A CASE STUDY ON LETTER OF CREDIT OF EVEREST BANK LIMITED. AN INTERNSHIP REPORT ACKNOWLEDGEMENT It has been a really awesome experience to be an intern at Everest bank limited. During the internship, I got an opportunity to meet the top personality of the banking sector and I got to know the real working environment and procedures of the banking industry. This report is based on Issuance of Letter of credit at one of the leading bank of Nepal, Everest Bank Limited. It is prepared as a part of the internship program in partial fulfillment of the course-Bachelor of Business Administration (BBA) 8th semester.
During the preparation of this report, many people have helped me either directly or indirectly. So this report is an outcome of the valuable suggestions and guidance of different peoples and also help of senior’s report along with our report supervisor. In regard to this it is an inevitable duty of mine to acknowledge these persons gratefully. EXECUTIVE SUMMARY Everest Bank Limited is one of the commercial banks in Nepal, which was established in joint venture with Punjab National bank of India. It has been serving its customer since .
Everest bank has contributed a lot in the development of the country. Being a member of SWIFT, this facilitates towards its valued customers. So, Everest bank plays a developing role not only in urban areas but also in rural areas. This shows that the bank has keen interest in the overall development of the country. It has provided loan for the agriculture, cottage, and small scale industry, large industries and many more. In other words, we can say that it has played a great role in the development of our country. Everest Bank has played a great role in the development of the international trade.
From the letter of credit transaction of Everest Bank Limited, we can say that it has really helped the international trade, which also helps to uplift the national economy. The terms and procedures used in the Letter of credit may vary from country to country and also from one bank to another bank. It is necessary to follow specific guidelines so that consistency can be achieved. So, It is advised that banks in Nepal should follow the NRB directives and ICC guidelines before opening L/C. The report attempts to examine and evaluate the financial overview of Everest Bank Ltd. with main references to Letter of Credit.
Further, it attempts deep evaluation for the role of L/C in total contingent liabilities. The financial statement of Five years of the bank has been Processed and analyzed comparatively for the purpose of the study. Individual interview with the management has been taken wherever necessary. The study is exploratory as well as analytical to some extent. ABBREVATIONS NRBNepal Rastra Bank L/CLetter of Credit ICCInternational Chamber of Commerce SWIFTSociety for Worldwide Interbank Financial Telecommunication UCPDCUniform Customs and Practice for Documentary Credits IFICInternational Finance Investment and Commerce
ATMAutomated Teller Machine SMSShort Messaging Service ABBSAny Branch Banking Systems CHAPTER I INTRODUCTION 1. 1 Background of the study: Financial services are the backbone of the modern economy. All branches of economic activity today are fundamentally dependent on access to financial services. So it is the key sector that underpins global economic growth and plays a major role in the development of infrastructure for trading goods and services. Thus growth of this sector is also booming than other sector of the economy. Same is the case of Nepalese financial service sector. After the adoption of conomic liberalization policy by Nepal Government, which was started some two decades age, Nepalese financial sector has been benefiting more than that of other sectors of the economy. The growth of the bank and financial institution is growing investment of diverse economy. Even though banking, insurance, finance and securities business falls under the area of financial sector, banking group largely dominate the Nepalese financial service sectors in terms of assets, deposits and credit flows. So it has been a great concerned area of all individuals for the development of financial system of the country.
In today’s dynamic and complex world, banks play a vital role in economy of the Nation. After reinstatement of multiparty democracy in the country, several joint ventures banks were established. Besides commercial activities, Everest bank also offers industrial and merchant banking. Today’s businesses are being rapidly globalize. The importance of International markets can be made clear from example of our daily life. While watching showcases and shelves of shops in Kathmandu full of these goods, some questions may arise in every ones mind How do they manage to import all of these goods from all over the world?
As it is not possible to businessman to to go abroad and buy goods every time in cash and bring it to host country to sell the product. The persons who plays the role of intermediary between the buyer and seller may be unknown to each other. Then How can the seller be sure that buyers will pay after the goods are exported and Hoe all transaction takes place? The answer to these questions is the commercial banks. Commercial banks act as the intermediary between buyer and seller. Parties involved felt the necessity of bankers because of their wide acceptance for their credibility and standing in financial transactions.
They give guarantee of payment to the seller and make it easier for companies in different countries to trade with each other by issuing a document, namely, “Letter of Credit”. L/C service has assumed a great importance with increasing economic activities and an inescapable daily task of banking sector. A L/C is a document typically issued by a commercial bank or financial institution, which authorizes the Applicant of the letter(the customer of the bank) to draw amounts of money up to a specified amount, consistent with any terms and conditions set forth in the letter.
This usually occurs where the bank’s customer seeks to assure a seller (the beneficiary) that he will receive payment for any goods he sell to the customer. 1. 2 Area of the study: International Trade is one of the important sectors of the economy. International trade plays a vital role in the economic advancement process of a nation. So the trends of international trade i. e, import and export is of great concern to the economic sector of a country. Fluctions in the parameters of international trade immediately brings about some impact in the total economy.
As such the nature, trend and volume of international trade are required to keep peace with the national economic needs and objectives. There may be some areas where emphasis is to be given while there may be others which deserve restrictions or discouragement. The study is focused mainly on L/C which includes buyer (Applicant), seller (Beneficiary), forms of L/C, types of L/C, common terms and conditions. The detail study of procedure for opening and settlement of import L/C are discussed. The L/C transaction occurred in the fiscal year 2010-11 are presented in the data presentation and analysis.
The area of study also covers the activities performed in the bank during the internship period. 1. 3 Objectives of the study: The internship can be conducted in financial institution and business enterprises. I selected the financial institution so as to gain corporate knowledge and understand working environment of a bank. The internship for a time period of eight weeks was conducted on Everest Bank Limited, New Baneshwor branch. The core objective of the internship is to achieve practical knowledge about the different departments of financial institution s well as to get a short job experience. With focus on the subject matter i. e, Letter of Credit; the objective of conducting internship seems to be as follows: 1. To gain practical knowledge about L/C. 2. To learn the various procedures, rules and regulations of L/C. 3. To learn about the different transactions of L/C. 4. To know about seasonal turnover of L/C. 5. To know how L/C is facilitating international trade. 6. To know how opening a L/C benefits a client. 7. To know how a bank earns from a L/C.
