Agrani Bank Ltd: A Nationalized Commercial Bank
1.1 INTRODUCTION:
Millions of Bangladeshi nationals are employed in a variety of professions in reputed organizations all over the world. Their expertise and professional acumen have earned Bangladesh not only fame and prestige but also hard currency strengthening the backbone of our economy. Bangladeshi nationals living abroad are to remit their hard earned savings through banking channels, but not all of them are aware of friendly banking channels they may send their money through.
Agrani Bank Ltd. a leading commercial bank with 866 outlets strategically located in almost all the commercial areas throughout Bangladesh, overseas Exchange Houses and hundreds of overseas Correspondents, came into being in 1972 immediately after the emergence of Bangladesh as an independent state. It started functioning as nationalised commercial bank taking over assets and liabilities of the erstwhile Habib Bank ltd and the commerce Bank ltd., functioning in the former East Pakistan.
Agrani Bank Limited, having established contractual relationship with about 400 Overseas Correspondents and 30 Exchange Houses all over the world, is ready to cater to the banking needs of foreigners as well as Bangladeshis living abroad as far as incoming remittance is concerned.
To ensure quick remittance inflow into Bangladesh Agrani Bank Limited has also made Special Arrangement with Citi Bank N.A. Under the arrangement, Citi bank N.A. and its correspondents, subsidiaries and affiliates outside Bangladesh will collect remittances and will issue Drafts on designated branches of Agrani Bank Limited. Designated Agrani Bank Limited Branches shall honour /execute payments of all the Drafts instantly within the stipulated time of 72 hours.
With a view to serving a huge number of Bangladeshi guest workers in Singapore, Agrani Bank Limited has taken a bold step to open in Singapore Agrani Exchange House Pvt. Ltd, a subsidiary company fully owned by Agrani Bank Limited, which started its operation since 8th February, 2002.
Bangladesh government has put emphasis on increasing remittance inflow and is determined to deter money transfer through non-banking channels. Anyone involved in money laundering activity in any form like “Hoondi” business are sure to be awarded heavy punishment, if found guilty under “Money Laundering Prevention Act, 2002” passed recently by Bangladesh Government. We request all concerned, especially our Bangladeshi brothers and sisters, to send their money through banking channels and help Bangladesh develop with their hard earned foreign currency.
Agrani Bank Limited has been maintaining around 903 number of correspondent including Exchange Houses located in different parts of the world to facilitate our international trade and other transactions of trade and remittances globally. The expatiate Bangladesh who are working abroad, can easily take the opportunity to remit their hard earned foreign exchange to their respective beneficiaries utilizing our correspondent services.
The Bank is fully owned by the Government of the People Republic of Bangladesh. Agrani Bank Limited is governed by a Board of Directors consisting of 7(seven) members headed by a chairman. The Managing director (Chief Executive) heads the Bank; Deputy Managing Director and General Managers assist Managing Director. The bank has 7 Circle offices, 30 Divisions and a head office, 52 zonal offices and 866 branches including 10 corporate and 40 AD (authorised dealer) branches. The corporate and AD branches are authorised to deal in Foreign exchange business.
1.2 BACKGROUND INFORMATION:
1.2.1 Establishment and Status of the Bank:
Agrani Bank is a Nationalized Commercial Bank established by the Bangladesh Bank’s (Nationalization) Order 1972 (P.O. 26 of 1972) and is fully owned by the Government of the People’s Republic of Bangladesh. The Bank had 866 branches as on 31 December 2008 (no overseas branch). The bank also has two wholly owned subsidiary Companies named Agrani Exchange House (Pvt) Ltd. in Singapore and Agrani Remittance House SDN, BHD, Malaysia.
1.2.2 Nature of Business:
The principal activities of the Bank are providing all kinds of commercial banking services to its customers and the principal activities of its subsidiaries are to carry on the remittance business and to undertake and participate in any or all transactions, and operations commonly carried or undertaken by remittance and exchange houses.
1.2.3 Scope and objective:
The accounting policy comprises principles and basic assumptions, concepts, rules, practices,and procedures adopted by the management for reporting the activity of the Bank and financial statements preparation and presentation. The purpose of accounting policy is to provide the necessary organizational and methodological direction in carrying the accounting activity of the Bank.
