with the migrant workers of other countries in their working place.

V) The government should take quick decision to distribute passport according to particular village
or district in a particular day or time. If government could distribute passport from the respective
village or district in particular day or time then the cost and time for getting passport would be more
affordable. The government may use information technologies to facilitate the process.

VI) The government should arrange emergency phone numbers and services for migrant workers
within and out the country and should these provide to them so that they contact and seek assistance.

VII) The government and private banks should increase the speed of their services throughout the
country and also decrease the paper work & documentation, which make it very simple & easy for
less educated or illiterate migrant workers to send their remittances through formal channel.

VIII) The government should take necessary legal actions against those people who are involved
with undisciplined activities in the airports of the country.

IX) The government should create investment friendly environment in order to use the remittance
money in productive sector. Otherwise, the large part of the remittance money will spend in
consumption purpose by the family members & relatives of the migrant workers.

X) The government should formulate clear and precise pre-departure legislation so that the migrant
workers can easily understand which will encourage them to follow.
XI) Migrant workers face lots of problems in abroad due to lack of information, knowledge &
education. The government and private recruiting agencies should expand their training centers in
different parts of the country in order to reduce this problem.

The return workers may help prospective workers by giving basic knowledge like how to use toilets,
how to talk/ behave with employers, how to proceed in the airport and others, which will minimize
the conflicts between employers and migrant workers that creates a bad reputation of Bangladeshi
workers.

3.23 Opportunities of Remittance Income in Bangladesh

Bangladesh has earned a record amount of foreign remittance amounting more than $ 14 billion and
exported the second highest number of workers to Middle- East Countries (Ministry of Expatriates’
Welfare and Overseas Employment Report, 2012). It has been indicated that the demand for blue-
collar workers are increasing day-by-day in Asian countries, especially Middle -East and South-East
Asian countries. The World Cup Football 2022 will be held in Qatar. That is why, the authority of
this country wants to import huge number of labor from Bangladesh. Thus, the government of
Bangladesh should start diplomatic and high-profile discussion with the government of Qatar
immediately to catch the labor market of this country so that the government can export huge number
of labors to Qatar and earn ample foreign remittance. Beside this, the government should take
necessary steps to open the labor market of Kuwait for fresh migrant workers of

Bangladesh promptly and should also arrange bilateral and multilateral discussion with the other
countries of the Middle-East which will help the government to expand the labor market in the
Middle-East countries.

Recently, Malaysia has been agreed to take labor from Bangladesh. Now, the government is trying to
collect required number of qualified labor through mass campaign from every district of Bangladesh.
In this case the government should be very much careful so that the Malaysian labor market will not
be stopped again for Bangladesh migrants. In addition to Malaysia, the government of Bangladesh
should arrange bilateral and multilateral discussion with the government of other Asian and Middle-
East countries so that our migrants will get more employment facilities in these countries.

The shortage of certain skilled professionals in industrialized countries such as information

technology experts and computer specialists, nurses, medical doctors, etc. is an important factor
behind the increase in demand for skilled manpower. In recent years, the OECD countries have
encouraged immigration of high skill people through immigration incentive policies such as H-1
professional Visas in the U.S. and special visas for information technology experts in Germany and
other countries. In this regard, the government of Bangladesh emphasis on developing the skill level
of potential migrants through various training program so that the Bangladeshi migrants will get
migration opportunities in the OECD and other countries in the world.

Still today, the African Continent is under the un-invented condition. Now, the government of
developed countries has been drawn special attention to develop the various countries in this
continent. Thus, the government of Bangladesh should start bilateral and multilateral discussion
immediately so that Bangladesh can export huge labor to the various countries of African Continent.
In addition to this, the government should start diplomatic and high profile discussion with the
government of Latin American counties because there are tremendous opportunities to export
Bangladeshi labor to these countries.

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