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Bank of Credit and Commerce International 1972–1991

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    • BCCI the Bank
      • Beginnings
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        • Commercial Banking
        • Foreign Exchange and Fund Management
        • Correspondent Banking
        • Merchant Banking
        • Private Banking
        • Offshore Banking
        • Islamic Banking
        • Other activities and services
      • Business Development
      • Training courses and Seminars for others
      • Corporate gifting
      • Internal controls, procedures & audit
      • Banking Supervision
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  4. Banking operations and other services

Commercial banking

Commercial banks provide basic banking services and products to the public, both individual consumers and small to large businesses. Banks earn income from charging interest, service charges and fees, and profit-sharing.

Although the BCC Group of banks, subsidiaries and affiliates handled a large volume of wholesale business, the bulk of the BCC's activities involved retail, commercial banking operations, both domestic and international, in the countries in which a branch in the BCC network was located.

The wholesale banking undertaken by BCC was in the form of varied services provided to multinational corporations and Governments and central banks of various countries.

Managers of BCC branches having worked in other banks had long experience of retail and commercial banking and a thorough understanding of the retail and commercial trade. 

A particular strength of BCC was in the financing of foreign trade by means of both bills of exchange and documentary credits. BCC also provided commercial intelligence to exporters and contractors, particularly relating to business and project opportunities in the Third World countries in the Far East, South Asia, Middle East, Africa and South America.

BCCI Holdings (Luxembourg) SA - Annual Report & Accounts 1989

BCC was ahead of most other large banks in having mechanised all branches with NCR terminals that were capable of relaying information to the Management Services Division in Central Support Office (CSO) in London, United Kingdom.

BCC branches were computerised to provide modern and efficient services to account holders and provide management information for effective supervision and control of operations.

Centres like U.A.E. and U.K. which had a large number of branches, were equipped with an advanced computer system, and the branches are connected to a central computer on an on-line basis. Other centres used mini-computers.

In many countries the Bank was authorised by the Government to accept payments from customers for electricity, gas, telephone, etc. on behalf of the Government Departments.

Below is a general list of commercial banking services provided by BCC Group Banks:

Current Accounts, Savings Accounts and other types of Deposit Accounts 

Opening of bank accounts for individuals, businesses, associations, banks and institutions. This included further maintenance of all accounts, standing instructions and payment orders, collections, investment, and money transfers services. Following are some instruction  circulars issued by BCC:

  • Opening of Accounts: February 1973
  • Accounts of Minors: September 1978

 Accepting Deposits

BCC accepted deposits from savers and current account holders and terms deposits. Following are some instruction circulars issued by BCC:

  • SDR Deposits: February 1981
  • Repayment of US Dollar and Pound Sterling Term Deposits Before Maturity: May 1980
  • Term Deposits Accounts: 1974
  • Rates of Interest on Deposits: February 1973

Mobilising deposits

BCC was active in developing client relationships to mobilise funds from individuals, businesses, and other organisations and open their current, savings, fixed deposits and investment accounts with BCC. This involved special campaigns and was in addition to increasing deposits of existing account holders. Following are some instruction circulars issued by BCC:

  • BCC - Relationship and Participation Deposit Drive 1989
  • BCCI - Dollar Deposit Mobilisation Programme for 1985

Cash Withdrawals

BCC provided account holders with over-the-counter facility at branches to withdraw cash from their accounts.   

Cash Deposits

BCC provided account holders with over-the-counter facility at its branches to deposit cash in their accounts with the bank. 

Cheque Payments

BCC provided cheque books to the account holders who preferred to write cheques to make payment from monies held in their accounts with BCC. 

Following is an instruction circular issued by BCC on return of paid cheques of issued by customers:

  • Return of paid cheques to the account holders on their requests: May 1978

Cheque Deposits & Clearance

BCC accepted cheques and other financial instruments such as drafts and pay orders from account holders and arranged for their clearance for credit to the clients’ accounts with BCC. Following is an instruction circular issued by BCC:

  • Caution against Collecting Cheques for Large Amounts: October 1983

Advancing of Loans and Credit Facilities

BCC granted personal and business loans to clients, after considering the borrower’s credit standing, business profitability, nature and size of the business, collateral to secure the loan (if required), and ability to repay the loan with interest. Following are some instruction circulars issued by BCC:

  • Charging of Higher Interest Rates on Accounts having excess of Sanctioned/Drawing Limits: June 1981
  • Classification of Advances Granted by Branches: July 1978
  • Introduction of New Credit Line Proposal Form: April 1978
  • Sub-Booklet on Advances - Record Keeping, Control and Review of Procedures at Branch Level: April 1975
  • Interest on Loans and Advances and Overdrafts and All Types of Cash Credits: September 1974
  • Booklet on Advances - Record Keeping, Control and Review Procedure at Branch Level: August 1974
  • Documentation - Advances: July 1973
  • Approval and Renewal of Credit Lines and Term Facilities: February 1973 

Overdraft

Sometimes, BCC provided temporary overdraft facilities to its clients through which they were allowed to withdraw more than their deposits held with BCC to meet urgent needs. Interest was charged by BCC on the overdrawn amount. 

Foreign Trade & Trade Finance

BCC was in a unique position to handle and finance transactions involving exports to, and imports from, countries around the world.

Compared to other international banks, BCC had reportedly the largest large network of branches in the developing countries known as the Third World. With a presence also in the West, BCC often had the advantage in linking transactions of both importers and exporters, and persuading them to move their business and accounts to local branches of BCC.

Several financial services to attract foreign trade business generated substantial income for the BCC group, these are set out below.

