Overview of Investment Corporation of Bangladesh: A study on Contribution of ICB Mutual Fund
1.1. Origin of the Report
To match theoretical knowledge with that of practical field, internship plays a vital role for the students of business education. With this program the student get experiences and know that how much theoretical knowledge is deviated from the real facts. To give the test, each business students of Dept. of Business Administration, Stamford University
Bangladesh has to carry out an internship program. That’s why; I had been placed for internship program in Investment Corporation of Bangladesh (ICB) for a period of two month.
1.2. Importance of the Study
I have got the opportunity to work in the Investment Corporation Bangladesh, as a part of the internship program. As I have finished the MBA. It was time for me to get real life experience. Having understanding this I decided to do my internship in renowned organization as Investment Corporation of Bangladesh (ICB). Now a days everybody wants to do there internship in private bank as they are performing well. As I came to know that ICB is an equity financer for the corporate investors and only disburse long term finance, and play a vital role in capital market. I decide to do my internship in ICB.
1.3. Objectives of the Study
The main objective of this study is to identify and familiarize with the objectives of the organization, function and analyzed performance of ICB in the capital Market. Other objectives of this report are as follows:
To evaluate and analyze-
# To evaluate and analyze the portfolio performance of ICB Mutual Fund
# To understand the operation and management of investment banking in Bangladesh.
# To know the role Investment Corporation of Bangladesh as the market maker.
# To understand the activities and contribution of mutual funds in the capital markets.
# To obtain the knowledge about how the ICB Mutual Funds are managed.
1.4. Sources and Methods of Data Collection
For the purpose of preparing this report, I have carefully observed all of the departments of ICB and got some information from the responsible officers at certain department. Sources of data collection are as follows:
a) Primary sources:
Primary sources data are those, which are collected from face to face discussion with the help of the officials of various departments of ICB in charge.
b) Secondary sources:
Secondary sources of data include:
Ordinance of ICB.
Annual reports of ICB.
Daily Newspapers, journals and books & various write up of Economic & Business Research Library.
Monthly review of DSE & CSE.
Materials & documents of ICB.
Bangladesh Bureau of Statistics.
1.5. Limitations of the Study
There were some difficulties, which I have faced in preparing this report. I have worked all the departments of ICB one after another. ICB is large corporation and therefore study time two months is too short to prepare a comprehensive report on the Mutual Fund & Unit Fund of ICB in the Capital Market. Other constraints l has faced during the course of study are as follows:
Secrecy of the official’s
Unavailability of relevant papers and documents.
Insufficiency of necessary information.
Relevant data sets, papers & documents were not available for us. These convey their inability for not providing all materials.
Our capital market is shallow & imperfect that is why various financial analyses cannot be applied to judge the performance of ICB.
Investment Corporation of Bangladesh (ICB)
2.1 BACKGROUND OF ICB:
Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment bank. As an investment bank is a financial institution, which mobilized fund from the surplus economic units by savings securities and developed funds to the deficit economic unit also by buying/underwriting securities. After Liberation in view of social economic changes, the scope for private sector investment in the economy was kept limited by allowing investment in projects up to taka 25 lacks. The new investment policy, which was announced in July, 1972 provides for an expanded role of private sector by allowing investment in a project up to taka 3 crores. The ceiling has further being raised to taka 10 crores in spite of the adequate facilities and incentives provided to the private sectors encouraging response was not for the coming. One of the reasons among other was the lack of institutional facilities, which provides underwriting support (Lick former ICB) to industrial enterprise that was required to raise much need equity fund. Thus, the need for reactivation for capital market, stock market was keenly felt.
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 accelerating 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.
2.2 OBJECTIVES OF ICB:
To encourage and broaden the base of investment.
To develop the capital market.
To provide for matters ancillary thereto.
To mobilize savings.
To promote and establish subsidiary companies for business expansion.
2.3 BUSINESS POLICY OF ICB:
To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general.
To provide financial assistance to projects subject to their economic and commercial viability.
To arrange consortium of financial institutions including merchant banks to provide equity support to projects and thereby spread the risk of underwriting.
