The emergence of National Bank Limited 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.
National Bank Limited was incorporated in Bangladesh on 31st
December 1981 and started its operation with effect from April 12, 1983. In
1983, the bank started with an authorized capital of Tk 100 million and
paid up capital of Tk 44 million. The three types of shareholders of the bank
are Group-A (Bangladeshi sponsors owning 50%), group-B (government of
Bangladesh and public sector financial institutions owning 5%) and group-C
(general public owning 45%).
The management of the bank is vested in a board of directors
consisting of 21 members including the managing director of the bank. Managing
directors is the chief executive of the bank. The bank carries out all
traditional functions which a commercial bank perform such a mobilization of
deposits, investment of funds, financing of traders, businessmen,
industrialist, importers and exporters etc., the National Bank Limited opened
new branches only eight during 1983, rising the total number of branches 76 in
2004, total number of employees of the bank which 242 in 1983 and increased to
2187 in 2004, during the short periods of its operation the bank has made
notable progress in various activities. Since, commencement of its activities
on 23rd March 1983, the bank mobilized the deposit of tk. 2085.50
million and Tk 3507.50 million at the end of the year 1983 to 2004
respectively. Foreign exchange business handled by the Bank during the year
1983 to 2004 was both TK. 1005.50 and TK. 10150.30 million respectively. The
Bank earned a profit of TK. 84.70 million in the year 1985, compare to the
52.10 million in the year 1984.
NBL inaugurated a change when it substituted the prevalent
austere and cold banking atmosphere with an intimate and warm one. The success
of NBL is largely credited to its friendly co-operative approach, understanding
the special Banking needs of each and every client and concern for their
benefits and welfare. From the beginning the objectives of NBL was to increase
capitalization, to maintain disciplined growth and high corporate ethics
standard and enhance the health of shareholder. NBL is scattered all over the
world consisting of 76 branches and 3 booths. In 1995, NBL acquired equity and
management of Nepal Arab Bank Limited and in 1996 NBL opened a representative
office in Myanmar.
Since the very beginning, the Bank exerted much emphasis on
overseas operation and handled a sizeable quantum of homebound foreign remittance.
With a strong sense in all business areas of commercial banking, NBL could
foresee tremendous growth in home in homebound remittance from Bangladesh
expatriates in U.S.A. and U.K., Middle East and different countries of the
world. 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.
Consecutively NBL established a unique money remittance system with Western
Union of USA for inbound and outbound remittance.
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.
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.
National Bank Limited is one of the leading private
commercial bank having a spread network of 102 branches across Bangladesh and
plans to open few more branches to cover the important commercial areas in
Dhaka, Chittagong, Sylhet and other areas in 2008.
National Bank Limited has been licensed by the Government of
Bangladesh as a Scheduled commercial bank in the private sector in pursuance of
the policy of liberalization of banking and financial services and facilities
in Bangladesh. In view of the above, the Bank within a period of 25 years of
its operation achieved a remarkable success and met up capital adequacy
requirement of Bangladesh Bank.
With a wide range of modern corporate and consumer financial
products National Bank has been operating in Bangladesh since 1985. In 1997,
the bank introduced automated branch banking system to increase efficiency and
improve customer service. The bank is one of the leading banks which introduced
first Credit Card in Bangladesh. The technology has been upgraded to manage the
growth of the bank and meet the demands of our customers. ATMs now allow
customers to retrieve 24×7 hours cash withdrawals. They are concentrating on
retail banking, side by side to business banking, in order to improve their
yield on advances and diversity credit risk. Profit orientation is encouraged
at all levels. With customer focus, sincere efforts, new products innovation
and total involvement of the human capital of the Bank they are determined to
improve business and profitability and occupy its justified position in the
forefront of the industry.
At present, NBL has been carrying on business through its 101
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 programmed 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.
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 a 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. National Bank Limited is
a customer oriented financial institution. It remains dedicated to meet up with
the ever growing expectations of the customer because at National Bank,
customer is always at the center.
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.
1.5 Organogram
of NBL
1.6 Functions of NBL
• 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.
- Offering
quick and improved clientele service through application of modern
information technology. Bringing modern Banking facilities to the
doorstep of general public through diversification of Banking services,
thereby arousing saving propensity among the people. - Playing
an important role in the national progress by inculcating improved
banking-customer relationship, thereby bringing us closer and closer to
them. - Ensuring
highest possible dividend to the respect shareholders by making best use
of their equity. - Pursuing
the policy of nurturing balance growth of bank in all sectors. - Consolidating
our position in the competitive market by introducing innovative banking
products. - Ensuring
highest professional excellent for our work force through enhancement of
their work efficiency and technological knowledge. - Expanding
the bank’s area of investment by taking part in syndicate large loan
financing. - Upholding
the image of the bank at home and abroad by pursing dynamic and
time-befitting banking activities. - Ensuring
capital adequacy, asset quality, efficient management, highest profit and
satisfactory liquidity through successful implementation of the
programmed for Marketing Core Risk banking. - To
improve and broaden the range of product and services and offer highest
possible benefit to customers.
The business philosophy of NBL is to move and develop with
the changing new era. Especially they want to operate their activities as much
accurate as possible rather than other private banks operating in Bangladesh
because this bank has come to this position through substantial step by step.
By developing human resource and providing qualitative service they want to be
leader in banking sector in the new private banking competitive market. Side by
side they assist in the development of national economy. Alongside providing
best service to the clients, patronizing and taking part in social development
activities as well as making due contribution to growth of the national
economy.
- Customer-first
- Quality-focus
- Credibility
& secrecy
- Loyalty
- Total
commitment & dedication - Excellence
through teamwork
- Discipline
- Sincerity
- Caring
- Creativity
1.9.1Corporate Social Responsibilities
NBL is a vibrant and promising bank. Its activities are not
limited only to business and financial matters. Earning the highest level of
trust requires the balanced provision of value to four constitutions. These
are:
- Employment,
- Education,
- Sports and
Cultural activities, - Disaster
relief.
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.
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 exuberant happy moments of cultural events.
1.10Product and
Services offered by National Bank Ltd
- Different kind
of Account
Ø Savings Account
Ø Current Account
- Individual
Account - Joint
Account - Proprietorship
Account - Partnership
Account
Ø National Bank Monthly Deposit Scheme
Ø STD(Short Term Deposit)
Ø NDS(National Bank Deposit Scheme)
- Cheque Book
Issue
- Cash
Receive/Payment - Payment
Order(PO) - Pay sleep(PS)
- Demand
Draft(DD) - Telegraphic
Transfer(TT) - Clearing
- Bill Collection
·
LBC(Local
Bill Collection)
·
OBC(Outward
Bill Collection)
·
IBC(Inward
Bill Collection)
·
FBC(Foreign
Bill Collection)
- Advance
·
CC
(Cash Credit)
·
SOD(Secured
Overdraft)
·
FDR
·
Loan
General
·
LDBP(Local
Documentary Bill Purchased)
·
LDBC(Local
Documentary Bill Collection)
- LC(Letter Of
Credit)
- Foreign
Remittance - Western Union
- SWIFT
- Credit Card
- Power
Card(Debit Card)
1.11 Other Services
For safekeeping of customers’ valuables like important
documents and goods like jewelries and gold ornaments, National Bank locker
service is available in most of the Branches in urban areas. For using a locker
customer must have an account in National Bank Ltd.
Table 2.1: Locker service
|
Nature |
|
|
|
Custody of Locker / Safe |
Rent |
a) Yearly TK.500/= for small size b) Yearly TK.1,000/= for large size locker |
Joining with the world’s largest money transfer service
“Western Union”, NBL has introduced Bangladesh to the faster track of money
remittance. Now money transfer between Bangladesh and
any other part of the globe is safer and faster than ever
before. In 1993, National Bank has made and arrangement with Western Union
Remittance services, which has over 127 years experience for speedy remittance
of money with more then 140 countries. The bank handles a substantial number of
inward remittances from Western Union. The beneficiaries receive payment within
minutes and they do not need to maintain any bank account. During the year 2007
NBL received sizable amount of foreign exchange of USD 215.37 million with
growth of 13.88 percent than the year 2006.
National Bank Limited is one of the first few Bangladeshi
Banks to obtain membership of SWIFT (Society for Worldwide Inter-bank
Telecommunication). SWIFT is a members’ owned cooperative which provide a first
and accurate communication network for financial transactions such as Letter of
Credit, Fund Transfer etc. NBL has established Bilateral Key replacing obsolete
test key arrangement. It has also established BKE with local banks.
NBL has been participated in capital market since long to
generate more income. Besides investment in secondary market, the bank invested
Tk. 13.05 crore in primary portfolio during 2007. It helped the capital market
remain vibrant. The purchase price of total quoted shares held by the bank on
31.12.2007 was Tk. 99.23 crore, market price of which was Tk. 229.55 crore on
that day.
The bank earned Tk. 42.30 crore from share trading and
received Tk. 4.21 crore as cash dividend the year 2007. The bank also earned
Tk. 25.07 lac from its market intermediary activities i.e Banker to the issue,
underwriter, etc.
NBL purchased a membership of the Dhaka Stock Exchange
Limited and got registration as NBL Capital Services and become a corporate
member of DSE.
National Bank Power card (Debit Card) is an ATM card too. For
withdrawal of cash the customer can use those ATMs where there is written
Q-Cash & ATM..
(F) ATM
National Bank Ltd. has installed ATMs around the country to
enable their Account Holders & Card Members to draw cash
(G)
Banking Software
A to Z software, which is used for Total Banking Operation.
The online banking is coming soon under this A to Z software is under process.
Implementation is expected soon by National Bank Ltd.
National Bank Ltd. has some future plan that they want to
implement in the near future. In most ca they wants to extend their existing
facilities that they are providing to their customer but they are now trying to
grab more potential customer by implementing some lucrative features and these
are:
- They have
planned to recruit more skilled human resource for the development of the
bank. - They have
planned to extend their ATM facilities - They are going
to launch the online banking very soon.
