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COMPARATIVE STUDY OF EXIM & ISLAMI BANK LTD
Executive Summary
Banks are the most important financial institution in the economy. The principle source of credit for millions of individuals and families and for many units of government is the Bank. EXIM Bank, as the name implies, is not a new type of bank in global but is the first in Bangladesh. It believes in togetherness with its customers, in its march on the road to growth & progress with services. To achieve the desired goal, it has intention to pursuit of excellence at all stages with a climate of continuous improvement. Because it believes, the line of excellence is never ending. It also believes that its strategic plans & business networking will strengthen its competitive edge over in rapidly changing competitive environment. Its personalized quality services to customers with the trend of constant improvement might be cornerstone to achieve its operational success. Export Import Bank of Bangladesh Limited has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through Credit rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas
of business operation. This study mainly focuses on the service of Export Import Bank of Bangladesh Limited, where the in influencing factors are analyzed in order to determine the prerequisites of providing quality service in the banking Industry with comparison of IBBL. Export Import Bank of Bangladesh Limited is being managed by a highly professional and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it repositions itself in the changed market condition. The Bank has also made a significant contribution to the national economy under the prudent leadership and untiring support of the member of the Board of Directors, who are leading business personalities and reputed industrialists of the country. As a matter of policy, the Bank conducts its business on the principles of Mudaraba, Murabaha, Bai-Muazzal and hire purchase transaction approved by Bangladesh Bank. The Bank is one of the interest-free Shariah-based Banks in the country and its modus-operandi is substantially different from those of other commercial banks.IBBL Bank earn the highest amount of profit, because of their high and qualified management system and also having a good communication channel so that it quite a easy tasks for the management for making an effective and efficient decision so that the bank is possess a good position in the market. IBBL has intent to use modern and contemporary technology to provide quality services. IBBL training system and its application is of-course admissible and their compensation procedure is quite an effective in the context of Bangladesh. EXIM bank is the newcomer in the field of banking sector, they done comparatively well ,but they need to focus on customers as well as the business environment.
Chapter: One
Introduction
1.0 INTRODUCTION
Banks play an important role in the business sector and industrialization of a country. Basically bank take deposit from the customers against interest and lend it to the borrower’s interest for a certain period. Under this sphere, the bank offers different interest notes and other options to there customers to remit and deposit there money. Most of the common between the banks, only the customer service and other facilities vary.
In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, Export Import Bank of Bangladesh Limited started commercial banking operations effective from August 03, 1999.The sponsors are reputed personalities in the field of trade and commerce.
As a fully licensed commercial bank, Export Import Bank of Bangladesh Limited is being managed by a highly professional and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it repositions itself in the changed market condition.
1.1 Origin of the report
Export Import Bank of Bangladesh Limited has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through Credit rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation. This study also focuses on the service of Export Import Bank of Bangladesh Limited, where the in influencing factors are analyzed in order to determine the prerequisites of providing quality service in the banking Industry.
1.2.1 OBJECTIVE OF THE REPORT
The main objective of practical orientation is to get a clear-cut idea about Bank, how it runs and what functions it does i.e. to be acquainted with practical everyday functions of Banking Business. Along with the main objective other objectives of Report are —
1. To apply theoretical knowledge with practical situation.
2. To understand the real management situation and to gather practical knowledge.
3. To familiar with Banking environment, clients, working hours, values, conditions
And other things related to Bank.
4. To analyze the financing system of the Bank and to have greater contribution towards country’s economy.
5. To determine the factors that influences the choice of a Bank by the customers.
6. To identify the problems faced by the customers and the Bankers.
7. To examine the profitability and productivity of the Bank.
1.4 LIMITATIONS OF THE REPORT
Have encountered some problems —
1. Time constraint was major drawback in the report. The duration of the Report was
Only three months.
2. The Report was limited by the size of sample.
3. Some essential data could not be gathered because of confidentiality concerns.
4. Many procedural matters were conducted directly in the operations by the top
Management level, which may also, gave sort of restrictions.
Chapter: Two
Banking Sector
In
Bangladesh
2.0 Bangladesh economy as a whole
In the Annual Report of Bangladesh Bank, the fiscal year 2007 witnessed a growth mainly by robust growth in service and notable expansion in manufacturing activities. Despite shocks from high and volatile prices of oil and other commodities in international market, Bangladesh achieved a strong growth of 6.5 percent in fiscal year 2007 slightly slower than 6.6 percent of fiscal year 2006. This performance was facilitated by strong remittances of expatriates from abroad and reasonable export growth. Growth rate of agricultural sector was 3.2 percent in fiscal year 2007 mainly due to lower growth in crops and horticulture sub-sector. The industry sector grew modestly at 9.5 percent during the FY 2007.The growth was supported by a continued improved performance in manufacturing sub-sector, facilitated by strong and sustained growth in export oriented manufacturing activity and expansion in domestic demand. Service sector grew by 6.7 percent during FY 2007, which was slightly higher than 6.4 percent of FY 2006. The growth was fairly well spread in different sub-sector. Monetary policy was cautioned and restrained with a view to curbing excess demand from inflationary expectations while supporting the highest sustainable real GDP growth. Growth of Broad Money (M2) was kept consistent with target GDP growth and inflation. The growth of Broad Money stood at 17.1 percent in FY 2007, which was lower than previous year’s growth of 19.3 percent. Credit to public sector and private sectors grew by 12.5 percent and 15.1 percent respectively as against 13.7 percent and 18.3 percent of previous year. Overall growth of domestic credit was 14.7 percent compared to 20.2 percent in FY06. The highest growth in industry sector along with the continuous trend of growth in service sector propelled the GDP growth rate to 6.51 percent in FY 2006-07 according to provisional estimate. The GDP growth rate is assumed slightly lower compared to the previous fiscal year due to the decline of growth in crops and horticulture sub-sector of agriculture sector. The higher growth of industry and service sectors mainly enabled the economy to post the growth at 6.33 percent according to the final estimate in FY2005-06.
National income and price from FY03-13.
