Foreign Remittance Activities and Financial Performance of National Bank Limited

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Foreign Remittance Activities and Financial Performance of National Bank Limited

Executive Summary

Throughout the analysis of report tried to provide an extensive view of the remittance and its overall impact on economy at a macro level and doing so with the help of office administration and various articles from different e-sources bring up the channelization of remittance, the impact of it and as well as its future improvisation to our economy. The tried to provide information in such a way which in one hand relate remittance with its macro effect and on the other hand at a specific level where National Bank Ltd playing its role in such development of utilization of remittance in our country.

Remittance generates remarkable benefits for the home country economy in terms of macro and microeconomics impacts. The remitters, most of whom were once unemployed in the home country, are now getting employed in the host country, and on the other hand, the inward remittance is causing employment generation domestically by reinforcing national savings, capital accumulation and investment. Over and above the employment aspect, many other key macroeconomic variables in Bangladesh such as growth, poverty reduction, social security, BOP situation have proven to be significantly positively related to remittances It is strongly opined in the Global Economic Prospects (GEP 2006, WB) 2006 that remittances have given rise to a decline in the poverty headcount ratio by 6 percentage points in Bangladesh during 1990-2006.

With the analysis of macroeconomic model it was found that remittances have a strong positive impact on GNP, a positive impact on consumption, investment and imports, but the largest impact is on private consumption while the smallest on investment and imports.

Recent boost in remittances has been attributed to the efforts to encourage remittances through official channel by adoption of measures such as opening of new exchange houses in source countries, expansion of drawing arrangements, setting an annual remittance threshold, close monitoring and supervision of banks, speeding up of delivery to the beneficiaries and more importantly, surveillance measures under the Money Laundering Prevention Act.

It is pertain to mention that a large amount of Bangladeshis around 6.4 million is working and living worldwide and sending their hard earned money to his or her dear ones regularly. Though some portion of remittance has been channeling through unofficial means like Hundi, the Bangladeshi Government has taken various measures and implanted money laundering act to combat such illegal activity. The inward foreign remittance will substantially be increased if, remittance through unofficial channels are combated.

According to the economical statistics published by Bangladesh Bank, it seems remittance inflow to Bangladesh has been gradually increased in last 20 years. Between 90s and onward till starting of 21st century remittance inflow was reported at a steady rate. After 2001 remittance inflow to our country was increasing and up to 2008-2009 a record amount of 10 million USD remittance inflows was recorded.

While considering this inflow pattern, found that due to global recession in world economy in the year 2009-2010 there is a drastic fall in the inflow amount `of remittance. Though our country was not at the verge of facing the recessional effect of world economy but certainly it is facing the after effect. Because by analyzing the data it was found that whereas a 20% growth rate was achieved in year 2008-09, a decline of 80% was recorded in year 2009-2010.

In the conclusion tried to provide some key points which might be implemented for increasing the rate of utilization of remittance. Such as in order to increase the flow of remittance through formal official channels, banks should be made more efficient and attractive so that Bangladeshi’s communities abroad send money through these institutions. This, in turn, requires making the Bangladeshi Banks adequately computerized, cost effective and flexible in order to compete with other banks and money exchange bureaus. Meeting the challenge with other banks also entails flexibility in determining the exchange rate, with a guideline from the Bangladesh Bank indicating the broad range to be followed.

Again In order to facilitate flow of remittance through the official channels and productive use of this scarce resource, government, particularly BMET, financial institutions and recruiting agencies should help create enabling environment for labor migration. Because the last truth is whatever the steps the Government or Banks takes to increase the flow of remittance but ultimately it is the number of skilled worker working in abroad will determine the flow of remittance in our country.

1.1 Introduction of the Report

In today’s world, a bank performs several general banking activities in line with its different internal departments. All the departments which are providing Foreign Remittance services are very much important while dealing with customers. Bank earns its operating profit through functional activities of Foreign Remittance. That is why; Foreign Remittance activities do mean a lot for a bank. If a bank can figure out its outstanding performance in foreign remittance banking through satisfying its customer then it is possible for that particular bank to gain competitive advantage from the market.

National Bank Limited performs several general banking activities through its existing branches throughout the country. In most of the branches there are deposit section, loan and advances section, accounts section, foreign exchange section cash section and foreign remittance section. NBL performs its different types of day to day general banking activities with the help of these sections. The tried best to learn several activities while doing internship in National Bank Limited by working in Foreign Remittance banking.

This study is done to evaluate the foreign remittance activities of NBL. Findings of this study may benefit the organization itself to take strategic decision on its future plan to enhance the foreign remittance performance of the bank. This study contains a lot of learning materials that gained through internship, thus think that the result and recommendation of this study will be very much helpful for the maintenance of operational activities under foreign remittance division.