NBL, which started its operation at Dilkusha Branch on march
23, 1983, was the first and major private commercial Bank in Bangladesh
operating throughout the country as well as the age of the Bank is 25
years. During this period it has established total 101 branches over the country
and made a smooth network in side the country as well as throughout the world.
The number of Branches as territory-wise is mentioned in the table.
Table 2.2: Branch Name
|
SL.No. |
Branch |
SL.No. |
Branch |
SL.No. |
Branch |
|||||
|
Dhaka |
38. |
Jatrabari |
74. |
Nator |
||||||
|
01. |
Dilkusha |
39. |
Progoti |
75. |
Shajadpur |
|||||
|
02. |
Lake |
40. |
Valuka |
76. |
Gaibandha |
|||||
|
03. |
Narayangonj |
|
Cittagong |
|
Khulna |
|||||
|
04. |
Bangshal |
41. |
Khathungonj |
77. |
Kunla |
|||||
|
05. |
Elephant |
42. |
Agrabad |
78. |
Barishal |
|||||
|
06. |
F. |
43. |
Comilla |
79. |
Kalhati |
|||||
|
07. |
Narsingdhi |
44. |
Feni |
80. |
Satkhira |
|||||
|
08. |
Tangail |
45. |
Jubilee |
81. |
Jessore |
|||||
|
09. |
Mymensing |
46. |
Chowmohoni |
82. |
Kustia |
|||||
|
10. |
Babu |
47. |
B-Baira |
83. |
Volla |
|||||
|
11. |
Malibagh |
48. |
Dagonbhuyan |
84. |
Jhalokhati |
|||||
|
12. |
Mohakhali |
49. |
Chadpur |
85. |
Naria |
|||||
|
13. |
Bandura |
50. |
Potiya |
86. |
Vangga |
|||||
|
14. |
Kawranbazar |
51. |
Sawndip |
87. |
Chowgcha |
|||||
|
15. |
North. |
52. |
Chaktai |
88. |
Charfashion |
|||||
|
16. |
Pagla |
53. |
Pahartoli |
|
Slyhet |
|||||
|
17. |
Islampur |
54. |
S.KMujib |
89. |
Laldighir |
|||||
|
18. |
Mothijheel |
55. |
Cox’s |
90 |
Moulobi |
|||||
|
19. |
Savar |
56. |
Chuddagram |
91. |
Sreemongal |
|||||
|
20. |
Dhanmondi |
57. |
Muradpur |
92. |
Mirpur |
|||||
|
21. |
Kishoregonj |
58. |
Bashurhat |
93. |
Tajpur |
|||||
|
22. |
Gulshan |
59. |
Mirsorai |
94. |
Jindabazar |
|||||
|
23. |
Uttara |
60. |
Undurkella |
95. |
Biyanibazar |
|||||
|
24. |
Mirpur |
|
Rajshahi |
96. |
Shibgonj |
|||||
|
25. |
Gazipur |
61. |
Rajshahi |
97. |
Subid |
|||||
|
26. |
Jamalpur |
62. |
Rangpur |
98. |
Bishonath |
|||||
|
27. |
Sharpur |
63. |
Bogura |
99. |
Hobigonj |
|||||
|
28. |
Z.H.S.M. |
64. |
Pabna |
100. |
Golapgonj |
|||||
|
29. |
Sree |
65 |
Dinajpur |
101. |
Sunamgonj |
|||||
|
30. |
Modhupur |
66 |
Saiedpur |
102. |
Kodomtali |
|||||
|
31. |
Lakecircus |
67 |
Naogaon |
103. |
Chakbazar |
|||||
|
32. |
Mohammadpur |
68 |
Sirajgonj |
104. |
33. |
Kaliakoir |
69. |
C.Nawab |
|
|
|
34. |
Tongibari |
70. |
Ishwardi |
|
|
|||||
|
35. |
Shibchar |
71. |
Joypurhat |
|
||||||
|
36. |
Banani |
72. |
Thakurgaon |
|
|
|||||
|
37. |
Imamgonj |
73. |
Godagari |
|
|
|
Years |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Number |
76 |
76 |
76 |
91 |
101 |
National Bank is the pioneer in private banking sector. The
numbers of employees increased throughout its life because of growing nature.
In 2006 the number of employees was 2270, which were 2183 in 2005 and 2133 in
2004. Number will be increased when the number of branches will be increased.
Table 2.4: Numbers of Employees.
|
Years |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Number |
2185 |
2133 |
2183 |
2270 |
2432 |
1.14
Number of Foreign Correspondents:
National Bank is the pioneer in private banking sector. In
2006 the Number of foreign correspondents are 400, which are 391 in 2005 and
358 in 2004. Number of Number of foreign correspondents will be increased when
NBL is able to make contract with other oversees financial institution.
Table
2.5: Number of Foreign Correspondents.
|
Years |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Number |
358 |
410 |
391 |
400 |
405 |
1.15 Five Years Financial performance of
National Bank Ltd at a glance
(Taka In Million)
2003
2004
2005
2006
2007
Income
Statement
Interest
Income
2,342.30
2,341.43
2,512.17
3,674.32
4,288.80
Interest
Expense
1,801.18
1,749.30
1,897.83
2,449.76
2,833.45
Non-Interest
Income
1,279.72
1,369.81
1,690.32
2,054.48
2,893.83
Non-Interest
expenses
8,75.75
1,226.79
1,453.34
2,132.26
2,134.08
Profit
Before Tax
336.09
484.21
581.13
1,058.73
2,035.10
Profit
After Tax
88.12
170.02
271.67
507.49
1,238.11
Balance
Sheet
Authorized
Capital
1,000.00
1,000.00
1,000.00
2,450.00
2,450.00
Paid
up Capital
430.27
516.33
619.59
805.47
1,208.20
Reserve
Fund & Surplus
1,270.63
1,345.99
2,115.03
2,468.79
3,360.18
Total
Shareholders’ Equity
1,700.90
1,862.31
2,734.61
3,274.25
4,568.39
Deposit
27,762.12
28,973.39
32,984.05
40,350.87
47,961.22
Loans
and advances
22,257.15
23,129.65
27,020.21
32,709.68
36,475.74
Investments
4,044.20
4,374.17
3,564.84
6,239.38
7,760.38
Fixed
Assets
889.61
895.35
1,431.23
1,627.29
1,842.28
Total
Assets
35,670.33
35,127.30
38,400.37
46,796.04
56,526.96
Off
Balance Sheet items
11,114.08
12,897.65
16,645.75
19,737.75
26,801.07
Foreign
Exchange Business
–
–
–
–
–
Import
19,264.50
22,028.30
31,648.20
42,458.50
62,759.00
Export
16,341.80
17,105.30
21,344.10
28,019.20
31,824.00
Remittance
7,637.50
9,035.50
13,618.20
21,353.90
27,560.80
BIS
Capital Measures
Risk
Weighted Assets
17,156.45
19,796.12
25,598.13
32,055.71
35,940.79
Core
Capital(Tier 1)
1,547.14
1,708.55
1,996.41
2,503.90
3,742.01
Supplementary
Capital(Tier 2)
361.77
380.13
661.61
733.97
969.46
Tier
1 capital Ratio
9.02%
8.63%
7.87%
7.81%
10.41%
Tier
2 Capital Ratio
2.11%
1.92%
2.58%
2.29%
2.70%
Total
Capital Adequacy Ratio
11.13%
10.55%
10.45%
10.10%
13.11%
Credit
Quality
Provision
for Unclassified Loans
166.64
185.00
251.13
307.43
514.91
Provision
for Classified Loan
2,995.22
1,747.64
716.07
854.18
947.74
%
of NPLs to Total Loans and advances
28.23%
17.37%
7.07%
6.01%
4.53%
|
Share |
No |
4.30 |
5.16 |
6.20 |
8.05 |
12.08 |
|
Earning |
– |
– |
– |
– |
– |
|
|
Basic |
17.07 |
27.44 |
43.85 |
63.01 |
102.47 |
|
|
Diluted |
– |
– |
– |
– |
– |
|
|
Dividend |
Cash(BDT) |
– |
– |
– |
– |
– |
|
Stock(Bonus |
20.00% |
20.00% |
30.00% |
50.00% |
55.00% |
|
|
Market |
226.61 |
475.25 |
746.50 |
760.50 |
1,494.00 |
|
|
Price |
13 |
17 |
17 |
12 |
14 |
|
|
Net |
395.31 |
360.68 |
441.36 |
406.50 |
378.12 |
|
|
Operating |
Credit |
80.17% |
79.83% |
81.92% |
81.06% |
76.05% |
|
Cost |
5.83% |
5.47% |
5.31% |
6.15% |
6.35% |
|
|
Cost |
9.22% |
8.78% |
8.50% |
9.32% |
9.31% |
|
|
Yield |
10.24% |
10.32% |
10.02% |
12.28% |
12.13% |
|
|
Return |
2.61% |
2.09% |
2.22% |
2.50% |
4.29% |
|
|
Return |
5.29% |
9.54% |
11.82% |
16.89% |
31.57% |
|
|
Other |
Number |
76 |
76 |
76 |
91 |
101 |
|
Number |
2,185 |
2,133 |
2,183 |
2,270 |
2,432 |
|
|
Number |
358 |
410 |
391 |
400 |
405 |
National Bank LTD is one of the oldest banks in Bangladesh.
It owns one of the strongest capital structures in the banking history of
Bangladesh. Authorized capital is increased in 2006 which is 2450 millions.
Apart from that paid up capital is also increased since it started its journey.
On the report the paid up capital is reported Taka 805.47 million. Last year it
was 619.59 million, which was lower than the amount reported in the year
2006.
