“Loan and Advance and Overall Customer Satisfaction toward the Level of International Finance Investment and Commerce (IFIC) bank Ltd.”
Introduction
Chapter 1.0
Introductory Thoughts study on “IFIC Bank Ltd.” The report is distributed in many parts according to nature and requirement of organization
Practice makes a man perfect- the proverbs tell us about to practice those procedures that we have learned through out the graduation program. Theoretical knowledge does not highlight the reality as clearly as practical knowledge. Theoretical knowledge is a guideline but practical knowledge is experience oriented. But both of them are equally important.
The internship report comprises a brief study on “IFIC Bank Ltd.” The report is distributed in many parts according to nature and requirement of organization and according to the instructions of the supervisor of the report.
The purpose of study is to develop skills through learning various aspects of organization. The study enables to get command on bookish knowledge through practical approach and to understand the difference in both approaches. This thing increases the knowledge and brings betterment in working within organizational environment. It includes practical experience through which have gone through whole internship program.
1.2 Origin of the Report
This report paper has been prepared as a part of the Internship Program of Master of Business Administration of Stamford University Bangladesh. The report titled “Loan and Advance and Overall Customer Satisfaction toward the Level of International Finance Investment and Commerce (IFIC) bank Ltd.” is an out come of three months Internship program at IFIC Bank Ltd. The report topic was approved by the faculty supervisor to satisfy the organizational requirements and fulfillment of the internship program. This report has been prepared under both of their direct supervision.
1.3 Background of the study
Banks are the life-blood of modern economy. Banks are established to earn profit and help economic and financial activities so as to help economic development of a country. In such a context, the main business of Banking is to take deposits from customers and sanction credit to the borrowers. Thus the Banks act as financial intermediaries.
As a servicing industry, the Banks are customers oriented. Customers are the driven power of a Bank and it earns profit by servicing customers. In general, he, who has an account in a Bank, may be treated as a customer.
In broad sense, customers may be seen from the two wings. Depositors and Borrowers. Beside these, other short-term served customers may exist in a Bank. However, as the Banking area is very hard and competitive, so in order to survive and successfully complete with other Banks, a Bank not only have to serve but have to nicely and effectively serve its customers. Now, in Bangladesh more than 50 scheduled Banks are operating their activities. Among those The IFIC Bank Ltd. has a positioned well & would be able to create a strong confidence in banking sector.
However, the present study in attempt to measure the overall banking performance of IFIC Bank Ltd., therefore, to determine the limit of how efficiently and how effectively the banking performance are served by the IFIC Bank officials and staffs. It will also be aimed at to suggest some recommendations in order to improve the existing performance of IFIC Bank. In the context, this measure will help in assessing the overall performance of IFIC Bank Ltd. find out any short comings in performance of IFIC Bank and finally some suggestions and recommendations to improve the present banking performance of IFIC Bank Ltd.
1.4 Objective of the Study
The primary objectives of the study are summarized in the following manner:
To fulfill the requirement of MBA program.
To learn desk-wise activities in Bank Branch.
To study financial activities of the Bank.
To analyze the performance of Elephant Road branch.
To gain practical experiences and view the application of theoretical knowledge in the real life. The Secondary objectives of the study are summarized in the following manner: Provide an overview of the procedure of general banking and credit facilities of IFIC Bank Ltd. Identify the over all customer satisfaction level. Study on how to improve customer satisfaction level.
1.5 Scope of the Study
Banking sector is a large and difficult area. A Bank has different products, different services and different customers. Different departments of a Bank perform different activities.
As an Intern, my scope was very much limited and restricted. had to maintain some official formality for the collection of data of my report. had the opportunity to work only at the IFIC Bank Ltd., Elephant Road Branch. The report is based on my observation and studies during my internship period in Elephant Road Branch of the IFIC Bank. The study covers the Bank’s functional areas i.e. Service of IFIC Bank & its other department such as General Banking, Loan and Advance, Account opening, Clearing and Foreign exchange.
1.6 Methodology of the Report
This report is prepared using both Primary and Secondary information.
1.6.1: Nature Of the study
The nature of the study has to be explanatory rather than testing any hypothesis. Being the nature of this study an exploratory one and using descriptive tools rather than inferential statistical ones, the present study is both a theoretical as well as empirical study.
1.6.2: Primary Information was collected through
Informal interview with the organization officials of concerned department.
Face to face conversation with the respective officers and staffs of the Branch.
Informal conversation with the clients.
Practical work exposures from the different desk of the three department of the branch were covered.
