What is Negotiable Instrument?

The term Negotiable Instrument literally means a written document which creates a legal right in favour of some person and which is freely transferable. In the words of Justice Willis, “a Negotiable Instrument is one, the property in which is acquired by any one who takes it bonafide and for value notwithstanding any defect in the title of the person from whom he took it”.

As per section 13 of the Negotiable Instrument Act, “ a negotiable instrument means a promissory note, bill of exchange or cheque, payable either to order or to bearer whether the words ‘order’ or bearer’ appear on the instrument or not”.

“When a Promissory note, Bill of Exchange or Cheque is transferred to any person so as to constitute that person the holder thereof, the instrument is said to be negotiated”. (NI Act 1881 – Section – 14)”.

Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to order or bearer (Section-13).

What is Mutual Fund?

A Mutual Fund can be defined as ‘a Collective Investment Scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities under strict professional management 

• Open end mutual fund 
• Closed-end mutual fund

What is capital market?

Capital Market: Capital market is a market in which long term securities like shares, debentures and other financial instruments are traded or exchanged. It is used mainly for chennelising savings of various sectors and common people in the productive uses, otherwise the savings of the people would have been diverted to unproductive channels. Thus the capital market accelerated the savings-investment process by providing the savers with an investment opportunity and the entrepreneurs with the capital required by them to finance their business operations. Capital market is a wide term used to comprise all operations in the new issues and stock market. New issues made by the companies constitute the prime market, while the existing securities relates to the secondary market. In Bangladesh, there are only two Security market. These are Dhaka Stock Exchange (DSE) established in 1954 and Chittagong Stock Exchange (CSE) established in 1995. Capital market again to types:

                                Primary market: It is the market for new issue securities. This is done through initial public offering (IPO) after obtaining permission from Security & Exchange Commission (SEC) and the involvement of intermediaries such as broker, merchant bankers and other financial institutions.

                                Secondary market: It is the market for trading existing securities after they have been created in the primary market. Shares, Bonds, Mutual funds are trading in DSE and CSE are called secondary market. It consists of the followings:

·         The public who are buyers and sellers of securities

·         Brokers (members of DSE and CSE)

·      The Stock exchanges where the trading takes place

What is money market?

Money market: Money market is a mechanism through which short term funds are loaned and borrowed and through which a large part of financial transactions of a particular country or of the world are cleared. A money market includes only dealings in more or less standardized types of investments/loans, such as, call investments/loans and in investment/credit instruments, such as acceptance of treasury bills. Money market is distinct from, but supplementary to the commercial banking system. It meets the short term requirements of borrowers and provides liquidity to the lenders. Normally money market deals with the transaction of maximum period of one year. The Central Bank occupies a strategic position in the money market.

What do you mean by KYC, CTR, STR?

KYC means Know Your Customer. It is a part of our account opening form printed by our Bank as per guidelines of Bangladesh Bank. It is compulsorily to be filled duly signed by all the deposit & investment clients. This part of account opening form contains the particulars, i.e. Name, Present address, Permanent address, business/service address, source of income, nature of business, Monthly/Yearly income, Telephone/Mobile no of present/permanent/business/service addresses, relationship with the introducer, expected amount & number of transaction in cash & other modes in a month etc. Bankers could segregate the accounts riskwise through KYC as per guidelines of Bangladesh Bank.

CTR means Cash Transaction Report. It is a monthly statement form introduced by Bangladesh Bank if Tk. Ten lac & above credited or debited by one or more vouchers in an account in a day, to submit the same to them by the branches through the Head Office of their Banks. This statement contains the date, Account no, name of the account, number of debit/credit vouchers of the day, amount credited/debited etc. This statement could generate by our computer. Anti Money Laundering unit of branches should observe the CTR statements whether any doubtful transactions are happened or not and they should put their comments upon the statement.

STR  means Suspicious Transaction Report. As per Bangladesh Bank Anti Money Laundering circular no.2 a quarterly statement designed by Bangladesh Bank to detect Money Laundering crimes. Branches of all Banks in Bangladesh prepare the statement at the end of the quarter which contains the full particulars of suspicious transacted account detected at the branch during the quarter. Head Office collect the statement from branches and submit a consolidated statement to Bangladesh Bank with their comments duly scrutinized/verified/inspected.

What are the major ways of Money Laundering?

The major three ways of money laundering: (i) Placement, (ii) Layering and (iii) Integration.

