General Banking Activities of Bangladesh Commerce Bank Ltd.

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General Banking Activities of Bangladesh Commerce Bank Ltd.

1.1 Background of the Study

Banking sector is the driving force for an economic growth of a country. Every commercial bank acts as financial intermediary whose main aim is to earn profit through borrowing and lending funds in the profitable sectors and they also issue different types of credit instruments. Therefore, the Banking system occupies an important place and plays significant role in a nation’s economy building. Necessarily, banking sector also ensure commendable contribution in the economic development of a country and forms the core of the money market in an advanced country. This sort of financial intermediary accepting deposits and granting loans; offers the widest menu of services for different business ventures. Commercial banks have significantly expanded their financial services to the clients and government around the world. In current business world is very dynamic and fast changing. That’s why every professional have to have clear concept regarding this changes and he/she need to conform to these changing environments. In order to become a real professional people’s needed to enter into practical business world. A professional is a person who is skilled in the theoretical, scientific and practical aspect of an occupation and who performs with a high degree of competence.

1.2 Scope of Study

Bangladesh Commerce Bank Ltd is one of the fast growing banks in the country. It’s actively competing with others leading commercial banks. It formally launched business activities on 06.09.1999. This report constructed on the basis of general banking activities of the organization and it covers the organization’s structure, chronological growth and development performance of the commercial banks. The main part of the repot consists of the “General Banking activities of the Bangladesh Commerce Bank Ltd.”. Due to successful completion of essential part of the report have the opportunity to discuss regarding following issues:

· Finding the bridge between academic study and practice in organization.

· Importance of the General activities in banking.

· Finding the bridge between academic study and practice in Organization.

· What are the problems of Overall banking practice in BCBL?

· What are the basic difference between other commercial banks and BCBL’s activities?

· How to maintain the organizational behavior inside the organization.

· How General Banking performance does affects overall progress of the Organization.

1.3 General Banking

General Banking is an operational function of the bank which consists the management of deposit, cash, clearing house, bills, account opening, security instruments handling, customer services, locker facilities and other ancillary services of the bank besides Advance and Foreign Trade.

General banking is one of the key drivers of the U.S. economy. General banking provides a safe place to save excess cash, known as deposits. It also supplies liquidity to the economy by loaning this money out to help businesses grow and to allow consumers to purchase homes, cars and consumer products. Banks primarily make money by charging higher on their than they pay for deposits.

Financial institution that mediates or stands between ultimate borrowers and ultimate lenders is known as banking financial institution. Banks perform this function in two ways – taking deposits from various areas in different forms and lending that accumulated amount of money to the potential investors in other different forms.

PROFILE OF BANGLADESH COMMERCE BANK LIMITED

2.1 Background of the Bangladesh Commerce Bank Ltd.

Bangladesh Commerce Bank Ltd. (BCBL) is a Commercial bank but it has some differences in its formation compare to other private banks. Bangladesh Commerce Bank Ltd. was established by recognizing the erstwhile BCI Ltd through passing act 12 of 1997 in the parliament of the People’s Republic of Bangladesh having paid up capital amounting to Tk. 92 crores consisting of Tk. 40 Crore cash money paid by the government and 3 state- owned Banks and Tk. 52 crores of BCI depositors’ money. The commercial operation of the Bank started since September 16, 1999 through opening of its principal branch and all other 23 branches were opened by 31st December 1999. Having incurred losses in the first two years the bank started earning profit since 2001. The Bank started its operation shouldering the legacy of BCI and has been progressing smoothly facing all hurdles and problems. The progress is satisfactory and noticeable.

Bank earned an extensive net profit Tk. 4.81 crores & Tk. 7.04 crores in the year of 2002 & 2003 respectively. Although the overall economic picture of the country was instable during 2003, but the bank registered a growth of 124% over that of previous year. The bank adequately covered capital adequate ratio as fixed by the Central Bank. This achievement had been possible due to positive attitude toward the organization, hard working, and honesty of the management team with the support of policy directives and guideline from the board of Directors. Out of deposited money of BCI Ltd. Tk. 163 crore has already been paid out of 180 crores of BCI which is a success for the bank. The said payment has been made through transferring Tk. 52 crores with investment BCI Ltd. and paying cash Tk. 62 crores. For the sake of BCI depositors Tk. 30 crores over the recovery of BCI investment has been paid to the depositors. In the year of 2003 the total deposit of the bank was Tk. 409.39 crores which is 46% more than that of previous year. At the same time the bank disbursed a total loan of Tk. 291.10 crores which is 71.11% more than that of previous year. The progress is continuing.

Bangladesh Commerce Bank Ltd. inherited 24 closed branches of former Bangladesh Commerce and Investment Limited. Having been registered with the Registrar of Joint Stock Companies and Firms with the prior approval of Securities and Exchange Commission, it commenced banking operation with the opening of its Principal Branch at 19, Rajuk Avenue, Motijheel Commercial Area, the financial hub of the Capital City of Dhaka on 16th September 1999. In the year of 2002 by opening a branch in Commilla the total no. of branches have been increased to 25. The bank has planned to open more new branches and that will be implemented in phases after getting approval from Bangladesh Bank. In the year 2009 bank earned profit Tk. 7.25 crores. In the year 2010 bank earned profit Tk. 11.59 Crore.

It is known that Bangladesh Commerce Bank Ltd. Could not started its operation smoothly this had to launch its operation with a burden of Tk. 179 crores of BCI stuck up loans. Most of the loans were from BCI period there was no documents and against which were unsecured. With continuous and sincere efforts of the Officers a cash recovery of Tk. 4.50 crore has been possible during the year which led the cumulative recovery to Tk. 84.00 crores up to this time.

The Bank is concentrating the activities in its area of specialization has achieved good market reputation with efficient customer service. The Bank is committed to providing continuous training to its staff to keep them up to date with modern practices in their respective fields of work. The Bank also tries to fulfill its share in community responsibilities. By such measures the Bank intends to grow and increase shareholder’s earning per share. Bangladesh Commerce Bank Ltd. Promises to maximize customer satisfaction through services and build a trusting relationship with customers, which has stood the test of time for the last all years.

The total manpower strength is 375 out of which 213 are officers and 162 are staff. They are very much efficient in their professional area. They are being further trained to take up the challenging job.

2.2 The Objectives of the Bank

As a member of the money market, BCBL plays a pivotal role in accelerating economic development of the country. Bangladesh Commerce Bank Ltd. has been established in order to achieve some certain objectives. Those objectives are as follows:

· Providing services by diversifications to the doorstep of people in the economic sector.

· Ensuring maximum utilization of professional manpower by developing skill and creativeness.

· Offering maximum service to the clients and shareholders of the Bank, as per rules.

· Creating savings attitude among various classes of people. Increasing investment for keeping the market economy operative.

· Assessment of customers need and provide short-term and long- term finance on the basis of real need.

· Earning confidence of all concerned by easing foreign trade and international transactions.

· Proper maintenance of bank’s resources through appropriate investment and active participation in various welfare programmers of the country.

· Involve customers with modern banking through proper uses of modern information technology.

· Provide best services to customers through establishing firm discipline in bank management and long-term relations.

· Achievement of economic growth through various socio- economic activities.

· Building image of the bank at home and abroad. Upgrading socio- economic aspects of Bangladesh by financing agro-based project.

· Activate capital market by more participation in capital market.

2.3 Goals of the Organization

The bank conducts its business activities toward some certain goals. These are as follows:

· The basic goal is to organize funds in order to invest for profitable purposes in various fields of small and medium scale of trading, large companies and corporate sectors.

· To undertake project promotion to identify profitable areas.

· To scrutinizes the opportunities for investment and developing the new products.

2.4 Mission of Bangladesh Commerce Bank Ltd.

Mission of Bangladesh Commerce Bank Ltd. is as follows:

· One Stop, Fast, and accurate customer services.

· High slandered business ethics

· Balanced financial growth strategy.

· Attracting & nourishing quality human resources with right compensation.

· High quality financial services with the assistance of latest technological device.

· Innovation in banking service at a competitive price.

· Steady return on shareholder’s equity.

· Committed to the growth of society and economic development.

2.5 Vision of the Bank

The vision of Bangladesh Commerce Bank Ltd. is to give experience to delight the customers and to give an environment where its own people will excel. At the juncture of global economic activities, BCBL has been driven by the strategic policy, as the prosperous economies of the global village are option. Its aim is to become the leader in banking sector of the country.

2.6 Functions of the Organization

Beside normal Banking business, the bank is engaged in them following activities:

  • Borrowing from individual institutions.
  • Lending against or without security for local or international trade.
  • Carrying out functions of foreign trade and foreign exchange business including opening of L/C, issuance of T/C, Credit card, buying, selling discounting of bills, CDs, Promissory Notes, approved securities, etc.
  • Buying and selling of foreign currencies.
  • Direct customer Service like payment of utility bills, insurance premiums, receiving dividends, pensions, etc.
  • Participating in the capital market as stock-broker and also as portfolio-investor.
  • Reliable safe custody of Valuables.
  • Providing excellent remittance facilities.
  • Publication of Financial Statement.
  • Provides withdrawal facilities of Deposits.

2.7 Organizational Structure of BCBL

In the legislative body the chairman is the head of the Board of Directors. There is a Managing Director who is also the President or CEO mainly controls and supervises the major divisions of the Bank. One Deputy Managing Director reports to him. Two Executive Vice President reports to him. Executive Vice Presidents controls the credit, loan administration, international, financial control, accounts, marketing and human resource Division.

The organizational structure of Bangladesh Commerce Bank Ltd. is quite horizontal where each person reports to only one person, which refers to a very good working environment. For example, each Officer reports to the AVP or VP or SVP, AVP or VP or SVP reports to EVP, EVP reports to DMD and DMD reports to MD.

2.8 Management Team

Toachieve the mission, a set of different drivers are mandatory. Commercial banks in Bangladesh are now in hard competition. This is because of the continuous growth of similar service oriented local banks along with special service providing foreign bank due to globalization. BCBL management team is sound experienced and enrich with excellent academic background and the legislative body or Board of Directors are responsible for selection of management team. The Board of Directors also sets objectives, policies and strategies and management team is the instrumental device, who implements those sets by the Board of Directors.

List of Management Personnel are given below…

1. Mr. S.A. chowdhury

Managing Director

4. Mr. Md. Gulam Nabi

Senior vice president

2. Mr. M. Ebadat Hussain

Executive Vice President

5.Mr.Sagir Ahmed

Senior vice president

3.Mr. Md. Shamsuddin Ahmed

Senior vice president

6.Md.Salim Hasan

Senior vice president

2.9 Management Information System

Bangladesh Commerce Bank Ltd. uses branch banking software, developed by a private company on windows platform. The head Office and branches use the software for book keeping, automatic interest calculation, daily transaction listing and auto trials, auto maturity and auto renewal of FDR, automatic integration customer’s ledger and general ledger, printing of general ledger position including balance of subsidiaries, monthly income and expenditure position etc.

2.10 Products and Services of BCBL

BCBL is a rapid growing commercial bank in the country. It’s competing with wide range of product and services that play a convenient role to its attainment. Products and services of Bangladesh Commerce Bank Ltd. are as follows:

General Banking

General banking department offer following products:

v Savings deposits on S/B A/C

v Current deposit A/C.

v Short Term deposit on STD A/C

v Term Deposit

v Fixed Deposit on FDR

v Special Scheme(including double & triple growth deposit, Lacpati Deposit Scheme, Millionaire Deposit Scheme, Marriage Deposit Scheme, Education Deposit Scheme, Kotipoti Deposit Scheme, and new addition nandita & srijoni )

v Consumers Financing

v Lease financing.

Foreign Exchange

Foreign exchange department of the bank provide following service in order for convenience of the customers:

  • Issuing Letter of Credit
  • Letter of credit advice
  • (FDBP) Foreign Document Bill Purchase.
  • (FDBC) Foreign Document Bill Collection
  • Bill of Exchange
  • Negotiating Bills
  • Issue of Traveler’s cheques and its encashment

Loans and Advances

Loans and advance department deals with following products and services:

  1. Financing of small and medium Industries
  2. Financing of Trade
  3. Financing if Import and Export
  4. Micro-Credit and Micro Enterprise schemes
  5. Credit Scheme for women entrepreneurs
  6. Consumers credit Scheme
  7. Special Credit Scheme for service holder

2.11 Special Schemes

Other than the normal banking business the bank has the following special schemes:

  • Small and medium scale entrepreneurs credit scheme.
  • Scheme for loans to employees.
  • Loan scheme for women entrepreneurs.
  • Pension deposit scheme for small saver.
  • Monthly deposit and profit scheme.
  • Credit scheme against share.
  • Interest free deposit.
  • Agricultural credit Scheme.
  • Life time savings Scheme.

2.12 Human Resource Management

BCBL strongly believe that only well qualified manpower can meet the expectations of the clients. For this reason BCBL always conscious regarding its existing Human Resources and frequently hiring efficient manpower to meet the standard of quality services. BCBL often arranging training program for junior level executives at BCBL Institution and senior level officers and executives are sent at BIBM, Mirpur, and Dhaka for higher training. Abreast this BCBL also send its employees abroad for higher training.

2.13 Sources of Funds

There are various sources of funds of Bangladesh Commerce Bank ltd. Basically BCBL accumulate funds from following sources:

Figure: 02, Sources of Fund

2.14 Branches of Bangladesh Commerce Bank Ltd.

Bangladesh Commerce Bank ltd. operates its business activities with 25 branches around the country. Following table shows the Branches’ names, addresses, Telephone no etc.

Name of the Branches Address Manager/Branch In-Charge Contact Numbers
Principal

Branch

Yunus Trade Center: Level # 22, 52-53, DilkushaC/A,Dhaka-1000, Mr. Shamsuddin Ahmed

Senior Vice President

Tel:9571581, 9559831-2

Fax:9553832, Talex:642557BCBLBJ

E-mail: bcbl@bdmail.net

Banglabazar

Branch

52, North Brook Hall Road, Banglabazar, Dhaka. Mr. Kaysarul Islam Vice President Tel:712227

Fax:

Talex:632145BC-BBS-BJ

Banshal

Branch

124, Shahid Sayed Nazrul Islam Sharany(Narht South Road),Dhaka-1100 Md. Abdur Raouf

Vice President

Tel:9566140,7166654

Fax: Talex:632145 BCBLBJ

Mouchak

Branch

93/1, New circular Road, Dhaka-1217 Dewan Md Moniruzzaman

Vice President

Tel:8321072
Mirpur

Branch

Plot-28, (1st Fl & 2nd Fl) Avenue-4 Mirpur, Section-1, Mirpur, Dhaka. Mrs. Sabnam Sultana

Principal Officer

Tel:8020115
Khilgaon

Branch

290/3, Block-a, Khilgaon

Railgate, Nahar tower(2nd fl), Dhaka-1219

Mr. Ali Azam Chowdhury

Vice President

Tel:7215803
Moulvy Bazar

Branch

77/6, Moulvy Bazar, Dhaka-1100 Mr. K.M. Ashraf Hossain

Senior Vice President

Tel:7311051
Jubilee Road Branch 360,Enayet Bazar, Chittagong-4000 Mr. Md. Ashequl Haque

Senior Principal Officer

Tel:7311051
Khatunganj Branch 279, Khatunganj,

Chittagong-4000

Mr. Md. Jamaluddin Senior Principal Officer Tel:011-701536,

031-618821

Dewanhat

Branch

1128 Shek Mujib Road, Ahmed Mansion, ChittagongG Mr. S.M. Alamgir

Assistant Vice President

Tel:011-701745,

031-728145

Khulna

Branch

141, Sar Iqbal Road, Khulna. Mr. S.M. Waliullah

Vice President

Tel:041-732595
Bogra

Branch

99/1-b, Boragola, Bogra-5800G Abdulah Al-Mahmud Senior Vice President Tel:051-5441,65710
Commilla Zilla School Rd. Branch 35/32, Zilla School Rd.,

kandir par, Commilla.

Mr. Aukhil Kumar Sarker

Assistant Vice President

Tel:081-69951
Dilkusha

Branch

16, Dilkusha C/A, Baliady Mansion Mr. Gazi Nazrul Islam Assistant Vice President Tel:9571375, 7171263
Green Road

Branch

75, Hosain Tower, Green Road Farm gate, Dhaka. Mr. Md. Fazlur Rahman

Vice President

Tel:8126886, 8154664
Dholai Khal

Branch

23, Goal ghat lane

(1st fl.)

Mr. Md. Golam Nabi Senior Vice President Tel:7118665,7165912
Zigatola

Branch

25/1 Zhigatola,

Dhaka-1209

Mr. Nizam Uddin

Senior Principal Officer

Tel:+8802862214
Gulshan

Branch

Bidisha Super Market, Darpon Complex Gulshan Mr. Md. Borhanuddin Senior Principal Officer Tel:8818339,9892026
Tan Bazar

Branch

18, R.K.Mitra Road, Islam super Market Narayan Gang-1400. Mr. Anowar Rashid

Assistant Vice President

Tel:7610321,7164750
Dhamrai

Branch

Kayet para, Dhamrai Bazar, Dhaka. Mr. Md. Khaibur Rahman

Senior Officer

Tel:06222-88139
Agrabad

Branch

56, Agrabad C/A, Jiban Bima Bhaban, Chittagong. Md. Zahangir Alam Vice President Tel:031-726007, 724879, ,812781
Chaktai

Branch

237,New Chaktai, Chittagong-4000 Mr. Md. Rafiqul Islam Bhuyan

Senior Officer

Tel:031-634612,0189-321444
Sylhet

Branch

Galaria Shoping & Appartment Complex (1st Fl.) ,West Zindabazar, Jallar par Road, Sylhetr. Mr. Md. Imany Choery

Vice President

Tel:0821-7232210,

0821-819521

Daulatpur

Branch

727, Jessor Road, Daulatper, Khulna-9202 Mr. Ehsan Ahmed Rouf

Assistant Vice President

Tel:041-762589
Nawgaon

Branch

Mohammadi Market, Bangabandhu Road, Nawgaon Mr. Golam Mostafa

Vice President

Tel:041-762589

Table: 01, Branches of BCBL

2.15 Foreign Exchange Business

During the short span of life of the Bank, it has got momentum in the area of foreign trade business. It deals in all kinds of export, import, remittance and all other sorts of foreign exchange business. BCBL has got nine major correspondent banks in important business centers of the world and maintain quite a good number of Nostro accounts with many leading banks of the world. It works in the following main areas:

· Letter of Credit (L/C)

· Bill Purchase & discounting

· Export Credit (Pre-shipment & post-shipment)

· Remittances

· Foreign Currency Accounts

· Taka Drawing Arrangements

· Dealing Room

· SWIFT

· Spot & Forward Contracts.