The report is on “Foreign Remittance Activities and Financial Performance of National Bank Limited”. studied on this topic because was assigned to know about all the activities under the foreign remittance wing of the branch. In the organization part, have presented the company in details so that the report presents the whole company, its activities, goals and objectives and its commitment towards the society. In the learning part it is been discussed that what studied while worked in the bank. The discussed the departmental activities that have observed while working. The presented all the functions of each department. The presented the details view of activities of the foreign remittance department of the bank.

Actually, set some well-defined objectives for study on this topic. Then following some specific methodology and analysis method have worked out some findings of the study and recommended for the problems that had identified in study. Finally, have concluded with some comments on how it much be better performing bank in near future and how it can contribute towards the economic development of the country.

For globalization and the financial needs and transaction rapidly banking sector are emerge to meet up the challenges of modern days. The banking activities operated to satisfy customer needs with modern trends the bank needs efficient executives. To keep pace with the trend, banks need executives with modem knowledge. The course practical orientation in Banks is an indispensable part of the BBA program. Under this course the students are sent to gather practical knowledge about banks and others organization environment and activities. This practical knowledge and environment build up a working attitude, responsibility, sincerity and norms to build up a future career to the Present world is changing rapidly to face the challenge of competitive free market students. The students also have to submit a report on practical orientation in institution. Mr, Shamsul Arifeen, The Lecturer of BBA Department, Dhaka City College authorized and supervised me to do the practical orientation at origin of the report. The completed practical orientation course at National Bank Ltd. in Elephant Road Branch and submitted this report to BBA program office on August 03, 2010.

1.2 Origin of the Study

Through the internship in Elephant Road Branch of National Bank Limited I tried to bridge the gap between the theoretical knowledge and real life experience as part of Bachelor of Business Administration (BBA) program. This Internship report has been designed to have a practical experience through the theoretical understanding.

This Internship is essential for every student of Business Administration which helps the students to know the real life situation of corporate life. That is why; a student takes the Internship program at the end of the BBA program as the requirement to Bachelors degree.

This Internship report titled “Foreign Remittnce Activities and Financial Performance of National Bank Limited” is prepared to fulfill the degree requirement of BBA program. In this regard I had been assigned in Elephant Road branch of National Bank Limited just immediately after the completion of the course requirement of the program. been supervised there by the management of the bank to gather information which was necessary to prepare my report.

1.3 Objectives of the Study

The start work with some specified objectives. The objectives act as a bridge between the starting point and the goal of the study. The report on “Foreign Remittance Activities and Financial Performance of National Bank Ltd.” has been written as a partial requirement for obtaining the Degree of Bachelor of Business Administration. The basic objective of the report is to be acquainted with the practical aspects of the dealings of the National Bank Ltd. Thus the report has been prepared for serving the academic purposes only, and not for taking decisions by the National Bank’s Management or any other organization. However, have an objective regarding why started work on such topic. The main objective is to evaluate and analysis of “Foreign Remittance activities and Financial Performance of National Bank Ltd.”

1.3.1 General Objective

To have a specific idea about the foreign remittance activities of NBL and to scrutinize its financial and operational performance of NBL in today’s banking industry of Bangladesh.

1.3.2 Specific Objectives

1. To be familiar with the history and operations of NBL in Bangladesh.

2. To figure out the operational performance of NBL in recent years.

3. To work out positive and negative aspects of general banking activities of NBL.

4. To gather knowledge about the function of different sections under foreign remittance activities.

5. To understand the financial status of the bank

6. To find out the sector in which NBL provides credit

1.4 Rationale of the Study

Private Banks have of course a vital role in promoting and accelerating the economic development process as per the demand of time through the implementation of finance for industrial and agricultural project, domestic and foreign trade and allocating the fund to various off-farm employment and self-employment generation projects. Focusing the light and considering the every pros and cons on available statistical data it has been apparently accepted that National Bank continued to register its steady progress in the field of deposits, advances, foreign exchange and foreign remittance business. In view of the sluggish nature of the economic activities over the years the deposit performance of National Bank Ltd is more or less satisfactory. The National Bank gain maximum advantages for foreign exchange and remittance related business, the National Bank policy is aimed at the integrated operation of all it outlet at home and abroad.

The low rate of economic growth, high rate of unemployment, illiteracy, growth rate of population, low rate of recovery etc. are the impediment factor of economic development of a country.

Inspired of the above obligations rather in a most favorable situation National Bank Ltd have been flourishing efficient and endeavoring to the maximum of efficiency of its capacity to catch up with slow growing development of our country.