Others, to know how a financial institution benefits a country, how a financial institution is serving a society, Why people are attached towards the job of a bank, how a commercial transaction is facilitated by a bank, how a bank creates loan, how it maintains cash for withdraw purpose, etc. 1. 4 Statement of the problems: In response to the economic liberalization policies of the government of the Nepal, establishment of private joint venture banks are continuing. The availability and accessibility for the capital is very important for any economy.
For the economic development of the country, strong money market and easy credit facilities are not sufficient. A L/C is the most acceptable instrument for arranging payment for export and offers the greatest protection to the parties concerned, so its use as a basis of settlement for the payment is widely accepted by both importers and exporters. It also minimizes the misuse of foreign currencies. Today there are 26 commercial banks in Nepal. Being competition among them the L/C facility has been provided without fulfilling criteria of L/C. NRB’s some of the rules and regulations do not match with that of UCPDC’s. . 5 Methodology and tools used Methodology The methodology and tools used in internship program should tell about the different sources of data and data collection procedure as well as the tools i. e, statistical and non statistical, which were used in the internship program. These are the support kit in the internship program, which makes the internship program easy and clear. Research Design In order to accomplish the objectives of the study, proper research design is necessary. Research design helps to collect quantum of accurate data economically but there are various types of research design.
The data for the analysis are collected from the annual report of Everest Bank Ltd. 1. 6 Sources of data There are several methods of data collection and they generally fall in to primary and secondary. The methods of collecting data are as follows: Primary Data The primary data are collected directly from the field. They are collected personally through questionnaires, observations and interviewing methods. In other words, the data which are generally collected by the investigator or researcher by him/herself is known as primary data.
Primary data is collected by interviewing the banks officials of Everest Bank wherever necessary. IT highlights the real information and facts of Everest Bank Ltd. Secondary Data The secondary data are collected from the secondary sources. The data, which is already collected and used by someone, is known as secondary data. It is collected indirectly. The secondary sources consist of two sources-internal and external. 1. Internal sources * Annual Reports of Everest Bank Ltd. * Balance sheet * Income statement * Interest rate chart * Brochure * Booklets 2. External Sources * Book publications Journal Articles * Banking statistics of Everest Bank. * Previous Internship Reports. Tools used To analyze the performance of Everest Bank, the data collected from sources are presented in tabular form after from after making necessary adjustments. Different financial as well as statistical tools are used in analyzing the data. * Bar Diagram * Pie Chart * Percentage * Mean Trend Analysis It shows the trend between variables and study. Trend analysis here is calculated by using least square method. This method is one of the most commonly and widely used methods to describe trend.
The formula for least square method is: Yc=a+bx where, Y-intercept, (a) = ? xyn Co-efficient of x, (b) = ? xy/? x? 1. 6 Limitations and assumptions of study The limitations, which are noticed in conducting internships, are listed below: * The time period was short for the study of all the departments of the departments of the bank. So, a brief study was done on other department and detail study was done on L/C only. * The sufficient information of the history of Everest Bank Limited was not available. * All the departments are inter-related with each other, so without a good nowledge of other departments it was difficult to difficult to understand L/C. * It was difficult to gather information approximately as secrecy is maintained in any financial institution. 1. 7 Diagrammatic Representation of data The Diagrams used to present the data are as follows: 1. Simple Bar Diagram 2. Pie chart CHAPTER II THEORETICAL FRAMEWORK OF ORGANIZATION 2. 1 Introduction of Banking Industry A Bank is a financial institution for collecting deposit, loans exchange or issue of money and for the transmission of funds. It is essentially an intermediary of short term funds.
It can carry out extensive sending operation only when it can effectively mobilize the saving community. Banking is the lifeblood of the modern business for the economy. “A bank is manufacturer of credit and machine so facilitating exchanges”, Horace. A bank simply carries out the work of exchanging of money, providing loan, accepting deposit and transferring the money. Banks are the most important pillars of an economy or economic system. They actually do not create money but they mobilize money – which might be termed as capitalization of money.
The ultimate source that creates money cannot be other than employment. Banks derive profit mostly from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. This difference in referred to as the spread between the cost of funds and the loan interest rate. – C. R. Crowther “A bank collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it. As pillars of economic system, there are entities such as Central Bank, Commercial Banks, Development Banks, Financial Institutions and Co-operatives. Commercial Banks are financial intermediaries who raise funds primarily by issuing checkable deposits (deposits on which checks can be written), savings deposits (deposits that are payable on demand but do not allow their owner to write checks), and time deposits (deposits with fixed terms to maturity). They then use these funds to make commercial, consumer, and mortgage loans and to buy government securities and municipal bonds.
Though the main function of commercial bank is to collect deposits from the depositors and to invest on profitable sectors by avoiding risks, these days, the commercial banks are moving towards the micro financing sectors like; Auto loan, Education loan, Professional loan, and Housing loan etc, because of low risk and lack of proper and secured investing sectors. 2. 2 Present Situation In the context of present situation there is tough competition for banking industry. The overall competitions have been increased over the gap of time. As, we know the economy of Nepal is very small but number of service provider high.
Due to this reason many banking industry is facing lots of problem in they are in the position of insolvent and some are in the process of merger . The political instability is creating lots of problem in their operation. Few banks are making their presence in market by providing security and confidence to customer. Banking industry is failing to achieve their respected target. S. No| Class| Financial Institution| Number| 1| A| Commercial Banks| 31| 2| B| Development Banks| 87| 3| C| Finance Companies| 79| 4| D| Micro Development Banks| 21| Table 2. Showing number of financial institution as per NRB data Mid-July 2011 These financial institutions and banking are able to provide the complete banking facility to Nepalese people. However, proper banking facilities are yet to be developed in the rural areas. Thus there is enough room for the expansion and creation of new financial institution in Nepal. As well as banking and financial institution could earn more profit by eliminating the authorized money lenders in different market. There has been a tremendous growth in banking transaction in term of their length and breadth than few years ago.
Nepalese banks are now providing better banking services and much facility, which have made customers easier and safer. Banking these days provide a strong security, more options and convenient. Apart from the government banks there had been emergence of lot of other commercial banks. Private and joint venture banks are successful in the present context. They are able to provide a qualitative facility to the customers. Commercial banks are now permitted to set their own deposit and lending rates maintaining the minimum spread and also cash margin in issuing letter of credit of imports.