1.3 ORGANOGRAM OF AGRANI BANK LTD.
1.4 GEOGRAPHICAL POSITION OF AGRANI BANK LTD. IN BANGLADESH:
1.5 EXISTING DIVITION OF AGRANI BANK LTD.
1.6 HILIGHTS ON THE OVERALL ACTIVITIES OF THE BANK FOR THE YEAR 2007 AND 2008:
Table-1: (Figure in Lac)
| SL
No |
Particulars | 2007 | 2008 |
| 1 | Paid up Capital | 24842 | 24800 |
| 2 | Total Capital/Equity | (153245) | 33400 |
| 3 | Capital surplus/deficit | (215529) | (325710) |
| 4 | Total assets | 1540803 | 1862803 |
| 5 | Total deposits | 1289207 | 1359213 |
| 6 | Total loans and advances | 1058692 | 1184938 |
| 7 | Total contingent liabilities and commitments | 664290 | 6796148 |
| 8 | Credit deposit ratio(%) | 82.12% | 26.8% |
| 9 | Percentage of classified loans againstTotal loans and advances | 26.27% | 8.82% |
| 10 | Profit after tax and provisions | 19398 | 85850 |
| 11 | Amount ofclassified loans | 278169 | 317888 |
| 12 | Provisions kept against classified loans | 120598 | 126917 |
| 13 | Provisions surplus/deficit | – | – |
| 14 | Cost of fund (%) | 6.84% | 6.68% |
| 15 | Average interest earning assets | 1307611 | 142633 |
| 16 | Non- interest earning assets | 233192 | 43647 |
| 17 | Income from investments | 15575 | 94992 |
| 18 | Return on investment(ROI) | 6.98% | 8.67% |
| 19 | Return on Assets(ROA) | 2.32% | 0.92% |
| 20 | Earnings per share | N/A | 34.56 |
2.1 GENERAL BANKING OF AGRANI BANK LTD.
General Banking department is considered as the direct customer service-centre. The clients and customers build their impression whether they are going for further dealings with the bank or not on the basis of their service. Moreover this is the first impression about the bank. So general banking section must be taken carefully.
2.2 FUNCTIONS:
General Banking department conducts different sorts of functions that ultimately affect the success of the whole bank. Functions that AGRANI BANK Limited, A. H. Road Branch performs are discussed below:
v Establishing Banker Customer relationship;
v Remitting customer’s money from one place to another;
v Collecting bills for customers;
v Taking deposit and honouring Cheque drawn over the A. H. Road Branch.
2.3 CONSTITUENTS OF GENERAL BANKING DEPARTMENT:
General Banking Department constitutes with the following sections:
- Account Opening Section
- Remittance Section
- Bills Section
- Clearing Section
- Cash & Computer Section
- FDR & BCD section
The functions of the different sections are discussed below:
2.4 ACCOUNT OPENING:
One of the vital sections under general Banking is the account opening section. Banker customer relationship begins through this section. Various tasks are performed in this section. Banking business is very much correlated with banker customer relationship. To be a customer one person must have some sort of accounts with the banker. Account Opening section establishes this relationship by opening new accounts. Vital thing to open any individual account also fill up the KYC (Know Your Customer) form and fill up the transaction profile to avoid or identify the black money protection or money laundering. It is ordered by Bangladesh Bank.
2.4.1 Opening of different types of account:
Agrani Bank Limited (AGRANI BANK) may open the following types of accounts and may receive the deposits in those accounts:
· Current Deposit;
· Savings Bank Deposit;
· Fixed Deposit;
· Short Term Deposit;
· Monthly Savings scheme.
· Agrani Bank Pension scheme ABPSP (5years, 10year)
All these type accounts are briefly described in the following:
2.4.2.Current Deposit Account:
A current account is an account that is generally opened by business people for their convenience. Money can be deposited and withdrawn at any time. It does not allow any interest on this account. Two important privileges customer can enjoy in a current account
a) Overdraft facility
b) Other facilities like collection of checks, transfer of money, rendering agency and general utility services. Current Deposit Accounts shall be opened with a minimum amount of Tk.1000.00. But under special circumstances it may be opened with Tk.500.00. It is payable on demand. No interest is paid in these types of accounts.
2.4.3 Savings Bank Account:
This deposit is intended primarily for small-scale savers. The main object of this account is promotion of thrift. Hence, there is restriction of withdrawals in a month.
Minimum amount of Tk.5000.00 is required for opening this type of account. The account may not be retained if the balance falls below Tk.200.00. Not more than one account shall be opened in one name. A depositor shall be allowed to withdraw per week up to 25% of the balance of his account. For calculation of interest the minimum balance at the credit of an account between the close of 8th in the beginning of the month should be taken into consideration.
