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LC TRACKING SYSTEM OF HSBC BANK

Prepared By

Sami Aziz
ID # 0020200

Submitted To

Mr. Muzahid Akbar


Lecturer
School of Business

August 31, 2004


Independent University, Bangladesh
Acknowledgement

I would like to take this opportunity to express my sincere gratitude to those without their
blessings and cooperation this report would not have been possible.

First of all I am grateful to All Mighty Allah for finishing this report on time.

I would like to thank my supervisor of the internship program Mr. Muzahid Akber Lecturer,
School of Business, Independent University, Bangladesh for his guidance, constant and
spontaneous support, efficient supervision and constructive suggestions. Without his help this
report could not have been a comprehensive one.

I would also like to express my humble gratitude to my organizational supervisor, Mr. Tahsin
Ashraf, Assistant Officer, Corporate Banking, HSBC Bank. His guidance, advice and
cooperation allowed me to complete this report successfully.

Last but not least I also acknowledge my family and friends for their support and
encouragement through out my internship period and also while preparing this report.

i
Abstract

This research paper is based on the Systems analysis and design of the Letter of
Credit (LC) tracking system of HSBC Bank. This research paper aims to develop a web-
based information system, which will meet LC related enquiries of the bank clients as
well as the employees’ of the bank. To analyze and design of the proposed system, the
researcher has taken in-depth investigation to understand the current business processes
related to LC. After analyzing the current processes, the requirement specification of the
proposed system has been made. The researcher adopted systems approach methodology
which includes systems analysis, design and implementation for the information system
development. In the system analysis part data flow diagrams (DFDs) have been used to
understand the processes precisely. In the system design part entity relationship diagram
(ERD) is made to draw the conceptual and physical architecture of the system. The
researchers also adopted object oriented design methodology (OODM) in which unified
modeling language (UML) use-case diagrams and sequence diagram have been used.
The prototype of user interfaces has also been designed in the research paper.
Maintenance and further improvement of the information system will be based on the
organization and the end users’ requirements.

ii
Table of Contents

Serial No. Topics Page No.


Acknowledgement i
Abstract ii

Chapter 1: Introduction
1.0 Introduction 1
1.1 Background of the Project 1
1.2 Problem Justification 1
1.3 Purpose of the Project 2
1.4 Objective 2
1.5 Literature Review 3
1.5.1 Documentary Credit 3
1.5.2 Types of Letter of Credit 4
1.5.3 Parties to a Letter of Credit 5
1.5.4 Steps Involved in Import Procedures 5
1.6 Limitations 6
1.7 Significance 6
Chapter 2: Organizational Overview
2.0 History of the Organization 7
2.1 HSBC Bangladesh – A Brief Look 8
2.2 Management of HSBC Bangladesh 8
Chapter 3: Methodology
3.0 Methodology 11
3.1 System Analysis 11
3.2 System Design 12
3.3 Fact Finding Techniques 13
3.3.1 Interview 13
3.3.2 Record Review 13
3.3.3 Observation 14
Chapter 4: Systems Analysis
4.0 Systems Analysis 15
4.1 Information System 15
4.2 Components of the Information System (PPDSH) 17
4.2.1 People 17
4.2.2 Procedures 17
4.2.3 Data 17
4.2.4 Software 18
4.2.4.1 System Software 18
4.2.4.2 Application Software 18
4.2.5 Hardware 18
4.2.5.1 Computers 18
4.2.5.2 Printers 18
4.3 Requirement Analysis 18
4.3.1 Functional Requirements 18
4.3.1.1 Input 19
4.3.1.2 Processing 19
4.3.1.3 Output 19
4.3.1.4 Storage 20
4.3.1.5 Control 20
4.4 Function-Component Matrix 21
4.5 Current System Analysis 22
4.6 Feasibility Study 23
4.6.1 Technical Feasibility 24
4.6.2 Operational Feasibility 24
4.6.3 Economical Feasibility 24
Chapter 5: Process Modeling
5.0 Process Modeling: DFD Diagram 25
5.1 DFD Symbols 25
5.1.1 External Entity: 25
5.1.2 System process: 25
5.1.3 Data flow: 26
5.1.4 Data store: 26
5.2 Functional decomposition and leveled DFDs 26
5.3 Context level DFD 27
5.4 System Level Diagram 30
5.5 LC Opening Process (Level 1 Diagram) 32
5.6 Goods Shipment Process (Level 1 DFD) 34
5.7 Goods Payment Process (Level 1 DFD) 36
Chapter 6: Data Modeling
6.0 Logical Data Modeling - E-R Diagram 37
6.1 The concepts of Entity-Relationship Model 37
6.1.1 Entities 37
6.1.2 Relationship 38
6.1.2.1 Degree of a Relationship 38
6.1.2.2 Connectivity and Cardinality 40
6.1.3 Attributes 40
6.2 Physical Data Modeling: Data Dictionary 40
Chapter 7: Object Oriented Approach
7.0 An Object Oriented Approach 46
7.1 Use Case Diagrams 46
7.2 Graphical Notation 46
7.3 Use Case Analysis of LC Tracking System 48
7.3.1 Use Case # 1 49
7.3.2 Use Case # 2 50
7.3.3 Use Case # 3 51
7.3.4 Use Case # 4 51
7.3.5 Use Case # 5 52
7.4 Event Trace Diagram 52

Chapter 8: User Interface


8.0 User Interface 54
8.1 Output Report 59
Chapter 9: Conclusion & Recommendations
9.0 Conclusion 60
9.1 Recommendations 60
9.1.1 Systems Implementation 60
9.1.2 Systems Maintenance 61
9.1.3 Systems Up-Gradation 61

References 62
Appendix – LC Documents 63

List of Figures and Tables

Serial No. List of Figures Page No.

Figure 2.1 HSBC Management Hierarchy 10


Figure 3.1 Traditional (waterfall) system development methodology 11
Figure 4.1 Basic functions of a System 15
Figure 4.2 LC Tracking System as an Information System 16
Figure 4.3 Rich Picture of Current LC System 23
Figure 5 Gane and Sarson DFD Symbols 25
Figure 5.1 Context Level DFD 27
Figure 5.2 System Level DFD 29
Figure 5.3 LC Opening Process 31
Figure 5.4 Goods Shipment Process 33
Figure 5.5 Payment Process 35
Figure 6.1 Entity Relationship Diagram (Conceptual Diagram) 39
Figure 6.2 Entity Relationship Diagram (Physical Diagram) 41
Figure 7.1 Graphical Presentation of Use case 48
Figure 7.2 UML Event Trace Diagram 27
Figure 8.1 LC Information Module 55
Figure 8.2 Loan Information Module 56
Figure 8.3 Payment’s Information Module 56
Figure 8.4 Invoice Information Module 57
Figure 8.5 Importer’s Information Module 57
Figure 8.6 Goods Information Module 58
Figure 8.7 Exporter’s Information Module 58
Figure 8.8 Output Report 59
List of Tables
Table 4.1 Function-Component Matrix of LC tracking system 21
LC Tracking System of HSBC Bank 1

1.0 Introduction
Computer technology has had and will continue to have a considerable impact on the
way in which business is carried out. Furthermore, computer systems are now providing new
ways of working, rather than just automating existing processes. They are also providing new
ways of doing business with the outside world. The role of Information Systems (IS) in the
current business world is unimaginable. An information system performs functions to help
an organization meet its objectives (Dewitz, 1996). Information systems aid it’s users to take
fast, effective decisions in their daily business operations. A well built information system
can maximize the efficiency of any given task. The success of an information system
depends on how well the business processes have been analyzed and requirement
specifications have been chartered, and overall designing and implementation has been made
considering the user’s requirements.

1.1 Background of the Project


This project has been prepared for fulfilling the requirement of the internship program
(BBA 499A). Duration of the internship program was 12 weeks, commencing on June 1,
2004 and finishing on August 30, 2004. The project was assigned by the academic supervisor
Mr. Muzahid Akber (Lecturer, School of Business, Independent University, Bangladesh) and
was approved by the organization supervisor Mr. Tahsin Ashraf, (Relationship officer,
Corporate Banking, HSBC Bank).