To develop and encourage entrepreneurs.
To diversify investments.
To induce small and medium savers for investment in securities.
To create employment opportunities.
To encourage Investment in IT sector.
To encourage Investment in joint venture capital/project.
2.4 BASIC FUNCTIONS OF ICB:
Direct purchase of shares and debentures including Pre-IPO placement and equity participation.
Providing lease finance to industrial machinery and other equipments singly or by forming syndicate.
Underwriting of initial public offering of shares and debentures.
Underwriting of right issue of shares.
Managing investors’ Accounts.
Managing Open End and Closed End Mutual Funds.
Operating on the Stock Exchanges.
Providing investment counsel to issuers and investors.
Participating in Government divestment Program.
Participating in and financing of, joint-venture projects.
Introducing new business products suiting market demand.
Providing Consumer Credit.
Providing Bank Guarantee.
To act as Trusty and Custodian.
Dealing in other matters related to capital market operations.
2.5 Services of ICB
In order to raise term debt and equity from the primary market, the govt. bodies, enterprises, corporation or companies may seek intermediary assistance from ICB in the form of underwriting.
ICB is authorized to act as an agent of the issuers and investors for private placement of securities. Under this arrangement, ICB places securities to individuals on behalf of the issuers for which it charges fees.
Manager and banker to the issues:
To act as the manager to the public issue of shares and debentures ICB provides professional services in respect to syndicate underwriting and bankers to the issue.
Mergers and acquisitions:
Companies willing to expand their business through mergers and acquisitions or to divest projects that no longer fit into the present scale of operation may contact of ICB. ICB provides professional services and advices.
Custodian and banker to the issues:
To act as the custodian to the public issue of open end & close end mutual funds, ICB provides professional services. It also acts as the banker to the issuer and provides similar services through the network of its branches. Fees in this regard are negotiable.
ICB provides some other services. These are corporate financial advices, investors scheme, ICB unit fund, Bank guarantee scheme, advanced against ICB mutual fund certificates scheme, lease financing, consumer credit scheme, ICB mutual fund, advanced against unit certificate scheme.
2.6 CAPITAL STRUCTURE:
The Capital structure as on 30 June 2010 was as follows: (Tk. In crore)
|ICB||Consolidated(ICB & Its Subsidiaries)|
|Particulars||2010||2009||Increase/decrease (%)||2010||2009||Increase/decrease (%)|
|Long-term govt. loan||3.50||3.85||-9.09||3.50||3.85||-9.09|
Figure: Capital structure as on 30 June 2010 of ICB (represent Tk. In crore)
2.7 SHAREHOLDING POSITION:
The Shareholding Position as on 30 June 2010 was as follows:
|Shareholders||No. of Shareholders||No. of Shares||Percentage of Shareholdings|
|Government of Bangladesh||1||5400000||27.00|
|State owned commercial banks||4||4545400||22.73|
|Development financial institutions||1||5126200||25.63|
|Denationalized Private commercial banks||2||1817050||9.08|
|Private commercial banks||7||5700||0.03|
Figure: Share holding pattern as on 30 June 2010
2.8 SHARE PRICE:
Market price of a share of ICB of Tk. 100 each varied from lowest Tk. 2170.5 to highest Tk. 5700.0 on the stock exchanges during the year. As on 30 June 2010, the market price of an ICB share was Tk. 4991.75 on DSC and Tk. 5020.0 on CSE.
2.9 TRANSFER OF SHARES:
The volume of shares transferred increased substantially during the year. A total of 665 shares were transferred during 2009-10 as against 99987 shares in 2008-09.
