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Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited PREFACE Praise to be Almighty, the creator and sustainer who has given the strength and opportunity to complete Internship Report on the topic of “Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited” as a part of completing M B A degree which reveals not only read but also realize the subject deeply and knowledge has no value. So it is very necessary to achieve practical knowledge and clear concept about the subject. The practical experience also helps the learners to gather new idea and techniques. Form this view the Management Studies Department of Jagannath University Dhaka, Bangladesh, has introduced an internship program in order to obtain practical knowledge related with the different fields of Business. To full these criteria, The work in Mercantile Bank Ltd., Main Branch. In this study and observation about three month the gathered knowledge on “Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited” Executive Summary The economic development of the country depends largely on the activities of commercial Banks. Specially in a country like Bangladesh, our agricultural, industrial and economic developments are very much depending on smooth operation of Banks. So we must ensure efficient and effective performance of Banks. In this respect the tried to find out General Banking activities, SMS Banking activities, ATM Banking service and some parts of Credit and Foreign Exchange activities of Mercantile Bank Limited. The general banking department does the most important and basic works of the bank. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. MBL provides different types of accounts, locker facilities and special types of saving scheme under general banking for their valued customers. The SMS banking solution targets the retail banking industry and enables customers to make account enquiries and transact bank accounts through mobile phones. Banks can automatically send transaction notifications and alerts to mobile phones, if specific events in the banking business work-flow occur. The solution provides convenient and latest front-end technology and a flexible architecture to support an SMS based delivery channel and to provide significant benefits for both the bank and the customer. Automatic teller machines (ATMs) ensure that cash is easily accessible, whenever and wherever someone needs cash. It helps businesses facilitate cash-only transactions and you avoid the mounting fees of credit card processing or check cashing, while also generating revenue for your business via a share of the transaction fees collected by the ATM provider. The Mercantile Bank Limited carries its banking activities through 65 branches in the country Bank credit is a catalyst for bringing about economic development. Without adequate finance there can be no growth or maintenance of a stable output. Bank lending is important to the economy, for it makes possible the financing of agriculture, commercial and industrial activities of a nation. At the same time, a bank will, therefore, distribute its funds among various assets in a manner as to derive sufficient info. But as liquidity and profitability are conflicting considerations, Mercantile Bank Limited, as a bank, while employing the funds pays due regard to both profitability and liquidity. In terms of section 2(d) of the Foreign Exchange Regulations -1947, as adopted in Bangladesh Foreign Exchange –means foreign currency and includes any instrument drawn, accepted, made or issued under clause 13 of article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and draft, travelers cheque., letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currencies. In exercise of the powers conferred by sec. 3 of the Foreign Exchange Regulation-1947, Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers (AD). Bangladesh Bank also issues licenses to persons or firms to exchange foreign currency instruments such as Currency notes and coins. Foreign exchange department of MBL is divided into three sections: Import (L/C Operation), Export (L/C Operation), Foreign Remittance. Chapter-1 1.introduction Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking services and to contribute socio-economic development of the country. The Bank commenced its operation on June 2, 1999.In this 21st century Banks are the life-blood of modern economy irrespective of its size & pattern. Banks are established to earn profit and help economic and financial activities so as to help economic development of a county. In such a context, the main business of Banking is to take deposits from customers and sanction credit to the borrowers. In performing multidimensional activities like borrowing and lending of money, the world of banking is undergoing a transformation. In Bangladesh, banking is the second largest industry where a very good number of employees are working. Banking is the backbone of national economy. All sorts of economic & financial activities revolve round the exits of the bank. Banking sector is expanding its hand in different financial events every day. At the same time the banking process is becoming faster, easier and the banking area is becoming wider, as the demand for better service increases day by day. Generally by the word “Bank” we can easily understand that the financial institution deals with money. Mercantile Bank Limited is one of the most flourishing banks of Bangladesh with wide growth opportunities in the industry. 1.0 Background of the report As the student of Masters of Business Administration (MBA) every student has to conduct a practical orientation (Internship) on any organization for fulfilling the requirements of the M.B.A program. In order to fulfill this requirement of the Internship program the choose Mercantile Bank Limited (MBL). The main purpose of the program is to know the real world situation. The topic of my report is “Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited”. In this regard the opportunity to make internship in Mercantile Bank Limited from April, 2011 to July 2011. The Mercantile Bank Limited is a scheduled private commercial bank established on May 20, 1999 under Bank Company Act, 1991 and incorporated as a public limited company under companies act, 1994. The bank started commercial banking operation from June 02, 1999. During this short span of time, the bank has been successful to position itself as a progressive and dynamic financial institution in the country. Involvement of the banking sector in different financial events is increasing day by day. At the same time the banking process is becoming faster, easier and the banking arena is becoming wider. As the demand for better service increases, the banking organizations are coming with innovative ideas. In order to survive in the competitive field of the banking sector, all banking organizations are looking for better service opportunities to provide to their clients. Within short time MBL expand its branch more than 65 areas by following their slogan “Efficiency is our strength”. But as their experience in terms of success rate in each branch which includes profit, client size, etc. the performance of Main branch is not aggressive than other branch. As a part of my topic try to identify the cause behind this by a scientific research on its existing client’s. 1.1 Origin of the report Present world is changing rapidly to face the challenge of competitive free market economy. To keep pace with the trend banks need executive with modern knowledge and provide fresh graduate with modern theoretical and practical knowledge in banking and financial institution management. As the practical origination is an integral part of the MBA degree requirement, was sent to Mercantile Bank Limited (Main Branch) to take the real life exposure of the activities of banking financial institution for three months only starting from 21th April. This research is a partial requirement of MBA Internship Program in the Jagannath University and report is being prepared from three months extensive knowledge and research. 