1.6.3: Secondary Information that was used for this report is collected mainly from
Statement of affairs and Statement of Income account of the specific branch on yearly basis.
Other sources are-
Annual report of IFIC Bank Ltd.
Web site of the bank.
Bank papers and hand notes.
Different lending forms and schemes used by the Bank.
1.6.4: Sample Size
The sample size used in this study is 30. The sample size was low assuming that the homogeneity prevails in customer perception related to service quality. The respondents were the regular customer of IFIC visiting Elephant Road Branch on regular interval.
1.6.5: Sampling Techniques and Procedure
The sampling technique used in this study is non- probabilistic in nature. More accurately convenient sampling was used. That is why the sample size was not mathematically calculated.
1.7 Limitations of the report
One of the major limitations is the shortage of internship period. To prepare a report on some issues takes much time but in practice we are given a short time.
The study was conducted only on the Branch level. Overall banking performance could not be evaluated for time constraints. Respondent haven’t agree withal the service related issues and some answer were indistinct.
Also some secrecy was maintained in the bank and the not exposed to activities.
Finally, the lack of the depth of my knowledge and the analytical capacity for writing such report is also a shortcoming of this study.
Chapter 2.0
Discussion on Banking
2.1: Origin of the word, Bank
A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money.
The name bank derives from the Italian word banco “desk/bench”, used during the Renaissance by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set their stalls in the middle of enclosed courtyards called macella on a long bench called bancu, from which the word banco and bank derived. As a moneychanger, the merchant at the bancu did not so much invest money a merely convert the foreign currency into the only legal tender in Rome- that of the Imperial Mint.
In fact, even today in Modern Greek the word Trapeza means both a table and a bank.
2.2 Definition of Banking
The definition of a bank varies from country to country.
Under English Common Law, a banker is defined as a person who carries on the business of banking, which is specified as:
Conducting current accounts for his customers
Paying Cheques drawn on him, and
Collecting Cheques for his customers.
In most English common law jurisdictions there is a Bill of Exchange Act that codifies the law in relation to negotiable instruments including cheques, and this Act contains a statutory definition of the term banker. “Banker includes a body of persons, whether incorporated or not, who carry on the business of banking” (Section 2, Interpretation). Although this definition seems circular, it is actually functional, and because it ensures that the legal basis for bank transactions such as Cheque does not depend on how the bank is organized or regulated.
The business of banking is in many English Common Law countries not defined by statute but by common law, the definition above. In other English Common Law Jurisdiction there are statutory definitions of the business of banking business. When looking at these definitions it is important to keep in minds that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervision banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the Common Law one. Examples of statutory definitions:
“ Banking Business” means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act: Singapore), Section 2, Interpretation.)
“ Banking Business” means the business of either or both of the following:
Receiving from the general public money on current, deposit, savings, or other similar account repayable on demand or within less than(3 months)… or with a period of call or notice of less than that period.
Paying or collecting Cheques drawn by or paid in customers.
Since the advent of EFTPOS (Electronic Funds Transfer at Point of Sale), direct credit, direct debit and internet banking, the Cheque has lost its primacy in most banking systems as a payment instruments. This has led legal theories to suggest that the Cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.
Chapter 3.0
IFIC Bank Limited.
3.1 Portrait of IFIC Bank
International Finance Investment and Commerce Bank Limited (IFIC Bank Ltd.) 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 percent shares and the rest 51 percent 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.
3.2 MISSION OF IFIC BANK LTD
The mission of IFIC Bank Ltd. is to provide service to its 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.
IFIC Bank is committed to the welfare and economic prosperity on the people and the community, for the Bank derives from them its inspiration and derives for onward progress of prosperity.
IFIC Bank want to be the leader among the banks in Bangladesh and make it’s indelible mark as an active partner in regional banking operating beyond the national boundary.
In an intensely competitive and complex financial and business environment, IFIC Bank particularly focuses on growth and profitability of all concerned.
3.3 Ownership Structure
Ownership of the Bank is held by the sponsors in the private sector and Government of the People’s Republic of Bangladesh. Sponsors and individuals now own about 62% of the share capital and the Government own a little more than 38% of the shares.
3.4 Organization Structure:
3.5 Board of Directors
3.6 Policy Committee
All matter relating to the principals, policies, rules and regulation etc. for operation and management of Bank is recommended by the committee to the board of Directors.