Name of the Project: LC Tracking System of HSBC Bank

1.2 Problem Justification


When an applicant applies for LC he/she usually has to wait for the issuing bank to be
verified that the LC has been accepted. The applicant usually makes phone calls, or makes
frequent visits to the bank to satisfy his/her queries about the pending LC. In the current
system, the applicants for LC’s have to wait for the confirmation of the issuing bank if the LC
has been issued or not. The proposed LC tracking system will enable it’s user in web based
environment to find the LC related information such as - whether LC has been issued or not,
good supplied or not, location and description of the goods, date of arrival, information about
the seller etc. Such facilities will ensure the buyers to be assured about the trade and as well
as enable the bank serve better to its’ customers. Such information system will reduce the

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LC Tracking System of HSBC Bank 2

pressure of customer’s LC related queries; thus, will save a lot of valuable time for the
management and increase efficiency of the management in their respective job.

1.3 Purpose of the Project


HSBC bank currently manages all the LC related information manually. A manual
system usually consists of huge filings, which takes time in decision making. This automated
LC tracking system will assist it’s user to show the current LC positions, provide queries
related to LC’s, and store important information regarding different parties of the trade. The
successful implementation will help the management enormously in their everyday job at the
trade service department.

1.4 Objectives
The main objective of the project is to develop web based information system - hosted
by a web server, which will provide letter of credit (LC) information to the customers (LC
applicant’s) of the bank.

ƒ To develop a LC tracking system which will reside a web database consisting to all
the information related to LC’s.
ƒ It will also enable the users to view the current position of processing LC’s.
ƒ To materialize the project Traditional Systems Development (TSD) methodology will
be followed.
ƒ In TSD, preliminary investigation, systems analysis and systems design and
implementation methods will be utilized. Under systems analysis methodology
process modeling – data flow diagram (DFD), Data Modeling – entity relationship
diagram (ERD) will be used to draw the conceptual and physical architecture of the
information system.
ƒ To make the analysis more meaningful the researcher will follow object oriented
methodology (OOM) along with TSD methodology. The Front end interface (user
interface) of the information system will be designed with the Microsoft InfoPath.
The database is designed by MS Assess 2000.

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LC Tracking System of HSBC Bank 3

1.5 Literature Review


Banking institutions plays a vital role in international trade. International trade is an
exchange of goods between a buyer (importer) and a seller (exporter) for a pre-determined
price. All export and import are executed through banks. In HSBC bank the international
trade is handled by trade service department or briefly called as a pet name HTV (HSBC
Trade Services) through out the bank all over the world. In HSBC bank, letter of credit or
(LC) credit is called Documentary Credit or DC. In this literature review chapter or in the
following chapters DC will be used as a synonym of letter of credit or LC.
The following literature is relevant to this report as it helps to better understand the
different types of DC’s, parties involved and steps performed in imports.

1.5.1 Documentary Credit:


In simple terms; a Documentary Credit is a conditional bank undertaking given by
bank (issuing bank) at the request of a customer (applicant) or on its own behalf to pay a
seller (Beneficiary) against stipulated documents provided all the terms and conditions of the
Credit is complied with.

These stipulated documents are likely to include those required for commercial,
regulatory, insurance or transport purposes such as commercial invoice, certificate of origin,
insurance policy or certificate and a transport document of a type appropriate to the modes of
transport used.

Documentary credits offer both parties to a transaction; a degree of security,


combined with possibility, for creditworthy party of securing financial assistance more easily.

Documentary credit is therefore -

■ Are arrangements by banks for settling international commercial transactions.


■ Provide a form of security for the parties' involved.
■ Ensure payment provided that the terms and conditions of the credit have been
fulfilled.
■ Mean that payment by such means is based on documents only, and not on
merchandise or services involved

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LC Tracking System of HSBC Bank 4

1.5.2 Types of Letter of Credit:

Documentary credits according to Payment Methods:

a) Sight Credit:
When the payment terms stipulate the presentation of sight draft, the
beneficiary (the seller) receives the proceeds of the credit upon presentation and
examination of the documents. The negotiating bank after making payment to the
exporter sends the documents to issuing bank. After determining that the documents
are in order, the issuing bank delivers them to the buyer and at the same time debits
the buyer's account, which offsets reimbursements to the seller's bank.

b) Acceptance Credit/Term Credit (Credit with time drafts):


In case of acceptance credit the exporter draws a time draft either on the
issuing or confirming bank or on the buyer or on another bank depending upon the
credit terms. The payment date may be for example 90 days after the invoice date or
the date of transport documents. When the documents are presented the draft is
accepted instead of payment being made.

c) Deferred Payment Credit:


The credit with deferred payment differs slightly in its effect on the
beneficiary from the time draft. The main difference is the lack of a draft. Upon
presentation of the proper documents, the bank so authorized issues a written promise
to make payment on the due date. Term credits i.e. acceptance credits and deferred
payment credits are financing instruments for the buyer. During the payment period,
the buyer can often sell the goods and pay the credit amount with the proceeds.

d) Credit with Advance Payment:


Some letters of credit provide for advance payment of a portion of the credit
prior to compliance with all the credit provisions. The purpose of this advance is to
give the exporter, the fluids necessary to purchase or process merchandise especially
for the buyer. Two typical arrangements deserve mention.

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LC Tracking System of HSBC Bank 5

1.5.3 Parties to a Letter of Credit:


A letter of credit is a legal instrument, which binds all parties according to the terms
and conditions incorporated in the credit. There are four principal parties in a Letter of Credit:

a) The Importer/Buyer/Opener:
The purchaser of the goods is called importer. Once the buyer and the seller
have agreed to the sales transactions, it is the buyers' responsibility to initiate the
opening of the letter of credit.

b) Issuing Bank/Opening Bank:


The Bank, which at the request of his customer (importer) opens a Letter of
Credit is named as Issuing Bank. The Issuing Bank is the buyer's bank/opening bank
of the credit.

c) The Seller/Exporter/Beneficiary:
The supplier of the goods is called as seller or exporter or the beneficiary. The
seller after shipping the goods as per terms of the credit presents the documents to the
negotiating bank.

d) Advising Bank:
It is the correspondent bank, of the issuing bank of the credit, through which
the credit issued by the opening bank is advised at seller's country. Advising bank
may also be a negotiating bank.

e) Negotiating Bank:
The bank who negotiates/purchases/discounts the documents tendered by the
exporter as per terms of the credit is known as negotiating bank.

1.5.4 Steps Involved in Import Procedures:

1. Procurement of IRC from the concerned authority


2. Signing purchase contract with the seller.
3. Requesting the concerned bank (importer's bank to open an LC (irrevocable)
on behalf of the importer favoring the exporter/ seller/ beneficiary

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LC Tracking System of HSBC Bank 6

4. The issuing bank opens/ issues the LC in accordance with the instruction/
request of the importer and request another bank (advising bank) located in
seller's /exporter's country to advise the L'C to the beneficiary. The issuing
may also request the advising bank to confirm the credit, if necessary.
5. The advising bank advises/informs the seller that the LC has been issued.
6. As soon as the exporter/seller receives the LC and is satisfied that he can meet
LC terms and conditions, he is in a position to make shipment of the goods.
7. After making shipment of goods in favor of the importer the exporter/s
submits the documents to the negotiating bank for negotiation.
8. The negotiating bank scrutinizes the documents and if found o.k. Negotiate
documents and sends the said documents to the LC issuing bank
9. After receiving the documents the LC issuing bank also examines the
document and if found o.k. And makes payment to the negotiating bank.
10. The LC opening bank then requests the importer to receive the document
payments.

1.6 Limitations
This project scope is limited with some constraints. Time limit is not sufficient
enough to conduct a project of this kind. The security requirements for a standard database
are limited for this project as Microsoft Access 2000 is used for the proposed system. Due to
licensing constraint and financial feasibility reasons more powerful database packages like
Oracle or Microsoft SQL Server could not be considered.

1.7 Significance
If the proposed LC tracking system could be implemented successfully, it will
eradicate the huge manual filing system. It will enable the users- mostly customers (LC
applicants) to view their LC related queries, which will help management to assist in taking
fast decisions, satisfy queries regarding LC’s and overall bring pace in the trade services
provided by the bank.