2.16 SWOT Analysis of the Bank

SWOT provides an opinion and judgment whether an organization’s business condition is healthy or unhealthy. It is shown as bellow:

2.16.1 Strengths

  • Chief Executive Officer (CEO) or the top management of the Bangladesh Commerce Bank Ltd. has contributed for the growth and development of the Bank is a key strength.
  • It has strong network and skilled manpower that able to provide quality services.
  • Positive professional relationships between bank and clients, which is an emotional tie in regular business.
  • Due to sophisticated system and technological advancement it’s easy to get the information without wasting paper works and time.
  • The Bank is always trying to add new and modern equipment and facilities to start online service from December next.
  • Employees are sharing good atmosphere in BCBL so that it gave them reason to work efficiently and to become dedicated in banking.
  • BCBL maintains corresponding relationship with many foreign banks so that it is an effective measure for the smooth business.

2.16.2 Weaknesses

  • Market promotional activities are not actively working due to the lack of appropriate initiative and encouragement.
  • Doesn’t have effective plane for aggressive marketing activities.
  • People are discouraged to save their money with BCBL due to Problem Bank.
  • Due to lack of high quality personnel in the top level of management personality businessmen and entrepreneurs are less interested to work with BCBL.
  • Well qualified personnel are not interested at all to work in BCBL due to less salary.
  • There is no well-developed infrastructure.
  • Most of the Branches are suffering for indiscipline problem.
  • The bank is far behind from technological advancement.
  • The branches are not well equipped by modern furniture whereas other commercial banks have sophisticated equipment.

2.16.3 Opportunity

  • Bangladesh Govt. has rendered its full support to the banking sector to develop the country’s economic position, at the same time creating employment opportunity.
  • It is almost decided that online banking will be started by December 2011 in BCBL and the wide area of network will facilitate the customer in BCBL Banking.
  • Bank will be able to accommodate knowledgeable, skilled, experienced and hardworking persons by offering attractive remunerations and fringe benefits with nice working environment.
  • By expanding the business portfolio, BCBL can start the investment business with foreign exchange curriculum.
  • DEPUTY MANAGING DIRECTOR

    By expanding the financing policy with credit facility customers are very much secured in business environment

2.16.4 Threats

  • Defaulters are seriously affecting the smooth banking culture in Bangladesh. BCBL is a new type of bank which has been started by passing the bills in national assembly with defaulting burdens of BCI -LTD.
  • Central bank is always supervising the local and foreign banks in Bangladesh and sometimes it is hampering the normal operations of Private Banks.
  • Though the innovation workings are in continuous process, but the other rival banks are copying it within the short period.
  • The worldwide trends and acquisitions in financial institutions the concentration goes on competitor’s products and increasing the power in their respective areas.
  • It is expecting that very shortly more financial institutions are coming with their new products and we should be prepared for hard competition in the following years.

Financial Performance of BCBL

3.1 Introduction

Every bank is the financial institution in nature. Therefore, finance is the blood of any bank. Necessarily the overall growth and development of the bank is totally depends on its financial performance. If the financial performances are being smooth the overall growth would be ensured other than the organizations growth would be disrupted.

3.2 Capital Structure

The capital and reserve of the Bank as on 31st December, 2010 stood at Tk.2237.80crores. The reserve of the Bank increased from Tk.249.1 million during the year from Tk.148.60 million in the year 2009.the bank has made provision against off balance sheet items amounting to Tk. 8.16million in the year 2010.

3.3Capital and Capital Adequacy Ratio of BCBL

According to the evidence of December 31, 2010.BCBL maintained a capital adequacy ratio of Tk.213.46 crore as on against the requirements of Tk.121.83 crore as set by the Bangladesh Bank as per Act 12 of 1997 up to 31-3-2004. It indicates that the bank maintained a satisfactory capital adequacy ratio during the year2010.

3.4 Deposit

At the end of the December 2010 the deposit of the bank was Tk.1218.76 crore against Tk.760.50 crore during the corresponding period of the previous year. The growth of deposit is 60.26% compared to last year. This growth rate may be termed as a remarkable achievement considering the adverse economic situation of the country during 2010. In the prevailing situation mobilizing of deposit had become very competitive and as a result average cost of fund of the bank in the private sectors had increased compared to previous year. The Bank has given stress on procurement of low cost funds including cost free funds for bringing down the average cost of fund. The deposit of their bank as on December 31, 2010 was as follows:

Particulars Crore Taka
Current and Others Deposit 210.37
Savings Bank Deposit 98.99
Short term Deposits 133.45
Deposit under different schemes 75.21
Fixed Deposit 502.65
Bills payable A/C 16.09
Others deposit 182.00
Total 1218.76

Table 04: Deposit

Graph 04: Deposit

3.5 Investment

The investment portfolio of the Bank during the year 2010 was Tk.147.23 crore against Tk71.01 crore in the previous year registering a growth of 107.34%. The portfolio of investment including Govt. Treasury Bills, Prize Bonds, Share in Public Limited Companies etc. The bank has always given emphasis on investment of funds in high yield areas and maintains statutory Liquidity requirements as fixed by Bangladesh Bank. Following listed seven years investment of BCBL.

Year Investment
2010 32.90
2009 21.28
2008 10.90

Table 05: Investment

Graph 05: Investment

3.6 Dividend

Due to shortfall in statutory provision on loans and advances, the bank was not in a position to declare dividend in 2010. Hopefully, the bank able to declare dividend in the next year if Tk.15.00 crore profits is earned in the year 2011 and the Bangladesh Bank allows declaring dividend without providing the required provisions for BCI classified loans and advances.

3.7 Comparative Financial Highlights from 2009 to 2010

Following table shows the Comparative Financial Highlights from 2009 to 2010:

Particulars 2009 2010
Liquidity & Efficiency Current Ratio 2.96 Times 3.11 Times
Solvency Paid up capital 92.00 Crore 92.00 Crore
Total Asset 404.00 541.00
Total Deposit 280.00 410.00
Total Loans & Advances 170.00 291.00
Credit- Deposit Ratio 61% 71%
Equity Ratio 23% 18%
Profitably Net Profit 1.37 4081
Return of Total Asset (ROA) .34% .89%
Return of Investment (ROI) 12.12% 11.26%
Market Book Value per Share 100 105
Basic earnings per share 1.50 5.23
Price-earning Ratio 53 34

Table: 06, Financial Highlight from 2009-2010

3.8 7 years Performance of Bangladesh Commerce Bank Ltd.

BCBL has established in September 16, 1999 and formally launched its business activities. From that day until today it’s conducting operation successfully. Therefore, following table shows the Performance indicator of Bangladesh Commerce Bank during the year 2004 to 2010.

Figure in Crore

2010 2009 2008 2007 2006 2005 2004
Authorized Capital 200.00 200.00 200.00 200.0 200.00 200.00 200.00
Paid-up-Capital 92.00 92.00 92.00 92.00 82.00 82.00 30.00
Total Capital 101.86 99.55
Interest Income 40.73 36.12 32.80 20.56 17.80 1.00 34.00
Interest Expense 26.29 24.64 22.80 13.69 12.80 8.00 34.30
Net Interest Income 14.08 11.48 10.00 6.87 5.00 3.00 (0.30)
Other Operating Income. 7.26 10.53 6.59 4.49 2.32 0.65 3.17
Total operating Expenditure 12.35 12.82 9.55 8.21 7.04 5.93 7.55
Operating Profit(Loss) 11.59 8.41 7.04 3.15 0.22 (2.36) (4.66)
Loans & Advances 307.29 317.51 291.10 170.00 57.00 10.10
Cash-in-hand & with Bangladesh Bank including other Banks 152.93 124.80 118.00 109.22 117.31 103.96 41.89
Deposits 423.04 428.17 409.39 280.00 176.00 91.40 8.90
Investment 32.90 21.28 0.90 1.02 1.00 0.33
Recovery of BCBL Loans 4.80 4.50 4.50 7.32 12.55 12.12 52.33
No. of Employees 425 447 436 375 384 367 372
No. of Shareholders 1975 1975 3587 3777 4201 4235
No. of Branches 25 25 25 25 24 24

Table 07: 7 years performance

3.9 Significant Accounting Policies

A). Basis of Preparation of the Financial Statements

The financial statements of the company are made up to 31 December each year and are prepared under the historical cost convention and in accordance with first schedule of Banking Companies Act (BCA) of 1991, Bangladesh Bank Circulars, Bangladesh Accounting Standards, the Companies Act 1994, the listing Regulations of the Exchange, the securities and Exchange Rule 1987 and other laws and rules applicable in Bangladesh on a going concern basis.

B). Revenue Recognition

The revenue during the year are recognized as following which satisfy all conditions of revenue recognition as prescribed by BAS 18 “ Revenue Recognition”.

  1. Interest is calculated on daily product on unclassified loan and advances but charged on quarterly basis.
  2. Interest is charged on classified loans and advances as per Bangladesh Bank BRPD circular No. 16 of 1989 and such interest were not taken into income.
  3. Dividend income is recognized at the time when it is realized.
  4. Commission and bills on purchased and discount are recognized at the time of realization.

C). Fixed Assets and Depreciation

  1. Assets are stated at cost less accumulated depreciation.
  2. Depreciation has been charged in diminishing balance method.

D). Earning Per Share (EPS)

The company calculates earning per share (EPS) in accordance with BAS 33 “Earning per Share” which has been shown on the face of profit and loss account. This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. A diluted earnings per share is required to be calculated for the year, as there is scope for diluted during the year under review.

E). Statement of Liquidity

The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on December 31, 2010

F). Investment

Values of investments have been shown as under:

Treasury Bill : Face value (Including unearned Income thereon).
Prized Bond : Cost price
Share and Debenture : Cost price

G). Cash Flow Statement

Cash flow statement is prepared principally in accordance with BAS 7 “Cash Flow Statement” and the cash flow from the operating activities have been presented under direct method as prescribed by the securities and exchange rules 1987 and considering the provision of paragraph 18 (b) of BAS-7 which provides that ‘Enterprise are Encouraged to report cash flow from operating activities using the direct method

3.9 Changes of Equity

Following table shows the changes of equity for the year ended 31 December 2010

Particulars Paid up Capital Share Premium Account Statuary reserve Other reserve Revaluation Reserve on Securities Surplus profit/ Loss Total Tk.
Balance as on 01January 2010 920,000,000 . 65792413 3848512 (26127843) 963513082
Share capital BCI Ltd 39000000 . . . . . 39000000
Dividend paid during the year . . . . . .
Increased in statutory reserve . . 32536744 . . . 32536744
Issuance of Share Capital 1068742800 . . . . .
Surplus of revaluation Reserve for HTM securities . . . 11836557
Net Profit/ Loss for the year . . . 30771838 30771838
Balance as on 31 December 2010 2027742800 . 98329157 3,848,512 11836557 4643995 2146401021

Table 09: Changes of Equity

General Banking of BCBL

Related to General Banking Activities & Customer Service

4.1 Introduction

Every commercial bank deals with different vital division such as:

  • General Banking division
  • Loans and Advance division
  • Foreign Exchange division etc.

Among these three divisions General Banking is the core and leading division. General Banking division is the most important point of all activities. It is the storage point for all kinds of transactions of foreign exchange division, loans and advance division, and other relevant events. Except General Banking functions a bank cannot sustain for long. With the technological advancement this sector is growing tremendously. As a fast growing bank BCBL actively realizing that development and trying to conform to the changing environment.

4.2 General Banking Activities of BCBL

Basically, General Banking division performs the core functions of a bank. It deals day to day transactional activities which include collection of deposit from customers and meet the customers demand for cash. Widely general banking division includes the following sections:

  • Account Opening Section/ Deposit Section
  • Collection and Clearing Section.
  • Cash Section
  • Local Remittance Section
  • Bill Section
  • Accounts Section
  • Dispatch Section
  • Administrative Section

4.3 Account Opening Section

To become a customer initially need to open an account with a particular bank and then a person is allowed to go for transaction. Through this process banker- customer relationship begins and continues until violation of any condition by the parties. According to the regulation of central bank and commercial bank everybody cannot open an account. In order to open an account customer need to fulfill some certain conditions and requirements provided by the bank.

4.4 Types of Account

As we know there are different type’s accounts, however it depends on bank’s goals, objectives, mission and vision as well. Bangladesh Commerce Bank Ltd. provides the opportunity to open following types of account:

  1. Savings Bank Account (SB)
  2. Current Account CA)
  3. Short Term Deposit (STD)
  4. Fixed Deposit Ratio (FDR)
  5. Deposit Pension Scheme (DPS)

4.5 Savings Bank Account (SB)

This account is primarily for small scale saver. Any adult and mentally smooth person can open this type of account through the fulfillment of required conditions. Saving bank account is convenient for the people of the lower and middle classes who wish to save a part of their current incomes to meet their future needs and also intend to earn an income from their savings. However, account holders cannot withdrawal money more than two times in a week but he can deposit any time as he/she wishes. If any customers want to withdraw large amount of money he have to notice the bank early. At present its interest rate is 7.50%. Abreast these some other relevant points listed below:

4.5.1 Requirements to open an Account:

In order to open an account customer need to fulfill following requirements:

  • 2 copies of passport size photographs.
  • Photocopy of 1-7 pages of valid passport (Absence of passport- driving license/ voter ID card/ Commissioner’s certificate).
  • Introducer signature and account number at the back of account holder’s (person going to open an account) photographs.
  • Photograph of nominee with the signature of account holder at the backside of nominee’s photograph.
  • Initial deposit of TK. 1000.
  • Two or more persons can open this account jointly.
  • Parents can open an account on behalf of his minor children.
  • Any private Organization can open savings account in its own name. In this regard 3324organizations need to submit name, photograph, and specimen signature of specific person who be responsible for the account.

4.5.2 Characteristics of the Savings Account

The basic characteristics of saving bank account are as follows:

a) At the time of opening an account customers have to deposit minimum Tk.1000.

b) One person can open only one account in one name.

c) Interest paid twice in a year depending on monthly minimum balance.

d) Minor cannot open an account.

e) Customer can deposit money at any times during working hour.

f) But customer can withdraw not more than twice in a week.

g) Generally this account holder cannot take loan but in special case it might happen.

h) The main purpose of this account is to construct fund.

i) The Bank provide passbook to deposit money in account.

4.5.3 Types of Savings Account

There are different types of savings account bank offers to its customers such as:

  1. Home savings account
  2. School savings account
  3. Works savings account
  4. Deposit pension account
  5. Cumulative savings account
  6. Loan Deposit account
  7. Foreign currency account etc.

4.6 Current Account (CA)

Current account is running and active account which may be operated upon any number of times during a working day. Basically it’s a pure demand deposit account. Since there is no restriction on withdrawal and deposit holder can withdraw and deposit money any times in a working day. Basically there are two types current account available in the Bank:

  1. General Current Account
  2. Special Notice Current Account

The basic requirements and characteristics of this account are as follows:

4.6.1 Requirements for Current Account

For person:

  • 2 copies of passport size photographs.
  • Photocopy of 1-7 pages of valid passport (Absence of passport- driving license/ voter ID card/ Commissioner’s certificate).
  • Introducer signature and account number at the back of account holder’s (person going to open an account) photographs.
  • Photograph of nominee with the signature of account holder at the backside of nominee’s photograph.
  • Initial deposit of TK. 2000.

For joint venture, Associations, and Clubs: If the party is joint venture, Associations, and Club then they have to fulfill following requirements:

  • True copies of certificate of incorporation or registration.
  • True copies of certificate of commencement of business.
  • True copies of memorandum and articles of association.
  • True copies of resolution of the board of directors.

For partnership Company:

  • Name and address of the firm.
  • Partnership deed.
  • Trade License
  • Endorsement of account holder of the same branch.

4.6.2 Characteristics:

Basic Characteristics of this account are as follows:

  1. There is no restriction on withdrawal, but in case of large amount i.e. more than 2 lac banks requires one day prior notice.
  2. Interest is not allowed on this account.
  3. Closing charge Tk.200 prescribed by the bank shall be realized at time of closing down of a current account.
  4. Current account holders enjoy certain privileges compared to the saving account holders. I.e. Current account holders provided overdraft facilities.
  5. The banker is under an obligation to repay the deposits on demand. So, they are called demand liabilities of a banker.
  6. Clients are permitted for overdraft on basis of contract.
  7. Banker does not provide any passbook for this account but sometimes issue description card.
  8. Bank cannot invest from this account due to demand deposit.

4.7 Short Term Deposit Account (STD)

We can assume the nature of this account from the name; it’s very short term in nature and payable on short notice. Generally large companies, firms, Institutions are the customer of this account. In order for withdraw money bank requires to prior notice. In BCBL customers are instructed that their current account would be debited whenever its deposited amount crosses a certain limit and this amount will be transferred to STD account. In this account deposited money requires to keep minimum seven days to earn interest at five percent rate. Basically interest is calculated based on daily minimum product and two times in a year. Minimum amount for opening STD account is about Tk. 10000 only. At present its interest rate is 4%. STD is mainly suitable for the large firms/ corporations/ public bodies, which have idle funds for deposit in a short term account.