2.4.4. Fixed Deposit Account:
A fixed deposit is one that is repayable after the expiry of a predetermined period fixed by the customer himself. The period varies from three month to three year and above. Fixed deposit accounts are opened for a fixed period varying from three months to three years or above and are payable at a fixed date of maturity. Interest on this deposit is paid at the rate fixed by H.O. from time to time depending on the period of maturity. Interest is payable only at the maturity of the deposit.
The following table shows different FDR rates:
Table-2: Different FDR rates
| PERIOD | FDR RATE (%) |
| From 3 months up to 6 months | 8.50% |
| From 6 months up to 1 year | 8.75% |
| From I year up to 2 year | 9.00% |
| From 2 year up to 5 year | 9.00% |
2.4.5 Short Term Deposit:
It is a deposit account open by customer where customer deposited money for short period. Customer can draw money after giving short notice. The deposits held in these accounts that should be payable on short time for 7 days or 21 days. The deposits may be accepted for period and rate of interest is fixed by H.O. from time to time. The STD interest rates in AGRANI BANK are 3%.
3.1 Agrani Bank Pension Scheme
It is one type of savings scheme where instalment payment should be deposited to the bank within first 10 days of each month. Monthly Savings Scheme in AGRANI BANK has been introduced replacing Deposit Pension Scheme since March 1995;lt can be opened for five or ten year’s maturity period for Tk.100.00 or Tk.500.00 monthly.
Table-3: Monthly Instalment of APS:
| MONTHLY INSTALLMENT | YEARS (5) | YEARS (10) |
| Tk.500 | Tk.35,100 | Tk.104000 |
| Tk.200 | Tk.14050 | Tk.41600 |
| Tk.100 | Tk.7000 | Tk.20800 |
Table-3: Monthly Instalment of ABS:
| MONTHLY INSTALLMENT | YEARS (5) | YEARS (10) |
| Tk.10,000 | Tk.7,16,250 | Tk.1813717.62 |
| Tk.5,000 | Tk.35,825 | Tk.9,06,858.81 |
| Tk.1,000 | Tk.71,625 | Tk.1,11,371.76 |
3.2 Nature of Accounts (Ownership Status):
In AGRANI BANK, A. H. Road Branch the following types of accounts may be opened:
1. Individual Accounts
2. Joint Accounts
3. Proprietorship Firm Accounts
4. Partnership Concerns Accounts
5. Private Limited Companies Account
6. Public Limited Companies Account
7. Accounts of Societies, Clubs, Association etc.
8. Trust Accounts
9. Accounts of Local Authorities
3.3 GENERAL PROCEDURES OF OPENING ACCOUNTS:
3.3.1 Current Deposit Account:
The procedures are needed to follow in case of opening a current deposit account is as follows:
Ø The account opening form of current account and specimen signature cards are supplied to the customers, which is filled and signed by them.
Ø In case of individual account, an account holder signs the AOF and SSC ‘in his individual capacity both under “Yours Faithfully- and “Specimen Signature”. In case of Partnership firms & Proprietary concerns it is to be signed by the persons/partners in their individual capacity under “Yours Faithfully” and in their official capacity under ‘Specimen Signature’ In other cases (Pvt. Ltd. Company, Public Ltd. Company) both the signatures must be in official capacity.
Ø A CD account holder of the bank shall introduce the account. An elite of the locality well known to the banker can introduce it. Official other than staff of AGRANI BANK can also introduce it.
Ø Clear instructions with regard to operations are noted in the AOF and SSC, especially III case of death or inability of any of the joint account holder.
Ø The officer in charge, Deposit Department, verifies the signature of the introducer. The stamp “Signature Verified” is affixed near the signature of the introducer & deposit officer signs over it.
Ø Approval of the branch in charge is obtained on the Account Opening Form.
Ø The signature of the account holder is admitted by the in charge of deposit department, and “Signature Admitted” stamp is affixed near the specimen signature of the account holder.
Ø Particulars of the account opening form is entered in the ‘Account Opened and Closed Register’ in serial order.
Ø The account number allotted to the new account is given on the AOF, SSC, and Cheque, Book requisition slip.
Ø The customer is supplied with Pay-in -slip Book (SF, -9) and requested to deposit the money with cash officer.
Ø Cheque is issued only after the Account Opening Form has been completed in all respects and initial cash deposit has been made. The chequebook series is noted in the Cheque requisition slip.
Ø Particulars of the Account Opening Form are entered in, the Reference Book under alphabetical order.
Ø The officer in charge initials the Account Opening Register and Reference Book. AOF, SSC und chequebooks Requisition Slip are sent to the ledger keeper for opening the account in the CD ledger.
Ø The title of account and other particulars are written in bold letters neatly on the ledger folio.
