Case Study On General Banking Activities of Bangladesh Commerce Bank Ltd.

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General Banking Activities of Bangladesh Commerce Bank Ltd.

1.1 Background of the Study

Banking sector is the driving force for an economic growth of a country. Every commercial bank acts as financial intermediary whose main aim is to earn profit through borrowing and lending funds in the profitable sectors and they also issue different types of credit instruments. Therefore, the Banking system occupies an important place and plays significant role in a nation’s economy building. Necessarily, banking sector also ensure commendable contribution in the economic development of a country and forms the core of the money market in an advanced country. This sort of financial intermediary accepting deposits and granting loans; offers the widest menu of services for different business ventures. Commercial banks have significantly expanded their financial services to the clients and government around the world. In current business world is very dynamic and fast changing. That’s why every professional have to have clear concept regarding this changes and he/she need to conform to these changing environments. In order to become a real professional people’s needed to enter into practical business world. A professional is a person who is skilled in the theoretical, scientific and practical aspect of an occupation and who performs with a high degree of competence.

1.2 Scope of Study

Bangladesh Commerce Bank Ltd is one of the fast growing banks in the country. It’s actively competing with others leading commercial banks. It formally launched business activities on 06.09.1999. This report constructed on the basis of general banking activities of the organization and it covers the organization’s structure, chronological growth and development performance of the commercial banks. The main part of the repot consists of the “General Banking activities of the Bangladesh Commerce Bank Ltd.”. Due to successful completion of essential part of the report have the opportunity to discuss regarding following issues:

· Finding the bridge between academic study and practice in organization.

· Importance of the General activities in banking.

· Finding the bridge between academic study and practice in Organization.

· What are the problems of Overall banking practice in BCBL?

· What are the basic difference between other commercial banks and BCBL’s activities?

· How to maintain the organizational behavior inside the organization.

· How General Banking performance does affects overall progress of the Organization.

1.3Objectives of the Study

There are some certain objectives behind preparing this report. These acted as incentive to make the report. The primary and basic objective is to fulfill the course requirement and then understand the entire banking system of Bangladesh Commerce Bank Ltd (BCBL). Other than these two other objectives are as follows:

· To achieve concept regarding practical business world.

· Find out similarities between academic knowledge and practical field.

· Understanding the organizational environment.

· How to maintain official rules and regulations.

· Understanding the basic activities of Overall banking.

1.4 Review Literature

General Banking

General Banking is an operational function of the bank which consists the management of deposit, cash, clearing house, bills, account opening, security instruments handling, customer services, locker facilities and other ancillary services of the bank besides Advance and Foreign Trade.

General banking is one of the key drivers of the U.S. economy. General banking provides a safe place to save excess cash, known as deposits. It also supplies liquidity to the economy by loaning this money out to help businesses grow and to allow consumers to purchase homes, cars and consumer products. Banks primarily make money by charging higher on their than they pay for deposits.

Financial institution that mediates or stands between ultimate borrowers and ultimate lenders is known as banking financial institution. Banks perform this function in two ways – taking deposits from various areas in different forms and lending that accumulated amount of money to the potential investors in other different forms.

1.5Methodology

Data Collection

To prepare an authentic and informative report we had to study all the company’s information, record, company website and other relevant things. With these it was most significant to discuss with employees of different section regarding various confidential records. Besides we studied different congenial books and journal published on related subject and collected information from different sources.

Sources of Data

To prepare an enrich report it require acquisition of huge information and study of different relevant works on it. That’s why we had to utilize both primary and secondary sources to collect relevant information.

A). Primary Sources of Data

· Conversation with the organization’s stuff and Executives in the Principal branch and employees of Mailbag Branch.

· Conversation with bank’s clients.

· Study of relevant file.

· Observation of day to day activities.

· Informal works exposures from different desks of the branches.

B) The secondary sources of Data

This source includes:

· Annual report of Bangladesh Commerce Bank Limited.

· Periodicals published by the Bangladesh Bank.

· Website of BCBL.

· In order to prepare the report I have used these sources widely.

Data Analysis and Organize

After collection of entire data different approaches are widely used to analyze and organize the data such as qualitative approach. In this process technological assistance was more significant and indispensable.