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
National income and prices (percent change)
Real GDP 5.3 6.3 6.0 6.6 6.7 6.7 7.0 7.0 7.0 7.0 7.0
GDP deflator 4.5 4.2 5.1 5.2 6.3 6.7 5.0 4.0 4.0 4.0 4.0
CPI inflation
(annual average) 2/ 4.4 5.8 6.5 7.2 7.2 6.5 5.0 4.0 4.0 4.0 4.0
Central government operations (percent of GDP)
Total revenue 10.3 10.2 10.5 10.7 10.4 10.7 11.1 11.5 11.9 12.2 12.2
Tax 8.3 8.2 8.5 8.5 8.3 8.6 9.0 9.4 9.8 10.1 10.1
Non tax 2.0 1.9 2.0 2.2 2.1 2.1 2.1 2.1 2.1 2.1 2.1
Total expenditure 13.7 13.3 13.8 13.9 14.0 15.9 14.3 14.8 15.4 15.8 15.8
Current expenditure 8.1 7.8 8.4 8.4 9.0 8.8 8.6 8.6 8.6 8.5 8.5
Of which: Interest
payments 1.9 1.6 1.7 1.8 1.9 2.1 1.9 1.9 1.9 1.9 1.8
Of which: Subsidies 2.3 2.4 2.8 2.6 3.0 2.8 2.8 2.8 2.8 2.8 2.8
Annual Development
Program 5.4 5.0 5.0 4.7 4.3 4.8 4.9 5.4 6.0 6.5 6.5
Other expenditures 3/ 0.1 0.5 0.4 0.8 0.7 2.3 0.8 0.8 0.8 0.8 0.8
Overall balance 4/ -3.4 -3.1 -3.3 -3.2 -3.5 -5.2 -3.3 -3.3 -3.5 -3.6 -3.6
Primary balance 4/ -1.5 -1.4 -1.7 -1.4 -1.6 -3.1 -1.3 -1.4 -1.6 -1.8 -1.8
Financing (net) 3.4 3.1 3.3 3.2 3.5 5.2 3.3 3.3 3.5 3.6 3.6
Domestic 4/ 5/ 1.2 1.8 1.7 2.1 2.3 3.7 1.7 1.6 1.6 1.6 1.6
External 2.1 1.3 1.6 1.2 1.2 1.5 1.6 1.7 1.9 2.0 2.0
Total central
government debt
(percent of GDP) 51.1 51.0 50.1 49.3 46.9 46.4 44.6 43.1 41.9 40.8 39.8
Net domestic assets 12.2 13.5 17.1 19.6 13.4 14.2 16.0 14.2 14.7 15.0 15.4
Credit to private sector 12.6 17.5 17.0 18.3 15.1 14.5 14.3 13.5 14.4 14.8 15.5
Broad money (M2) 15.6 13.8 16.7 19.3 17.5 15.0 17.7 15.7 15.3 14.8 14.3
Balance of payments (in billions of U.S. dollars) 6/
Exports, f.o.b. 6.5 7.5 8.6 10.4 12.5 15.0 17.1 19.5 22.1 25.1 28.5
(Annual percent change) 9.5 15.9 14.0 21.6 19.9 19.9 14.1 14.1 13.4 13.5 13.6
Imports, f.o.b. -8.7 -9.8 -11.9 -13.3 -16.0 -19.3 -21.8 -24.4 -27.4 -30.7 -34.5
(Annual percent change) 13.1 13.0 20.6 12.1 20.0 21.2 12.7 12.1 12.0 12.1 12.4
Current account 0.2 0.2 -0.6 0.6 0.5 0.2 -0.1 -0.5 -0.9 -1.5 -2.1
(Percent of GDP) 0.3 0.3 -0.9 0.9 0.8 0.3 -0.2 -0.5 -1.0 -1.4 -1.8
Gross official reserves
(in billions of U.S. dollars) 2.5 2.7 2.9 3.5 5.0 5.7 6.9 8.1 9.2 10.2 10.8
In months of imports of goods
and nonfactor services 2.9 2.8 2.5 2.7 3.2 3.0 3.2 3.4 3.4 3.4 3.2
Memorandum item:
Nominal GDP
(in billions of taka) 3,006 3,330 3,707 4,157 4,715 5,368 6,031 6,712 7,469 8,311 9,249
Sources: Data provided by the Bangladesh authorities; and Fund staff estimates and projection
Price rate of daily commodities is increasing. And at the same time national savings is deteriorating. But national savings is increasing. Private investment is increasing from 2000-2007. But most surprisingly public investment is increasing.
This diagram shows that the contribution of GDP in service, agriculture and industry sector. In the fiscal year 1980-1981 the contribution of service sector in GDP is 50%, in agriculture 33% and in industry it was 17%.And in the year it is in service sector 49%, in agriculture 21% and in industry it is 21% in GDP. This shows that the contribution from agriculture in GDP is decreasing but contribution of industry is flourishing from compare from 1980 to 2008.
In the diagram show the proper identification of percentage of growth of import, export, remittance and major economical problem in the context of Bangladesh is inflation. The
Diagram belong to from august, 2007 to September, 2008.
2.1 Overall Banking Sector Performance:
In the Year of 2006-2007 loan advances is 385.7 billion, Government bills 15.5 billion, Deposit with BB 86.3, cash in Tills 190.9 and other assets is 1041.1 billion.
Here is the comparison of aggregate industry assets of 2005-2006
Here is the proportionate of aggregate industry assets in percentage in the year of 2006-2007, 2007-2008.
Here are the aggregate industry liabilities in billion, in deposit, 296.9 billion and capital reserve 76.8 billion and in others 1140.3 billion.
Here is the comparison of aggregate industry liabilities in billion in 2007-2008.
Chapter-3
An overview
Of EXIM Bank Ltd
3.0 Historical Background of EXIM Bank Limited
Export Import Bank of Bangladesh Limited is a public listed scheduled bank categorized in private sector and established under the ambit of Bank Companies Act, 1991 and
incorporated as a public limited company under the Companies Act, 1994 on June 02. The Bank started commercial banking operations effective from August 03, 1999. The Bank converted its Banking Operations into Islamic Banking based on Islamic Shariah from traditional banking operation in July 01, 2004 after obtaining approval from Bangladesh Bank.