4.8 Fixed Deposit Ratio (FDR)

Fixed deposit account consists of long term deposit. Fixed deposit is normally high yield to earn the maximum possible return. Any amount to be deposited for three months, six months, and one year. BCBL currently offer the interest rate about 12.5%, and 11% respectively. The basic requirements to open a fixed account are almost same as savings and current account.

4.8.1 Procedure to open a Fixed Deposit Account

To open a fixed deposit account customer need to fill up a specific form provided by the bank. At the time of opening account depositor sign in a contract paper with the bank and then depositor deposit money through payment slip. Bank return one part of the slip to the customer and rest of the part keep into the bank. In this account bank does not provide any cheque book, depositor can draw money after the end of the duration through payment slip. Customers can open this account individually or jointly.

4.8.2 Features of Fixed Deposit Account

The main features of fixed deposit account are as follows:

a) Payment slip is the major document of this account.

b) This is for a certain period of time. After the end of period contract also get finished but customer can redeposit if he/she desire.

c) Initial deposit should not less than Tk.2000 for individual and Tk.5000 Institutions.

d) It earns higher income.

e) Customer can deposit only one time and draw after end of duration.

f) Payment slip is not transferable.

g) It does not require cheque book.

4.9 Deposit Pension Scheme (DPS)

Pension Scheme can be opened in the name of individual who crossed the minimum age level 18 years. Under this scheme joint account is not permissible. Account holder can deposit from Tk.500-5000 per month for minimum three years to maximum ten years. At the end of duration holder can withdrawal cumulated money with interest through monthly installment or over 3 to 10 years. BCBL currently offer the interest rate about 10%.

4.10 Account Opening Procedure in a flow chart

General Banking Activities of Bangladesh Commerce Bank Ltd

View With Charts And Images 

 

 

1.1 Background of the Study

Banking sector is the driving force for an economic growth of a country. Every commercial bank acts as financial intermediary whose main aim is to earn profit through borrowing and lending funds in the profitable sectors and they also issue different types of credit instruments. Therefore, the Banking system occupies an important place and plays significant role in a nation’s economy building. Necessarily, banking sector also ensure commendable contribution in the economic development of a country and forms the core of the money market in an advanced country. This sort of financial intermediary accepting deposits and granting loans; offers the widest menu of services for different business ventures. Commercial banks have significantly expanded their financial services to the clients and government around the world. In current business world is very dynamic and fast changing. That’s why every professional have to have clear concept regarding this changes and he/she need to conform to these changing environments. In order to become a real professional people’s needed to enter into practical business world. A professional is a person who is skilled in the theoretical, scientific and practical aspect of an occupation and who performs with a high degree of competence.

1.2 Scope of Study  

Bangladesh Commerce Bank Ltd is one of the fast growing banks in the country. It’s actively competing with others leading commercial banks. It formally launched business activities on 06.09.1999. This report constructed on the basis of general banking activities of the organization and it covers the organization’s structure, chronological growth and development performance of the commercial banks. The main part of the repot consists of the “General Banking activities of the Bangladesh Commerce Bank Ltd.”. Due to successful completion of essential part of the report have the opportunity to discuss regarding following issues:

 

· Finding the bridge between academic study and practice in organization.

· Importance of the General activities in banking.

· Finding the bridge between academic study and practice in Organization.

· What are the problems of Overall banking practice in BCBL?

· What are the basic difference between other commercial banks and BCBL’s activities?

· How to maintain the organizational behavior inside the organization.

· How General Banking performance does affects overall progress of the Organization.

 

1.3Objectives of the Study

There are some certain objectives behind preparing this report. These acted as incentive to make the report. The primary and basic objective is to fulfill the course requirement and then understand the entire banking system of Bangladesh Commerce Bank Ltd (BCBL). Other than these two other objectives are as follows:

 

· To achieve concept regarding practical business world.

· Find out similarities between academic knowledge and practical field.

· Understanding the organizational environment.

· How to maintain official rules and regulations.

· Understanding the basic activities of Overall banking.

 

1.4 Review Literature

 

General Banking

General Banking is an operational function of the bank which consists the management of deposit, cash, clearing house, bills, account opening, security instruments handling, customer services, locker facilities and other ancillary services of the bank besides Advance and Foreign Trade.

 

· High quality financial services with the assistance of latest technological device.

· Innovation in banking service at a competitive price.

· Steady return on shareholder’s equity.

· Committed to the growth of society and economic development.

 

2.5 Vision of the Bank

The vision of Bangladesh Commerce Bank Ltd. is to give experience to delight the customers and to give an environment where its own people will excel. At the juncture of global economic activities, BCBL has been driven by the strategic policy, as the prosperous economies of the global village are option. Its aim is to become the leader in banking sector of the country.

 

2.6 Functions of the Organization

Beside normal Banking business, the bank is engaged in them following activities:

· Borrowing from individual institutions.

· Lending against or without security for local or international trade.

· Carrying out functions of foreign trade and foreign exchange business including opening of L/C, issuance of T/C, Credit card, buying, selling discounting of bills, CDs, Promissory Notes, approved securities, etc.

· Buying and selling of foreign currencies.

· Direct customer Service like payment of utility bills, insurance premiums, receiving dividends, pensions, etc.

· Participating in the capital market as stock-broker and also as portfolio-investor.

· Reliable safe custody of Valuables.

· Providing excellent remittance facilities.

· Publication of Financial Statement.

· Provides withdrawal facilities of Deposits.

 

2.7 Organizational Structure of BCBL

In the legislative body the chairman is the head of the Board of Directors. There is a Managing Director who is also the President or CEO mainly controls and supervises the major divisions of the Bank. One Deputy Managing Director reports to him. Two Executive Vice President Reports to him. Executive Vice Presidents controls the credit, loan administration, international, financial control, accounts, marketing and human resource Division.

The organizational structure of Bangladesh Commerce Bank Ltd. is quite horizontal where each person reports to only one person, which refers to a very good working environment. For example, each Officer reports to the AVP or VP or SVP, AVP or VP or SVP reports to EVP, EVP reports to DMD and DMD reports to MD.

 

2.8 Management Team

To achieve the mission, a set of different drivers are mandatory. Commercial banks in Bangladesh are now in hard competition.  This is because of the continuous growth of similar service oriented local banks along with special service providing foreign bank due to globalization. BCBL management team is sound experienced and enrich with excellent academic background and the legislative body or Board of Directors are responsible for selection of management team. The Board of Directors also sets objectives, policies and strategies and management team is the instrumental device, who implements those sets by the Board of Directors.  

List of Management Personnel are given below…

 

 

1. Mr. S.A. chowdhury

Managing Director

4. Mr. Md. Gulam Nabi    
Senior vice president

2. Mr. M. Ebadat Hussain

Executive Vice President

5.Mr.Sagir Ahmed
Senior vice president

3.Mr. Md. Shamsuddin Ahmed

  Senior vice president

6.Md.Salim Hasan
Senior vice president

 

 

2.9 Management Information System

Bangladesh Commerce Bank Ltd. uses branch banking software, developed by a private company on windows platform. The head Office and branches use the software for book keeping, automatic interest calculation, daily transaction listing and auto trials, auto maturity and auto renewal of FDR, automatic integration customer’s ledger and general ledger, printing of general ledger position including balance of subsidiaries, monthly income and expenditure position etc.

 

2.10 Products and Services of BCBL

 

BCBL is a rapid growing commercial bank in the country. It’s competing with wide range of product and services that play a convenient role to its attainment. Products and services of Bangladesh Commerce Bank Ltd. are as follows:

 

General Banking

General banking department offer following products:

· Savings deposits on S/B A/C

· Current deposit A/C.

· Short Term deposit on STD A/C

· Term Deposit

· Fixed Deposit on FDR

· Special Scheme(including double & triple growth deposit, Lacpati Deposit Scheme, Millionaire Deposit Scheme, Marriage Deposit Scheme, Education Deposit Scheme, Kotipoti Deposit Scheme, and new addition nandita & srijoni )

· Consumers Financing

· Lease financing.

 

Foreign Exchange

Foreign exchange department of the bank provide following service in order for convenience of the customers:

· Issuing Letter of Credit

· Letter of credit advice

· (FDBP) Foreign Document Bill Purchase.

· (FDBC) Foreign Document Bill Collection

· Bill of Exchange

· Negotiating Bills

· Issue of Traveler’s cheques and its encashment

 

Loans and Advances

Loans and advance department deals with following products and services:

· Financing of small and medium Industries

· Financing of Trade

· Financing if Import and Export

· Micro-Credit and Micro Enterprise schemes

· Credit Scheme for women entrepreneurs

· Consumers credit Scheme

· Special Credit Scheme for service holder

 

2.11 Special Schemes

Other than the normal banking business the bank has the following special schemes:

· Small and medium scale entrepreneurs credit scheme.

· Scheme for loans to employees.

· Loan scheme for women entrepreneurs.

· Pension deposit scheme for small saver.

· Monthly deposit and profit scheme.

· Credit scheme against share.

· Interest free deposit.

· Agricultural credit Scheme.

· Life time savings Scheme.

 

2.12 Human Resource Management

BCBL strongly believe that only well qualified manpower can meet the expectations of the clients. For this reason BCBL always conscious regarding its existing Human Resources and frequently hiring efficient manpower to meet the standard of quality services. BCBL often arranging training program for junior level executives at BCBL Institution and senior level officers and executives are sent at BIBM, Mirpur, and Dhaka for higher training. Abreast this BCBL also send its employees abroad for higher training.

2.13 Sources of Funds

There are various sources of funds of Bangladesh Commerce Bank ltd. Basically BCBL accumulate funds from following sources:

Organization Chart

Figure: 02, Sources of Fund

 

2.14 Branches of Bangladesh Commerce Bank Ltd.

 

Bangladesh Commerce Bank ltd. operates its business activities with 25 branches around the country. Following table shows the Branches’ names, addresses, Telephone no etc.

Name of the Branches

Address

Manager/Branch In-Charge

Contact Numbers

Principal

 

Mr. Shamsuddin Ahmed

Senior Vice President

Tel:9571581, 9559831-2

Fax:9553832, Talex:642557BCBLBJ

E-mail: bcbl@bdmail.net

Banglabazar

Branch

52, North Brook Hall Road, Banglabazar, Dhaka.

Mr. Kaysarul Islam Vice President

Tel:712227

Fax:

 

124, Shahid Sayed Nazrul Islam Sharany(Narht South Road),Dhaka-1100

Md. Abdur Raouf

Vice President

Tel:9566140,7166654

Fax: Talex:632145 BCBLBJ

Mouchak

Branch

93/1, New circular Road, Dhaka-1217

Dewan Md Moniruzzaman

Vice President

Tel:8321072

 

Mirpur

Branch

 

Mr. Ali Azam Chowdhury

Vice President

Tel:7215803

 

Moulvy Bazar

Branch

77/6, Moulvy Bazar, Dhaka-1100

 

Mr. K.M. Ashraf Hossain

Senior Vice President

Tel:7311051

 

Jubilee Road Branch

360,Enayet Bazar, Chittagong-4000

Mr. Md. Ashequl Haque

Senior Principal Officer

Tel:7311051

 

Khatunganj Branch

279, Khatunganj,

Chittagong-4000

Mr. Md. Jamaluddin Senior Principal Officer

Tel:011-701536,

031-618821

 

Dewanhat

Branch

1128 Shek Mujib Road, Ahmed Mansion, ChittagongG

Mr. S.M. Alamgir

Assistant Vice President

Tel:011-701745,

 

Khulna

Branch

141, Sar Iqbal Road, Khulna.

Mr. S.M. Waliullah

Vice President

Tel:041-732595

 

Dilkusha

Branch

16, Dilkusha C/A, Baliady Mansion

 

Mr. Gazi Nazrul Islam Assistant Vice President

Tel:9571375, 7171263

 

Dholai Khal

Branch

23, Goal ghat lane

(1st fl.)

 

Tan Bazar

Branch

18, R.K.Mitra Road, Islam super Market Narayan Gang-1400.

Mr. Anowar Rashid

Assistant Vice President

Tel:7610321,7164750

 

Mr. Md. Imany Choery

Vice President

Tel:0821-7232210,

0821-819521

 

Daulatpur

Branch

727, Jessor Road, Daulatper, Khulna-9202

Mr. Ehsan Ahmed Rouf

Assistant Vice President

Tel:041-762589

 

Nawgaon

Branch

Mohammadi Market, Bangabandhu Road, Nawgaon

 

Mr. Golam Mostafa

Vice President

Tel:041-762589

 

Table: 01, Branches of BCBL

 

 

2.15 Foreign Exchange Business

During the short span of life of the Bank, it has got momentum in the area of foreign trade business. It deals in all kinds of export, import, remittance and all other sorts of foreign exchange business. BCBL has got nine major correspondent banks in important business centers of the world and maintain quite a good number of Nostro accounts with many leading banks of the world. It works in the following main areas:

 

· Letter of Credit (L/C)

· Bill Purchase & discounting

· Export Credit (Pre-shipment & post-shipment)

· Remittances

· Foreign Currency Accounts

· Taka Drawing Arrangements

· Dealing Room

· SWIFT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.16   SWOT Analysis of the Bank

 

SWOT provides an opinion and judgment whether an organization’s business condition is healthy or unhealthy. It is shown as bellow:

 

2.16.1 Strengths

Chief Executive Officer (CEO) or the top management of the Bangladesh Commerce Bank Ltd. has contributed for the growth and development of the Bank is a key strength.

It has strong network and skilled manpower that able to provide quality services.

Positive professional relationships between bank and clients, which is an emotional tie in regular business.

Due to sophisticated system and technological advancement it’s easy to get the information without wasting paper works and time.

The Bank is always trying to add new and modern equipment and facilities to start online service from December next.

Employees are sharing good atmosphere in BCBL so that it gave them reason to work efficiently and to become dedicated in banking.

BCBL maintains corresponding relationship with many foreign banks so that it is an effective measure for the smooth business.

 

 

 

 

 

2.16.2 Weaknesses

Market promotional activities are not actively working due to the lack of appropriate initiative and encouragement.

Doesn’t have effective plane for aggressive marketing activities.

People are discouraged to save their money with BCBL due to Problem Bank.

Due to lack of high quality personnel in the top level of management personality businessmen and entrepreneurs are less interested to work with BCBL.

Well qualified personnel are not interested at all to work in BCBL due to less salary.

There is no well-developed infrastructure.

Most of the Branches are suffering for indiscipline problem.

The bank is far behind from technological advancement.

The branches are not well equipped by modern furniture whereas other commercial banks have sophisticated equipment.

 

2.16.3 Opportunity

Bangladesh Govt. has rendered its full support to the banking sector to develop the country’s economic position, at the same time creating employment opportunity.

It is almost decided that online banking will be started by December 2011 in BCBL and the wide area of network will facilitate the customer in BCBL Banking.

Bank will be able to accommodate knowledgeable, skilled, experienced and hardworking persons by offering attractive remunerations and fringe benefits with nice working environment.

By expanding the business portfolio, BCBL can start the investment business with foreign exchange curriculum.

 

 

DEPUTY MANAGING DIRECTOR

By expanding the financing policy with credit facility customers are very much secured in business environment

 

2.16.4 Threats

Defaulters are seriously affecting the smooth banking culture in Bangladesh. BCBL is a new type of bank which has been started by passing the bills in national assembly with defaulting burdens of BCI -LTD.

Central bank is always supervising the local and foreign banks in Bangladesh and sometimes it is hampering the normal operations of Private Banks.

Though the innovation workings are in continuous process, but the other rival banks are copying it within the short period.

The worldwide trends and acquisitions in financial institutions the concentration goes on competitor’s products and increasing the power in their respective areas.

It is expecting that very shortly more financial institutions are coming with their new products and we should be prepared for hard competition in the following years.

 

Financial Performance of BCBL

 

3.1 Introduction

Every bank is the financial institution in nature. Therefore, finance is the blood of any bank. Necessarily the overall growth and development of the bank is totally depends on its financial performance. If the financial performances are being smooth the overall growth would be ensured other than the organizations growth would be disrupted.

3.2 Capital Structure

The capital and reserve of the Bank as on 31st December, 2010 stood at Tk.2237.80crores. The reserve of the Bank increased from Tk.249.1 million during the year from Tk.148.60 million in the year 2009.the bank has made provision against off balance sheet items amounting to Tk. 8.16million in the year 2010.

 

 

3.3 Capital and Capital Adequacy Ratio of BCBL  

According to the evidence of December 31, 2010.BCBL maintained a capital adequacy ratio of Tk.213.46 crore as on against the requirements of Tk.121.83 crore as set by the Bangladesh Bank as per Act 12 of 1997 up to 31-3-2004. It indicates that the bank maintained a satisfactory capital adequacy ratio during the year2010.

 

3.4 Deposit

At the end of the December 2010 the deposit of the bank was Tk.1218.76 crore against Tk.760.50 crore during the corresponding period of the previous year. The growth of deposit is 60.26% compared to last year. This growth rate may be termed as a remarkable achievement considering the adverse economic situation of the country during 2010. In the prevailing situation mobilizing of deposit had become very competitive and as a result average cost of fund of the bank in the private sectors had increased compared to previous year. The Bank has given stress on procurement of low cost funds including cost free funds for bringing down the average cost of fund. The deposit of their bank as on December 31, 2010 was as follows:

 

Particulars

Crore Taka

Current and Others Deposit

 

502.65

Bills payable A/C

16.09

Others deposit

182.00

Total

1218.76

 

Table 04: Deposit

 

 

Graph 04: Deposit

 

3.5 Investment

The investment portfolio of the Bank during the year 2010 was Tk.147.23 crore against Tk71.01 crore in the previous year registering a growth of 107.34%. The portfolio of investment including Govt. Treasury Bills, Prize Bonds, Share in Public Limited Companies etc. The bank has always given emphasis on investment of funds in high yield areas and maintains statutory Liquidity requirements as fixed by Bangladesh Bank. Following listed seven years investment of BCBL.