Profile of Bangladesh commerce bank limited

2.1 Background of the Bangladesh Commerce Bank Ltd.

Bangladesh Commerce Bank Ltd. (BCBL) is a Commercial bank but it has some differences in its formation compare to other private banks. Bangladesh Commerce Bank Ltd. was established by recognizing the erstwhile BCI Ltd through passing act 12 of 1997 in the parliament of the People’s Republic of Bangladesh having paid up capital amounting to Tk. 92 crores consisting of Tk. 40 Crore cash money paid by the government and 3 state- owned Banks and Tk. 52 crores of BCI depositors’ money. The commercial operation of the Bank started since September 16, 1999 through opening of its principal branch and all other 23 branches were opened by 31^st December 1999. Having incurred losses in the first two years the bank started earning profit since 2001. The Bank started its operation shouldering the legacy of BCI and has been progressing smoothly facing all hurdles and problems. The progress is satisfactory and noticeable.

Bank earned an extensive net profit Tk. 4.81 crores & Tk. 7.04 crores in the year of 2002 & 2003 respectively. Although the overall economic picture of the country was instable during 2003, but the bank registered a growth of 124% over that of previous year. The bank adequately covered capital adequate ratio as fixed by the Central Bank. This achievement had been possible due to positive attitude toward the organization, hard working, and honesty of the management team with the support of policy directives and guideline from the board of Directors. Out of deposited money of BCI Ltd. Tk. 163 crore has already been paid out of 180 crores of BCI which is a success for the bank. The said payment has been made through transferring Tk. 52 crores with investment BCI Ltd. and paying cash Tk. 62 crores. For the sake of BCI depositors Tk. 30 crores over the recovery of BCI investment has been paid to the depositors. In the year of 2003 the total deposit of the bank was Tk. 409.39 crores which is 46% more than that of previous year. At the same time the bank disbursed a total loan of Tk. 291.10 crores which is 71.11% more than that of previous year. The progress is continuing.

Bangladesh Commerce Bank Ltd. inherited 24 closed branches of former Bangladesh Commerce and Investment Limited. Having been registered with the Registrar of Joint Stock Companies and Firms with the prior approval of Securities and Exchange Commission, it commenced banking operation with the opening of its Principal Branch at 19, Rajuk Avenue, Motijheel Commercial Area, the financial hub of the Capital City of Dhaka on 16th September 1999. In the year of 2002 by opening a branch in Commilla the total no. of branches have been increased to 25. The bank has planned to open more new branches and that will be implemented in phases after getting approval from Bangladesh Bank. In the year 2009 bank earned profit Tk. 7.25 crores. In the year 2010 bank earned profit Tk. 11.59 Crore.

It is known that Bangladesh Commerce Bank Ltd. Could not started its operation smoothly this had to launch its operation with a burden of Tk. 179 crores of BCI stuck up loans. Most of the loans were from BCI period there was no documents and against which were unsecured. With continuous and sincere efforts of the Officers a cash recovery of Tk. 4.50 crore has been possible during the year which led the cumulative recovery to Tk. 84.00 crores up to this time.

The Bank is concentrating the activities in its area of specialization has achieved good market reputation with efficient customer service. The Bank is committed to providing continuous training to its staff to keep them up to date with modern practices in their respective fields of work. The Bank also tries to fulfill its share in community responsibilities. By such measures the Bank intends to grow and increase shareholder’s earning per share. Bangladesh Commerce Bank Ltd. Promises to maximize customer satisfaction through services and build a trusting relationship with customers, which has stood the test of time for the last all years.

The total manpower strength is 375 out of which 213 are officers and 162 are staff. They are very much efficient in their professional area. They are being further trained to take up the challenging job.

2.2 The Objectives of the Bank

As a member of the money market, BCBL plays a pivotal role in accelerating economic development of the country. Bangladesh Commerce Bank Ltd. has been established in order to achieve some certain objectives. Those objectives are as follows:

· Providing services by diversifications to the doorstep of people in the economic sector.

· Ensuring maximum utilization of professional manpower by developing skill and creativeness.

· Offering maximum service to the clients and shareholders of the Bank, as per rules.

· Creating savings attitude among various classes of people. Increasing investment for keeping the market economy operative.

· Assessment of customers need and provide short-term and long- term finance on the basis of real need.

· Earning confidence of all concerned by easing foreign trade and international transactions.

· Proper maintenance of bank’s resources through appropriate investment and active participation in various welfare programmers of the country.

· Involve customers with modern banking through proper uses of modern information technology.

· Provide best services to customers through establishing firm discipline in bank management and long-term relations.

· Achievement of economic growth through various socio- economic activities.

· Building image of the bank at home and abroad. Upgrading socio- economic aspects of Bangladesh by financing agro-based project.

· Activate capital market by more participation in capital market.

2.3 Goals of the Organization

The bank conducts its business activities toward some certain goals. These are as follows:

· The basic goal is to organize funds in order to invest for profitable purposes in various fields of small and medium scale of trading, large companies and corporate sectors.

· To undertake project promotion to identify profitable areas.

