Customer satisfaction and General Banking Activities of National Bank Limited
1.1 Historical Background of National Bank Limited
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.In1983, 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.
1.2 Overview of National Bank Limited
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.
1.3 Vision of the National Bank Limited
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.
1.4 Mission of the National Bank Limited
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.
To ensure the best uses of its creativity, well disciplined, well manages and perfect growth.
1.7 Objectives of National Bank Limited
- 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.
1.8 Business philosophy of National Bank Limited
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.
In Serving Customers
- Credibility & secrecy
In Serving the Bank
- Total commitment & dedication
- Excellence through teamwork
In Carrying Ourselves at Work
- Honesty & Integrity
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:
- Sports and Cultural activities,
- Disaster relief.
1.9.2 National Bank Foundation
NBL is a vibrant and promising bank. Its activities are not limited only to business and financial matters. Out of social responsibility, NBL has extended its support for expansion of educated in the country. With this objective, the National Bank Foundation was formed in 1989. Under the financial assistance of this Foundation, the National Bank Public School and College was established at Moghbazar in Dhaka.
1.9.3 Sports and Cultural Activities
Since its inception, NBL has been playing a pioneering role in sponsoring sports and games in the country. NBL was the sponsor of Metropolis Football League and Senior Division Football League last year. Besides, NBL extended substantial patronization to Bangladesh Olympic Association and Bangladesh volleyball Federation in 2003.The Bank never hesitates to extend its helping hands to the people as in the days of crisis so also in the 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)
- Bill Collection
Ø LBC(Local Bill Collection)
Ø OBC(Outward Bill Collection)
Ø IBC(Inward Bill Collection)
Ø FBC(Foreign Bill Collection)
Ø CC (Cash Credit)
Ø SOD(Secured Overdraft)
Ø Loan General
Ø LDBP(Local Documentary Bill Purchased)
Ø LDBC(Local Documentary Bill Collection)
- LC(Letter Of Credit)
- Foreign Remittance
- Western Union
- 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 of Service||Nature of Charges||Rate of Charges|
|Custody of Locker / Safe||Rent||a) Yearly TK.500/= for small size locker
b) Yearly TK.1,000/= for large size locker
(B) Western Union Money Transfer:
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.
(C) SWIFT Service:
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.
(D) Merchant Banking:
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.
(E) ATM Information
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.
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.
2.12 Future Plan
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.
1.13 Present Trends of the Bank
1.13.1 Branches of NBL
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
Table 2.3: Number of Branches.
|Number of Branches||76||76||76||91||101|
1.13.2 Numbers of Employees:
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.
|Number of Employees||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.
|Number of foreign correspondents||358||410||391||400||405|
1.15 Five Years Financial performance of National Bank Ltd at a glance
Table 2.6: Financial Performance
|No of Share outstanding(million)||4.30||5.16||6.20||8.05||12.08|
|Earning Per Share||–||–||–||–||–|
|Dividend Per Share|
|Market Value Per Share(Taka)||226.61||475.25||746.50||760.50||1,494.00|
|Price Earning Ratio(Times)||13||17||17||12||14|
|Net Asset Value Per Share(Taka)||395.31||360.68||441.36||406.50||378.12|
|Operating Performance Ratio|
|Credit Deposit Ratio||80.17%||79.83%||81.92%||81.06%||76.05%|
|Cost of Funds||5.83%||5.47%||5.31%||6.15%||6.35%|
|Cost of Funds with Establishment Costs||9.22%||8.78%||8.50%||9.32%||9.31%|
|Yield on Loans and Advances||10.24%||10.32%||10.02%||12.28%||12.13%|
|Return on Assets||2.61%||2.09%||2.22%||2.50%||4.29%|
|Return on Equity||5.29%||9.54%||11.82%||16.89%||31.57%|
|Number of Branches||76||76||76||91||101|
|Number of Employees||2,185||2,133||2,183||2,270||2,432|
|Number of Foreign Correspondents||358||410||391||400||405|
1.16 Capital Structure of National Bank Limited
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.
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.
1.18 Balances with Bangladesh Bank and its Agents
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).
1.19 Balances with other Banks/Financial Institutions
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.
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)
|Loans, Cash credit, Overdrafts etc.||21119.53||21613.77||24913.19||29619.6||33137.02|
1.22 International Trade of National Bank Limited
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.
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.
|Export (in million)||16341.8||17105.3||21344.1||28019.2||31824|
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.
|Foreign remittance (in million)||7637.5||9035.5||13618.2||21353.9||27560.8|
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.
|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|
1.25 Source & Utilization of Capital
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.
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
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,