3.7 Corporate Culture
IFIC Bank is one of the disciplined Banks with a distinctive Corporate Culture. Here it believes in shared meaning, shared understanding and shared sense making. IFIC Bank’s people can see and understand events, activities, objects and situations in a distinctive way. They maintain their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to them. People in the Bank see themselves as a tight knit than family that believes in working together for growth. The corporate culture IFIC Bank belongs has not been imposed; it has rather been achieved through IFIC Bank’s Corporate Culture.
3.8 Different Divisions
Human Resources division:
Investment Division
Marketing Division
International Division
General Banking Division
General Service Division
Financial administration Division
Internal Control and Compliance Division
3.9 Joint Ventures
Bank of Maldives Limited:
IFIC is the first among the private banks 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.
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, the Overseas Branches in Pakistan have been amalgamated with a reputed leasing company in Pakistan named National Development Leasing Corporation (NDLC) Ltd. Therefore, the existence of the above Overseas Branches has ceased on 2nd October 2003 and a new joint venture bank entitled NDLC-IFIC Bank Ltd. Emerged in Pakistan on 3rd October 2003. The Bank was subsequently renamed as NIB Bank Ltd. IFIC Bank presently holds 7.31% equity in the Bank.
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 was so far opened 17 (seventeen) branches at different important locations in Nepal. IFIC Bank presently holds 25% shares in NB Bank.
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 Nepal Nationals, started its operation on April 18, 1999 in Nepal. IFIC Bank presently holds 15% share in the company.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 Contact.
3.10 Technology
Since the beginning of its journey as a commercial bank in 1983, IFIC Bank has been giving great emphasis on the adoption of modern technology. It became the pioneer in the field of automation by introducing computerized branch banking right in the same year. Subsequently, all the branches were brought under similar automated platforms with upgraded software applications to offer all the critical banking features. At present all 65 domestic branches are fully computerized under networked environment.
The Bank has taken up a new project with MYSYS International Banking System Inc. (UK) to further upgrade its banking operation to state-of-art world class on-line banking solutions to provide faster and even more convenient centralized services to the clients.
Besides, the Bank is also operating fully on-line Automated Teller Machine (ATM) services under the banner Q-Cash at a number of locations in Dhaka and Chittagong. The ATM facilities are available to the customers at Q-Cash booth.
Since the importance of Web presence in the Internet is absolutely critical, IFIC Web Site www.ificbankbd.com has long been launched for the convenience of the customers, where all the activities and information are constantly being posted and updated. A Central Mailing System is operational at the Head Office to let the customers have direct electronic access to the selected staff.
3.11 Human resource Development
The Bank has a Human Resource Development & Research Department to develop human resources internally. The Academy is equipped with professional library, modern training aids professional faculty and other facility. The Academy conducts regularly foundation courses, specialized courses and seminars on different areas of banking to take care of the professional needs
3.12 IFIC BANK AT A GLANCE
(1) Name of the Bank : International Finance Investment & Commerce Bank Ltd.
(2) Head office : 8, Rajuk Avenue, Motijheel, Dhaka.
(3) Date of establishment : 24th June, 1983.
(4) Company registration Number : 4967, dated October 08, 1976
(5) Market Category : A Category
(6) Objectives : To establish maintain, carry on transect undertake and conduct all types of banking financial investment and trust business in Bangladesh and abroad.
(7) Branch : 80 Domestics & 4 Affiliates
(8) Control : Board of directors.
(9) Board of directors : 14 executing members including chairman & managing director.
(10) Number of employee : 2193.
(11) Number Of shareholders : 34152
(12) Customers : 200,000
(13) Capital & Reserve : Authorized capital Tk. 5350 million, paid up capital Tk. 1744 million.
(14) Share : Ownership of the Bank held by the sponsors in the private sector and Government of the People’s Republic of Bangladesh. Sponsors and individuals now some 65 percent of the share capital and the Government own a little more than 35 percent of the shares
(15) Auditing System : Both internal & external.
(16) Future Plan 🙁 a) to increase market share in opening student through providing logistic support including media support.
(b) To increase sale of TCs through providing all logistic support account.
