General Banking Activities of IFIC Bank Limited
CHAPTER-ONE
| INTRODUCTION PART |
1.1. Introduction of the Report:
International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the People’s Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions abroad. The Government held 49 per cent shares and the rest 51 per cent were held by the sponsors and general public. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a full-fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 35% of the share capital of the Bank. Leading industrialists of the country having vast experience in the field of trade and commerce own 34% of the share capital and the rest is held by the general public.
Generally by the word “Bank” we can easily understand that the financial institution deals with money. But there are different types of Bank like; Central Banks, Commercial Banks. Savings Banks, Investment Banks, Industrial Banks, Co-operative Banks, etc. But when use the name term “Bank” without any prefix, or qualification it refers to the Commercial banks. Commercial Banks are the primary contributor to the economy of a country.
So we can say Commercial Banks are a profit making institution that holds the deposit of the individuals & business in checking & saving account and then uses these funds to make loans. For these, people and government are very much dependent on these banks as the financial intermediary. As banks are profit earning concern; they collect deposit at the lowest possible cost and provide loans and advanced a higher cost. The differences between two are the profit for the bank.
Banking sector is expanding its hand in different events every day. At the same time the banking process is becoming faster, easier, and the banking area becoming wider. As the demand for better service increases day by day, they are coming with different innovative ideas and products. In order to survive in the competitive field of the banking sector, all banking organization are looking for better service opportunity to provide their fellow clients. As a result, it has become essential for every person to have some idea on the bank and banking procedure.
1.3 Topic of the Study
The topic of the report is:
“General Banking Activities of IFIC Bank limited” A Study on The IFIC Bank Limited, Bangshal Branch.
1.4 Objective of the Report:
The study is undertaken with the following objectives:
· To know about the General Banking Activities of IFIC Bank Limited.
· To get an overall practical knowledge concerning banking activities as a financial institution.
· To describe the rules, restrictionsand procedures of General Banking transactions.
· To identify problems related to General Banking Activities.
· To recommend actions that may be necessary to improve the General Banking Activities of IFIC Bank Ltd. and provide some measures for possible improvement in future.
1.5 Scope of the Report:
This report has been prepared through extensive discussion with bank employees and with the clients. While preparing this report, Great opportunity to have an in depth knowledge of all the banking activities practiced by the IFIC Bank limited Bangshal Branch. It also helped to acquire a fast hand perspective of a leading private bank in Bangladesh.
1.6 Significance of the Report
IFIC (International Finance and Commerce) Bank Ltd. is one of leading private commercial banks of the country. Though it has 82 branches and SME 4 branches all over the country, it is performing banking activities very successfully. To mobilize funds from surplus units and deploy funds to deficit units, the bank is playing a great role in the economic development of the country. IFIC Bank Ltd. is one of the key players of country’s economic development.
1.7 Methodology
The Study requires a systematic produced from selection of the topic to preparation of the final report. To perform the study, the data sources were to be identified and collected, to be classified, analyzed, interpreted and presented in a systematic manner and key point were to be found out. The overall process of methodology has been given below:
Nature of the study: This is an exploratory type of research. Information collected to furnish this report is both from primary and secondary sources.
Sources of Data:
1) The primary data sources are: For primary data, there are two types of population. Such as:
· Officers
· Customers
2) The secondary data sources are:
· Annual report of IFIC Bank Ltd.
· Prior research report.
· Publications obtained from library of IFIC Bank and
· Officials web site of IFIC Bank Ltd.
Sampling Procedure:
· Sampling Technique: Non- probability convenience sampling method has been used to select sample.
· Target Population: All officers and customers of the IFIC Bank Ltd, Bangsal Branch.
· Sampling Frame: SSO of GB and Get-1, Get-1 and Get-2 of Credit Section and Manager of IFIC Bank Ltd.
· Sample Size: Six officers; two from GB section, two from Credit Section and one from Foreign Exchange Section of IFIC Bank Ltd.
· Execute the Sampling Process: Primary data were collected through direct and face-to-face interview.
Data analysis Method: After collection of raw data from different sources I have done the editing and processing job with the help of Qualitative Analysis and MS-Word.
1.8 Limitations of the Report:
To prepare a report on the achieved practical experience in a short duration (only three months) is not an easy task. In preparing this report some problems and limitation have encountered which are as follows:
· Learning all the banking functions within just three months was really tough.
· The main constraint of the study was insufficiency of current information, relevant to the study.
· All required information was not available in any specific branch of the Bank and there was also limited opportunity to visit more than one branch.