Ø The chequebooks series are entered in the cage provided for the ledger.
Ø The Opening of the account and the issue of cheque books in the ledger are authenticated by the manager deposit department by signing across the title of the account and in the cheque series cage.
Ø Accounting Opening form shall be posted in a file in serial orders. The specimen signature card shall be placed in the specimen signature card box in numerical order.
Ø Account Opening Form is posted in file in serial order.
Ø While issuing new chequebook, signature on the new chequebook requisition forms shall be properly verified.
3.3 .2 Savings Bank Accounts:
The procedures of opening Current Deposit Accounts are applicable for opening Savings Bank Accounts with the following exceptions:
Ø Separate Account Opened and Closed Register, Reference Book and Posting Files are maintained.
Ø Pay-in-slip Book No. SF-8 and Savings Book Ledger are used.
3.3.3 Fixed Deposit Accounts:
Account opening form (SF-16) and specimen signature card shall be given to the customer and get them filled in and signed by him. Voucher no SF-12 crediting “Fixed Deposit Account” with the amount of deposit with full narration viz. The name of the party, period of deposit, and rate of interest etc. shall be prepared and be given to the depositor to deposit cash with cash officer after recording the particulars in the scroll book. in case of payment by cheque it shall be attached to the credit voucher and sent to the deposit department for posting and cancellation. On receipt of the vouchers from the cash department a Fixed Deposit Receipt shall be prepared and entered in the Fixed Deposit Ledger. To admit the signature of the account holder the stamp ‘Signature Admitted’ shall be affixed near the specimen signature in the account opening form and specimen signature card.
The AOF, SSC, the ledger and the voucher shall be sent to the officer in charge for signature. The in charge shall sign the receipt and initial the ledger. At the time of signing the receipt, he shall verify the authenticity of the voucher.
Then the documents shall be sent to the Manager /Authorised Official for his signature on the receipt and across the stamp ‘Signature admitted’ on the account opening form, Specimen Signature Card, and the related voucher. The branch manager shall ensure that the printed number on the deposit receipt forms and in deposit receipt books in use are invariably noted in the respective ledger in advance.
At the close of each business day the officer in charge shall verify the total amount for which the Deposit receipt have been used during the day both from the credit vouchers and the counter foils of the various deposit receipts.
3.3.4 Consideration:
Bank should always consider the following matters while opening accounts for the limited company:
? Chairman, managing director or secretary duly attests that all documents.
? Consistency among all the papers submitted by company.
? Any change of existing director shall be informed to the bank with supported documents.
3.4 DOCUMENTS TO BE OBTAINED FOR DIFFERENT TYPES OF ACCOUNT:
When anyone comes to open an accounts he has to submit some documents to the banker. Different Types of document needs for different customer. Some common documents require for all types of account are:
a. Introduces recommendation.
b. Specimen signature card.
c. Account opening agreement form.
d. Two copies of Photograph of account holder and two copies for nominee (if any).
e. Deposit slips book.
f. Chequebook requisition slip.
g. Letter of mandate authorising another person to operate the account on behalf of the account holder.
h. Special instruction ” either or survivor” for joint account.
3.4.1 Proprietorship account:
Document require for Proprietorship business to open an account are:
ü Introducers with account number.
ü Valid trade license from Rajshahi City Corporation. Attested copy should be submitted.
ü Receipt of Tax revenue copy from Rajshahi City Corporation.
3.4.2 Partnership account:
Documents to be obtained for opening an account of partnership firm are:
ü Trades license or board resolution.
ü Deeds of partnership signed by all partners.
ü Signature of at least two witnesses.
ü Two copies photograph of each partner.
ü Partnership resolution signed by all partners to open account.
ü Resolution must indicate authorised person who operates the account.
3.4.3 Limited company account:
Documents require for Limited company to open an account are:
ü Memorandum and Articles of Association of company.
ü Power of attorney.
ü Resolution of board of directors.
ü Certificate of incorporation
ü Certificate of commencement of business (in case of public limited company).
ü List of directors
ü Two copies of passport size photograph of account operators.
ü Others: name of directors with signature, minutes of board of directors.