Due to the result of financial utilization process, a number of activities are open in bank including mutual funds, money market; portfolio management etc. competition among banks has become more keen and tough with the increase in the number of commercial banks, which are providing better services. Hence the commercial banks are trying to differentiate themselves by providing prompt services and attractive schemes. Similarly most of the banks are providing insurance schemes and health service facilities which are the extra bonus to the customer that motivates them to deposit their surplus in one of these banks.
Customization of credit card is another feature of banks. There is no deposit withdrawal limitation in today’s banks as compared to traditional bank, that facility attracts the depositors most. Depositors can withdraw any amount of money in a day maintaining a minimum balance in the saving account. These banks, now can offer competitive rate on foreign exchange too. The success of these commercial banks lies on their efficiency, competitiveness and sustainability in the autonomous financial sector of Nepal.
These financial institutions and banking are able to provide the complete banking facility to Nepalese people. However, proper banking facilities are yet to be developed in the rural areas. Thus there is enough room for the expansion and creation of new financial institution in Nepal. As well as banking and financial institution could earn more profit by eliminating the authorized money lenders in different market Business environment is not feasible in Nepal. Lots of business firm have been decreased due to political instability which will directly impact on the banking industry.
Despite mushrooming of banks in the city, villagers are still deprived of banking services. 2. 3 Introduction of Everest Bank Limited Everest Bank Limited (EBL) started its operation in 1994 with a view and objectives of extending professionalized and efficient banking services to various segments of the society. The bank is providing customer friendly services through a network of 44 branches across the nation. Punjab National Bank (PNB), joint venture partner (holding 20% equity in the bank) is the largest nationalized bank in India having 113 years of banking history.
PNB is a technology driven bank serving over 35 billion customers through a network of over 4500 branches spread all over the country with a total business of around INR 2178. 74 billion. EBL in association with Smart Choice Technology (SCT) is providing ATM services to its customers through more than 350 ATMs and over 1000 Point of Sales across the country. ATM sharing arrangements with Punjab National Bank has facilitated usage of EBL Debit Card at more than 3500 PNB ATM outlets across the India at a nominal rate. Similarly, Indian tourists and businessmen having PNB cards will be able to use EBL ATM, while in Nepal.
Everest Bank Limited, thus, has the advantage of the banking expertise and financial strength of its partner. Drawing its strength from its joint venture partner, EBL has been steadily growing in its size and operations and established itself as a leading Private Sector Bank. EBL is currently in operation with more than 44 branches all across the nation, while planning to open its branches in some more cities of the nation. EBL believes in providing the best service to its customers and the number of increasing satisfied customers across the nation proves it.
EBL was awarded by the honor of “Bank of The Year” 2006 Nepal, which also clarifies its impact in the banking sector of Nepal in the recent years of operation. It has introduced itself as “The name you can bank upon”. The vision of EBL is to evolve and position itself as a progressive, cost effective and customer friendly institution providing comprehensive financial and related services. The bank believes in integrating frontiers of technology and serving various segments of society. The institution is committed to excel in serving the public and also excelling in corporate values.
Figure 3. 1 Pie chart sector wise distribution of credit Figure 3. 2 pie chart showing deposit mix 2. 3. 1 Present Situation EBL is one of the leading bank in the banking industry . The competition among different commercial bank is increasing day by day. The share ownership of the bank is composed by different individual and institution. It can be seen by the help of pie chart which is given below: Figure 3. 3 Pie chart showing the share ownership of EBL EBL is able to earn profit every year but this time many branches were unable to accomplish their goal.
Bank has earned operating profit of Rs. 134. 91 crore which is 26. 56% more than last year and has been able to post a after tax net profit of Rs 83. 18 crore, which is 30. 23% higher than last year. The total deposits have reached Rs3693. 23 recording at annual growth of 10. 83%. The loan and advances stood at Rs2815. 64 crore showing annual growth of 15. 07%. EBL has various types of consumer loan to suit various types of people with view to augmenting the income level of bank and as well diversify the risk. The average spread has been gone up marginally from 4. 37% to 4. 8%. The spread has been gone up due to improvement in average yield on interest bearing asset from 7. 89% to 9. 53% and cost of deposit and borrowing also increased from 3. 52% to 4. 75%. The capital adequacy ratio of EBL is 10. 77% as on year end 16th July 2010. EBL has increased its number of branches up to now 44 branches and some are at process. EBL is trying to reach at every part of country. Due to tough competition EBL is creating different schemes to attract customer like ABBS free, student account. For Letter of Credit bank is taking very little margin amount.
The bank overall attempt is meeting but branches target have not meet this year. In the present situation many bank in the process of merger to be competitive. EBL is also in the process of merger. It will definitely make the EBL strong. So, from the present situation I can say that bank is in healthy position but competition will definitely make them challenges. The sources and uses of fund in various years are shown below: YEAR| 2005/06| 2006/07| 2007/08| 2OO8/09| 2009/10| SOURCES| | | | | | Capital and Reserve| 962. 8| 1201. 5| 1921. 2| 2203. 6| 2759. 1| Deposit| 13802. | 18186. 2| 23976. 3| 33322. 9| 36932. 5| Loan| 300| 300| 300| 612. 0| 704. 6| Other Liabilities| 1228. 8| 2163. 4| 1449. 0| 1363. 2| 1586. 8| Total| 16294. 0| 21851. 1| 27646. 5| 37501. 7| 41982. 8| | | | | | | USES| | | | | | Cash in hand and bank balances| 1552. 9| 2391. 3| 2667. 9| 6164. 4| 7818. 8| Loan and advances(including bills purchase)| 10136. 2| 14082. 7| 18836. 4| 24469. 6| 28156. 4| Investment| 4200. 5| 4984. 3| 5059. 6| 5948. 5| 5008. 3| Money at call and short notice| 66. 9| ——-| 346. 0| ——-| —–| Other Assets| 337. 5| 392. 8| 736. 6| 919. | 999. 3| Total| 16294. 0| 21851. 1| 27646. 5| 37501. 7| 41982. 8| Total Income| 1066. 5| 1370. 7| 1848. 2| 2565. 3| 3500. 8| Total Expenses| 613. 4| 772. 8| 1024. 3| 1491. 8| 2151. 7| | | | | | | Operating Profit| 453. 1| 597. 9| 823. 9| 1073. 5| 1349. 1| Net Profit| 237. 2| 296. 4| 451. 2| 638. 7| 831. 8| Table 3. 1 Showing the Sources and uses of fund and Net profit also 2. 3. 2 Challenges and Opportunities 2. 3. 2. 1 Challenges i. Globalization The world is converted in to single village. So, it’s a tough competition among the banking sector for their survival.