· Due to time limitation many of the aspects could not be discussed in the present report.
· The employees of the bank were very much helpful. But the nature of job is such that they did not get sufficient time for discussion.
The study has been conducted to make an investigation of the bank’s state of affairs of foreign trade, on the study in this field some problem were created that may be termed as limitations of the study. There are as follows:
1.9 Research Timeline
Three months internship from 1st March to 31st May 2010 in IFIC Bank Ltd. Bangshal Branch.
2010 March Research Proposal Writing.
2010 March Literature Review.
2010 April Development of conceptual framework.
2010 April Data collection procedure.
2010 May Data analysis and interpretation of the findings.
2010 May Submission of draft copy.
2010 May Submission of research paper.
CHAPTER-TWO
| OVERVIEW OF IFIC BANK LTD. |
2.1 IFIC Profile
International Finance Investment and Commerce Bank Limited (IFIC Bank) is banking company incorporated in the People’s Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a fully fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast experience in the field of trade and commerce own 11.42% of the share capital and the rest is held by the general public.
2.2 HISTORICAL BACKGROUND OF IFIC BANK LTD.
IFIC Bank (International Finance, Investment and Commerce Bank Limited) originally named as International Finance and Investment Company was formed in October 1976. It obtained certificate of commencement on 28 February 1977 as an investment banking company. The company was established mainly to carry out banking and other financial business outside Bangladesh (especially in the oil-rich Middle-Eastern countries) either singly or in collaboration with other companies, banks and financial institutions. Bangladesh Bank allowed IFIC to transform itself into a banking company and accordingly, it was renamed and after completion of required legal formalities, it started full-fledged commercial banking operations on 24 June 1983.
Initially, the bank’s authorised capital was Tk 100 million divided into 1 million ordinary shares of Tk 100 each. The paid up capital was Tk 71.5 million, which rose to Tk 80 million in 1986. 60% of the shares of the company were A-class ordinary shares owned by its sponsors and members of the general public. The remaining 40%, grouped as B-class ordinary shares, were held by the government of Bangladesh. On 31 December 2000, the authorised and paid up capital, after being enhanced several times, stood at Tk 500 million and 279.35 million respectively. On that date, total shareholders equity of the bank was Tk 1,120.48 million and its reserve funds totaled Tk 648.20 million, which comprised statutory reserves (Tk 378.48 million) and general reserve and retained surplus (Tk 269.72 million). The bank is listed with Dhaka and Chittagong stock exchanges.
IFIC conducts all types of commercial and investment banking functions. Deposits with the bank in 1984 were Tk 863.40 million and they rose to Tk 6,594 million in 1990, and to Tk 15,505.87 million in 2000. The bank follows flexible interest rate policy and the interest rates offered by it on its deposits since 1 May 1998 varied between 7.5% and 10.5%.
Total lending of the bank had increased from Tk 576.51 million in 1984 to Tk 16,233.79 million in 2000. Interest charged by the bank on its lending varied between 10% and 16.5% depending on area of lending and maturity. Insider lending (loans to directors) of the bank accounted for 18% of its total loans and advances as on 31 December 2000. On the same date, the bank’s non-performing (classified) loans stood at Tk 6,130.8 million (37.77% of total loans and advances).
In December 2000, the total investment of the bank other than loans and advances accounted for Tk 3,375.43 million and the investment portfolio comprised government treasury bills, prize bonds, and shares and debentures of local and foreign companies. Foreign Exchange business of the bank during the year 2000 stood at Tk 36,500 million, which included export financing (Tk 16,546 million) and import servicing (Tk 15,886 million).
Total assets of the bank excluding off-balance-sheet items were valued at Tk 24,918.96 million in 2000, when the value of off-balance-sheet assets was Tk 8,048.2 million. In the same year, the bank earned a net profit (after tax and provisions) of Tk 192.93 million. Profitability of IFIC was seriously affected by the compulsory retaining of a huge amount of provision for classified loans and the transfer of accrued interest on non-performing loans to suspense account.
Overall management of the bank is vested in a 13-member board of directors with the managing director as the chief executive. In December 2000, the bank had a total of 1,659 employees and 54 branches including two overseas.