Placement: Illegally earned/acquired money or black money when placed/entered/deposited into a financial system is called placement.

Layering: Complicated/difficult transfer of illegal/black money which was placed/entered/deposited into financial system is called layering.

Integration: After successful completion of layering, uses of the illegally earned/acquired money or black money in a manner that it seems to be a legal money or white money. In this stage the owner of the money purchase movable/immovable properties

First Anti Money Laundering Act in Bangladesh and meaning

At first Anti Money Laundering Law was introduced in our country on 30.4.2002.

The meaning of ‘money laundering’ as per first Anti Money Laundering Act:

                        (K) A‰ea cš’vq cÖZ¨¶ ev c‡iv¶fv‡e AvnwiZ ev AwR©Z m¤ú`,

(L) ˆea ev A‰ea cš’vq cÖZ¨¶ ev c‡iv¶fv‡e AvnwiZ ev AwR©Z m¤ú‡`i A‰ea cš’vq n¯ZvšZi, iƒcv¯Zi, Ae¯’vb †MvcbKiY ev D³ Kv‡R mnvqZvKiY|

Important laws relating to banking in Bangladesh

• Bangladesh Bank Order – 1972
• Bangladesh Bank Nationalisation Order – 1972
• The Bank Company Act – 1991
• The Companies Act – 1994
• The Financial Institution Act – 1993
• The Negotiable Instrument Act – 1881
• The Contract Act – 1872
• Anti Money Laundering Act – 2009
• Artha Rin Adalat Ain – 2003
• Transfer of Property Act – 1882
• Guidelines for Foreign Exchange Transactions – 1996
• Service rule
• Bankruptcy Act-1997
• Convertibility of our Currency-1993
• Limitation Act-1908
• Civil law
• Criminal law
• Stamp Act-1998
• Import & Export Act-1950
• Import & Export Policy
• UCPDC- 600, URC-522, URR-725, INCOTERMS, URDG – 458 (ICC Publications)
• Manuals of General Banking, Investment, Foreign Exchange, Internal Control & Compliance, Money Laundering, Asset Liability Management, Core Risk Management.
• Anti-Terrorism Act-2009

Monetary policy applied by Bangladesh Bank to increase/decrease money supply

• Bank rate
• CRR & SLR
• OMO (Open Market Operation) of Government securities.

Functions of Central Bank (Bangladesh Bank)

• Note issue
• Enlistment of Banks
• Bankers’ Bank
• Governments’ Bank
• Clearing House maintenance
• Supervision of the country’s foreign currency
• Lender of last resort to Govt. & Banks
• Advisor to the Govt. on financial matter
• Supervisor of Banks & Financial Institutions
• Research & Statistics
• Formulation & Implementation of monetary policy
• CAMELS rating of Commercial banks.
• Supervision and training for implementation of AML and Anti Terrorism Acts
• Maintain the intrinsic value of Taka currency
• Work as safe-guard or parent of all banks
• Play a vital rule to develop/emphasis a specific sector as per policy of the government
• Control inflation and Interest/profit rate of all banks
• Help government to implement policy or strategy for economic development of the country 
• Submission of returns
• Audit & Inspection
• Appointment of MD/CEO
• Investment/Credit Control
• Discount rate policy
• Open market operations
• Monitoring of non-performing investment/loans
• Risk Management
• Foreign Exchange Regulation Act

Central Bank in Bangladesh (Bangladesh Bank)

With a view to manage the monetary and investment/credit system of Bangladesh to stabilizing domestic monetary value and maintaining a competitive external par value of the Bangladesh Taka towards fostering growth and development of country’s productive resources in the best national interest, the Government of Bangladesh made a law named as ‘The Bangladesh Bank Order, 1972’ (President’s Order no. 127 of 1972 dated 31.10.1972). As per Clause 3(1) of Bangladesh Bank Order, 1972. The name of the Central Bank of Bangladesh is called ‘Bangladesh Bank’ which shall be deemed to have taken effect on the 16th day of December, 1971.

Who is Banker?

“Banker means a person transacting the business of accepting, for the purpose of lending or investment, of deposit of money from the public, repayable on demand or otherwise and withdraw able by Cheque, Draft, Order or otherwise” 

(Section 3b, NI Act – 1881)

What is Bank?

Bank is a Government approved Financial Institution which collect/receive fund from  surplus unit, repayable on demand or otherwise and deploy to the deficit unit duly observed some rules & regulations.