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LC Tracking System of HSBC Bank 7

2.0 History of the Organization


The HSBC Asia Pacific group represents HSBC in Bangladesh. HSBC opened its first
branch in Dhaka in 17th December, 1996 to provide personal banking services, trade and
corporate services, and custody services. The Bank was awarded ISO9002 accreditation for
its personal and business banking services, which cover trade services, securities and safe
custody, corporate banking, Hexagon and all personal banking. This ISO9002 designation is
the first of its kind for a bank in Bangladesh.

Realizing the huge potential and growth in personal banking industry in Bangladesh,
HSBC extended its operation to the personal banking sector in Bangladesh and within a very
short span of time; it was able to build up a huge client base. Extending its operation further,
HSBC opened a branch at Chittagong, two branch offices at Dhaka (Gulshan and Mothijheel)
and an offshore banking unit on November, 1998. Another branch has been opened at
Dhanmondi on 1st of March, 2003. Till date, the number of employees of this bank in
Bangladesh was 180.

HSBC Bangladesh is under the strict of supervision of HSBC Asia Pacific Group,
Hong Kong. The Chief Executive Officer of HSBC Bangladesh manages the whole banking
operation of HSBC in Bangladesh. Under the CEO, there are heads of departments, who
manage specific banking functions e.g. Personal banking, corporate banking, etc.

Currently HSBC Bangladesh is providing a wide range of services both individual and
corporate level customers. In 2000, the bank launched a wide array of personal banking
products designed for all kinds of (middle and higher middle income group) customers. Some
such products were Personal loans, car loans, etc. Recently the bank launched three of its’
personal banking products – Personal Secured Credit, Personal secured loan & Automated
Tele Banking (ATB) service, Credit Cards, ATM, Day& Night Banking Service and Easy
Pay Machines. These products are designed to meet the diverse customer needs more
completely.

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LC Tracking System of HSBC Bank 8

2.1 HSBC Bangladesh – A Brief Look

Name of the Organization: The Hongkong and Shanghai Banking Corporation


Limited.
Year of Establishment: 1996
Head Office: Anchor Tower, 1/1-B, Sonargaon Road, Dhaka-1205
Bangladesh.
Mission: To become the No. 1 bank of Bangladesh within 2005
in terms of customer service.
Nature of the organization: Multinational Company with subsidiary group in
Bangladesh.
Capital: Asset- Tk. 4380 million
Deposit- Tk. 3985 million
Advance- Tk. 2755 million
Shareholder: HSBC group shareholder.
Products: Savings and deposit services.
Loan products.
Corporate and Institutional services.
Trade services.
Number of Offices: 5 (Dhaka, Motijheel, Gulshan, Dhanmondi &
Chittagong)
Number of ATMs: 10
Number of employees: 175
Technologies: Offers full online banking from branch to branch and
also from Dhaka to Chittagong.
Service Coverage &
Customers: Serves individual and corporate customers within
Dhaka & Chittagong.

2.2 Management of HSBC Bangladesh


HSBC, Bangladesh is one such company that has to overcome a lot of hurdles to
reach the position it now holds. At present, Mr. David Griffith is the CEO; Mr. Adil Islam is
the chief of Corporate Banking; Mr. Adnan Wahed is COO, Mr. Mamoon Mahmud Shah is

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LC Tracking System of HSBC Bank 9

the Chief of Personal Banking, and Mr. Syed Akhtar Hossain is the Human Resource
Manager at HSBC Bangladesh. These five men at the top carried out their management roles
exhaustively. They equally contributed to HSBC’s superior leadership, by carrying out their
unique roles. They worked well together, respecting each other’s abilities, & arguing openly
& without any rancour when they disagreed.

To maintain a close touch with the organization each man works in separate area of
HSBC’s complex. Their offices are indistinguishable from all other cubicles where HSBC’s
junior executives & secretaries work in. There are no office walls in HSBC and all the staff
starting from the CEO to the lower operating level employee shares the same premises under
one roof. There are no specialized cabins for top management and executives and also no
executive dining rooms. This has created a management team that is unified, cohesive &
energetic.

Each and every employee of HSBC takes pride of being an employee at HSBC and
his or her pride comes from the freedom of direct communication with the top management.
The management of HSBC is supportive in the sense that the top management deliberately
supports the suggestions, values, ideas, innovation and hard work of the employees and
officer. Again high amount of employee participation is encountered in the management
process. There are also systems for awards, incentives, and status for innovative ideas and
hard works. Again the management style can also be termed as Collegial as high amounts of
team work and participation exists between the top and bottom parts of HSBC. Thus
according to the researcher’s perspective management style at HSBC Bangladesh falls
somewhere between supportive and collegial.

HSBC follows a 4 (figure 2.1) layer management philosophy in Bangladesh. These


are Managers, Executives, officers & Assistant officers. The CEO is the top most authority of
all the levels. Managers are the departmental heads who are responsible for the activities of
their departments. They are the heads of the department and formulate strategies for that
department. e.g. Human Resources Manger. Executives have the authority next to managers.
They are basically responsible for certain activities & organizational functions. e.g. Admin
Executive. These two layers represent the management level of HSBC Bangladesh.
Officers are the next persons to stand in the hierarchy list. They are the typical mid-
level employees of HSBC organizational hierarchy. These officers are responsible for

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LC Tracking System of HSBC Bank 10

managing the operational activities and operating level employees. The operating level
employees of HSBC who are ranked as Assistant Officer fill the last layer of this hierarchy.
They perform day-to-day operational activities of HSBC. An organizational hierarchy chart is
shown below:

Figure 2.1: HSBC Management Hierarchy

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LC Tracking System of HSBC Bank 11

3.0 Methodology
A Methodology is a systematic description of the sequence of activities required to
solve a problem. It provides a collection of procedures, techniques, tools and documentations
aids which helps systems developers in their efforts to develop and implementation of the
proposed system (Wilkinson & Cerullo, 1996).

Figure 3.1: Traditional (waterfall) system development methodology

In this project Systems Approach Method has been used. The systems approach is a
problem-solving method that breaks a complex problem into pieces, designs a solution for
each piece, and then integrates the solution into a complete system (Dewitz, 1996). As
applied to information systems, the systems approach decomposes a system into subsystems
and with its environments. The systems approach recognizes two major activities: analysis
and design.

3.1 System Analysis


Systems analysis is the process of studying an existing system – whether manual or
automated – and its’ environment. The purposes of analysis are to understand the components
and functions of the current system, to identify the organization’s information and processing
needs, and to determine the characteristics of a new system to meet these needs (Dewitz,
1996). In the System Analysis phase, Preliminary Investigation, Problem Analysis (studying
the existing system), Requirement Analysis (identifying the information needs and what the
new system should perform) and Feasibility Study (determining whether the system is
feasible for the proposed system) will be performed.

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LC Tracking System of HSBC Bank 12

3.2 System Design


System design is the key phase within the system development cycle. It consist of
devising specifications for an information system (IS) that best fit a firm’s current and
expected circumstances (Wilkinson. J.W & Cerullo. M.J, 1997). The design may involve an
improvement to an existing IS or may pertain to the initial IS for a new firm.

Wilkinson and Cerullo, 1997 stated, systems design as, Reassembling the components
and functions of the IS to satisfy the organization’s information needs most effectively and
efficiently.

System design is based on process modeling and data modeling. In the process-
modeling phase, the Data Flow Diagrams (DFD) have been used to analyze the system.
Project DFD is based on Gene and Sarson’s (1979) method. In the data-modeling phase
Entity Relationship Diagram (ERD) has been utilized.

The researcher also followed objects structure and behavior analysis (OS&BA)
methodology. In this approach a system is decomposed into objects. This paradigm
emphasizes the things that comprise the system and how these things acts and interrelate
(Dewitz, 1996). The researcher used use case diagrams to analyze the current systems.

In this approach the business objects that comprise of the system are identified in
terms of its attributes, methods and relationship to other classes. This specification of object
class is the foundation of object-oriented systems development (OOSD) paradigm. The
researchers have used UML use case diagram to describe the system in some scenarios.
Event Trace diagram has also been used to show the dynamic relationships between objects.