2.3 Goals and Objectives of IFIC Bank
o To build up strong pillar of capital.
o To promote trade, commerce and industry.
o To discover strategies for achieving systematic growth.
o To improve and broaden the range of product and services.
o To develop human resource by increasing employment opportunities.
o To enhance asset of shareholders.
o To offer standard financial services to the people.
o To create congenial atmosphere so that the client becomes interested to deal with the IFIC bank limited.
o To keep business morality.
o To develop welfare oriented banking service.
o To offer highest possible benefit to customers.
o As to its position among its counterparts is held high to let the viewers cast their very first look at it.
o To carry on the business of discounting and dealing in exchange of specie and securities and all kinds of mercantile banking.
o To provide for safe-deposit vaults and the safe custody of valuables of all kinds.
o To carry on business as financiers, promoters, capitalists, financial and monitory agents, concessionaires and brokers.
o To act as agents for sale and purchase of any stock, shares or securities or for any other momentary or mercantile transaction.
o To establish and open offices and branches to carry on all or any of the business abroad and within the country provided prior permission is obtained from Bangladesh bank.
2.4 Vision, Mission, Strategic Priority and Core Values
2.4.1Vision
To be best private commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity.
2.4.2 Mission
To build IFIC Bank Limited into efficient, market driven, customer focused institution with good corporate governance structure. To provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for.
2.4.3 Strategic Priority
To have sustained growth, broaden and improve range of products and services in all areas of banking activities with the aim to add increased value to shareholders investment and offer highest possible benefits to our customer.
2.4.4Core Values
For our customers: To become most caring bank-by proving the most courteous and efficient service in every area of our business
For our Employees: Promoting the well– being of the members of the staff.
For our Shareholders: Ensuring fair return on their investment through generating stable profit
For our Community: Assuming our role as a socially responsible corporate entity in a tangible manner through close adherence to national policies and objectives and upholding ethical values.
2.5 Milestones in the development of IFIC BANK
1976 – Established as an Investment & Finance Company under arrangement of joint venture with the govt. of Bangladesh.
1980 – Commenced operation in Foreign Exchange Business in a limited scale.
1982 – Obtained permission from the Govt. to operate as a commercial bank. Set up a it’s first overseas joint venture (Bank of Maldives Limited) in the Republic of Maldives (IFIC’s share in Bank of Maldives Limited was subsequently sold to Maldives Govt. in 1992)
1983 – Commenced operation as a full-fledged commercial bank in Bangladesh.
1985 – Set up a joint venture Exchange Company in the Sultanate of Oman, titled Oman Bangladesh Exchange Company (subsequently renamed as Oman International Exchange, LLC).
1987 – Set up its first overseas branch in Pakistan at Karachi.
1993 – Set up its second overseas branch in Pakistan at Lahore.
1994 – First joint venture in Nepal for banking operation, titled Nepal Bangladesh Bank Ltd.
1999 – Set up its second joint venture in nepal for lease financing, titled nepal Bangladesh Finance & leasing Co. Ltd. (which was merged with NBBL in 2007)
2003 – Overseas Branches in Pakistan amalgamated with NDLC, to establish a joint venture bank: NDLC-IFIC Bank Ltd. subsequently renamed as NIB Bank Ltd.
2005 – Acquired MISYS solution for real time on-line banking application.
Core Risk Management implemented.
2006 – Corporate Branding introduced. Visa Principal and Plus (Issuer and Require) Program Participant Membership obtained.
2008 – Observing 25th Anniversary of Customer Satisfaction.
2009 – 64 Branches offering Real Time On-line banking facility.
2010 – All Branches of IFIC Bank is operating under state-of-art world class Real Time On-line Banking Solution
2.6 Present Ownership Structure
The Government of the People’s Republic of Bangladesh now holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast experience in the field of trade and commerce own 11.42% of the share capital and the rest is held by the general public.
Board of Directors
Unlike others bank in the private sector, Board of directors of this bank is an unique combination of both private and Govt. sector experience. Currently it consist eleven (11) directors, of them seven represent the sponsors and general public and four senior officials in the rank and status of Join secretary/ Additional secretary represent the government. The Managing Director is the ex-officio director of the board.
Current Board of Director is:
· Mr. Salman F Rahman Chairman
· Mr. Abu Tahir Mohammad Golam Maruf Director
· Mr. Aminur Rahman Director
· Mr. Syed Anisul Huq Director
· Mr. Mohammed Nayem Syed Director
· Mr. S.M. Faruqi Hasan Director
· Mr. Tanim Noman Sattar Director
· Mr. Mahmudul Huq Bhuiyan Gov. nominated Director
· Arastoo Khan Gov. nominated Director
· Syed Monjurul Islam Gov. nominated Director
· Mohammad Ali Khan , ndc Gov. nominated Director
· Mosharraf Hossaian Managing Director
(Source: IFIC Bank Limited, Bangshal Branch)
2.7 Management Structure:
The eleven members of the Board of Directors are responsible for the strategic planning and overall policy guidelines of the Bank. Further, there is an Executive Committee of the Board to dispose of urgent business proposals.