3.13 PROGRESS REPORT OF IFIC BANK LTD:
Progress report of IFIC Bank Ltd for the five years is given below:
GROWTH OVER THE YEAR:
| PARTICULARS | 2005 | 2006 | 2007 | 2008 | 2009 |
| Authorized Capital | 500.00 | 500.00 | 500.00 | 1600.00 | 5350.00 |
| Paid-up Capital | 406.39 | 406.44 | 406.39 | 1341.43 | 1744.00 |
| Total Capital | 1608.8 | 1754.41 | 2028.89 | 3045.09 | 4928.76 |
| Deposit | 20774.49 | 22505.17 | 28,620.91 | 29,900.05 | 50017.96 |
| Credit | 18189.70 | 19502.70 | 25,490.66 | 28,361.46 | 32412.79 |
| Total Loans & Advances | 1623.45 | 2169.49 | 2549.07 | 2836.15 | 37793.89 |
| Total Income | 2687.02 | 2672.20 | 3687.80 | 5196.50 | 7243.83 |
| Total Expenditure | 1986.77 | 2122.66 | 2825.10 | 3693.60 | 4221.75 |
| Total Assets | 28575.83 | 30201.05 | 36080.48 | 45729.47 | 62901.86 |
| Number of Shareholders | 6210 | 5669 | 5724 | 9286 | 34152 |
| Number of Employees | 1860 | 1883 | 2003 | 1997 | 2193 |
| No. of Branches | 62 | 65 | 65 | 78 | 84 |
3.14 List of Branches
| SERIAL NO | CODE | BRANCH NAME | BRANCH MNUMONIC | |
| 1 | 2030 | AGRABAD BRANCH | 0801 | |
| 1197 | ASHULIA BRANCH | ASHU | ||
| 3 | 1112 | BAJITPUR BRANCH | BJIT | |
| 4 | 1096 | BANANI BRANCH | BANA | |
| 5 | 6187 | BANESHWAR BRANCH | BNSW | |
| 6 | 1011 | BANGSHAL BRANCH | 0808 | |
| 7 | 5064 | BARISAL BRANCH | BARI | |
| 8 | 3138 | BEANI BAZAR BRANCH | BEAN | |
| 9 | 6188 | BELKUCHI BRANCH | BELK | |
| 10 | 4166 | BENAPOLE BRANCH | BENA | |
| 11 | 6082 | BOGRA BRANCH | 0812 | |
| 12 | 4067 | BORO BAZAR BRANCH | BORO | |
| 13 | 2034 | BRAHMANBARIA BRANCH | BBAR | |
| 14 | 2054 | CDA AVENUE BRANCH | CDAB | |
| 15 | 6086 | CHAPAI NAWABGANJ BRANCH | CHAP | |
| 16 | 2040 | CHAWK BAZAR BRANCH | CBZR | |
| 17 | 2050 | CHOUMUHANI BRANCH | CHOU | |
| 18 | 2035 | COMILLA BRANCH | COMI | |
| 19 | 2148 | COMPANYGANJ BRANCH | CPNY | |
| 20 | 2044 | COX’S BAZAR BRANCH | COX | |
| 21 | 1193 | DANIA BRANCH | DANI | |
| 22 | 1006 | DHANMONDI BRANCH | 0814 | |
| 23 | 6083 | DINAJPUR BRANCH | DINA | |
| 24 | 1014 | ELEPHANT ROAD BRANCH | 0810 | |
| 25 | 1023 | FARIDPUR BRANCH | FDP | |
| 26 | 2152 | FATIKCHARI BRANCH | FATK | |
| 27 | 1008 | FEDERATION BRANCH | 0807 | |
| 28 | 2041 | FENI BRANCH | FENI | |
| 29 | 1109 | GHORASAL BRANCH | GHO | |
| 30 | 3151 | GOALA BAZAR BRANCH | GOAL | |
| 31 | 1002 | GULSHAN BRANCH | 0802 | |
| 32 | 2137 | HATHAZARI BRANCH | HATH | |
| 33 | 9900 | HEAD OFFICE | HO | |
| 34 | 1005 | ISLAMPUR BRANCH | 0799 | |
| 35 | 4061 | JESSORE BRANCH | 0811 | |
| 36 | 1017 | KAWRAN BAZAR BRANCH | 0816 | |
| 37 | 1195 | KERANIGANJ BRANCH | KERN | |
| 38 | 2031 | KHATUNGANJ BRANCH | 0800 | |
| 39 | 4060 | KHULNA BRANCH | 0804 | |
| 40 | 1121 | KONABARI BRANCH | KONA | |
| 41 | 4062 | KUSHTIA BRANCH | KUSH | |
| 42 | 1025 | LALMATIA BRANCH | LAL | |
| 43 | 2153 | MADAM BIBIR HAT BRANCH | MBHB | |
| 44 | 1118 | MADHABDI BRANCH | MADB | |
| 45 | 1019 | MALIBAGH BRANCH | MALI | |
| 46 | 1094 | MOHAKHALI BRANCH | MOHA | |
| 47 | 1001 | MOTIJHEEL BRANCH | 0796 | |
| 48 | 1004 | MOULVI BAZAR BRANCH | 0797 | |
| 49 | 3046 | MOULVI BAZAR BRANCH (DIST.) | MBD | |