2.10 ACHIEVEMENTS OF ICB DURING 2009-10:
(Tk. In crore)
|Particulars||Consolidated position(ICB & its subsidiaries)||Growth (Percentage)|
|Earnings per share(Tk.)||152.84||82.92||84.33|
|Book value per share(Tk.)||424.25||536.14||-20.87|
|Return on Equity(percentage)||36.95||31.40||-17.68|
|Return on Investment(percentage)||36.28||29.95||21.24|
|Net profit to total income (%)||42.21||35.91||17.54|
|Dividend Payout Ratio (%)||26.17||63.32||-58.67|
|Price earnings ratio(times)||32.66||14.94||118.61|
|Debt-Equity ratio||2 : 98||5 : 95|
|Capital Adequacy ratio||40.47||27.96||44.74|
|Transaction of securities||12435.32||5424.63||129.24|
|ICB||15% cash,1B:4||5% cash, 1B:1||-61.90|
|ICB Capital Management Ltd.||1B:5||3B:10||-33.33|
|ICB Asset Management company ltd.||5% cash, 3B:4||3B:5||33.33|
|ICB Securities Trading Company Ltd.||2B:1||1B:1||-50.00|
|ICB Unit Fund||26.00||22.00||18.18|
|First ICB Mutual Fund||400.00||310.00||29.03|
|Second ICB Mutual Fund||200.00||95.00||110.53|
|Third ICB Mutual Fund||140.00||85.00||64.71|
|Fourth ICB Mutual Fund||125.00||80.00||56.25|
|Fifth ICB Mutual Fund||100.00||56.00||78.57|
|Sixth ICB Mutual Fund||75.00||37.00||102.70|
|Seventh ICB Mutual Fund||70.00||35.00||100.00|
|Eighth ICB Mutual Fund||65.00||32.00||103.13|
|ICB AMCL First Mutual Fund||50.00||35.00||42.86|
|ICB AMCL Unit Fund||30.00||25.00||20.00|
|ICB AMCL Islamic Mutual Fund||35.00||25.00||40.00|
|ICB AMCL Pension Holders’ Unit Fund||28.00||24.00||16.67|
|ICB AMCL First NRB Mutual Fund||35.00||24.00||45.83|
|ICB AMCL Second NRB Mutual Fund||22.00||12.50||76.00|
|Prime Finance First Mutual Fund||1.25||–||–|
|ICB AMCL Second Mutual||14.00||–||–|
|ICB Employees Provident Mutual Fund One: Scheme One||1.15||–||–|
|Prime Bank First ICB AMCL Mutual Fund||1.00||–||–|
2.11 FINANCIAL RESULTS:
2.11.1 Total Income:
In 2009-10 ICB earned a total income of Tk.527.62 crore as compared to Tk.364.21 crore earned in 2008-09 showing an increase by 44.87 per cent. The major heads of income of ICB were interest income, capital gain, dividend income and income from fees and commissions. During 2009-10 income from all heads excepting interest income went up substantially compared to those of the previous year. Of the total income of Tk.527.62 crore, the highest income being the capital gain of Tk.262.9 crore (49.83 %) followed by interest income of Tk.194.85crore (36.93 %),dividend and interest income on securities of Tk.36.55 crore (6.93%), fees and commissions of Tk.30.27 crore (5.74 %) and Tk.3.05 crore (0.57 %) as income from other sources. Due to efficient management of the portfolio and favorable market condition income from capital gain stood at Tk.262.9 crore in 2009-10, which was 123.63 % higher than the capital gain of Tk.117.56 crore of the previous year. Divided income increased due to satisfactory dividend performance of maximum companies.
2.11.2 Total expenditure:
During 2009-10, the total expenditure amounted to Tk. 314.57 crore as compared to Tk. 252.58 crore in 2008-09 showing a decrease of 24.54% over the previous year. The major heads of expenditure were: interest expense of Tk. 157.71 crore which was Tk. 172.85 crore in the previous year, showing a decrease by 8.72 %. Other operating expense was Tk. 29.78 crore compared to Tk. 21.32 crore in 2008-09, registering an increase by 39.68%. Through the other operating expense was 39.68% higher than that of the previous year, it was 19.43% lower than the budgeted amount of Tk.36.96 crore as a result of various measures undertaken by the management to contain costs. During the year, provision of Tk.2.02 crore was provided against loans and advances. In addition, Tk.100.0 crore has been set aside against future diminution in the value of marketable securities held in the own portfolio, possible fluctuation of stock market indices and present booming market condition.
