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“Investors Scheme of Investment Corporation of Bangladesh (ICB)”

CHAPTER-1

An Overview of Internship imam

1.1 What is internship?

Internship means practical training through attending the particular work physically. Practical training means a way through which a person or a trainee can gather experience about the related subject practically and be able to apply his theoretical experience in the field of real life action. Practical training paves the way for gaining practical knowledge through activities other than reading textbooks and attending formal academic courses. Practical training is necessary to achieve complete knowledge about something. Internship program is actually a form of practical training. firmly believe, practical training can open the inner eyes of a man. The works conducted during the Internship Program will expand the horizon of our practical knowledge.

According to “Standard methods taken for searching knowledge are meant internship.”

For the students of MBA of the Department of Accounting & Information Systems internship is an academic requirement. For the internship every student is required to work in a selected institution to enhance his practical experiences. The internship is managed and supervised by a supervisor who is a teacher of the department.

For internship, was sent to the Investment Corporation of Bangladesh under the supervision. Topic was “Investors Scheme of Investment Corporation of Bangladesh.” have done internship in ICB from 18^th December to 27 December 2006.

1.2 Importance of Internship

Internship program, in Accounting especially is of great importance and significance under the circumstances of the present competitive state of the business world. Business strategies are in a continuous flux. Internship prepares an intern for this highly fluid situation. Its importance is gradually increasing due to the development and expansion of industries. Industries are the main elements of production and supply of consumer goods; Business industries need highly skilled personnel for proper functioning. Internship prepares the trainee for the tough job conditions and future challenges of business activities. The trainee learns how to adapt himself in situations quickly and how to work in a team environment. Internship increases the interpersonal communicative skill of the trainee as it opens in front of him a panorama towards the functioning of corporate institutions. In addition internship helps a trainee to fulfill his practical knowledge and makes him fit for important jobs.

1.3 Objectives of Internship

The objective of internship incorporates so many things. To be specific, the objectives of the internship program undertaken by the Department of Accounting & Information Systems, University of Rajshahi is as follows:

1) It helps the trainee to know the institution as a national organization contributing to the economic development of the country.

2) It provides the opportunity for the trainee to see how the theories he learnt from academic lessons are applied in the practice of real life.

3) It helps him evaluate the relationship existing among cost, volume and profit of the selected institution.

4) It teaches the trainee to be able to identify various problems of the institution and ways of solving them.

5) It prepares the trainee for the future challenges of modern business world.

1.4 Limitation of Internship Program

In internship training, have faced some problems, which may be termed as the limitations. They are as follows:

• To get clear knowledge is any field we required sufficient time. get only seven days for internship training, this time is not sufficient to acquire data from field during the study period, Due to shortage of time, could not go into depth.

• Collected information was not adequate. Some key figure regarding cost structure and overdue sundry debtors where not available for certain years.
• The internship is mainly based on published annual report. But for the preparation of the report, we can not get sufficient official data.
• Since, we are students, so we have no depth knowledge and experience in preparing report.
• This is the first research of life; that is why knowledge in this field is not enough to prepare the report.

Chapter-2

Study of an Internship Program

2.1 Background of the study

This report has been prepared to serve the purpose of “Internship Report” for the MBA program of the assigned student in the department of Accounting & Information Systems, University of Rahshahi.

was assigned for seven days internship program by the department. The selected organization was Investment Corporation of Bangladesh (ICB). The concerned authority in ICB assigned me to go to the various departments of the Corporation to get an overview of its organizational structure and the activities.

ICB is an investment company operated by the Government of Bangladesh. This organization plays a very important role in the country’s capital market. It also offers asset management and merchant banking services. The report has covered the area of Investors Scheme of the organization. The report is titled as “Investors Scheme of Investment Corporation of Bangladesh (ICB)”

2.2 Scope of the study

As has been mentioned earlier, the main focus of the study is the Investors Scheme of Investment Corporation of Bangladesh The report establishes the theoretical and conceptual framework comparing with which the Investors Scheme of ICB will be judged.

There is one elaborate chapter on the ‘Managing of Investors Account through Investors Scheme’ of ICB. This study will also present some problems of ICB observed during the internship and the study will suggest some internship possible remedy of those problems.