Table 2.7: Capital Structure of NBL.
|
Years |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Authorized |
1000.00 |
1,000.00 |
1000.00 |
1000 |
2450.00 |
2450.00 |
|
Paid |
430.27 |
430.27 |
516.33 |
619.59 |
805.47 |
1208.20 |
|
Reserve |
1198.7 |
1270.63 |
1345.99 |
2115.03 |
2468.79 |
3360.18 |
1.17
Cash
Cash in hand stood at Tk. 107.71 crore in 2007 which is 49.24
percent higher than the previous year. It increased due to expansion of
business activities through widening of branch network.
The balances maintained with Bangladesh bank and its agents
increased by 40.83 percent at the end of December 2007. Due to the increase
deposit the bank increased balances with Bangladesh Bank and its agents for
maintaining proportionate Cash Requirement (CRR).
The balances maintained with other banks and financial
institutions increased by 140.05 percent mainly due to transfer of funds to
different banks for covering the payment against inward foreign
remittances.
1.20 Deposits of National Bank Limited
On 2007 total deposits of the bank stood at TK. 47961.2
million which is higher than last years 40350.9 millions and the growth rate is
18.86%. The increasing trend of collecting deposit is followed in last five
year.
Table 2.8: Deposits
of NBL.
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Deposits(in |
22257.12 |
28973.39 |
32984.05 |
40350.9 |
47961.2 |
|
Growth |
NIL |
30.18% |
13.84% |
22.33% |
18.86% |
1.21 Loans and Advances of National Bank Limited
With a view to improve the quality and soundness of Loan
portfolio, the bank arranges more strict procedure for risk assessment, lending
decisions and monitoring functions at the time of granting Loans and Advances.
The emphasis on maintaining the quality of assets has rendered a diversified
and well-structured advances portfolio. We have furnished below the loan and advance
position of National Bank Limited to comparison its progress for last five
years.
Table 2.9: Amount of different types of Advances in NBL (in
million)
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Loans, |
21119.53 |
21613.77 |
24913.19 |
29619.6 |
33137.02 |
|
Others |
1137.62 |
1226.67 |
2107.01 |
3090.08 |
3338.73 |
|
Total |
23122.53 |
23617.77 |
26918.19 |
31625.6 |
35144.02 |
|
Growth |
NIL |
13.12% |
33.22% |
22.41% |
13.28% |
In the year 2007 National Bank Limited remains highly active
in the arena of international trade financed by offering a board spectrum of
services namely, Issuance of Documentary Credit, Advising of Export L/Cs,
Purchase and negotiation of export bills, Documentary collections, pre-shipment
and post-shipment financed, Remittance Disbursement Activities etc.
In the year 2007, National Bank saw the highest ever growth
rate in import business, which stood at Tk 62759.00 million, compared to 2006s
volume of Tk 42458.50 million marking the increase of 47.81% from last year.
The major import items of the year were: Coals, Steel items, HDPE, Raw cotton,
Fabrics and Accessories, Industrial commodities and Seeds, poultry feeds,
capital machineries etc
Table 2.10:
Import of NBL.
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Import(in |
19264.5 |
22028.3 |
31648.2 |
42458.5 |
62759 |
|
Growth |
NIL |
14.35% |
43.67% |
34.16% |
47.81% |
1.22.2
Export:
National Bank experienced sound growth of export business in
2007 from 2006. The volume of export business rose 28019.2 million from Tk
31824 million in 2007 showing and increase of around 13.58%. As before, Ready
Made Garments still remained in the major export item of 2007 constituting more
than 19.3%. The other export items were frozen fishes, which was 4.2% of total
export.
Table 2.11:
Export of NBL.
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Export (in million) |
16341.8 |
17105.3 |
21344.1 |
28019.2 |
31824 |
|
Growth |
NIL |
4.67% |
24.78% |
31.27% |
13.58% |
1.23 Foreign
Exchange Business
National Bank Limited has passed a successful year in foreign
exchange business. NBL expended the foreign exchange business in different
countries with different agencies in last year. National Bank made money
transfer arrangements with Bolaka exchange house last year. NBL has the highest
number of foreign correspondents in abroad. So it receives the major portion of
remittance from the non-returning Bangladeshis and from the international
importers. National Bank’s remittance volume increased at a huge amount by
56.80% about Tk 21353.9 million from last year’s Tk 13618.2million. It also
increased by 29.07% in the year 2007.
Table 2.12:
Foreign Remittance Business of NBL.
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Foreign |
7637.5 |
9035.5 |
13618.2 |
21353.9 |
27560.8 |
|
Growth |
NIL |
18.30% |
50.72% |
56.80% |
29.07% |
1.24 Profit of
NBL
Profit performance of National Bank Limited proves that it is
performing well in the last five years. In 2003, profit before tax was 336.09
millions. Profit became 88.12 millions, when tax for that year was deducting.
Since then, the profit before tax and profit after tax are increasing at a
faster growth rate. The highest amount of profit is earned in 2007. The profit
of last five years suggests that NBL is managed well during that time.
Table 2.13: Profit of NBL.
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Profit before tax (in million) |
336.09 |
484.21 |
581.13 |
1058.73 |
2035.1 |
|
Profit after tax (in million) |
88.12 |
170.02 |
271.67 |
507.49 |
1238.11 |
Main part of the source of capital of NBL bank is Equity of
Share Holder & Savings of mass people. That money is used by the bank for
short term & long term debt/loan to the different enterprise &
financial institutions and earns huge profit against that.
1.26 SWOT Analysis
SWOT analysis is the detailed study
of an organization’s exposure and potential in perspective of its strength,
weakness, opportunity and threat. This facilitates the organization to make
their existing line of performance and also foresee the future to improve their
performance in comparison to their competitors. As though this tool, an
organization can also study its current position, it can also be considered as
an important tool for making changes in the strategic management of the
organization.
Strengths
National Bank Limited has already
established a favorable reputation in the banking industry of the country. It
is one of the leading private sector commercial banks in Bangladesh. The bank
has already shown a tremendous growth in the profits and deposits sector.
National Bank Limited has already achieved a high growth rate accompanied by an
impressive profit growth rate in 2001. The number of deposits and the loans and
advances are also increasing rapidly. National Bank has the reputation of being
the provider of good quality services too its, potential customers.
Modern technology & computer
NBL has well decorated with modern
equipment and facilities. For the speedy service to the customer NBL has
installed money –counting machine in teller counter .The bank has computerize
banking operation under the software
Weakness:
The main important thing is that the
bank has no clear mission statement and strategic plan. The banks not have any
long-term strategies of whether it wants to focus on retail banking or become a
corporate bank. The path of the future should be determined now with a strong
feasible strategic plan. The bank failed to provide a strong
quality-recruitment policy in the lower and some mid level position. As a
result the services of the bank seem to be Deus in the present days. The poor
service quality has become a major problem for the bank. The quality of the
service at National Bank is higher than the Dhaka Bank, Prime Bank or Dutch
Bangla Bank etc. But the bank has to compete with the multinational Bank
located here. Some of the job in National Bank has no growth or advisement
path. So lack of motivation exists in persons filling those positions. This is
a weakness of National Bank that it is having a group of unsatisfied employees.
In terms of promotional sector, National Bank has to more emphasized on the.
They have to follow aggressive marketing campaign.
Opportunity:
Business diversification:
In order to reduce the business risk,
National Bank has to expand their business portfolio. The management can
consider options of starting merchant banking or diversify into leasing and
insurance sector. The activity in the secondary financial market has direct
impact on the primary financial market. Banks operate in the primary financial
market. Investment in the secondary market governs the national economic
activity. Activity in the national economy controls the business of the bank.
Opportunity in retail banking lies in the fact that the country’s increased
population is gradually learning to adopt consumer finance. The bulk of our population
is middle class. Deferent types of retail lending products have great appeal to
this class. So a wide variety of retail lending products has a very large and
easily pregnable market. A large number of private banks coming into the market
in the recent time. In this competitive environment National Bank must expand
its product line to enhance its sustainable competitive advantage. In addition o f those things, National Bank
can introduce special corporate scheme for the corporate customer or officer who
have an income level higher form the service holed. At the same time, they can
introduce scheme or loan for various service holders. And the scheme should be
separate according to the professions, such as engineers, lawyers, doctors,
etc.
Threats:
Increasing competition
All sustain multinational banks and
upcoming foreign, private banks posse’s enormous threats to National Bank
Limited. If that happens the intensity of competition will use further and
banks will have to develop strategies to compete against an on slough of
foreign the banks.
Default
culture:
The default risks of all terms of
loan have to be minimizing in order to sustain in the financial market. Because
default risk leads the organization towards to bankrupt. National Bank has to remain vigilant about
this problem so that proactive strategies are talent to minimize this problem
if not elimination. The low compensation package of the employees from mid
level to lower level position threats the employee motivation. As a result,
good quality employees leave the organization and it effects the organization
as a whole.
National Bank Limited:
(Lake Circus) Branch
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 Lake
Circus 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
8. Accounts section
9. Western Union Money Transfer Section
10. Dispatch
2.1 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
Step 2 |
Step 3 |
· · · · · |
|
Step 4 |
Authorized Officer accepts the application. |
||
|
Step 5 |
Minimum balance is deposited – only |
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).
Partnership Account:
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)
Limited company:
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 types, 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.
2.2 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.
Accepting deposits:
The deposits that are accepted by NBL
like other banks may be classified in to,
a) Demand Deposits
b) Time Deposits
Demand 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
Time deposits:
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.
2.3 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 below:
Functions of Cash Department:
|
Cash Payment
|
1. Cash payment is made only 2. This is the unique function of 3. It makes payment only against |
|
Cash Receipt
|
1. It receives deposits from the 2. So it is the “mobilization unit” 3.It collects money only its |
Cash
receiving
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 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
Lake Circusr Branch Branch name
Date Date
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; Cheque number, Account
number, Payment amount, Authorized signature, Payment date.
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.
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
Evening banking hour begin after
original banking hour. This evening banking hour begin from 3pm to 5 pm.
2.4 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.