3.5 ISSUE OF CHEQUEBOOK TO CUSTOMERS:
3.5.1 Cheque book:
A cheque is a very important document. Cheque is an instrument in printed form containing an unconditional order, signed by the account holder directing a certain person signed by the account holder directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the barer of the instrument, A cheque is always supposed to be drawn against the funds in the party’s account in the bank. It may be crossed for safety
3.5.2 Types of Chequebook:
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Figure-4.1: Types of Cheques in a flow chart
3.5.3 Cheque book Issue:
To issue of chequebook to account holder (current and savings bank) is another major function of the account opening section. Chequebook is used for drawing money from account. After filling the application form and submit it with other documents customer gets a cheque issuing requisition slip. If customer fill it and submit to the banker than he will get a chequebook. It has been observed that for savings bank account holder bank is issuing a chequebook containing 10 leaves. For current account bank is issuing two types of chequebook. One type of cheque book containing 50 leaves and issued to customer which doing more transaction and other type of cheque book consisting with 25 leaves for the customer having less transaction with the bank.
Before using all the leaves of cheque book customer has to submit the requisition slip, which was kept at the last end of the chequebook with proper signature and address. On receiving the chequebook requisition slip bank issues new chequebook and record the cheque book serial number in the chequebook issue register with customer’s signature. It is seen that in issuing cheque book the concerned officer of the account opening section sealed the account number of the account holder and location of the branch on each leaves of the cheque book and finally hand over the cheque to the account holder.
3. 6 REMITTANCE SECTION:
The major function of commercial banks is mobilisation of fund. Other than this, banks provide ancillary services to its clients. Clients need to remit money from one place to another for their business or other purposes. Banks fulfil this need of customers by means of remittance service. Money can be transmitted domestically or internationally, which known as local remittance and foreign remittance. Transferring money within the country is known as local remittance and beyond the national boundary is known as foreign remittance.
3.7.1 Local Remittance:
There are three ways of transferring fund domestically. The modes of transferring funds are:
• Demand Draft. (D.D.)
• Telegraphic Transfer (T.T.)
• Mail Transfer
Now we shall discuss briefly about these instruments and their issuing procedure.
3.7.1 Demand Draft (DD):
Demand draft is an instrument which carry out the order of the issuing branch upon another branch of the same bank known as drawee branch for the payment of certain amount of money to the payee or to his order on demand by the beneficiary presenting the draft itself.
DD is a very much popular instrument for remitting money from one corner of a country to another. The instrument is basically used for transfer and payment. Difference between PO and DD is in terms of place only. PO is used for remitting money within the city where as DD is used for within the country.
3.7.2 Telegraphic Transfer (TT):
Telegraphic transfer is one of the fastest means of transferring money from one branch to another or from one place to another. Regarding the TT the branch is to be sure there is testing arrangement for authenticating the telex messages with the desired branch to make payment. No instrument is given for TT. Both parties should have account, as money is transferred. In Telegraphic Transfer (T.T.) the issuing branch sends a telegraphic message to the branch at the other end, to pay a certain amount of money to a named payee’s account maintained with the drawee branch or through a pay order if no account is maintained with the drawee branch. In AGRANI BANK, A. H. Road Branch the charge for telegraphic transfer is Tk.1.1 per thousand. Telegraphic charge is Tk.50. 15% VAT is charged on the commission amount that is transferred to the Government later on.
3.7.3 Procedure of Issuing T.T
Against cash:
a) The customer is asked to complete application form no SF-64, which also treated as credit voucher for Head Office accounts (branch concerned).
b) Other procedures is as follows:
i. Telegram charges are also recovered from the customer and are credited to Income Account Telegram Charges Recovered.
ii. A credit voucher is prepared for the amount.
iii. Test of telegram is written and handed over to the in charge.
iv. The test is checked, coded and tested by the In charge and the Manager v. The message is typed on form (SF-60) in duplicate.
vi. The telegram is checked and signed by the In charge and the Manager.
vii. Original Telegram and the confirmation are sent to the despatch department.
viii. Inter branch credit advice is prepared in duplicate. The original meant for Head Office is send to Accounts Department.
ix. Separate register (SF-S8-40) is maintained for Telegraphic Transfer Issued.
Against Cheque:
a) Commission Charges are calculated and inserted in the cage provided in the application form.
b) Party is advised to draw cheques favouring branch and deposit the same to the receiving cashier.
c) Cashier receives cheque and sent it to the Officer In Charge for passing and cancellation.
d) The following entries are passed.
i If the cheque includes commission charges:
Dr- Party’s Account
Cr. –H.O. A/c (Branch Concerned)
Cr- Income A/c Commission on T.T. (15% VAT on T.T.)
ii. If the cheque does not include commission charges:
Dr- party’s Account (cheque)
Cr- H.O. a/c branch concerned
Dr- Party’s A/c voucher (No SF-11A) with the amount of
Commission
Cr.- Income Account Commission on T.T.
e) Party is asked to fill up the application form (No SF-64) f) Telegraphic
Transfer is entered in the T.T. issued register.
g) T.T. number is written In the voucher and the Voucher along with the register is send to the In charge for Signature
h) Similar procedure is adopted as explained in Para (b) of TT against cash.