2.3 Methodology of the study

Methodology can be termed as underlying principles and rules of organization or the philosophical systems that work at the backdrop of any study. It clarifies the problems involving the research in a very ordered and systematic fashion. Strategies are determined at this stage for future implementation. In this study decisions and calculations have been made basing on past experiences and the available data of past activities. These data is collected by the following ways:

i) Personal Interview: This is the most effective way of collecting information about any organization. Through this process confronted the responsible officials of the selected organization and have collected the necessary information.

ii) Briefing Sessions: In case of corporate organizations this method is useful. The different department chiefs brief the trainees. Through these Briefing Sessions have collected the necessary information about the different segments of the institution.

iii) By observation: Through this process data is collected by ways of investigators own observation without interviewing any body. It is a costly process and through this process the observer gets limited information.

iv) Through Telephone Interviews: Sometimes data are collected through telephone interviews. It is used rarely, especially in the field of industrial survey.

v) Mail Survey: Sometimes questionnaires are sent to the respondent to get some important decisions. The respondent fills the questionnaire and send to the sender. From a lot of such questionnaires data is also collected.

vi) Through Schedules: Sometimes data is also collected through schedules that are sent to respondents by appointed enumerators. Data is also collected by these schedules filling up by respondents.

2.4 Objective of the Study

Investors’ Scheme was established to help the investors to develop diversified and balanced portfolio to minimize risk and earn a reasonable return. So that efficient allocation of resources can be done. To make this, it is necessary to establish a way to collect and disburse the resource. At the same time there should be an opportunity for the entrepreneurs to invest. ICB’s investors’ scheme is doing this. They are now providing margin loan, professional counseling, secured custodian services, modern logistic support and computer facilities and excellence working environment facilities. By doing they play a vital role in the capital market and the industrialization of the country. This activates make me interested to work on the investment scheme. So the objectives of the study are:

• Analysis the activities of investment scheme.
• Explain the growth trends of the investment accounts through Investment Scheme.
• To interpret the importance of the investment scheme in respect to the country’s capital accumulation.

2.5 Limitations of this Study:

Limitations are obvious in any study so do here. Since this is an internship report, the limitations regarding the internship program has acted as the limitations of the study. Among others the main limitations are:

· For this study purpose my sample area is a branch office of ICB but the branch office do not maintain the complete Balance sheet and Income statement. They only maintain the trial Balance which is not provided sufficient data for the analysis. So I used the consolidated Balance sheet and Income statement which is maintained by Head office.

· I had to go to almost every Department of ICB as part of the internship program. Seven days is a very short span of time to get in-depth knowledge about a massive organization like ICB

· Officials of ICB maintain a very busy schedule. So they were not always able to provide enough time to enlighten the intern students every time, even if they had the intention to do so.

· The area covered by the report “Investors Scheme of ICB” concerns a huge number of activities, and it is very difficult to sketch a total picture of the financial activities in a report of this scale.

Chapter – 3

Overview of ICB, Rajshahi Branch: At A Glance

3.1 Location of the Branch:

Shaheb Bazaar, heart of the city and busiest place in Rajshahi where the Branch is situated. This branch was established on 15 February 1984 in Rajshahi. It is located at Gaffar plaza (2^nd Floor) in Rajshahi. This branch serves the Shaheb Bazaar area and also the whole city through its various customer services.

3.2 Current Organ gram of this Branch

			Supervisor				Supervisor
		Steno Typist
	Cashier

Source: Rajshai Branch of ICB

3.3 Human Resources Management

Human Resource Management (HRM) is one of the most crucial divisions in ICB. It brings speed in all the works of the Corporation. Human resource planning decision is taken by personnel department through head office. There is no particular Human Resource division in this branch.

Name of the management personnel are as follows:

Md.Rafiqul Islam Manager/ Senior Principal Officer

Mrs. Sultana Begum Principal Officer

Mr. Abdul Mottalib Principal Officer

Md. Kamrul Hassan Assistant Programmer

Md.Rajjakul Islam Supervisor

Mr. Sk. Rafiqul Islam Supervisor

Md.Ershadunnabi Sarker Steno Typist

Abu Md.Rokonuzzaman Cashier

3.4 Subsidiary Activities:

3.4.1 ICB Capital Management Ltd. (ICML)

To accelerate the activities of the capital market government takes some restructuring policy. As a part of restructuring program of ICB under Capital Development Program (CMDP) initiated by the Government of Bangladesh and the Asian Development Bank(ADB),ICB Capital Management has been created as a subsidiary of ICB to carry out merchant banking activities including issue management, underwriting and portfolio management. The Company was incorporated under the Companies Act, 1994 on 5 December, 2000 and registration from the Securities and Exchange Commission was obtained on 16 October.2001.The company started its’ operation from 01 July, 2002 upon issuance of gazette notification by the government. ICB Capital Management Ltd. has started its activities from 16 June 2005.It is providing better services day by day. No of account is increasing in a tremendous rate.