•
Telegraphic transfer (TT)
• Pay order
(PO)
• Demand draft (DD))
• Pay slip
Type of remittance:
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
requests another
branch to pay specified money to
the specific payee on demand by Telegraphy Telephone
Payment from
Payment from
Issuing branch
Payment from ordered branch
Payment from ordered branch
Generally
used to Remit
fund
Within the clearinghouse area of
issuing branch
Outside the clearinghouse area of
issuing branch. Payee can also be the purchaser.
Anywhere in the country
Payment
Process of the
paying bank
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
2.4. 1.Telegraphic 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:
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 KB 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
2.4.2 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:-
Situation one:-
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 pay order 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.
Credit voucher: – clients account
Situation two:-
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
2.4.3 Demand draft
(DD)
Requirements for sending DD:
Procedure for sending DD: When client
want to transfer money from NBL, branch to Kawranbazar NBL, Agrabad
Branch (suppose) then following ways
he should follow
•Deposit money in cash department
which he mentioned in DD form.
•Client should have account in
National at KB 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.
Commission:-
Up to 25000 taka commission 25 taka
Above 25000 taka every one thousand
carry 1 taka
VAT: – VAT is 15% of commission.
2.4-4 Pay slip
Pay slip is used only bank internal
payment purpose such as different types bills payment.
2.5 Clearing Section:
Cheque, Pay Order (P.O), Demand Draft
(D.D.) Collection of amount of other banks on behalf of its customer are a
basic function of a Clearing Department.
2.5.1 Clearing:
Clearing is a system by which a bank
can collect customers fund from one bank to another through clearing house.
2.5.2 Clearing House:
Clearing House is a place where the
representatives of different banks get together to receive and deliver check
with another banks.
2.5.3 Member of clearing House:
NATIONAL Bank LTD is a scheduled
Bank. According to the Article 3 7(2) of Bangladesh Bank Order, 1972, the
banks, which are the member of the clearinghouse, are called as Scheduled
Banks. The scheduled banks clear the cheque drawn upon one another through the
clearinghouse.
2.5.4 Types of Clearing:
2.5.4(A) Outward Clearing: When the
Branches of a Bank receive cheque form its customers drawn on the other Banks
within the local clearing zone for collection through Clearing House, it is
Outward Clearing.
2.5.4(B) Inward Clearing: When the
Banks receive check drawn on them from other Banks in the Clearing House it is
Inward Clearing.
2.5.5 Types of clearing house:
There are two type of clearing house:
Those are
1) Normal clearing house
2) Same day clearing house
2.5.5(1) Normal clearing house:
1) 1st house: 1st house normally
stands at 10 am to 11 am
2) 2nd house: 2nd house normally
stands after 3 p.m. and it is known as return house.
2.5.5(1) same day clearing house:
1) 1st house: l house normally stands at 11 a.m. to
12 pm
2) 2nd ’ house: 2nd
’ house normally after 2 p.m. and it is known as return house.
• Who will deposit cheque for
Clearing: Only the regular customers i.e. who have Savings, Current, STD &
Loan Account in the Bank can deposit cheque for collection of fund through
clearing house.
• Precaution at the time of cheque
receiving for Clearing, Collection of LBC, OBC &
Transfer:
1. Name of the account holder same in
the cheque & deposit slip.,
3. Date in cheque may be on or before
(but not more than six months back) clearing house date.
5. Cheque must be signed.
6. Signature for confirmation of
date, amount in words / in figure Cutting & Mutilation of cheque.
7. Cheque should be crossed (not for
bearer cheque).
8. Account number in the deposit slip
must be clear.
9. Depositor’s signature in the
deposit slip.
Clearing Division
NBL, Lake Circus branch receive
cheque, demand draft, pay order from their clients for clearing. It has been
seen that when the instrument of other banks have deposited in the NBL; Lake
Circus branch , then the officer has to check the particulars of the credit
voucher ,he ensure that giving instrument and credit voucher account number ,
amount should be same. When officer receive any instrument he should ensure
that instrument issuing date should not exceed six months. When every thing ok
then authorized officer put a received seal on the carbon copy of credit
voucher, then authorized officer put a cross seal on that instrument. Cross
seal as like as follows:— National Bank Ltd
Lake Circus after receipt of
instruments the authorized officer examines following things:
The paying bank is another bank,
which is situated with in Dhaka city.
The paying bank is another branch of
National bank, which is situated in Dhaka city.
The paying bank is situated outside
of Dhaka city its may be another bank or another branch of NBL
a) When the paying bank is another
bank, which is situated with in Dhaka city.
When the authorized officer examines
that the instruments paying bank is another bank which is situated in Dhaka
city then officer put an endorsement seal opposite side of instruments and in
this case clearing process made by clearing house.
Endorsement components:
Received payment and payees account
Lake Circus Branch, Dhaka.
Before send instrument the clearing
house the authorized officer put a seal on the front side of the instrument,
which is as like:
National Bank Ltd
Lake Circusr branch
Clearing date
Clearing House
Then authorized officer has been
slotting or arranging those instruments and put serial number. Then officer has
give entry in the computer according bank name. branch name, cheque no, account
number, cheque serial number, issuing date and amount of those instrument. Then
officer made a schedule paper which contains instruments particulars and total
figures. All this functions has been done by special software. Then send them
to the local principle office (NBL, Dilkusha branch) for clearing and credit
voucher send to the cash department of Mahibugli branch for crediting parties
account. Before clearing process parties account yet not credited.
When authorized officer send
instruments for clearing, he made one debit and credit voucher. This is as
follows:
After clearing process some
instruments is made cleared and some instrument might be retune. Then local
principle office sends a credit advice and all instruments those have been send
for clearing.
|
When Lake
Circus branch get advice and instruments then authorized officer made following
voucher:-
After receiving credit advice Lake
Circus branch authorized officer has to respond on the credit advice’ (IBCA)
send by local office. IBCA bears the documents of the total amount of
instruments received by the local office from Lake Circus branch. IBCA has
described that NBL Lake Circus branch general accounts have credited.
Return Cheque
|
In the time of
clearing process some instruments might be returned. If client wants to get
back their return cheque then authorized officer issue a debit voucher, which
is as follows:-
And this debit voucher posted on cash
departments computer by debating parties account.
2.5.6 Return house:
Return House means 2 houses where the
representatives of the Bank meet after 3 p.m. to receive and deliver dishonored
cheque, which place in the Clearing I-louse.
Cheque may be dishonored for any one
of the following reasons:
1) Insufficient fund.
2) Amount in figure and word differs.
3) Cheque out of date! Post- dated.
4) Payment stopped by the drawer.
5) Payee’s endorsement irregular!
Illegible I required.
6)
Drawer’s signature differs required.
7) Crossed cheque to be presented
through a bank.
8) Other specific reasons not
mentioned above.
The
dishonor cheque entry in the Return Register & the party is informed about
it. Party’s signature required in the return register to deliver the dishonor
cheque. After duration, the return cheque is sent to the party’s mailing
address with Return Memo.
Responsibility of the concerned
officer for the Clearing Cheque:
1) Crossing of the cheque.
2) (Computer) posting of the cheque.
4) Separation of cheque from deposit
slip.
5) Sorting of cheque 1St bank wise
and then on branch wise.
6) Computer print Clearing House
computer validation sheet.
7)
Examine computer validation sheet with the deposit slip to justify the computer
posting.
8) Copy of computer posting in the
floppy disk.
2.5.7 Bills Collection:
In modern banking the mechanism has
become complex as far as smooth transaction and safety is concerned. Customer
does pay and receive bill from their counterpart as a result of transaction.
Commercial bank’s duty is to collect bills on behalf of their customer.
2.5.8 Types of Bills for Collection
Outward Bills for Collection (OBC)
2.5.8. (a) What is OBC?
OBC means Outward Bills for
Collection. OBC exists with different branches of different
banks outside the local
clearinghouse. Normally two types of OBC:
1) OBC with different branches of
other banks
2) OBC with different branches of the
same bank
Procedure of OBC:
1) Entry in
the OBC register.
2) Put OBC number in the cheque.
3) “Crossing seal” on the left corner
of the cheque & “payees account will be Credited on realization” seal on
the back of the cheque with signature of the Concerned officer.
4) Dispatch the OBC cheque with
forwarding.
5) Reserve the photocopy of the
cheque, carbon copy of the forwarding and deposit
Slip of the cheque in the OBC file.
3.5.8 (b) Inward bills for collection (IBC)
When the banks collect bills as an
agent of the collecting branch, the system is known as
IBC. In this case the bank will work
as an agent of the collection bank. The branch receives a forwarding letter and
the bill.
Procedure of IBC:
1. IBC against OBC: To receive the
OBC cheque first we have to give entry in the IBC Register. The IBC number
should put on the forwarding of the OBC with date.
2. Deposit of OBC amount: OBC cheque
amount is put into the “sundry deposit sundry Creditors account”, prepare debit
& credit vouch of it. If the OBC cheque is honored, send credit advice
(IBCA) with signature & advice number of the concern branch for the OBC
amount.
3. If the OBC cheque is dishonored,
the concerned branch is informed about it.
4. Again place in the clearing house
or send the OBC cheque with Return Memo to the issuing branch according to
their information.
2.6 Credit Card Section
Carrying of cash is not so safe in
today’s world. There is always a chance of losing or hijacking of cash. On the
other hand, the desire to purchase any desired item of one may not be fulfilled
for the want of cash at the time of that willingness. To remove these problems,
credit card has been introduced which is very popular to face the mentioned
problems.
2.6.1 What is Credit Card?
It is a card (usually plastic) that
assures a seller that the person using it has a satisfactory credit rating and
that the issuer will see to it that the seller receives payment for the
merchandise delivered.
2.6.2 NBL & Credit Card
NBL is the first local bank, which
introduced credit card & MasterCard in Bangladesh in both local and
international market in 1997. MasterCard captured 35% of credit card through
the world. However present market analysis reflects that a large number of
people whose average income ranges in above Tk.l0000 are using the credit card.
