Commercial Activities of National Bank Limited
Introduction & Background Of The Study
Five Year’s Performance at a Glance
|(Taka in million)|
|Profit before tax||400.64||250.32||336.09||484.21||581.12|
|Profit after tax||274.44||142.19||88.12||170.02||271.67|
|( in Taka )|
|book value per share||365.52||378.59||395.31||360.68||441.36|
|market value per share||287.28||238.86||226.61||475.25||746.50|
|earning per share||63.78||33.98||17.07||27.44||43.85|
|dividend||30%||20%||20% bonus share||20% bonus share||30% bonus share|
|Number of foreign corresponds||328||358||358||410||391|
|Number of Employees||2073||2171||2185||2133||2184|
|Number of shareholders||9052||9521||9276||9491||9564|
|Number of branches||75||76||76||76||76|
1.1 Scope of the study:
The scope of the study on “Commercial Activities of National Bank Limited” is enjoying an eminent image is vast and it is hardly possible to become familiarized with the total operation of the Bank decently within a short period of time. In this report we have tried to focus on the Commercial Activities of the Bank. Therefore, we had limited my scope within all the applications of those. To make it a complete report we had to perform our tasks in a routine way. The scope of the report encompasses the areas covered by the organization part, Evaluation part, an Analysis part. Maximum endeavor has been carried out to focus on the total Commercial Banking Operations conducting the bank, which has included in the project and evaluation part. The organization part started with the history of National Bank Limited and end with ultimate activities of the National Bank.
2.1 Company profile:
National Bank Limited has its prosperous past, glorious present, prospective future and under processing projects and activities. Established as the first private sector Bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the passage of time after facing many stress and strain. The member of the board of directors is creative businessman and leading industrialist of the country. To keep pace with time and in harmony with national and international economic activities and for rendering all modern services, NBL, as a financial institution automated all its branches with computer network in accordance with the competitive commercial demand of time. Moreover, considering its forth-coming future the infrastructure of the Bank has been rearranging. The expectation of all class businessman, entrepreneurs and general public is much more to NBL. Keeping the target in mind NBL has taken preparation to open new branches by the year 2007.
The emergence of National Bank Ltd. in the private sector is an important event in the Banking arena of Bangladesh. When the nation was in the grip of severe recession, Govt. took the farsighted decision to allow in the private sector to revive the economy of the country. Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize the economy of the country.
National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the private sector. From the very inception it is the firm determination of National Bank Limited to play a vital role in the national economy. We are determined to bring back the long forgotten taste of banking services and flavors. We want to serve each one promptly and with a sense of dedication and dignity.
The then President of the People’s Republic of Bangladesh Justice Ahsanuddin Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong.
At present, NBL has been carrying on business through its 92 branches spread all over the country. Besides, the Bank has drawing arrangement with 415 correspondents in 75 countries of the world as well as with 32 overseas Exchange Companies. NBL was the first domestic bank to establish agency arrangement with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use the latest information technology services of SWIFT and REUTERS. NBL has been continuing its small credit program for disbursement of collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving their lot. Alongside banking activities, NBL is actively involved in sports and games as well as in various Socio-Cultural activities. Up to September 2006, the total number of workforce of NBL stood at 2239, which include 1689 officers and executives and 550 staff.
Since the very beginning, the Bank exerted much emphasis on overseas operation and handled a sizeable quantum of homebound foreign remittance. The Bank established extensive drawing arrangement network with Banks and Exchange Companies located in important countries of the world. Expatriates Bangladeshi wage earners residing in those countries can now easily remit their hard-earned money to the country with confidence, safety and speed.
The year 2006 marked the addition of yet another golden stair in the chronicle of NBL’s success story. Compared to 2005, Foreign exchange business of the Bank increased by 34.40% to Tk. 5186 crore, of which export, import and remittance business increased by 34.16%, 31.27% and 56.50% respectively. Total assets of the Bank stood at Tk. 4483 crore on 30.09.2006.