Against a letter of instruction:
The letter is sent to deposit department for verification of signature and then the following entries are passed:
Dr- Party’s Account (with T.T. commission and T.T. amount) Credit: H.O. account (Branch concerned)
Cr.- Income account commission on T.T.
Other things are similar to the T.T. against cash procedure.
3.7.4 Payment of Telegraphic Transfer
Receipt of Telegram:
a) Telegram is detected and test is verified by the In charge and the manager
b) If the test does bot agree or the telegram is received mutilated, a telegram is sent to the branch concerned asking them to repeat the test of the message with correct test.
c) If the test agrees, stamp (No.26) is affixed on the telegram and signed by the officers.
d) Following entries are passed:
Dr-H.O. general account (Branch Concerned)
Cr.-T.T. payable account
Dr-T.T. payable account
Cr.-Party’s Account
Advice to payee:
1) When the paying branch from the issuing branch receives T.T. Advice, the advice (IBCA) is posted in the T.T. register for response only without preparing any voucher.
2) If the amount is to be credited to the payee’s account, following entries are passed:
Dr-T.T. payable Account
Cr.- party’s account Date of payment is noted in the register and
Initialled.
3) If the T.T. is to be issued:
i . The receipt number is noted on the register
ii. The receipt along with the register is sent for checking and signature
Of the in charge
iii. After the signature of charge the receipt signed by the manager
iv. The receipt is send to the payee.
3.8 CASH:
Cash is one of the most important sections of General Banking Department. It deals with cash, the most liquid asset. The value of banking is insured for a certain some of money. When money exceeds the limit it must be sent to the Central bank vault. So Cash In charge should always be concerned about his custody. A Senior Officer heads cash section of General Banking Department of AGRANI BANK, A. Hamid Road Branch.
3.8.1. Functions of this Section:
- Receiving cash
- Paying cash
- Issuing vouchers
- Making Proper entries in the ledgers
3.8.2. Depositing:
Deposit may be done by cash, cheque or clearing. Clearing will be discussed later in this chapter. Procedure of deposit by cash:
1. Pay-in -slip or credit Voucher (Form no. SF-9) for CD accounts and Form no. SF-8 for SB accounts filled in by customers.
2. At first he goes to the Scroll Writer. The Scroll Writer verifying the particulars enters them into the Scroll Book under progressive serial and gives the serial number on it.
3. After getting the scroll do the customer goes to the Cash receipt counters and
submits it to the receiving cash officer. The officer checks the title of’ the account,its number, amounts in words and figures.
4. Receiving cash Officer receives cash duly counted and checked and enters the particulars in the Receiving cash-book and gives Initials on it.
5. After that the Receiving Cash Officer gives it to the Computer Operator (an
officer) for entering in the computer ledger. In this case party’s accounts credited.
- The computer operator then affixes the Cash received stamp on the credit voucher.
At the end of each day the total figure in the scroll book must be equal to the total figure in the Receiving cash book and computer deposit statement so that ii is balanced.
3.8.3 Withdrawals
Procedures of withdrawals of cash through cheques, DD, Pay Order are discussed below-
- At first the bearer of an instrument come to the Token Counter and submits his instrument to the assistant Token Officer. The Token Officer verifies the account number, date, title, branch name and signature. If these are correct he enters the particulars in the Token book and receives signature of the bearer on the opposite side of the instrument.
- He gives his signature and token no on the opposite side of the instrument and gives a Token to the customer
- He sends the instrument to the verifying officer for signature verification. If’ the signature is authentic the verifying officer sends it to the computer operator for making entries in the computer ledger. After entering the account number in the computer, the computer shows the particulars of the customer’s account including current balance. If there is available balance the computer operator debits the customer’s account and affixes “POSTED” and “PAY CASH” seal on the instrument and sign in the specified place on the instrument. He makes a print out of present balance of the customer’s account.
- Then he sends back the instrument and prints out of the present balance to the verifying officer and the verifying officer signs over it and sends to the cash counter for cash payment.
- Receiving the Token from the customer the paying cash officer pays cash to the customer and enters the amount to Cash Paying Register indicating the token number.
At the end of each day the amount in the Token Book must equal to the amount in the Paying Cash Register and Computer Withdrawal Statement.
3.8.4 Balancing Of Cash:
At the end of each business day the Receiving and Paying Cashier’s Book are balanced. After Cash Balance Book, is written the Cash Position Memo is prepared, checked and signed by the Cash Officer. The Cash Position Memo is sent to the Accounts Department.