3.4.2 ICB Asset Management Company Ltd. (ICB AMCL)

Under the restructuring program, ICB AMCL was created in 5^th December, 2000 and commenced its business in July 1; 2002.The vision of the company is to play a dominant role in developing Mutual Fund industry as the preferred tool of investment in the country. Meanwhile, the company has emerged as one of the fast expanding asset management company in the country. It is started working at Rajshahi in 16^th July 2005.

3.4.3 ICB Securities Trading Company Ltd. (ISTCL)

ICB Securities Trading Company Ltd. is also made under the restructuring program. The company obtained license from the Securities and Exchange Commission on 13 August 2002 and started its brokerage activities with the Dhaka Stock Exchange (DSE) from 13 August 2002 and Chittagong Stock Exchange (CSE) from 17 August 2002. Its main objective is to facilitate online trading, to ensure better, fraud less and quick services to the customers. ICB Securities Trading Company Limited has started its journey in Rajshahi from 16 June 2005. From then it is operating its activities in a better way. This branch is closely linked with the CSE. Recently it got linked with DSE.

3.5 Computer Division

The most important division is Computer division of ICB Rajshahi Branch. Though the division has been established recently, it has brought speed in all the works of this branch. It reduces paper jobs and also saves the time. For example, to check the balance of an account holder, Investors department need not go the account department but can do the job by using the workstation of the department. A strong networking environment exists among the different department of ICB that is mainly controlled by computer division. The main purpose of computer division is to maintain the existing networking environment of ICB and generate some application for different departments in order to fulfill the total automation planning by the Investment Corporation Bangladesh.

Computer division includes three departments

1. Data Management

2. System Analysis

3. Programming

ICB has developed a set of software to conduct and support its main business and management operations, mutual funds management system, stock exchange index publication IPO management, unit sales and repurchase management system, personnel management information system, the software merchandising operation management system, accounting application, mutual fund reconciliation, share reconciliation etc.

3.6 Operational Activities

ICB, Rajshahi Branch operates its activities getting direct instructions and supervision of the head office. The head office formulates all policies and regulations and these are implemented through its branches including this branch. This branch does not provide for underwriting, bridge financing, and other such activities for the development of industries. The sector in which the head office gives loan is supervised by the branch office. The branch also provides the following functions

· To participate in the primary market transactions directly.

· Maintaining different types of voucher.

· To participate in the secondary market by ICB Securities Trading

Co. Ltd. Rajshahi Branch

· Investment Account Management

· Unit Fund Management

· Mutual Fund Management

· Legal Action

· Consumer Credit Scheme

· Custodian and Banker to the issues

· Corporate Financial Advice

Chapter –4

Trend Analysis of the Activities of ICB

4.1 Preamble and Origin of ICB

The Investment Corporation of Bangladesh (ICB) was established on 1 October 1976 under “The Investment Corporation of Bangladesh Ordinance, 1976” (No. XL of 1976). The establishment of ICB was a major step in a series of measures undertaken by the Government to accelerate the pace of industrialization and to develop a well organized and vibrant capital market particularly securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity gap of the companies. In view of the national policy of increasing the rate of savings and investment to foster self reliant economy, ICB assumes an indispensable and pivotal role. Through the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (no.24 of 2000), reforms in operational strategies and business policies have been implemented by establishing and operating subsidiary companies under ICB. Now the institution can play a more dynamic role in the development of the capital market of Bangladesh.

4.2 Objectives of ICB

· Promoting and establishing subsidiaries for business development

· Mobilizing savings

· Developing the capital market

· Providing for matters ancillary thereto.

· Encouraging and broadening the base of investments.

4.3 Business Policy of ICB

· Inspiring small and medium savers for investment in securities

· Diversifying investments

· Arranging equity and loans singly or through consortium of financial institutions including banks.

· Creating employment opportunities.

· Providing financial assistance to projects subject to their economic and commercial viability.

· Acting on commercial consideration with due regard to the interest of industry, commerce, depositors, and investors and to the public in general.

· Encouraging more on investment in Agro-based and Information and communication (ICT) sectors.

· Developing and encouraging entrepreneurs.

4.4 Functions of ICB

• Managing existing Investment Accounts.
• To participate in and finance of joint-venture projects.
• Purchasing shares and debentures including placement and equity participation directly.
• To provide lease finance singly or by forming syndicate.
• Acting as Trustee and Custodian.
• Managing Portfolios of existing business
• To provide Bank Guarantee
• Managing existing mutual funds and unit fund.
• To conduct Computer Training Programs.
• To provide Consumer Credit.
• To provide investment counseling to investors.
• To supervise and control the activities of the subsidiary companies.
• To participate in Government Divestment Program.
• To deal in other matters related to capital market operations.
• To provide advance against ICB Unit and Mutual Fund Certificate.