Credit card division is continuing their all-possible efforts for the
participation in the globalize MasterCard program. The number of users of the
credit cards is increasing day by day. During the year 2004 the bank has got a
profit of Tk.104.25 million from credit card business. NBL also has got the
licenses from international brand Visa Card and very soon, it will be launched
in the country
2.6.3 Types of Credit Card
National Bank Limited offers mainly
two type of credit card according to the geographical area. These are Local
credit card and International credit card. According to the level of income the
local and international credit cards are divided into two categories viz. Gold
card and Silver card. These types of credit cards are described below:
a)
:
:
(a) Local credit card:
Local credit card is valid only in Bangladesh. Out side
Bangladesh, the card is invalid. Local card are two types. They are Gold local
card and Silver local card. The card limit of gold local card is Tk.50000 to
Tk. 100000 and silver local card is below Tk, 50000.
(b) International Credit Card:
International credit card is valid
mainly outside Bangladesh. But for the payment of roaming facilities for
Grameen phone, cardholders can use international credit card in Bangladesh.
International credit cards are of two types. These are gold international
credit card and silver international credit card. The card limit of gold
international credit card is $ 2000 to $4000 and silver international credit
card below $2000.
2.6.4 Yearly Charges on credit card
National Bank Limited receive card
fee for new card and renew card from the cardholder.
The rate of card fee for new card and
renew card are the same, In case of new card the bank receives the card fee
with the next month’s bill. The rates of card fee are given in below:
Yearly charges on credit card
|
Type of card |
Local |
International |
|
Gold card |
Tk.2000.00 |
US$70.00 |
|
Silver Card |
Tk.1200.00 |
US$ 35.00 |
- Source:
National Bank brochure 2005
2.6.5 Documentation for a credit card
Any person whose monthly income is
over 10000 can be a credit card holder of NBL. The requirements of a card are:
For Local
card:
- The
fulfillment of the application form. - 2
copies of photographs. (If supplementary card is taken then 2 copies of
photographs of the nominee). - TIN
certificate. - A
security. (MSS, SDS or FDR as lien). - Charge
documents.
For
International card:
The fulfillment of the application
form.
2 copies of photographs. (If
supplementary card is taken then 2 copies photographs of the nominee).
TIN certificate.
A security. (MSS, SDS or FDR as
lien).
Charge documents.
The photocopy of passport.
2.6.6 Billing of a credit card
National Bank Limited offers the
cardholder 15 to 45 days credit facilities. For the proper billing the bank
divided the cardholder into three cycles. These are 0 cycle, 3 cycle and
5cycle.
In 0 cycle bill are prepare and send to the cardholder 1st day or
every month and last date of payment is 15th day of the month.
5cycle bill
are prepare and send to the cardholder 5th day of every month and last date of
payment is 20th day of the month.
ATM card
ATM means automated teller machine.
NBL ATM card give opportunity to their customer that they can withdraw their
money at any time, any days even holidays. By using ATM subscriber can give
various utility bill such as telephone, gas, electricity bills etc. actually
ATM card is a debit card.
Charges for ATM card: –
ATM card holders have to pay 1000
taka annually and in the case of’ card lost subscriber also pay additional 300
taka.
2.7 Accounts section
Accounts Department is called as the
nerve Center of the bank. In banking business, transactions are done every day
and these transactions are to be recorded properly and systematically as the
banks deal with the depositors’ money. Improper recording of transactions will
lead to the mismatch in the debit side and in the credit side.
To avoid these mishaps, the bank
provides a separate department; whose function is to check the mistakes in
passing vouchers or wrong entries or fraud of forgery. This department is
called as Accounts Department. If any discrepancy arises regarding any
transaction this department repot to the concerned department.
Besides these, the branch has to
prepare some internal statements as well as some statutory statements, which
are to be submitted to the Central Bank and the Head Office.
• Recording the transactions in the cash book.
• Recording the transactions in
general and subsidiary ledger.
• Preparing the daily position of the
branch comprising of deposit and cash.
• Preparing the daily Statement of Affairs showing all the assets and liability of
the branch as per General Ledger and Subsidiary Ledger separately.
• Making payment of all the expenses
of the branch.
• Recording inters branch fund
transfer and providing accounting treatment in this regard.
• Preparing the monthly salary
statements for the employees.
• Preparing the weekly position for
the branch which is sent to the Head Office to maintain Cash
Reserve Requirement (C.R.R)
• Preparing the monthly position for
the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (S,L.R)
• Make charges for different types of
duties.
• Preparing the budget for the branch
by fixing the target regarding profit and deposit so as to take necessary steps
to generate and mobilize deposit.
• Checking of Transaction List.
• Recording of the vouchers in the
Voucher Register
• Packing of the correct vouchers
according to the debit voucher and the credit voucher.
• Prepare advice
• Prepare incomes and expenditures
statement
• All administrative work
When accounts officer receive any
types of voucher then he has to identify whether it are
Clearing, Cash, Transfer.
Clearing: When accounts officer receive clearing
voucher then he send it to the clearing division.
Cash: When accounts officer receive cash
voucher then payment made by clients.
Transfer: When accounts officer receive transfer
voucher that means this amount should be transfer of account head to another
account head. In this case accounts officer register it in register hook before
computer posting. Before register this voucher in register book officer put a
serial number that is register in register book. In transfer register book
contains debit and credit side, particulars and amount. End of banking hour
accounts officer calculate the transferred amount and debit balance and credit
balance should he equal and he make sure that the debit balance and credit
balance of transfer, clearing and cash position should be same figure.
Every day accounts division prepared
daily statement affairs and send them to the every department.
National bank Ltd. signed an
agreement with the Western Union Financial services, USA in 1993. Millions of
people from different parts of the world are sending money with confidence to
their near and dear through the western union has the most modern technology
for remitting money within quiets possible time from any part of the world
through their more than 170000 representatives in 190 countries and regions has
established a unique money transfer system
with western union of. Through an online computer systems finds can be
instantly of the world. 114.9million dollar was remitted to this bank through
this organization during the year 2005 .NBL brought a substantial amount of
foreign exchanges in to the country through the western union in 2005, which is
79% higher than that of 2004
The western union is a globally
reputed name in money transfer services and data exchange forever 150 years.
Western union has continued its tradition of possessing the latest technology
and handling wide scale remittances.
Payment of remittance by expatriate
Bangladeshis through the western union are being made at 92 branches of NBL.
These branches are connected with the on-line computer system of the western
union.
The special feature of services is as
follows:
Fast: Remits money in minutes
Safe: World class security system
Easy: Over 2, 00,000 agent locations
across 200
Countries and territories worldwide
Reliable: Trusted by millions for
over 150 years.
• To preserve the par value of the
Bangladesh Taka (currency);
• To promote and maintain a high
level of production, employment and real income in Bangladesh; and
• To foster growth and development of
the country’s productive resources for the national interest.
Reconciliation:
The reconciliation division collects
the CIBTA (computerized inter bank transaction advice) related voucher. Foreign
exchange division take seine voucher which is related to-their division and
rest of the vouchers are supposed to make advice. l3etbre written advice,
accounts officer slotting those vouchers according to IBCA (inter branch credit
advice) IBDA (inter branch debit advice) responding and originating wise.. When
all are complete then those are posting in computer and take a print of
originating and responding sheet and make extract.
Dispatch:
The main function et dispatch
division is dispatching all types of documents such as OBC, LBC, and different
types of letter, different advice. Beside dispatch division receives letter and
documents, which are may be coming from head office, all other branches of
National Bank Ltd. other banks, negotiation and opening bank (incase of Import
and Export) in the name of National Bank Ltd Lake Circus branch. Following arc
given a graph which shown the activities are done by dispatch division: Dispatch
In ward mail Out word mail
By courier, DHL/Fed EX, Register post
The officer engaged in the dispatch
division maintain two types of mail, which is
Inward mail
Outward mail
Inward mail
When officer receives any letter or
documents from out side of the branch then he done following function which is
arrange at sequentially:.
First put receive seal on that letter
or document
Register in the inward register book
with receiving date.
Outward mail
– it is necessary to dispatch any types
of letter or document out side of the Lake Circus branch the dispatch officer
done following job which are arrange sequentially: –
DHL/ Fed Ex: – These types of courier
services are use when foreign documents or letter are dispatch. Its payment
also made by monthly basis.
Dispatch officer always maintain petty
cash account to full fill the dispatch division requirements, which name is:
Suspense A/C Advance against postage”
At the beginning of the month
dispatch officer withdraws money from bank by’ issuing a debit voucher for the
payment of dispatching bills. At the end of the month he calculate his total
expanse, if his debit amount has surplus after all expanses then he refund it
to the bank by a credit voucher.
3.0 Loans
& Advances
3.1 Introduction:
This is the survival unit of the
bank. The reason is, until and unless the success of this section, the survival
is a big question. This is the main earning unit of the bank. Banks accepts
deposits from the depositors in condition of providing interest to the
depositors in condition of providing interest to them. Now the question is how
bank provides interest to their clients. The simple answer is — interest from
advances. The bank provides interest to the borrowers because:
• To earn interest from borrowers and
give depositors the interests get back. The rest are the profit of the bank.
• To accelerate economic development.
• To meet the interest groups.
Credit is a continuous process.
Recovery of one credit gives rise to another credit. In this process of
revolving funds, bank earns income in the form of interest. A bank can invest
its fund in many ways. Bank provides loans and advances to traders, businessmen
and industrialists. Moreover, nature of credit may differ in terms of security
requirement, disbursement provision, terms and conditions etc.
Bank often uses loans and advances as
an alternative to one another. But, academically this concept is incorrect.
Academically, Advances is the combination such items where loans is a part
only. For this credit section of the banks is known as advance section.
Advance division is heart for any
bank. A big portion of income of the National bank Ltd is comes from this
advance division. This income comes from different Types of investment of
depository money. Investment decision is the most important which is taken by
the management of the National bank lid. NBL advance division plays a vital
role for economical development.