 

Year

Investment

2010

32.90

2009

21.28

2008

10.90

 

Table 05: Investment

 

Graph 05: Investment

 

3.6 Dividend

Due to shortfall in statutory provision on loans and advances, the bank was not in a position to declare dividend in 2010. Hopefully, the bank able to declare dividend in the next year if Tk.15.00 crore profits is earned in the year 2011 and the Bangladesh Bank allows declaring dividend without providing the required provisions for BCI classified loans and advances.

 

3.7 Comparative Financial Highlights from 2009 to 2010

 

 

F). Investment

Values of investments have been shown as under:

 

Treasury Bill

: Face value (Including unearned Income thereon).

Prized Bond

: Cost price

Share and Debenture

: Cost price

 

G). Cash Flow Statement

Cash flow statement is prepared principally in accordance with BAS 7 “Cash Flow Statement” and the cash flow from the operating activities have been presented under direct method as prescribed by the securities and exchange rules 1987 and considering the provision of paragraph 18 (b) of BAS-7 which provides that ‘Enterprise are Encouraged to report cash flow from operating activities using the direct method

 

3.9 Changes of Equity

Following table shows the changes of equity for the year ended 31 December 2010

 

 

Particulars

Paid up Capital

Share Premium Account

Statuary reserve

Other reserve

Revaluation Reserve on Securities

Surplus profit/ Loss

Total Tk.

Balance as on 01January 2010

920,000,000

.

65792413

3848512

 

(26127843)

963513082

Share capital BCI Ltd

39000000

.

.

.

.

.

39000000

Dividend paid during the year

.

.

.

.

.

.

 

Increased in statutory reserve

.

.

32536744

.

.

.

32536744

Issuance of Share Capital

1068742800

.

.

.

.

.

 

Surplus of revaluation Reserve for HTM securities

 

.

.

.

11836557

 

 

Net Profit/ Loss for the year

.

.

 

.

 

30771838

30771838

Balance as on 31 December 2010

2027742800

.

98329157

3,848,512

11836557

4643995

2146401021

Table 09: Changes of Equity

 

General Banking of BCBL

 

4.1 Introduction

Every commercial bank deals with different vital division such as:

General Banking division

Loans and Advance division

Foreign Exchange division etc.

Among these three divisions General Banking is the core and leading division. General Banking division is the most important point of all activities. It is the storage point for all kinds of transactions of foreign exchange division, loans and advance division, and other relevant events. Except General Banking functions a bank cannot sustain for long. With the technological advancement this sector is growing tremendously. As a fast growing bank BCBL actively realizing that development and trying to conform to the changing environment.

 

4.2 General Banking Activities of BCBL

Basically, General Banking division performs the core functions of a bank. It deals day to day transactional activities which include collection of deposit from customers and meet the customers demand for cash. Widely general banking division includes the following sections: 

· Account Opening Section/ Deposit Section

· Collection and Clearing Section.

· Cash Section

· Local Remittance Section

· Bill Section

· Accounts Section

· Dispatch Section

· Administrative Section

 

4.3 Account Opening Section

To become a customer initially need to open an account with a particular bank and then a person is allowed to go for transaction. Through this process banker- customer relationship begins and continues until violation of any condition by the parties. According to the regulation of central bank and commercial bank everybody cannot open an account. In order to open an account customer need to fulfill some certain conditions and requirements provided by the bank. 

 

4.4 Types of Account

As we know there are different type’s accounts, however it depends on bank’s goals, objectives, mission and vision as well. Bangladesh Commerce Bank Ltd. provides the opportunity to open following types of account:

· Savings Bank Account (SB)

· Current Account CA)

· Short Term Deposit (STD)

· Fixed Deposit Ratio (FDR)

· Deposit Pension Scheme (DPS)

 

4.5 Savings Bank Account (SB)

This account is primarily for small scale saver. Any adult and mentally smooth person can open this type of account through the fulfillment of required conditions. Saving bank account is convenient for the people of the lower and middle classes who wish to save a part of their current incomes to meet their future needs and also intend to earn an income from their savings. However, account holders cannot withdrawal money more than two times in a week but he can deposit any time as he/she wishes. If any customers want to withdraw large amount of money he have to notice the bank early. At present its interest rate is 7.50%. Abreast these some other relevant points listed below:

 

4.5.1 Requirements to open an Account:

In order to open an account customer need to fulfill following requirements:

· 2 copies of passport size photographs.

· Photocopy of 1-7 pages of valid passport (Absence of passport- driving license/ voter ID card/ Commissioner’s certificate).

· Introducer signature and account number at the back of account holder’s (person going to open an account) photographs.

· Photograph of nominee with the signature of account holder at the backside of nominee’s photograph.

· Initial deposit of TK. 1000.

· Two or more persons can open this account jointly.

· Parents can open an account on behalf of his minor children.

· Any private Organization can open savings account in its own name. In this regard 3324organizations need to submit name, photograph, and specimen signature of specific person who be responsible for the account.

 

 

4.5.2 Characteristics of the Savings Account

The basic characteristics of saving bank account are as follows:

· At the time of opening an account customers have to deposit minimum Tk.1000.

· One person can open only one account in one name.

· Interest paid twice in a year depending on monthly minimum balance.

· Minor cannot open an account.

· Customer can deposit money at any times during working hour.

· But customer can withdraw not more than twice in a week.

· Generally this account holder cannot take loan but in special case it might happen.

· The main purpose of this account is to construct fund.

· The Bank provide passbook to deposit money in account.

 

4.5.3 Types of Savings Account

There are different types of savings account bank offers to its customers such as:

· Home savings account

· School savings account

· Works savings account

· Deposit pension account

· Cumulative savings account

· Loan Deposit account

· Foreign currency account etc.

 

4.6 Current Account (CA)

Current account is running and active account which may be operated upon any number of times during a working day. Basically it’s a pure demand deposit account. Since there is no restriction on withdrawal and deposit holder can withdraw and deposit money any times in a working day. Basically there are two types current account available in the Bank:

General Current Account

Special Notice Current Account

The basic requirements and characteristics of this account are as follows:

 

4.6.1 Requirements for Current Account

For person:

 

· 2 copies of passport size photographs.

· Photocopy of 1-7 pages of valid passport (Absence of passport- driving license/ voter ID card/ Commissioner’s certificate).

· Introducer signature and account number at the back of account holder’s (person going to open an account) photographs.

· Photograph of nominee with the signature of account holder at the backside of nominee’s photograph.

· Initial deposit of TK. 2000.

 

For joint venture, Associations, and Clubs: If the party is joint venture, Associations, and Club then they have to fulfill following requirements:

· True copies of certificate of incorporation or registration.

· True copies of certificate of commencement of business.

· True copies of memorandum and articles of association.

· True copies of resolution of the board of directors.

 

For partnership Company:

· Name and address of the firm.

· Partnership deed.

· Trade License

· Endorsement of account holder of the same branch.

 

4.6.2 Characteristics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.13.4.3 Payment Order Working Procedure

Figure 05: Working procedure of Pay Order

 

4.13.4.4 Cancellation of PO

If it requires canceling pay order then purchaser need go through a predetermined procedure. At purchaser have to submit written application to refund the pay order attaching therewith the original pay order. Then authority will confirm purchaser’s signature with the original signature. Beside this there have to have the permission of authorized employees prior refund the amount of pay order. Pay order should be affixed on the pay order. In order to cancel pay order there does not charge any fees, only refund the pay order amount and finally reserve original entries with proper description.

 

4.14 Bill Section

The most important and mentionable task of general banking is to collect and payment of different bills on behalf of clients and the government. As a representative of client BCBL perform following basic tasks:

 

· Bill collection

· Clearing

· Transfer and Delivery

· Outward and inward bill Collection.

 

4.14.1 Bill collection

Under this section bank collect different types of bill on behalf of clients. Such as- Purchase and sale share and securities, pay the tax and vat, collect and disburse house rent, collect dividend, collect pension fund, invest the money etc. There are basically two different types of bill. Besides, bank receives check for collection from other bank on behalf of clients. In this case following points should be carefully investigated:

· Cheque should not carry more six months from the date of transfer of funds. In that case check would be stale check.

· The amount should be identical both in word and in pay-in slip.

· The name mentioned should be same both in check and in pay- in-slip.

· Check must be crossed.

 

Clearing

Clearing is one of the mentionable tasks of a commercial bank. Clearing means accomplishments of cheque drown on each other through clearing house. In general clearing house means “A place where representatives of local banks meet at an agreed time each day to exchange cheque and other items drown on each other and to settle the resulting balances. This is an initiative of central bank to accumulate the representatives of schedule bank to clear their cheques. In order for clear the cheque BCBL developed a unique section that is responsible for receive checks, drafts, and other instruments like these from customers for the purpose of collection with a deposit slip over the counter crediting their accounts. Only the schedule banks are allowed to participate in clearing house. According to the Article 37 (2) of Bangladesh Bank Order, 1972, the banks which are the member of clearing house known as schedule bank. Accordingly BCBL is a schedule bank and actively participate in clearing function with clearing house on behalf of the customers.

 

Types of Clearing: Basically two types of clearing available:

· Outward Clearing: When the branches of a bank receive cheques from its customers drawn on the other banks within the local clearing zone for collection through clearing house.

· Inward Clearing: When the bank receives cheque drawn on it from other banks in order for clearing function. 

 

4.14.2.1 Considerable Factors to receive Cheque

The Bank carefully consider following factors at the time of receiving the cheques for clearing:

· Name of the account on the cheque and Deposit slip.

· Amount in the Cheque must be both in word and figure.

· Bank and Branch name, number and date of the cheque.

· Cheque must be signed by the holder.

· Cheque should be crossed.

· Account number in the cheque must be clear.

· Signature of the depositor.

 

4.14.3 Outward and inward Bill Collection

This is the transaction occur outside and the debts that arise due to transaction among different branches of different banks are settled through Outward and inward Bill Collection.

 

 

4.15 Cash Section

Cash section is most vital and significant section of the bank. Let’s they say cash is the blood of the bank. The main task of this section is receive and payment of money. As we know it has two major counters-

 

Cash receive counter

Cash payment counter

 

4.15.1 Cash Receive Counter

In receive counter two/three efficient persons are responsible for cash collection. In this section cheque, pay order, drafts etc. are being received. These tasks accomplish through a predetermined process-

 

· At first customer need to fill up the deposit slip provided by the bank.

· Deposit the slip to cashier.

· Cashier receives money, confirm the amount and then enter into the cash receipt register book and finally sign with seal and date in the deposit slip.

· Slip then passed to another officer who is responsible for taking details like serial number, amount etc. and return deposit slip to customer. 

 

Cash payment

Cash payment counter is responsible only for payment of cash on the basis of check, pay order, drafts etc. In terms of cash payment bank initiate some extra care regarding following things- whether the cheque is crossed or not, endorsement, date, specimen signature, amount, and other relevant things. To pay money bank follow process:

 

· At customer need to deposit the cheque to the cash section.

· Authorized individual verify required things- whether it is properly crossed if it is being cross cheque, endorsement, date, amount, signature, and also ensure current balance in the account and then it send to cashier if everything is positive.

· Cashier is then asked bearer to sign on the back side of the cheque and pay the money.

· Then cashier enter payment details into register book.

 

Account Section

 

It’s regardless to analyze how much significant the account section are! Let’s the say account is the nerve center of the bank. Everyday huge transaction occur in different section, account section regularly keep record each and every transaction. In banking business bank need to go for various transaction and these transactions are to be recorded properly and systematically. If the bank fails to record this transaction in an appropriate manner it might happen mismatch and misunderstanding between bank and customers and it also mismatch in the debit and credit side. To avoid this violence bank developed account section which is responsible record keeping of all transactions required information, prepare different statement and other relevant things. Basically accounts supply information to other sections of the bank according their requirement. Generally account section of BCBL responsible for following activities:

 

· Record keeping of all transactions in the cash book.

· Recording the transactions in general and subsidiary ledger.

· Packing of the correct vouchers according to the debit voucher a credit voucher.

· Constructing the daily position of the branch comparing of deposit and cash.

· Make payment of all expenses of the branch.

· Recording inters branch fund transfer and providing accounting treatment in this regard.

· Preparing monthly salary statements for the employees.

· Preparing weekly position for the branch which is sent to the Head Office to maintain cash reserve requirements.

· Checking transaction list.

· Recording of the vouchers in the voucher register.

· Preparing the daily statement of affairs showing all the assets and liability of the branch as per general ledger and subsidiary ledger separately.

 

 

5.  Consumers Credit Scheme

Domestic useable items i.e. Computer, Photocopier, Furniture, Washing Machine, Air Cooler, Refrigerator, Sewing Machine, Car; Pressure Cooker etc are financed for comfortable and modern living of the people of limited source of income.

6.  Special Credit Scheme for Service-holder

Under this scheme service-holders of govt. bank or autonomous bodies are provided with 6 month's basic salary as loan realizable in 18 equal installments. Professionals are also covered under this special credit.

 

4.17.2 Considerations of Bank in Granting Loans and Advances

Basically main task of the bank is to earn profit through borrowing and lending money. That’s why bank need to proceed some significant principles to provide loans from its fund. At the time of granting loan BCBL consciously investigates followings:

 

Character of the Clients

7. Sources of Re-payment loan

Financial solvency of borrower

8. National Interest

Capacity to use the loan

9. National Interest

Safety of loan

10. Volume of loan

Liquidity of the bank

11. Order of the Central Bank.

Whether sufficient profit is earning

 

 

 

 

 

4.17.3 Classification of Advances

The Bangladesh Commerce Bank Ltd. classified its advances/ credit program in following forms:

 

4.17.3.1 Bank Advances on the basis of the objectives/ Uses

 

A. Commercial Credit

B. Non- Commercial Credit

 

A. Commercial Credit: Bank provides this type of credit for the purpose of national and international business. Commercial credit may be short term or long term.

B. Non- Commercial Credit: Bank provides this credit for non- commercial purpose. The bank offers this credit to purchase house, Home materials, Social development, traveling, education, etc.

 

4.17.3.2 Bank’s Advances on the basis of Duration

Short Term Credit: Bank offers this type of loan for very short time. The maximum duration of this loan is one year and minimum one hour. Basically individual, firms and industries are the main customer of this loan.

Mid Term Loan: Bank also provides credit for mid term between short term and long term. The maximum duration of this credit is less than five years and minimum one year. Bank charge a certain percentage of interest against this credit and that is 11%-14%. Customers of the Long term credit are-

 

· General Businessman

· Importer

· Exporter

· The bank demand borrower land and properties as collateral against this loan.

 

Long Term Credit: Bank offers this credit for long term, generally bank grants this credit for five years to twenty years duration. Bank charge high interest against long term credit it is 15%-20%.

Normally bank grants long term credit under a certain project. However, bank provide long term loan to purchase land and machineries, house building, construction of industry and machineries purchase, etc. Bank also grants long term credit for small and cottage industries, fisheries, etc.

 

4.17.3.3 Loan

Among all the advances loan is most significant and comparatively high demandable to the customers. Generally bank provides this loan through credit account, it does not provide in cash. Customers draw by the cheque from his / her account. Normally, loan need to repay within a certain time period. However, customers are allowed to repay loans in installment. Necessarily bank demand high interest on different types of loan and customers are instructed to pay interest with principle amount of loan. BCBL grant loans for following different purposes:

 

· Purchasing Transportation

· Agricultural activities

·

BCBL make arrangement for foundation training for all of officers in order for their better development at Bank’s own institute and BIBM.

Bill section is most cash liquidity handle in banking transaction.

 

Some problems of BCBL

Until now the bank apply traditional banking system, the bank is far behind from modernization.

The Bank could not introduce proper automation and database system. Only a few branch use automation system.

The working environment of the bank is not modern like other commercial bank.

The cash section of the bank could not properly develop. In order for cash receive and payment they employ traditional system that is extensive time consuming.

The bank did not formally develop the job description and job responsibility. That’s why one employee’s need to work in different working area.

Last but not the list banks depend on deposit collection less than to give loan.

They have no normal credit or debit card.

Some branches are to much less busy then other branches.

They have no ATM Booth.

Just principals Branch create more foreign transaction then others branches.

 

 

 

 

 7. Conclusion

Its high committed toward better customer services. The Bank by concentrating on the activities in its area of specialization has achieved good market reputation with effective customer services. The bank is committed to keep its working force modern by providing continuous training to its staff in their respective field of work. BCBL Pledges to maximize customers’ satisfactions through services and building a trusting relationship with customers, which has stood the least of time for the last seven years.

 

The bank offers wide ranges product line in order for customer convenience and marketing activities in banking is the most significant. Basically, General Banking activities are the driving force of the Organization. Abreast this bank also offers credit to all sectors of commercial activities having productive purpose and successfully performs foreign exchange activities.

Recommendations

After analysis of all the gathered information and other relevant things the Bangladesh Commerce Bank Ltd. should consider the following matters.

Since today’s business world totally technology depended so the Bank should develop online banking system as soon as possible.

To sustain in the competitive market bank should modernize the working environment.

The Bank performs business activities with only 25 of its branches. Therefore in order to capture the market share bank should immediately enhance number of branches. 

Retrieved October 10, 2010, from www.bcbl-bd.com.