| 50 | 1115 | MUKTARPUR BRANCH | MKT | |
| 51 | 1022 | MYMENSINGH BRANCH | MSIN | |
| 52 | 6085 | NAOGAON BRANCH | NAOG | |
| 53 | 1003 | NARAYANGANJ BRANCH | 0798 | |
| 54 | 1110 | NARSINGDI BRANCH | NAR | |
| 55 | 1029 | NAWABPUR ROAD BRANCH | 0817 | |
| 56 | 1020 | NAYA PALTAN BRANCH | NAYA | |
| 57 | 1016 | NETAIGANJ BRANCH | NTG | |
| 58 | 4163 | NOAPARA BRANCH | 0815 | |
| 59 | 1028 | NORTH BROOKE HALL ROAD BRANCH | NBHR | |
| 60 | 6084 | PABNA BRANCH | PBNA | |
| 61 | 1027 | PALLABI BRANCH | PLLB | |
| 62 | 1173 | PANCHABOTI BRANCH | PANC | |
| 63 | 6080 | RAJSHAHI BRANCH | 0805 | |
| 64 | 6081 | RANGPUR BRANCH | RANG | |
| 65 | 1198 | RUPGONJ BRANCH | RUP | |
| 66 | 4065 | SATKHIRA BRANCH | 0813 | |
| 67 | 1171 | SAVAR BAZAR BRANCH | SAVR | |
| 68 | 2042 | SHAH AMANAT MARKET BRANCH | SAM | |
| 69 | 1007 | SHANTINAGAR BRANCH | SHAN | |
| 70 | 1092 | SHARIATPUR BRANCH | SHAR | |
| 71 | 2132 | SHEIKH MARKET BRANCH (OLD)/
NOZUMIA HAT BRANCH (NEW) |
NOJU | |
| 72 | 2045 | SHEIKH MUJIB ROAD BR | SMR | |
| 73 | 3047 | SHREEMONGAL BRANCH | SMGL | |
| 74 | 1090 | STOCK EXCHANGE BRANCH | STOK | |
| 75 | 3043 | SUBID BAZAR BRANCH | SUBD | |
| 76 | 3033 | SYLHET BRANCH | 0803 | |
| 77 | 1126 | TAKERHAT BRANCH | TKHT | |
| 78 | 1091 | TANBAZAR BRANCH | TANB | |
| 79 | 2036 | TERRI BAZAR BRANCH | 0809 | |
| 80 | 3139 | TULTIKAR BRANCH | TULT | |
| 81 | 3049 | UPOSHOHAR BRANCH | UPO | |
| 82 | 1024 | UTTARA BRANCH | 0818 |
Branches of IFIC Bank Limited
3.15 Information about the Employee of IFIC Bank Ltd.
(Elephant Road Branch):
IFIC Bank Limited.
Elephant Road Branch
73/1, Elephant Road. (1st floor), Dhaka
Tel: 9672119, 8613361 (T-Fax), PABX: 9676151-2
IFIC Bank Limited of Elephant Road Branch is one of the Profitable Branch of IFIC Bank Ltd. It started its journey at the year 1989, 31st October.
Manpower Position of IFIC Bank, Elephant Road Branch
| S.L. No. | Category of employee | Number |
| 1 | First Vice President & Manager | 1 |
| 2 | First Assistant Vice President | 2 |
| 3 | Senior Staff Officer | 3 |
| 4 | Staff Officer | 2 |
| 5 | Office grade 1 | 6 |
| 6 | Probationary Officer | 3 |
| 7 | Office grade 2 | 3 |
| 8 | Cash officer | 4 |
| 9 | Computer officer | 2 |
| 10 | Security guard | 3 |
| 11 | Office attendants | 3 |
| TOTAL | 32 |
Different Departments of
IFIC Bank Limited
4.1 General Banking
General banking is the standing point of the banking operation. It is the department which provides day to day services to the customers. Main function of general banking department is the following:
4.1.1 Account Opening Section
The relationship between banker and customer begins with the opening of an account by the customer. Opening accounts binds the banker and customers into contractual relationship. But selection of the customer for opening an account is very crucial for a bank. In fact, fraud and forgery for all kinds start by opening an account. So bank should take extreme caution in this section. Customers can different types of accounts through this department such as:
Current deposit account.