NBL has an investment committee they
are responsible following things:
•To ensure the cash liquidity
requirement and can this cash liquidity meet
To identify new investment portfolio
and this is profitable for the National bank.
•To examine banks deposit, investment
and identify their surplus money. They should be active for recovery their
substandard, doubtful and bed loan.
•They should be take short-term
investment but this investment return is comparably high.
They should aware about market study
and existing portfolio of investment.
•They should aware to identify new
sources of investment.
NBL invests in two ways which is
• Head office investment
• Branch investment
Head office investment: Bangladesh bank has a regulation that every commercial bank
should reserve 15% of their total depository money in central bank. Head
investments are two types. Such as they invest in treasury bills, prize bond,
share, debenture etc.
They purchase securities for
liquidity purpose. The largest portion of security investment is in government
obligation. They invest in short term government securities. This type of
investment risk is zero and market risk is low. ((Figure in Crore)
|
Year |
2001 |
2002 |
2003 |
2004 |
2005 |
|
Investment |
289.20 |
383.96 |
404.42 |
437.42 |
391.51 |
Own investment by the National Bank
Ltd last fives executive five years:
Branch investment: Branch invests indifferent sectors and they have no limitation for
selecting investment sector but they should responsible for selecting
profitable sector. Breach makes their investment to the general public, bank
employees, business men, and some cases in securities market. More then 70%
investment money comes from deposited money.
3.2 Types of Advances
It is not possible to discuss all
these types of advances in details in this report but an attempt has been made
to analyze the basic difference and characteristics of these advances all in
the following manner:
3.3 Types of loan:
By the nature of loans are three
types. Following describe different types of loan by a structure
3.4 Current or continuous
loan:
Current loan is also cal1ed revolving
credit. Current loan holder can withdraw or deposit money in his account in
several times with in the loan period. If loan holder wants to renew his loan
amount then it can be done with the authorization of the bank. Current loan
duration time is one year and interest is charged by quart lay basis. End of
the duration period loan holder must have to pay loan amount with the interest.
3.4.1Current loan is two types:
Cash credit (CC)
Security over draft (SOD) End of the
duration loan holder must have to pay loan amount with interest rate. Risk fund
and service charge is not needed for cash credit. Collateral security is
essential for cash credit .Cash credit is offer for those peoples whose need
working capital or there is a Shortage in their capital.
:
Cash credit (hypothecation)
Cash credit (Pledge)
3.4.1.1 Cash credit (Hypo) In the case of cash credit (Hypo)
the borrower sign a letter of hypothecation and physical possession of the
goods are control by the borrower but borrower binding himself to the national
bank ltd at Lake Circus branch. In the case of CC(hypo) bank always prefer
legal equitable mortgage of properties (land, building) as a collateral
securities.
Charge documents for Cash credit
(Hypo):
Promissory note (DP note)
Letter a of arrangement
Letter of continuity
Letter of hypothecation
Letter of guarantee.
3.4.1.2 Cash
credit (pledge)
In the ease of cash credit (pledge)
loan is issue against the security of goods its may be finished goods or row
materials. When borrower wants CC (pledge) then he has to singe a letter of
pledge. Where the physical possession of that goods pledge under NBL, Malibugh
branch control but ownership with borrowers. In this case the goods are stored
in bank store and a caretaker is joining for take care of that goods. This caretaker
salary bears by the borrowers.
Charge documents for cash credit
(pledge):
Promissory note (DP note)
Letter of arrangement
Letter of continuity
Letter of pledge
Letter of guarantee.
3.5. Secured over draft (SOD)
Nature of secured over draft (SOD):
SOD loan issue against FDR or Work
order duration of loan is one year
Bank issue letter of lies if loan is
against FDR
SOD loan is offer for those persons
whose need money to meet his financial obligation
Secured over draft (SOD) loan are two types:
SOD (G) against work order:
Basis of bills receivable. When SOD
issued against work order party gives the power of attorney for draw the
cheques. SOD against work order loan involves three parties such as bank, loan
holder, and work giver. Bills receivable calculation following ways 🙁 Total
value of work- (17.5% of work value+ cheque receive) bills receivable.
Charge documents for SOD against work
order:
Promissory note (DP note)
Letter of arrangement
Letter of continuity
Letter of guarantee.
)
SOD (Rid Bond) is gives for those
borrowers who want to participating an\ bid for collect work. In SOD Bid Bond
payment is making by the pay order. If borrower gets that work then interest is
charger of that amount. If borrower does not get that work then he deposit that
amount which he has issued by pay order.
Charge documents for SOD (Bid Bond):
Some times NBL give SOD loan against
FDR. In this case the loan amount is 80% of FDR account. In SOD against FDR
interest rate is 3% more then FDR interest rate. This loan is more secured then
other types of loan. In the case of SOD loan against FDR party gives power to
the bank if borrower unable to pay loan amount then bank can withdrawn his loan
amount from parties FDR account.
3.5.3. Demand loan
It has been seen [hat demand loan
usually used in import export purpose.
Following are given different types
of demand loan:
Import related loan
For encourages our import business
National bank offer following loan facility for import purpose:
LTR (loan
against trust receive)
PAD (purchase
against document)
LIM (loan
against import merchandise)
For encourages our export NBL ,offers
following loan facility for export:
IDBP (inland
documentary bills purchased)
FDBP (foreign
documentary bills purchased)
PC (Packing
credit)
ABP (accepted
bills for payment)
3.5.4. Term loan
Term loan holder can withdraw his
loan amount in several times but he should be repayment with a specific date
and installment basis .national bank offer different types of term loans for
general public, businessmen, or employees. Different types of term loan as
follows: —
Consumer credit scheme (CCS)
Employees house building loan (EHBL)
House building loan (HBL)
Car loan
3.5.4. 1 Employee Loan:
For the betterment of its own
employees NBL provides loans. The branch managers and executives get this
facility. Repayment is adjusted from their monthly salary on an equal monthly
installment. 10% of basic is contributed by employee in every month. The staffs
can also take loan, which is known as Staff Loan against Provident Fund (SPF).
The repayment is adjusted from their monthly salary. 10% of basic is also contributed
to the PF by the bank.
3.5.4..2 Employees
house building loan (EHBL)
The employee of NBL can take
house-building loan from bank but the range of loan amount depends on person’s
designations. Simple interest rate is charge on employee’s house building loan
and interest rate is 8%.
3.5.4..3 House building loan (HBL)
National bank provide house-building
loan for their target groups. In the case of
HBL interest rate is 14.5%. For HBL
loan bank keep land as a collateral security
for their safety.
3.5.4. 4 Consumer Credit Scheme:
National Bank’s Consumer Credit
Scheme gives a great opportunity to buy household and office items on easy
installments. This scheme gives the advantage of part payment to cope with the
high price tags of many necessary home and office appliances.
To lead a better life NBL provides
this credit to consumers to purchase household items as Television,
Refrigerator, Personal Computer, Furniture, Car etc. The people with fixed
income get this credit. It is a 24 to 48 installment system of 14% interest.
The amount allowed to the borrower is 10000/- to 300000/-.
3.5.5. Inland Bills Purchased (IBP):
Bank purchases two types of Inland
Bill — Clean Bill and Documentary Bill.
Clean Bill:
Clean bill are those that requires no
payment for documents cheque, Demand Draft, Telegraphic Transfer, and Mail
transfer.
• Documentary Bills:
Documentary bills are those which
require related documents for payments like Bills of Exchange, Railway/Shipment
receipt and invoice etc. This bill is often created in businesses and bank
purchases these before their maturity. Thus, purchases of these bills are one
kind of credit to these before their maturity. As bank purchases these bills on
behalf of the business so it is one kind of credit to those businesses. After
maturity, bank presents it to the drawee for encashment.
3.6. Classification loan
Loan can be classified into three
types. Which is as follows:
Sub stranded (SS) loan: — Sub stranded is that types of loan which does not collect
last six months.
Doubt full loan: – When loam amount doesn’t collect last nine months.
Bad loan: —
Bad loan is that types of loan which there is no change to repayment. Bad
loan create when any outstanding loan
doesn’t collect last one year.
For Unclassified loan
provision must be keep 1% of outstanding loan amount.
Sub stranded (SS): For sub stranded loan provision
must be keep 20% of outstanding loan amount.
Doubt full loan: For doubt full loan provision
must be keep 50% of outstanding loan amount.
Bad loan: In the case of bad loan provision must be
keep 100% of outstanding bad loan.
Write off
One account can be write-off without
absolving the borrower from the payment of the loan. It is done only to make
the banks account or recorded showing better.
3.7. Creation of charges for securing Loans
For the safety of the loan, bank
requires security from the borrower so that it can recover the loan by selling
security if borrower fails to repay. Creation of charge means making it
available as a cover for an advance. The method of charging should be legal,
perfect and complete. Securities are charges in order to:
* Protection of interest.
*
Ensuring the recovery of the money lent.
*
Provision against unexpected change.
* Commitment of the borrower.
A brief description about the
securities that is kept against the loans is described below:
3.7.1: Primary Security:
• Narrow Sense — security deposited
by a third party to secure the advances for the borrower.
• Wider sense — any types of security
on which the creditor has a personal right of action on the debtor in respect
of advance common method of charging security and their nature of security.
Lien:
It is the right of the banker to hold
the debtor’s property until the debt is discharged — generally retained by the
bank in its own custody or to the hands of the third party with lien marked.
The third party cannot discharge it without the permission of the bank. In case
of need bank needs permission of the court to sell the property.
Assignment:
Borrower transfers the right of
property or debt to the bank. Life Insurance Policy, supply bills, book debt of
the borrower can be assigned.
Pledge:
It is one kind of lien but the bank
enjoys more rights on it. In this case, physical transfer of the goods is must
to the bank. Bank can sell the property without the intervention of the court
in case of default on loan.
Mortgage:
Mortgage is the transfer of special
movable property — like land, building, plant etc. Most common type of mortgage
is legal mortgage in which ownership is transferred to the bank by registration
of the mortgage deed.