Besides, there is an Audit Committee in the Board to oversee compliance of major regulatory and operational issues.
The CEO and Managing Director, Deputy Managing Director and Head of Divisions are responsible for achieving business goals and overseeing the day to day operation.
The CEO and Managing Director is assisted by a Senior Management Group consisting of Deputy Managing Director and Head of Divisions who supervise operation of various Divisions centrally and co-ordinates operation of branches.
Key issues are managed by a Management Committee headed by the CEO and Managing Director. This facilitates rapid decisions.
There is an Asset Liability Committee comprising member of the Senior Executives headed by CEO and Managing Director to look into all operational functions and Risk Management of the Bank.
2.8 Hierarchy of Management
IFIC Bank has eighteen hierarchy levels which are shown sequentially from the top levels-
| Assistant Officer |
| Office Assistant |
| Managing Director |
| Deputy Managing Director |
| Senior Executive Vice President |
| Executive Vice President |
| Senior Vice President |
| First Vice President |
| Senior Asst. Vice President |
| First Asst. Vice President |
| Assistant Vice President |
| Senior Staff Officer |
| Staff Officer |
| Officer Grade I |
| Officer Grade II |
| Office Attendant |
(Source: IFIC Bank Limited, Bangshal Branch)
2.9 MANGERIAL POLICIES
i) Financial policies
ii) Procurement policiesiii) Marketing policies
iv) Promotional policies
v) Lending policiesvi) Personal policies
i) FINANCIAL POLICIES
The financial policies of any bank are the most important policies through which the whole banking activity is conducted. These policies are primarily conducted on:
- Source of funds
- Use of funds
SOURCE OF FUNDS:
The bank finance policy is acquiring funds from the following sources:
- Deposits of account holders.
- Interest on advances and loans granted to the borrowers.
- Income and commission from the services provided by the bank.
- Bank opens various types of accounts for its customers Services are provided for earning.
- Interest income and commission bank providing the services to its customer.
USE OF FUNDS:
After the acquisition of the funds their acquisitions become necessary. The bank seeks the best way for making investment to got more profit with the maximum security. The bank has an investment portfolio in which it allocate its funds for crediting to borrowers, investment in the stock market, investment in the real estate property etc. for allocation of funds a bank has to follow some banking policies and the prudential regulations of SBP these are:
A bank has to maintain liquidity with central bank, i.e. 25 %of its total deposits. A bank cannot invest all of its funds otherwise it will be difficult to meet urgent needs. A substantial part of funds is received from interest on loans and advances. Before granting a loan the bank analyzes and observes the borrower and conduct a complete ratio analysis. Bank prepares credit line for this purpose the major thing is granting an advance is the security offered by the borrower and its actual market value.
ii) PROCUREMENT POLICIES
Procurement policies are more concerned with manufacturing organizations. In bank industry that is service industry procurement means the procurement of funds from various sources such as deposits. It involves attracting and holding the funds of the depositors. After the acquisition of funds, the bank invest the acquire funds. One alternative is to lend its money and earned interest markup or invest in govt. securities etc. as already mentioned in the above paragraph the major sources of funds for a bank are the deposit of the general and the other sources of income includes interest or markup charges received for various services offered by the bank to its clients.
A bank tries to attract maximum no. Of accounts so that it can increase it’s deposits and these lending ability. In order to get maximum no. of accounts the staff of the bank must be efficient as compared to the other banks and the manager of the branch must take personal interest in attracting deposits. Good quality of the service is the key to success.
iii) MARKETING POLICIES
Marketing policies are also one of the most important policies because they are related to the growth of the organization. Marketing for a bank would mean:
- Creation of new product and services.
- The bank marketing must be consumer oriented.
Following are the marketing policies of the IFIC.
- Keeping the track of latest development in the world and incorporating the latest and most modern equipment to make the banking procedures simple and easy for the customers.
- Development of products for the customers.
- Giving good services and maintaining good relations with the customers.
These policies can be implemented by providing the right product and service to the customer at the right place, at the right time, at the right price. It is necessary for the managers to keep in touch with consumers, observe their needs and develop products, which meet their needs.
iv) PROMOTIONAL POLICIES
Public relation and advertising has assumed a great importance in the modern banking business. As for as promotional activities are concerned, the main objective of the bank is to inform the existing clients and other people about its new products or change in the existing services. IFIC establishes its purpose through:
- Direct contact with customers.