4.4.1 Growth of Different Investment Schemes

Since its establishment, ICB launched Investors’ Scheme first in 1977 and then it become successful in introducing eight mutual funds and one unit fund during the last two decades. Table shows the trend of introduction of different schemes.

Table-4.1

Attainments of ICB

Type of Attainment	Date of Establishment/Commencement
ICB	October 1 ,1976
Investors’ Scheme	June 13,1977
1st ICB Mutual Fund	April 25,1980
ICB Unit Fund	April 10,1981
2nd ICB Mutual Fund	June 17,1984
3rd ICB Mutual Fund	May 19,1985
4th ICB Mutual Fund	June 06,1986
5th ICB Mutual Fund	June 08,1987
6th ICB Mutual Fund	May 16,1988
7th ICB Mutual Fund	June 30,1995
8th ICB Mutual Fund	July 23,1996

Source: ICB annual report, 2003-2004

Over the year, the investor’ scheme has grown tremendously. Table 1 shows that after establishment, ICB floated eight closed-ends and one open-end fund between April 25, 1980 and July 23, 1996. Since ICB got significant responses from the public, that’s why it was possible on the part of ICB to float eight mutual funds and one unit fund within 16 years of its operation. Mutual funds are very popular to the investors because of satisfactory dividend payment performance; and side by side because of the capital gains. As on 30 June, 2005 there were 31,372 mutual fund certificate holders. Not only that the total number of unit holders as on 30 June 2005 were 40354525.

4.4.2 Other products of ICB

Without above product, ICB has some other products. Those are given below:

Consumer Credit Scheme

As part of business diversification programmed ICB has introduced “Consumer Credit Scheme” in 2003-04 looking at the need of various household commodities of different professional of govt., semi-govt., autonomous bodies and some established private sector organizations. Under this scheme one can enjoy minimum of TK. 1.0 lac but maximum of TK. 5.0 lac credit facilities. The rate of interest on the loan is reasonable competitive. Under this scheme the cumulative amount of loan disbursed up to 30 June 2005 was TK. 1.28 crore including TK. 1.0 crore during the year under review.(Annual Report 2004-05)

Lease Financing

ICB provides lease finance mainly for machinery, equipment and transport. ICB is in a position to provide professional advice and financial assistance to the intending clients. The period of lease, rental, and charges and other terms and conditions are determined on the basis of type of assets and the extent of assistance required by the applicants. Since introduction of this scheme in 1999 good responses have been received from the intending lessees. In 2004-05, ICB sanctioned lease assistance to 2 projects involving TK. 50.55 crore. In previous year, 7 projects involving TK.11.21 crore were sanctioned. As on 30 June 2005, cumulative disbursement against this scheme stood at TK. 22.62 crore.(Annual Report 2004-05).

Bank Guarantee Scheme

ICB introduced Bank Guarantee Scheme in 2002-2003. ICB provides ( I ) Bid Bond for enabling the business people to participant in any tender or bidding; ( II ) Performance Bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients; and ( III ) Customers Guarantee for solving different disagreements between customers authority and the business classes at the initial stage. The maximum limit of guarantee is TK. 2.0 crore and would be issued against at least 20 percent cash and 80 percent easily encashable securities or against 100 percent cash margin. Re-guarantee from other financial institution is required for guarantee against the amount exceeding TK. 2.0 crore.(Annual Report 2004-05)

Advance against ICB Unit certificate scheme

Advance against ICB unit certificate scheme was introduced in 1998, especially designed for the ICB unit holders to meet their emergency fund requirements. One can borrow maximum of TK. 85 per unit by depositing his/ her unit certificates under lien arrangement from any of the ICB offices where from such unit certificates were purchased. The rate of interest on the loan is reasonable and competitive.

Advance against ICB Mutual Fund certificates scheme

Advance against ICB Mutual Fund certificates scheme was introduced in 2003, designed for the ICB Mutual Fund certificate holders to meet their emergency fund requirement. One can borrow maximum of 50 percent value of last one year’s weighted average market price of certificates at the time of borrowing by depositing his/ her certificates under lien arrangement from any of the ICB offices. The rate of interest on the loan is reasonable and also competitive.