· To scrutinizes the opportunities for investment and developing the new products.

2.4 Mission of Bangladesh Commerce Bank Ltd.

Mission of Bangladesh Commerce Bank Ltd. is as follows:

· One Stop, Fast, and accurate customer services.

· High slandered business ethics

· Balanced financial growth strategy.

· Attracting & nourishing quality human resources with right compensation.

· High quality financial services with the assistance of latest technological device.

· Innovation in banking service at a competitive price.

· Steady return on shareholder’s equity.

· Committed to the growth of society and economic development.

2.5 Vision of the Bank

The vision of Bangladesh Commerce Bank Ltd. is to give experience to delight the customers and to give an environment where its own people will excel. At the juncture of global economic activities, BCBL has been driven by the strategic policy, as the prosperous economies of the global village are option. Its aim is to become the leader in banking sector of the country.

2.6 Functions of the Organization

Beside normal Banking business, the bank is engaged in them following activities:

· Borrowing from individual institutions.

· Lending against or without security for local or international trade.

· Carrying out functions of foreign trade and foreign exchange business including opening of L/C, issuance of T/C, Credit card, buying, selling discounting of bills, CDs, Promissory Notes, approved securities, etc.

· Buying and selling of foreign currencies.

· Direct customer Service like payment of utility bills, insurance premiums, receiving dividends, pensions, etc.

· Participating in the capital market as stock-broker and also as portfolio-investor.

· Reliable safe custody of Valuables.

· Providing excellent remittance facilities.

· Publication of Financial Statement.

· Provides withdrawal facilities of Deposits.

2.7 Organizational Structure of BCBL

In the legislative body the chairman is the head of the Board of Directors. There is a Managing Director who is also the President or CEO mainly controls and supervises the major divisions of the Bank. One Deputy Managing Director reports to him. Two Executive Vice President Reports to him. Executive Vice Presidents controls the credit, loan administration, international, financial control, accounts, marketing and human resource Division.

The organizational structure of Bangladesh Commerce Bank Ltd. is quite horizontal where each person reports to only one person, which refers to a very good working environment. For example, each Officer reports to the AVP or VP or SVP, AVP or VP or SVP reports to EVP, EVP reports to DMD and DMD reports to MD.

2.8 Management Team

To achieve the mission, a set of different drivers are mandatory. Commercial banks in Bangladesh are now in hard competition. This is because of the continuous growth of similar service oriented local banks along with special service providing foreign bank due to globalization. BCBL management team is sound experienced and enrich with excellent academic background and the legislative body or Board of Directors are responsible for selection of management team. The Board of Directors also sets objectives, policies and strategies and management team is the instrumental device, who implements those sets by the Board of Directors.

List of Management Personnel are given below…

1. Mr. S.A. chowdhury Managing Director 4. Mr. Md. Gulam Nabi Senior vice president 2. Mr. M. Ebadat Hussain Executive Vice President 5.Mr.Sagir Ahmed Senior vice president 3.Mr. Md. Shamsuddin Ahmed Senior vice president 6.Md.Salim Hasan Senior vice president

2.9 Management Information System

Bangladesh Commerce Bank Ltd. uses branch banking software, developed by a private company on windows platform. The head Office and branches use the software for book keeping, automatic interest calculation, daily transaction listing and auto trials, auto maturity and auto renewal of FDR, automatic integration customer’s ledger and general ledger, printing of general ledger position including balance of subsidiaries, monthly income and expenditure position etc.

2.10 Products and Services of BCBL

BCBL is a rapid growing commercial bank in the country. It’s competing with wide range of product and services that play a convenient role to its attainment. Products and services of Bangladesh Commerce Bank Ltd. are as follows:

General Banking

General banking department offer following products:

· Savings deposits on S/B A/C

· Current deposit A/C.

· Short Term deposit on STD A/C

· Term Deposit

· Fixed Deposit on FDR

· Special Scheme(including double & triple growth deposit, Lacpati Deposit Scheme, Millionaire Deposit Scheme, Marriage Deposit Scheme, Education Deposit Scheme, Kotipoti Deposit Scheme, and new addition nandita & srijoni )

· Consumers Financing

· Lease financing.

Foreign Exchange

Foreign exchange department of the bank provide following service in order for convenience of the customers:

· Issuing Letter of Credit

· Letter of credit advice

· (FDBP) Foreign Document Bill Purchase.