 

General Banking Activities of Bangladesh Commerce Bank Ltd

View With Charts And Images  

 1.1 Background of the Study

Banking sector is the driving force for an
economic growth of a country. Every commercial bank acts as financial
intermediary whose main aim is to earn profit through borrowing and lending
funds in the profitable sectors and they also issue different types of credit
instruments. Therefore, the Banking system occupies an important place and
plays significant role in a nation’s economy building. Necessarily, banking sector
also ensure commendable contribution in the economic development of a country
and forms the core of the money market in an advanced country. This sort of
financial intermediary accepting deposits and granting loans; offers the widest
menu of services for different business ventures. Commercial banks have
significantly expanded their financial services to the clients and government
around the world. In current business world is very dynamic and fast changing.
That’s why every professional have to have clear concept regarding this changes
and he/she need to conform to these changing environments. In order to become a
real professional people’s needed to enter into practical business world. A
professional is a person who is skilled in the theoretical, scientific and
practical aspect of an occupation and who performs with a high degree of
competence.

1.2 Scope of Study  

Bangladesh
Commerce Bank Ltd is one of the fast growing banks in the country. It’s
actively competing with others leading commercial banks. It formally launched
business activities on 06.09.1999. This report constructed on the basis of
general banking activities of the organization and it covers the organization’s
structure, chronological growth and development performance of the commercial
banks. The main part of the repot consists of the “General Banking activities
of the Bangladesh Commerce Bank Ltd.”. Due to successful completion of
essential part of the report have the opportunity to discuss regarding
following issues:

·
Finding the bridge between academic study and practice in organization.

·
Importance of the General activities in banking.

·
Finding the bridge between academic study and practice in Organization.

·
What are the problems of Overall banking practice in BCBL?

·
What are the basic difference between other commercial banks and BCBL’s
activities?

·
How to maintain the organizational behavior inside the organization.

·
How General Banking performance does affects overall progress of the
Organization.

1.3Objectives of the Study

There
are some certain objectives behind preparing this report. These acted as
incentive to make the report. The primary and basic objective is to fulfill the
course requirement and then understand the entire banking system of Bangladesh
Commerce Bank Ltd (BCBL). Other than these two other objectives are as follows:

·
To achieve
concept regarding practical business world.

·
Find out
similarities between academic knowledge and practical field.

·
Understanding the
organizational environment.

·
How to maintain
official rules and regulations.

·
Understanding the
basic activities of Overall banking.

1.4 Review Literature

General Banking

General
Banking is an operational function of the bank which consists the management of
deposit, cash, clearing house, bills,
account opening, security instruments handling, customer services, locker facilities and other ancillary services of the
bank besides Advance and Foreign Trade.

General
banking is one of the key drivers of the U.S. economy. General banking provides
a safe place to save excess cash, known as deposits. It also supplies liquidity
to the economy by loaning this money out to help businesses grow and to allow
consumers to purchase homes, cars and consumer products. Banks primarily make
money by charging higher on their than they pay for deposits.

Financial
institution that mediates or stands between ultimate borrowers and ultimate
lenders is known as banking financial institution. Banks perform this function
in two ways – taking deposits from various areas in different forms and lending
that accumulated amount of money to the potential investors in other different
forms.

1.5Methodology

Data Collection

To prepare an authentic and informative report we
had to study all the company’s information, record, company website and other
relevant things. With these it was most significant to discuss with employees
of different section regarding various confidential records. Besides we studied
different congenial books and journal published on related subject and
collected information from different sources.

Sources of Data

To
prepare an enrich report it require acquisition of huge information and study
of different relevant works on it. That’s why we had to utilize both primary
and secondary sources to collect relevant information.

A). Primary Sources of Data

·
Conversation with
the organization’s stuff and Executives in the Principal branch and employees of
Mailbag Branch.

·
Conversation with
bank’s clients.

·
Study of relevant
file.

·
Observation of
day to day activities.

·
Informal works
exposures from different desks of the branches.

B) The secondary sources of Data

This source includes:

·
Annual report of Bangladesh Commerce Bank Limited.

·
Periodicals published by the Bangladesh Bank.

·
Website of BCBL.

·
In order to prepare the report I have used these sources widely.

Data Analysis and Organize

After
collection of entire data different approaches are widely used to analyze and
organize the data such as qualitative approach. In this process technological
assistance was more significant and indispensable.

Profile of Bangladesh commerce bank
limited

2.1
Background of the Bangladesh Commerce Bank Ltd.

Bangladesh Commerce Bank Ltd. (BCBL) is a
Commercial bank but it has some differences in its formation compare to other
private banks. Bangladesh Commerce Bank Ltd. was established by recognizing the
erstwhile BCI Ltd through passing act 12 of 1997 in the parliament of the
People’s Republic of Bangladesh having paid up capital amounting to Tk. 92
crores consisting of Tk. 40 Crore cash money paid by the government and 3
state- owned Banks and Tk. 52 crores of BCI depositors’ money. The commercial
operation of the Bank started since
September 16, 1999 through opening of its principal branch and all other 23
branches were opened by 31st December 1999. Having incurred losses
in the first two years the bank started earning profit since 2001. The Bank
started its operation shouldering the legacy of BCI and has been progressing
smoothly facing all hurdles and problems. The progress is satisfactory and
noticeable.

Bank earned an extensive net profit Tk. 4.81
crores & Tk. 7.04 crores in the year of 2002 & 2003 respectively.
Although the overall economic picture of the country was instable during 2003,
but the bank registered a growth of 124% over that of previous year. The bank adequately
covered capital adequate ratio as fixed by the Central Bank. This achievement
had been possible due to positive attitude toward the organization, hard
working, and honesty of the management team with the support of policy
directives and guideline from the board of Directors. Out of deposited money of
BCI Ltd. Tk. 163 crore has already been paid out of 180 crores of BCI which is
a success for the bank. The said payment has been made through transferring Tk.
52 crores with investment BCI Ltd. and paying cash Tk. 62 crores. For the sake
of BCI depositors Tk. 30 crores over the recovery of BCI investment has been
paid to the depositors. In the year of
2003 the total deposit of the bank was Tk. 409.39 crores which is 46%
more than that of previous year. At the same time the bank disbursed a total
loan of Tk. 291.10 crores which is 71.11% more than that of previous year. The
progress is continuing.

Bangladesh Commerce Bank Ltd. inherited 24 closed
branches of former Bangladesh Commerce and Investment Limited. Having been
registered with the Registrar of Joint Stock Companies and Firms with the prior
approval of Securities and Exchange Commission, it commenced banking operation
with the opening of its Principal Branch at 19, Rajuk Avenue, Motijheel
Commercial Area, the financial hub of the Capital City of Dhaka on 16th
September 1999. In the year of 2002 by opening a branch in Commilla the total
no. of branches have been increased to 25. The bank has planned to open more
new branches and that will be implemented in phases after getting approval from
Bangladesh Bank. In the year 2009 bank earned profit Tk. 7.25 crores. In the
year 2010 bank earned profit Tk. 11.59 Crore.

It is known that Bangladesh Commerce Bank Ltd.
Could not started its operation smoothly this had to launch its operation with
a burden of Tk. 179 crores of BCI stuck up loans. Most of the loans were from
BCI period there was no documents and against which were unsecured. With
continuous and sincere efforts of the Officers a cash recovery of Tk. 4.50
crore has been possible during the year which led the cumulative recovery to Tk. 84.00 crores up to this time.

The Bank is concentrating the activities in its
area of specialization has achieved good market reputation with efficient
customer service. The Bank is committed to providing continuous training to its
staff to keep them up to date with modern practices in their respective fields
of work. The Bank also tries to fulfill its share in community
responsibilities. By such measures the Bank intends to grow and increase
shareholder’s earning per share. Bangladesh Commerce Bank Ltd. Promises to
maximize customer satisfaction through services and build a trusting relationship
with customers, which has stood the test of time for the last all  years.

The total manpower strength is 375 out of which
213 are officers and 162 are staff. They are very much efficient in their
professional area. They are being further trained to take up the challenging
job.

2.2 The
Objectives of the Bank

As
a member of the money market, BCBL plays a pivotal role in accelerating
economic development of the country
. Bangladesh Commerce Bank
Ltd. has been established in order to achieve some certain objectives. Those
objectives are as follows:

·
Providing services by diversifications to the doorstep of people in the
economic sector.

·
Ensuring maximum utilization of professional manpower by developing
skill and creativeness.

·
Offering maximum service to the clients and
shareholders of the Bank, as per rules.

·
Creating savings attitude among various classes of people. Increasing
investment for keeping the market economy operative.

·
Assessment of customers need and provide short-term and long- term
finance on the basis of real need.

·
Earning confidence of all concerned by easing foreign trade and
international transactions.

·
Proper maintenance of bank’s resources through appropriate investment
and active participation in various welfare programmers of the country.

·
Involve customers with modern banking through proper uses of modern
information technology.

·
Provide best services to customers through establishing firm discipline
in bank management and long-term relations.

·
Achievement of economic growth through various socio- economic
activities.

·
Building image of the bank at home and abroad. Upgrading socio-
economic aspects of Bangladesh by financing agro-based project.

·
Activate capital market by more participation in capital market.

2.3 Goals
of the Organization
 

The bank conducts its business activities toward
some certain goals. These are as follows:

·
The basic goal is
to organize
funds in order to invest for profitable purposes in various fields of small and
medium scale of trading, large companies and corporate sectors.

·
To undertake project promotion to identify profitable areas.

·
To scrutinizes the opportunities for investment and developing the new
products.

2.4
Mission of Bangladesh Commerce Bank Ltd.  

Mission of Bangladesh Commerce Bank Ltd. is as
follows:

·
One Stop, Fast, and accurate customer services.

·
High slandered business ethics

·
Balanced financial growth strategy.

·
Attracting & nourishing quality human resources with right
compensation.

·
High quality financial services with the assistance of latest
technological device.

·
Innovation in banking service at a competitive price.

·
Steady return on shareholder’s equity.

·
Committed to the growth of society and economic development.

2.5 Vision
of the Bank

The
vision of Bangladesh Commerce Bank Ltd. is to give experience to delight the
customers and to give an environment where its own people will excel. At the
juncture of global economic activities, BCBL has been driven by the strategic
policy, as the prosperous economies of the global village are option. Its aim
is to become the leader in banking sector of the country.

2.6 Functions of the Organization

Beside normal Banking business, the bank is
engaged in them following activities:

·
Borrowing from
individual institutions.

·
Lending against
or without security for local or international trade.

·
Carrying out
functions of foreign trade and foreign exchange business including
opening
of L/C, issuance of T/C, Credit card, buying, selling discounting of bills,
CDs, Promissory Notes, approved securities, etc.

·
Buying and
selling of foreign currencies.

·
Direct customer
Service like payment of utility bills, insurance premiums, receiving dividends,
pensions, etc.

·
Participating in
the capital market as stock-broker and also as portfolio-investor.

·
Reliable safe
custody of Valuables.

·
Providing
excellent remittance facilities.

·
Publication of
Financial Statement.

·
Provides
withdrawal facilities of Deposits.

2.7 Organizational Structure of BCBL

In the legislative body the
chairman is the head of the Board of Directors. There is a Managing Director
who is also the President or CEO mainly controls and supervises the major
divisions of the Bank. One Deputy Managing Director reports to him. Two
Executive Vice President Reports to him. Executive Vice Presidents controls the
credit, loan administration, international, financial control, accounts,
marketing and human resource Division.

The organizational structure of Bangladesh
Commerce Bank Ltd. is quite horizontal where each person reports to only one
person, which refers to a very good working environment. For example, each
Officer reports to the AVP or VP or SVP, AVP or VP or SVP reports to EVP, EVP
reports to DMD and DMD reports to MD.

2.8
Management Team

To achieve
the mission, a set of different drivers are mandatory. Commercial banks
in Bangladesh are now in hard competition. 
This is because of the continuous growth of similar service oriented
local banks along with special service providing foreign bank due to
globalization. BCBL management team is sound experienced and enrich with
excellent academic background and the legislative body or Board of Directors
are responsible for selection of management team. The Board of Directors also
sets objectives, policies and strategies and management team is the instrumental
device, who implements those sets by the Board of Directors.  

List of Management Personnel are given below…

1. Mr. S.A. chowdhury

Managing Director

4. Mr. Md. Gulam Nabi    

Senior vice president

2. Mr. M. Ebadat Hussain

Executive Vice President

5.Mr.Sagir Ahmed

Senior vice president

3.Mr. Md. Shamsuddin Ahmed

  Senior vice president

6.Md.Salim Hasan

Senior vice president

2.9 Management Information System

Bangladesh Commerce Bank
Ltd. uses branch banking software, developed by a private company on windows
platform. The head Office and branches use the software for book keeping,
automatic interest calculation, daily transaction listing and auto trials, auto
maturity and auto renewal of FDR, automatic integration customer’s ledger and
general ledger, printing of general ledger position including balance of
subsidiaries, monthly income and expenditure position etc.

2.10
Products and Services of BCBL

BCBL is a rapid growing commercial bank in the
country. It’s competing with wide range of product and services that play a
convenient role to its attainment. Products and services of Bangladesh Commerce
Bank Ltd. are as follows:

General Banking

General banking department offer following
products:

·
Savings deposits on S/B A/C

·
Current deposit A/C.

·
Short Term deposit on STD A/C

·
Term Deposit

·
Fixed Deposit on FDR

·
Special Scheme(including double & triple growth deposit, Lacpati
Deposit Scheme, Millionaire Deposit Scheme, Marriage Deposit Scheme, Education
Deposit Scheme, Kotipoti Deposit Scheme, and new addition nandita & srijoni
)

·
Consumers Financing

·
Lease financing.

Foreign Exchange

Foreign exchange department of the bank provide
following service in order for convenience of the customers:

·
Issuing Letter of Credit

·
Letter of credit advice

·
(FDBP) Foreign Document Bill Purchase.

·
(FDBC) Foreign Document Bill Collection

·
Bill of Exchange

·
Negotiating Bills

·
Issue of Traveler’s cheques and its encashment

Loans and Advances

Loans and advance department deals with following
products and services:

·
Financing of small and medium Industries

·
Financing of Trade

·
Financing if Import and Export

·
Micro-Credit and Micro Enterprise schemes

·
Credit Scheme for women entrepreneurs

·
Consumers credit Scheme

·
Special Credit Scheme for service holder

2.11 Special Schemes

Other than the normal banking business the bank
has the following special schemes:

·
Small and medium scale entrepreneurs credit scheme.

·
Scheme for loans to employees.

·
Loan scheme for women entrepreneurs.

·
Pension deposit scheme for small saver.

·
Monthly deposit and profit scheme.

·
Credit scheme against share.

·
Interest free deposit.

·
Agricultural credit Scheme.

·
Life time savings Scheme.

2.12 Human Resource Management

BCBL strongly believe that only well qualified
manpower can meet the expectations of the clients. For this reason BCBL always
conscious regarding its existing Human Resources and frequently hiring
efficient manpower to meet the standard of quality services. BCBL often
arranging training program for junior level executives at BCBL Institution and
senior level officers and executives are sent at BIBM, Mirpur, and Dhaka for
higher training. Abreast this BCBL also send its employees abroad for higher
training.

2.13
Sources of Funds

There are various
sources of funds of Bangladesh Commerce Bank ltd. Basically BCBL accumulate
funds from following sources:

Organization Chart

Figure: 02, Sources of
Fund

2.14 Branches of Bangladesh Commerce Bank Ltd.

Bangladesh Commerce Bank ltd. operates its
business activities with 25 branches around the country. Following table shows
the Branches’ names, addresses, Telephone no etc.

Name of the Branches

Address

Manager/Branch In-Charge

Contact Numbers

Principal

Mr. Shamsuddin Ahmed

Senior Vice President

Tel:9571581, 9559831-2

Fax:9553832,
Talex:642557BCBLBJ

E-mail: bcbl@bdmail.net

Banglabazar

Branch

52, North Brook Hall Road,
Banglabazar, Dhaka.

Mr. Kaysarul Islam Vice
President

Tel:712227

Fax:

Banshal

124, Shahid Sayed Nazrul
Islam Sharany(Narht South Road),Dhaka-1100

Md. Abdur Raouf

Vice President

Tel:9566140,7166654

Fax: Talex:632145 BCBLBJ

Mouchak

Branch

93/1, New circular Road,
Dhaka-1217

Dewan Md Moniruzzaman

Vice President

Tel:8321072

Mirpur

Branch

Mrs. Sabnam Sultana

Principal Officer

Tel:8020115

Khilgaon

Branch

290/3, Block-a, Khilgaon

Mr. Ali Azam Chowdhury

Vice President

Tel:7215803

Moulvy Bazar

Branch

77/6, Moulvy Bazar,
Dhaka-1100

Mr. K.M. Ashraf Hossain

Senior Vice President

Tel:7311051

Jubilee Road Branch

360,Enayet Bazar,
Chittagong-4000

Mr. Md. Ashequl Haque

Senior Principal Officer

Tel:7311051

Khatunganj Branch

279, Khatunganj,

Chittagong-4000

Mr. Md. Jamaluddin Senior
Principal Officer

Tel:011-701536,

031-618821

Dewanhat

Branch

1128 Shek Mujib Road, Ahmed
Mansion, ChittagongG

Mr. S.M. Alamgir

Assistant Vice President

Tel:011-701745,

Khulna

Branch

141, Sar Iqbal Road,
Khulna.

Mr. S.M. Waliullah

Vice President

Tel:041-732595

Bogra

Branch

99/1-b, Boragola,
Bogra-5800G

Abdulah Al-Mahmud Senior
Vice President

Tel:051-5441,65710

Commilla Zilla School Rd.
Branch

35/32, Zilla School Rd.,

kandir par, Commilla.