Saving deposit account.
Fixed deposit account (FDR)
Short term deposit (STD)
Sanchay patra opening
Pension saving scheme (PSS)
Monthly saving scheme
4.1.2 Deposit Section
There are some requirements that have to be completed for opening an account.
4.1.2.1. Current Deposit Account
Current account is the account where the account holders can make numerous transactions within working day. There is no restriction on the number and the amount of withdrawals from the current account with in availability of founds. As the banker is under the obligation to repay this deposit on demand, no interest is paid in this account. Generally current account is opened for businessmen and traders for easy transaction. But a person can open a current account for special purpose.
Private firm:
Proprietorship firm:
Declaration of proprietorship.
Photograph
An introducer of IFIC Bank Ltd. Introducer must be a CD account holder
Photograph must be attested by the introducer
Signed and rubber stamp seal of the client.
Account agreement form.
Valid trade license from City Corporation.
Mandate if operation by third party is to be allowed.
Partnership Firm:
There is a different account form for proprietorship firm; introduction of running an account is given in this form. The following documents are required to open this type of accounts:
Photograph.
An introducer of IFIC Bank Ltd. Introducer must be a CD account holder.
Photograph must be attested by the introducer.
Photocopy of partnership deed registered with Register of firm duly
Attested by notary public.
Photocopy of registration certificated duly attested by notary public.
Resolution signed by all partners to open the account.
Letter of partnership duly signed by all partners in case of non-registered firm.
Mandate as to operation of the account.
Account agreement form.
Valid trade license from City Corporation
Club society:
The following documents duly completed shall be obtained from the customer at the time of current deposit account of association/ club/ society etc.
Photograph
Signed and rubber stamp seal of the client
An introducer of IFIC Bank Ltd. Introducer must be a CD account holder.
Certified copy of the constitution.
Certified registration of the association.
List of the members of governing body.
Exact of resolution of the association.
Limited company:
A separate account opening form is used for limited company. There are two kinds of limited company: public limited company and private limited company. The bank always takes precautions for opening this type of accounts. Several documents are submitted by the client, which should be checked carefully by the bank to. The following documents are required to open this type of accounts:
Private limited company:
Photograph
An introducer of IFIC Bank Ltd. Introducer must be a CD account holder.
Photograph must be attested by the introducer.
Memorandum of association and articles of association duly certified by the Chairman or Secretary.
Principal agreement form.
Resolution of board, duly chairman/ secretary/ authorizing to open the account with the bank and naming the persons who will operate the account, as per provision of Articles of Association.
Certificate of incorporation duly certified by chairman/ Secretary.
List of directors as per return of joint stock Company with signature
Public limited company:
Photograph
An introducer of IFIC Bank Ltd. Introducer must be a CD account holder.
Photograph must be attested by the introducer.
Certificate of incorporation duly certified by chairman/ Secretary.
Memorandum of association and articles of association duly certified by the Chairman or secretary.
Resolution of board duly chairman/ secretary/ authorizing to open the account with the bank and naming the persons who will operate the account, as per provision of Articles of Association.
Principal agreement form.
Certificate of commencement of business.
List of directors as per return of joint stock Company with signature.
4.1.2.2. Savings Deposit Account
Saving account is meant for the people of the lower and middle classes who wish to save part of their income to meet their future needs and intended to earn an income from their savings. For opening this type of accounts following requirements are necessary:
Photograph must be attested by the introducer.
An introducer of IFIC Bank Ltd. Introducer must be a SD account holder.
For joint accounts, signatures of all the account holders are necessary. Interest rates of saving deposit and short-term deposit (STD) are as follows:
The interest rates on deposits is being revised which came into effect from 01.03.2008-
| Types of Deposit | Deposit Rates |
| Savings Bank Deposits (SB) | 6.00% |
| Short Term Deposit (STD) | |
| Less than TK. 1.00Crore | 4.00% |
| TK.1.00crore and above but less than TK.5.00crore | 4.50% |
| TK.5.00crore and above but less than TK10.00crore | 5.00% |
| Above TK10.00crore | 5.50% |
| Bank to Bank | 2.50% |
4.1.2. 3. Fixed Deposit Revenue (FDR)
FDR is one kinds of fixed deposit scheme. Normally it can be fixed for one month, three months, six months and twelve months. Its interest rate is higher than normal account.
The required documents for FDR are as follows:
PP size photos of account holder
Photocopy of national ID card.
One PP size photo of nominee.