During the span of time the Bank has been widely acclaimed by the business community, from small entrepreneurs to large traders and industrial conglomerates, including the top rated corporate borrowers for forward- looking business outlook and innovative financing solutions. With a few of the Company’s activities and program on the basis of Islamic Shariah, within this period of time it has been able to create an image of responsibility for itself and has earned significant reputation in the country’s banking sector. Within an operative period as eight years, the bank has arrived at a strong financial and business position by expanding its market share compared to its contemporaries and to some extent to the 2nd even 1st generation banks of private sector.
In edition, the Bank has also made a significant contribution to the national economy under the prudent leadership and untiring support of the member of the Board of Directors, who are leading business personalities and reputed industrialists of the country.
As a matter of policy, the Bank conducts its business on the principles of Mudaraba, Murabaha, Bai-Muazzal and hire purchase transaction approved by Bangladesh Bank. The Bank is one of the interest-free Shariah-based Banks in the country and its modus-operandi is substantially different from those of other commercial banks
3.1 OBJECTIVES OF THE STUDY
The general objective of the study is to analyze the status and dynamic of various function indicators and to find out the pattern and magnitude of relationship that exists among different parameters of EXIM Bank. The main object of the study is to observe the existing system by the EXIM Bank. The specific objective of the study are listed below-
o To evaluate the effectiveness of operational management of EXIM Bank.
o To identify the problem area of EXIM Bank.
o To delve into the existing system of rural credit, innovated and practical by the bank.
o To identify the beneficiaries of the credit programs.
o To study the working atmosphere of EXIM Bank, as an incentive to the effectiveness of the credit programs.
o To provide suggestions and preliminary recommendation for improvement by undertaking indent study in the line of findings.
o To learn about the comparative study of EXIM Bank with other banks on the ratio of success on the program.
o To have an exposure about the real management situation.
o To have an exposure on the financial institution such as banking environment of Bangladesh.
o To familiarize with practical lob environment.
o To gain experience on different function of the different department of the bank.
o To relate the theories of banking with the practical banking.
o To examine the profitability and productivity of the bank.
o To observe banker and customer relationship.
o To face the various situation.
The report covers the banking service to the customer specially the customer of EXIM Bank of Bangladesh Limited. This has been prepared through extensive discussion with the bank employees and also with the customer.
3.2 Key Function of EXIM Bank
Like other commercial banks like EXIM bank performs all traditional banking business including introduction of a wide range of caving and credit products, retail banking and ancillary service with the support of modern technology and professional management, but the Exim Bank Bangladesh Limited emphasizes its function in export and import trade handing and financing of export oriented industries will enhance wealth, quotes more employment opportunities helps formation of capital and reduces in balance in the balance of payment in the country.
Social Commitment:
The purpose of the banking business is, obviously, to earn profit, but the promoters and the equity holders of EXIM bank are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of art; culture and sports of the country and the bank want to make a substantive contribution to the society where we operate, to the extent of our separable resources.
Corporation Culture:
This bank is one of the most disciplined Banks with a distinctive corporate culture. Here we believe in shared meaning, shared understanding and shared sense making. Our people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to us. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate conduct. The Bank achievement has been possible because of the able leadership; dedicated and committed services provided by all levels of management and staff which all possible because of a good and quality full corporate culture.
Communications Strategy of EXIM Bank:
EXIM Bank is a third generation bank. It has converted into Islami Banking in July 01, 2004 with the approval of Bangladesh Bank. EXIM Bank mainly emphasis on public relation out of four communications strategy. EXIM Bank does following activities for their market promotion and advertising.
1. When they open new branch, send letter to the elite persons, offices and industries in that area for opening account in their bank.
2. Every year they arrange get together for their loyal customer in Dhaka and Chittagong. For that reason EXIM Bank build good relationship with their clients. EXIM Bank also solves the clients problems and they show the procedure the overcoming the problem.
3. They arrange the ceremony of award to the honorable person in every year.
4. They send gift item at the beginning of the year to the senior citizen of the society. These items include pen, dairy, calendar, pen stand, wall clock etc.
5. They also give special gift to the elite person in different occasions.
6. In every month the higher authority of EXIM Bank give information about the market condition and suggestion to the branch manager.
7. The managers of every branch tell present condition of his branch to the head office in every month.
8. Head Office updates deposit and investment guideline to the branch manager.
9. EXIM Bank sponsors different types of National games.
EXIM Bank will soon setup a Research and Development Division and separate marketing divisions, which are, help them to implement better marketing strategy.
Place Strategy of EXIM Bank:
One of the simplest methods of segmenting markets is by their geographic location. People who are living in one region of the country have consuming and purchasing habits that differ from those who live other regions. For example, the usage of woolen sweaters and jackets is higher in north India, due to the extreme cold during cold during the winter months, compared to consumers in south India.
Even in local markets, geographic segmentation is important. A bank branch in the western part of the city may attract account holders from that part of town to the bank. However, the bank branch manager may find it difficult to attract customers from the eastern part of the city due to the location inconvenience. When marketers analyze geographic data, they study sales by region, by state, city size, specific locations and the kind of retail outlets where sales are made.
Its may be seen and unseen it is not necessary that bank perform its activities by branch network. Bank may be deal contacts with a client or corporation in different location out of Bank branch. EXIM Bank has 45 branches in urban and rural area. But most of them are in urban commercial area.
3.3 Mission of Export Import Bank of Bangladesh Limited
Export Import Bank of Bangladesh Limited mission statement states:
• To be the most caring and customer friendly and service oriented bank.
• To create a technology based most efficient banking environment for our customer.
• To ensure ethics and transparency in all levels.
• To ensure sustainable growth and establish full value of the honorable shareholders.
• To add effective contribution to the national economy.
• Provide high quality financial services in export and import trade.
• Become trusted repository of customers’ money and their financial advisor.
• Display team spirit and professionalism.
• Create sound capital base.
• Enhance shareholders wealth.