- Relation with business organizations.
- Community relations.
v) LENDING POLICIES:
Every bank has its own lending policies except for those, which are common for all the banks, i.e. the policies, which are imposed on all the commercial banks by the SBP, are known as prudential regulations. The lending policies of IFIC are as follows:
- The bank only invests in those sound and viable projects, which have good rate of return.
- Bank prefers to advance loan to their account holders.
- Loan is given to reliable person only.
- No political loan is sanctioned by bank.
- Any account holder can apply for running finance or demand finance. The manger apprises the past record of account holder and his credit worthiness. If he finds any thing wrong he can refuse to sanction the amount.
- The bank while taking security prefers govt. Securities to shares.
- It also advances working capital loans.
vi) PERSONAL POLICIES:
Personal policies have an important role in the success of an any organization. IFIC have its proper personal policies. Good personal policies motivate the employees towards hardworking.
Following are the main personal policies of IFIC:
- Selection of employees on merit
- Selection of capable employees.
- Attractive salary package for motivation of employees.
- To train and develop the future management of the bank.
- Every employee must have certain set of clearly defined duties
- Effective communication at al levels of the organization.
2.10 Corporate Objectives:
IFIC Bank’s objectives are reflected in the following areas:
· Highly personalized service.
· Customer-driven focus.
· Total commitment to quality.
· Contribution in the economy.
· Quality of human resources.
· Commitment to its clients at each level.
The company believes that communication with, and feedbacks from its clients help it achieve its goal of providing world-class product and services. IFIC Bank regularly conducts client satisfaction surveys and make immediate accommodations and adjustments where needed. It also constantly monitors its standards, and strives to meet clients’ requirements.
2.11 Risk Management
In view of the global recognition towards need of an effective risk management and control systems in financial sector, IFIC Bank being cognizant of the importance of the subject, has prepared and implemented the following policy guidelines on Risk Management:
• Credit Risk Management
• Asset Liability Management
• Foreign Exchange Risk Management
• Internal Control & Compliance
• Prevention of Money Laundering
2.12 Joint Ventures Abroad
2.12.1 Bank of Maldives Limited
IFIC is the first among the banks in the private sector to have operations abroad. In 1983, the Bank set up a joint venture bank in Maldives known as ‘Bank of Maldives Limited’ (BML) at the request of the Government of the Republic of Maldives. This is the only national bank in that country having branches throughout that country. IFIC Bank managed the affairs of BML from 1983 to 1992. IFIC Bank sold its shares in 1992 to the Government of the Republic of Maldives and handed over the Management of BML to Maldives Government.
2.12.2 NIB Bank Ltd., Pakistan
IFIC Bank had two branches in Pakistan, one in Karachi and the other in Lahore. Karachi Branch was opened on 26th April 1987, while Lahore Branch was opened on 23rd December 1993.To meet the Minimum Capital Requirement (MCR) of the State Bank of Pakistan Therefore, the existence of our above Overseas Branches has ceased w.e.f. 2nd October 2003 and a new joint venture bank entitled NDLC – IFIC Bank Ltd. emerged in Pakistan w.e.f. 3rd October 2003. The Bank was renamed as NIB Bank Ltd. IFIC Bank presently holds 7.31% equity in the Bank.
2.12.3 Nepal Bangladesh Bank Ltd. (NB Bank)
Nepal Bangladesh Bank Ltd. (NB Bank), a joint venture commercial bank between IFIC Bank Ltd. and Nepal nationals, started operation with effect from June 06, 1994 in Nepal with 50% equity from IFIC Bank Ltd. The Bank has so far opened 17 (seventeen) branches at different important locations in Nepal. IFIC Bank presently holds 25% shares in NB Bank.
2.12.4 Nepal Bangladesh Finance & Leasing Limited (NB Finance)
Nepal Bangladesh Finance & Leasing Co. Ltd. (subsequently renamed as Nepal Bangladesh Finance & Leasing Ltd.), another joint venture leasing company between IFIC Bank Ltd. and Nepali Nationals, started its operation on April 18, 1999 in Nepal. IFIC Bank presently holds 15% share in the company.
2.12.5 Oman International Exchange LLC (OIE)
Oman International Exchange LLC (OIE), a joint venture between IFIC Bank Limited and Oman nationals, was established in 1985 to facilitate remittance by Bangladeshi wage earners in Oman. IFIC Bank holds 25% shares, and the balance 75% is held by the Omani sponsors. The exchange company has a network of 10 branches covering all the major cities/towns of Oman. The operations of the branches are fully computerized having online system. The affairs and business of the company is run and managed by the Bank under a Management Contract.