Nepal is member of WTO, BIMSTEC, and SAFTA, etc creates the competition since there will be no barrier in trade. ii. Customer retention Customer retention means holding the current customer. Due to tough competition; it’s a very tough job to retain the existing customer. To retain existing customer EBL should provide better return in deposits and services charge must be reasonable in comparison to competitor. iii. Technology Need to change the banking software due to fast growing IT; like Everest bank had replace the pumari software with finacle for more systematic. iv.
Maintaining quality services To maintain the consistency in quality of services is big challenges. If the deviation is found in the quality then customer may shift to other sector. Bank should provide prompt and quality service. Customer notice the quality of services offered by other bank and compare it. v. Maintaining liquidity Liquidity means the conversion of assets and liabilities in to cash. Anytime customer can come to ask for their withdrawal, so its duty of bank to provide cash. Last year in Dashain there was shortage of cash so many customer find difficult in withdrawing.
So, bank should maintain adequate cash. vi. Adjustments with macro and micro environment Macro environment means the environment which is not in control of industry and Micro environment is adjustable. So, it’s tough job to control macro environment (Economic, Political, Socio-cultural, etc) and micro environment (staff, customer, etc). Bank should try to minimize the problem created by this environment in order to be success. 2. 3. 2. 2 Opportunities i. Increasing habit of general public toward saving gives opportunity, to EBL to increase their market share ii.
As the hydropower sector business has been increasing rapidly in Nepal. The major investing area of EBL is hydropower which gives biggest chance to bank. iii. The Nepalese market is searching for the innovative product and services which gives opportunity to EBL to penetrate the market. iv. EBL ATM card can be operated in India more than 1500 ATM cell of Punjab National Bank which attracts the student, business person, worker for the transaction. v. Different services are served by EBL outside the Nepal which shows opportunity of diversifying their services.
As EBL takes very minimum margin amount for operating L/C which indirectly attracts the business house to operate L/C through EBL. 2. 3. 3 Joint Venture Partner Punjab National Bank (PNB), our joint venture partner (holding 20% equity in the bank) is the largest nationalized bank in India. With its presence virtually in all the important centers at India, Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking.
Among the clients of the Bank are Indian conglomerates, medium and small industrial units, exporters, non-resident Indians and multinational companies. The large presence and vast resource base have helped the Bank to build strong links with trade and industry. 2. 3. 4 Awards and Achievements * The bank has been conferred with “Bank of the Year 2006, Nepal” by the banker, a publication of financial times, London. * The bank was bestowed with the “NICCI Excellence award” by Nepal India chamber of commerce for its spectacular performance under finance sector Pioneering achievements
Recognizing the value of offerings a complete range of services, we have pioneered in extending various customer friendly products such as Home Loan, Education Loan, EBL Flexi Loan, EBL Property Plus (Future Lease Rental), Home Equity Loan, Vehicle Loan, Loan Against Share, Loan Against Life Insurance Policy and Loan for Professionals. EBL was one of the first bank to introduce Any Branch Banking System (ABBS) in Nepal. EBL has introduced Mobile Vehicle Banking system to serve the segment deprived of proper banking facilities through its Birtamod Branch, which is the first of its kind.
EBL has introduced branchless banking system first time in Nepal to cover unbanked sector of Nepalese society. EBL is first bank that has launched e-ticketing system in Nepal. EBL customer can buy yeti airlines ticket through internet. 2. 3. 5 Corporate Vision & Mission Vision * To evolve & position the bank as a progressive, cost effective & customer friendly institution providing comprehensive financial and related services. * To integrate the frontiers of technology & serving the various segments of society. * To be committed to excellence in corporate values.
Mission * To provide excellent professional services & improve its position as a leader in the field of financial related services. * To build & maintain a team of motivated and committed workforce with high work ethos. * To use the latest technology aimed at customer satisfaction & act as an effective catalyst for socio-economic developments. 1. 8 CHAPTER III INTRODUCTION AND ANALYSIS OF ACTIVITIES DONE 3. 1 Letter of Credit Letter of Credit L/c also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade.
The document is issued by a financial organization at the buyer request. Buyer also provide the necessary instructions in preparing the document. The International Chamber of Commerce (ICC) in the Uniform Custom and Practice for Documentary Credit (UCPDC) defines L/C as: “An arrangement, however named or described, whereby a bank (the Issuing bank) acting at the request and on the instructions of a customer (the Applicant) or on its own behalf : 1. Is to make a payment to or to the order third party ( the beneficiary ) or is to accept bills of exchange (drafts) drawn by the beneficiary. . Authorised another bank to effect such payments or to accept and pay such bills of exchange (draft). 3. Authorised another bank to negotiate against stipulated documents provided that the terms are complied with. A key principle underlying letter of credit (L/C) is that banks deal only in documents and not in goods. The decision to pay under a letter of credit will be based entirely on whether the documents presented to the bank appear on their face to be in accordance with the terms and conditions of the letter of credit.
The documentary credit—letter of credit, documentary letter of credit, or commercial letter of credit—is an arrangement whereby the applicant (the importer) requests and instructs the issuing bank (the importer’s bank) or the issuing bank acting on its own behalf, * pays the beneficiary (the exporter) or accepts and pays the draft (bill of exchange) drawn by the beneficiary, or * authorizes the advising bank or the nominated bank to pay the beneficiary or to accept and pay the draft drawn by the beneficiary, or * authorizes the advising bank or the nominated bank to negotiate, . 1. 1 Parties to Letters of Credit * Applicant (Opener): Applicant who is also referred to as account party is normally a buyer or customer of the goods, who has to make payment to beneficiary. LC is initiated and issued at his request and on the basis of his instructions. * Issuing Bank (Opening Bank) : The issuing bank is the one which create a letter of credit and takes the responsibility to make the payments on receipt of the documents from the beneficiary or through their banker.
The payment has to be made to the beneficiary within seven working days from the date of receipt of documents at their end, provided the documents are in accordance with the terms and conditions of the letter of credit. If the documents are discrepant one, the rejection thereof to be communicated within seven working days from the date of of receipt of documents at their end. * Beneficiary : Beneficiary is normally stands for a seller of the goods, who has to receive payment from the applicant.