Vision of the Export Import bank of Bangladesh limited:
The gist of their vision is “Together towards Tomorrow”. Export Import Bank of Bangladesh Limited, as the name implies, is not a type of Bank in some countries on the globe, but is the first of its kind in Bangladesh. It believes in togetherness with its customers, in its march on the road to growth and progress with services.
• Provides the greatest return to the stakeholders by the stakeholders by achieving sound profitable growth.
• Be perceived by the customers and employees as the best whenever it operates.
3.4 Customer Services and Automation
“To err human and forgiveness divines” a proverb, the bank believes but the customers will not accept. Because for a service they pay for they want it 100% defect free. So improvement of the customer service should always be their matto altered expectation of the customer have shifted the focus from resource base productivity.
To operate in the globalize environment, the banks future plan is to equip all the units of the bank with the modern technology, such as online computer network telex, fax, e-mail etc. for the service of the customer round the clock, it has a plan to install ATMs suitable places in Dhaka and other cities of the country.
Organizational Development of the Exim Bank:
In the 1450s and 1960s a new integrated type of training originated knows was organizational development. Organizational development is an intervention strategy that uses group processes to focus on the whole culture of an organization in order to bring about planned change, it seeks to change belief attitudes, values structure and practices so that organization can better adapt to technology and live with the fast pace of change.
The general objective of organization development is to change all parts of the organization in order to make humanly responsive, more effective, and more capable of self-renewal.
The organizational development process does not preclude the use of conventional training method, which are useful for some purpose. The management of Exim Bank is also concern about the training for its development. They believe that if the employees will be trained enough they would contribute more for the development of the banking business that is why, they send some employee in every batch. So a number of employee took training from different training institutions such as Bangladesh Bank, National Bank training Institute, Bangladesh Institute of Bank Management.
3.5 Organizational Structure of Exim Bank
The development of on organization depends on the management style of their organizations the same the development if the bank is being occurred only for the good management team. Management of the Exim Bank controlling of all the resources of the organization. To achieve the ultimate objective of making Exim Bank the finest banking of the country, the workforce will be futuristic in outlook, professional in attitude and honest in reputation.
The board of directors wants to repose in the management all executive powers to run this service industry administration and credit portfolio independently without any undue influence from outside. The board formulates policy and give policy directives to the management. Transparency and accountability are strictly ensured at all leaves of the bank. Bank operate with integrity, competence and farsightedness abiding by all the principals and provisions laid down in the bank company act 1991, 1994 and the guidelines of Bangladesh Bank. The bank is committed to pursue a straight forward, upright legitimate banking business, never be tempted by the abnormal prospect of large returns to do any thing. It will only do what may be done under the national policy.
3.6 Management Profile of Exim Bank
Registered Name : Export Import Bank of Bangladesh Limited.
Registered Head Office : Printers Building (5th floor)
5 Rajuk Avenue, Motijheel, Dhaka-1000
Phone: 9566764, 955382, 9561604.
Telex: 642527 Eximbo bj
Fax: 880-2-9556988
E-mail: eximho@bdonline.com
Date of Incorporation : June 02, 1999.
Inauguration of 1st Branch : August 03, 1999.
Chairman : Mr. Md. Nazrul Islam Mazumder
Advisor : Mr. Alamgir Kabir, FCA
Board of Directors:-
Name of Directors Name of Sponsors
Mr. Md. Nazrul Islam Mazumder Mr. Md. Nazrul Islam Swapan
Mr. Md. Faiz Ullah Mr. Mohammad Abdullah
Mrs. Nasima Akhter Mr. Md. Altaf Hossain
Mr. A.K.M. Nurul Fazal Mrs. Nasreen Islam
Mr. Zubayer Kabir Mr. Md. Mazakat Harun
Mr. Md. Habibullah Mr. Abdullah Al-Mamun
Mr. Md. Abdul Mannan Mr. Md. Fahim Zaman Pathan
Al-haj Md. Nurul Amin Mrs. Asma Begum
Mr. Abdullah Al-Zahir Sawpan Engr. Aminur Rahman Khan
Mr. Mohammed Shahidullah Mrs. Rizwana K. Riza
Bay-Leasing & Investment Ltd. Mr. Md. Nur Hussain
Represented by Mr. Mahbubur Rashid
3.7 Organizational Lay Out
Hierarchy of EXIM Bank Limited:-
Chairman
?
Managing Director
?
Senior Executive Vice President
?
Executive Vice President
?
Senior Vice President
?
Vice President
?
Senior Asst. Vice President
?
Asst. Vice President
?
Senior Principal Officer
?
Principal Officer
?
Executive Officer
?
Officer
?
Asst. Officer
?
Junior Officer
?
Computer Operator
?
Sub- Staff
Functional Organizational Structure of EXIM Bank Limited (In Head Office)
The commercial banking system dominates Bangladesh’s financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system consists of four nationalized commercial Banks, around forty private commercial banks, nine foreign multinational banks and some specialized banks. The Nobel-prize winning Grameen Bank is a specialized micro-finance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh.
Central Bank (Bangladesh Bank): According to Bangladesh Bank Order-1972, the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank with retrospective effect from 16th December, 1971.