Our Bank invested 25% equity in Gulf Overseas Exchange Company LLC, a joint venture Exchange Company in Oman, operating since November, 1985 under the management of our Bank. The Bank received Riyal Omani 11875 equivalent to Tk.2.10 million as dividend for the year 2006.
Now NBL is on line to establish trade and communication with the Prime International banking companies of the world. As a result NBL will be able to build a strong root in international banking horizon. Bank has been drawing arrangement with well conversant money transfer service agency “Western Union”. It has a full time arrangement for speedy transfer of money all over the world.
Banking is not only a profit-oriented commercial institution but it has a public base and social commitment. Admitting this true NBL is going on with its diversified banking activities. NBL introduced National Bank Monthly Savings Scheme (NMS), Special Deposit Scheme, Consumer’s Credit Scheme and NBL Housing Loan, NBL Small Business Loan, Small House Loan Scheme, Festival Small Business loan etc. to combine the people of lower and middle-income group.
Inspired by its social obligation and commitment and responsibility, NBL has been running a School and College up to Class XII solely on its own guardianship. From the very inception, this institution has been maintaining a good track record of results at the SSC and HSC Examinations. Conducted by an well-educated and trained team of teachers, reputation of this institution has been increasing day-by-day as a result of their relentless and sincere endeavor.
Transparency and accountability of a financial institution is reflected in its Annual Report containing its Balance Sheet and Profit & Loss Account. In recognition of this, NBL was awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by the Institute of Chartered Accountants of Bangladesh.
A team of highly qualified and experienced professionals headed by the Managing Director of the Bank who has vast banking experience operates bank and at the top there is an efficient Board of Directors for making policies.
Establishing ourselves firmly at home and abroad as a front representative bank Of Bangladesh by ensuring highest standard of clientele services though best application of modern information technology and making due contribution to the national economy is our cherished vision.
Efforts for expansion of our activities at home and abroad by adding new dimensions to our business strategy are being continued unabated. Alongside, we are also putting highest priority to cost control, transparency, accountability, good governance, improved clientele service as well as to our commitment to serve the society, through which we want to get closer and closer to the people of all strata .wining an everlasting seat in the hearts of people as a caring companion in uplifting their living standard through continuous up gradation and diversification
We intend to plat more important role in the economic development of Bangladesh and its finical relations with the rest of the world by interlining both domestic and international 1 operations.
2. 4 Functions of National bank Ltd:
• To maintain all types of deposit A/Cs.
• To make investment.
• To conduct of foreign exchange business.
• To conduct other Banking services.
• To conduct social welfare activities.
• To work for continues business innovation and improvements.
• To build up strong-based capitalization of the country.
To ensure the best uses of its creativity, well disciplined, well manages and perfect growth.
2.5 Management structure of National Bank Ltd.
In 2005 National Bank Limited made commendable progress in all business, like deposit, credit, fund management, investment, foreign remittance, credit card & foreign exchange related business. Bank has expended business activities as holding previously & parallel by diversification its investment to a new product. As a major financier remarkable portion of total exports of the country. The total assets of the bank were Tk 55046.13 million as on 31st December 2005, which is higher than Tk. 7021.17 million than the previous year. This is the sign of good management. The management processes are as follows:
The strategic planning approach in NBL is top-down. Top management formulates strategy at the corporate level, and then it is transmitted through the division to the individual objectives. Board of directors or Executive committee usually takes the decision. In this process lower level manager are detached in making process, even brainstorming of lower level manager is absent in decision-making and planning process.
Organizing of the National Bank Limited is based on Departmentalization. The organization is divided into twelve departments headed by Executive vice President or Senior Vice President. In the National Bank Limited the whole operation is centralized and authority is delegated by written guidelines. These guidelines are:
· Operational manual approved by Head Office, where each aspect or banking operation is elaborately defined.
· Advance manual including advances limit for different management level.
· Bad and doubtful recovery manual.
· Code of conduct.
· Foreign banking guidelines.
· Central bank directives.
Different management position holders in departments and branches practice their authorized power in different cases with administrative loophole.