A credit is issued in his favor to enable him or his agent to obtain payment on surrender of stipulated document and comply with the term and conditions of the L/C. If L/C is a transferable one and he transfers the credit to another party, then he is referred to as the first or original beneficiary. * Advising Bank : An Advising Bank provides advice to the beneficiary and takes the responsibility for sending the documents to the issuing bank and is normally located in the country of the beneficiary. * Confirming Bank :
Confirming bank adds its guarantee to the credit opened by another bank, thereby undertaking the responsibility of payment/negotiation acceptance under the credit, in additional to that of the issuing bank. Confirming bank play an important role where the exporter is not satisfied with the undertaking of only the issuing bank. * Negotiating Bank: The Negotiating Bank is the bank who negotiates the documents submitted to them by the beneficiary under the credit either advised through them or restricted to them for negotiation.
On negotiation of the documents they will claim the reimbursement under the credit and makes the payment to the beneficiary provided the documents submitted are in accordance with the terms and conditions of the letters of credit. * Reimbursing Bank : Reimbursing Bank is the bank authorized to honor the reimbursement claim in settlement of negotiation/acceptance/payment lodged with it by the negotiating bank. It is normally the bank with which issuing bank has an account from which payment has to be made. * Second Beneficiary : Second Beneficiary is the person who represents the first or original Beneficiary of credit in his absence.
In this case, the credits belonging to the original beneficiary is transferable. The rights of the transferee are subject to terms of transfer. 3. 1. 2 Types of Letter of Credit 1. Revocable Letter of Credit L/C A revocable letter of credit may be revoked or modified for any reason, at any time by the issuing bank without notification. It is rarely used in international trade and not considered satisfactory for the exporters but has an advantage over that of the importers and the issuing bank. There is no provision for confirming revocable credits as per terms of UCPDC, Hence they cannot be confirmed.
It should be indicated in LC that the credit is revocable. if there is no such indication the credit will be deemed as irrevocable. 2. Irrevocable Letter of Credit L/C In this case it is not possible to revoked or amended a credit without the agreement of the issuing bank, the confirming bank, and the beneficiary. Form an exporters point of view it is believed to be more beneficial. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made. . Confirmed Letter of Credit L/C Confirmed Letter of Credit is a special type of L/C in which another bank apart from the issuing bank has added its guarantee. Although, the cost of confirming by two banks makes it costlier, this type of L/C is more beneficial for the beneficiary as it doubles the guarantee. 4. Sight Credit and Usance Credit L/C Sight credit states that the payments would be made by the issuing bank at sight, on demand or on presentation. In case of usance credit, draft are drawn on the issuing bank or the correspondent bank at specified usance period.
The credit will indicate whether the usance draft are to be drawn on the issuing bank or in the case of confirmed credit on the confirming bank. 5. Back to Back Letter of Credit L/c Back to Back Letter of Credit is also termed as Countervailing Credit. A credit is known as backtoback credit when a L/c is opened with security of another L/c. A backtoback credit which can also be referred as credit and countercredit is actually a method of financing both sides of a transaction in which a middleman buys goods from one customer and sells them to another.
The parties to a BacktoBack Letter of Credit are: 1. The buyer and his bank as the issuer of the original Letter of Credit. 2. The seller/manufacturer and his bank, 3. The manufacturer’s subcontractor and his bank. The practical use of this Credit is seen when L/c is opened by the ultimate buyer in favour of a particular beneficiary, who may not be the actual supplier/ manufacturer offering the main credit with near identical terms in favour as security and will be able to obtain reimbursement by presenting the documents received under back to back credit under the main L/c.
The need for such credits arise mainly when : 1. The ultimate buyer not ready for a transferable credit 2. The Beneficiary do not want to disclose the source of supply to the openers. 3. The manufacturer demands on payment against documents for goods but the beneficiary of credit is short of the funds 6. Transferable Letter of Credit L/c A transferable documentary credit is a type of credit under which the first beneficiary which is usually a middleman may request the nominated bank to transfer credit in whole or in part to the second beneficiary.
The L/c does state clearly mentions the margins of the first beneficiary and unless it is specified the L/c cannot be treated as transferable. It can only be used when the company is selling the product of a third party and the proper care has to be taken about the exit policy for the money transactions that take place. This type of L/c is used in the companies that act as a middle man during the transaction but don’t have large limit. In the transferable L/c there is a right to substitute the invoice and the whole value can be transferred to a second beneficiary.
The first beneficiary or middleman has rights to change the following terms and conditions of the letter of credit: 1. Reduce the amount of the credit. 2. Reduce unit price if it is stated 3. Make shorter the expiry date of the letter of credit. 4. Make shorter the last date for presentation of documents. 5. Make shorter the period for shipment of goods. 6. Increase the amount of the cover or percentage for which insurance cover must be effected. 7. Substitute the name of the applicant (the middleman) for that of the first beneficiary (the buyer). 3. 1. 3 Forms of Letter of Credit
The documentary Credit Department is divided into different sections, which are as follows: Import L/C Export L/C Guarantee Import L/C: The Import Letter of Credit guarantees an exporter payment for goods or services, provided the terms of the letter of credit have been met. A bank issue an import letter of credit on the behalf of an importer or buyer under the following Circumstances * When a importer is importing goods within its own country. * When a trader is buying good from his own country and sell it to the another country for the purpose of merchandizing trade. When an exporter who is executing a contract outside his own country requires importing goods from a third country to the country where he is executing the contract. The bank of importer normally opens L/C not the exporter, hence it is known as import L/C. However the same import L/C is known as export L/C for the bank of exporter and exporter himself. Import Operations under L/C 1. Application receiving and forwarding section 2. Document receiving section 3. Document retirement section 4. Payment section 1. Application receiving and forwarding section This is the birthplace of import L/C Parties eligible to open L/C * Should be current account holder. * Should be eligible firm or company, and renewed up to date. * In case if individual, permission from NRB is required. * Documents required for processing L/C * L/C application duly signed by authorized person * Bi-BI-Ni form No. 4 (L/C estd for convertible foreign currency) * Perfo5rma invoice. * Copy update renewed income tax registered certificates. * Copy of company registration certificate. * Citizenship certificate/ Promissory note for non-limited holder clients and request for over limited clients. Partnership agreement/ Authorized letter if necessary under certain conditions. * Points to be noted in making L/C. * Does the NRB list the beneficiary black? * Can L/C be established for request item? * All bank charges outside Nepal are on account of applicant/ beneficiary. * Are signature and stamp verified? * Does the application, performa invoice contain all information required such as: Detailed of merchandise, pan no. of applicant, L/C issuing and expiry date, harmonic code no. , quantity, unit price, total value, Amount of L/C, Inco-terms (CIF, C&F, C&I, FOB etc). Transhipment- allowed or prohibited. * Mode of L/C transmission mail/ telex/ swift. 2. Document receiving section: Upon arrival of document first it6 is registered and then informed to the applicant by phone, fax or in any convenient mode in the same day and name of the person contacted, phone no. and date is clearly noted with mail conformation. Documents are thoroughly checked with L/C terms and condition. If discrepancies are found negotiating bank is informed by telex /swift immediately and applicant is also informed by phone or fax. As per article no. 4 of UCP if discrepancies are not informed to the negotiating bank/collecting bank within 7 days following the date of document receipt of document is accepted and opening bank is bound to remit the payment. 3. Document Retirement Section: After receiving the documents, if the documents are found perfect and or accept by the opener for discrepancies the bank receives payment from the party worth the document value with other requisite bank charges and commissions and retires the document to the opener. Payment can be made as such a ways: a.