An amount of TK. 4.66 crore was disbursed under these schemes in 2004-05 which was TK. 3.89 crore in the previous year registering an increase of 19.79 percent. As on 30 June 2005, the cumulative disbursement was TK. 22.0 crore. The net balance of outstanding advance on that date stood at TK. 4.05 crore. During the year under review, the total recovery under this scheme was TK. 3.90 crore. (Annual Report 2004-05)

4.4.3 Growth Trends of Accounts and Deposits

Investment banking system is very much related to deposit mobilization. If the corporation invests to expand the leading activities as much as possible

deposits from the ideal savers of the society are expected to be accumulated. Now, let us see to what extent ICB was able to accumulate funds and at the same time we have to look upon the performance of ICB Capital Management Ltd. (ICML).Because it is now operating the investor’s scheme and we are reporting on this scheme’s .ICB has stopped opening of new investment account since 1 July2002, ICML a subsidiary of ICB has undertaken the function of opening and managing of new investment account. How ever, ICB continues to manage its existing accounts to fulfill its fiduciary obligation to the accounts holders. So the current deposit position of the ICB and ICML should be described.

Table No-4.2

Position of Net Account of Investor’s Scheme of ICB

Year	Head Office	Rajshahi Branch	Others Branch	Total	Increase/ Decrease of ICB in (%)	Increase/Decrease of Raj.B in (%)
2002-03	26814	3999	19648	50461	…….	…..
2003-04	26440	3977	19270	49687	-1.53	-0.55
2004-05	26152	3753	18975	48880	-1.62	-5.63
2005-06	25652	3613	18800	48065	-1.67	-3.70

Source. Annual Report 2003-04, 2004-05, 2005-06

From the table we get that growth rate is negative because of non-continuing of Investors’ Scheme.

Table No-4.3

Position of Deposit of Investors’ Scheme of ICB

(Taka in Crore)

Year	Head office	Rajshahi Branch	Others Branch	Total	Total Growth in (%)	Raj.B. Growth in (%)
2002-03	5.30	1.23	7.38	13.91	……..	…….
2003-04	10.69	2.34	14.28	27.31	96.33	90.24
2004-05	9.68	2.74	10.35	22.77	-16.62	17.09
2005-06	7.25	2.38	7.14	16.77	-26.35	-13.14

Source. ICB annual report.2004-05,2005-06

Though the no. Of account is going to reduce so the growth rate of deposit is negative. Now we will focus on the ICML’s performance:

Table-4.4

Growth Trends of Accounts and Deposit of ICML in Bangladesh

Particulars	2004-05	2003-04	Growth in(%) in crore
No. of Investment Accounts Opened	3405	536	535.26
Deposit Received	41.58	17.38	139.24

Source; ICML annul report 2003-04, 2004-05

From the above table we got that both the account and deposit growth rate is so high because this subsidiary is a specialized firm to serve this purpose. At the same time it’s a newly open company so investors are eager to open account in this. That’s why these rates are so high. The growth performance of Rajshahi Branch is given below:

Table No-4.5

Deposit and Account of ICML, Rajshahi Branch

Particular	Up to 28th June,.2006	2004-05
Net Operating Accounts	483	18
Deposit Received	155.55	15.33

Tk. in Lac.

Source. Rajshahi Branch

4.4.4 Loan Recovery Performance of ICB

To make the market’s function sound and smooth greatly depends upon the recovery of its dues in time. Without timely recovery, no financial institution can run smoothly and successfully. Financial assistance operations are one of the major functions of ICB. It provides bridging loan and debenture loan to projects which is economically and socially feasible. Now let us see to what extent ICB has been able to achieve these broad objectives.

Table-4.6

Loan Recovery Position of ICB (Taka in Crore)

Year	Head Office	Rajshahi Branch	Other Branch	Total	Total growth in (%)	Raj.B. growth in (%)
2002-03	21.95	1.33	17.09	40.37	……..	……..
2003-04	70.53	3.76	28.85	103.14	155.48	182.71
2004-05	73.46	20.35	85.79	179.60	74.13	441.22
2005-06	55.84	14.62	45.80	116.26	35.27	28.18

Source. Annual Report 2003-04, 2004-05,2005-06

Table -4.6 shows the past performance of recovery against the over due loans. In this section their performance is quite satisfactory.

Table No-4.7

Loan Recovery Position of ICML

(Taka in Crore)

Year	Recovery	Growth in Percentage
2003-04	12.56	……….
2004-05	16.19	28.90

Source. ICML Annual Report 2004-05

As a new company its performance is quite attractive and efficient.