Entry-level recruitment process of the National Bank Limited is conducted in three ways. One way is recruitment of probationary officer. Each probationary officer has one-year probation period. After completion of probation period the officer joins as officer grade III (b). The career path of probationary officer is headed toward different management positions.
Second way of recruitment is to recruit non-probationary officer who joins as a assistant officer. The career path of an assistant officer is lengthier than probationary officer.
The third way of recruitment is recruitment of staff and sub-staff such as typist,
messenger, driver, guard, attendant, cleaner and other lower level positions. Promotion policy of NBL is basically based on seniority basis. Sometimes, employees are promoted to the higher position for their outstanding performance. However, it is found that the average length of a position held by an employee is around five years.
The bank has strict control over its all-organizational activities. The Bangladesh Bank directives indicate some control measures. Audits and inspection are conducted by different parties to check whether the bank implement these control system properly or not. The central bank conducts credit inspection by a team. The National Bank Limited has audit and inspection department to take controlling measures in internal operations. Audit and inspection team send to the branches now and then and is responsible for preparing report that will be submitted to the chief Administration to take necessary actions.
2.6 Organizational Structure and Department:
Organizational setup of the National bank Limited is consisting of three organizational domains.
Firstly the central top management, which contains Board of Directors, Managing Director, Additional Managing Director and Deputy Managing director, Major responsibilities of this are to take central decision and transmit it to the second step.
Secondly, Central executive level management, which contains executive vice president, senior vice president, vice president and Assistant vice president. Major responsibilities of this part are to supervise and control division Department.
Thirdly, branch operation management, which contains branch manager and other mid lower level management. Major responsibilities of this part are to the 92 branches of this bank and report to the Head office from time to time..
2.6 .1 Organogram of NBL
Board of Directors
|MS. PARVEEN HAQUE SIKDER||:||Chairperson|
|MRS HELENA RAHMAN||:||Director|
|MR. A. B. TAJUL ISLAM||:||Director|
|MR. ZAKARIA TAHER||:||Director|
|MR. SHAHADAT HOSSAIN (SALIM)||:||Director|
|MR. M. G. MURTAZA||:||Director|
|MR. LT. COL. (RETD.) MD. AZIZUL ASHRAF, PSC||:||Director|
|MR. A. M. NURUL ISLAM||:||Director|
|MR. SALIM RAHMAN||:||Director|
|MR. S. M. SHAMEEM IQBAL||:||Director|
|PROF. MAHBUB AHMED||:||Director|
|CAPT. ABU SAYEED MONIR||:||Director|
|MR. M. AMINUZZAMAN||:||Managing Director & CEO|
2.7 National Bank Foundation
NBL is a vibrant and promising bank. Its activities are not limited only to business and financial matters. Out of social responsibility, NBL has extended its support for expansion of educated in the country. With this objective, the National Bank Foundation was formed in 1989. Under the financial assistance of this Foundation, the National Bank Public School and College was established at Moghbazar in Dhaka.
2.8 Sports and Cultural Activities
Since its inception, NBL has been playing a pioneering role in sponsoring sports and games in the country. NBL was the sponsor of Metropolis Football League and Senior Division Football League last year. Besides, NBL extended substantial patronization to Bangladesh Olympic Association and Bangladesh volleyball Federation in 2003.The Bank never hesitates to extend its helping hands to the people as in the days of crisis so also in the cheerful happy moments of cultural events.
2.9 Present trends of the bank:
At present, NBL has been carrying on business through its 92 branches spread all over the country. Besides, the Bank has drawing arrangement with 415 correspondents in 75 countries of the world as well as with 32 overseas Exchange Companies. NBL was the first domestic bank to establish agency arrangement with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use the latest information technology services of SWIFT and REUTERS.
As a first generation private commercial bank of Bangladesh, National Bank Ltd. could do more for the development of nation’s economy. But it was not fully successful. This bank is also a victim of default culture. Bangladesh Bank declared this bank as a problem in 1997 for unlimited stuck-up loan. The bank could not declared dividend and opened branch in the year 1996 and 1997. Market value of shares was reduced to TK 65.25 for each TK 100 share in that time.