2.11.3 Gross Profit
The gross profit before provision and tax was Tk.340.07 crore in 2009-10 compared to Tk/170.04 crore in 2008-09, showing an increase of 99.99% over last year
2.11.4 Net profit:
During 2009-10, ICB’s net profit after tax increased to Tk. 213.05 crore from Tk. 111.63 crore in 2008-09, showing an increase of 90.85 percent.
The Board of directors of ICB recommended cash dividend as the rate of Tk. 15.00 per share and 1:4 stock dividend for 2009-2010. Cash dividend of Tk. 5.00 per share and 1:1 stock dividends were paid in the previous year.
2.11.6 Appropriation of Profit:
The Board of Directors of ICB recommended appropriation of Tk. 222.25 crore which includes net profit of Tk. 213.05 crore of 2009-10 and retained profit of Tk. 9.2 crore of the previous year and others in the manner as stated below:
Figure: Appropriation of profit of 2009-10 (crore)
2.11.7 Statement of Financial Results and some key financial ratios:
|Total income ( tk. In crore)||527.62||364.21||44.87|
|Total expenses (tk. In crore)||314.57||252.58||24.54|
|Profit before provision (tk. In crore)||340.07||170.04||99.99|
|Provision made (tk. In crore)||127.02||58.41||117.46|
|Net profit (tk. In crore)||213.05||111.63||90.85|
|Net profit to total income( percentage)||40.38||30.65||31.75|
|Return on total investment( percentage)||34.69||26.76||30.02|
|Return of equity( percentage)||35.58||28.43||25.15|
|Earning per share (Tk.)||106.52||111.62||-4.58|
|Book value per share (Tk.)||302.50||397.29||-23.86|
|Dividend yield (percentage)||0.80||4.24||-81.13|
|Dividend Payout ratio (percentage)||37.55||94.06||-66.08|
|Price earning ratio(times0||46.86||22.20||66.04|
|Debt equity ratio||3:97||6:94||–|
|Capital Adequacy Ratio(%)||37.25||28.20||32.09|
2.12 ICB’S ROLE IN THE SECURITIES MARKET: ICB has been one of the architects of the capital market, particularly the securities market in Bangladesh. ICB undertakes diverse activities with the objectives of quickening the pace of industrialization on the one hand and on the other hand, bolster the capital market. ICB and its three subsidiary companies play impressive roles in maintaining a buoyant and sustainable capital market in the country. In this regard ICB participates both in primary and secondary markets. As on 30 June 2010, the number of ICB assisted securities was 139 out of 279 listed securities (excluding 171 Govt. treasury bonds) of Dhaka Stock Exchange Ltd. out of 232 listed securities of Chittagong Stock Exchange were 100. In the reporting year, through the purchase and sale of securities for ICB’s investment portfolio, unit fund and mutual funds portfolios and on behalf of investment account holders ICB made significant contribution In maintaining depth, stability, reliability and liquidity of the stock market. During 2009-10 the total trading of ICB and its subsidiary companies in both the bourses was Tk. 12435.32 crore which was 129.24 percent higher than the previous year. In the reporting year, ICB and its subsidiary companies contribution to total turnover of Tk. 277870.91 crore of both the bourses was 4.48 percent which was 5.32 percent in the preceding year. As the rate of contribution of ICB and its subsidiary companies to total turnover of both the bourses has increased, simultaneously the transaction volume has increased significantly during the year. The activities pertaining to merchant banking, mutual fund operations and stock brokerage functions by the three subsidiary companies of ICB, namely ICB Capital Management Ltd.ICB Asset Management Company Ltd. and ICB Securities Trading Company Ltd. has been remarkable during the year. During the year, all the mutual funds and unit funds managed by ICB Asset management Company Ltd. a subsidiary of ICB declared much higher dividend over 2008-09. ICB motivates companies to float bonds in the securities market. Up to 30 June 2010, 11 bonds of 8 companies of Tk.1007.95 crore have been floated of which one is a listed corporate bond. Ten out of these eleven bonds were floated under trusteeship of ICB.