4.4.5 Rebate Benefits Activities in Investment Account:

Table No-4. 8 (Taka in Lac)

Particulars	Financial Year 2003-04	Financial Year2004-05	Financial Year2005-06	CumulativeUp to 30 June, 2006
Application received:
No. of investment account	769	59	41	1629
Amount of down payment	71.35	9.84	2.62	97.79
Amount rebate payable	208.43	27.07	34.96	319.07
Amount payment for effective rebate	72.69	9.84	23.31	182.01
Interest during the period of rebate	37.79	36.91	4.37	89.18
Effective rebate benefits:
No. of investment account	727	59	19	1477
Amount of rebate benefits paid	204.84	27.07	15.90	291.14
Total amount received with down payment	71.35	9.84	11.91	174.41

Source: ICB Rajshahi Branch

To rehabilitate the badly affected the investment account due to share market crush in 1996 and it’s after match effect, interest waiver facilities were extended during the reporting year. A significant no. of investors enjoyed the facilities .A total waiver of interest of Tk.19.06 crore was allowed to investment accounts in 2004-05.

CHAPTER-5

Managing of Investors’ Account through Investors’ Scheme

5.1 Main features of Investor’ Scheme

The main features of the investor’ scheme are:

· An investor should open an account with a minimum deposit of TK.10000 ;

· Provision of loan is made for the account holder with 50 percent margin with a maximum Of TK.3 lac ;

· All funds are required to be investment in shares, stocks, debentures and securities only and ;

· For purchase and sale of securities in the secondary market and only 0.5 percent commission is charged as service charge.

5.2 Operations of the scheme

ICB introduced this scheme with a view to encourage and broaden the base of investment, develop the capital market and mobilize savings. This scheme has created a new horizon of investment for varies types of investors with the stock exchanges. Operation of investors’ scheme can be divided into the following categories:

• Opening an investment account;
• Loan facilities for the account holders;
• Purchase and sales of securities;
• Withdrawals of funds and securities;
• Counseling the investors;
• Documentation;
• Internal transfer of funds and
• Closing investment account.

5.2.1 Opening of Investment Account

The Investors’ Scheme was launched in 1977 with the objective broadening the base of equity investment through mobilizing savings of small and medium savers for investment in the securities market. In view of strategic changes in policy reform, ICB has stopped opening of new investment account since 1 July 2002 ICB Capital Management Ltd.- a subsidiary of ICB has undertaken opening and managing of new investment account. However, ICB continued to manage its existing accounts only to fulfill its fiduciary obligations to the account holders. Now if an investor wants to open investment account he/ she must satisfy the following conditions:

• Any Bangladeshi adult citizen, corporate bodies and statutory organizations are eligible for opening for opening an investment account. Persons of unsound mind or minors are not allowed to open such account. Minimum deposit for opening account is TK.10,000 only. There is no fixed ceiling of additional deposit. Account holder may deposit any amount in phases according to his convenience.
• Maximum two accounts can be opened by an individual. One account in his own name and another jointly with person. Corporate bodies/ statutory organizations shall not be allowed to open joint account.
• Account can be opened by properly filling in prescribed application form and complying with other all requisite formalities.
• At the time of opening account holders shall have to appear in person before the authorized officer of the company for completing legal formalities. An account holder can nominate another person to operate to portfolio account in the prescribed form at the time of opening account. The operator shall carry authority to operate the accounts freely. The actions of the operator in respect of operating portfolio accounts will be treated as actions of the account holder. Authority to operate the account can be assigned to an individual who has an existing account, either or both of the holders can operate the account. (ICML Brochure)

5.2.2 Classification of Investors:

Investors can be grouped according to their occupation and their savings. Under investors scheme investors may be Non Government Employees, Salaried Government, Retired Personnel, Housewives, and Working Women.

Table No-5.1

Occupation-wise classification of the investment account holders of ICB, Rajshahi Branch

Occupation	No. of account holders as on 30 June, 2006	Percentage
Salaried Government / Non-Government Employees	2110	58.40
Retired Personnel	158	4.37
Engineers, Doctors and Layers	545	15.08
Business/Agricultures	119	3.29
Housewives /Working Women	269	7.45
Workers	184	4.55
Others	248	6.86
Total	3613	100

Source: ICB Rajshahi Branch

Lack of sufficient information about the ICML, we are bound to present information of the investors categories all the ICML. The follows shows the occupation wise classification of the investment account holders of ICML who opened accounts during FY 2004-05;

Table No-5.2

Occupation-wise classification of the investment account holders of ICML

Occupation	No. of account holders as on 30 June, 2005	Percentage
Government/Non-Government Employees	1485	43.61
Retired Personnel	70	2.06
Engineers, Doctors and Layers	100	2.94
Businessmen /Agriculturists	891	26.17
Housewives /Working Women	315	9.25
Student	155	4.55
Workers	2	0.05
Others	387	11.37
Total	3405	100

Source. ICML annual report 2004-05

Loan under Investors’ Scheme

For purchasing shares and securities against the account, loans are sanctioned to investment account. Through the scheme an investor can get loan 1:1 ratio i. e. a loan of Tk.10, 000 is available against a deposit of Tk.5, 000. However this ratio may be changed from time to time as per the management’s decision. A maximum amount of loan of Tk. 300,000 can be sanctioned to an investment account. The following terms and conditions are to be maintained by the investors:

• The period of loan is one year;
• Interest charged against the loan is 12.50 percent;
• The mode of repayment is quarterly; and
• The loan must be utilized for acquisition of shares or debentures of listed public companies.