Nationalized Commercial Banks (NCBs): The banking system of Bangladesh is dominated by the 4 Nationalized Commercial Banks, which together controlled more than 54% of deposits and operated 3388 branches (54% of the total) as of December 31, 2004. The nationalized commercial banks are:
1) Sonali Bank
2) Janata Bank
3) Agrani Bank
4) Rupali Bank
3.8 Banking Sector as a Whole
(Private Commercial Banks): Private Banks are the highest growth sector due to the dismal performances of government banks (above). They tend to offer better service and products. Some of PCBs are:
1) AB Bank Limited
2) BRAC Bank Limited
3) Eastern Bank Limited
4) Dutch Bangla Bank Limited
5) Dhaka Bank Limited
6) Islami Bank Bangladesh Ltd
7) Pubali Bank Limited
8) Uttara Bank Limited
9) IFIC Bank Limited
10) National Bank Limited
11) The City Bank Limited
12) United Commercial Bank Limited
13) NCC Bank Limited
14) Prime Bank Limited
15) SouthEast Bank Limited
16) Al-Arafah Islami Bank Limited
17) Social Investment Bank Limited
18) Standard Bank Limited
19) One Bank Limited
20) Exim Bank Limited
21) Mercantile Bank Limited
22) Bangladesh Commerce Bank Limited
23) Mutual Trust Bank Limited
24) First Security Bank Limited
25) The Premier Bank Limited
26) Bank Asia Limited
27) Trust Bank Limited
28) Shahjalal Bank Limited
Foreign Banks:
There are some foreign banks which are successfully operated within our country. The lists of foreign banks are:
29) Citigroup
30) HSBC
31) Standard Chartered Bank
32) Commercial Bank of Ceylon
33) State Bank of India
34) Habib Bank
35) National Bank of Pakistan
36) Woori Bank
37) Bank Alfalah
38) ICB Islami Bank
Specialized Banks: Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector. The Specialized banks are:
1) Grameen Bank
2) Bangladesh Krishi Bank
3) Bangladesh Shilpa Bank
4) Rajshahi Krishi Unnayan Bank
5) Bangladesh Shilpa Rin Sangstha
6) Basic Bank Ltd (Bank of Small Industries and Commerce)
7) Bangladesh Somobay Bank Limited(Cooperative Bank)
8) The Dhaka Mercantile Co-operative Bank Limited (DMCBL)
3.9 Products and Services of EXIM Bank
The following chart shows products and services of different branches of EXIM Bank
Product and Services
DEPOSIT PRODUCT
Al-Wadia Deposit Account
Mudaraba Term Deposit
Mudaraba Savings Scheme
Mudaraba Credit Card
Foreign Currency Deposit A/c
Investment Product
Corporate Finance
Commercial Finance
Industrial Finance
Project Finance
Lease Finance
Syndicate Investment
Hire Purchase Finance
Real Estate Finance
Foreign Exchange service
Export Finance
Import Finance
Inward Remittance
Issue L/C
Foreign DD
Foreign TT
Shipping Guarantee
Bonded warehouse Service
Telex/SWIFT Facility
Figure:- Products & Services of EXIM Bank
Mudaraba Savings Schemes are as follows:-
Super Savings Monthly Savings Monthly Income Smart Saver Hajj Deposit
Chapter-Four
Literature Review
4.0 General Banking
Introduction
Bangladesh is one of the less development countries. So the economic development of the country depends largely on the activity of commercial banks. So I need to emphasis whether these commercial banks are effectively and honestly performing their functions, assign their duties, and responsibilities.
In thus respect I need to know the general banking function of those Banks as well as the EXIM Bank Limited, is to provide the general banking service.
The general banking department does the most important and basic works of the bank. All other department are linked with this department. It also pays a vital role in deposit mobilization of the branch. EXIM Bank provides different types of accounts, locker facilities and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows:
1. Deposit Section.
2. Account Opening Section.
3. Cash Section.
4. Bills and Clearing Section.
5. Remittance Section.
6. FDR Section.
7. Accounts Section.
Deposit:
Deposit is one of the principal sources of fund for investment of commercial banks and investment of deposit is the main stream of revenue in banking business. The total deposit of the bank stood at Tk. 35,032.02 million as on December 2006 against Tk. 28,319.21 million of the previous year which is an increase of 23.70%.
In 2007 Al wadeah current deposit and other account stood at Tk. 3,463.14 million, Bills payable stood Tk. 316.70 million; Mudaraba savings bank deposits stood Tk. 1,684.52 million, Mudaraba term deposits stood Tk. 29,479.56 million and foreign currency deposits stood Tk. 87.91 million.
Assets:
The total asset of the bank stood at Tk. 41,793.54 million as on December 2007 against Tk. 33,716.69 million of the previous year which is an increase of 23.95%.
In 2007 the total assets consist of cash of Tk. 3,319.12 million, balance with other banks and financial institutions Tk. 1,419.34 million, investment (Share & bonds) Tk. 2,233.25 million, investments Tk. 32,641.27 million, fixed asset Tk. 178.43 million, other assets Tk. 2,002.11 million.
Investment:
Total amount of investment of the bank stood at Tk. 32,461.27 million as on December 31, 2007 as against Tk. 26,046.34 million as on December 31, 2006 showing an increase of Tk. 6,594.93 million with growth rate of 25.32%.
In the investment, general investments amounting Tk. 30,567.13 million and other investment amounting Tk. 2,074.13 million.
Investment (Share & Bonds):
The size of investment portfolio in 2007 is Tk. 2,233.25 million while it was Tk. 1,633.03 in 2006.
In year 2006 to 2007 , the Investment (share & bonds) increased by 36.75%.
In this investment Government securities amounting Tk. 2,000.08 million and others amounting Tk. 233.17 million.
Import Business:
During the year, the bank opened 25,817 import letter of credit and import volume stood at Tk. 49,596.73 million while it was Tk. 41,432.10 million in 2006. The growth is 19.73% in comparison with previous year.
Export Business:
During the year, the banks export volume stood at Tk. 46,234.59 million while it was Tk. 31,285.37 million in 2007. The growth is 47.78% in comparison with previous year.
Foreign Remittance:
Foreign Remittance of the bank stood at Tk. 343.78 million as of December 31, 2008 against Tk. 222.97 million in 2007.
In year 2007 to 2008, the Foreign Remittance increased by 54.18%.
4.1 Performance Evaluation in 2008
A bank is essentially an intermediary of short-term funds. It can carry out extensive lending operations only when it can effectively channels the saving of community. A good banker is one who effectively mobilizes the saving of the community as well as makes such use of saving by making it available to productive and priority sectors of the economy thereby fostering the growth and the development of the nation economy.
Therefore deposit is the blood of bank. From the history and origin of the banking system, we can know those deposit collection the main function of a bank.
4.2 Accepting Deposit
The deposits that are accepted by EXIM Bank like other banks may be classified into,
• Demand deposits.
• Time deposits.
Demand Deposits:
These deposits are withdrawn without notice, e.g. current deposit.
EXIM Bank accepts demand deposit through the opening of,
• Current account.
• Saving account.
• Call deposit from the fellow bankers.