Mr. Aukhil Kumar Sarker

Assistant Vice President

Tel:081-69951

Dilkusha

Branch

16, Dilkusha C/A, Baliady
Mansion

Mr. Gazi Nazrul Islam
Assistant Vice President

Tel:9571375, 7171263

Green Road

Branch

75, Hosain Tower, Green
Road Farm gate, Dhaka.

Mr. Md. Fazlur Rahman

Vice President

Tel:8126886, 8154664

Dholai Khal

Branch

23, Goal ghat lane

(1st fl.)

Tel:7118665,7165912

Zigatola

Branch

25/1 Zhigatola,

Dhaka-1209

Mr. Nizam Uddin

Senior Principal Officer

Tel:+8802862214

Gulshan

Branch

Bidisha Super Market,
Darpon Complex Gulshan

Mr. Md. Borhanuddin Senior
Principal Officer

Tel:8818339,9892026

Tan Bazar

Branch

18, R.K.Mitra Road, Islam
super Market Narayan Gang-1400.

Mr. Anowar Rashid

Assistant Vice President

Tel:7610321,7164750

Dhamrai

Branch

Kayet para, Dhamrai Bazar,
Dhaka.

Mr. Md. Khaibur Rahman

Senior Officer

Tel:06222-88139

Agrabad

Branch

56, Agrabad C/A, Jiban Bima
Bhaban, Chittagong.

Md. Zahangir Alam Vice
President

Tel:031-726007, 724879,
,812781

Chaktai

Branch

237,New Chaktai,
Chittagong-4000

Mr. Md. Rafiqul Islam Bhuyan

Senior Officer

Tel:031-634612,0189-321444

Sylhet

Branch

Mr. Md. Imany Choery

Vice President

Tel:0821-7232210,

0821-819521

Daulatpur

Branch

727, Jessor Road, Daulatper,
Khulna-9202

Mr. Ehsan Ahmed Rouf

Assistant Vice President

Tel:041-762589

Nawgaon

Branch

Mohammadi Market,
Bangabandhu Road, Nawgaon

Mr. Golam Mostafa

Vice President

Tel:041-762589

Table: 01, Branches of
BCBL

2.15 Foreign Exchange Business

During the short span of life of the Bank, it has got momentum in
the area of foreign trade business. It deals in all kinds of export, import,
remittance and all other sorts of foreign exchange business. BCBL has got nine
major correspondent banks in important business centers of the world and
maintain quite a good number of Nostro accounts with many leading banks of the
world. It works in the following main areas:

·
Letter of Credit
(L/C)

·
Bill Purchase
& discounting

·
Export Credit
(Pre-shipment & post-shipment)

·
Remittances

·
Foreign Currency
Accounts

·
Taka Drawing
Arrangements

·
Dealing Room

·
SWIFT

·

2.16   SWOT
Analysis of the Bank

SWOT provides an opinion and judgment whether an
organization’s business condition is healthy or unhealthy. It is shown as
bellow:

2.16.1 Strengths

Chief Executive Officer (CEO) or the top
management of the Bangladesh Commerce Bank Ltd. has contributed for the growth
and development of the Bank is a key strength.

It has strong network and skilled manpower that
able to provide quality services.

Positive professional relationships between bank
and clients, which is an emotional tie in regular business.

Due to sophisticated system and technological
advancement it’s easy to get the information without wasting paper works and
time.

The Bank is always trying to add new and modern equipment
and facilities to start online service from December next.

Employees are sharing good atmosphere in BCBL so
that it gave them reason to work efficiently and to become dedicated in
banking.

BCBL maintains corresponding relationship with
many foreign banks so that it is an effective measure for the smooth business.

2.16.2 Weaknesses

Market promotional activities are not actively
working due to the lack of appropriate initiative and encouragement.

Doesn’t have effective plane for aggressive
marketing activities.

People are discouraged to save their money with
BCBL due to Problem Bank.

Due to lack of high quality personnel in the top
level of management personality businessmen and entrepreneurs are less
interested to work with BCBL.

Well qualified personnel are not interested at all
to work in BCBL due to less salary.

There is no well-developed infrastructure.

Most of the Branches are suffering for
indiscipline problem.

The bank is far behind from technological
advancement.

The branches are not well equipped by modern
furniture whereas other commercial banks have sophisticated equipment.

2.16.3 Opportunity

Bangladesh Govt. has rendered its full support to
the banking sector to develop the country’s economic position, at the same time
creating employment opportunity.

It is almost decided that online banking will be
started by December 2011 in BCBL and the wide area of network will facilitate
the customer in BCBL Banking.

Bank will be able to accommodate knowledgeable,
skilled, experienced and hardworking persons by offering attractive
remunerations and fringe benefits with nice working environment.

By expanding the business portfolio, BCBL can
start the investment business with foreign exchange curriculum.


DEPUTY MANAGING DIRECTOR

 

By expanding the financing policy with credit facility customers are
very much secured in business environment

2.16.4 Threats

Defaulters are seriously affecting the smooth
banking culture in Bangladesh. BCBL is a new type of bank which has been
started by passing the bills in national assembly with defaulting burdens of
BCI -LTD.

Central bank is always supervising the local and
foreign banks in Bangladesh and sometimes it is hampering the normal operations
of Private Banks.

Though the innovation workings are in continuous
process, but the other rival banks are copying it within the short period.

The worldwide trends and acquisitions in financial
institutions the concentration goes on competitor’s products and increasing the
power in their respective areas.

It is expecting that very shortly more financial
institutions are coming with their new products and we should be prepared for
hard competition in the following years.

Financial Performance of BCBL

3.1 Introduction

Every
bank is the financial institution in nature. Therefore, finance is the blood of
any bank. Necessarily the overall growth and development of the bank is totally
depends on its financial performance. If the financial performances are being
smooth the overall growth would be ensured other than the organizations growth
would be disrupted.

3.2 Capital Structure

The
capital and reserve of the Bank as on 31st December, 2010 stood at
Tk.2237.80crores. The reserve of the Bank increased from Tk.249.1 million
during the year from Tk.148.60 million in the year 2009.the bank has made
provision against off balance sheet items amounting to Tk. 8.16million in the
year 2010.

3.3 Capital and Capital Adequacy Ratio
of BCBL  

According
to the evidence of December 31, 2010.BCBL maintained a capital adequacy ratio
of Tk.213.46 crore as on against the requirements of Tk.121.83 crore as set by
the Bangladesh Bank as per Act 12 of 1997 up to 31-3-2004. It indicates that
the bank maintained a satisfactory capital adequacy ratio during the year2010.

3.4 Deposit

At
the end of the December 2010 the deposit of the bank was Tk.1218.76 crore
against Tk.760.50 crore during the corresponding period of the previous year.
The growth of deposit is 60.26% compared to last year. This growth rate may be
termed as a remarkable achievement considering the adverse economic situation
of the country during 2010. In the prevailing situation mobilizing of deposit
had become very competitive and as a result average cost of fund of the bank in
the private sectors had increased compared to previous year. The Bank has given
stress on procurement of low cost funds including cost free funds for bringing
down the average cost of fund. The deposit of their bank as on December 31, 2010
was as follows:

Particulars

Crore
Taka

Current
and Others Deposit

Savings
Bank Deposit

98.99

Short
term Deposits

133.45

Deposit
under different schemes

75.21

502.65

Bills
payable A/C

16.09

Others
deposit

182.00

Total

1218.76

Table
04: Deposit

Graph
04: Deposit

3.5 Investment

The
investment portfolio of the Bank during the year 2010 was Tk.147.23 crore
against Tk71.01 crore in the previous year registering a growth of 107.34%. The
portfolio of investment including Govt. Treasury Bills, Prize Bonds, Share in
Public Limited Companies etc. The bank has always given emphasis on investment
of funds in high yield areas and maintains statutory Liquidity requirements as
fixed by Bangladesh Bank. Following listed seven years investment of BCBL.

Year

Investment

2010

32.90

2009

21.28

2008

10.90

Table
05: Investment

Graph
05: Investment

3.6 Dividend

Due
to shortfall in statutory provision on loans and advances, the bank was not in
a position to declare dividend in 2010. Hopefully, the bank able to declare
dividend in the next year if Tk.15.00 crore profits is earned in the year 2011
and the Bangladesh Bank allows declaring dividend without providing the required
provisions for BCI classified loans and advances.

3.7 Comparative Financial Highlights
from 2009 to 2010

Particulars

2009

2010

Liquidity
& Efficiency

Current Ratio

2.96
Times

3.11
Times

Solvency

Paid
up capital

92.00
Crore

92.00
Crore

Total
Asset

404.00

541.00

Total
Deposit

280.00

410.00

Total
Loans & Advances

170.00

291.00

Credit-
Deposit Ratio

61%

71%

Equity
Ratio

23%

18%

Profitably

Net
Profit

1.37

4081

Return
of Total Asset (ROA)

.34%

.89%

Return
of Investment (ROI)

12.12%

11.26%

Market

Book
Value per Share

100

105

Basic
earnings per share

1.50

5.23

Price-earning
Ratio

53

34

Table:
06, Financial Highlight from 2009-2010

3.8 7 years Performance
of Bangladesh Commerce Bank Ltd.

BCBL
has established in September 16, 1999 and formally launched its business
activities. From that day until today it’s conducting operation successfully.
Therefore, following table shows the
Performance indicator of Bangladesh Commerce Bank during the year 2004 to 2010.

Figure in Crore

2010

2009

2008

2007

2006

2005

2004

Authorized Capital

200.00

200.00

200.00

200.0

200.00

200.00

200.00

Paid-up-Capital

92.00

92.00

92.00

92.00

82.00

82.00

30.00

Total Capital

101.86

99.55

Interest Income

40.73

36.12

32.80

20.56

17.80

1.00

34.00

Interest Expense

26.29

24.64

22.80

13.69

12.80

8.00

34.30

Net Interest Income

14.08

11.48

10.00

6.87

5.00

3.00

(0.30)

Other Operating Income.

7.26

10.53

6.59

4.49

2.32

0.65

3.17

Total operating Expenditure

12.35

12.82

9.55

8.21

7.04

5.93

7.55

Operating Profit(Loss)

11.59

8.41

7.04

3.15

0.22

(2.36)

(4.66)

Loans & Advances

307.29

317.51

291.10

170.00

57.00

10.10

Cash-in-hand & with Bangladesh Bank including other Banks

152.93

124.80

118.00

109.22

117.31

103.96

41.89

Deposits

423.04

428.17

409.39

280.00

176.00

91.40

8.90

Investment

32.90

21.28

0.90

1.02

1.00

0.33

Recovery of BCBL Loans

4.80

4.50

4.50

7.32

12.55

12.12

52.33

No. of Employees

425

447

436

375

384

367

372

No. of Shareholders

1975

1975

3587

3777

4201

4235

No. of Branches

25

25

25

25

24

24

Table 07:  7
years performance

3.9 Significant Accounting Policies

A). Basis of Preparation of the Financial Statements

The
financial statements of the company are made up to 31 December each year and
are prepared under the historical cost convention and in accordance with first
schedule of Banking Companies Act (BCA) of 1991, Bangladesh Bank Circulars,
Bangladesh Accounting Standards, the Companies Act 1994, the listing
Regulations of the Exchange, the securities and Exchange Rule 1987 and other
laws and rules applicable in Bangladesh on a going concern basis.

B). Revenue Recognition

The
revenue during the year are recognized as following which satisfy all
conditions of revenue recognition as prescribed by BAS 18 “ Revenue
Recognition”.

Interest
is calculated on daily product on unclassified loan and advances but charged on
quarterly basis.

Interest
is charged on classified loans and advances as per Bangladesh Bank BRPD
circular No. 16 of 1989 and such interest were not taken into income.

Dividend
income is recognized at the time when it is realized.

Commission
and bills on purchased and discount are recognized at the time of realization.

C). Fixed Assets and Depreciation

Assets
are stated at cost less accumulated depreciation.

Depreciation
has been charged in diminishing balance method.

D). Earning Per Share (EPS)

The
company calculates earning per share (EPS) in accordance with BAS 33 “Earning
per Share” which has been shown on the face of profit and loss account. This
has been calculated by dividing the basic earnings by the weighted average
number of ordinary shares outstanding during the year. A diluted earnings per
share is required to be calculated for the year, as there is scope for diluted
during the year under review.

E). Statement of Liquidity

F). Investment

Values
of investments have been shown as under:

Treasury
Bill

:
Face value (Including unearned Income thereon).

Prized
Bond

:
Cost price

Share
and Debenture

:
Cost price

G). Cash Flow Statement

Cash
flow statement is prepared principally in accordance with BAS 7 “Cash Flow
Statement” and the cash flow from the operating activities have been presented
under direct method as prescribed by the securities and exchange rules 1987 and
considering the provision of paragraph 18 (b) of BAS-7 which provides that
‘Enterprise are Encouraged to report cash flow from operating activities using
the direct method

3.9 Changes of Equity

Following
table shows the changes of equity for the year ended 31 December 2010

Particulars

Paid
up Capital

Share
Premium Account

Statuary
reserve

Other
reserve

Revaluation
Reserve on Securities

Surplus
profit/ Loss

Total
Tk.

Balance
as on 01January 2010

920,000,000

.

65792413

3848512

(26127843)

963513082

Share
capital BCI Ltd

39000000

.

.

.

.

.

39000000

Dividend
paid during the year

.

.

.

.

.

.

Increased
in statutory reserve

.

.

32536744

.

.

.

32536744

Issuance
of Share Capital

1068742800

.

.

.

.

.

Surplus
of revaluation Reserve for HTM securities

.

.

.

11836557

Net
Profit/ Loss for the year

.

.

.

30771838

30771838

Balance
as on 31 December 2010

2027742800

.

98329157

3,848,512

11836557

4643995

2146401021

Table
09: Changes of Equity

General Banking of BCBL

4.1 Introduction

Every
commercial bank deals with different vital division such as:

General
Banking division

Loans
and Advance division

Foreign
Exchange division etc.

Among
these three divisions General Banking is the core and leading division. General
Banking division is the most important point of all activities. It is the
storage point for all kinds of transactions of foreign exchange division, loans
and advance division, and other relevant events. Except General Banking
functions a bank cannot sustain for long. With the technological advancement
this sector is growing tremendously. As a fast growing bank BCBL actively
realizing that development and trying to conform to the changing environment.

4.2 General Banking Activities of BCBL

Basically,
General Banking division performs the core functions of a bank. It deals day to
day transactional activities which include collection of deposit from customers
and meet the customers demand for cash. Widely general banking division
includes the following sections: 

·
Account Opening
Section/ Deposit Section

·
Collection and
Clearing Section.

·
Cash Section

·
Local Remittance
Section

·
Bill Section

·
Accounts Section

·
Dispatch Section

·
Administrative
Section

4.3 Account Opening Section

To
become a customer initially need to open an account with a particular bank and
then a person is allowed to go for transaction. Through this process banker-
customer relationship begins and continues until violation of any condition by
the parties. According to the regulation of central bank and commercial bank
everybody cannot open an account. In order to open an account customer need to
fulfill some certain conditions and requirements provided by the bank. 

4.4 Types of Account

As
we know there are different type’s accounts, however it depends on bank’s
goals, objectives, mission and vision as well. Bangladesh Commerce Bank Ltd.
provides the opportunity to open following types of account:

·
Savings Bank
Account (SB)

·
Current Account
CA)

·
Short Term
Deposit (STD)

·
Fixed Deposit
Ratio (FDR)

·
Deposit Pension
Scheme (DPS)

4.5 Savings Bank Account (SB)

This
account is primarily for small scale saver. Any adult and mentally smooth
person can open this type of account through the fulfillment of required
conditions. Saving bank account is convenient for the people of the lower and
middle classes who wish to save a part of their current incomes to meet their future
needs and also intend to earn an income from their savings. However, account
holders cannot withdrawal money more than two times in a week but he can
deposit any time as he/she wishes. If any customers want to withdraw large
amount of money he have to notice the bank early. At present its interest rate
is 7.50%. Abreast these some other relevant points listed below:

4.5.1 Requirements to open an Account:

In
order to open an account customer need to fulfill following requirements:

·
2 copies of
passport size photographs.

·
Photocopy of 1-7
pages of valid passport (Absence of passport- driving license/ voter ID card/
Commissioner’s certificate).

·
Introducer
signature and account number at the back of account holder’s (person going to
open an account) photographs.

·
Photograph of
nominee with the signature of account holder at the backside of nominee’s
photograph.

·
Initial deposit
of TK. 1000.

·
Two or more
persons can open this account jointly.

·
Parents can open
an account on behalf of his minor children.

·
Any private
Organization can open savings account in its own name. In this regard
3324organizations need to submit name, photograph, and specimen signature of
specific person who be responsible for the account.

4.5.2 Characteristics of the Savings Account

The
basic characteristics of saving bank account are as follows:

·
At the time of
opening an account customers have to deposit minimum Tk.1000.

·
One person can
open only one account in one name.

·
Interest paid
twice in a year depending on monthly minimum balance.

·
Minor cannot open
an account.

·
Customer can
deposit money at any times during working hour.

·
But customer can
withdraw not more than twice in a week.

·
Generally this
account holder cannot take loan but in special case it might happen.

·
The main purpose
of this account is to construct fund.

·
The Bank provide
passbook to deposit money in account.

4.5.3 Types of Savings Account

There
are different types of savings account bank offers to its customers such as:

·
Home savings
account

·
School savings
account

·
Works savings account

·
Deposit pension
account

·
Cumulative
savings account

·
Loan Deposit
account

·
Foreign currency
account etc.