Under the direct supervision of Bangladesh Bank the situation of the bank was improved in the next two years. The classified loan was reduced to a tolerable position. Net profit before tax of the bank jumped to TK 396 per share in the year 1999.The bank achieved highest operating profit of TK 945.09 million in 2003 among 22 private commercial banks in Bangladesh. Bangladesh bank has satisfied to the performance of the bank and discharged it from problem bank obligation in the year 2000 the bank opened 10 new branches in different places of Bangladesh after realizing from problem bank.
Many new private commercial banks came to the banking sector. Competition has also been increased, These banks attached the market share of National bank Ltd. They have been taken employees of the bank by offering attractive salary. As a result overall performance of the bank again started to decrease.
The classified loan of the bank has increased in 2005 than 2001. The total amount of classified loan is Tk 1907.62million as on 1-12-2005 which is 7.06% of total loans and advances.
The percentage of classified loan to advances (2001-2005) is shown in bellow:
(Tk in million)
|Year||Amount||Total loans & advances||%|
The bank could not recover its classified loans although it relieved from problem bank.
2.10 Capital & Reserve fund:
Authorized capital of the National Bank Ltd. is 100.00 crore and paid-up-capital is 61.96 cores which is increased from the preceding year compare to Tk 10.33 cores. Reserve fund increased by Tk 10 crore to Tk 80.62 crore during the year under report .Total equity of the bank stood at Tk 273.46 crore at the end of December 2005 as compared to Tk 186.23 crore at the end of previous year .the rate of increase was 46.84%.
2.11 Bank’s Own share
National bank Ltd. started its January in 1983 with a paid-up-capital of Tk 4.40 crore and 19 owner shareholders. At present, paid up capital of the bank has increased to 43.03 crore which is casting a beginning impact in improving liquidity situation in the capital market. Till 31 December 2003, the bank has opened a total of 18,490 share portfolio
2.12 Deposits& Advances:
The deposit of the bank was Tk. 2897.34 corer as on 3 1-12-2004. It was Tk. 3298.40 crore in the year 2005. The growth rate of deposit is 13.84% in the year 2005.
The bank has been maintaining a stable dividend policy since 1998. The market of share was in a good position during the last six years. The board of directors bank declared 30% Bonus Share dividend for the year 2005.The dividend paid since 2001-2005 is as follows : Table-3
|Dividend||30% Cash||20% Cash||20% Bonus Share||20% Bonus Share||30% Bonus Share|
2.14 Sources and uses of Fund:
The main working forces of financial and commercial organization are fund. Bangladesh financial institutions collect fund from different sources and make profit through utilization of this fund. Earning of Maximum profit and holding of minimum liquidity a financial institution depended on its efficient fund management. The main sources of fund are as follows:
2. Reserve fund
5. Borrowing from Bangladesh bank
Under different heads and borrowing from different banks through REPO. In according with provision of Bangladesh Bank, 5% of total demand & time liabilities are kept as CRR in current account with the Bangladesh bank, while 13% of the liabilities are maintained in different approved securities (Bills, Bonds, and Debenture etc.) foreign currencies. The rest of the fund is utilized as loans and advance investments in profitable outlets.
National Bank Ltd. is conscious about use fund properly. It keeps necessary cash and securities to maintain CRR and SLR under instruction of Bangladesh Bank. Funds are invested in economic activities of Bangladesh as loan And advances. It uses its surplus fund in call money Market and different banks with higher profit.
Uses of fund
2.15 Bank’s Profit:
The last five (2001-2005) years profit position of the bank is as follows:
|Year||Operating Profit||Net profit before tax|
There is an increasing trend of operating profit of the bank till the year 2000. But it was largely increased in the year 2001 and again declined by million in the year 2002. Then operating profit is increasing in the year 2003 to 2005.