· (FDBC) Foreign Document Bill Collection

· Bill of Exchange

· Negotiating Bills

· Issue of Traveler’s cheques and its encashment

Loans and Advances

Loans and advance department deals with following products and services:

· Financing of small and medium Industries

· Financing of Trade

· Financing if Import and Export

· Micro-Credit and Micro Enterprise schemes

· Credit Scheme for women entrepreneurs

· Consumers credit Scheme

· Special Credit Scheme for service holder

2.11 Special Schemes

Other than the normal banking business the bank has the following special schemes:

· Small and medium scale entrepreneurs credit scheme.

· Scheme for loans to employees.

· Loan scheme for women entrepreneurs.

· Pension deposit scheme for small saver.

· Monthly deposit and profit scheme.

· Credit scheme against share.

· Interest free deposit.

· Agricultural credit Scheme.

· Life time savings Scheme.

2.12 Human Resource Management

BCBL strongly believe that only well qualified manpower can meet the expectations of the clients. For this reason BCBL always conscious regarding its existing Human Resources and frequently hiring efficient manpower to meet the standard of quality services. BCBL often arranging training program for junior level executives at BCBL Institution and senior level officers and executives are sent at BIBM, Mirpur, and Dhaka for higher training. Abreast this BCBL also send its employees abroad for higher training.

2.13 Sources of Funds

There are various sources of funds of Bangladesh Commerce Bank ltd. Basically BCBL accumulate funds from following sources:

Figure: 02, Sources of Fund

2.14 Branches of Bangladesh Commerce Bank Ltd.

Bangladesh Commerce Bank ltd. operates its business activities with 25 branches around the country. Following table shows the Branches’ names, addresses, Telephone no etc.

Name of the Branches	Address	Manager/Branch In-Charge	Contact Numbers
Principal Branch	Yunus Trade Center: Level # 22, 52-53, Dilkusha C/A,Dhaka-1000,	Mr. Shamsuddin Ahmed Senior Vice President	Tel:9571581, 9559831-2 Fax:9553832, Talex:642557BCBLBJ E-mail: bcbl@bdmail.net
Banglabazar Branch	52, North Brook Hall Road, Banglabazar, Dhaka.	Mr. Kaysarul Islam Vice President	Tel:712227 Fax: Talex:632145BC-BBS-BJ
Banshal Branch	124, Shahid Sayed Nazrul Islam Sharany(Narht South Road),Dhaka-1100	Md. Abdur Raouf Vice President	Tel:9566140,7166654 Fax: Talex:632145 BCBLBJ
Mouchak Branch	93/1, New circular Road, Dhaka-1217	Dewan Md Moniruzzaman Vice President	Tel:8321072
Mirpur Branch	Plot-28, (1st Fl & 2nd Fl) Avenue-4 Mirpur, Section-1, Mirpur, Dhaka.	Mrs. Sabnam Sultana Principal Officer	Tel:8020115
Khilgaon Branch	290/3, Block-a, Khilgaon Railgate, Nahar tower(2nd fl), Dhaka-1219	Mr. Ali Azam Chowdhury Vice President	Tel:7215803
Moulvy Bazar Branch	77/6, Moulvy Bazar, Dhaka-1100	Mr. K.M. Ashraf Hossain Senior Vice President	Tel:7311051
Jubilee Road Branch	360,Enayet Bazar, Chittagong-4000	Mr. Md. Ashequl Haque Senior Principal Officer	Tel:7311051
Khatunganj Branch	279, Khatunganj, Chittagong-4000	Mr. Md. Jamaluddin Senior Principal Officer	Tel:011-701536, 031-618821
Dewanhat Branch	1128 Shek Mujib Road, Ahmed Mansion, ChittagongG	Mr. S.M. Alamgir Assistant Vice President	Tel:011-701745, 031-728145
Khulna Branch	141, Sar Iqbal Road, Khulna.	Mr. S.M. Waliullah Vice President	Tel:041-732595
Bogra Branch	99/1-b, Boragola, Bogra-5800G	Abdulah Al-Mahmud Senior Vice President	Tel:051-5441,65710
Commilla Zilla School Rd. Branch	35/32, Zilla School Rd., kandir par, Commilla.	Mr. Aukhil Kumar Sarker Assistant Vice President	Tel:081-69951
Dilkusha Branch	16, Dilkusha C/A, Baliady Mansion	Mr. Gazi Nazrul Islam Assistant Vice President	Tel:9571375, 7171263
Green Road Branch	75, Hosain Tower, Green Road Farm gate, Dhaka.	Mr. Md. Fazlur Rahman Vice President	Tel:8126886, 8154664
Dholai Khal Branch	23, Goal ghat lane (1st fl.)	Mr. Md. Golam Nabi Senior Vice President	Tel:7118665,7165912
Zigatola Branch	25/1 Zhigatola, Dhaka-1209	Mr. Nizam Uddin Senior Principal Officer	Tel:+8802862214
Gulshan Branch	Bidisha Super Market, Darpon Complex Gulshan	Mr. Md. Borhanuddin Senior Principal Officer	Tel:8818339,9892026
Tan Bazar Branch	18, R.K.Mitra Road, Islam super Market Narayan Gang-1400.	Mr. Anowar Rashid Assistant Vice President	Tel:7610321,7164750
Dhamrai Branch	Kayet para, Dhamrai Bazar, Dhaka.	Mr. Md. Khaibur Rahman Senior Officer	Tel:06222-88139
Agrabad Branch	56, Agrabad C/A, Jiban Bima Bhaban, Chittagong.	Md. Zahangir Alam Vice President	Tel:031-726007, 724879, ,812781
Chaktai Branch	237,New Chaktai, Chittagong-4000	Mr. Md. Rafiqul Islam Bhuyan Senior Officer	Tel:031-634612,0189-321444
Sylhet Branch	Galaria Shoping & Appartment Complex (1st Fl.) ,West Zindabazar, Jallar par Road, Sylhetr.	Mr. Md. Imany Choery Vice President	Tel:0821-7232210, 0821-819521
Daulatpur Branch	727, Jessor Road, Daulatper, Khulna-9202	Mr. Ehsan Ahmed Rouf Assistant Vice President	Tel:041-762589
Nawgaon Branch	Mohammadi Market, Bangabandhu Road, Nawgaon	Mr. Golam Mostafa Vice President	Tel:041-762589