Time Deposits:
A deposit which is payable at a fixed date or after a period of notice is a time deposit. EXIM Bank accepts time deposits through fixed deposit receipt (FDR), short time deposit (STD), bearer certificate deposit (BCD) etc. While accepting these deposits, a contract is executed between the bank and the customer. This contract will be a valid one only when both the parties are competent to enter into contracts. As account initiates the fundamental relationship and since the Banker has to deal with different kinds of persons with different legal status, EXIM Bank officials remain very much careful about the competency of the customer.
4.3 Account Opening Section
Deposits the life blood of a bank which is invested in a bank through opening an account.
This section deals with opening of different types of accounts. It is also deals with issuing of checkbooks and different deposits books to the different accounts openers. A customer can open different types of accounts through this department such as:
• Current account
• Saving account.
• Short term deposit (STD)
• Fixed deposit (FDR)
5.4 Procedure for Opening of Accounts
Before opening of a currents or savings account, the following formalities must be complete by the customer:
• Submit application on the prescribed form.
• Furnishing photographs-2 (two) copies.
• Introduction by an account holder.
• Putting specimen signature in the specimen card.
• Mandate if necessary.
After fulfilling above formalities, opens an account for the client and provide the customer with a pay-in-slip book and a checkbook in case of savings account and current accounts.
4.5 Types of deposit accounts and their formalities
Current Account:
In this kind of account a customer can deposit this money and can write one or more check to withdraw their money. For doing this notice is not required. He/she can deposit it whenever he/she wants to and also can withdraw it whenever he/she wants to.
In the Name of Individual:
The client has to fill up a light green account opening form. Terms and conditions are printed on the back of the form. The form contains the declaration clause, special instructions etc. two copies of passport size photograph duly attested by the introducer are affixed with the form.
In Joint Name:
In this type the formality is same as individual account, but in the special instruction clause, either or ‘survivor’ or ‘former or survivor’ clause is marked.
Proprietorship:
In addition the customer has to submit the valid trade license and tax paying identification numbers (TIN) along with the application.
Partnership:
In case of partnership account the banks ask for,
• A copy of partnership agreement (partnership deed).
• A letter signed by all partners contained the following particulars.
• The name and address of all partners.
• The nature of firms business.
The name of the partner authorized to operate the account in the name of the firm, including the authority to draw, endorse and accepting the bills and mortgage and sell the properties belonging to the firm.
Limited Company:
On having the desire to open an account from a limited company, an EXIM Bank officer asks for the following documents.
• Registration certificate from the registrar of joint stick of companies.
• Certificate of incorporation.
• Certificate of commencement of business.
• Memorandum of association.
• Articles of association.
• Copies of annual accounts.
• Copies of board resolution, which contains.
1. The name of the persons who have been authorized to operate the bank account on behalf of the company.
2. The name of the persons who are authorized to execute documents with the bank on company’s behalf.
Societies, clubs and Associations:
In case of these sort of accounts EXIM Bank requires the following documents.
• Registration certificate under the societies registration Act, 1962.
• Copies of memorandum, articles of association.
• Resolution of the managing committee.
• Power of attorney to borrow.
Non- government Organization (NGO)
The account opening procedure is same but in exception is that the Registration Certificate from the Social welfare Department of Government must be enclosed with application.
Joint account in the name of Minor:
A Minor cannot open an account in his/her own name due to the in capacity to enter into a contract. He/she can open an account in EXIM bank in joint name of another person who will be guardian of him/her.
Saving bank account:
This deposit is basically meant for small-scale savers. There is restriction on withdrawals in a month. Heavy withdrawals are permitted only against prior notice. Interest is paid on these types of accounts.
Short term deposit (STD):
In short term deposit, the deposit should be kept for at least seven days to get interest. The interest offered for STD is less than that of savings deposit. In EXIM bank various big companies, Organization, Government Departments keep money in STD accounts. Frequent withdrawal is discouraged and requires prior notice.
Fixed deposit:
They are also known as time deposit or time liabilities. These are deposits, which are made with the bank for a fixed period, specified in advance. The bank need not maintain cash reserves against these deposits and therefore, the bank offers higher of interest on such deposits.
In EXIM Bank, fixed deposit account is opened in two forms-midterm (MTD), which is less than one year and the other is term deposit, which is more than one year.
Opening of fixed Deposit Account:
The depositor has to fill an account form where in the mentions the amount of deposit, the period for which deposit is to be made and name/names is which the fixed deposit receipt is to be issued. In case of a Joint name EXIM Bank also takes the instructions regarding payment of money on maturity of the deposit. The banker also takes specimen signatures of the depositors. A fixed deposit account is then issued to the depositor acknowledging receipt o the sum of money mentioned there. In also contains the rate of interest and the date on will due for payment.
Term Deposits:
These rates are not negotiable. In this table we can find out the percentage that are given by the bank for specific period of time to the customer.
Fixed Deposit: 1 (one) month
Fixed Deposit 2 (two) month:
Fixed Deposit 6 (six) month:
Fixed Deposit 13 (twelve) month:
Fixed Deposit 24 (twenty four) months and above:
Loss of FDR:
In case of lost of FDR the customer is asked to record a GD (General Dairy) in the nearest police station. After that the customer has to furnish an Indemnity Bond to EXIM Bank a duplicate FDR is then issued to the customer by the bank.
Renewal of FDR:
In EXIM Bank, the instrument is automatically renewed within seven days after the date of its maturity if the customer does not come to encash the FDR. The period for renewal is determined as the previous one.
Bearer Certificate Deposit (BCD):
The bearer certificate deposit is a document of title similar to time deposit receipt issued by the bank. The document is a bearer document, hence readily negotiable. Whoever presents it to the bank has the right to get the money. There is no prescribed interest rate
on such funds but EXIM Bank offers 1% less than the rate of the term deposit of different maturity. The face value of the instrument is the future value. The face is the sum of the principal amount and the interest. It is beneficial to both EXIM Bank and the investor because of the following reasons.
1. The banker is not required to encase the deposit before the date of maturity. Hence it is assured of funs for a minimum period.