2.15 Training and Training Institute:
The bank continued to endeavor in building up a efficient and knowledge workforce through imparting in service modem banking training. For this, Bank developed a training institute in shamoli in 1987 for its own to train-up its employees. During the years under review 225 employees attained training programs arranged by the training institute of the bank. In every batch, 25 trainees can attain in training program with residential facilities. Up to 2001 from the beginning of the institute 3283 employees have trained-up.
2.16 Consumer services Expansion Program of National bank Ltd
Present age is the age of competition. A good number of new private commercial banks came to banking sector in Bangladesh during the last decade. Foreign banks (Standard chartered, American Express, HSBC, city NA, etc) also conduct banking business in Bangladesh very successfully. These new generation banks introduced many attractable products for customers. National Bank Ltd. is also introduced many products to attract customers.
The products introduced during the last five years are as follows:
A. Monthly savings Scheme
B. E-Cash! ATM card
C. Consumer credit scheme
D. Western union money transfer
E. SWIFT Services
Now a days NBL introduced a new product Name “Power Card”.
A. Monthly Savings Scheme:
It is an attractable savings project for limited income group. National bank Ltd. got quick
response in this project. A depositor can deposit 500-10000
Taka monthly for 5-8 years. The return is as follows:
|Return after 3
|Return after 5
|Return after 8
B. E- Cash! ATM CARD:
ATM service is the dynamic process of electronic technology in modem banking. National bank Ltd. has elevated services to the highest standard by bringing Electronic banking (E Banking) and ATM services at the doorstep of clients. To day the entire banking system has been undergoing is evolution change in providing improved services to the clients. One of ATM has made the lifestyle of our clients much easier and comfortable. The note able characteristics of ATM are:
Payment facility for 24 hours a day
Arrangement for payment of bills
Multiple location facility Dhaka, Chittagong, and Sylhet
C. Consumer credit Scheme:
National Bank’s consumer credit scheme gives a great opportunity to buy house and office items on easy installments. This scheme gives an advantage of part payment to cope with high price tags of many necessary home and office appliances. A consumer is the ultimate user of a good. Thus” Consumer credit” is the credit, which directly comes into the use of consumer.
Objectives of Consumer Credit Scheme:
The Objectives of Consumer Credit Scheme of National Bank Ltd. is as follows:
1. To bring the credit facility to wide range of customers.
2. To provide financial assistance to the limited income group people toward buying utility products.
3. To help the professionals to raise their living standard.
4. To participate in the socio-economic development of the country.
Goods and services under the scheme:
Under the “Consumer Credit Scheme” NBL grants pecuniary help for the following goods and services.
• Private car and station wagon new and reconditioned.
• Refrigerator and deep fridge.
• Air cooler, Air condition, Room-heater, Water Purifier.
• Sewing machine.
• Other goods that are not mentioned above but are considered essential.
D. SWIFT Services:
NBL is one of the first few Bangladesh Banks to obtain membership of SWIFT (Society for World Inter-bank Telecommunication). SWIFT is a members’ owned cooperative which a first and accurate communication network for financial transaction such as Letter of credit, Fund Transfer etc. By being a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5700 user institutions in 150 countries all over the world.
2.17- Pictures of Small loan Project of National Bank Ltd
General banking department
General banking department is the heart of all banking activities. This is the busiest and important department of a branch, because funds are mobilized, cash transactions are made; clearing, remittance and accounting activities are done here. Since bank is confined to provide the services everyday, general banking is also known as retail banking. In NBL Dhanmondi Branch, the following departments are under general banking section:
1. Account opening section
2. Deposit section
3. Cash section
4. Remittance section
5. Clearing section
6. Credit card section
7. Loans & Advances Section
8. Accounts section
9. Western Union Money Transfer Section
3.1 Account Opening section:
Account opening is the gateway for clients to enter into business with bank. It is the foun dation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account
Account opening procedure:
|Step 1||The account should be properly introduced by Any one of the following:
/Sub- Manager of the Branch concerned
|Step 2||Receiving filled up application in bank’s prescribed form mentioning what type of account is desired to be opened.|
|Step 3||· The form is filled up by the applicant himself / herself.