These above mentioned two systems development paradigm adopt different


perspective to decompose a system. Traditional systems development (TSD) paradigm
adopts different perspective to decompose a system. TSD focuses on what the a system does,
that is, on the verbs that describes a system; OOSD focuses on what the system is made of,
that is, on the nouns that describe the system. Simply stated, TSD is concerned with functions
performed on data; OOSD is concerned with objects performing functions. Although one
paradigm seems to be the inverse of the other, they are similar in that both are concerned with
software and data. Whereas TSD separates the software and data components, OOSD

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LC Tracking System of HSBC Bank 13

combines data and software into a single construct, an object class. In a way they are
complementary of each other with an objective to analyze the system and designing it. As
the researcher’s goal is to build a L/C tracking system based on systems analysis and design,
both the systems development methodology has been used to make the analysis more
meaningful, accurate and efficient.

3.3 Fact Finding Techniques


In order to follow the process modeling, the following fact-finding techniques was
used to build the system. To collect all the other related information the following techniques
will be used.
- Interview,
- Record Review, and
- Observation.

3.3.1 Interview:
This is the most common method used in most system building to verify the new
system design and to gather facts about the procedure (Dewitz, 1996). As it was not possible
to interview all the members of the Trade department, and also not convenient; Informal
interview sessions with the manger and officers of trade services department were held to
gather information of the current work procedures of the manual system.

3.3.2 Record Review:


As part of the requirement analysis, some documents related to LC’s have been
reviewed. Typical reviewed documents includes LC application form, Import Registration
Certificate (IRC), Letter of credit authorization form (LCA), pro-forma invoice etc.

3.3.3 Observation:
As an intern of HSBC corporate department the researcher has used his academic
knowledge and managerial acumen to understand the current system (manual) in the system
development phase to build the new proposed system.

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LC Tracking System of HSBC Bank 15

4.0 Systems Analysis


Before moving to the broader horizon of systems analysis it is necessary to shed some
light about the core concepts of system and information systems.
Dewitz (1996) stated, a system is a set of interrelated components that work together
in a particular environment to perform whatever functions are required to achieve the
system’s objectives. Each of these components is very critical to the makeup of the system.
These components must be interrelated for the system to work properly. A system has three
basic functions:

Figure 4.1: Basic functions of a system

Input: Input involves capturing and assembling elements that are to be entered and processed
in the system.
Processing: Processing involves transformation process that converts inputs into outputs.
Output: Output involves transfer elements that have been produced by a transformation
process to their ultimate destination.

4.1 Information System


A system that accepts data from its environment (input) and manipulates the data
(processing) to produce information (output). An information system is a data processing
system that engages in collecting, processing, editing, storing, transmitting and supplying
data relating to a certain area of application.

The term information system is normally used in a narrower sense to refer to an


automated system; it then refers to the applications in combination with the IT infrastructure.
In a wider sense the information system includes all the procedures and resources in

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LC Tracking System of HSBC Bank 16

connection with the data of a certain area of application. A non-automated administrative


system is therefore an information system, too.

Taking as an example, (figure 4.2) LC tracking system – processing system, which


accepts inputs (shipment and delivery data) from its’ external environment – government
regulations, competitors and internal environment – end users, organizational polices and
processes this data to produce outputs (goods arrival date).

Government regulations International trade law

End Users Organizational policies

(Processing)

External System
Environment
(Input) LC Tracking (Output)
System Internal System
Shipping Goods
documents arrival date Environment

Standard Operating Procedure

Shippers Customers Competitors

Figure 4.2: LC Tracking System as an Information System

Information systems can be manual and automated. To analyze any information


system it is necessary to break down the system into functions and components. An
automated system performs the same functions as manual system but by means of
information technology. Thus, in an automated system, the information system components
include people, procedures, data, software, and hardware (Kroenke, 1992). The acronym
PPSDH is a shorthand method of indicating system component.

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4.2 Components of the Information System (PPDSH)


As mentioned earlier an information system is decomposed in the following
components. In the case of LC tracking system, the following components are attributed with
some specific functions.

4.2.1 People:
Users:
ƒ End-Users: End users use the system to perform their job activities (Dewitz, 1996).
Customers (buyers and sellers) of the trade service department are the end-users of this
system.

ƒ Administrator: Manager or Senior Assistant officers have administrative authority in the


system. He/she has the full authorization to view, edit, or to make manipulation of the
data of any kind. Only the administrator has the access to the system to make necessary
maintenance, make system backups for LC tracking system.

4.2.2 Procedures:
The procedure implemented in the system is not a very complex one. It is necessary to
have one-computer systems at the user’s premises. The user will be able to view information
regarding LC’s by logging on to the internet in the respected website which will host the
tracking system. The user can view his/her LC related information, make queries, track his
goods from the web enabled database. He can also generate reports based on the information
provided or on the queries.

4.2.3 Data:
Data is the core of any Information System. The LC tracking systems deals with a
variety of data. They enter and store most of the required information in the computerized
system. The purpose of this system is to keep record of all the LC information categorized on
buyer, seller, advising bank, negotiating bank, goods etc. All these data have to be entered
and stored correctly into the system. New data have to be continuously added while others
may have to be updated. Specific data have to be retrieved and used to generate reports.

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4.2.4 Software:
Two types of software are used to maintain the total information system.

4.2.4.1 System Software:


Proposed LC Tracking System can be run on Windows 98™, Windows 2000™ and
Windows XP™ environment. In case of project the system will be hosted in a windows
2000™ based operating system.

4.2.4.2 Application Software:


Microsoft Access 2003™ will be used to design and to host the database of the LC
Tracking System. Microsoft Infopath™ 2003 a form designing tool has been used to design
the user interface to ensure the connectivity with the database.

4.2.5 Hardware:

4.2.5.1Computers:
This software can run on any Intel Pentium III processor with 128 MB system
memory.

4.2.5.2 Printers:
Any computer printer - dot matrix, bubble jet or laser printer is able to produce
printed output for the system.

4.3 Requirement Analysis


Requirement Specification is an important component of the system development
process. It is an essential ingredient of the system analysis phase and its’ proper completion
ensures the success of the entire system. It is termed as the most important phase of the entire
system development process. It helps the System designer to a great extent in his/her progress
with the system development process.

4.3.1 Functional Requirements:


An automated information system functions include input, processing, output, storage,
control. The acronym IPOSC is a shorthand method of indicating system functions.

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4.3.1.1 Input:
Input functions describe the activities that must be performed to access data
processing (Dewitz, 1996). It is the capture of raw data from within the organization or from
its external environment. In the case of opening letter of credit (LC), Import Registration
Certificate (IRC), trade license, IMP form, Letter of Credit authorization (LCA) form, pro-
forma invoice, credit report of the importer, credit report of seller are used. Also in the case
of FOB, C& F (Clearing and Forwarding), insurance cover cote, proforma invoice etc. are
needed.

4.3.1.2 Processing:
Processing functions describe the ways that data are manipulated to perform business
functions and to produce information of value in management decision making (Dewitz,
1996). In case of LC processing the processes are:-
ƒ LC application and all required document are submitted to the bank by their clients.
ƒ Then bank verify each documents.
ƒ Generate the LC
ƒ Negotiate with the beneficiary/importer bank.

4.3.1.3 Output:
Output functions describe the activities required to generate business documents or
reports (Dewitz, 1996). The outputs of this system are the reports -
ƒ LC Confirmation number, confirmation date.
ƒ Goods Shipment Information (Goods description, Shipment date, Goods quantity,
Unit price, invoice value, arrival date).
ƒ Information about the exporter (name, address, contact information, registration
code).
ƒ Advising/Negotiating bank information.

The output documents are required for both the banks and also for the importer and
exporter. Typical output documents for the manual LC processing are:- Bill of exchange,
invoice, certificate of origin, packing list, quality control certificate.

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4.3.1.4 Storage:
Storage functions describe the activities required to maintain system data. Captured
data must be stored in computer or storage medium in an organized manner for subsequent
retrieval. As the current system (opening a LC) is not computer based, data are stored
manually in the register book. But transactional data are maintained by the computers.

4.3.1.5 Control:
Control functions describe the manual and automated activities performed.
1. To verify the validity and accuracy of input and outputs.
2. To ensure the integrity of stored data, and
3. Provide data security with controlled access to data and processing information.
In the current manual system data is stored in register books. Security measures for storing
confidential information are not very high in the manual system. Any body in the department
can have access to confidential information. This proposed system will check user
authentication by check user name and password of user before logging into the system.