Another method called equitable
mortgage is also used in bank for creation of charges. Registration is not
required. In both the cases, the mortgaged property is retained in hand of the
property.
3.8. Principles of sound lending
In order to secure a balance between
liquidity Profitability, and security, NBL following principles of sound
lending:
3.8. 1.Liquidity:
While lending adequate care is taken
to ensure the liquidity of the lien item. In this case, NBL choose such
securities, which possess such liquidity.
When banker sanctioning any loan then
they should ensure the liquidity position of National Bank Limited.
3.8. 2 Safety:
National Bank exercises the lending
function only it is safe and the risk factor is adequately mitigated and
covered. Safety depends upon the security offered by the borrower safety is the
most important for sanctioning loan. At the time of repayment borrower may be
not able to pay the loan amount. For that reasons when bank sanctioning loan
they should take collateral security from the borrowers.
3.8. 3 Diversity of risk:
Bank should not invest in one or two
sector. If it is happened then their investment risk is higher then market
risk. Bank should maintain investment portfolios for reducing their risk. In
this case when one investment makes loss another investment will cover that
loss. In order to minimize the risk,
National Bank invests its fund in different industries of different industries
situated in different regions of the country.
3.8. 4. Adequate Yield:
From the commercial point of view,
National Bank considers sufficient yield of return while financing a project.
Banker should select those investment which interest rate is higher then
savings interest rate.
3.8. 5.Productive Purpose:
National Bank exercises its lending
function only on productive purpose.
3.8. 6.National or Social
Interest:
National Bank also considers national
aspect of any project while financing. They take utmost care so that the
project cannot be determined to the society as well as to the nation.
3.7.3 (G) Security: – Banker should be aware in the
selections of security for their loan. They should properly evaluate the value
of security it should not less then or equal of loan amount. When bank take any
land, building as a collateral security then banker should checking CS , SA, RS
porcha.
3.9. Selection of Borrower
In lending, the most important step
is the selection of the borrower. Due, to the asymmetric information and moral
hazard, banks have to suffer a lot due to the classified loans and advances,
which weakens the financial soundness of the bank. If the selection of the
borrower is correct, that is the borrower is a good character, capital and
capacity or
Reliability, resourceful and
responsible the bank can easily get the return from them. This point of view,
NBL follows the following procedures:
past track record:
After getting a application for a
loan the past record of the applicant is carefully studied. Generally such
studies includes –
i. Account balances and past
transactions
ii. Credit report from other banks
iii. Information of the industry by
studying market feasibility
iv. Financial statements (balance
sheet, cash flow statement, and income statement). If the borrower is a sole
proprietor then the single entry accounting treatment is converted into double entry
system.
v. If the amount is more then TK. 10
lacs then report from credit information bureau of Bangladesh Bank is
collected.
Borrower analysis:
Borrower analysis is based on 5-c’s
(character, capital, capacity, collateral, creditworthiness) and 3-r
(responsibility, reliability and resourcefulness). It follows that the bank
forms a rational judgment about the integrity of the borrower, which should be
undoubted.
approval procedure:
After receiving the application from
the client, National Bank Limited prepares a Credit
Line Proposal (CLP) and forwards the
same to the Head Office to place before Head Office Credit Committee (HOCC) for
approval. It includes-
Ø Request for credit limit of customer.
Ø
·
Copy
of T I N certificate.
·
·
3
years balance sheet and profit & loss account.
·
Personal
net worth statement of the owner! Directors! Partners etc
·
Valuation
certificate of the collateral security in bank’s form with photograph of the
security.
·
CIB
enquiry form duly filled in (for proposal of above 10 lacs).
·
Credit
report from other banks.
·
Stock
report duly verified.
·
Indent!
Performa invoice! Quotation. & Statement of accounts.
Service Quality and
Customer Satisfaction
In the case of pure service, service
quality will be the dominant element in customers’ evaluations. In cases of
where customer service or services are offered in combination with a physical
product, service quality may also be very critical in determining customer
satisfaction. Consumers judge the quality of services based on their
perceptions of the technical outcome provided, the process by which that
outcome was delivered and the quality of physical surroundings where the
service is delivered. The relationship between customer satisfaction and
service quality has been shown graphically.
|
From the figure above we can see that
customer satisfaction depends on service quality along with product quality and
price in a certain situational and personal condition. As banking sector is categorized
as pure service, the dominant feature that influences customer satisfaction is
the service quality. Offerings of the bank change within short term frequently.
Price for service also fluctuates within a short range of time. So service
quality is the dominant factor that should be maintained a certain level to
retain customer satisfaction and loyalty.
Service Quality Dimensions
Many
researchers who research on customer satisfaction of service; identified five
specific dimensions of service quality such as reliability, responsiveness,
assurance, empathy and tangibles. These dimensions represent how customers
organize information about service quality in their minds. These are described
below:-
Reliability
Reliability is defined as the ability
to perform the promised service dependably and accurately. In its broadest
sense, reliability means that the company delivers on its promises- promises
about delivery, service provision, problem solution and pricing. Customers want
to do business with companies that keep their promises, particularly their
promises about the service outcomes and core service attributes.
Responsiveness
Responsiveness is the willingness to
help customers and to provide prompt service. This dimension emphasizes
attentiveness and promptness in dealing with customer request, complaints and
problems. Responsiveness is communicated to customers by the length of time
they have to wait for assistance, answers to questions or attention to
problems. Responsiveness also captures the notion of flexibility and ability to
customize the service to customer needs. To excel on the dimension of
responsiveness, a company must be certain to view the process of service
delivery and the handling of requests from the customer’s point of view rather than
from the company’s point of view.
Assurance
Assurance is defined as employee’s
knowledge and courtesy and the ability of the firm and its employees to inspire
trust and confidence. This dimension is likely to be particularly important for
services that the customer perceives as involving high risk and/or about which
they feel uncertain about their ability to evaluate outcomes.
Empathy
Empathy is defined as the caring,
individualized attention the firm provides its customers. The essence of
empathy is conveying through personalized or customized service, that customers
are unique and special. Customers want to feel understood by and important to
firms that provide service to them
Tangibles
Tangibles are defined as the
appearance of physical facilities, equipment, personnel and communication
materials. All of these provide physical representations or image of the
service that customer, particularly new customers consider evaluating service
quality.
5.1. Analysis and Findings
5.2.
Service Quality Dimensions of National Bank Limited
From the above figure, it is figure out that rating for the responsiveness
(4.00) is the highest for National Bank Limited. The other ratings are 3.97,
3.95, 3.86 and 3.78 for Assurance, Tangibility, Reliability and Empathy
respectively. This rating indicates that National Bank Limited have more
responsiveness compare to other service quality dimensions where Empathy is
low. (Appendix-I)
5.2.1 Reliability
The reliability score 3.86 indicates
that customers are agree to the services of National Bank Limited is reliable
(Based on their consent collected by questionnaire). By the questions for
measure of reliability (question number 7, 8 and 9); it is found that the
aggregate score of reliability is 3.86 (Appendix-XX).
45% customers are strongly agree, 26%
moderately agree, 14% agree and 15% customers moderately disagree that National
Bank limited are capable to provide to promised services, which is denoted by
reliability measurement question no 07, Showed by the figure (Appendix-II)
41 %
customers are strongly agree, 30% are moderately agree, 27% are agree and 2%
are moderately disagree that when they face service related problems, employees
of National Bank Limited shows sincere enough to solving it; that is found from
the reliability measurement question no 08. Showed by the graph (Appendix-III)
In case of question no-09, Showed by
the graph (Appendix-IV) denotes that 25% customers are strongly agree, 30% are
moderately agree, 23% are agree, 10% are moderately disagree and 12% are
strongly disagree that the National Bank charges a reasonable price for the
service they provide.
5.2.2 R
National Bank Limited response to its
customers promptly and always willing to help them that is denoted from the
score of responsiveness is 4.00. From the responsiveness measurement questions
(Questions no -10 and 11) it is stated that the aggregate score 4.00 (Appendix-XX).
40% customers are strongly agree, 33%
are moderately agree, 15% are agree, 5% are moderately disagree and 7% are
strongly disagree that employees in the National Bank Limited provide prompt
service which is denoted from the responsiveness measurements questions
(Questions no: 10) which is showed by the graph
(Appendix-V)
It was also found that 30% customers
are strongly agree, 46% are moderately agree and 24% are agree that employees
in the Bank are always willing to co-operated which is measure by reliability
questions (Questions no 11) which is showed by graph (Appendix-VI)
5.2.3 Assurance
The score of assurance is 3.97, which
mean that customers of the National Bank Limited agree (near to moderately
agree) that the Bank provides assured services.
The aggregate score of assurance is 3.97, which are calculated by
arithmetical mean of assurance measurements questions (Questions no 12, 13 and
14). (Appendix-XX)
37% customers are strongly agree, 32%
are moderately agree, 20% agree, 7% are moderately disagree and 4% are strongly
disagree to the behavior of employees of the National Bank Limited generates
confidence about the service quality that is denoted from assurance question
(Questions no 12) which is showed by graph (Appendix-VII)
It was also found that 27% customers
are strongly agree, 43% are moderately agree, 27% are agree and 3% are
moderately disagree to the employees of National Bank Limited are consistently
courteous with the customers (By the question no 13) which is showed by graph
(Appendix-VIII)
37% customers are strongly agree, 35%
are moderately agree, 24% are agree 4% are moderately disagree that employees
in National Bank Limited have knowledge to answer the customers’ questions (It
was found from question no 14) which is showed by graph (Appendix-IX)
5.2.4 Empathy
The score of the empathy is 3.78 that
indicate the customers agree that employees are caring and give individualized
attention to them. The means of Q-15 and Q-16 are 3.88 and 3.68. Thus the
average value of empathy is 3.78 (Appendix-XX).