Mere opening of an account does not mean that it will get loan against it rather it largely depends upon the capability and availability of the fund of the corporation. It dose not allow the investors to utilize the entire loan amount in the single security, rather it encourages diversified investment with a view to minimize risk.

Table No-5.3

Loan sanctions against the Investment Account in Rajshahi Branch

(Taka in lac)

Year	Loan Sanction	No of account
2001-02	61.01	725
2002-03	192	800
2003-04	132.12	132
2004-05	346.56	347
2005-06	389.19	389

Source. ICB Rajshahi Branch

5.2.3 Loan under Investor’s Scheme in ICML

Margin Loan will be provided on the basis on the debt/equity ratio of 50:50.Maximum loan limit will be Tk.10.00 lac for each account. Current interest rate is 13.00 percent. The loan will be utilized in purchasing securities from Pre-IPO placement, primary and secondary market. The assets in the portfolio will be held as collateral against loan and are subject to sale in the event the investor fails to maintain required equity margin or repay the loan when it becomes due and asked for payment by the company. No other collateral is adopted here for this loan. The company reserves the right to make any variation of the loan limit from time to time which will be binding on the investors. Loan availed by the investors at any time from the date of opening of account will become payable at the end of one year. However, on maintaining equity and upon request by the investor, the company at its own discretion may extend the period of loan as it considers appropriate .In the event of shortfall in equity, the investor(s) will pay the balance to maintain debt/equity at a level of 50:50 immediately after being informed by the company to so. If the investors failed to maintain the required equity, the company will have the right to sell the assets in order to compensate the equity shortfall and take other legal actions to recover all dues.

Current Year Net Margin Loan Disbursement by ICML in Rajshahi branch up to 28^th June is Tk.13.43 lac.

5.2.4 Sector wise Investment under Investors’ Scheme

In the following table we show the sectoral investment in the Investors’ Scheme in ICB Rajshahi branch.

Table No-5.4

Sector wise Investment under Investors’ Scheme, Rajshahi Branch

SL. No.	Sector	Financialyear2003-04	Financial year2004-05	Financial year2005-06
1.	Banks	79.32	150.32	155.85
2.	Investment	42.97	25.28	27.32
3.	Engineering	9.92	27.41	30.46
4.	Food & Allied	13.22	5.84	6.31
5.	Fuel & Power	33.06	40.22	55.61
6.	Jute	—	0.55	0.21
7.	Apparel	36.35	96.13	75.43
8.	Pharmaceutical & Chemical	49.58	78.81	72.98
9.	Paper & Printing	6.62	2.14	1.25
10.	Service & Real Estate	9.91	23.27	15.48
11.	Cement	3.30	17.21	16.58
12.	Miscellaneous	39.66	93.55	22.38
13.	Insurance	6.62	17.10	33.14
	Total	330.53	577.93	513

Source: ICB Rajshahi Branch

Now the investors’ Scheme is operating ICML Rajshahi Branch. This branch was established in 16^th June 2005.The following table shows the position of sectoral investments (Gross) under Investors’ Scheme of ICML up to 28^th June, 2006:

Table No-5.5

Sectoral investment at cost under Investors’ Scheme of ICML

SL.No.	Sector Name	No. of Shares	Amount
1.	Banks	17,790	89,93,608.50
2.	Cement	1,185	4,66,680.00
3.	Ceramics	50	3,600
4.	Engineering	19,700	6,85,855.00
5.	Food and Allied	10,640	3,34,475.00
6.	Fuel and Power	6,700	19,89,727.50
7.	Insurance	1,760	12,09,550.00
8.	Investments	34,460	5,38,245.00
9.	IT	22,000	2,95,450.00
10.	Miscellaneous	7,925	2,11,377.50
11.	Pharmaceuticals and Chemicals	49,711	42,38,107.00
12.	Service and Real State	1,330	93,982.50
13.	Tannery Industries	1,000	79,335.00
14.	Textile	96,850	31.90.671.90
15.	Total	2,71,101	2,23,30,664.90

Source. ICML of Rajshahi

5.2.5 Transaction of securities

To place order for purchasing and selling securities should be communicated to the ICB in writing, telephonic or telegraphic form. Again direct purchase or sale with broker is not also allowed. Order one place is not usually cancelled. Cancellation can also be effective provided that the order is not executed.