1.5 Scope of the Study

National Bank Ltd. is one of the largest private commercial bank, which provides its services through almost 122 branches all over in Bangladesh. This bank is a reputed and leading one in our banking sector for its performance. The assigned to learn practical knowledge from National Bank Ltd, Elephant Road Branch. The covered all departments during the period in my practical orientation and try to portrait the area of organizational overview, performance of general banking, foreign remittance activities and finance, credit management, conclusion and recommendation.

1.6 Methodology Of the Study

The report has been prepared mainly based on secondary data, famishing by the National Bank officials have also been incorporated in the report wherever it was considered necessary to maintain the singleness and lucidity of the report. This report has been prepared on the basis of experience gathered during the period of three months internship. Personal experience gained by visiting different desks during internship period. The collected data are taken from various sources which are mentioned in the below

1.6.1 Data Collection Method

1. Face to face conversation

2. Observation of activities of different departments

1.6.2 Data Sources

· Primary Sources

1. Practical experience of banking.

2. Conversation, exchange of ideas and views with senior officials of bank.

3. Training, workshop and seminar.

4. Related files, books study provided by the officers concerned.

· Secondary Sources:

The major parts of information are collected from the secondary such as:

· Annual report and Audit report of National Bank Ltd.

· Office files and Documents

· Study related book and journals.

· Web site.

Discussion with Concerned Person:

As study related current data are not available, had to discuss with concern persons for getting up to data information.

1.6.3 Sample frame

The completed paperwork having face-to-face conversation with 2 (Two) officials in the branch. All the officials are in the in-charge of their respective sections in the branch. As have done a framework of study with these people within my branch that means within the sample size of the study, it can be mentioned that the sample frame of my study is five.

1.6.4 Population Size

All the Branches of NBL located in everywhere in Bangladesh has been taken into consideration as population.

1.6.5 Sample Size

National Bank Limited, Elephant Road Branch taken as a sample size

1.6.6 Sampling Technique

I have implemented Simple Random Sampling Technique by choosing representative of total population as sample for this study. have observed activities of each and every department of selected sample and then analyzed those activities from point of view. While observing chose some employees and then made face-to-face conversation with them.

1.6.7 Data Analysis Method

The used different charts and diagrams such as Pie-chart and Bar Diagram for the analysis of data that are collected from different sources and have also used ratio analysis and financial and operational information of the Bank to evaluate its performance and to compare its performance with other banks.

1.7 Limitations of the Study:

It may agree to by the readers of the report that of such a report especially to enrich with empirical findings, wherever necessary, is a time to consuming matter. As the report prepared with a short span of time, the report could not be made comprehensive and conclusive. Mainly the report could be made descriptive. Some usual constraints did face during the course of investigation.

These are as follows:

· The main limitation of the study is availability of literature and data and in many cases the up-to date information is not yet published. Even the Annual Report of 2010 is not yet published.

· Time constraints impede me to make in depth study.

· Entrance to every corner of the bank was not possible to me.

· Relevant paper and documents were not available sufficiently which can my writing this paper.

· I had to base on secondary data for preparing this report.

2.1. Banking History of Bangladesh

Bangladesh is a developing country. Banking sectors place a pivotal role in the economic development of the country. The importance of bank as a significant institution of economic development fro a country can hardly be overemphasized. Banking system of a country can well be said as a barometer of its economic prosperity. Well-developed banking system is indispensable for modern trade and commerce. Banks not only, now-a day act as custodian of public money but also are indispensable as vital agent for maintenance of sound financial position of a government. Bangladesh bank acts as a central bank for our country and it controls, supervises, and looks after the private scheduled banks as well as the nationalized banks formed by amalgamating the business of the twelve banks doing business in Bangladesh before liberation as per schedule given below:

Existing Bank New Bank Authorized Capital (Lacs) Paidup Capital (Lacs)
The National Bank of Pakistan.The Bank of Behawalpur Ltd. Sonali Bank 500 200
The Premier Bank Ltd. The Habib Bank Ltd. The Commerce Bank Ltd. Agrani Bank 500 100
The United Bank Ltd. The Union Bank Ltd. Janata Bank 500 100
The Muslim Commercial Bank Ltd. The Standard Bank Ltd. Rupali Bank 500 100
The Austrasia Bank Ltd. The Estem Mercentile Bank Ltd. Pubali Bank 500 100
The Estem Banking Corporation Ltd. Uttara Bank 500 100

The banking system at independence consisted of two branch offices of the former State Bank of Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks. Virtually all banking services were concentrated in urban areas. The newly independent government immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit and monetary policy, and administering exchange control and the official foreign exchange reserves. The Bangladesh government initially nationalized the entire domestic banking system and proceeded to reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing business in Bangladesh. The insurance business was also nationalized and became a source of potential investment funds. Cooperative credit systems and postal savings offices handled service to small individual and rural accounts. The new banking system succeeded in establishing reasonably efficient procedures for managing credit and foreign exchange. The primary function of the credit system throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent of total advances.