Full payment i. e, by debiting the clients account for full value of the document. b. Trust receipt payment i. e, by available the client by short term credit for maximum of up to 120 days and up to 90% of the documents value. For Calcutta custom * Commercial invoice * Bill of lading (transport documents) * Certificate of origin * Packing list * Other documents as per L/C * L/c copy * Amendment copy, if any For Nepal custom * Commercial invoice * Transport documents * Certificate of origin * Insurance policy * Packing lists * Other documents as per L/C terms BiBiNi form No. 4 * L/C copy The bank for recording details of BiBiNi form no. 4 maintains customs wise separate register. The L/C transaction comes to an end only after the custom office returns back second copy of BiBiNi certifying that the goods have entered unto Nepal. In case of those parties whose BiBiNi is not returned to the bank within 120 days, they are reported to Nepal Rastra Bank. 4. Payment Section When the opener accepts the document then the bank sends payment as per instructions of the party does not retire documents within 7 working days.
On sight L/C the bank books BLC with the validity of monthly from the booked date. At the time of booking BLC and TR deal account cash margin and L/C liability is reserved. In case of partial shipment cash margin and L/C liability shall be reserved proportionally. Regular follow up is done for over dues BLC and TR loan by phone, fax and mail in order to regularize the party. A copy of follow up letter is kept in the respective file for record. Fees and Reimbursements The different charges/fees payable under import L/c is briefly as follows 1.
The issuing bank charges the applicant fees for opening the letter of credit. The fee charged depends on the credit of the applicant, and primarily comprises of : (a) Opening Charges This would comprise commitment charges and usance charged to be charged upfront for the period of the L/c. The fee charged by the L/c opening bank during the commitment period is referred to as commitment fees. Commitment period is the period from the opening of the letter of credit until the last date of negotiation of documents under the L/c or the expiry of the L/c, whichever is later.
Usance is the credit period agreed between the buyer and the seller under the letter of credit. This may vary from 7 days usance (sight) to 90/180 days. The fee charged by bank for the usance period is referred to as usance charges (b)Retirement Charges 1. This would be payable at the time of retirement of LCs. LC opening bank scrutinizes the bills under the LCs according to UCPDC guidelines , and levies charges based on value of goods. 2. The advising bank charges an advising fee to the beneficiary unless stated otherwise The fees could vary depending on the country of the beneficiary.
The advising bank charges may be eventually borne by the issuing bank or reimbursed from the applicant. 3. The applicant is bounded and liable to indemnify banks against all obligations and responsibilities imposed by foreign laws and usage. 4. The confirming bank’s fee depends on the credit of the issuing bank and would be borne by the beneficiary or the issuing bank (applicant eventually) depending on the terms of contract. 5. The reimbursing bank charges are to the account of the issuing bank. Risk Associated with Opening Imports L/cs
The basic risk associated with an issuing bank while opening an import L/c are : 1. The financial standing of the importer As the bank is responsible to pay the money on the behalf of the importer, thereby the bank should make sure that it has the proper funds to pay. 2. The goods Bankers need to do a detail analysis against the risks associated with perishability of the goods, possible obsolescence, import regulations packing and storage, etc. Price risk is the another crucial factor associated with all modes of international trade. 3. Exporter Risk
There is always the risk of exporting inferior quality goods. Banks need to be protective by finding out as much possible about the exporter using status report and other confidential information. 4. Country Risk These types of risks are mainly associated with the political and economic scenario of a country. To solve this issue, most banks have specialized unit which control the level of exposure that that the bank will assumes for each country. 5. Foreign exchange risk Foreign exchange risk is another most sensitive risk associated with the banks.
As the transaction is done in foreign currency, the traders depend a lot on exchange rate fluctuations. Export L/C Export Letter of Credit is issued in for a trader for his native country for the purchase of goods and services. Such letters of credit may be received for following purpose: 1. For physical export of goods and services from India to a Foreign Country. 2. For execution of projects outside India by Indian exporters by supply of goods and services from Indian or partly from India and partly from outside India. 3.
Towards deemed exports where there is no physical movements of goods from outside India But the supplies are being made to a project financed in foreign exchange by multilateral agencies, organization or project being executed in India with the aid of external agencies. 4. For sale of goods by Indian exporters with total procurement and supply from outside India. In all the above cases there would be earning of Foreign Exchange or conservation of Foreign Exchange. Banks in India associated themselves with the export letters of credit in various capacities such as advising bank, confirming bank, transferring bank and reimbursing bank.
In every cases the bank will be rendering services not only to the Issuing Bank as its agent correspondent bank but also to the exporter in advising and financing his export activity. 1. Advising an Export L/C The basic responsibility of an advising bank is to advise the credit received from its overseas branch after checking the apparent genuineness of the credit recognized by the issuing bank. It is also necessary for the advising bank to go through the letter of credit, try to understand the underlying transaction, terms and conditions of the credit and advice the beneficiary in the matter.