Table: 01, Branches of BCBL

2.15 Foreign Exchange Business

During the short span of life of the Bank, it has got momentum in the area of foreign trade business. It deals in all kinds of export, import, remittance and all other sorts of foreign exchange business. BCBL has got nine major correspondent banks in important business centers of the world and maintain quite a good number of Nostro accounts with many leading banks of the world. It works in the following main areas:

· Letter of Credit (L/C)

· Bill Purchase & discounting

· Export Credit (Pre-shipment & post-shipment)

· Remittances

· Foreign Currency Accounts

· Taka Drawing Arrangements

· Dealing Room

· SWIFT

· Spot & Forward Contracts.

2.16 SWOT Analysis of the Bank

SWOT provides an opinion and judgment whether an organization’s business condition is healthy or unhealthy. It is shown as bellow:

2.16.1 Strengths

Chief Executive Officer (CEO) or the top management of the Bangladesh Commerce Bank Ltd. has contributed for the growth and development of the Bank is a key strength.

It has strong network and skilled manpower that able to provide quality services.

Positive professional relationships between bank and clients, which is an emotional tie in regular business.

Due to sophisticated system and technological advancement it’s easy to get the information without wasting paper works and time.

The Bank is always trying to add new and modern equipment and facilities to start online service from December next.

Employees are sharing good atmosphere in BCBL so that it gave them reason to work efficiently and to become dedicated in banking.

BCBL maintains corresponding relationship with many foreign banks so that it is an effective measure for the smooth business.

2.16.2 Weaknesses

Market promotional activities are not actively working due to the lack of appropriate initiative and encouragement.

Doesn’t have effective plane for aggressive marketing activities.

People are discouraged to save their money with BCBL due to Problem Bank.

Due to lack of high quality personnel in the top level of management personality businessmen and entrepreneurs are less interested to work with BCBL.

Well qualified personnel are not interested at all to work in BCBL due to less salary.

There is no well-developed infrastructure.

Most of the Branches are suffering for indiscipline problem.

The bank is far behind from technological advancement.

The branches are not well equipped by modern furniture whereas other commercial banks have sophisticated equipment.

2.16.3 Opportunity

Bangladesh Govt. has rendered its full support to the banking sector to develop the country’s economic position, at the same time creating employment opportunity.

It is almost decided that online banking will be started by December 2011 in BCBL and the wide area of network will facilitate the customer in BCBL Banking.

Bank will be able to accommodate knowledgeable, skilled, experienced and hardworking persons by offering attractive remunerations and fringe benefits with nice working environment.

By expanding the business portfolio, BCBL can start the investment business with foreign exchange curriculum.

DEPUTY MANAGING DIRECTOR

By expanding the financing policy with credit facility customers are very much secured in business environment

2.16.4 Threats

Defaulters are seriously affecting the smooth banking culture in Bangladesh. BCBL is a new type of bank which has been started by passing the bills in national assembly with defaulting burdens of BCI -LTD.

Central bank is always supervising the local and foreign banks in Bangladesh and sometimes it is hampering the normal operations of Private Banks.

Though the innovation workings are in continuous process, but the other rival banks are copying it within the short period.