After the liberation of Bangladesh the twelve Banking companies who were doing business in Bangladesh, were nationalized by the Government of People’s Republic of Bangladesh under president’s order no. 26 of 1972 entitled “The Bangladesh Bank (Nationalizations) order, 1972” on 26 March, 1972.

During 1983 Bangladesh Govt. allowed the private sector to sector to operate banking business. Now Banks are formed and operate under banking co. act 1991. At present there are 52 Banks operating their business in Bangladesh.

2.2. Relevant Laws/Acts for Bank /Financial Institutions:

The following Law, Acts and Order are guiding Banks and Financial Institutions-operating in Bangladesh:

1. The Artha Rin Adalat Act-1990

2. The Bangladesh Bank Order-1972

3. The Banker’s Books Evidence Act-1891

4. The Banking Companies-Act-1991

5. The Bankruptcy Act-1997

6. The Bangladesh Bank (Nationalism) Order-1972

7. The Bill of Exchange Act-1882

8. The Companies Act-1994

9. The Contract Act-1872

10. The Co-operative Societies Act-1940

11. The Insurance Act-1938

12. The Pre-Shipment Inspection order-1999

13. The Partnership Act-1932

14. The Securities and Exchange commission Act-1993

15. The Foreign Exchange Regulation Act-1947

16. The Bangladesh Export Processing Zones Authority Act-1980

17. The Export Policy-1997-2002

18. The Guidelines for Foreign Exchange Transaction-1996 (Bangladesh Bank)

19. The Import Policy order-1997-2002

20. The Uniform Customs and Practice for Documentary credits (1993 revision, ICC) publication-500) etc.

2.3 Present Situation of E-Banking and Online Banking

In Bangladesh, the expansion of e-banking is beset with several infrastructural, institutional, and regulatory constraints such as inadequate availability of reliable and secure telecommunication infrastructure, absence of a backbone network connecting the whole country, poor ICT penetration in the banking sector, lack of skilled manpower and training facilities, absence of supportive policies, guidelines, rules and regulations relating to e-transactions and the like. Despite the constraints, efforts by the Bangladesh Bank in modernizing the country’s payment system and commitment by the government in building ‘Digital Bangladesh’ have brought competition among the scheduled banks to improve banking services and rapidly adopt e-banking on a wider scale. This note provides a critical overview on development of e-banking in Bangladesh and future prospects for better understanding the issue that includes concept of e-banking, present status of scheduled banks in adopting e-banking services, and prospects of e-banking in Bangladesh on the basis of current trend in developing the ICT infrastructure in the country.

Despite huge demand from the business community as well as the retail customers particularly the urban customers, electronic banking (e-banking) in Bangladesh is still at a budding state due mainly to a number of constraints such as unavailability of a backbone network connecting the whole country; inadequacy of reliable and secure information infrastructure especially telecommunication infrastructure; sluggish ICT penetration in banking sector; insufficient legal and regulatory support for adopting e-banking and so on.

In Bangladesh, telephone connectivity is inadequate, cost of PCs are still beyond purchasing capacity of most people, internet connection is costly, IT literacy is yet to reach satisfactory level, banking sector lacks skilled IT personnel, and huge investment requirement for establishing technology based banking services are prime drawbacks. In this backdrop, with high potential of e-banking, Bangladesh Bank and

the scheduled banks together need to come forward with necessary initiatives for successful introduction of e-banking in Bangladesh.

2.3.1 Present Status of E-Banking

E-banking at per international standard is yet to develop in Bangladesh. At present, several private commercial banks (PCBs) and foreign commercial banks (FCBs) offer limited services of tele banking, internet banking, and online banking facilities working within the branches of individual bank in a closed network environment. As a part of stepping towards e-banking, the FCBs have played the pioneering role with adoption of modern technology in retail banking during the early 1990s whereas the state-owned commercial banks (SCBs) and PCBs came forward with such services in a limited scale during the late 1990s. Moreover, the banking industry as a whole, except for the four specialized banks (SBs), rushed to offer technology based banking services during the middle of the current decade. The existing form of e-banking that satisfies customer demand in banking activities electronically throughout the world are PC banking or PC home banking that include online banking, internet banking, mobile banking, and tele banking. PC Banking or PC Home Banking:

PC banking refers to use of personal computer in banking activities while under PC home banking customers use their personal computers at home or locations outside bank branches to access accounts for transactions by subscribing to and dialing into the banks’ Internet proprietary software system using password. PC banking or PC home banking may be categorized into two types such as online banking and Internet banking. Online Banking:

Transactions in online banking are performed within closed network for which the customer use specialized software provided by the respective bank. International standard online banking facilities are expanding in Bangladesh. At present, 29 scheduled banks offer any branch banking facilities through their respective bank online network that provides facilities like transaction through any branch under the respective bank online network; payment against pay order or pay order encashment,

demand draft encashment, opening or redemption of FDR from any branch of the same bank; remote fund transfer, cash withdrawal, cash deposit, account statement, clearing and balance enquiry within branches of the same bank; and L/C opening, loan repayment facility to and from any branch of respective bank under its own online network. Inter-bank transactions or transaction between inter bank branches are yet to expand. Under the modernization program of the National Payment and Settlement System, Bangladesh Automated Clearing House (which includes Bangladesh Automated Cheque Processing System and Bangladesh Electronic Fund Transfer Network) is scheduled to come into effect from September 2009 followed by implementation of online banking at per international standard in near future. Internet Banking:

Internet banking refers to the use of internet as a remote delivery channel for banking services which permits the customer to conduct transactions from any terminal with access to the internet. It is the WWW through which banks can reach their customers directly with no intermediaries. Internet banking in true sense is still absent in Bangladesh. Only 7 out of 48 banks are providing some banking services via internet that include account balance enquiry, 4 fund transfer among accounts of the same customer, opening or modifying term deposit account, cheque book or pay order request, exchange rate or interest rate enquiry, bills payment, account summary, account details, account activity, standing instructions, loan repayment, loan information, statement request, ,cheque status enquiry, stop payment cheque, refill prepaid card, password change, L/C application, bank guarantee application, lost card (debit/credit) reporting, pay credit card dues, view credit card statement, or check balance. The core banking activities like fund transfer to third party, cross border transactions and so on are still uncovered by internet banking offered by the scheduled banks in Bangladesh. Tele Banking:

Tele banking refers to the services provided through phone that requires the customers to dial a particular telephone number to have access to an account which provides several options of services. Despite huge potential, tele banking services have not been widened enough in daily banking activities in Bangladesh. Only four banks so far provide a few options of tele banking services such as detail account information, balance inquiry, information about products or services, ATM card activation, cheque book related service, bills payment, credit card service and so on. Funds transfer between current, savings and credit card account, stock exchange transactions etc are still inaccessible through tele banking in Bangladesh. Mobile Banking:

Mobile banking (also known as M-banking or SMS banking) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking is most often performed via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device. The standard package of activities that mobile banking covers are: mini-statements and checking of account history; alerts on account activity or passing of set thresholds; monitoring of term deposits; access to loan statements; access to card statements; mutual funds/equity statements; insurance policy management; pension plan management; status on cheque, stop payment on cheque; ordering check books; balance checking in the account; recent transactions; due date of payment (functionality for stop, change and deleting of payments); PIN provision, change of PIN and reminder over the internet; blocking of (lost/stolen) cards; domestic and international fund transfers; micro-payment handling; mobile recharging; commercial payment processing; bill payment processing; peer to peer payments; withdrawal at banking agent;3 and deposit at banking agent. Despite huge prospects, only a few banks adopted mobile banking in Bangladesh during the last year.

Conclusions and Policy Recommendations:

A well functioning e-banking network is dependent on availability of a backbone network connecting the whole country; reliable and secure information infrastructure including telecommunication infrastructure; ICT penetration in the banking sector; skilled operational personnel; and legal and regulatory framework. The government, Bangladesh Bank and scheduled banks are related to these issues. Therefore, both individual and joint efforts are needed to overcome the constraints in promoting e-banking in the country.

In respect to technology adoption, the PCBs and FCBs have attained greater success relative to other bank categories but their coverage is concentrated mainly in urban and semi-urban areas. The rural parts of Bangladesh still remain outside of their services. Since the SCBs and SBs have branches throughout the country including the rural areas, penetration of technology in banking activities of these two categories of banks are crucial to wider spread of e banking services. For the purpose, the management of these banks might allocate a part of their yearly profit for ICT penetration in banking activities and human resources development supported by fixed targets. In addition, several steps may be contemplated in order to accelerate the adoption of e-banking.

Internet penetration is a key factor for the growth of e-banking. Christiansen (2001) reports that the take off phase of Internet banking needs at least 30 percent Internet usage among the population. Moreover, since Internet penetration alone is not adequate for online banking expansion, the government may provide subsidy for surfing cost, organize training facilities with private partnership, widen multiple access facilities like web, telephone, ATM etc., and initiate motivation programs for the users and the target population. Moreover, adequate legal framework and security are essential for flourishing internet banking.