· Two copies of passport size photographs from individual are taken, in case of firms photographs of all partners are taken.
· Applicants must submit required documents
· Application must sign specimen signature sheet and give mandate
· Introducer’s signature and accounts number – verified by legal officer.
|Step 4||Authorized Officer accepts the application.|
|Step 5||Minimum balance is deposited – only cash is accepted.|
A customer can open different types of accounts through this department. Such as:
Documents required for opening account:
i Individual/Joint Account:
1. Introduction of the account.
2. Tow photographs of the signatories duly attested by the introducer.
3. Identity (copy of passport).
4. Joint Declaration Form (For joint a/c only).
5. Employee’s Certificate (in case of service holder).
1. Introduction of the account.
2. Two photographs of the signatories duly attested by the introducer.
3. Valid copy of Trade License.
4. Rubber stamp.
5. TIN number certificate.
6. Identity (Copy of passport).
7. Permission letter from DC/Magistrate (in case of newspaper)
1. Introduction of the account.
2. Two photographs of the signatories duly attested by the Introducer.
3. Valid copy of Trade License.
4. Board resolution of opening A/C duly certified by the Chairman/Managing Director.
5. Certificate of Incorporation.
6. Certificate of Commencement (In case of Public limited company).
7. Certified (joint stock) true copy of the Memorandum and Article of Association of the Company duly attested by Chairman or Managing Director.
8. List of directors along with designation & specimen signature.
9. Latest certified copy of Form – xii (to be certified by register of joint stock companies) (In case of Directorship change).
10. Rubber Stamp (Seal with designation of each person)
11. Certificate of registration (In case of Insurance Company -. Obtained
from department of Insurance form the Peoples Republic of BD.)
Club / societies account:
1. Introduction of the account.
2. Two photographs for Opening A/C duly certified by President/Secretary.
3. Board Resolution for Opening A/C duly certified by President/Secretary.
4. List of Existing Managing Committee.
5. Registration (if any).
6. Rubber Stamp.
7. Permission letter from Bureau of N.G.O. (In case of N.GO. A/C).
Issuing Cheque Book
There are three type ,of cheque book in the National Bank ltd. those are:
•Ten leaves cheque book: -Ten leaves cheque book use only for savings account. Twenty leaves cheque book: -Twenty leaves cheque book is use for current account.
Fifty leaves cheque book: – Filly leaves cheque book use for current account but this is provided those depositors who are loyal customer or those whose transaction has done randomly.
Chequebook issue to a new account holder
New account holder has to fill up an application form that is provided by NBL. After verifying depositor signature the authorized officer put branch seal and put his signature then dale, name of the account holder, account number, cheque number are recorded in the register book. When all this function is successfully completed the client gets his cheque book and put his signature on the register book.
Cheque book issue to existing account holder
When a existing deposit holder wants to withdraw a new cheque book then he should be give a requisition slip to the bank which he get from previous cheque book then authorized officer verifying deposit holder signature. After verifying signature authorized officer put breach seal, and his signature on new cheque book then date, name of account, account number, cheque no, are recorded in the register book then client get his cheque book and put his signature on the register book.
In the case of lost Cheque-book
It has been observed that when the account holder has lost a cheque book, then account holder must have filled an indemnity bond that has been authorized by the introducer.
3.2 Deposit Section
Deposit is the lifeblood of a bank. From the history and origin of the banking system. We know that deposit collection is the main function of a bank.
The deposits that are accepted by NBL like other banks may be classified in to,
a) Demand Deposits
b) Time Deposits
These deposits are withdrawn able without notice, e.g. current deposits. National Bank Limited accepts demand deposits through the opening of,
a) Current account
b) Savings account
c) Call deposits from the fellow bankers
A deposit which is payable at a fixed date or after a period of notice is a time deposit. National Bank Limited accepts time deposits through Fixed Deposit Receipt (FDR), Short Term Deposit (STD) and Beared Certificate Deposit (BCD) etc.