Purchase of shares and debentures against an investment account are usually made. It can also be done in both primary and secondary markets. In case of secondary market transaction, ICB acts as an intermediary’s agent on behalf of the investors. The selection of a portfolio for the investors is determined on the basis of past performance such as cash dividend, bonus share, right share, etc. It should be borne in mind that the principle of diversification of stock is followed in designing of portfolio with a view to minimizing the risk and maximizing the return. The following table shows the transactions under Investors’ Scheme.

Table No-5.6

Transaction of securities under Investors’ Scheme in Rajshahi Branch

(Tk. in Crore)

Year	Securities Purchase	Increase/ Decrease in (%)	Securities Sold	Increase/ Decrease in (%)	Total Transaction	Increase/ Decrease in (%)
2002-03	1.35	…….	1.23	……	2.58	……
2003-04	2.81	108.15	3.42	178.05	6.23	141.47
2004-05	5.83	107.47	7.16	109.36	12.99	108.51
2005-06	5.12	-12.18	4.64	-35.20	9.76	-24.87

Source. ICB annual report 2003-04, 2004-05,2005-06

5.2.6 Withdrawals of funds and securities

An investor is entitled to withdraw funds from his account, which remains unutilized. He can also withdraw securities whenever the account is closed and the entire corporation’s dues or outstanding against him are closed keeping TK. 5000 as balance[1].

5.2.7 Counseling the investors

Counseling service is provided to diversify portfolio investment at a minimum risk so that minimum return and security of investment is ensured. The officials of ICML provide counseling and other services related to investment of fund to avoid speculative transactions and to constitute.

5.2.8 Internal transfer of funds

It is possible on the part of an investor to transfer his/ her fund from one account to another. He/ She can also transfer his/ her credit balance to debit balance account after maintaining necessary formalities. (ICML Brochure)

5.2.9 Closing of investment accounts

An account holder can close his account by adjusting the entire debit balance including margin loan, interest, service charges, brokerage commission and other charges ( if any).

After payment of full debit balance, the account holder can withdraw the securities and credit balance from the account at the time of closing. Once an investment account is closed, it can not be opened further. (ICML Brochure)

5.3 Role of Investors’ Scheme in capital market development and its operational activities

As mentioned earlier, a financial market has two parts, money market and secondary market. Money market deals with short term funds, which is generally of less than one year duration and the capital market deals with long term funds. In this regard three authors observe:

“A financial market can again be divided into two segments: non-security segment and security market. The security market is popularly known as capital market though in a security market not only long term securities such as shares, debentures etc. but also short term securities such as commercial papers, money market mutual funds etc. are traded.”[2]

Investor’s scheme has a close relationship with the securities segment. This securities segment of capital market can be divided into two parts: Primary market secondary market. Primary market deals with the new issues, while the secondary market deals with existent issues. “There is no additional flow of funds for investment purpose in a secondary market; it only provides liquidity and marketability to the existing securities. A necessary market is essential for a new issue market to develop.” [3]

5.3.1 Participants of capital market

The capital market in Bangladesh can broadly be divided into three sections:

• The stock Exchange forum,
• The investment banking and brokerage firm, and
• Individual or institutional investors in the share market.

The stock exchange forum consist of

(1) Dhaka Stock Exchange and

(2) Chittagong Stock Exchange.

Investment banking and brokerage firm includes ICB, NCL, and the like as principal institution and 195 members Of Dhaka Stock Exchange. The major and prime institutional participants in the share market of Bangladesh are BSB, BSRS, and Insurance companies, Commercial Banks, Provident Fund, Trust Fund and Pension Fund of different organization. Capital market includes all organized markets and institutions, such as commercial banks, Discount houses, stock exchanges, investment corporations, investment trust etc. dealing in long term instruments. The capital market facilities the purchase and sales or exchange of long term claims or securities. In this way, its helps to transfer fund from savers to borrows. Secondary market allows investors and financial institutions to covert the existing securities into cash and thus creates demand of securities in the market.

5.3.2 Accounts opening trends under Investors’ Scheme

As mentioned earlier that ICB has stopped opening investment account under investor’s scheme, so it can’t be analyzed based on ICB investment account. Moreover we can show a table on existing no. of account.

Table No-5.7

Trend of Account opening in ICB Rajshahi Branch

Year	Currant Account	Increase/ Decrease in Current Account in (%)
2002-03	3999	………..
2003-04	3977	-0.55
2004-05	3753	-5.63
2005-06	3613	-3.70

Source. ICB Rajshahi Branch

In this point, we have to look upon the activities of IMCL because they are now responsible