2. The investor is assured of ready liquidity. In case of need he can sell the certificate in the secondary market.
As the identification of the owner is not given in the instrument, it is very much popular. During the encasement of the instrument, the excise duty and income tax (10%) is deducted. In case of premature encashment, the principal amount is only paid to the customer.
4.6 Dishonor of Cheque
If the cheque is dishonored, EXIM Bank sends a memorandur (cheque returns memo) to the customer stating the reason in the following way:
• Refer to drawer.
• Not arranged for
• Effects not cleared. May be presented again.
• Exceed arrangements.
• Full cover not received.
• Payment stopped by drawer.
• Payee’s endorsement irregular/required.
• Payees endorsement irregular, require banks confirmation.
• Drawer’s signature differs/required.
• Alterations in date/figures/words require drawer’s full signature.
• Cheque is post dated/differ.
• Crossed cheque must be presented through a bank.
• Clearing stamp required/requires cancellation.
• Addition to bank discharge should be authenticated.
• Cheque crossed ‘Account payee only’.
• Collecting bank discharge out of date/mutilated.
• Amount in words and figures irregular/required.
If the cheque is dishonored due to insufficiency of funds than EXIM Bank charges Tk. 50/= as penalty.
4.7 Rules for Passing Cheque
In order to enable the branches to facilitate their day-to-day transaction smoothly/efficiently/accurately, the following schedule of power for passing of cheque/instrument signature of vouchers shall come into force with immediate effect.
? An authorized officer shall pass cheque for less than Tk. 10,000.00 singly after proper supervision in computer print out.
? Cheque for Tk. 10,000.00 and above but below Tk. 50,000.00 shall be passed jointly by any two authorized officers after proper supervision by any one-officer computer print out. He will however also ensure that no factitious/wrong credit in the account has been posted on the day by referring to credit vouchers of the day.
? Cheque for Tk. 50,000.00 and above shall be passed under joint signatures of two officers, one of whom must be Manager of the branch. The procedures regarding supervision of cheque as at (2) above must however be followed.
? All’s suspense’s A/C (debit) vouchers, Sundry Deposit (Debit) vouchers, Credit A/C Debit vouchers, Expenditure A/C vouchers must be signed by the incumbent in-charge of the branch with any other authorized officer. As at the close of Business of
the day all transactions (both debit & credit) shall be checked by referring to computer print out and relative cheque/vouchers.
Apart from the above it will also be ensured that the total amount of debit & credit totaling to current A/C, saving, STD & Term Deposit corresponds with the total of cash receipt/payment, transfer clearing (both outward and inward).
4.8 Different types of products offered by EXIM Bank
Steady money-‘Make your money work for you’
Monthly income scheme:
A monthly income scheme that really makes good sense. A sure investment for a steady return.
Highlights of the Scheme:
• Minimum deposit Tk. 25,000/-
• Higher monthly income for higher deposits.
• The scheme is for a five years period.
• Monthly income will be credited to the depositors account on the 5th of each month.
Objective of the Scheme:
• An account is to be opened by filling up a form.
• The bank will provide to thew customer a deposit receipt after opening the account. This receipt is non-transferable.
• If the deposit is withdrawn before a 5 year term, then saving interest rate will be applicable and paid to the depositor. However, no interest will be paid if the deposit is withdrawn within 1 year of opening the account and monthly income paid to the customer will be adjusted from the principal amount.
A depositor can avail loan upto 80% of the deposit amount under this scheme. In this case, interest will be charged against the loan as per banks prevailing rate. During the tenure of the loan, the MSS will be credited to the loan amount inclusive of interest.
Smart Sever:
What is Smart Saver?
Smart sever is a high return investment plan which helps a customer build up sizeable amount in a period of 5 years. This scheme offers a customer to buy Smart Saver Term Deposit 5 times the invested amount. Smart Saver is a 5 year term deposit scheme.
How does it work?
Smart Saver is available unit wise. One unit of SM is Tk. 25,000. For purchasing one unit SM a customer has to invest Tk. 5000 as down payment and the Bank will provide loan for Tk. 20000 the is repayable monthly in equal installment of Tk. 490 for a period of 5 years. At the end of the 5 years period. The SM term deposit will be encashed and customer will be paid Tk. 45,000.
Flexible Repayment Schedule:
Customer also has the option to repay in 12,24,36,48 and 60 monthly installment.
Maximum Investment:
400 units i.e. Tk. 1,00,00,000 (one crore) in single /joint names.
Terms and Conditions:
1. One unit of Smart Saver Term deposit is Tk. 25,000.
2. During the tenure of the loan the term deposit will be kept in the bank as security.
3. The customer will have to open an account and monthly installment of loan will be debited from the account commencing from 30 days after the loan account.
4. Within the 1st year if the customers fail to repay 3 consecutive installments then only the principal amount of Smart Saver Term Deposit will be encashed and the loan will be liquidated inclusive of accrued interest and the balance paid to the customer. After completion of 1 years, Savings rate will be added to the principal
5. Amount of Smart Saver Term deposit. In both cases closing charges will be Tk. 500.
6. For missed installment on due date customer will be charged Tk. 25 per month.
7. In the event of death of customer, the bank shall be entitled to encash the term deposit and adjust the dues first before any refund is made to the nominees /successors.
8. The bank reserves the right to amend the rules and rates as and when deemed necessary.
Super Savings Scheme:
Savings help to build up capital and capital is the prime source of business investment in a country. Investment takes the country towards industrialization, which eventually creates wealth. That is why savings is treated as the very foundation of development. To create more awareness and motivate people 0 save, EXIM Bank offers SUPER SAVINGS Scheme.
Terms and Conditions of the Scheme:
1. Any individual, company, educational institution, government organization, NGO, trust, society etc. may invest their savings under this scheme.
2. The deposit can be made in multiples of Tk. 10,000/-.
3. The period of deposit is for six years.
4. Any customer can open more than one account in a branch in his name or in joint names deposit receipt will be issued at the time of opening the account.
5. If the deposit is withdrawn before six years term, then savings interest rate +1% will be applied before payment is made. However no interest be paid if the deposit is withdrawn within 1st year.