The worldwide trends and acquisitions in financial institutions the concentration goes on competitor’s products and increasing the power in their respective areas.

It is expecting that very shortly more financial institutions are coming with their new products and we should be prepared for hard competition in the following years.

Financial Performance of BCBL

3.1 Introduction

Every bank is the financial institution in nature. Therefore, finance is the blood of any bank. Necessarily the overall growth and development of the bank is totally depends on its financial performance. If the financial performances are being smooth the overall growth would be ensured other than the organizations growth would be disrupted.

3.2 Capital Structure

The capital and reserve of the Bank as on 31^st December, 2010 stood at Tk.2237.80crores. The reserve of the Bank increased from Tk.249.1 million during the year from Tk.148.60 million in the year 2009.the bank has made provision against off balance sheet items amounting to Tk. 8.16million in the year 2010.

3.3Capital and Capital Adequacy Ratio of BCBL

According to the evidence of December 31, 2010.BCBL maintained a capital adequacy ratio of Tk.213.46 crore as on against the requirements of Tk.121.83 crore as set by the Bangladesh Bank as per Act 12 of 1997 up to 31-3-2004. It indicates that the bank maintained a satisfactory capital adequacy ratio during the year2010.

3.4 Deposit

At the end of the December 2010 the deposit of the bank was Tk.1218.76 crore against Tk.760.50 crore during the corresponding period of the previous year. The growth of deposit is 60.26% compared to last year. This growth rate may be termed as a remarkable achievement considering the adverse economic situation of the country during 2010. In the prevailing situation mobilizing of deposit had become very competitive and as a result average cost of fund of the bank in the private sectors had increased compared to previous year. The Bank has given stress on procurement of low cost funds including cost free funds for bringing down the average cost of fund. The deposit of their bank as on December 31, 2010 was as follows:

Particulars	Crore Taka
Current and Others Deposit	210.37
Savings Bank Deposit	98.99
Short term Deposits	133.45
Deposit under different schemes	75.21
Fixed Deposit	502.65
Bills payable A/C	16.09
Others deposit	182.00
Total	1218.76

Table 04: Deposit

Graph 04: Deposit

3.5 Investment

The investment portfolio of the Bank during the year 2010 was Tk.147.23 crore against Tk71.01 crore in the previous year registering a growth of 107.34%. The portfolio of investment including Govt. Treasury Bills, Prize Bonds, Share in Public Limited Companies etc. The bank has always given emphasis on investment of funds in high yield areas and maintains statutory Liquidity requirements as fixed by Bangladesh Bank. Following listed seven years investment of BCBL.

Year	Investment
2010	32.90
2009	21.28
2008	10.90

Table 05: Investment

Graph 05: Investment

3.6 Dividend

Due to shortfall in statutory provision on loans and advances, the bank was not in a position to declare dividend in 2010. Hopefully, the bank able to declare dividend in the next year if Tk.15.00 crore profits is earned in the year 2011 and the Bangladesh Bank allows declaring dividend without providing the required provisions for BCI classified loans and advances.

3.7 Comparative Financial Highlights from 2009 to 2010

Following table shows the Comparative Financial Highlights from 2009 to 2010:

Particulars		2009	2010
Liquidity & Efficiency	Current Ratio	2.96 Times	3.11 Times
Solvency	Paid up capital	92.00 Crore	92.00 Crore
	Total Asset	404.00	541.00
	Total Deposit	280.00	410.00
	Total Loans & Advances	170.00	291.00
	Credit- Deposit Ratio	61%	71%
	Equity Ratio	23%	18%
Profitably	Net Profit	1.37	4081
	Return of Total Asset (ROA)	.34%	.89%
	Return of Investment (ROI)	12.12%	11.26%
Market	Book Value per Share	100	105
	Basic earnings per share	1.50	5.23
	Price-earning Ratio	53	34

Table: 06, Financial Highlight from 2009-2010

3.8 7 years Performance of Bangladesh Commerce Bank Ltd.

BCBL has established in September 16, 1999 and formally launched its business activities. From that day until today it’s conducting operation successfully. Therefore, following table shows the Performance indicator of Bangladesh Commerce Bank during the year 2004 to 2010.