2.13 CREDIT RATING ON IFIC BANK LIMITED
Table 2.1: Credit rating on IFIC Bank Limited
| Long Term | Short Term | |
| Surveillance Rating 2008 | A | ST – 2 |
| Entity Rating – 2007 | A | ST – 3 |
| Outlook | Stable | |
| Date of Rating | June 29, 2009 | |
(Source: IFIC Bank Limited, Bangshal Branch)
Credit Rating Information and Services Limited (CRISL) has assigned A (pronounced as single A) rating in the long term and ST – 2 in the short term to International Finance Investment and Commerce (IFIC) Bank Limited for the year 2008. The above rating has been given in consideration of the Bank’s good fundamentals such as good capital adequacy, good financial performance, sound liquidity position, increasing trend in market share and decreasing trend in NPL. However, the above has been constrained, to some extent, by high loan deposit ratio, decline in internal capital generation ratio and dependence on term deposits. Bank/ Financial Institutions rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. The short term rating indicates high certainty of timely payment. Liquidity factors are strong supported by good fundamentals and the risk factors are very small.
Credit Rating Information and Services Limited (CRISL) also viewed the bank with “stable outlook” on the basis of its consistent increase in operational efficiency.
2.14 Specialized Areas & Major Highlights of the IFIC Bank
2.14.1 VISA Card
IFIC Bank VISA Credit has been launched in June 2007. The bank successfully launched VISA Card-Credit Card which created a new dimension in its customer service and consumer financing. It can be used for withdrawal of cash from ATM or purchase of goods and services from any point of sales (POS) displaying VISA Logo.
Recently the bank launched VISA Debit Card and Prepaid Card. The Debit Cards are issued to the customers who have been maintaining Savings/Current account with our online branches. Prepaid cards are issued by the branches instantly. For Prepaid cards, it is not necessary to maintain any account with the bank. Bank POS has been installed at all the branches which will facilitate the card holders for withdrawal of cash from any branch of IFIC Bank.
2.14.2 “Your Satisfaction is First” Slogan
Like any other country of the world, the people living in the urban areas of our country lead a very busy life. Time is very valuable to them. Despite this, they are to waste their valuable time at the counter of different Banks and other Institutions for payment of their monthly bills of different utility services like Electricity, Telephone, Water, Gas etc. They, as such, face enormous difficulties for payment of their monthly bills in time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the bills of various utility services at One Point.
With this end in view, IFIC Bank Limited has introduced a slogan entitled “YOUR SATISFACTION IS FIRST”. The slogan is designed to provide all the required services to the customer in making payment of their various bills on their behalf from the counter of the Bank irrespective of location.
2.14.3 IFIC Line- (Any Branch Banking)
Online Branch Banking The Bank has set up a Wide Area Network (WAN) across the country to provide online branch banking facility to its valued clients. Under the Scheme, clients of any branch shall be able to do banking transaction at other branches of the bank.
Any amount can be deposited or transferred under IFIC Line. In the system, however, at present there is a limit for cash withdrawal through bearer or by account holder himself.
2.14.4 Information and Communication Technology
Banks are constantly upgrading their technological platform to enhance customer value management capability for profit maximization. Accordingly, Real Time Online Banking, ATM, Credit Card, Debit Card / Prepaid Card, POS, SMS Banking; KIOSK etc. have been introduced in the domestic Banking Arena.
IFIC Bank has introduced the following updated technology for the valued clients:
o Introduction of Real Time Online Banking System in 56 branches out of total 74 Branches and up gradation of Head Office with Misys Online Banking Solution.
o Establishment of ATM interface with core Banking solution.
o Credit Card, Debit card / Prepaid Card and POS.
2.14.5 Customer care
IFIC bank’s firm commitment to excellent customer service delivery has resulted to remarkable progress in all areas of operation during 2006. With the liberalization of banking and financial industry and increasing customer knowledge and sophistication, competitive pricing of products is no longer sufficient in capturing large market share. The continuous improvement in delivery of products and services, reduction of turn around time for loan processing, on-line deposits and remittance payments payment has the key differentiation for winning the customer satisfaction… Advertisement has been given in TV channels for developing awareness of the anti money laundering initiatives of the Bank
2.14.6 Corporate Social Responsibility (CSR)
Globally, the notion of Corporate Social Responsibility (CSR) is fast gaining acceptance. IFIC Bank manages its business in a responsible way and contributes to the society and environment in which it operates.