The main features of advising export LCs are: 1. There are no credit risks as the bank receives a onetime commission for the advising service. 2. There are no capital adequacy needs for the advising function. 2. Advising of Amendments to L/Cs Amendment of LCs is done for various reasons and it is necessary to fallow all the necessary the procedures outlined for advising. In the process of advising the amendments the Issuing bank serializes the amendment number and also ensures that no previous amendment is missing from the list. Only on receipt of satisfactory information/ clarification the amendment may be dvised. 3. Confirmation of Export Letters of Credit It constitutes a definite undertaking of the confirming bank, in addition to that of the issuing bank, which undertakes the sight payment, deferred payment, acceptance or negotiation. Banks in India have the facility of covering the credit confirmation risks with ECGC under their “Transfer Guarantee” scheme and include both the commercial and political risk involved. 4. Discounting/Negotiation of Export LCs When the exporter requires funds before due date then he can discount or negotiate the LCs with the negotiating bank.
Once the issuing bank nominates the negotiating bank, it can take the credit risk on the issuing bank or confirming bank. However, in such a situation, the negotiating bank bears the risk associated with the document that sometimes arises when the issuing bank discover discrepancies in the documents and refuses to honor its commitment on the due date. 5. Reimbursement of Export LCs Sometimes reimbursing bank, on the recommendation of issuing bank allows the negotiating bank to collect the money from the reimbursing bank once the goods have been shipped.
It is quite similar to a cheque facility provided by a bank. In return, the reimbursement bank earns a commission per transaction and enjoys float income without getting involve in the checking the transaction documents. Reimbursement bank play an important role in payment on the due date ( for usance LCs) or the days on which the negotiating bank demands the same (for sight LCs). Bank Guarantee Everest bank also have provided its client with guarantee service on the same department and facilitated the client with more effective and promising performance.
Guarantees are expressed commitment of the bank settle claim if any financial loss the beneficiary of the guarantee may sustained when party named in the guarantee whose behalf the guarantee is issued fails performed the contract. Although the bank issuing the guarantee is not called upon to pa immediately, the delegation is undertaken as per the rule. Guarantee is sustaining its own credit where its customer falls on demand the sum guaranteed is payable. The various types of the guarantee are as folloes: * Shipping indemnity * Bid bond * Advance payment guarantee * Performance bond
Before issuance of any types of guarantee, the specimen of the guarantee is thoroughly examined by the assigned person to as certain that is has no ambiguity. The amount and the expiry date of import L/C some document required for issuance of bank guarantee is as follows: * Individual or the company’s guarantee is required * A written request for the guarantee specifying the purpose amount period and the security offered. * Completely filled bank guarantee application form by authorized person. 3. 1. 4 Process of Letter of Credit Figure 4. 1 Work Process of the Letter of Credit.
The seller (known in the Letter of Credit as the “Beneficiary”) advises the buyer (known in the Letter of Credit as the “Applicant”) that the purchase order is acceptable. The Beneficiary also sends the Applicant a copy of their “Letter of Credit Guidelines” to ensure that the credit is opened properly and will not require any costly amendments. i. A Letter of Credit Application is completed by the Applicant and is submitted to their Bank (aka, the Opening Bank). ii. The Letter of Credit is issued and sent by the Opening Bank to an Advising Bank in the country of the Beneficiary.
The main role of an advising bank is to check the authenticity of the Letter of Credit before it is advised to the Beneficiary. iii. The Advising Bank then sends a copy of the Letter of Credit to the Beneficiary, either electronically, by fax, or by mail. iv. The Beneficiary must now carefully review the requirements of the Letter of Credit to ensure it has been issued per the agreed terms. The Beneficiary should make sure that they can comply with all stipulations, such as shipping terms, documentary requirements, shipping and/or expiration dates and packing and marking conditions. . If the Letter of Credit has terms that are not per the agreement, the Beneficiary should request an amendment to the Letter of Credit. This request is made directly to the Applicant, who then instructs the Opening Bank to amend the Letter of Credit. vi. Once the Letter of Credit is in order and the shipment is ready for export, the Beneficiary ships the goods to the freight forwarder. vii. The seller (or third party, such as LC Solutions) can now begin preparation of documentation required under the Letter of Credit terms. viii.
After goods have shipped, the transport document is acquired by the Beneficiary (or LC Solutions), is checked for accuracy, matched up with other created documentation, and presented to the Negotiating Bank. (The Negotiating Bank may or may not be the same as the Advising Bank, depending on the requirements of the Letter of Credit and the wishes of the Beneficiary. ) The Negotiating Bank checks over the documentation and advises any problems they may find with the paperwork. They then either issue payment to the Beneficiary, or forward the documents to the Opening Bank for payment, depending on the terms of the Letter of Credit. . 2 Activities Performed in Trade Finance Service Unit Letter of credit is the main task of TFSU. LC is a written assurance of bank (issuing bank) to the seller (beneficiary) on instructions from the buyer (applicant) to effect payment (i. e. , by making payment, or by accepting or negotiating bills of exchange) up to a stated sum of money provided that seller presents specified documents. Letter of Credit Department is responsible for handling the payment procedures of importers to exporters and also in order to facilitate the importers to carry out their business transaction effectively and efficiently.
Different activities carried out in letter of credit department are: 3. 2. 1 Registering the Document Documents are the main source for conducting any business transaction. This intern was responsible for registering the documents that was send by the exporter in the name of the importer. While registering the document the responsibilities given were as following: i. Serial number ii. Exporters name iii. Importers name iv. Harmonic code v. Letter of credit number vi. Total amount of the document vii. Name of the negotiating bank
Serial number should be written in the document as well that was received by the letter of credit issuing bank. 3. 2. 2 Checking the LC application form and other documents to be submitted Applicants need to submit the necessary documents in order to open the LC in the bank along with the LC application form. My responsibility was to check the documents presented by the applicant along with the LC application because the bank has been legally bound by the NRB so This intern was involved in checking the necessary documented that should be presented by the applicant.
The documents include: i. Letter of credit application form ii. Permanent Account Number Registration Certificate. iii. Company Registration Certificate. iv. Proforma Invoice. v. Bi Bi Ni form number. 3 vi. Citizenship Certificate 3. 2. 3 Checking the Documents Presented By Exporter In LC transaction when an importer want to make a business transaction by importing goods from the foreign country the importer can only receive the goods when the importer submits the necessary documents to the respective custom office which is send by the exporter.