1.2 Objective of the report The primary objective of this report is to comply with the requirement of my course. But the objective behind this study is something broader. The principal intent of this report is to analyze the trends of overall banking and their customer’s satisfaction. Objectives of the study are summarized in the following manner: · To identify the present state of Mercantile Bank Limited (MBL), Main Branch. · To observe the customers and their satisfaction towards the MBL. · To observe the customers reaction towards service of MBL. · To describe the General Banking, SMS Banking, ATM facilities and other facilities provided by MBL. · To draw SWOT analysis of MBL, Main branch. · To discuss the potential of MBL. · To provide the recommendation for improvement of MBL. · Finally, to sketch out the overview of Mercantile Bank Limited (MBL) 1.3 Scope of the study Mercantile Bank Limited is one of the new generation banks in Bangladesh. The scope of the study is limited to the Main Branch only. The report will cover the functions of different departments of Mercantile Bank Ltd (MBL), Main Branch like General banking, Loan and Advances, and Foreign Exchange. It will also present a brief scenario of the Mercantile Bank Ltd in total. The include on the report first of the introduction of Mercantile Bank Ltd .Then the overall banking activities, products and services. Finally, I shall provide a financial analytical view on a real project that Mercantile Bank Main Branch facing, and it is the special focus of report. 1.4 Methodology of data collection This report has been prepared on the basis of experience gathered during the period of internship. For preparing this report, also got information from annual report and website of the Mercantile Bank Ltd. have presented experience and finding by using different charts and tables, which are presented in the analysis part. Actually, this study is descriptive in nature. Maximum data were collected from the primary sources. The details of the work plan are furnished below: Data collection method Relevant data for this report has been collected primarily by direct investigation of different records, papers, Documents, operational process and different personnel. No structured questionnaire has been used. Information regarding office activities of the bank has been collected through consulting and discussion with bank personnel Data sources Both primary and secondary source of data are used to complete this study. These two sources are explained below: Primary sources: · Face to face conversation with the bank officers and staffs · Conversation with the clients · Through consulting with officials of the branch · Notes taken from day to day working Secondary sources: · Different manuals of Mercantile Bank Ltd. · Different circulars of Mercantile Bank Ltd · Files and documents of the Branch. · Annual report of Mercantile Bank Ltd 2005-2010. · Different paper of Mercantile Bank Ltd. · Different publications regarding banking functions& Foreign exchange operations. Data presentation & Analysis Techniques: Here, data collected from various sources are presented mainly in the findings & Analysis part with the help of column chart. 1.5 Sampling design
Table: Sampling design
1.6 Limitations of the study
The face different problems while preparing this internship report. At the same time the tried to make an adjustment with those problems.
Those problems are as follows;
· It was very difficult to collect the information from various personnel for the job constrain.
· Bank policy was not disclosing some data and information for various reasons.
· The department people always remain busy due to lack of supporting employees so they could not dedicate their full efforts
· The annual report is the main secondary source of the information but this information was not enough to complete the report and it was not identified clear idea about this bank.
· Because of the limitation of information some assumption was made. So there may be some personal mistake in this report.
· The times 3 months are not sufficient to know all activities of the branch to prepare the report.
Unavailability of statistical data on inward and outward remittance through informal channels can be considered as a major limitation.
Chapter -2
Description part of the organization
2.0 Introduction
Banking system occupies an important place in a nation’s economy. Banking institution is indispensable in a modern society and it plays a vital role in the economic development of a country. Against the background of liberalization of economic policies in Bangladesh, Mercantile bank Limited emerged as a new commercial bank to provide efficient banking services with a view to improving the socio-economic development of the country.
The Bank provides a broad range of financial services to its customers and corporate clients. The Board of Directors consists of eminent personalities from the realm of commerce and industries of the country.
2.1 Historical background
Mercantile Bank Limited is a scheduled private commercial bank established on May20, 1999 under the Bank Company Act, 1991 and incorporated as a Public Limited Company under Company Act, 1994. The Bank started commercial banking operations from June 02, 1999. During this short span of time, the Bank has been successful to position itself as a progressive sand dynamic financial institution in the country.
The Bank had been widely welcome by the business community, from small entrepreneurs for forward-looking business outlook business outlook and innovative financing solutions. Thus, within this very short period it has been able to create an image
for itself and has earned significant reputation in the country’s banking sector as a bank with vision. The company Philosophy -“Efficiency is our strength” has been exactly the essence of success of this Bank.
Mercantile Bank Limited has been licensed by the Government of Bangladesh as a scheduled Bank in the private sector in the process of the policy of liberalization of banking and financial services or Bangladesh. In view of the above, the Bank has, within a period of eight years of its operation, achieved a remarkable success and has always met up capital adequacy requirement set by Bangladesh Bank.