- Vocational training program for migrant workers
- Education for life program
- IFIC school/orphanage
- Education program for tokai/street children
- Medical training for midwives
- IFIC health care centre
- Eye camp
- And other related programs.
2.14.7 Human Resource Development:
Human Resources Development (HRD) activities aim at fulfilling the Bank’s Mission. One of our four major missions of IFIC is to: “Provide service to their clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make their position unique in giving quality service to all institutions and individuals that they care for.”
Skilled and dedicated workforce with creative talents, innovative actions are not always readily available. Appreciating the scarcity of such manpower, the Bank /Tom the very beginning laid importance to HRD that conceptually includes activities like: pre-recruitment drill, recruitment, induction training in the Academy, job rotation, placement and posting, reward and promotion. All these activities are planned by the Bank in an integrated way aiming at manpower with required technical, managerial, human and conceptual skills.
Management of IFIC Bank not only appreciates the need of skills required for day to day banking but also realizes the need for skills to meet the global and national financial and economic environments that are changing fast. Meeting the needs of new skills arising out of Financial Sector Reforms Programme (FSRP) is also a major concern of the management.
2.14.8 THE ACADEMY
At the very beginning, the Bank laid a foundation by setting up an Academy at Head Office under Human Resource Development Division to develop human resource internally. Equipped with a professional library, modem training aids, professional faculty and other facilities, the Academy of the Bank is a leading one among the Banks in private sector.
The Academy regularly conducts foundation courses, specialized courses and seminars in different areas of banking to take care of the professional banking needs. In addition, officers are regularly sent to Bangladesh Institute of Bank Management (BI8M) and Bangladesh Bank Training Academy for professional training. Sending officers abroad for higher training is a regular feature. A Research Department also works in aid of HRD and other operational areas.
Academy Objectives
IFIC Bank Academy, established in 1983 as an in-house training institution, takes care of the training need of the employees of the Bank. The objectives of the Academy are to:
? Make available skilled and dedicated workforce within shortest possible time by
Reducing time required for on-the-job training.
? To develop understanding about law and practice of banking through foundation training;
?Develop understanding about human/conceptual skill and organizational culture
? impart managerial skills to groom future Executives and to keep existing Executives up-to-date with national and international environment.
Types of Programs
For fresher, Foundation Courses on elementary knowledge of banking are organized. Specialized Courses on the areas like Credit, Foreign Exchange, Accounts, Inspection, and Marketing etc. are meant for officials working in those areas. Senior level courses are run on specific knowledge area. Certain courses are a blend of different knowledge areas.
Approaches to Teaching
The Academy holds need-based training courses/workshops/seminars etc. which are finalized by HRD Division in consultation with various departments and senior Executives at Head Office. Training inputs are constantly reviewed/modified for achieving the Bank’s objectives. Methods in training include: discussion lecture/workshop/case study/games/role play/ film show/simulation/group work & presentation/project visit and so on.
2.14.9 On-The-Job Training
Foundation courses have to parts:
? Theoretical training in the academy and
? Job rotation.
The officers on probation are required to under go both in a period if one year. During this period three –phased training is provided. On the theoretical training in, say, General Banking the officers required to undergo rotation in General Banking Activities under the supervision of the HRDD. Similar process is followed in case of Credit and foreign Exchange.