6. A depositor can avail loan upto 80% of the deposited amount under this scheme.
7. In case of death of the depositor, before the term, the deposit (with interest at savings rate+1%) will be given to the nominee. In the absence of nominee, the legal heirs/successors will be paid on production of succession certificate.
Some examples are given in the table below. Any amount can be deposit in multiples Tk. 10,000.
Money Grower: (Monthly Savings Scheme)
Secure your future with ease. A small savings today will provide you comfort tomorrow.
Savings period and monthly installment rate:
The savings period is for 5,8,10 or 12 years. Monthly installment rate is Tk. 500/-, 1,000/-, 2,000/- or 5,000/-.
It is a project of EXIM Bank, which is a scheme like DPS. The savings amount is to be deposited within the 10th of every month. The deposit may also be made in advance. The depositor can have a separate account in the bank for which a standing instruction can be given to transfer the monthly deposit in the scheme account. In case of failure to make the monthly installment in the scheduled time 5% of overdue installment will be charged. The charged will be added with the following month’s installment and the lowest charges will be Tk. 10. After three years savings in this scheme the deposited (if an adult) is eligible for a loan up to 80% of his/her deposited amount. In that case, interest rate on the loan will be applicable as per prevailing rate at that time. If the depositor fails to pay three installments in a row, then he/she will be disqualified from this scheme.
Generally, withdrawal is not advised before a five years term, but if it is withdrawn before the above term, then interest will be paid at savings rate. However no interest will be paid if the deposit is withdrawn within one year of opening the account. In case the
depositor wishes to withdrawn between the 5,8,10 or 12 year period then full interest will be paid for a completed term and savings rate will be applicable for the functional period.
Table: Total savings on the basis of monthly installment and total time.
Multiplus Savings:
Savings help to build up capital and capital is the prime source of business investment in a country. Investment takes the country towards industrialization, which eventually creates wealth. That is why saving is treated as they very foundation of development. To create more awareness and motivate people to save, EXIM Bank offers Multiplus Savings scheme.
Terms and Conditions of the Scheme:
1. Any individual, company, educational institution, government organization, NGO, trust, society etc. may invest their savings under this scheme.
2. The deposit can be made in multiplus of Tk. 10,000.00.
3. The period of deposit is 10 years. But the deposit can be withdrawn at any year with interest. As an example, if deposit is withdrawn after completion of 1 year but before 2 years then deposit with interest will be paid for 1 year only. The same rule will apply for other years. If deposit is withdrawn before 1st year then no interest will be paid.
4. Any customer can open more than one account in a branch in his name or in joint names. A deposit receipt will be issued at the time of opening the account.
5. The depositor can avail loan up to 80% of the deposit under this scheme.
In case of issuing duplicate receipt the rules of issuing a duplicate receipt of term deposit will be applicable.
6. (A) in case of death of depositor before the term, the deposit (with interest at savings rate) will be given to the nominee. In the absence of nominee, the heirs/successors will be paid on production of succession certificate.
Education Savings Scheme:
The most gratifying experience for parents are proper education of their children. Educational expense is rapidly increasing and therefore appropriate planning needs to be done by all parents. EXIM Bank offers customer ‘Education Savings Scheme’ to assist customer in financial planning well ahead in time for customers children’s higher education.
Terms and Conditions of the Scheme:
1. Deposit of Tk. 25,000/- and multiples there of at a time will be accepted under the scheme.
2. The instrument shall be issued for 7 years, 10 years, 15 years, 20 years term.
3. The deposit is payable at maturity with benefit either in lumpsum or on monthly basis as education allowance for 6 (six) years starting after the completion of respective term.
4. To avail the education allowance, the depositor is required to deposit the receipt or instrument with the bank duly discharged by him with the written instruction to pay the amount to his/her nominated person on monthly installment basis as stipulated in the scheme.
5. Normally, no withdrawal will be allowed before maturity. But if any depositor intends to withdraw his deposit before maturity, the following rules will be applicable:
a. if withdrawal is made before seven years, interest will be calculated and paid as per prevailing savings rate.
b. if withdrawal is made at any time after seven years, the total amount payable at maturity of the immediate preceding term will be paid along with interest for the fractional period at prevailing saving rate.
6. The depositor can avail loan up to 80% under this scheme.
7. A) in case of death of the depositor the proceeds will be paid to the nominee of the depositor or in absence of nomination to the legal successors of the depositor on production of succession certificate.
8. B) if after death of depositor the nominee intends to continue the deposit to get monthly educational allowance for 6 years as admissible under the rules of the scheme, the receipt of the deposit should be surrendered to the Bank duly discharged by the nominee and duly authenticated by the legal guardian on maturity.
9. in case of issuing duplicate receipt the rules of issuing duplicate receipt of term deposit will be applicable.
Closing of an Account:
The closing of an account may happen.
• If the customer is desirous to close the account.
• If the EXIM Bank finds that the account is inoperative for a long duration.
• If the court of EXIM Bank issues garnishee order.
A customer may close his/her account any time by submitting an application to the branch. The customer should be asked to draw the final check for the amount standing to the credit to his/her account less the amount of closing an other incidental charge and surrender the unused check leaves. The account should be debited for the account closing charge etc. and the authorized officer of the bank should destroy unused check.
In case of joint account the application for closing the account should be signed by the joint account holder. The fee for closing of an account is Tk. 25.00 for SB account and Tk. 50.00 for CD or STD account.
Cash Section:
The cash section of EXIM Bank deals with all types of negotiable instrument, cash and other instruments treated as sensitive section of the bank. It includes the vault that is used as the beyond this time, the excess cash is then transferred to Bangladesh Bank. These sections perform the following functions:
Cash Packing:
After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial.
Allocation of Currency:
Before starting the banking hour all tellers give requisition of money through ‘Teller cash proof sheet’. The head teller writes the number of the packet denomination wise in ‘Reserve sheet’ at the end of the day, all the notes remained are recorded in the sheet.
Bills and clearing section:
For safety and security in financial transaction people use financial instruments like DD, PO, Cheque etc. Commercial Banks duty is to collect these financial instruments on behalf of their customer.