While accepting these deposits, a contract is done between the bank and the customer. When the banker opens an account in the name of a customer, there arises a contract between the two. This contract will be valid one only when both the parties are competent to enter into contracts. As account opening initiates the fundamental relationship & since the banker has to deal with different kinds of persons with different legal status, National Bank Limited officials remain very much careful about the competency of the customers.
3.3 Cash Section
Banks, as a financial institution, accept surplus money from the people as deposit and give them opportunity to withdraw the same by check, etc. But amount the banking activities, cash department play an important role. It does the main function of a commercial bank i. e, receiving the deposit and paying the cash on demand. As this department deals directly with the customers, the reputation of the bank depends much on it. The functions of a cash department are described bellow:
Functions of Cash Department:
|Cash Payment||1. Cash payment is made only against Check
2. this is the unique function of the banking system which is known as “payment on demand”.
3. It makes payment only against its printed valid Check
|Cash Receipt||1. It receives deposits from the depositors in form of cash
2. So it is the “mobilization unit” of the banking system
3.It collects money only its receipts forms
When customers want to deposit his money then he deposited it by pay slip in the cash counter. After receiving money and pay slip from client, officer done following functions which is arrange at sequentially:
Officer ensure that all the writing on pay slip have been right. & Then count money and write denomination in the backside of the pay slip. Then officer put cash receive seal on the carbon copy of the pay slip. Officer put his signature on the carbon copy pay slip
Then register in cash receive register book, following give a format of cash receiving register book: In cash receive seal contains some components which are as follows:
National Bank Ltd. Name of Bank
Dhanmondi Branch Branch name
When depositor wants to withdraw his money then he present or order cheque for withdrawing cash from cash counter. At first deposit holder present his cheque on the computer desk. Then the authorized officer checks that cheque and amount has been balance in his account. When every things right then the amount has been debited from the depositor account on which the cheque has been drawn. If there is any doubt in the signature which has been appeared on the specimen signature card has verified. When every thing ok then payment seal put on the cheque
Then bearer has signed on the back side of the cheque and authorized officer made payment. The authorized officer must have to maintain cash payment register. Following give the components of cash payment register book:
Transaction cash money
At the beginning of the banking our in charge of cash department provides some money from the vault to the counter officer for meet clients demand. Cash department in charge keep record that amount. At the end of the banking hour balance must be adjust with recorded transaction. At last the received balance and payment must be equal with the balance on the receiving and payment register book.
Every branch of National lank Limited has ability to maintain five million taka in their vault to meet their daily transaction. Because every vault has an insurance premium which limit is five million taka. If any branches need more then five million taka then branch bring it from principle branch or the nearest branch of National Bank Ltd.
Cash balance book
In cash balance book keep record of that cash has maintained by the incharge. In cash balance book opening balance have to be always the previous days closing balance. At the end of the banking hour all receives have to be added with opening balance then deducted all his payment from the total balance. Remaining balance has continued as the opening balance of next transactions day.
Evening banking hour begin after original banking hour. This evening banking hour begin from 3pm to 5 pm..
Different types of notes
There are different types of notes has contained in banking system which as follows:
• Non-issue note
• Torn note
• Solid note
3.4 Remittance Section:
Local carrying cash money is troublesome and risky, that’s why money can be transferred from one place to another through banking channel. This is called remittance. Remittances of funds are one of the most important aspects of the Commercial Banks in rendering services to its customers.
Remittance means transfer of money from one place to another. It is one of the safest ways to transfer money from one place to another. National bank ltd has 91 brunches so they have strong network through whole country and they can easily remit money most of the districts with in the country.
For transferring money National bank ltd offers different instruments such as:
• Telegraphic transfer (TT)
• Pay order (PO)
• Demand draft (DD))
• Pay slip
Type of remittance:
Between banks and non banks customer
Between banks in the same country
Between banks in the different centers.