3.1. History of the National Bank Ltd :

Bangladesh economy has been experiencing a rapid growth since the 90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers’ remittance local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to canalize consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to responded to this need and established National Bank Limited in the year 1983.

National Bank Limited was established on 23rd March 1983 with authorized capital TK. 100 million and paid up capital of TK. 80 million was subscribed by the sponsors/directors and TK. 4 million was subscribed to the government. Remaining TK. 36 million has been fully subscribed by the public. 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 of deposits, investment of funds, financing of trades, businessmen, industrialists, importers and exporters etc. The National Bank Limited opened new branches eight during 1983, raising the total number branches 122 in 2009, total number of employees of the Bank was 242 in 1983 and increased to 2960 in 2009, and during the short periods of its operation the Bank has made notable progress in various activities.

NBL determined to bring back the long forgotten taste of banking services and flavors. NBL want to serve each one promptly and with a sense of dedication and dignity. The then President of the People’s Republic of Bangladesh Justice Ahsanuddin Chowdhury in angulated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong. At present; NBL has been carrying on business through its 122 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. The Bank established extensive drawing arrangement network with Banks and Exchange Companies located in important countries of the world. Expatriates Bangladeshi wage earners residing in those countries can now easily remit their hard-earned money to the country with confidence, safety and speed. The number of workforce of NBL stood at 2239, which include 1689 officers and executives’ and 550 staff. Now NBL is on line to establish trade and communication with the NBL 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. Transparency and accountability of a financial institution is reflected in its Annual Report containing its Balance Sheet and Profit and Loss Account. In recognition of this, NBL was awarded Crest in 1999 and 2000, and Certificate of Appreciation by the Institute of Chartered Accountants of Bangladesh.

With a strong sense in all business areas commercial banking, NBL could foresee tremendous growth in home in homebound remittance form Bangladesh expatriates in USA and UK, Middle East and different countries of the world. Consecutively NBL established a unique money remittance system with Western Union of USA for inbound and outbound remittance.

National Bank Limited is one of the leading private commercial bank having a spread network of 122 branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2010.

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 26 years of its operation achieved a remarkable success and met up capital adequacy requirement of Bangladesh Bank.

National Bank Ltd is one of the leading banks which introduced first Credit Card in Bangladesh. Our 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. 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.

National Bank Limited has its prosperous past, glorious present, prospective future and under processing projects and activities. Established as the first private sector Bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the passage of time after facing many stress and strain. The member of the board of directors is creative businessman and leading industrialist of the country. To keep pace with time and in harmony with national and international economic activities and for rendering all modern services, NBL, as financial branches with computer network in accordance with the competitive commercial demand of time. Moreover, considering its forth-coming future the institution automated all its infrastructure of the Bank has been rearranging Keeping the target in mind NBL has taken preparation to open new branches by the year 2007. 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.

3.2 Corporate Information

tABLE : 1 Corporate Information

Incorporation of the Bank 15.03.1983
Certificate of commencement of Business 20.03.1983
Licensed issued by Bangladesh Bank 22.02.1983
Licensed issued by Bangladesh Bank for opening the First branch, Dilkusha Branch 22.03.1983
Formal Lunching of the Bank 23.031983
Commencement of Business of Dilkusha Branch 23.03.1983
Listed with Dhaka Stock Exchange 20.12.1984
Publication of prospectus 30.12.1984
Date of first public subscription (IPO) 14.01.1985
Trading of shares in DSE 21.04.1985
Association with Gulf exchange Pte Ltd 26.11.1985
Signing in agreement with Western Union Money Transfer 16.05.1993
Listed with Chittagong Stock exchange 06.11.1995
Trading of Shares in CSE 06.11.1995
Listed with CDBL 29.09.2004
Inauguration of Balaka Exchange Pte Ltd 08.07.2007
Registration Certificate as Stock Broker 24.10.2007

(Source: National Bank Limited annual Report, 2009)

3.3 Vision of National Bank Limited

Ensuring highest standard of clientele services through best application of latest information technology making due contribution to the national economy and establishing ourselves firmly at home and abroad as a front ranking bank of the country are our cherished vision.

3.4 Mission of National Bank Limited

Efforts for expansion of our activities at home and abroad by adding new dimensions to our banking services are being continued unabated. Alongside, we are also putting highest priority in ensuring transparency, account ability, 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. Winning an everlasting seat in the hearts of the people as a caring companion in uplifting the national economic standard through continuous up gradation and diversification of our clientele services in line with national and international requirements is the desired goal we want to reach.