Intern responsibility was to check the documents send by the exporter in order to confirm that the documents have been received as per the letter of credit in accordance with the check list provided by the bank and to check that the document includes all the basic information required such as letter of credit no, harmonic code, name of the applicant and letter of credit issuing date.. Documents include: i. Covering / Payment Instruction of Negotiating Bank ii. Commercial Invoice iii. Airway Bill/ Bill of Lading iv. Certificate of Origin v. Packing List vi.
Bills of Exchange vii. Insurance Policy (if insurance is done by the exporter). viii. Other documents as per the letter of credit term. 3. 2. 4 Notifying Discrepancies Discrepancies are the differences between what is to be done and what is actually done. Intern responsibility was to notify the discrepancies of the documents that was send by the exporter if the documents were not as per the letter of credit. This intern was responsible to notify the discrepancies very carefully after checking each and every document in accordance with letter of credit. 3. 2. Preparing BI BI NI 4 BI BI NI 4 is the main document required by the importer to discharge the goods from the customs office to their respective ports. My responsibility was to prepare the BI BI NI 4 to the respective custom office mentioning the importers name, description of goods to be received, total quantity of goods expressed in terms of barrels, cartoons and boxes, mentioning the harmonic code and the total amount of goods that are imported. Intern was assigned to o this task very carefully because even a slight mistake can make the importer suffer a lot. 3. 2. Issuing cheque to the respective custom office Cheques are issued to the respective custom offices for paying the necessary taxes to the respective customs for importing the goods from the foreign country. Intern was responsible for issuing the cheque to the respective custom office such that the importer can receive the goods after submitting the cheque to the concerned authorities of the custom office. Cheque and BI BI NI 4 has to be submitted together for receiving the goods from the custom office. The major custom points in Nepal from where the goods can be collected are: i.
Tribhuvan International Airport Custom (TIA custom) ii. Birgunj Custom iii. Dry Port Custom iv. Biratnagar Custom v. Bhairahawa Custom vi. Mechi Custom vii. Tatopani Custom 3. 2. 7 Filing Filing is a very important task in bank. Intern was responsible for filing the necessary documents of the respective importers and exporters letter of credit because all the documents are equally important in trade transaction. Intern was responsible for filing all the documents of the respective letter of credit very carefully and precisely. 3. 2. 8 Preparing the Document Required By the Importer
Documents play a major role for importer to obtain the goods from the custom office. Intern was responsible for preparing the documents required by the importer in order to discharge the goods from the respective custom office since without the complete documents an importer cannot discharge the goods from the custom. Importer needs a complete set of documents with signature of the legal authorities of the letter of credit issuing bank. Intern was responsible for preparing the following documents to the importer: i. BI BI NI 4 ii. A/C Payee cheque drawn in favour of respective custom office. iii.
Commercial Invoice iv. Bill of Lading/ Airway Bill (endorsed by the letter of credit issuing bank) v. Packing List vi. Certificate of Origin vii. Insurance policy (if insurance is done by the exporter) 3. 2. 9 Handling Telephone Calls Several customers call in the letter of credit department of a bank. Intern responsibility was to handle those calls and provide necessary information to the customers regarding letter of credit as per their request and in some cases Intern was also responsible for providing them various information as per their request regarding letter of credit and its terms. . 2. 10 Document Intimation While making entry of document the document intimation is made in order to inform that document was received on the particular date and copy of intimidation is send to branch opening the LC. 3. 3 Fitting in the Organization Structure Figure 4. 2 Hierarchy showing the organization structure 3. 3. 1 Responsibilities of Intern i. To reach bank on time at sharp 11 AM ii. To scan the account opening form iii. To verify the account opening form and legalizing by stamping iv. Filing the account opening form on the respective files. . Registering the document in inward register and also in dispatch register for outgoing documents. vi. Filling the cheque for respective custom and taking the signature of legalized person of bank. vii. Providing customer copy of document to customer’s of trade finance. viii. Transferring document to concerned branch by doing fax. ix. Providing the files demanded by Auditor x. Providing locker form to customer and finding the form on the basis of respected key xi. Intern was not allowed to give cheque slip without permission of concerned bodies. xii.
Intern was not allowed to use the system and confidential area of bank. 3. 4 Experiences in Internship i. Customer’s attitude decreases the efficiency of staff. ii. Staff being monotonous due to the repetition of work and over load of work. iii. Due to inefficient service of canteen, staff and intern have to spend lots of time for their lunch. iv. Due to limited staff in Trade Finance Service Unit, staff has to work more than office hour. v. Irritation for staff due to inefficiency of printer, fax and photocopy. vi. Intern has to face sometime negative reaction of customer and staff due to their bad mood. . 5 Problem Identified and Solved During internship program, although Everest bank limited is able to meet the changing need of customers. In spite, of that table some problems have been analyzed and best suitable measures have been taken to minimize the problem and solved them while working in customer service department and Trade Finance department. Following are some of the problems faced during internship and the problem are solved as below: 3. 5. 1 Communication Problem Different customers of different region came to bank for the services.
They are different in their attitude, learning, behavior, qualification, etc. So Intern has to deal differently which sometime create communication problem. Some customer does not have idea about how the forms are filling up and also the English language is creating problem to customer. To solve this problem as an intern they were clearly made understand about the terminologies used by translating in simple and understandable language, which help them to fill up the form correctly and within short period of time. 3. 5. 2 Grievances handling
If it is not handled properly, it directly affects the bank image; as a result customer is dissatisfied. They will stop transacting with the particular bank and switch to other bank which are eagerly waiting to provide them service. Grievances are the problem associated with bank faced by customers during their transaction period with bank and this result to make customer dissatisfied. In the trade finance department customer face difficulty in understanding the document. To solve this problem customer service department can play the important role, as this department is mainly in interaction with the customers.
In CSD and trade finance department the staff should interact properly to handle their problems. 3. 5. 3 Unsystematic Handling of Things Unsystematic management leads to failure. Unsystematic handling of thing is also a problem. It is not a big problem, but if it is not managed properly and timely it directly affects the efficiency of banking activities. To manage this problem things were managed in a systematic way, so they are readily available wherever and whenever needed creating a mark to efficiency. 3. 5. Hesitation of Customers It’s one of the problems faced by bank in recent time. During the documentation