Between banks and central bank in the same country
Between central bank of different customers.
|Points||Pay Order||Demand Draft||TT|
|Explanation||Pay order gives the payee the right to claim payment from the issuing bank||Demand Draft is an order of issuing bank on another branch of the same bank to pay specified sum of money to payee on demand.||Issuing branch
branch to pay specified money to the specific payee on demand by Telegraphy Telephone
|Payment from||Payment from
|Payment from ordered branch||Payment from ordered branch|
used to Remit
|Within the clearinghouse area of issuing branch||Outside the clearinghouse area of issuing branch. Payee can also be the purchaser.||Anywhere in the country|
Process of the
|payment is made through clearing||1. Confirm that the DD is not forged one.
2. Confirm with sent advice
3. Check the ‘Test Code’
4. Make payment
|1. Confirm issuing branch
2. Confirm Payee AIC
3. Confirm amount
4. Make payment
5. Receive advice
|Charge||Only Commission||Commission + telex charge||Commission + telephone|
3.4- 1Telegraphic transfer (TT)
Telegraphic transfer (TT) is the quickest and self way of transferring money from one destiny to another destiny. It is done by telephone massage, telex massage. T he message is authenticated by prefixing of suffixing a cheque cypher. A cheque chyper for any remittance is worked out on test key table and a code block which is allowed only authorized officer.
Elements of the test code for TT:
Code for amount
Code for date
Code for branch`
This test code is generally given by the authorized officer because it is confidential.
Requirements for sending TT:
1) TT incoming & 2) TT outgoing
Procedure for sending TT:
When client want to transfer money from NBL, Dhanmondi branch to NRL,Agrabad
branch (suppose) then following ways he should follow :
At first collect TT form from remittance division
•Deposit money in cash department which he mentioned in TT form.
•Client should have account in National at Dhanmondi branch and sending place. C1ient should paid commission, VAT and telex charge
Then client collect cost memo from remittance division, this cost memo work as an evidence in favor of client.
The authorized officer put test code and registers it in the TT payment register book then authorized officer send massage to the Agrabad branch by telephone or telex. This massage contains Client account number, test number, amount,
Commission of TT:
• Up to 25000 commissions is 25 taka
Above 25000, for every one thousand pay one taka as commission.
VAT: – 15% of commissions
Telex charge: – It is always 40 taka
3.4-2 Pay order (P0)
Pay order is an order by an issuing branch or bank upon client for made payment of the amount mentioned there in that named pay on according to client order. Pay order issued only for local payment.
Commission: For issuing pay order client should pay 10 take as commission and 2 taka for VAT.
Procedure for cancel pay order: It has been seen that usually pay order cancel in two certain situation which is as follows:-
When client issued any pay order in the name of any payee. If payee does not accept the pay order then payee put his seal and signature back side on the payorder then payee returns to the client. The client of the pay order has deposited it on his account after that authorized officer issue one debit and credit voucher.
Debit voucher: – pay order accounts
Credit voucher: – clients account
If clients wants to cancel his pay order before submitted then have to submit as application for deposited that pay order amount to his account. In this client should paid cancellation charges. Which as follows:
Up to 500 taka charge 10 taka
•Above 500 taka charge 25 taka
3.4-3 Demand draft (DD) *
1)DD incoming & 2) DD outgoing
Requirements for sending DD:
Procedure for sending DD: When client want to transfer money from NBL, Dhanmondi branch to NRL,Agrabad
branch (suppose) then following ways he should follow
:At first collect DD form from remittance division
•Deposit money in cash department which he mentioned in DD form.
•Client should have account in National at Dhanmondi branch and sending place. C1ient should paid commission, VAT .
Then client collect cost memo from remittance division, this cost memo work as an evidence in favor of client.
The authorized officer put test code and registers it in the DD payment register book then authorized officer send massage to the Agrabad branch by telephone or telex. This massage contains Client account number, test number, amount.
Characteristics of demand draft (DD):
• It is drawn on one branch upon another branch of’ the same bank
• Its payment cans only that whose name is mentioned in the pay orders.