4.6 Current Account (CA)

Current
account is running and active account which may be operated upon any number of
times during a working day. Basically it’s a pure demand deposit account. Since
there is no restriction on withdrawal and deposit holder can withdraw and
deposit money any times in a working day. Basically there are two types current
account available in the Bank:

General
Current Account

Special
Notice Current Account

The
basic requirements and characteristics of this account are as follows:

4.6.1 Requirements for Current Account

For
person:

·
2 copies of
passport size photographs.

·
Photocopy of 1-7
pages of valid passport (Absence of passport- driving license/ voter ID card/
Commissioner’s certificate).

·
Introducer
signature and account number at the back of account holder’s (person going to
open an account) photographs.

·
Photograph of
nominee with the signature of account holder at the backside of nominee’s
photograph.

·
Initial deposit
of TK. 2000.

For
joint venture, Associations, and Clubs: If the party is joint venture,
Associations, and Club then they have to fulfill following requirements:

·
True copies of
certificate of incorporation or registration.

·
True copies of
certificate of commencement of business.

·
True copies of
memorandum and articles of association.

·
True copies of
resolution of the board of directors.

For
partnership Company:

·
Name and address
of the firm.

·
Partnership deed.

·
Trade License

·
Endorsement of
account holder of the same branch.

4.6.2 Characteristics:

·
There is no
restriction on withdrawal, but in case of large amount i.e. more than 2 lac
banks requires one day prior notice.

·
Interest is not
allowed on this account.

·
Closing charge
Tk.200 prescribed by the bank shall be realized at time of closing down of a
current account.

·
Current account
holders enjoy certain privileges compared to the saving account holders. I.e.
Current account holders provided overdraft facilities.

·
The banker is
under an obligation to repay the deposits on demand. So, they are called demand
liabilities of a banker.

·
Clients are
permitted for overdraft on basis of contract.

·
Banker does not
provide any passbook for this account but sometimes issue description card.

·
Bank cannot
invest from this account due to demand deposit.

4.7 Short Term Deposit Account (STD)

We
can assume the nature of this account from the name; it’s very short term in
nature and payable on short notice. Generally large companies, firms,
Institutions are the customer of this account. In order for withdraw money bank
requires to prior notice. In BCBL customers are instructed that their current
account would be debited whenever its deposited amount crosses a certain limit
and this amount will be transferred to STD account. In this account deposited
money requires to keep minimum seven days to earn interest at five percent
rate. Basically interest is calculated based on daily minimum product and two
times in a year.  Minimum amount for
opening STD account is about Tk. 10000 only. At present its interest rate is
4%. STD is mainly suitable for the large firms/ corporations/ public bodies,
which have idle funds for deposit in a short term account.

4.8 Fixed Deposit Ratio (FDR)

Fixed
deposit account consists of long term deposit. Fixed deposit is normally high
yield to earn the maximum possible return. Any amount to be deposited for three
months, six months, and one year. BCBL currently offer the interest rate about
12.5%, and 11% respectively. The basic requirements to open a fixed account are
almost same as savings and current account.

4.8.1 Procedure to open a Fixed Deposit Account

To
open a fixed deposit account customer need to fill up a specific form provided
by the bank. At the time of opening account depositor sign in a contract paper
with the bank and then depositor deposit money through payment slip. Bank
return one part of the slip to the customer and rest of the part keep into the
bank. In this account bank does not provide any cheque book, depositor can draw
money after the end of the duration through payment slip. Customers can open
this account individually or jointly.

4.8.2 Features of Fixed Deposit Account

The
main features of fixed deposit account are as follows:

·
Payment slip is
the major document of this account.

·
This is for a
certain period of time. After the end of period contract also get finished but
customer can redeposit if he/she desire.

·
Initial deposit
should not less than Tk.2000 for individual and Tk.5000 Institutions.

·
It earns higher
income.

·
Customer can
deposit only one time and draw after end of duration.

·
Payment slip is
not transferable.

·
It does not
require cheque book.

4.9 Deposit Pension Scheme (DPS)

Pension
Scheme can be opened in the name of individual who crossed the minimum age
level 18 years. Under this scheme joint account is not permissible. Account
holder can deposit from Tk.500-5000 per month for minimum three years to
maximum ten years. At the end of duration holder can withdrawal cumulated money
with interest through monthly installment or over 3 to 10 years. BCBL currently
offer the interest rate about 10%.

4.10 Account Opening Procedure in a flow chart

Collection of Bank
Account Opening Form

Filling the Application
& Specimen Signature Card

Enclosing Documents
with Application Form

Submission of
Application Form

Primary Deposit

Receiving Cheque and
Pass Book

Figure
03: Account Opening Procedure

4.11 Facilities for Customers toward an Account

Bank
provides some facilities to customers for their convenience like below:

4.11.1 Issuing Check Book/ Pass Book

When
account opening formalities is finished bank provides a checkbook/ pass book to
account holders. In order get checkbook/ pass book account holder require to
requisite on prescribed application form. In case of old account, requisition
made on the prescribed slip attached with the checkbook/ pass book issued
earlier. To avoid hassle it requires signing by the authorized officer on every
page of the check.

4.11.2 Transfer of an Account

There
is opportunity to transfer account from one branch to another if any customer
wish without any extra fee. In this regard, customer should formally apply to
the branch manager with reasonable causes. Manager then convey a request
massage to the branch manager where the customer want to transfer account as
well as manager also sends inventive copy of account opening form and specimen
signature card and others relevant documents.

4.11.3 Closing of an Account

No
account for eternal, due some reasons account might be closed. If account
holder wishes to close the account he/ she can do it any time. Beside this bank
can close the account due to following reasons:

·
Due to the death
of account holder.

·
If the holder
discontinue transaction for long time.

·
If the court send
legal notice to close the account.

·
If account holder
become mental abnormal.

·
Absence of
minimum deposit requirement.

·
If bank receive
notice regarding account transfer.

·
If it’s not profitable
for bank.

After
closing the account customer instructed to return the checkbook, pass book, and
deposit slip. On the other hand bank return deposited money; but bank will
charge Tk.100 by debiting the amount from his account.

4.12 Sample of Deposit Slip and Pass Book


Sample
of Deposit Slip

Date

Description

Cheque No.

Debit

Credit

Balance

Officer’s
Signature

June

2007

1

2

3

4

Balance

Cash

Mr. Alam

Mr. Rahim

SA046493

SA046494

1500

1000

500

5000

5500

400

5000

Sample
of Pass Book

4.13 Local Remittance Section

One
of the most important aspects of commercial bank is rending services to its
customers. The word “Remittance” implies sending money from one place to
another through post and telegraph to avoid any unexpected situation. Banks
also extend these facilities to its customers by means of receiving money from
one branch and making arrangement for payment to another branch around the
country. One of the most aspects of the commercial banks is the rending service
to its customers. Local remittance facilities are the most significant and
congenial among the services provided by the bank. Local remittance facilities
consist of three different categories:

·
Demand Draft

·
Telegraph
Transfer

·
Payment Order

4.13.1 Demand Draft (DD)

Among
different financial instruments Demand draft is most significant. Demand Draft
issued by a particular branch on behalf of the customers to another branch
instructing to pay a certain amount of money. According to the regulation if the
amount is more than Tk. 25000 a test code is require to give on IBCA. In terms
of DD serial number is much important in both receiving and payment of money.

In
order to issue Demand Draft bank impose some charge is as follows:

·
Commission @
0.15% but minimum Tk.50, Postage charge Tk.20 (Fixed), DD collection charge
Tk.50 (Fixed).

4.13.2 Issuance of duplicates (DD)

Bank
provides the facilities for duplicate Demand Draft in order for convenience of
the customers. If the customers demand for duplicate DD then they require
filling up following formalities:

·
Drop an
application by the original DD holder early

·
Require to inform
nearest police station

·
Furnishing an
Indemnity Bond

·
Put a “Caution”
mark in the register

·
Inform head
office instantly through issuing branch

·
Inform all the
branches around the country to pause payment

·
Issue a new DD by
the bank.

4.13.3 Telegraphic Transfer: (TT)

Due
to the technological advancement it’s possible to transfer money over
telegraphic modes. Sometimes customers need money immediately, in that
circumstances they ask for telegraphic transfer. There are some common modes
for this type of transfer such as Telegram, Telephone, Telex, and Fax.  Though telegraphic transfer is expensive but it’s
fast and convenient. Customers have to pay for this service according to the
rate determined by the central bank. Telegraphic transfer commission calculates
as per Bangladesh Bank rate min Tk.25 and telex charge to be taken as Tk.30 per
minute.

4.13.4 Payment Order (PO)

Pay
order means order to pay a certain amount of money to specific parties
mentioned on the PO. It’s an instrument for bank and bank earns a percentage of
money. Once PO was issued only to effect local payment of banks own but
situation has been changed now it issued on behalf of customers. PO is not
transferable and there is no chance to dishonor like a check does. Basically,
PO can be purchased by three different modes such as:

Payment
Order is a current liability for bank and it required to be discharge against
payment in cash or through an account. In order for pay order bank charge a
certain amount of fees:

Range Tk.

Charge Tk.

Up to Tk.1000

10

Tk.1000 to 10000

25

Tk.10000 to 50000

50

Over Tk.50000

100

4.13.4.1 PO Issuing Process

To
issue a pay order need to maintain some formalities like below:

·
Fill up
application form by the customers

·
Deposit specific
amount of money either in cash or by check

·
Prepare the
instrument and make necessary entries in the bills payable register where
payees name, date, PO no. etc.

·
Deliver the
instrument to the customer after scrutinized and approved by authorized by
taking signature of the customer on the counter part.

4.13.4.2 Entry for Pay Order

As
we know pay order is a current liability for the bank and it required to
discharge against payment in cash or in account. For pay Order the bank’s
accounting entry is like below:

4.13.4.3 Payment Order Working Procedure

Figure
05: Working procedure of Pay Order

4.13.4.4 Cancellation of PO

If
it requires canceling pay order then purchaser need go through a predetermined
procedure. At purchaser have to submit written application to refund the pay
order attaching therewith the original pay order. Then authority will confirm
purchaser’s signature with the original signature. Beside this there have to
have the permission of authorized employees prior refund the amount of pay
order. Pay order should be affixed on the pay order. In order to cancel pay
order there does not charge any fees, only refund the pay order amount and
finally reserve original entries with proper description.

4.14 Bill Section

The
most important and mentionable task of general banking is to collect and
payment of different bills on behalf of clients and the government. As a representative
of client BCBL perform following basic tasks:

·
Bill collection

·
Clearing

·
Transfer and
Delivery

·
Outward and
inward bill Collection.

4.14.1 Bill collection

Under
this section bank collect different types of bill on behalf of clients. Such
as- Purchase and sale share and securities, pay the tax and vat, collect and
disburse house rent, collect dividend, collect pension fund, invest the money
etc. There are basically two different types of bill. Besides, bank receives
check for collection from other bank on behalf of clients. In this case
following points should be carefully investigated:

·
Cheque should not
carry more six months from the date of transfer of funds. In that case check
would be stale check.

·
The amount should
be identical both in word and in pay-in slip.

·
The name
mentioned should be same both in check and in pay- in-slip.

·
Check must be
crossed.

Clearing

Clearing
is one of the mentionable tasks of a commercial bank. Clearing means
accomplishments of cheque drown on each other through clearing house. In
general clearing house means “A place where representatives of local banks meet
at an agreed time each day to exchange cheque and other items drown on each
other and to settle the resulting balances.
This is an initiative of central bank to accumulate the representatives
of schedule bank to clear their cheques. In order for clear the cheque BCBL
developed a unique section that is responsible for receive checks, drafts, and
other instruments like these from customers for the purpose of collection with
a deposit slip over the counter crediting their accounts. Only the schedule
banks are allowed to participate in clearing house. According to the Article 37
(2) of Bangladesh Bank Order, 1972, the banks which are the member of clearing
house known as schedule bank. Accordingly BCBL is a schedule bank and actively
participate in clearing function with clearing house on behalf of the
customers.

Types
of Clearing: Basically two types of clearing available:

·
Outward Clearing:
When the branches of a bank receive cheques from its customers drawn on the other
banks within the local clearing zone for collection through clearing house.

·
Inward Clearing:
When the bank receives cheque drawn on it from other banks in order for
clearing function. 

4.14.2.1 Considerable Factors to receive Cheque

The
Bank carefully consider following factors at the time of receiving the cheques
for clearing:

·
Name of the
account on the cheque and Deposit slip.

·
Amount in the
Cheque must be both in word and figure.

·
Bank and Branch
name, number and date of the cheque.

·
Cheque must be
signed by the holder.

·
Cheque should be
crossed.

·
Account number in
the cheque must be clear.

·
Signature of the depositor.

4.14.3 Outward and inward Bill Collection

This
is the transaction occur outside and the debts that arise due to transaction
among different branches of different banks are settled through Outward and
inward Bill Collection.

4.15 Cash Section

Cash
section is most vital and significant section of the bank. Let’s they say cash
is the blood of the bank. The main task of this section is receive and payment
of money. As we know it has two major counters-

Cash receive counter

Cash payment counter

4.15.1 Cash Receive Counter

In
receive counter two/three efficient persons are responsible for cash
collection. In this section cheque, pay order, drafts etc. are being received.
These tasks accomplish through a predetermined process-

·
At first customer
need to fill up the deposit slip provided by the bank.

·
Deposit the slip
to cashier.

·
Cashier receives
money, confirm the amount and then enter into the cash receipt register book
and finally sign with seal and date in the deposit slip.

·
Slip then passed
to another officer who is responsible for taking details like serial number,
amount etc. and return deposit slip to customer. 

Cash payment

Cash
payment counter is responsible only for payment of cash on the basis of check,
pay order, drafts etc. In terms of cash payment bank initiate some extra care
regarding following things- whether the cheque is crossed or not, endorsement,
date, specimen signature, amount, and other relevant things. To pay money bank
follow process:

·
At customer need
to deposit the cheque to the cash section.

·
Authorized
individual verify required things- whether it is properly crossed if it is
being cross cheque, endorsement, date, amount, signature, and also ensure
current balance in the account and then it send to cashier if everything is
positive.

·
Cashier is then
asked bearer to sign on the back side of the cheque and pay the money.

·
Then cashier
enter payment details into register book.

Account Section

It’s
regardless to analyze how much significant the account section are! Let’s the
say account is the nerve center of the bank. Everyday huge transaction occur in
different section, account section regularly keep record each and every
transaction. In banking business bank need to go for various transaction and
these transactions are to be recorded properly and systematically. If the bank
fails to record this transaction in an appropriate manner it might happen
mismatch and misunderstanding between bank and customers and it also mismatch
in the debit and credit side. To avoid this violence bank developed account
section which is responsible record keeping of all transactions required information,
prepare different statement and other relevant things. Basically accounts
supply information to other sections of the bank according their requirement.
Generally account section of BCBL responsible for following activities:

·
Record keeping of
all transactions in the cash book.

·
Recording the
transactions in general and subsidiary ledger.

·
Packing of the
correct vouchers according to the debit voucher a credit voucher.

·
Constructing the
daily position of the branch comparing of deposit and cash.

·
Make payment of
all expenses of the branch.

·
Recording inters
branch fund transfer and providing accounting treatment in this regard.

·
Preparing monthly
salary statements for the employees.

·
Preparing weekly
position for the branch which is sent to the Head Office to maintain cash
reserve requirements.

·
Checking
transaction list.

·
Recording of the
vouchers in the voucher register.

·
Preparing the
daily statement of affairs showing all the assets and liability of the branch
as per general ledger and subsidiary ledger separately.

Loans and Advances

Loans
and advances is another vital function of commercial bank. Generally bank loan
means the credit granted by a banker to his customers either in cash or any
other means, is called bank credit or bank loan. Besides deposit collection
BCBL lend money to its customer as well. The loans and advances of the bank
registered an impressive growth during the year 2010. The total loans and
advances amount to Tk.826.60 crore as on 31st December 2010, against
Tk.625.62 crores in the previous year showing an increase of 32.12%. The
advance portfolio of the bank is well diversified and covers funding to a wide
spectrum of business and industries. The classified loan of BCBL during the
year under report was 3.75% which may be termed as encouraging in the
socio-economic environment prevailing in the country. The bank gives top most
priority to acquire quality assets and does appropriate lending risk analysis
while approving commercial and trade loans to clients. Bank provides different
types of loan on the basis of customers demand. 

Graph
13: Loans and Advances from 2004-2010

Credit Scheme

BCBL
offers following Schemes to its customer:  

1. Financing of small and medium
Industries

6. Credit Scheme for women
entrepreneurs

2.Financing of Trade

7. Consumers credit Scheme

3.Financing if Import and Export

8. Special Credit Scheme for service
holder

4.Micro-Credit and Micro Enterprise
schemes

1. 
Financing of small and medium Industries

The
main thrust of financing is given on small and medium enterprises. This is the
priority sector of Bangladesh Commerce Bank.

2. 
Financing of Trade
 

Trade
Finance includes CC (Cash Credit), SOD (Secured Overdraft) FO (Financial
Obligation), RE (Real Estate) working capital. This will help the local traders
and businessmen to expand their trade and business unhindered.

3. 
Micro-Credit and Micro Enterprise Scheme

For
poverty alleviation micro-credit is provided to poor people without security
for their self-sustenance and to rehabilitate them in the society.

4. 
Credit Scheme for Women entrepreneurs

5. 
Consumers Credit Scheme

Domestic
useable items i.e. Computer, Photocopier, Furniture, Washing Machine, Air
Cooler, Refrigerator, Sewing Machine, Car; Pressure Cooker etc are financed for
comfortable and modern living of the people of limited source of income.

6. 
Special Credit Scheme for Service-holder

Under
this scheme service-holders of govt. bank or autonomous bodies are provided
with 6 month’s basic salary as loan realizable in 18 equal installments.
Professionals are also covered under this special credit.