The interest rate on deposits are being revised with effect from 16-08-2008
| Types of Deposits (FDR) | Deposit Rates |
| One month | 9.50% -12% |
| Three month | 10.00% – 12.00% |
| Six month | 10.00% -12.00% |
| Twelve month | 12.50% |
|
Different types of deposits |
Amount | Percentage |
| Current Account & Others | 48,572,209.30 | 7.88% |
| Savings Account | 145,727,807.58 | 23.64% |
| Short Term Deposits (STD) | 2,163,400.66 | 0.35% |
| Fixed Deposit (FDR) | 344,694,232.92 | 55.91% |
| Double Deposit Scheme (DPS) | 5,942,000.00 | 0.96% |
| Pension Savings Scheme (PSS) | 27,984,830.35 | 4.54% |
| Bills Payable | 8,270,044.46 | 1.34% |
| Others | 33,106,660.38 | 5.37% |
| Total | 616,461,185.65 | 100.00% |
Deposit Mix of 2009 in IFIC Bank Ltd. (Elephant Road Branch)
4.1.3 Cash Section
Cash section is a very sensitive organ in a branch and it is handled with extra care. Operation of this section begins at the beginning of the banking hour. Cash officer begin his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a much secured room. Keys of the room remain under control of the cash officer and branch in charge. The amount of Opening cash balances is entered into the cash register. After transaction of whole day, the surplus money remains in the cash counter is put back in the vault and known as the Closing balance.
The maximum amount of money that the branch can keep in its vault is only TK. 15,000,000 according to the permission of the Bangladesh Bank and relative insurance policy. Money is received and paid in this section.
Cash Receipt:
At first the depositor fills the deposit slip. There are two types of deposit slips in this section. One for saving account and another for current account.
Officer at the cash counter receives the money, count it, enter amount of money in the scroll register dept at the counter, seal the deposit slip and sign on it with date.
After filling the required deposit slip, depositor deposits the money.
At the end of day, entries of both of the registers and cross cheques used with the registers are kept at the cash counter to see whether the transaction is correct or not.
Then this slip is passed to another officer who enters the scroll number given by the cash counter in his register along with the amount of the money, signs the slip and kept the bank’s part of the slip. The other part is given to the depositor.
Cash Payment: When a person comes to the bank to cash a cheque, he/she first gives it to the cash payment counter. If his/her account has sufficient fund, then the computer in charge will post it into the computer.
There is a computer desk for both saving account and current account. The cheques are placed at that computer desk. If the cheque is not dishonored the bearer will get a token as to show that he/she is the true owner of the cheque while receiving the money from cash counter.
4.1.4 Clearing Section
According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks which are a member of the clearing house are called as Scheduled Banks. The scheduled banks clear the cheques drawn upon one another through the clearing house. This is an arrangement by the central bank where everyday the representative of the member banks sits to clear the cheques. For clearing, there is a department in every Bank.
This department receives cheques, drafts and like instruments from its customers for the purpose of collection with a deposit slip over the counter crediting their accounts. Clearing of cheque is done through the clearing house in Bangladesh Bank. Everyday the first hour starts at 10:00 a.m. and returns house at 5:00 p.m.. Here shows the types of cheque clearing:
Inward Clearing Bills refers the instrument drawn on IFIC, FEx. Branch received from other banks in the clearing house by their representative(s). Settlement process is as following:
Settlement Process of Inward Clearing Bills
Outward Clearing Bills refers the instruments drawn on the other banks received by IFIC Bank Ltd. Branch. They are of three kinds as follows –
Settlement Process of Outward Clearing Bills
4.1.5 Remittance Section
Local Remittance Department:
The commercial bank’s remittance facility towards the customers is to enable them avoid risk rising from carrying cash money from one place to another or making payment to some one in another place. Banks take this risk by remitting the fund on behalf of the customers to save them from any awkward happening through the network of their branches and ensure payment to the beneficiary in exchange of a little benefit known as commission. There are four mode of remitting money from one place to another:
a. Pay order (PO):
Following procedure is maintained for the issuance of pay order (PO):
After filling the form carefully, the customer pays the money in cash or by cheques.
Customer is given a pay order form.
The concerned teller then issues pay order on its special block. This block has three parts, one for bank and another two for customer. “A/C payee” crossing its seal on all PO issued by the bank. The teller then writes down the name and address of beneficiary on the main part of the PO block. In other two parts, name and address of the customer is written.
Two authorized officer signed the PO block.
The teller gives an entry to the registry book and maintains the same number of PO block.