There are twenty-seven sponsors involved in creating Mercantile Bank Limited; the sponsors of the Bank have a long heritage of trade, commerce and industry. They are highly regarded for their entrepreneurial competence. The sponsors happen to be member of different professional
groups among whom are also renowned banking professionals having vast range of banking knowledge. There are also members who are associated with other financial institution like companies, leasing company’s etc.
The board of directors consists of 21 members elected from the sponsor of the bank. And the board of directors is the apex body of e bank. All route matters beyond delegated owners of management are decided upon by or routed through the executive committee, subject to ratification by the board of directors.
2.2. Objectives of the Mercantile Bank Limited
Objectives
Strategic objective
· To achive positive Economic value added (EVA) each year
· To be market leader in product innovation
· To be one of the top three financial institutions in
Bangladesh in terms of cost efficiency.
· To be one of the top five financial institutions in Bangladesh
In terms of market share in all significant market segments we serve.
Financial objectives
· To achieve a return on shareholders
Equity of 20% or more on average
2.3 Vision, Mission and Core values
For the customers:
Providing with caring services by being
innovative in the development of new
banking products and services.
For the shareholders:
Maximizing wealth of the bank.
For the employees:
Respecting worth and dignity of
individual employees devoting their
energies of the progress of the bank.
For the community:
Strengthening the corporate values and
taking environment and social risks and
reward into account
2.4 At a Glance of MBL
Table: At a Glance of M B L
2.5.2 MBL Timeline
Source: MBL Annual Report – 2010
2.5.3 Network of the Branches
Mercantile Bank has 65 existing branches and some other proposed branch all over Bangladesh to provide better services to their valuable customer. The objective of MBL is not only to earn profit but also keep the social commitment and to ensure its co-operation to the persons of all levels, to the businessmen, industrialists-specially who are engaged in establishing large scale industries by consortium and the agro-based export oriented medium and small scale industries by self inspiration. MBL as the largest private bank is committed to continue its endeavor by rapidly increasing the investment of honorable shareholders into asset.
Figure: Network of the Branches
MBL MAP
2.6 The organizational structure
The organization structure and corporate of Mercantile Bank Limited (MBL) strongly reflect its determination to establish, uphold and gain a stronger footing as an organization which is customer-oriented and transparent in its management.
2.6.1 Board of Directors
The Board of Directors consists of 21 member elected from the sponsors of the Bank. The Board of Directors is the apex body of the bank.
2.6.2 Board Committees
The Board of Directors who also decides on the composition of each committee determines the responsibilities of each committee.
2.6.3 Executive Committees
All routine matter beyond delegated powers of management are decided upon by or routed through the Executive Committee, subject to ratification by the Board of Directors.
2.6.4 Policy Committe
All mater relating to the principles, policies, rules, and regulation, ethics etc. for operation and management of the bank are recommended by the Committee to the Board of Directors.
2.7 Management
The management of the bank is vastly on a Board of Directors, for overall supervision and directions on policy matters by the board. The power of general supervision and control of the affairs of the bank is exercise by the president and managing director of the bank who is the chief executive officer. Above all, the bank will be manned and managed by a galaxy of talented professionals proficient in their individual fields and dedicated to the cause of the bank
2.7.1 Management Hierarchy of MBL
The board of directors consists of eminent personalities from commerce and industry of the country. Mr. Md. Abdul Jalil, the Founder Chairman of this Bank, is the member of parliament of the National Assembly and a businessperson, besides being an eminent personality of the country. Highly qualified and efficient professionals manage this bank. Board of Directors who also decides the composition of each committee determines the responsibilities of each committee. All routine matters beyond delegated powers of management are d decided by or routed through the executive committee, subject to rectification by the board of directors.
Management Hierarchy of MBL
Source: HRD, Head Office MBL
Figure: Management Hierarchy of MBL
2.8 Division of MBL
MBL, being one of the best financial intermediaries in the country, blended in operation in conventional banking, Merchant banking and Retail banking. The blending has been done with the objective of diversifying the operations for catering to the needs of the customers of the different sterna of the society from one viewpoint and for having sustainable growth in profitability and business with the least possible risk. The bank’s operations were diversified into the following areas of activities as a dynamic financial intermediary.
· Conventional Banking operation
· Lease finance operation
· Merchant banking
· Retail banking
In order to carry out the above operations of Mercantile Bank Ltd has set up the following divisions, departments and units in its head office. For the operations by the above-mentioned divisions, the bank has established the following divisions to provide support and internal services.
Table: Division of MBL
The professionalism, dedication and loyalty demonstrated by the client and people are the corner stone of the success in this bank. And the main aim of MBL is to improve the competitive position in the chosen market segments and make steady investment in the core business.