4.17.2 Considerations of Bank in Granting Loans and Advances

Basically
main task of the bank is to earn profit through borrowing and lending money.
That’s why bank need to proceed some significant principles to provide loans
from its fund. At the time of granting loan BCBL consciously investigates
followings:

Character of the Clients

7. Sources of Re-payment loan

Financial solvency of borrower

8. National Interest

Capacity to use the loan

9. National Interest

Safety of loan

10. Volume of loan

Liquidity of the bank

11. Order of the Central Bank.

Whether sufficient profit is earning

4.17.3 Classification of Advances

The
Bangladesh Commerce Bank Ltd. classified its advances/ credit program in
following forms:

4.17.3.1 Bank Advances on the basis of the objectives/ Uses

A. Commercial Credit

B. Non- Commercial Credit

A. Commercial Credit: Bank
provides this type of credit for the purpose of national and international
business. Commercial credit may be short term or long term.

B. Non- Commercial Credit:
Bank provides this credit for non- commercial purpose. The bank offers this
credit to purchase house, Home materials, Social development, traveling,
education, etc.

4.17.3.2 Bank’s Advances on the basis of Duration

Short Term Credit: Bank
offers this type of loan for very short time. The maximum duration of this loan
is one year and minimum one hour. Basically individual, firms and industries
are the main customer of this loan.

Mid Term Loan: Bank also
provides credit for mid term between short term and long term. The maximum
duration of this credit is less than five years and minimum one year. Bank
charge a certain percentage of interest against this credit and that is
11%-14%. Customers of the Long term credit are-

·
General
Businessman

·
Importer

·
Exporter

·
The bank demand
borrower land and properties as collateral against this loan.

Long Term Credit: Bank
offers this credit for long term, generally bank grants this credit for five
years to twenty years duration. Bank charge high interest against long term
credit it is 15%-20%.

Normally
bank grants long term credit under a certain project. However, bank provide
long term loan to purchase land and machineries, house building, construction
of industry and machineries purchase, etc. Bank also grants long term credit
for small and cottage industries, fisheries, etc.

4.17.3.3 Loan

Among
all the advances loan is most significant and comparatively high demandable to
the customers. Generally bank provides this loan through credit account, it
does not provide in cash. Customers draw by the cheque from his / her account.
Normally, loan need to repay within a certain time period. However, customers
are allowed to repay loans in installment. Necessarily bank demand high
interest on different types of loan and customers are instructed to pay
interest with principle amount of loan. BCBL grant loans for following
different purposes:

·
Purchasing
Transportation

·
Agricultural
activities

·
·
Working Capital

·
Small and Cottage
Industries

·
House building
etc.

Generally
bank offers two different types of loan:

·
Secured Loan

·
Unsecured Loan

1. Secured Loan: Secured
loan means any loan which is guaranteed by the borrower giving valuable
property as security. Generally bank grant this types of loan against some
movable or immovable assts or properties for the safe return of loans. If the
customers fail to repay loan then bank sale all his security assets and
properties to compensate the loss.

2. Unsecured Loan:
Unsecured loan means any loan which grant without any security money or assets.
Bank generally provide this loan to the persons with whom bank has long term
relationship, honest, socially well-known persons, and the clients who has
goodwill in the society. This type of loan contains high risk, if the borrowers
get unable to repay the bank collect the loan by the help of the court.

Rate
of interest on Loans and Advances: BCBL Charges interest on loans and advances
according to the following rate:

Types
of Deposit

Rate
of Interest

1.
Commercial Sector

14.7%

2.
Industrial Sector ( Term and Current)

16%

3.
Export Sector

7%

4.17.3.4 Cash Credit

Under
the cash credit Banker specifies a limit, called the cash credit limit, for
each customer up to which the customer is permitted to borrow against the
security of tangible assts or guarantee. Bank generally offers this type of
credit for businessman and industries for a certain period of time ( 6- 12
months) to meet their instant financial need.

Bank
offers two different types of cash credit:

Cash Credit Hypothecation

Cash Credit Pledge

1. Cash Credit Hypothecation:
The mortgage of movable assets or property for securing credit is known as
hypothecation. Hypothecation is a legal transaction whereby goods are made
available to the banker as security. Since the goods always remain in the
physical possession of the borrower, that’s why it contain high risk for
banker.

2. Cash Credit Pledge:
Cash credit pledge imply the credit allowed against pledge of goods as security
for credit. Bank retains an effective control over the pledged goods. The goods
might be stored in the storehouse of the borrower under the active supervision
of the bank.

Formalities for Cash Credit:
If customers wishes to take cash credit ten they need to submit following
documents:

·
Trade license

·
Up to date income
tax clearing certificate.

·
Charge of documents

·
Letter of
continuity

·
Letter of
arrangement

·
Demand Promissory
note

·
Letter of
Guarantee

After
end of the analysis of above documents bank prepares a CC proposal form that
contains the following information’s:

·
Nature of
Business

·
Banking with BCBL

·
Transaction with
Current Deposit account by the client

·
Allied deposit
with SB/STD account

·
Number of
adjustment

·
Based on the
above information the credit officer prepares recommendation about the prospect
of granting the CC loan.

4.17.3.5 Process of Giving Loan

In
order to get the loan customers have to go through following process:


4.17.3.6 Overdraft

The
overdraft is always allowed on a current account. The customers may be allowed
to a certain limit up to which he can overdraw within a stipulated period of
time. In an overdraft account withdrawal and deposit can be made any number of
times within the limit and prescribed period. Interest is calculated and
charged only on the actual debit balances on daily product basis. Generally
bank grant three different types of overdraft such as:

·
Temporary
Overdraft (TOD)

·
Clean Over
draft  ( COD)

·
Secured Overdraft
( SOD)

1. Temporary over Draft:

TOD
is allowed to honor an important cheque of a valued client without any prior
arrangement. As this facility is allowed for a very short period, it is called
temporary Overdraft.

2. Clean overdraft:

Sometimes
overdrafts are allowed with other security other than the personal security of
the borrower. These types of overdraft are known as clean overdraft.

3. Secured overdraft:

When
overdrafts are allowed against securities they are called secured overdraft.

4.18
Foreign Exchange

Generally
foreign exchange means the rate of exchange at which one currency is exchanged
against another. Foreign exchange is a significant department of Bangladesh
Commerce Bank Ltd. Bank provides extensive facilities in foreign exchange
business. Generally bank provides the following service to foreign exchange
business:

·
Foreign
Remittance

·
Import

·
Export

4.18.1 Foreign Remittance

Foreign
remittance section of BCBL is an integral part of foreign exchange department.
This section normally deals with-

I. Inward Foreign Remittance

II.
Outward Foreign Remittance

I. Inward Foreign Remittance:

Normally
inward foreign remittance comprises all incoming foreign currencies. Remittance
issued by the correspondent banks situated in the foreign countries and thereby
drawn on BCBL is considered to its inward foreign remittance. The major inward
remittance of BCBL is as follows:

·
FDD payable

·
FTT payable

·
TC payable

·
Encashment of
foreign currencies

·
Purchase of
foreign currencies.

II. Outward Foreign Remittance:

Remittance
issued by the BCBL to its foreign correspondent to fulfill their customers
demand is considered to be outward foreign remittance. OFR comprises following
activities:

·
FDD Issued

·
FTT Issued

·
TC Issued

·
Endorsement of
foreign currencies in the passport

·
Sale of foreign
currencies.

4.18.1.1 Methods of Foreign Remittance Applied BCBL

The
BCBL performs foreign remittance activities with following different ways:

·
Foreign Bills of
Exchange

·
Foreign Bank
Draft

·
Mail Transfer- MT

·
Telegraphic
Transfer- TT

·
Personal Cheque

·
Cash Letter of
Credit

·
Traveler’s Cheque

·
International
Money Order- IMO

·
Cash paper Money
and Coins.

4.17.2 Import

Import
means purchase of product and services from foreign countries. Sometimes
private firms, businessman, and government organization purchase different a
type of products from other countries in order to meet their demand and this is
known as import from foreign country. BCBL actively assist in import business
and make it easy for importer. Basically the bank work on behalf of the
importer by the issuing and collecting different documents. Sometimes the bank
directly communicates with foreign exporter on behalf of the clients. The
function of BCBL in import business is to issuance of “Letter of Credit (L/C)”
on behalf of importer and in favor of exporter.

4.18.3 Letter of Credit (L/C)

A
letter of credit is a document issued by the banker in one place authorizing
any other banker or agent in another place or country, to honour the cheques or
drafts of a person named in the document, to the extent of a certain sum stated
in the letter and to charge the total sums of cheques and drafts so honoured to
the account of the grantor.

In
general “Letter of Credit” is a document where issuing bank undertake
responsibility on behalf of his clients (Importer) to make payment if the
importer fails to pay.

4.18.3.1 Types of Letter of Credit (L/C):

There
are different types of L/C’s are available in import and export business.
Following are more common and frequently issued by the bank:

·
Confirmed Letter
of Credit

·
Un- Confirmed
Letter of Credit

·
Documentary
Letter of Credit

·
Clean Letter of
Credit

·
Revolving Letter
of Credit

·
Fixed Letter of
Credit

·
Revocable or open
Letter of Credit

·
Irrevocable or
Firm Letter of Credit

·
Back to Back
Letter of Credit.

4.18.3.2 Parties in the Letter of Credit:

Letter
of Credit consists following parties

·
The Opening Bank

·
The Advising Bank

·
The Buyer and the
Beneficiary.

·
The paying Bank

·
The negotiating
Bank and

·
The confirming
Bank.

The Opening Bank: The
opening bank is one that issues L/C at the request of buyers. Through issuing
LC the bank takes responsibility to pay the money if the client is unable to
pay. If the draft is negotiated by another bank the opening bank reimburses to
that bank.

Advising Bank: The letter
of Credit often transmitted to beneficiary through a bank in the latter country
which is known as advising bank. The bank may be a branch or correspondent of
opening bank. The advising bank undertakes responsibility to prompt advice of
credit to the beneficiary and has to be careful in communicating all its
details.

Buyer and Beneficiary: The
importers who buy the LC are known as buyer. Bank issue LC on behalf of the
buyer. On the other hand, the exporter to whose favor bank issue LC is known as
beneficiary. As a seller beneficiary is entitled to receive the money which he
do by drawing bills under the LC.

Paying Bank: The Paying is
responsible for make sure the payment stated on the letter of credit by
debating the latter accounts with it if there is such an account or by any
other measured up between two bankers.

Confirming Bank: Sometimes
an exporter stipulates that the LC issued in his favor be confirm by one of his
local bank which is known as confirming bank.

4.18.3.3 Contents of Letter of Credit

The
contents of LC may vary bank to bank though most of the banks issue it on a
specific form which clearly mentions the banks name and its area of obligations
under the credit. The more common contents of a general LC are listed below:

1. Name of the buyer

6. Required Documents

2. Name of the beneficiary

7. General description of merchandise

3. Issuing and Payment date

8. Amount of money

4. Trade terms

9. Name of the currency need to pay

5. Name of the participant banks

10. Nature of Businesses

4.18.3.4 Procedure to Open a L/C

In
order to open a letter of credit buyer and banker need to go some process. The
beginning of LC the importer receive a invoice from exporter, then the importer
request his/ her bank issue a letter of credit on behalf of him/herself or
organization in favor of the exporter. The bank willingly does that if it can
rely on reimbursement by the buyer. Before doing that the bank carefully check
the customers account whether enough funds are exit in his account. In order to
get LC from the customer have to have sufficient funds in the account otherwise
bank won’t provide LC. With this the customers need to submit some documents
like below:

Tax Identification Number.

Valid Trade License.

Import registration Certificate etc.

After
this customers need to fill up some forms provided by the bank such as LC form,
Application form, Agreement form etc. Besides he/ she suggested to complete
other relevant formalities.

4.18.4 Export

If
any Bangladeshi firm, organization and government Institutions sale products
and services to foreign buyers that is known as export. The Bangladesh Commerce
Bank Ltd. actively assists in export business. This is the most significant
section of the bank, because every day they are to process an extensive number
of export facilities. In export business bank need to perform huge formalities
on behalf of the customers. Therefore, the foreign exchange of BCBL is always
conscious toward their responsibilities in this particular context.

6. Findings

During
three months internship with Bangladesh Commerce Bank Ltd. I have achieved huge
experience and also understood the entire banking system of BCBL and found
different information regarding their activities which enriched my knowledge
extensively. Here I have tried to present my experiences and knowledge in order
for better judgment. Bangladesh Commerce Bank Ltd. is one of the first growing
and committed private commercial bank in the country. It conducts business
activities efficiently around the country to achieve its objectives, and goals
and gradually forwarding toward its mission and vision. As a commercial bank
sometimes its success and sometimes fail to its achievements. The bank have
been achieving continuous growth rate in all spares of banking operation since
its establishment. All of its departments, sections are working hard for better
customer services. Abreast these I also have found the following essence
through careful investigation. 

Findings about the Organization:

Bangladesh
commerce Bank Ltd. is one of the first growing and committed commercial bank
conducting business activities around the country with 25 of its branches.

The
bank offers wide range of products line to its customers.

It
has strong and efficient management team, who works hard in order to survive
successfully in the competition.

BCBL
offers credit to all sectors of commercial activities having productive
purpose.

General
Banking activities are the driving force of the Organization.

Excellent
interpersonal relation exists among the employees.

Account
Opening procedure is comparatively essay.

The
loans and advances of the bank registered an impressive growth in every year.

With
normal banking business the bank offer some special scheme.

The
gives top most emphasis to acquire quality assets and does appropriate lending
analysis at the time approving commercial and trade loans.

BCBL
provides excellent remittance facilities around local area through pay order,
Demand Draft, Telephone Transfer, Mail Transfer and Transfer of funds by
special arrangement.

The
investment portfolio of the bank increasing gradually.

The
Bank actively participates in international trade.

BCBL
make arrangement for foundation training for all of officers in order for their
better development at Bank’s own institute and BIBM.

Bill
section is most cash liquidity handle in banking transaction.

Some problems of BCBL

Until
now the bank apply traditional banking system, the bank is far behind from
modernization.

The
Bank could not introduce proper automation and database system. Only a few
branch use automation system.

The
working environment of the bank is not modern like other commercial bank.

The
cash section of the bank could not properly develop. In order for cash receive
and payment they employ traditional system that is extensive time consuming.

The
bank did not formally develop the job description and job responsibility.
That’s why one employee’s need to work in different working area.

Last
but not the list banks depend on deposit collection less than to give loan.

They
have no normal credit or debit card.

Some
branches are to much less busy then other branches.

They
have no ATM Booth.

Just
principals Branch create more foreign transaction then others branches.

 7. Conclusion

Its
high committed toward better customer services. The Bank by concentrating on
the activities in its area of specialization has achieved good market
reputation with effective customer services. The bank is committed to keep its
working force modern by providing continuous training to its staff in their
respective field of work. BCBL Pledges to maximize customers’ satisfactions
through services and building a trusting relationship with customers, which has
stood the least of time for the last seven years.

The
bank offers wide ranges product line in order for customer convenience and marketing
activities in banking is the most significant. Basically, General Banking
activities are the driving force of the Organization. Abreast this bank also
offers credit to all sectors of commercial activities having productive purpose
and successfully performs foreign exchange activities.

Recommendations

After
analysis of all the gathered information and other relevant things the
Bangladesh Commerce Bank Ltd. should consider the following matters.

Since
today’s business world totally technology depended so the Bank should develop
online banking system as soon as possible.

To
sustain in the competitive market bank should modernize the working
environment.

The
Bank performs business activities with only 25 of its branches. Therefore in
order to capture the market share bank should immediately enhance number of
branches. 

The
bank should introduce automation immediately in every branch to achieve
efficiency of the employees.

Cash
section is not well organized. The bank needs to make it more structured and
disciplinary to collect and payment of money.

The
bank should formally develop job description and job responsibility for the
employees.

In
order to build up excellent relationship between customers and bankers bank
should take initiative. To do this bank can send gift items like calendar,
books, dairy for their old and reliable customers.

The
bank is somewhat reluctant toward advertisement, but they should participate
more in advertise campaign in order to present themselves in front of the people.

In
banking business Islamic banking is getting popularity gradually. That’s why
bank might consider this. In accounts section need to employ more personnel in
order for smooth operation.

The
bank should care about employee’s satisfaction. Sometimes employees are
dissatisfied with bank’s strategy and their job responsibility.

Banks
create more SME loan and house loan because now every day will be more
competitive and challenging.

Bibliography:

1. Annual Report of BCBL (2006 to 2010.)

2. Auditors Report of BCBL.

3. Brochures of BCBL.

4. Circulars/ Instructions

5. Bangladesh Bank’s Circular

6. New Management’s Action Plan


Retrieved October 10, 2010, from www.bcbl-bd.com.

9. Internship Report on different topics
of different banks.

10. INTERNET WABSITE GOGOLES.com

Acronyms

A/C

Account

AVP

Assistant Vice President

BB

Bangladesh Bank

BCBL

Bangladesh Commerce Bank Ltd.

BCI

Bangladesh Commerce and Investment.

BIBM

Bangladesh Institute of Bank
Management

CC

Cash Credit

CEO

Chief Executive Officer

DD

Demand Draft

EVP

Executive Vice President

FDD

Foreign Demand Draft

FDR

Fixed Deposit Ratio

L/C

Letter of Credit

MT

Mail Transfer

OBC

Outward Bill Collection

PO

Payment Order

RE

Real Estate

SOD

Secured Overdraft

STD

Short Term Deposit

SVP

Senior Vice President

SWIFT

Society for Worldwide Inter Bank
Financial Transfer.

TC

Travelers Cheque

TOD

Temporary Overdraft

VP

Vice President

DGDS

Degun growth deposit scheme

MDS

Marriage deposit scheme

ESS

Education Savings scheme

ABB

Any branch banking