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4.4 Function-Component Matrix: The table 4.1 shows the function and components
matrix, a useful technique for gaining preliminary overview of system functions and
components of LC tracking system. . It helps the analyst concisely describe a system and
provides a starting point for creating data flow diagrams.

Table 4.1: Function-Component Matrix of LC tracking system

People (users: seller, buyer. Administrator: Bank employee)


Input Processing Output Storage Control
People who People who People who people who perform people who
perform input perform manual perform output storage procedure: perform control
procedure: processing: seller procedures: users only administrator procedure:
administrator, has the privilege to administrator
user. cerate, update and
delete LC records
Procedure
search payment determine goods Give reports to user Not specified. Security
information, shipment, authorization as
search invoice determine loans user log on to
number, search amount, loans due webpage and as
exporter, search date administrator
goods shipment, log on to the
search goods system.
location
Data
LC information Data accessed Report: Invoice LC database, sorting, add,
during processing: report, Payment payment database, delete, merge
LC order quantity, report exporter master file,
invoice number, goods database,
shipment date. loan master file.
Software
User Interface Look up shipment Not specified. Microsoft Access System:
information, Look 2000 Windows 2000
up seller Professional,
information, Windows 98.
calculate shipment
date, trace the
shipment.
Hardware
Keyboard, Mouse Pentium III 600 Dot-Matrix, Inkjet, Hard Disk Drive Not specified
Mhz, 256 MB Laser Printer
memory

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4.5 Current System Analysis


Every organization has some procedures to do a job done. Procedures are sets of
instructions that tell people in the organization how to perform their jobs (Dewitz, 1996).
Figure 4.3 shows the rich picture of the current system. A rich picture is a pictorial
representation of a system. It is method describing the usage world by means of pictures
(Hawryszkiewycz, 1998). As an organization evolves, it develops standard operating
procedures (SOP) to guide it operations. These procedures may be formal or informal. The
formal procedures for opening a LC in the HSBC is as follows:-

Bank serves it LC application form-affixing stamp, which acts as the contract between
the importer and the opening bank. Then importer submits the LC application form duly
signed along with IMP form (undertaking of the importer) and LCA form (authorization for
opening LC). It is required to arrange margin from banker’s end. If LC is opened with 100%
margin then bank collects full value of LC.

After opening of the LC, issuing bank sends telex or through SWIFT message to the
advising bank located in the seller’s country to advice the LC to the beneficiary (seller). The
issuing bank may also request the advising bank to confirm the credit if necessary. The
advising bank advises/informs the seller that the LC has been issued. As soon as the
buyers/sellers receives the LC and is satisfied that the buyer can meet the LC’s terms and
conditions, then the seller is in a position to make shipment of the goods. After making
shipment of goods in favor of the importer the exporter or seller submits the documents to the
negotiating bank for negotiation. Negotiating bank scrutinizes the documents and if found
acceptable, negotiates the documents (pays the amount to the beneficiary) and sends the said
documents to the LC issuing bank. After receiving the documents, the LC issuing bank also
examines the documents and if found acceptable makes payment to the negotiating bank’s
account. LC opening bank request the importer to receive the documents on payment. The
importer after paying all dues receives the document from the LC issuing bank and then
releases the imported goods from the port authority with the help of clearing and forwarding
agent.

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Figure 4.3 Rich Picture of Current LC System

4.6 Feasibility Study


Feasibility study determines whether the solution is feasible or achievable given the
organization’s resources and constraints (Hawryszkiewycz, 1998). In order to complete this

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project successfully the researcher had to undergo a feasibility analysis. The researcher had to
stress on three types of feasibilities:-
4.6.1 Technical Feasibility:
Technical feasibility is an evolution to determine whether the technology needed for the
proposed system is available and how it can be integrated within the organization
(Hawryszkiewycz, 1998). It refers to whether the proposed solution can be implemented with
the available hardware, software and technical resources. The proposed system does not need
any high configuration computer hardware and software resources. The existing facility of
the bank equipped with Pentium III processors with 128 MB of memory and also windows
2000 operating systems can easily run the LC tracking system.

4.6.2 Operational Feasibility:


Operational feasibility is an evolution to determine whether the system is operationally
acceptable (Hawryszkiewycz, 1998). It covers two aspects. One is technical performance
aspects and the other is acceptance within the organization. Technical performance includes
issues such as determining whether the system can provide the right information for the
organization’s performance. As the project concerned, the design and implementation of the
project has been conducted such a manner so that it can provide the relevant information to
the management effectively and efficiently. Operational feasibility also deals with general
attitudes and skills required for the existing personnel to run the system (Hawryszkiewycz,
1998). As the project shifts the current manual process of storing LC information into an
automated one, the management is technically skilled to perform such tasks. A few training
sessions (two or three sessions) will hopefully be sufficient for the persons who will operate
the system.

4.6.3 Economical Feasibility:


This evolution looks at the financial aspects of the project. That is, it refers whether the
benefit of the proposed system out-weights its costs (Hawryszkiewycz, 1998). The project
does not require any financial investment. The existing technological facility is sufficient to
implement the project. From the bank’s point of view it is an economically feasible project
to execute.

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5.0 Process Modeling: DFD Diagram

A data flow diagram (DFD) models the sources and destinations of data (external
entities), the data inputs and data outputs (data flows), the actions that transforms inputs into
outputs (processes), and data maintained by an information systems (data stores). There are
two types of DFDs. A logical DFD models the processes that must be performed but gives
no identification of how they will be performed, that is, by what person or software module.
In contrast a physical DFD specifies the details of a system’s physical implementation,
including who performs and how (e.g. manually or using information technology). Thus, a
logical DFD describes logical functions whereas a physical DFD describes physical
functions.

5.1 DFD Symbols

Data flow diagrams use four basic symbols, as represented in figure 5. The figure shows
symbols developed by Gane and Sarson (1979).

Figure 5: Gane and Sarson DFD Symbols

5.1.1 External Entity:


An external entity is represented by a labeled square or rectangle. The name of
external entity (e.g) is indicated inside the rectangle. In a DFD, an external entity is any
person or agency outside the organization or any employee, system, or department outside the
system being studied; that is, an external entity maybe any entity that provides inputs to or
receives outputs from the system but does not perform any system processes.

5.1.2 System process:


A system process is represented by a rounded rectangle (Jane and Sarson, 1997). A
process is any activity – manual or automated – that transforms data. Logical DFD’s model

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both manual or automated processes, but they make no distinction between the two. Thus,
whether a process is performed by humans or computers is not an issue in creating a logical
DFD.

5.1.3 Data flow:


It is represented by an arrow. This symbol is labeled with a noun phrase describing
the data flow. Data flows represent inputs to and outputs from processes; they also represent
data written to or read from a data store. They are usually unidirectional, that is, they point in
one direction.

5.1.4 Data store:


A data store is any organized data store for future use by the organization. For
example, in a manual information system, a data store may be telephone book; customers file
folders, inventory-count sheets. In an automated information system, most data is stored in
magnetic or optical form on magnetic tape, magnetic disk, or optical disk.

5.2 Functional decomposition and leveled DFDs

Data flow diagrams are primary modeling technique of traditional systems


development because they support top-down analysis and functional decomposition.
Creating leveled DFDs – multiple DFDs in which each successive level presents a more
detailed view of a process – helps manage the complexity inherent in most systems and
creates a model that can be viewed at many levels of process detail. Functional
decomposition, as embodied in DFDs, begins with the highest level DFD, commonly called
context diagram, which consolidates all processes and data stores and all internal data flows
into a single process symbol representing the system. Thus, only the external entity and data
flows between the system and its external entities are shown.

A Level 0 DFD documents the major processes of a system, as shown in the figure
5.2. It is noticeable that, the major processes are assigned identification numbers stated as
whole numbers: 1, 2, 3, and so on. A 0 level DFD shows the parent processes, which may be
described in more detailed in a level 1 DFD, which shows the child processes of the 0 level
DFD. It is noticeable that, the level 1 processes are assigned process identification numbers
plus a sequential numbering of child processes.