2.9 Operations
The importance of the mobilization of saving for economic development of our country can hardly be over emphasized. The bank considers savings and deposit as life-blood of the bank. More the deposit, greater is the strength of the bank. So, they intends to launch various new savings schemes with greater is the strength of the bank and prospect of higher of return duly supported by a well-orchestrated system of customer services. Technology such as computer, ATM, Tele-communication etc. all would be harmonized and adapted to the system in order to provide round-the-clock and any-branch services to the clients. Travelers’ cheques, credit cards and other ancillary services including payment of different bills from one counter will also be introduced to achieve the ultimate goal of ONE-STOP service to the customers’ value. The bank would cater to the credit needs of individuals as well as corporate clients. Initially it will emphasize on trade finance, which would be short-term and self-liquidating in nature. Considering the importance of Export and Import and also handing of foreign remittance business would be given top-most priority. Customer credit is a relatively new field of micro-credit activities. People with limited income can avail with this credit facility to buy any household effects including car, computer and other durable. Mercantile Bank Limited (MBL) will play a vital role in extending the consumer credits in line with its policy of people-oriented banking. Lease-Finance is an area of business where the bank would activity participates. Because of certain built-in advantages, the industrial entrepreneurs are being increasingly attracted to this type of financing. Moreover, Mercantile Bank Limited (MBL) intends to expand the scope of this finance to include financing of agricultural equipment’s as well. The bank would not depend only on interest earnings; rather it would strive hard to go for fee-based income from non-activities of the bank. This type of business include capital market operations like Underwriting, Portfolio management, Mutual fund management, Investors’ account as well as commission-based business like Letter of Guarantee, Inland remittance, Foreign remittance etc. These businesses usually do not involve bank’s fund, but on the contrary, offer immense opportunity and scope to expand bank services to the members of public at large.
Chapter – 3
Product and services of Mercantile Bank
Services Provided
· General Banking
· Credit or Loan Department
· Foreign Exchange Business
Part-1
General Banking
1.0 Introduction
Bangladesh is one of the less development countries. So the economic development of the country depends largely on the activities of commercial Banks. So need to emphasis whether these commercial Banks are effectively and honestly performing their functions, assign their duties, and responsibilities and whether the customers are really satisfy or not. In thus respect I need to know about the general banking function of Mercantile Bank Limited, Main Branch, Dhaka.The general banking department does the most important and basic works of the bank. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. MBL provides different types of accounts, locker facilities and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows.
· Account Opening Section,
· Local Remittance Section,
· Deposit Schemes Section,
· Accounts Section,
· Clearing Section,
· Collection Section,
· Cash Section,
1.1 Account Opening Section
To establish a Banker and customer relationship account opening is the first step. Opening of an account binds the banker and customer into contractual relationship. But selection of customer for opening an account is very crucial for a Bank. Indeed, fraud and forgery of all kinds start by opening account. So, the Bank takes extremely cautious measure in its selection of customers.
1.1.1 Types of Account
MBL has the following types of accounts:
· Current Account
· Savings Account
· Fixed Deposit Account
1.1.2 Procedure to open an Account:
(1) For opening an account, at first the prospective account holder will apply for opening an account by filling up account opening form. Account opening form consists of the name of the branch, type of account, name of the applicant(s), present address, permanent address, passport number (if any), date of birth, nationality, occupation, nominee(s), special instruction (if any), initial deposit, specimen signature(s) of the applicant(s), introducer’s information etc.
(2) The prospective customer should be properly introduced by the followings:
i. An existing customer of the bank.
ii. Officials of the bank not below the rank of Assistant Officer.
iii. A respectable person of the locality who is well known to the manager or authorized officer.
(3) Two copies of passport size photograph duly attested by the introducer.
(4) Signature of the prospective account holder in the account opening form and on the specimen signature card duly attested by the introducer.
(5) Then the concerned authority will allocate a number for the new account.
The customer than deposit the “initial deposit” by filling up a deposit slips. Initial deposit to open a current account in MBL is Tk. 10000.00 and saving account is Tk. 5000.00.
When the following requirements are fulfilled, the account is considered to be opened. MBL maintains all of its accounts in computer. After depositing the initial deposit, MBL records it in the computer by giving new account number. Then it issues cheque book requisition slip by the customer. Then it distributes all relevant papers to respective department.
1.1.2 Activities & papers necessary for opening an account
1.1.3.1 Joint Account:
If the account is a joint account, then the joint account holder should submit a declaration and operational instructions of the account along with their signature. The declaration is
“Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability whatsoever incurred in respect of this account shall be joint and several.”
1.1.3.2 Partnership firm:
The following documents have to be submitted for preparing an account of a partnership firm:
· Partnership deed.
· If the partnership firm is a registered one, then one copy of registration forms.
· If not, then a copy of certificate from the notary public.
1.1.3.3 Limited Company:
For the opening of an account of a limited company, following documents have to be submitted:
· A copy of resolution of the company that the company decided to open an account in Mercantile Bank Limited.
· Certified true copy of the Memorandum & Articles of Association of the Company.
· Certificate of Incorporation of the company for inspection and return along with a duly certified Photocopy for Bank’s records.
· Certificate from the Registrar of Joint Stock Companies that the company is entitled to commence business (in case of Public Ltd. Co. for inspection and return) along with a duly certified Photocopy for Bank’s records.
· Latest copy of balance sheet.
· Extract of Resolution of the Board/General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/Managing Director of the company.
· List of Directors with address (a latest certified copy of Form-XII).
1.1.3.4 Club/Society:
Following documents have to be obtained in case of the account of the club or society:
· Up to date list of office bearers.
· Certified copy of Resolution for opening and operation of account.
· Certified copy of Bye-Law and Regulations/Constitution.
· Copy of Government Approval (if registered).