3.5. Objectives of National Bank Limited

· Bringing modern Banking facilities to the doorstep of general public through diversification of Banking services, thereby arousing saving propensity among the people.

· Foreign a cordial, deep-rooted and firm banker-customer relationship by dispensing prompt and improved clientele services.

· Taking part in the development of the national economy through productive deployment of the Bank’s resources as well as patronizing different social activities.

· Connecting clients to modern banking practices by the best application of improved information technology, so that they get encouraged to continue and feel proud of banking with NBL.

· Ensuring highest use of the professional workforce through enhancement of their aptitude and competence.

· Responding to the need of the time by participating in syndicated large loan financing with like-minded Bank’s of the country, thereby expanding the area of investment of the Bank.

· Elevating the image of the Bank at home and abroad by sustained expansion of its activities.

3.6. Business Goal

To patronize, sponsor and encourage games and sports, entertainment and other socio-economic activities, alongside providing the best services to the clients.

3.7. Line of Business of NBL

  • Investment Banking (Capital Market Operation In DSE and CSE)
  • Lease Finance
  • Investment In Government and provide Security
  • International Trade Finance (Import, Export)
  • Foreign Exchange Dealing (Currency Dealing, Remittance)
  • Money Market Operations (Call Money Market)
  • Corporate Finance
  • Syndication
  • SME Banking
  • Personal Banking (Auto Loan, Vocational Loan, Personal Loan)Housing Finance
  • Transport Loans
  • Remittance Operations

3.8. Branches of NBL

NBL which was started at Dilkusha Branch on March 23rd, 1983 was the first and major private commercial Bank in Bangladesh operating throughout the country as well as the age of the Bank is only 18 years. During this period it has established total 76 branches over the country and made a smooth network in side the country as well as throughout the world. working Branch, that is Elephant Road Branch is established in 1985. Recently the bank establish its new branch named Rifles Square Branch in Rifles Square market, 80 Pilkhana, Dhanmondi, Dhaka in June, 2010. And was physically present there in the branch opening day. The number of Branches as territory wise is mentioned in the table-

Area-wise Branches
Division Area Number of Branches
Dhaka Area 48
Chittagong Area 29
Rajshahi Area 16
Khulna Area 08
Sylhet Area 16
Barisal Area 05
Total Branches 122

4.1 General Banking

General banking is the starting point of the banking operation. It is the department which provides day-to-day services to the customers. Main functions of general banking department are the following:

(Source: National Bank Limited)

4.1.1 Account Opening and Closing

The relationship between banker and customers begins with the opening of an account by the customer. Opening accounts binds the banker and customers into contractual relationship. But selection of customer for opening an account is very crucial for a bank. In fact, fraud and forgery for all kinds start by opening an account. So bank should take extreme caution in this section. A customer can open different types of accounts through this department.

There are some requirements that have to be completed for opening an account. Savings Account {Individuals/ Joint} :

Savings account (SB) is meant for the people of the lower and middle classes who wish to save part of their incomes to meet their future needs and intended to earn to an income from their savings. For opening of this type of accounts following requirements are necessary:

When a person will do this A/C, the important things are necessary.

  1. Two copies of photographs attested by the introducer.
  2. An introducer of National bank Bangladesh Ltd. Introducer must have the SB account holder.
  3. Photocopy of passport/Chairman Certificate/Attested of First Class Officer/Voter ID Card.
  4. Two copies of photographs.
  5. KYC (Know Your Customer) form.
  6. For joint accounts, signatures of all the account holders are necessary.

The interest rate on deposits are being revised with effect from 01.08.2009

Types of Deposit Deposit Rates
Savings Bank Deposit (SB)

Short Term Deposit (STD):

Less Than Tk. 1.00 crore

Tk. 1.00 crore and above but less than Tk. 5.00 crore

Tk. 5.00 crore and above but less than Tk. 10.00 crore

Above Tk. 10.00 crore

Bank to Bank







Source: National Bank Ltd, Interest Rate 2009) Current Account

Current account is the account where the account holders can make numerous transactions with in working day. There is no restriction on the number and the amount of withdrawals from the current account with in availability of funds. As the banker is under the obligation to repay this deposit on demand, no interest is paid in this account. Generally current account is opened for businessmen and traders for easy transaction. But a person can open a current account for special purpose. The following documents are required to open these types of accounts:

Company Account:

A separate account opening form is used for limited company. There are two kinds of limited company public limited company and private limited company. The bank always takes precautions for opening this type of accounts. Several documents are submitted by the client, which should be checked carefully by

the bank to legally in a safe position. The following documents are required to open this type of accounts:

  1. Common Individual of S/A.
  2. Trade license.
  3. Memorandum or articles of association.
  4. Certificate in Corporation.
  5. Regulation of full board with signature.
  6. List of Directors.
  7. Organizations seal.
  8. Certificate of commencement.
  9. STD (Short term Deposits).
  10. Requirement same as individual A/C.
  11. STD (Public and Private)
  12. Requirement same as Public and private A/C. Fixed Deposit Revenue {FDR}

FDR is one kinds of fixed deposit scheme. Normally it can be fixed for 01 Month, 03 month, 06 month and 12 month. Its interest rate is higher than normal account.