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LC Tracking System

LC Confirmation
Requesting LC & payments
Importer/Buyer Exporter/Seller

Goods received payments received


LC Tracking
system
LC Documents & payments Payments
received

Exporter’s bank/ Importer’s bank/


advising bank Release Issuing bank
LC Documents & payments
forwarded documents

LC database

Figure 5.1: Context Level DFD

5.3 Context level DFD


Context level DFD (figure 5.1) shows the basic structure of the information flow.
There are four entities. They are Importer/Buyer, Exporter/Seller, Importer’s Bank/Issuing
Bank and Exporter bank/ Advising Bank. These four entities are working under one process,
it is LC tracking process. There is also a database called LC database. The information
generated by this process is stored in this database. At first Importer request his Issuing Bank
to open a LC, when issuing bank accept his request and open LC then importer gives all
necessary paper and documents to the issuing bank with some terms and condition. After that

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issuing bank sends these documents to the exporter bank. Finally exporter bank contacts with
the exporter for negotiate. After negotiation exporter ships the goods and release the
necessary documents and send payments advice to his bank (Exporter bank). Then exporter
bank inform the issuing bank that to pay and release their documents. Issuing bank inform to
the importer for payment and to take the document. Importer gives the payment instruction to
his issuing bank, then issuing bank sends the payment to the exporter’s bank and exporter
bank gives the payment to the exporter. The exporter’s bank releases the documents to the
issuing bank. After the importer makes payment in favor of issuing bank, the issuing bank
releases the documents to importer.

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5.4 System Level Diagram


In this level, there are four entities, three process and two databases. These are –

Entities
1. Importer.
2. Exporter.
3. Issuing Bank.
4. Exporter’s Bank.
Process
1. LC Opening Process
2. Goods Shipments Process
3. Payments Process.
Databases
1. LC Database
2. Shipment Database

At first importer applies for opening a LC and submit all the necessary documents to
the issuing bank. If the document meets the criteria, issuing bank accept the importer’s
application and open a LC. The issuing bank keeps all the LC information in their LC
database and contact with the Exporter bank and send LC papers. Exporter’s bank receives
the documents and informs the exporter. Exporter Release documents, advice copy to his
advising bank and ship the goods. Exporter bank sends the documents to the issuing bank.
Then issuing bank informs the importer about the documents. Then importer gives payment
instruction to the issuing bank. Issuing bank sends the payment to the Exporter bank and
exporter bank gives the payments to the exporter.

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5.5 LC Opening Process (Level 1 Diagram)


There are four external entities:-
1. Importer.
2. Exporter
3. Issuing Bank
4. Exporter’s Bank
Four processes
1. Documents verification process
2. Margin Arranging process
3. LC Advising Process
4. Report generation process
Two databases
1. LC database
2. Client’s database

Importer gives LC documents to the issuing bank, after verification, LC confirmation


is given to the importer. After verification process, LC information moves to the margin
arranging process. After that exporter’s bank send the documents to the exporter for advising
and the exporter confirms the LC. The overall LC opening process should generate a report
at the end of preceding processes. This report confirms the both importer and exporter about
the LC.

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5.6 Goods Shipment Process (Level 1 DFD)


There are three entities:
1. Exporter’s bank
2. Importer’s bank
3. Importer
4. Exporter

Four processes:
1. LC verification process
2. Goods verification process (against shipment information)
3. Goods verification process (against LC quantity)
4. Report generation process

Two databases:
1. Shipment Database
2. LC Database

The advising bank first verifies whether the LC documents are in order. When the
verification is completed, the advising bank (exporter’s bank) requests the exporter to make
goods shipment favoring the importer. In the process of shipment, goods are verified against
shipment information and also against the LC quantity mentioned in the LC. Goods shipment
confirmation is than sent to the issuing bank. A shipment confirmation report is generated for
the importer to ensure the shipment of goods.

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5.7 Goods Payment Process (Level 1 DFD)

There are three entities:


1. Exporter’s bank
2. Importer’s bank
3. Importer

Four processes:
1. Negotiation process
2. Initiate payment process (exporter’s bank)
3. Payments to exporter
4. Report generation process

Two databases:
1. Payment Database
2. LC Database

This process initiates with the importer’s request to make payment in favor of
the exporter. The importer’s bank request exporter’s bank to release shipping documents
and makes payment favoring exporters’ bank. After receiving the shipping documents
the issuing bank asks importer to reimburse the loan given to the importer for the LC.
The importer pays his bank and takes possession of the shipping documents to release the
goods from the port.

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6.0 Logical Data Modeling - E-R Diagram

An important aspect of every business is record keeping. In our information society,


this has become an important aspect of business, and much of the world's computing power is
dedicated to maintaining and using databases. Databases of all kinds pervade almost every
business. All kinds of data, from emails and contact information to financial data and records
of sales, are stored in some form of a database.

The logical data design technique most commonly used in traditional systems
development is the entity-relationship (E-R) diagram. This diagram uses a number of
notational conventions to model the relationship among the entities of organizations. Thus
data modeling technique is based on relational database concepts.

The entity-relationship (E-R) model is a high level conceptual data model developed
by Chen (1976) to facilitate database design. A conceptual data model is a set of concepts
that describe the structure of the database and the associated retrieval of and update
transactions on the database. The main purpose of developing a high-level data model is to
support the user’s perception of the data, and to conceal the more technical aspects associated
with database design. Furthermore, a conceptual data model is independent of the particular
Database Management Systems (DBMS) and hardware platform that is used to implement the
database.

6.1 The concepts of Entity-Relationship Model

The basic concepts of the ER model include - Entity, Relationship, and Attributes.

6.1.1 Entities:

The basic concept of ER model is an entity or entity type, which represents a set of
‘objects’ in the ‘real world’ with some properties. An entity has an independent existence and
can be object with a physical (real) existence or an object with an conceptual (abstract)
existence. Many authors of have perceived entities in different ways – according to Bruc
(1992) an entity is any distinguishable person, place, thing, event, or concept, about which
information is kept. Chen (1976) noted entity as a thing which can be distinctly identified.
Entities are represented as rectangle in ER diagram. In this project such entities are:-
ƒ Importer,

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ƒ Exporter,
ƒ Importer’s bank
ƒ Exporter’s bank
ƒ Goods
ƒ LC

6.1.2 Relationship
Relationships are associations between entities. Typically, a relationship is indicated
by a verb connecting two or more entities. It is represented as diamond shaped.
For example:
ƒ Importer’s bank issues LC.
ƒ Importer gives payment instruction to Issuing bank
Relationships are classified by their degree, connectivity, cardinality, direction, type, and
existence. Not all modeling methodologies use all these classifications.

6.1.2.1 Degree of a Relationship


The degree of a relationship is the number of entities associated with the relationship.
The n-ary relationship is the general form for degree n. Special cases are the binary, and
ternary, where the degree is 2, and 3, respectively.
Binary relationships, the association between two entities is the most common type in the real
world. A ternary relationship involves three entities and is used when a binary relationship is
inadequate. Many modeling approaches recognize only binary relationships. Ternary or n-ary
relationships are decomposed into two or more binary relationships.

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6.1.2.2 Connectivity and Cardinality


The connectivity of a relationship describes the mapping of associated entity instances
in the relationship. The values of connectivity are "one" or "many". The cardinality of a
relationship is the actual number of related occurrences for each of the two entities. The basic
types of connectivity for relations are: one-to-one, one-to-many, and many-to-many. For this
particular project, only one-to-one, one-to-many relationship have been discussed as many-
to-many relationship is not present in the project ER diagram (figure 6.1).

A one-to-one (1:1) relationship is when at most one instance of an entity A is


associated with one instance of entity B. For example, "Importer receives goods”. For each
LC application there is only one consignment of goods received.

A one-to-many (1:M) relationships is when for one instance of entity A, there are zero, one,
or many instances of entity B, but for one instance of entity B, there is only one instance of
entity A. An example of a 1: M relationships is :-
ƒ One issuing bank provide loans to many applicants (figure 6.1)
ƒ One issuing bank issues many LC (figure 6.1)

6.1.3 Attributes
The particular properties of entities are called attributes. For example, an entity in this
project is Exporter. Exporter entity has some properties like Name, Address, Phone No., and
Fax No. etc (figure 6.2). The attributes of an entity hold values that describe each entity. The
values held by attributes represent the main part of the data stored in the database.

6.2 Physical Data Modeling: Data Dictionary


A dictionary serves as a reference or repository containing facts about the structure of
data elements employed in applications. The data dictionary enables users to access and
maintain the data stored in databases. The data dictionary shows the table name, data type,
field size, keys, constraint and functions of the tables.