3.9 BILLS SECTION:
Customers of AGRANI BANK, A. H. Road Branch submit many instruments in the bill section for collection. Bill section plays a vital role in collecting these bills. The bills submitted for collection can be divided into two categories, namely
1) Outward Bills; and
2) Inward Bills.
3.9.1 Outward Bills for Collection:
· The instruments are received duly entered in the Pay-in-slip.
· The instruments are checked for any apparent discrepancy and are compared with the particulars noted in the Pay-in-Slip and its counterfoil.
· The counterfoil is stamped and signed by the officer.
· The instruments and the Pay-in-Slip detached from the counterfoil, which is handed over to the customer.
· The instruments are stamped
· The instruments are suitable endorsed.
· The details of the instruments and special instructions are entered in the, Outward Bills Collection Register. And a collection number is allotted in serial order which is also noted on the on the instruments and the pay-in -slip.
· The instruments are enlisted in the forwarding schedule and any special instructions are noted therein.
· The instruments drawn on other banks are sent to the clearing section and instruments drawn on other branches of AGRANI BANK are sent direct to the branch concerned.
· Following entries are passed on contra voucher:
Dr- Outward Bills Lodged
Cr- Outward Bills For Collection.
· The instruments, schedules along with the schedule and voucher are sent to the in charge for checking and signatures.
· The instruments are attached with the forwarding schedule and are handed over to Despatch Department against acknowledgement on the office copy.
· The pay in slip is attached to the office copy of the schedule and filled in the “O.B.C. Outstanding File”
· The Voucher is sent to the accounts department
· In case the instrument drawn on other bank branch which is not covered by the clearing area of Bangladesh Bank forwarding letter are sent direct to that branch for collection and asked them to draw a pay order in favour of A. H. Road Branch on any of the other bank’s office situated in Dhaka.
3.9.2 Inward Bills for Collection:
- When instruments are received from our branches or other banks they are checked for any apparent discrepancy and are compared with the particulars in the schedule
- The instruments are stamped and the schedule is attempted.
- The instruments are suitably discharged,
- The details of the schedule and special instruction are entered in Inward bills for collection Register. IBC numbers in serial order are allotted and noted on the schedule and the instruments,
- The following entries are passed on the contra voucher:
- Dr- Bills Lodged
- Cr.- Inward Bills Collection
- The vouchers, schedules and instruments along with the register are sent to the In charge for checking and signatures
- The instrument along with the relative vouchers are sent to the clearing department
- The contra voucher is sent to the accounts department.
- The schedule is filled in the “IBC Outstanding File”.
3.9.3 Outward Bills for Collection:
- The account is balanced on fortnightly basis in the following manner:
- Jotting of Outstanding bills is taken from O.B.C. register on the balance book.
- The balance is agreed with the figures of Outward Bills for collection in the Subsidiary Ledger.
3.9.4 Inward Bills for Collection:
- The account is balanced on fortnightly basis, III the following manner:
- Jotting of outstanding bills is taken from O.B.C. register in the Balance Book.
- The balance is agreed with the figures of 1nward Bills for collection in the subsidiary Ledger.
3.10 ORGANIZATIONAL SET UP OF GENERAL BANKING DEPARTMENT:
4.1 LOAN AND ADVANCES
The main objective of a business organisation is to get more profit. If the business rotates successfully the profit is gained in a satisfactory mode. As we know very well that bank is nothing but a financial intermediary and it takes deposit from surplus economic units and deploys the fund to deficit economic units through credit deployment. So the more recoverable credit is deployed the more profit is gained. In fact this credit deployment process is being run under Advance department.
The Advance department is very important part of the branch operation that also provides administrative support for the lending activities of’ the branch. The Advance department provides an effective perfect check and balance on funds lend to clients and that the transaction is within approved limit for borrower and amount. In AGRANI BANK, A. H. Road branch a big amount of loans and advances are sanctioned every year.
4.2 FUNCTIONS OF ADVANCE DEPARTMENT:
Ensuring that funds are disbursed only after compliance with terms and conditions or required documents received
- Make sure that the bank has always valid and current loan documentation.
- Ensuring that the collateral security is adequate at times to support the loans. Keeping the loan documentation under safe custody.
- Ensuring that the bank receives sufficient valid insurance cover whenever required from a recognised insurance company.
- Monitoring the receipt of periodical receivable. Debiting the client for all charges, interest etc.
- Maintaining the central liability records for all extensions of credit and balancing the totals with General Ledger.