1.1.3.5 Cooperative Society:
Following documents have to be obtained in case of the account of Cooperative Society:
· Copy of Bye-Law duly certified by the Co-operative Officer.
· Up to date list of office bearers.
· Resolution of the Executive Committee as regard of the account.
· Certified copy of Certificate of Registration issued by the registrar, Co-operative societies.
1.1.3.6 Non-Govt. College / School / Madrasha / Muktab:
Following documents have to be obtained in case of the account of non-govt. College / school / madrasha / muktab:
· Up to date list of Governing Body/Managing Committee.
· Copy of Resolution of the Governing Body/Managing Committee authorizing opening and operation of the account duly certified by Gazetted Officer.
1.1.3.7 Trustee Board:
Following documents have to be obtained in case of the account of trustee board:
· Prior approval of the Head Office of MBL.
· Certified copy of Deed of Trust, up to date list of members of the Trustee Board and certified copy of the Resolution of Trustee Board to open and operate the account.
1.1.3.8 Minor’s Account:
Following documents have to be obtained in case of the account of minor:
· Putting the word “MINOR” after the title of the account.
· Recording of the special instruction of operation of the account.
The AOF is to be filled in and signed by either the parents or the legal guardian appointed by the court of law and not by the minor.
1.2 Local Remittance Section
Local remittance is one of the main components of general banking. The activities of local remittance are —
· Telegraphic Transfer,
· Demand Draft issue,
· Pay order.
1.2.1 Telegraphic Transfer
It is an order from the issuing branch to the drawee bank / branch for payment of a certain sum of money to the beneficiary. The payment instruction is sent by telex and funds are paid to the beneficiary through his account maintained with the drawee branch or through a pay order if no account is maintained with the drawee branch.
1.2.1.1 Procedure of issuing TT:
Following procedures are followed while issuing of TT:
· The applicant fills up the relevant parts of the prescribed application form in triplicate, duly signed the same and gives it to the GB.
· GB will fill up the commission part for bank’s use and request the applicant to deposit necessary cash or cheque at the cash booth.
· The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket. The third copy will be handed over to the applicant as customer’s copy.
· GB will prepare telex in appropriate form, sign it and send it to the telex operator for transmission of the message.
· GB will prepare necessary advice. Debit advice is sent to the client if clients account is debited for the amount of T.T.
· T.T. Confirmation Advice is sent to the drawee branch.
· Credit Ticket (second copy of the application form) is used to credit the PBL General Account.
1.2.1.2 Payment of T.T.
On receipt of T.T. payment instructions the following entries are passed by the drawee branch if the T.T. is found to be correct on verification of the Test number.
In case the beneficiary does not maintain any account with the drawee branch a pay order will be issued in favor of the payee and sent to his banker / local address as the case may be.
Every branch maintains a prescribed T.T. Payable Register. All the particulars off T.T. are to be properly recorded in this register duly authenticated. A separate Type of T.T. confirmation advice is sent to the drawee branch on the same day. On receipt of T.T. confirmation advice, the particulars of T.T. are verified with reference to particulars already recorded in the T.T. payable register.
1.2.2 Demand Draft (DD) Issue
Sometimes customers use demand draft for the transfer of money from one place to another. For getting a demand draft, customer has to fill up an application form. The form contains date, name and address of the applicant, signature of the applicant, cheque number (if cheque is given for issuing the DD), draft number, name of the payee, name of the branch on which the DD will be drawn and the amount of the DD. The form will be duly signed by the applicant and by the authorized officer. MBL charges .15% commission on the face value of DD as service charge.
1.2.2.1 Process of issuing Local Draft :
Followed procedures are followed while issuing local draft-
· Get the application form properly filled up and signed by the applicant.
· Complete the lower portion of the form for the bank’s use.
· Calculate the total amount including the bank’s commission.
· If the cheque is presented for of the local draft, the officer should get the cheque duly passed for payment by the authorized person and record the particulars of local draft on the back of the cheque.
· If the client wants to debit his account for the payment of the draft amount, the officer should get the account holder’s signature verified properly, from signature card on record of the branch and debit clients account for the total amount including commission.
· The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket and kept by the GB. The third copy is handed over to the applicant as customer’s copy.
The GB Department maintains a prescribed L.D. Issue Register. All the required particulars of LDs issued and should be entered in that register duly authenticated.
1.2.2.2 Issue of Duplicate Draft:
Duplicate Draft is not normally issued unless getting of satisfactory evidence is produced regarding loss of the draft. If the L.D. is reported to be lost or stolen, the issuing branch on receipt of a written request from the purchaser may issue a duplicate draft.
Before issuing duplicate L.D. the branch should observe the followings-
· Verify the purchaser’s signature on the request letter from the signature appearing on the original application form.
· Immediately issue a stop payment instruction to the drawee branch under advice of head office and obtain confirmation of non-payment the L.D. in acquisition.
· After the drawee branch has acknowledged the stop payment order and confirmed that the local draft in acquisition remains unpaid at their end, the issuing branch
· Should obtain an Indemnity Bond on stamp paper as per prescribed format from the purchaser duly signed by him. The branch will thereafter write to head office for their approval to issue a duplicate draft.
· The head office on receipt of the request from the issuing branch will immediately issue a caution circular to all the branches regarding the lost of the local draft asking them to record stop payment.