Figure in Crore

	2010	2009	2008	2007	2006	2005	2004
Authorized Capital	200.00	200.00	200.00	200.0	200.00	200.00	200.00
Paid-up-Capital	92.00	92.00	92.00	92.00	82.00	82.00	30.00
Total Capital	101.86	99.55
Interest Income	40.73	36.12	32.80	20.56	17.80	1.00	34.00
Interest Expense	26.29	24.64	22.80	13.69	12.80	8.00	34.30
Net Interest Income	14.08	11.48	10.00	6.87	5.00	3.00	(0.30)
Other Operating Income.	7.26	10.53	6.59	4.49	2.32	0.65	3.17
Total operating Expenditure	12.35	12.82	9.55	8.21	7.04	5.93	7.55
Operating Profit(Loss)	11.59	8.41	7.04	3.15	0.22	(2.36)	(4.66)
Loans & Advances	307.29	317.51	291.10	170.00	57.00	10.10	–
Cash-in-hand & with Bangladesh Bank including other Banks	152.93	124.80	118.00	109.22	117.31	103.96	41.89
Deposits	423.04	428.17	409.39	280.00	176.00	91.40	8.90
Investment	32.90	21.28	0.90	1.02	1.00	0.33	–
Recovery of BCBL Loans	4.80	4.50	4.50	7.32	12.55	12.12	52.33
No. of Employees	425	447	436	375	384	367	372
No. of Shareholders		1975	1975	3587	3777	4201	4235
No. of Branches	25	25	25	25		24	24

Table 07: 7 years performance

3.9 Significant Accounting Policies

A). Basis of Preparation of the Financial Statements

The financial statements of the company are made up to 31 December each year and are prepared under the historical cost convention and in accordance with first schedule of Banking Companies Act (BCA) of 1991, Bangladesh Bank Circulars, Bangladesh Accounting Standards, the Companies Act 1994, the listing Regulations of the Exchange, the securities and Exchange Rule 1987 and other laws and rules applicable in Bangladesh on a going concern basis.

B). Revenue Recognition

The revenue during the year are recognized as following which satisfy all conditions of revenue recognition as prescribed by BAS 18 “ Revenue Recognition”.

Interest is calculated on daily product on unclassified loan and advances but charged on quarterly basis.

Interest is charged on classified loans and advances as per Bangladesh Bank BRPD circular No. 16 of 1989 and such interest were not taken into income.

Dividend income is recognized at the time when it is realized.

Commission and bills on purchased and discount are recognized at the time of realization.

C). Fixed Assets and Depreciation

Assets are stated at cost less accumulated depreciation.

Depreciation has been charged in diminishing balance method.

D). Earning Per Share (EPS)

The company calculates earning per share (EPS) in accordance with BAS 33 “Earning per Share” which has been shown on the face of profit and loss account. This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. A diluted earnings per share is required to be calculated for the year, as there is scope for diluted during the year under review.

E). Statement of Liquidity

The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on December 31, 2010

F). Investment

Values of investments have been shown as under:

Treasury Bill	: Face value (Including unearned Income thereon).
Prized Bond	: Cost price
Share and Debenture	: Cost price

G). Cash Flow Statement

Cash flow statement is prepared principally in accordance with BAS 7 “Cash Flow Statement” and the cash flow from the operating activities have been presented under direct method as prescribed by the securities and exchange rules 1987 and considering the provision of paragraph 18 (b) of BAS-7 which provides that ‘Enterprise are Encouraged to report cash flow from operating activities using the direct method

3.9 Changes of Equity

Following table shows the changes of equity for the year ended 31 December 2010

Particulars	Paid up Capital	Share Premium Account	Statuary reserve	Other reserve	Revaluation Reserve on Securities	Surplus profit/ Loss	Total Tk.
Balance as on 01January 2010	920,000,000	.	65792413	3848512		(26127843)	963513082
Share capital BCI Ltd	39000000	.	.	.	.	.	39000000
Dividend paid during the year	.	.	.	.	.	.
Increased in statutory reserve	.	.	32536744	.	.	.	32536744
Issuance of Share Capital	1068742800	.	.	.	.	.
Surplus of revaluation Reserve for HTM securities		.	.	.	11836557
Net Profit/ Loss for the year	.	.		.		30771838	30771838
Balance as on 31 December 2010	2027742800	.	98329157	3,848,512	11836557	4643995	2146401021

Table 09: Changes of Equity

General Banking of BCBL

4.1 Introduction

Every commercial bank deals with different vital division such as:

General Banking division

Loans and Advance division

Foreign Exchange division etc.

Among these three divisions General Banking is the core and leading division. General Banking division is the most important point of all activities. It is the storage point for all kinds of transactions of foreign exchange division, loans and advance division, and other relevant events. Except General Banking functions a bank cannot sustain for long. With the technological advancement this sector is growing tremendously. As a fast growing bank BCBL actively realizing that development and trying to conform to the changing environment.

4.2 General Banking Activities of BCBL

Basically, General Banking division performs the core functions of a bank. It deals day to day transactional activities which include collection of deposit from customers and meet the customers demand for cash. Widely general banking division includes the following sections:

· Account Opening Section/ Deposit Section

· Collection and Clearing Section.