It was found that (which is showed by
following figure) 32% customers are strongly agree, 38% are moderately agree,
21% are agree, 4% are moderately disagree and 5% are strongly disagree that
employees give individual attention to the customers (By Empathy measure
questions no 15, Appendix-X)
Findings from the question no-16, 25%
customers are strongly agree, 34% are moderately agree, 30% are agree, 6% are
moderately disagree and 5% are strongly disagree that employees of the Bank
understand specific needs of the customers which is showed by graph
(Appendix-XI)
5.2.5 Tangibles
The score of the tangibles is 3.95
that mean customers of the Bank Asia Limited agree (near to moderately agree)
that the BANK has modern looking equipment and the physical facilities of the
BANK are visually appealing. The mean values of Q – 17, Q – 18 and Q – 19 are
4.45, 3.59 and 3.80 respectively which give the aggregate score of tangibles
3.95 (Appendix-XX)
Findings from the question no
-17(Appendix-XII) denotes that 65% customers are strongly agree, 20% are
moderately agree, 10% are agree and 5% are moderately disagree that the Bank
has modern looking environment.
32% customers are strongly agree, 25%
are moderately agree, 20% are agree, 16% are moderately disagree and 7% are
strongly disagree that the company’s physical facilities (ATM Card, Check Book
etc) are visually appealing which was found by tangibility measurements
questions (Questions no: 18) showed by graph (Appendix-XIII)
32% customers are strongly agree, 39%
are moderately agree, 10% are agree, 15% are moderately disagree and 4% are
strongly disagree that the Bank’s employees appear are smart that was found
from the (questions no 19, Appendix-XIV)
5.3 Demographic analysis
5.3.1 Types of Account
Among the
respondents, 35 customers maintain current account, 25 maintain savings
accounts, 10 have FDR, 15 respondents are for Pay Order/Demand Draft, 10 are
Term loan and 5 are SOD. (Appendix-XV)
5.3.2 Profession
Among the
respondents, 27 customers are private job holders, 35 are Businessmen, 19 are
civil service, 10 are students, 4 are housewives and 5 from other
professions.(Appendix-XVI)
5.3.3Income
Income range of customers is
categorized into four categories. Students, housewives, retired persons and a
few civil service holders belong to the first range. The second range includes
mostly the private sector service holders. They are basically executives of
range-one officers. The third category includes small and medium business
owners and to some extent executives and officers of MNCs. The highest income
range includes medium or large business owners and mid and top management of
the companies. (Appendix-XVII)
5.3.4 Age
Among 100 respondents 35% Customer
are 41-50 age range, 29% are 31-40 age range, 24% are 21-30 age range, and 12%
are above 50 age range. The age ranges of customers are shown in the figure
(Appendix-XVIII)
Findings, Conclusion
Recommendation
6.1 Findings
General banking Department
In general
banking department they follow the traditional banking system,. The entire
general banking procedure is not fully computerized. Under Information
Technology (IT) Department they do not have sufficient facilities of Data Base Networking management. They
transfer data from branch to branch and branch to head office by using floppy
disk. According to some clients, introducer is one of the problems to open an
account. If a person who is new of the city wants to open account, it is a
problem for him/her to arrange an introducer of SB or CD accounts holder.
Western Union Money Transfer Section:
Most of the time the desk is very
busy. Some time clients were kept waiting because internet speed is slow and
some time the online connection gets disrupted. Only one officer provides
service that is not enough to serve the number of customers need service there.
Loans and Advances Department:
Political influence is one of the
major problems in Bangladesh. Due to political intervention the bank becomes
obliged to provide loans in most of the cases, which are rarely recovered. Bank
has to face this in convenience situation almost every year. Sometimes the employees of the bank too
unlawfully help the client deliberately overvalues the securities taken against
the loan. As a result if the client fails to repay the loan the bank authority
cannot collect even the principal money invested by selling those assets. It is
also a very important factor the leads to loan default. National Bank doesn’t
advertisement much. As a competitive market it is important for any
organization to advertise and increase their marketing activities. NBL has huge
amount of idle money which increase their cost of capital. Most of the
employees do not have sufficient knowledge of computer and management does not
take much initiative to train them or encourage them to have basic computer knowledge.
Customer Satisfaction:
Lake Circus branch always wants to
satisfy those customers first. It was also observed that customers of Lake
Circus Branch are satisfied to National Bank Ltd except few products and
services. From an informal conversation with customers it was known that they
are satisfied to cash department because they rarely faces long queue for
payment or receipt. Interior and exterior decoration of Lake Circus branch are
so nice that provide customers friendly environment. It was also observed that
the behavior of employees attracts customers and customers think employees are
for them. Customers are satisfied to online facilities of National Bank because
National Bank charges no fee for online Banking. But in some extend customers were
also dissatisfied to few products and services. Customers of National Bank are
quite dissatisfied to ATM and Credit card services of Bank. Customers sometimes
complain for extra charge of ATM and Credit services. Customers were quite
bored to rules and regulations for Accounts opening; they want some flexibility
to open a bank account. Sometimes customers suggest the employee to recommend
the Manager of National Bank Ltd to offer new products and services. Customers
also dissatisfied in that sense that National Bank Ltd has few branches and
them face problems to transaction.
7.1
Recommendation:
• The entire general banking system is
needed to computerize as the customers will be more satisfied by faster
services.
·
To
collect more deposit NBL can increase rate of interest on deposit. For this
they should try to reduce the bad debt so that the cost of capital will reduce.
• Try to avoid giving loan the political
person who had bad reputation of loan repaying.
• Evaluate the securities value properly to
avoid the risk of loan recovery. The punishment system should be established to
discourage the unlawful activities of the employees.
• The Bank should give more attention to
advertisement to enlarge the customer base and increase both the deposit
collection ad number of customers it can reach.
Service quality
dimensions like empathy rate is 3.78 which is minimum. National Bank should emphasis more on empathy to
customers which means that National Bank should take more attention to
individual care of customers and solves their specific needs.
Among other things the bank should also try to implement the
followings:
· Establish a true On-Line Banking solution
· Diversification of debit and credit Card Products, for instance debit
cards and credit cards may be extended to students and other market segments.
· Diversification of Deposit Base by securing low cost & no cost
Deposit
· Branch Network expansion in strategic location of the country
· Increase of Exchange House arrangement
· Maintenance of healthy Credit Deposit ratio
Human Resources:
· Enhancement of capabilities of existing Human
Resources through motivation &
training
· Recruitment of appropriate Personnel
· Introduction of performance based evaluation
& implementation of Reward and
Punishment System
· Identification of
outstanding performers & appropriate Rewarding
· Creation of Team
Sprit through participating Management Concept
and Exchanging views and ideas among the officers & executives both at Branches and HO
level
Branding of NBL
The
image of NBL should be engraved in the People’s hearts which says;
“We are the pioneer local establishment in the banking
arena”.
Which
include effective measurement to be taken for branding of NBL through the use
of followings?
o
Appropriate
Media Exposure, both Paper and Electronic
o
Mass
Promotional Activities
o
Decoration
of Branches in Identical form
o
Corporate
Culture
8.1Conclusion:
National bank Ltd. has established
goodwill through innovative products and services. It has many problems but is
followed very sincerely the rules, regulations and advice of Bangladesh bank
during the last ten years. Technological developments have opened up a new dimension
in the development of creative products, efficient services and customer
satisfaction. National Bank Ltd. must cope with this technological advancement
to retain its present status. Many new generation private commercial banks have
already introduced online banking. But National Bank Ltd. Could not established
it till now. The bank must take initiative to established on-line banking.
Overall rating
of National Bank Limited is 3.91, which is satisfactory. From the analysis it
has been observed that significant number of customers is dissatisfied about
the promise of the bank. In some cases the bank failed to keep promises such as
ATM facility, consumer loans, etc. But the other factors like caring attention
of the employees and comparative service charges have regained customer
satisfaction in term of reliability.
Responsiveness
of the bank towards customers has managed to satisfy them. The willingness of
the employees to help the customers and especially prompt services have made
the customer satisfied.
The employees of
the bank have assured the customers about courteous service that generates
confidence in the customers’ mind about quality services. That is the reason;
most of the customers are pleased by the courteous, caring service of the bank.
Dealing with
specific needs of each and every customer National Bank Limited has created the
impression of a “Modern banking facilities” financial institution. But 9%
customers are dissatisfied to get individual attention to their specific needs
for financial services. Bank should emphasis more on these customers to reduce
their dissatisfaction.
During the 12 weeks internship
program more or less all the desk have been observed. It helped me gaining knowledge of practical
banking and to compare this practical knowledge with theoretical knowledge.
Though all departments and sections are covered in the internship program, it
is not possible to go to the depth of each activities of division because of
time limitation. So, objectives of this internship program have not been
fulfilled with complete satisfaction. However, highest effort has been given to
achieve the objectives the internship program.
- Annual Report 2008 of National Bank Limited.
- National Bank Ltd prospectus
- National Bank Ltd, Guidelines Manual of 2008.
- National Bank Ltd, Daily Affairs of Lake Circus
Branch. - http://www.google/
bank/Bangladesh.com - http://www.nblbd.com
1.
A/C
:
Account
2.
AD
:
Authorized
Dealer
3.
BB
:
Bangladesh
Bank
4.
CFR
:
Cost
& Freight
5.
CIB
:
Credit
Information Bureau
6.
DD
:
Demand
Draft
7.
DP
Note
:
Demand
Promissory Note
8.
EPB
:
Export
promotion Bureau
9.
FC
:
Foreign
Currency
10.
IBC
:
Inward
Bills for Collection
11.
IBCA
:
Inter
Branch Credit Advice
12.
IBDA
:
Inter
Branch Debit Advice
13.
IRC
:
Import
Registration Certificate
14.
PO
:
Payment
Order
15.
SWIFT
:
Society
for Worldwide Inter bank Financial Telecommunication.
16.
TC
:
Travelers
Cheque
17.
TR
:
Truck
Receipt
18.
TT
:
Telegraphic
Transfer
19.
STD
:
Short
Term Deposit
20.
VAT
:
Value
Added Tax