4.2.1 Interview and Application:
As liquidity and profitability are conflicting considerations, AGRANI BANK as a Bank while employing the funds pays due regard to both profitability and liquidity, The first step in the sanctioning process of credit in favour of a customer/client is the interview between the banker and the client. The credit officer should be assured that he would gather as much of the data necessary for the credit granting decision. In order to gain efficiency and credibility, checklists should be developed and used. An application for credit is essential for every loan request. Every applicant should indicate whether the loan request is to be considered.
Ø The type of credit
Ø The financial information that can be used to determining credit worthiness
Ø The loan amount, maturity and for other information
Ø The credit application must be properly signed
4.3 PRINCIPLES OF SOUND LENDING:
In order to secure a balance between liquidity, profitability and security AGRANI BANK follows the following principles of sound lending:
Safety:
AGRANI BANK, local office exercises the lending function only when it is safe and the risk factor is adequately mitigated and covered. Safety depends upon
-The security offered by the borrower,
-The repaying capacity and willingness of the borrower to repay the loan.
Liquidity:
The liability of bank is repayable on demand or at a. short notice. So the bank has to maintain its liquidity at a sufficient level. Investment on building, plants, machinery, land etc. cannot be recovered quickly, so it is less liquid.
Profitability:
Profit is needed to pay interest to depositors, depreciation and maintenance, declare dividend to share holders, provide for reserve against bad & doubtful debts etc. So like all other banks AGRANI BANK also disburse advances to earn profit.
Security:
To ensure safety of advances banks take different types of securities like FDR, Sanchaya Patra, land, work order etc. Banker should ensure that the securities are adequate, marketable and free from encumbrances.
Diversification of Risks:
It is very risky for a bank to invest all its assets into a particular sector or a single borrower or to one particular region. If somehow the businesses of that sector or area or borrower collapse, the bank may fall in a critical situation. So it is better to invest in different sectors/ borrowers and spread over the country.
Yield / Profitability:
From the commercial point of view AGRANI BANK considers sufficient yield or return while financing a project.
Productivity of the loan
Banks should invest on those sectors, which are productive.
Social Interest
Today banks have a strong social objective and social conscience. Sometimes they invest in neglected sector to boost the economy.
Purpose of the loan
Sometimes it is important to know for what purpose the loan is taken. The bank should not tolerate any misuse of the fund.
4.3 SELECTION OF BORROWER:
To have the optimum returns from the deployed funds in different kind of lending, selection of borrower is mostly important. During the discussion with the prospective client the bank manager has to focus on the following points:
IDENTITY:
The loan officer must be secure about customers identity, it means that the loan officer has to sure about customers full name, his address, and his profession.
CHARACTER:
Character is the greatest single asset any individual can have. The character of the borrower indicates his intention to pay the amount advanced. Character of a customer besides honest, involves the promptness in payment, the ability and willingness to carry out the planned project to its end and the reputation of the people with whom he deals.
CAPACITY:
Capacity means the ability to employ the funds profitability and repay the advance according to the terms and conditions of the sanction. The loan officer must be sure that the customer requesting has the authority to request a loan and the legal standing to sign a binding loan agreement.
CASH:
In general, borrowing customers have only three sources to draw upon to repay their loans. Cash flow generated from sales or income. The sale or liquidation of asset or Funds raised by issuing debt or equity securities.
4.4 TYPES OF ADVANCES PROVIDED BY A. Hamid Road Branch, Pabna:
AGRANI BANK Limited A. Hamid Road Branch, Pabna. Provides different types of advances to its customers. Recovery rate is also satisfactory. Before discussing about different types of advances, we shall try to represent an overall picture of different types of advances provided by New Market Branch. The following figure represents different types of Advances provided by A. H. Road Branch, Pabna.
For convenience of the report foreign advances will not be discussed here. Those will be discussed in Foreign Exchange Chapter.
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** A. Hamid Road Branch, Pabna is not AD or Foreign exchange Branch
4.5 RATE OF INTEREST ON LENDING:
Table- 4: Rates of Interest on Lending
| Sl. No. | Categories of Lending | Rate of Interest (% Per Annum) |
| 1 | Agriculture | 10 |
| 2 | Consumer Credit | 14 |
| 3 | General House Building Loan/ Urban housing | 13 |
| 4 | Woman Credit Loan | 15 |
| 5 | Loan for disabled person | 12 |
| 6 | Rural credit | 12 |
| 7 | Loan against FDR | 10 |
| 8 | Loan against APBS | 13 |
| 9 | Small and cottage industry | 10 |
| 10 |