At the end, customer is provided with the two parts of the PO block after signing on the backs of bank’s part.
Pay Order Issuing Process
IFIC Bank Ltd. Pay order charges:
| Description | Commission | VAT |
| Up to TK. 1000.00 | 10.00 | 2.00 |
| TK.1001 –TK. 100000 | 25.00 | 3.75 |
| TK.100001 –TK. 5000000 | 50.00 | 8.00 |
| TK. 500001 and above | 100.00 | 15.00 |
b. Demand Draft (DD):
DD is called ‘Banker’s Draft’. It is an instrument, issued by a particular branch, drawn on another branch of the same bank, instructing to pay a certain sum of money. It is very popular instrument for remitting fund from one corner of a country to another. DD is issued in favor of a customer who maintains an a/c with IFIC Bank.
It can be issued against Cash or Cheque. If DD amount is more than TK. 50,000/=, a test code is given on IBCA. The a/c treatments will be – after giving these entries an Inter Bank Credit Advice (IBCA) is prepared which contains the controlling number, depicted that the branch is credited to whom it is issued.
Demand Draft Issuing Process
Following procedure is maintained for the issuance of Demand Draft (DD):
Customers are supplied with DD form.
Customer fill up the form, which includes the name of the drawer, name of the payee. Amount of money to be sent, commission, name of the drawer branch, signature and address of the drawer.
The customer may pay in cash or by cheques from his accounts.
After the money is paid and the form is sealed, accordingly it is given to the DD issuing desk.
The block has two parts: one for bank and another for customer.
Bank part contains issuing date, drawer’s name, payee’s name and sum of the money and name of the drawee’s branch.
After finishing all the required information entry of the DD given in the DD issuing register and at the same time bank issues a DD confirmation slip. It is entered into the DD advice issue register and a number is put on the confirmation slip form in the same register. Later the bank mails this advice to the drawer branch.
The income from DD and PO in Elephant Road Branch in last five years is given in the following table. It shows that income increases in 2009 than 2008. (TK’ in Lac)
| Bills Payable | 2005 | 2006 | 2007 | 2008 | 2009 |
| Payment Order Issued | 64.14 | 53.33 | 116.35 | 82.01 | 112.23 |
| DD Payable | 8.98 | 8.61 | 1.85 | .68 | 3.45 |
| Total | 73.13 | 61.95 | 118.21 | 82.70 | 115.68 |
c. Telegraphic Transfer (TT):
Sometimes the remitter of the funds requires fund immediately. In that case, the banker is requested to remit the funds telegraphically. Different modes are Telegram, Telephone, Telex, Fax. Telegraphic Transfer is the most rapid and convenient but expensive method. The drawer and the payee should have accounts with IFIC Bank Ltd. TT is issued against cash, cheque, and letter of instruction.
Flow Chart of TT (Outward) Working Process
4.1.6 Accounts section
Accounts department maintains all records of transactions and all types of statements. At the end of transaction hour, all concerned sections send vouchers of transactions to this department. Accounts department compares all figures/ amounts, contents of transactions with supplementary statement prepared by computer. If any discrepancy arises regarding any transaction, then this department reports to the concerned department. Following are the activities of accounts department:
To record all transaction in the cash book.
To prepare daily, weekly, monthly, half-yearly and yearly fund position.
To prepare all kinds of statements related to Bangladesh Bank, Head office and National Board of Revenue (NBR).
To prepare monthly salary statement, provident fund statement and administrative expenditure statement.
To make charges for different types of duty.
4.1.7 Other services
Utility Bills Payment
To offer customers a greater banking convenience, one can pay following utility bills from any of the locations:
DESA
Grameen Phone.
Card Service
IFIC Bank provides only credit card facilities to its customers. But recently they introduce new types of card named Pre-Paid card.
LOAN AND ADVANCE
4.2
4.2.1 Credit Services of IFIC Bank Ltd.
This is the survival unit of a bank, because the success of this section is a question to every bank. If this section is not properly working, the bank itself may become bankrupt. This is important because this is the earning unit of the bank. Banks are accepting deposits from the depositors in condition of providing interest to them as well as keeping their deposits safely. Now the question may gradually arise how the bank will provide interest to the clients and the simple answer is advance.
We often use loans and advances as an alternative to one another. But academically this concept is incorrect. Advance is the combination of such items where loan is a part only for this credit section of the bank.
To run operations and to earn profit thereby, every bank advances and invests it’s deposited money and reserves equity and other available funds in various profitable sectors. The effective and profitable policies concerning advancing and investment is needed increasingl