The required document for FDR is as follows:

  • PP size photos (account holder)
  • One PP size photo (nominees)
  • Photocopy of national ID card.

The interest rate on deposits is being revised with effect from 18/11/2008.

Types of Deposit (FDR) Deposit Rates
01 Month

03 Month

06 Month

12 Month


11.75 %


13.00 %

(Source: National Bank annual Report, 2009)

No. Monthly Deposit Amount


3 Years @ 9% 5 Years @ 9.25% 8 Years @ 9.00%
01. 500/- 20,627/- 37,896/- 70,849/-
02. 1000/- 41,255/- 75,791/- 1,41,697/-
03. 2000/- 82,510/- 1,51,583/- 2,83,394/-
04. 3000/- 1,23,765/- 2,27,378/- 4,25,091/-
05. 4000/- 1,65,020/- 3,03,166/- 5,66,788/-
06. 5000/- 2,06,274/- 3,78,957/- 7,08,485/-
07. 10000/- 4,12,549/- 7,57,914/- 14,16,970/- Monthly Saving Scheme (NMSS) :

(Source: National Bank Ltd. Report, 2009)

Monthly saving scheme is an account where people deposit money for a fixed period of time at a fixed interest and withdraw money at once. Different types of amount and interest rate are given by the bank to generate client’s savings

4.2 Remittance Sector

The commercial Bank Remittance facilities to its customer is to enable them top avoid risk rising out of profit or loss in cash carrying cash money to one place to another or making payment to someone in another places. Banks take this risk remit the fund on behalf of the customers to save them from any awkward happening through the network of their branches and ensure payment to the beneficiary.

4.3 Bills and Clearing Section

According to the article 37(2) OF Bangladesh Bank order, 1972, the banks which are the number of clearinghouse are called as schedule banks. The schedule banks clear the cheque drawn upon one another through the clearinghouse. This is an agreement by the central bank where every day the representative of the member banks gather to clearing the cheque. Banks for credit of the proceeds to the customer’s account accept cheque and other similar instruments. The bank receives many such instruments during the day form account holders. Many of these instruments are drawn payable at other banks.

The department in the branch that involves in clearing cheque is known as clearing department. The function of this department is –

  • Preparation of clearing Outward and Inward Lodgment and record maintenance of the same.
  • Batch posting as when required.

The procedures are as follows.

The collecting instrument will be received with a credit voucher and customer part of the credit voucher will be returned with a received seal. The collecting cheque will be crossed specially.

An entry has to be given in the outward clearing register along with clearing seal. The cheque has to be sent in National Bank Ltd Local Office and Local Office will clear clearinghouse of Bangladesh Bank.

But when the cheque is drawn for collection form other branch of National Bank Ltd, within the range of it clearing area then it no need to go the clearinghouse Bangladesh Bank. This type of cheque can be collected through inward clearinghouse of National Bank Ltd itself. At the time of sending instruction of outward clearing the following account procedure has to be done.

Essential things for clearing the instrument:

There are three Essential things for clearing the instrument:

· Crossing seal.

· Endorsement seal.

· Clearing seal.

4.4 Cash Section

Cash section is a very sensitive organ in a branch and is handling with extra care. Operation of these section beings at the beginning of the banking hour. Cash officer being his transaction with taking money form the vault, known as the opening cash balance. Vault is kept in a much secured room. Keys to the room under control of the cash officer and branch in charge. The amount of opening cash balances entry into the cash register. After transaction of whole day, the surplus money remain in the cash counter is put back in the vault and known as the closing balance. The maximum amount of money that the branch can kept in its vault is only TK. 1, 50, 00,000/- according to the permission of the Bangladesh Bank and relative insurance policy. Money is received and paid in this section.

4.4.1 Cash Receipt

· At first the depositor fills the deposit slip. There are two types of deposit slip in this branch. One for saving account and another for current account.

· After filling the required deposit slip, depositor the money.

· Officer at the cash counter receives the money, count it, enter the amount of money in the scroll register kept at the counter, seal the deposit slip and sign on it with date.

· Then this slip is passed to another officer who enters the scroll number given by the cash counter in his register along with the amount of the m