· The head office will thereafter issue clearance to the issuing branch for issuing for issuing a duplicate draft in lieu of original reported lost.
· On receipt of the clearance from head office, the issuing branch will issue a completely fresh draft marking clearly the words duplicate issued in lieu of original draft no………………. dated …………….in bold letters on the top of the front page of the draft. The printed serial number on the draft should not however be struck off. Intimation should be given to the drawee branch furnishing full particulars of the duplicate draft.
· The particulars of the duplicate draft must resemble those of the original draft in all respects, i.e., all the particulars to the duplicate draft must be identical with those in the original draft. No further IBCA is to be issued for the duplicate draft.
· Prescribed duplicate issuance charge is to be recovered for issuing the duplicate draft and credited to “Income Account”.
1.2.2.3 Cancellation of Local Draft
The followings are followed while canceling a L.D.-
· The purchaser should submit a written request for cancellation of the L.D. attaching therewith the original L.D.
· The signature of the purchaser will have to be verified from the original application form.
· Manager’s prior permission is to be obtained before refunding the amount of draft.
· Cancellation charge is to be recovered from the applicant and only the amount of the draft less cancellation charge should be refunded. Commission charge, posted charge etc. recovered for issuing the L.D. should not be refunded.
· The original entries are to be reversed giving proper narration. An IBDA for the cancelled L.D. should be issued on the drawee branch.
· Cancellation of L.D. should also be recorded in the L.D. Issue Register.
1.2.2.4 Payment of L.D
While payment of L.D. PBL performs the following functions-
· On receipt of Credit Advice (IBCA) from the issuing branch the receipt amount is credited in responding branch.
· When L.D. is presented for payment at the paying branch, its details are to be carefully examined with reference to the following points-
· Whether the draft is drawn on the Local office.
· Whether the draft is crossed or not. Amount of crossed draft is not paid in cash to the payee but to be paid to his account with a bank.
· Draft must have to be signed by two authorized officers of the issuing branch. Their signatures are to be verified from the specimen signature book for being sure that draft that the draft is genuine. The verifier should put his initial.
· Endorsement on the back of the draft must be regular in case the draft is presented through clearing.
· The amount of the draft should not exceed the amount written in red ink at the top of the draft.
· The payee is to be properly identified in case of cash payment.
· The particulars of the draft i.e. the draft number, date, amount and the name of the payee should be verified from the L.D. Payable Register.
· In case of payment, the draft should be cancelled with red ink. The date of payment should be recorded in the L.D. Payable Register.
1.2.2.5 Stop payment of Local Draft
The payee or purchaser of the draft cannot give stop payment instruction to the drawee branch. If the paying branch receives a request from the purchaser of the draft for stopping payment of the draft, it will ask the purchaser to approach the issuing branch about the purpose. The paying branch should however exercise necessary precaution in this regard. Only the issuing branch can issue instruction for stop payment of the draft under special circumstances.
1.2.3 Pay Order
For issuing a pay order, the client is to submit an application to GB in the prescribed form. This form should be properly filled up and signed. The procedure of the issuing pay order is similar to that of the Local Draft. For issuing pay order MBL charges commission on the following rate-
Total amount of Po Commission Vat
Up to TK. 10,000.00 TK. 25.00 Tk.4
TK. 10,001.00 – TK .1, 00,000.00 TK. 50.00 Tk.8
TK. 1, 00,001.00 – TK. 5,00,000.00 TK. 100.00 Tk.16
TK. 5,00,001.00 and above TK. 150.00 Tk.23
Table: Charges on issuing pay order commission and vat
1.2.3.1 Payment of Pay Order:
The pay order is presented to the bank either through clearance or for credit to the client’s account. While payment, relative entry is given in the pay order register with the date of payment.
1.2.3.2 Cancellation of Pay Order:
The following procedure should be followed for the cancellation of the pay order:
· The client should submit a written request for canceling the pay order attaching therewith the original pay order.
· The signature of the purchaser will have to be verified from the original application form.
· Manager’s prior permission is to be obtained before refunding the amount of the pay order.
· Cancellation charge is to be recovered from the applicant and only the amount of the pay order less cancellation charge should be refunded. Commission recorded for issuing of the original pay order should not be refunded.
· Then the officer should write “cancelled” on the pay order.
· The original entries should be reversed with narration.