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Table no: 01
Entity name: Importer
Table name: imp_info

Key
Field Name Type Size Null? Field Description
Type
Not
imp_no varchar2 10 PK importer’s identification no.
null
Not
imp_name char 20 importer’s name.
null
Not
imp_address varchar2 50 importer’s address.
null
imp_phone number 12 importer’s phone number.
imp_fax number 12 importer’s fax number.
imp_trade
varchar2 10 importer’s trade license number.
license_no
imp_contact- Not
char 20 importer’s contact person.
person null
Not
lc_no varchar2 10 FK LC number.
null

Table no: 02
Entity name: Exporter
Table name: exp_info

Key
Field Name Type Size Null? Field Description
Type
Not
exp_no varchar2 10 PK exporter’s identification no.
null
Not
exp_name char 20 exporter’s name.
null
Not
exp _address varchar2 50 exporter’s address.
null
exp _phone number 12 exporter’s phone number.
exp _fax number 12 exporter’s fax number.
exp_contact- Not
char 20 exporter’s contact person.
person null
exp_bank_na Not
char 20 exporter’s name of the bank.
me null
Not
bank_address varchar2 50 exporter’s bank address.
null
bank_phone number 12 exporter’s bank phone number.
bank_fax number 12 exporter’s bank fax number.
Not Hold’s exporter’s bank’s branch
bank_branch char 10
null name.
Not
lc_no varchar2 10 FK LC number.
null

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Table no: 03
Entity name: LC Information
Table name: lc_info

Key
Field Name Type Size Null? Field Description
Type
varchar Not
lc_no 10 PK LC identification number
2 null
lc_detail char 100 Detailed description about LC.
Types of LC: Deferred, Sight,
lc_type char 10
Term, Credit.
Not
app_date date Date of application of the LC.
null
Not
expiary_date date date of expiry of the LC.
null
place_of_expiary char 10 place of the expiry of the LC.
varchar Not
lc_reg_no 10 the LC registration number.
2 null
varchar Not
imp_no 10 IMP number.
2 null
varchar Not Letter of Credit authorization
lca_no 10
2 null number.
varchar Not
irc_no 10 IRC number.
2 null
varchar Not
shipping_period 10 shipping period.
2 null
source_of varchar Not the source of financing: cash,
10
_financing 2 null barter, loan, credit, others

Table no: 04
Entity name: Payment Information
Table name: pay_info

Key
Field Name Type Size Null? Field Description
Type
Not
pay_invo_no varchar2 10 PK payment’s invoice number.
null
Not
lc_no varchar2 10 FK LC number.
null
information about payment type:
pay_type char 20 sight payment, deferred payment,
acceptance, negotiation.
pay_amount number 10 payment amount.
Not
pay_amount_word char 20 payment amount in word.
null
currency_code char 50 Currency code US dollar = USD

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Table no: 05
Entity name: Loan Information
Table name: loan_info

Key
Field Name Type Size Null? Field Description
Type
Not
loan_no varchar2 10 PK loan number.
null
Not
loan_date date the date of taking loan.
null
loan_type char 20 the type of taking loan.
Not
loan_amount number 12 loan amount.
null
payment_by char 10 payment details.
Not
lc_no varchar2 10 FK LC number.
null

Table no: 06
Entity name: Goods Information
Table name: goods_info

Key
Field Name Type Size Null? Field Description
Type
Not
lc_no varchar2 10 PK LC number.
null
Not
imp_no varchar2 10 IMP number.
null
goods_detail char 100 details description about goods.
Not
quantity_of_goods varchar2 10 quantity of goods.
null
Not
country_of_origin char 10 the country of origin of goods.
null
Not
port_of_shipment char 10 name of the port of shipment.
null
name_of_ship/airline char 20 name of the ship or airlines.
the name of the port of
port_of_destination char 20
destination.

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Table no: 07
Entity name: Invoice
Table name: invoice_info

Key
Field Name Type Size Null? Field Description
Type
Not
invoice_no varchar2 10 PK invoice number.
null
Not
invoice_date date date of issuing the invoice.
null
Not
lc_no varchar2 10 FK LC number.
null
Not
invoice_amount number 10,2 invoice amount.
null
goods_detail char 100 details description about goods.
Not
quantity_of_goods varchar2 10 quantity of goods.
null

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7.0 An Object Oriented Approach


The Unified Modeling Language (UML) is a graphical language for visualizing,
specifying, constructing, and documenting the artifacts of a software-intensive system. UML
define symbols as objects and shows the interaction, relation and inheritance among objects.
UML has become a widely accepted standard for object oriented analysis. The UML offers a
standard way to write a system's blueprints, including conceptual things such as business
processes and system functions as well as concrete things such as programming language
statements, database schemas, and reusable software components.

7.1 Use Case Diagrams


Many object oriented analysis and design methodologies (Booch, 1994; Jacobson et
al., 1992; Taylor, 1995) have adopted the concept of a use case to analyze system data
structures and behaviors. A use case is a sequence of transactions in a system whose task is
to yield a result of measurable value to an individual actor of the system (Jacobson et al.
1995). More simply, a use case is an atomic sequence of activities that produces something
of value to an external entity or a user (Dewitz, 1996). Use Case diagrams identify the
functionality provided by the system (use cases), the users who interact with the system
(actors), and the association between the users and the functionality. Use Cases are used in
the analysis phase of software development to articulate the high-level requirements of the
system.
The primary goals of Use Case diagrams include: -
ƒ Providing a high-level view of what the system does
ƒ Identifying the users ("actors") of the system
ƒ Determining areas needing human-computer interfaces
Use Cases extend beyond pictorial diagrams. In fact, text-based use case descriptions
are often used to supplement diagrams, and explore use case functionality in more detail.

7.2 Graphical Notation


The basic components of Use Case diagrams are the Actor, the Use Case, and the
Association.

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Actor An Actor, as mentioned, is a user of the system, and is


depicted using a stick figure. The role of the user is
written beneath the icon. Actors are not limited to
humans. If a system communicates with another
application, and expects input or delivers output, then
that application can also be considered an actor.

Use Case A Use Case is functionality provided by the system,


typically described as verb+object (eg. Register Car,
Delete User). Use Cases are depicted with an ellipse.
The name of the use case is written within the ellipse.

Association Associations are used to link Actors with Use Cases,


and indicate that an Actor participates in the Use Case
in some form. Associations are depicted by a line
connecting the Actor and the Use Case.

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7.3 Use Case Analysis of LC Tracking System

Figure 7.1: Graphical Presentation of Use case

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The current LC process has been decomposed in the following use cases. Each use
case describes a unique process.
7.3.1 Use Case # 1
Use Case Name: Buyer and Seller sign sales contract.
Use Case Purpose: Describes process of initiating trade.
Actors: Buyer, Seller

Typical Course of Events:

1. Use case is initiated when a buyer selects a trader to buy stated amount of selected products.
2. The seller finds products offers that satisfy the request through the product, obtaining offer
volumes and prices and displays these offers to the buyer.
3. If the buyer is satisfied with seller offers, request him to arrange shipment of the said amount of
products.

Preconditions:
- Buyer desires to Buy product from the seller.
- Buyer agrees to sellers offer.

Alternative Courses of Actions:


- At step 2 if the buyer is not satisfied with sellers offer than seller makes another offer or the
buyer chooses another seller.

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7.3.2 Use Case # 2


Use Case Name: Buyer requests his bank to issue a LC in favor of Seller.
Use Case Purpose: Describes the process of opening a LC
Actors: Buyer, Issuing bank

Typical Course of Events:

1. Buyer fills up LC application form of his bank. Providing various information required in LC
application form.
2. Buyer fills up letter of credit authorization form(LCA) providing information like - name,
address, IRC number, renewal date, industry type, amount of LC, currency, description of
products.

3. The buyer fills up Form-IMP , to purchase foreign exchange for payment of imports.
Information provided for this form are : LCA, L/C registration number, description of goods, H.S
code, I.T.C No., quantity of good-units, invoice value in foreign currency(f.o.b/c&f), country of
origin, port of shipment, name of the carrier, date of shipment, intendors name and address,
intendor's registration no.
4. After providing all the required information bank verifies every single form to find any
discrepancies. If any discrepancy is found the form is returned to the buyer and advised to make
adjustments.
5. After verifying the documents the issuing bank opens a LC for the buyer and send the LC to a
branch/correspondent bank in the seller's country(advising bank) through mail, courier or by
using Telex, Speedlink, SWIFT.