Opening letters of credit (documentary credit): the letter of credit was a written undertaking given by BCC on behalf of its client (an importer of goods) to the exporter to pay an amount of money within a specified time-frame, once the exporter shipped the goods and complied with other terms and conditions set out in the letter of credit. The letter of credit addressed to the exporter and was advised through a BCC branch, or correspondent bank of BCC, in the exporter’s country.

The different types of letters of credit services performed by BCC included: 

  • Sight irrevocable letters of credit for import of goods and advising the document through the local BCC branch or branch of a BCC's correspondent bank in the exporter’s country providing for payment by the importer on receipt (sight) of valid documents after shipment of goods. The letter of credit could also be a sight revolving letter of credit allowing for multiple shipments of the same goods over a long period, between the same buyer (importer) and the seller (exporter), thus avoiding the need for the importer to open, and incur cost for, separate letters of credit for each shipment. 
  • Usance irrevocable letters of credit for import of goods and advising the document through a local BCC branch or branch of a BCC's correspondent bank in the exporter's country providing for payment by the importer after a specified number of days (the usance period) from date of receipt of valid documents after shipment of goods. The letter of credit could also be a revolving usance letter of credit covering multiple shipments of the same goods over a long period, between the same buyer (importer) and the seller (exporter), this avoided the need for the importer and cost to open separate letters of credit for each shipment. 
  • Adding confirmation to letters of credit opened by BCC branches or foreign correspondent banks of BCC where the BCC branch in the exporter's country guaranteed payment or acceptance to make payment on due date to the exporter after shipment the goods and presentation of valid documents to the BCC branch that added its confirmation to the document. 
  • Back-to-Back letters of credit, where the exporter acting as a middleman received a letter of credit opened by the bank of a foreign importer of goods and advised through a BCC branch. The two credits were put “back-to-back”, a new letter of credit was opened by BCC on the security of the original. BCC gained a reputation in this practice particularly in the UK in taking the risk to accommodate middlemen with small capital resources but had a good track record in such dealings. 
  • Transferable letters of credit where the benefit of the letter of credit received in favour of a middleman was simply transferred by BCC to the actual seller of the goods, avoiding the need for the middleman to open a back-to-back letter of credit. 
  • "Red Clause" letters of credit against which the BCC branch in the exporter's country made advance payments to the exporter on behalf of the importer before shipment of goods. The advance payment was to assist the exporter to obtain raw materials or finance the movement of goods to the ports of shipment. The amount was deducted from the final payment made to the exporter after the goods were shipped and documents specified were presented to the BCC branch. The bank opening the letter of credit for the importer was responsible for advance payments.

Following are ​some instruction circulars issued in respect of letters of credit, payment against documents, guarantee

  • Documents Received under Letters of Credit and Payment Against Documents (PAD) Account: February 1983
  • Revision of Procedure with regard to Payment Against Documents (PAD: December 1982
  • Letters of Credit issues in countries where BCC Group has no branches: April 1982
  • Caution needed in transactions under Letters of Credit: December 1978
  • Confirmation by Foreign Correspondents of Letters of Credit opened by BCC branches: December 1974
  • Contra Liabilities - Letters of Credit and Letters of Guarantees: December 1974
  • Payment Against Documents: November 1974

Discounting Bills of Exchange

BCC branches advising and adding confirmation to usance letters of credits in the exporter’s countries made payment immediately to the exporter by purchasing the accepted bill of exchange at a discount when an exporter did not wish to wait and receive payment on the due date. The bill of exchange was drawn by the exporter and accepted by the importer under usance Letters of Credit, agreeing to make payment to the exporter on due date (usually, 60 to 18o days after shipment of goods and presentation of valid documents). When the bill of exchange was due for payment, BCC obtained payment from the BCC branch or correspondent bank that opened the letter of credit.

Documentary Bills

BCC branches forwarded documents from their exporter clients to importers in another country evidencing goods shipped in trust without involving letters of credit and the long-standing relations between both parties. The documents were sent direct or through a BCC branch or correspondent bank in the importer’s country and the payment collected from the exporter on due date was remitted to the exporter.

Bank Guarantees

BCC branches issued ​guarantees in the form of bid-bonds, performance bonds, advance payment and retention money guarantees on behalf of civil engineering and other project contractors in a large competitive market ​that was growing in the developing countries where BCC had an active presence.

Remittance of Funds

BCC branches transferred monies on payment instructions of their clients from one place to another by money remittances, large money transfers or issuing bank drafts and pay orders which are both like bank cheques and given to the client to pass on. Remittances and money transfers also involved settlement of other financial transactions handled by the bank, such as making payments due from an importer in one country to the exporter in another country for supply of goods. Following are some instructions circulars issued by BCC:

  • Drawing of Foreign Currency Draft on Banks/Branches: October 1980
  • Demand Drafts Payable to the Bearer: July 1977

Also read: 

  • Banking operations and other services
  • BCCI the Bank
  • The Founder
  • Perspective
  • Beginnings
  • BCCI Group
  • Corporate Identity
  • Around the BCC World
  • Organisation Structure
  • Human Resources
  • Global Presence
  • Banking operations and other services
    • Commercial Banking
    • Foreign Exchange and Fund Management
    • Correspondent Banking
    • Merchant Banking
    • Private Banking
    • Offshore Banking
    • Islamic Banking
    • Other activities and services
  • Business Development
  • Training courses and Seminars for others
  • Corporate gifting
  • Internal controls, procedures & audit
  • Banking Supervision
  • Supporting Charitable Activities and Communities
  • Significant Events
  • Forced closure
  • Liquidation
  • BCCI legacy
  • BCCI documentary
  • The Founder
  • Perspective
  • Donate
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