· Cancellation of the pay order should also be
Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited PREFACE Praise to be Almighty, the creator and sustainer who has given the strength and opportunity to complete Internship Report on the topic of “Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited” as a part of completing M B A degree which reveals not only read but also realize the subject deeply and knowledge has no value. So it is very necessary to achieve practical knowledge and clear concept about the subject. The practical experience also helps the learners to gather new idea and techniques. Form this view the Management Studies Department of Jagannath University Dhaka, Bangladesh, has introduced an internship program in order to obtain practical knowledge related with the different fields of Business. To full these criteria, The work in Mercantile Bank Ltd., Main Branch. In this study and observation about three month the gathered knowledge on “Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited” Executive Summary The economic development of the country depends largely on the activities of commercial Banks. Specially in a country like Bangladesh, our agricultural, industrial and economic developments are very much depending on smooth operation of Banks. So we must ensure efficient and effective performance of Banks. In this respect the tried to find out General Banking activities, SMS Banking activities, ATM Banking service and some parts of Credit and Foreign Exchange activities of Mercantile Bank Limited. The general banking department does the most important and basic works of the bank. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. MBL provides different types of accounts, locker facilities and special types of saving scheme under general banking for their valued customers. The SMS banking solution targets the retail banking industry and enables customers to make account enquiries and transact bank accounts through mobile phones. Banks can automatically send transaction notifications and alerts to mobile phones, if specific events in the banking business work-flow occur. The solution provides convenient and latest front-end technology and a flexible architecture to support an SMS based delivery channel and to provide significant benefits for both the bank and the customer. Automatic teller machines (ATMs) ensure that cash is easily accessible, whenever and wherever someone needs cash. It helps businesses facilitate cash-only transactions and you avoid the mounting fees of credit card processing or check cashing, while also generating revenue for your business via a share of the transaction fees collected by the ATM provider. The Mercantile Bank Limited carries its banking activities through 65 branches in the country Bank credit is a catalyst for bringing about economic development. Without adequate finance there can be no growth or maintenance of a stable output. Bank lending is important to the economy, for it makes possible the financing of agriculture, commercial and industrial activities of a nation. At the same time, a bank will, therefore, distribute its funds among various assets in a manner as to derive sufficient info. But as liquidity and profitability are conflicting considerations, Mercantile Bank Limited, as a bank, while employing the funds pays due regard to both profitability and liquidity. In terms of section 2(d) of the Foreign Exchange Regulations -1947, as adopted in Bangladesh Foreign Exchange –means foreign currency and includes any instrument drawn, accepted, made or issued under clause 13 of article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and draft, travelers cheque., letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currencies. In exercise of the powers conferred by sec. 3 of the Foreign Exchange Regulation-1947, Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers (AD). Bangladesh Bank also issues licenses to persons or firms to exchange foreign currency instruments such as Currency notes and coins. Foreign exchange department of MBL is divided into three sections: Import (L/C Operation), Export (L/C Operation), Foreign Remittance. Chapter-1 1.introduction Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking services and to contribute socio-economic development of the country. The Bank commenced its operation on June 2, 1999.In this 21st century Banks are the life-blood of modern economy irrespective of its size & pattern. Banks are established to earn profit and help economic and financial activities so as to help economic development of a county. In such a context, the main business of Banking is to take deposits from customers and sanction credit to the borrowers. In performing multidimensional activities like borrowing and lending of money, the world of banking is undergoing a transformation. In Bangladesh, banking is the second largest industry where a very good number of employees are working. Banking is the backbone of national economy. All sorts of economic & financial activities revolve round the exits of the bank. Banking sector is expanding its hand in different financial events every day. At the same time the banking process is becoming faster, easier and the banking area is becoming wider, as the demand for better service increases day by day. Generally by the word “Bank” we can easily understand that the financial institution deals with money. Mercantile Bank Limited is one of the most flourishing banks of Bangladesh with wide growth opportunities in the industry. 1.0 Background of the report As the student of Masters of Business Administration (MBA) every student has to conduct a practical orientation (Internship) on any organization for fulfilling the requirements of the M.B.A program. In order to fulfill this requirement of the Internship program the choose Mercantile Bank Limited (MBL). The main purpose of the program is to know the real world situation. The topic of my report is “Evaluation of Banking Services and Performance appraisal of Mercantile Bank Limited”. In this regard the opportunity to make internship in Mercantile Bank Limited from April, 2011 to July 2011. The Mercantile Bank Limited is a scheduled private commercial bank established on May 20, 1999 under Bank Company Act, 1991 and incorporated as a public limited company under companies act, 1994. The bank started commercial banking operation from June 02, 1999. During this short span of time, the bank has been successful to position itself as a progressive and dynamic financial institution in the country. Involvement of the banking sector in different financial events is increasing day by day. At the same time the banking process is becoming faster, easier and the banking arena is becoming wider. As the demand for better service increases, the banking organizations are coming with innovative ideas. In order to survive in the competitive field of the banking sector, all banking organizations are looking for better service opportunities to provide to their clients. Within short time MBL expand its branch more than 65 areas by following their slogan “Efficiency is our strength”. But as their experience in terms of success rate in each branch which includes profit, client size, etc. the performance of Main branch is not aggressive than other branch. As a part of my topic try to identify the cause behind this by a scientific research on its existing client’s. 1.1 Origin of the report Present world is changing rapidly to face the challenge of competitive free market economy. To keep pace with the trend banks need executive with modern knowledge and provide fresh graduate with modern theoretical and practical knowledge in banking and financial institution management. As the practical origination is an integral part of the MBA degree requirement, was sent to Mercantile Bank Limited (Main Branch) to take the real life exposure of the activities of banking financial institution for three months only starting from 21th April. This research is a partial requirement of MBA Internship Program in the Jagannath University and report is being prepared from three months extensive knowledge and research. 