Preconditions:
Buyers credit reports accepted for the bank.

Alternative Courses of Actions


At step 4 if any discrepancies found the bank ask the buyer to resolve the issue.

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7.3.3 Use Case # 3


Use Case Name: Advising bank authenticates and advices the LC to Seller.
Use Case Purpose: Describes the process of advising the LC to the Seller.
Actors: Advising bank, Seller.

Typical Course of Events:

1. This use case is initiated when the advising bank(seller's bank) receives the LC through mail,
courier, or by using Telex, Speedlink,SWIFT.
2. The advising bank the authenticity of the LC -

a) Signatures of Issuing Bank officials on the LC verified with the specimen signatures book of
the said bank when LC received by airmail.
b) If the LC is intended to be an operative cable LC(SWIFT, Telex, Speedlink), test code on
the LC invariably be agreed and authenticated by two authorized officers.
c) LC scrutinized thoroughly complying with the requisites of concerned provisions.
d) Entry made in the LC advising register.
e) LC advising charges recovered.
3. After advising bank checks the authenticity of the LC, forwards the LC to the seller.
4. The seller receives the LC and initiates the shipment of the good.

Preconditions:
- Issuing bank opened a LC in favor of seller
- Issuing bank sent the LC to advising bank
Alternative Courses of Actions:
- At step 2(a-e) if any error or discrepancy found the LC is sent again.
- At step 3 if seller disagrees to any clause of the LC the LC is amended.

7.3.4 Use Case # 4


Use Case Name: Seller ships the goods
Use Case Purpose: Describes the process of goods shipment to the carrier.
Actors: Seller

Typical Course of Events:

1. The use case is initiated after the seller is advised about the LC.
2. The goods are insured to cover the risk of any damages of the goods.
3. Before the goods are shipped it is inspected by the custom authority to ensure the certain quality
standards.
4. The seller prepares bills of lading which ensures that the goods have been shipped on board.
5. At the time of the shipment it is ensured that goods are uploaded on the carrier against the terms
of the LC.
6. The shipment process generates the following documents:- certificate of origin, commercial
invoice, Bill of exchange, insurance policy, packing list.

Preconditions:
- Seller agrees with terms and conditions provided in LC.

Alternative Courses of Actions:


- At step 3 if any discrepancy found with the quantity or quantity of the goods, the shipment is
cancelled.

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7.3.5 Use Case # 5


Use Case Name: The buyer makes payment
Use Case Purpose: Describes process of payments
Actors: Buyer

Typical Course of Events:

1. Seller presents documents to the negotiating bank for negotiation/payment/acceptance.


2. The negotiating bank checks documents and pays seller if documents are in order.
3. Negotiating bank sends documents to issuing bank.
4. Negotiating bank claims reimbursement from the issuing bank or from a bank specified in the LC.
5. The buyer makes payment to the issuing bank after the good arrives in the port.
6. Issuing bank delivers document to the buyer to have positions of the goods.

Preconditions:
- Seller has made the shipment of goods.

Alternative Courses of Actions


- Not specified.

7.4 Event Trace Diagram

Figure 7.2: UML Event Trace Diagram

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Event Trace Diagrams also known as scenario diagrams, or interaction diagram, form
a powerful tool when combined with Jacobson’s use cases. An event trace diagram shows
dynamic relationships among objects.

Here in the above figure (7.3) the main objects are shown in the rectangle boxes
above vertical lines. The horizontal arrows between the vertical lines define events in the use
case. These events usually result in the exchange of information between the objects. These
lines closely follow the sequence portrayed by the use case. Thus, the first line from seller to
buyer shows the interaction of sales contract. This is followed by the request of issuing LC
from the buyer to his bank. Buyers bank checks initial documents and issue LC in favor of
the seller and dispatches these to the seller’s bank. Seller’s bank examines these papers and
forward LC documents to the seller. This process is known as LC advising. When the seller
is satisfied with the documents, he initiates shipment of the goods and handover the shipping
documents to his bank. Seller’s bank pays the seller after receiving the shipping document.
The seller’s bank than send these documents to buyers bank. Buyer bank checks the
documents and pays to seller’s bank. The buyer’s bank acknowledges the buyer receipt of
shipping documents and advice the buyer to pay him and receive the documents. The buyer
pays his bank and takes possession of shipping documents to release the goods from the port.

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8.0 User Interface


An interface is the ‘tangent plane’ between man and computer (the user interface) or
the link between components (both software and hardware) in computer systems. Data are
exchanged in two directions via the interface.

There have to be proper standards concerning the way the data are exchanged via the
interface. This standardization concerns the functional meaning of the data, their physical
shape and the technology used for the interface. A proper standardization of the user interface
leads to the simplification of human/computer interaction and contributes a great deal to the
transparency for the user.

The following figures show the prototype design of the user interface of LC tracking
system.

The user interface of LC tracking system is divided into 7 modules.

1. Exporter’s Information module


2. Importer’s Information module
3. LC Details information module
4. Goods Information module
5. Loan information module
6. Invoice, and
7. Payment information module

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Figure 8.1: LC Information Module

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Figure 8.2: Loan Information Module

Figure 8.3: payment’s Information Module

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Figure 8.4: Invoice Information Module

Figure 8.5: Importer’s Information Module

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Figure 8.6: Goods Information Module

Figure 8.7: Exporter’s Information Module

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8.1 Output Report

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9.0 Conclusion

The task of developing an information system based on the real world business
process is very crucial as the acceptability of the information system depends on the user’s
requirement and adaptability with the new system. The implementation of a new system is
subject to organizational change. Whether the organization accepts this change depends on
the successful implementation of the developed system and the organization prepared to take
such change. The researcher with his sincere effort has tried to analyze the business process,
understand accurate user requirements and designed the system to fulfill the user’s need.
This report is an effort to apply the theoretical knowledge in the practical field based on real
business scenario.

9.1 Recommendations

The recommendation of this research paper is based on three perspectives.

I. Systems Implementation,
II. Systems Maintenance, and
III. Systems Up gradation

9.1.1 Systems Implementation:


It is never possible to develop a system based on one single scratch. An information
system development is a matter of multiple phased efforts of the developers of the system.
The proposed system is currently in development phase. Which includes:-
ƒ System development (Module and integration testing).
ƒ System Testing.
Specifically the current project is at module and integration testing and system testing
stage. It is a parallel process with system development. In this stage the modules of the
system are created and tested by the developer. During integration testing groups of modules
are combined into test modules and tested together (Hawryszkiewycz, 1998). This is also
known as integration testing. The goal is to determine whether the interfaces between
modules work perfectly. Then the entire system will be tested. The entire system will be
tested by the end users (bank users). The use of proto typing tools can be employed to show
the users the functionality of the system. The end users will provide their suggestions, advice
for the improvement of the system. To increase the adaptability of the user to the system,
three or four training sessions are necessary to make the users acquaintance.

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LC Tracking System of HSBC Bank 61

9.1.2 Systems Maintenance:


Maintenance is necessary to eliminate errors in the system during its working life and
to tune the system to any variations in its working environment (Hawryszkiewycz, 1998).
The system maintenance will be based on the user’s suggestions. Moreover, the maintenance
of the web server will performed according to the organizations IT policy. System software
will be maintenanced by the IT department of the organization.

9.1.3 Systems Up-gradation:


Further improvement of the system can be performed according to the user’s
requirements. A web based LC related issues such as complaint, enquiry, suggestions can be
added as modules in the current modules of LC tracking system.

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References

Dewitz, S. 1996, Systems Analysis and Design and the Transition to Objects,
McGraw-Hill: New York.

Hawryszkiewycz, I. 1998, Introduction to Systems Analysis and Design, Prentice Hall


of India: New Delhi.

Wilkinson, W. J. 1997, Accounting Information Systems Essential Concepts and


Applications, John Wiley & Sons Inc.: New York.

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LC Tracking System of HSBC Bank 63

Appendix - LC Documents

Internship Report, Summer 2004

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