2.15 Periodical performance 2003 to 2008
Figure-2.1: Performance at a Glance Income Statement of the year 2003-2008 (Taka in Millions)
| Particulars | 2003 | 2004 | 2005 | 2007 | 2008 |
| Income Statement | |||||
| Interest Income | 1620 | 2159 | 2641 | 2775 | 3515 |
| Interest Expense | 1055 | 1408 | 1616 | 1897 | 2347 |
| Net Interest Income | 565 | 751 | 1025 | 878 | 1168 |
| Non-interest Income | 631 | 841 | 946 | 1232 | 1732 |
| Non-interest Expense | 448 | 591 | 824 | 886 | 1101 |
| Net Non-interest Income | 183 | 250 | 121 | 346 | 631 |
| Profit before provision and tax | 748 | 1001 | 1146 | 1502 | 1622 |
| Provision for loans and assets | 51 | 232 | 82 | 38 | 305 |
| Profit after provision before tax | 697 | 770 | 1064 | 1201 | |
| Tax including deferred tax | 279 | 394 | 452 | 633 | 689 |
| Profit after tax | 418 | 375 | 612 | 568 | 1052 |
(Source: IFIC Bank Limited, Bangshal Branch)
Profit After Tax:
Figure-2.2: Performance at a Glance Balance Sheet of the yearend 2004-2008 (Taka in Millions)
| Particulars | 2004 | 2005 | 2006 | 2007 | 2008 |
| Balance Sheet | |||||
| Authorized Capital | 1000 | 1000 | 1000 | 4000 | 4000 |
| Paid-up Capital | 600 | 700 | 1000 | 1400 | 1750 |
| Total Shareholder’s equity | 1526 | 1732 | 2240 | 2808 | 3860 |
| Deposits | 16482 | 20483 | 28069 | 36022 | 54724 |
| Long-term liabilities | 5350 | 7052 | 7371 | 11406 | 16877 |
| Loans and advances | 12687 | 16492 | 23220 | 31916 | 45010 |
| Investments | 1996 | 2750 | 3084 | 3940 | 7844 |
| Property, Plant and Equipment | 219 | 256 | 322 | 372 | 412 |
| Earning Assets | 15125 | 19335 | 27131 | 36727 | 55458 |
| Net current assets | 437 | 583 | (1299) | 31 | 5286 |
| Total assets | 19359 | 24249 | 32362 | 41506 | 60899 |
| Current ratio | 1.00 | 0.96 | 1.06 | 1.00 | 0.88 |
| Debt equity ratio | 8.56% | 8% | 7% | 7% | 7% |
| Other Business | |||||
| Import | 19564 | 25441 | 36747 | 40303 | 52639 |
| Export | 12190 | 16490 | 19502 | 28882 | 41801 |
| Remittance | 1252 | 3063 | 2140 | 3688 | 15050 |
| Guarantee Business | 3659 | 4248 | 4085 | 5303 | 5386 |
| Inland letter of credit | 1523 | 3729 | 4267 | 5405 | 10174 |
| Capital Measures | |||||
| Total risk weighted assets | 13389 | 16455 | 23050 | 31890 | 44324 |
| Core capital (Tier-I) | 1526 | 1782 | 2240 | 2808 | 3860 |
| Supplementary capital (Tier-II) | 139 | 176 | 236 | 369 | 549 |
| Total Capital | 1665 | 1958 | 2476 | 3177 | 4409 |
| Tier-I capital ratio | 11.409 | 10.83 | 9.72 | 8.80 | 8.71 |
| Tier-II capital ratio | 1.04 | 1.07% | 1.02 | 1.16 | 1.24 |
| Total Capital Ratio | 12.44 | 11.90% | 10.74 | 9.96 | 9.95 |
| Credit Quality | |||||
| Nonperforming loans (NPLs) | 188.22 | 326.53 | 352.73 | 308.21 | 367.15 |
| % of NPLs to total loans & advances | 1.48% | 1.98% | 1.52% | 0.96% | 0.82% |
| Provision for unclassified loans | 131.73 | 171.73% | 231.73 | 364.80 | 544.80 |
| Provision for classified loans | 122.81 | 249.44 | 174 | 127.00 | 308.52 |
(Source: IFIC Bank Limited, Bangshal Branch)
Deposits, Loans and Advances:
CHAPTER-THREE
| LEARNING PART |
3.0 Introduction
The general banking development does the most important and basic work of the banks. All other developments are linked with this department. It also plays a vital in deposit mobilization of the branch. IFIC Bank Ltd. provides different types of accounts, locker facilities and special type of saving scheme under General Banking- For proper functioning and excellent customer service this department is divided in to various namely as follows:
· Accounts opening section
· Dispatch section
· Cash section
· Bills and clearing section
· Remittance section
· Accounts section
3.1 Account Opening Section:
Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account.
Table 3.1: Various rules and regulations for opening an account.
| Step1 | The account should be properly introduced by any one of the following:Ø An existing Current Account holder of the Bank
Ø Officials of the Bank not below the rank of an Assistant officer. Ø A respectable person of the locality well known to the manager / sub- Manager of the Branch concerned |
| Step2 | Receiving filled up application in bank’s prescribed form mentioning what type of account is desired to be opened. |
| Step3 |
|
| Step 4 | Authorized Officer accepts the application. |
| Step 5 | Minimum balance is deposited – only cash is accepted. |
ACCOUNT OPENING PROCEDURE & PRECAUTIONS
· Know your customer
The objective of knowing a customer is to have a fair idea about the identity, financial resources, and general information about the customer at the time when the relationship is established. A banker must have following information about the customer:
· Customer name:
Enter complete name as mentioned in original ID card /other business documents.
Nature of business /profession: if customer is of salaried class enter his employer name. If the customer is a businessman, trader, sole proprietor, enters the business name, for example “