1.2 Objective of the report The primary objective of this report is to comply with the requirement of my course. But the objective behind this study is something broader. The principal intent of this report is to analyze the trends of overall banking and their customer’s satisfaction. Objectives of the study are summarized in the following manner: · To identify the present state of Mercantile Bank Limited (MBL), Main Branch. · To observe the customers and their satisfaction towards the MBL. · To observe the customers reaction towards service of MBL. · To describe the General Banking, SMS Banking, ATM facilities and other facilities provided by MBL. · To draw SWOT analysis of MBL, Main branch. · To discuss the potential of MBL. · To provide the recommendation for improvement of MBL. · Finally, to sketch out the overview of Mercantile Bank Limited (MBL) 1.3 Scope of the study Mercantile Bank Limited is one of the new generation banks in Bangladesh. The scope of the study is limited to the Main Branch only. The report will cover the functions of different departments of Mercantile Bank Ltd (MBL), Main Branch like General banking, Loan and Advances, and Foreign Exchange. It will also present a brief scenario of the Mercantile Bank Ltd in total. The include on the report first of the introduction of Mercantile Bank Ltd .Then the overall banking activities, products and services. Finally, I shall provide a financial analytical view on a real project that Mercantile Bank Main Branch facing, and it is the special focus of report. 1.4 Methodology of data collection This report has been prepared on the basis of experience gathered during the period of internship. For preparing this report, also got information from annual report and website of the Mercantile Bank Ltd. have presented experience and finding by using different charts and tables, which are presented in the analysis part. Actually, this study is descriptive in nature. Maximum data were collected from the primary sources. The details of the work plan are furnished below: Data collection method Relevant data for this report has been collected primarily by direct investigation of different records, papers, Documents, operational process and different personnel. No structured questionnaire has been used. Information regarding office activities of the bank has been collected through consulting and discussion with bank personnel Data sources Both primary and secondary source of data are used to complete this study. These two sources are explained below: Primary sources: · Face to face conversation with the bank officers and staffs · Conversation with the clients · Through consulting with officials of the branch · Notes taken from day to day working Secondary sources: · Different manuals of Mercantile Bank Ltd. · Different circulars of Mercantile Bank Ltd · Files and documents of the Branch. · Annual report of Mercantile Bank Ltd 2005-2010. · Different paper of Mercantile Bank Ltd. · Different publications regarding banking functions& Foreign exchange operations. Data presentation & Analysis Techniques: Here, data collected from various sources are presented mainly in the findings & Analysis part with the help of column chart. 1.5 Sampling design
| Variables | Procedure |
| Target Population | Branch customers and employees. |
| Sample units | Branch customers and employees. |
| Sampling Frame | Priority customer, general customer, corporate customer and also the different levels of employees in the branch. |
| Sampling technique | Stratified sampling by different account holder. |
| Sample size | 45 |
| Sampling Plan | Data gathered based on the focus group interview and experience survey through the questionnaire. |
| Execution | Allocate sample by strata, select 5 strata and conducted survey on them. |
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| Name | Mercantile Bank Limited |
| Date of incorporation | 20th May, 1999 |
| Date of inauguration of operation | 2nd June, 1999 |
Registered Office |
61, Dilkusha Commercial AreaDhaka –1000, Bangladesh
Tel-02-9559333, 0171-1535960 Fax: 880-2-09561213 Telex: 642480 MBLMB BI |
| Logo | Mercantile Bank Limitedefficiency Is our strength |
| Name of the Chairman of the Board | Md. Abdul Jalil |
| Name of the managing Director | A.K.M. Shahidul Haque |
| Number of branches | 65 |
| Services provided | Deposit Scheme, credit facility and foreign exchange services |
| Diversification of Product And Services | Corporate banking, Retail Banking |
| Paid up capital | 4072.206(Million) |
| Profit after tax & provision | 1425.338(Million ) |
| Publicly Traded Company | Shared quoted daily in DSE & CSE |
| Credit Card | Member of Master Card |
| Banking operation system | Both conventional and foreign exchange system |
| Technology used | Member of SWIFT, online banking, UNIX based computer system |
| Market value per share | 415.61 |
| Earnings per share | 41.04 |
| mbl@bol-online.com | |
| Website | www.mblbd.com |
| SWIFT | MBLBBDDH |
2.5.1 The Corporate Structure |
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| December 30,2010 | Opening of 65th Branch |
| October 20, 2010 | Opening of 60th Branch |
| August 2, 2010 | Opening of 55th Branch |
| December 30, 2009 | Opening of 50th Branch |
| October 22, 2009 | Opening of 45th Branch |
| June 06, 2009 | Mercantile Bank Brokerage House Operation. |
| November 24, 2008 | Opening of 42th Branch |
| December 17, 2007 | Opening of 40th Branch |
| December 05, 2006 | Opening of 30th Branch |
| December 29, 2004 | Opening of 25th Branch |
| February 26, 2004 | Listed in Chittagong Stock Exchange |
| February 16, 2004 | Listed in Dhaka Stock Exchange |
| December 24, 2003 | Opening of 20th Branch |
| October 21-22, 2003 | Subscription for Shares |
| June 30, 2003 | Publication of Prospectus for IPO |
| July 03, 2002 | Opening of 15th Branch |
| October 29, 2000 | Opening of 10th Branch |
| June 02, 1999 | Commencement of Business |
| May 20, 1999 | Incorporation of the Bank |
| Human resource division | General service division |
| Information Technology division | Marketing division |
| Public relation division | Share/customer care division |
| Financial administration division | Branches control division |