· Cash Section

· Local Remittance Section

· Bill Section

· Accounts Section

· Dispatch Section

· Administrative Section

4.3 Account Opening Section

To become a customer initially need to open an account with a particular bank and then a person is allowed to go for transaction. Through this process banker- customer relationship begins and continues until violation of any condition by the parties. According to the regulation of central bank and commercial bank everybody cannot open an account. In order to open an account customer need to fulfill some certain conditions and requirements provided by the bank.

4.4 Types of Account

As we know there are different type’s accounts, however it depends on bank’s goals, objectives, mission and vision as well. Bangladesh Commerce Bank Ltd. provides the opportunity to open following types of account:

· Savings Bank Account (SB)

· Current Account CA)

· Short Term Deposit (STD)

· Fixed Deposit Ratio (FDR)

· Deposit Pension Scheme (DPS)

4.5 Savings Bank Account (SB)

This account is primarily for small scale saver. Any adult and mentally smooth person can open this type of account through the fulfillment of required conditions. Saving bank account is convenient for the people of the lower and middle classes who wish to save a part of their current incomes to meet their future needs and also intend to earn an income from their savings. However, account holders cannot withdrawal money more than two times in a week but he can deposit any time as he/she wishes. If any customers want to withdraw large amount of money he have to notice the bank early. At present its interest rate is 7.50%. Abreast these some other relevant points listed below:

4.5.1 Requirements to open an Account:

In order to open an account customer need to fulfill following requirements:

· 2 copies of passport size photographs.

· Photocopy of 1-7 pages of valid passport (Absence of passport- driving license/ voter ID card/ Commissioner’s certificate).

· Introducer signature and account number at the back of account holder’s (person going to open an account) photographs.

· Photograph of nominee with the signature of account holder at the backside of nominee’s photograph.

· Initial deposit of TK. 1000.

· Two or more persons can open this account jointly.

· Parents can open an account on behalf of his minor children.

· Any private Organization can open savings account in its own name. In this regard 3324organizations need to submit name, photograph, and specimen signature of specific person who be responsible for the account.

4.5.2 Characteristics of the Savings Account

The basic characteristics of saving bank account are as follows:

· At the time of opening an account customers have to deposit minimum Tk.1000.

· One person can open only one account in one name.

· Interest paid twice in a year depending on monthly minimum balance.

· Minor cannot open an account.

· Customer can deposit money at any times during working hour.

· But customer can withdraw not more than twice in a week.

· Generally this account holder cannot take loan but in special case it might happen.

· The main purpose of this account is to construct fund.

· The Bank provide passbook to deposit money in account.

4.5.3 Types of Savings Account

There are different types of savings account bank offers to its customers such as:

· Home savings account

· School savings account

· Works savings account

· Deposit pension account

· Cumulative savings account

· Loan Deposit account

· Foreign currency account etc.

4.6 Current Account (CA)

Current account is running and active account which may be operated upon any number of times during a working day. Basically it’s a pure demand deposit account. Since there is no restriction on withdrawal and deposit holder can withdraw and deposit money any times in a working day. Basically there are two types current account available in the Bank:

General Current Account

Special Notice Current Account

The basic requirements and characteristics of this account are as follows:

4.6.1 Requirements for Current Account

For person:

· 2 copies of passport size photographs.

· Photocopy of 1-7 pages of valid passport (Absence of passport- driving license/ voter ID card/ Commissioner’s certificate).

· Introducer signature and account number at the back of account holder’s (person going to open an account) photographs.

· Photograph of nominee with the signature of account holder at the backside of nominee’s photograph.

· Initial deposit of TK. 2000.

For joint venture, Associations, and Clubs: If the party is joint venture, Associations, and Club then they have to fulfill following requirements:

· True copies of certificate of incorporation or registration.

· True copies of certificate of commencement of business.

· True copies of memorandum and articles of association.

· True copies of resolution of the board of directors.

For partnership Company:

· Name and address of the firm.

· Partnership deed.

· Trade License

· Endorsement of account holder of the same branch.

4.6.2 Characteristics:

Basic Characteristics of this account are as follows:

· There is no restriction on withdrawal, but in case of large amount i.e. more than 2 lac banks requires one day prior notice.

· Interest is not allowed on this account.

· Closing charge Tk.200 prescribed by the bank shall be realized at time of closing down of a current account.

· Current account holders enjoy certain privileges compared to the saving account holders. I.e. Current account holders provided overdraft facilities.

· The banker is under an obligation to repay the deposits on demand. So, they are called demand liabilities of a banker.

· Clients are p