Portfolio Analysis: As on 30th June, the cost price and market price of eight mutual funds was Tk. 8006.72 lac and Tk. 32058.21 lac respectively. A consolidated statement of the portfolios of the funds is given in the following table:
|2||No of Securities||124||123||141||141||155||189||182||177|
|3||Total investment (Tk in lac)||887.70||612.98||698.25||748.52||952.61||1225.85||1341.95||1538.86|
|4||Market value (30 June 2010)||7791.87||1782.44||2547.87||2784.04||3662.00||4162.39||4324.86||5002.74|
2.13 MILESTONES OF ICB:
|Particulars||Date of Establishment|
|ICB||1 October 1976|
|Investors’ Scheme||13 June 1977|
|ICB Chittagong Branch||1 April 1980|
|First ICB Mutual Fund||25 April 1980|
|ICB Unit Fund||10 April 1981|
|ICB Rajshahi Branch||9 February 1984|
|Second ICB Mutual Fund||17 June 1984|
|Third ICB Mutual Fund||19 May 1985|
|ICB Khulna Branch||10 September 1985|
|ICB Sylhet Branch||15 December 1985|
|Fourth ICB Mutual Fund||6 June 1986|
|Fifth ICB Mutual Fund||8 June 1987|
|Sixth ICB Mutual Fund||16 May 1988|
|ICB Barisal Branch||31 May 1988|
|Nomination as the Country’s Nodal DFI in SADF||7 May 1992|
|Seventh ICB Mutual Fund||30 June 1995|
|Eighth ICB Mutual Fund||23 July 1996|
|ICB Bogra Branch||6 October 1996|
|ICB Local Office,Dhaka||15 April 1997|
|Purchase of Own Land & Building (Rajarbag)||11 December 1997|
|Participation in equity of SARF||16 January 1998|
|Advance against ICB Unit Certificates Scheme||12 October 1998|
|Lease Financing Scheme||22 April 1999|
|“The Investment Corporation of Bangladesh (Amendment) Act, 2000”||6 July 2000|
Commencement of operations of the Subsidiary Companies:
|Formation & Registration of Three Subsidiary Companies||5 December 2000|
|ICB Capital Management Ltd.||1 July 2002|
|ICB Asset Management Company Ltd.||1 July 2002|
|ICB Securities Trading Company Ltd.||13 August 2002|
|Registration as a Trustee with SEC||20 August 2002|
|Registration as a Custodian with SEC||20 August 2002|
|Bank Guarantee Scheme||21 June 2003|
|Advance Against ICB Mutual Fund /ICB AMCL Unit Certificates Scheme||21 June 2003|
|Consumer Credit Scheme||15 February 2004|
|Venture Capital Financing Scheme||26 April 2007|
|Purchase of own Land (Agargoan)||3 March 2008|
|Equity and Entrepreneurship Fund (EEF)||1 June 2009|
2.14 PRODUCTS OF ICB:
2.14.1 Private Placements:
ICB is authorized to act as an agent of the issuers and investors for private placements of securities. Under this arrangement, ICB places securities to individuals/institutions on behalf of the issuers for which it charges fees. ICB also acquires shares/securities for its own portfolio.
2.14.2 Trustee, Custodian and Issue Manager:
ICB is acting as trustee to the issue of debenture and securitized bonds. Up to 30 June 2009 ICB acted as trustee to the debenture issues of 17 companies involving taka 184.15 crore and issues of 7 bonds of 5 companies involving taka 624.36 crore. ICB also under took the responsibilities of trustee to 8 mutual funds involving taka 230.00 crore.
To act as the custodian to the public issue of open-end &closed-end mutual funds, ICB provides professional services. It also acts as banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable. However, ICB has, under restructuring programme, discontinued issue management function since 2003.
2.14.3 Lease Financing:
ICB extends lease finance mainly for machinery, equipment and transport. ICB has the capacity to provide professional advice and financial assistance to the prospective clients. The period of lease, rentals, 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 response has been received from the intending lessees.
2.14.4 Advances 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 requirements. One can borrow maximum of 50 percent value of last one year’s weighted average market price of certificates at 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.
2.14.5 Advances against Unit Certificates Scheme:
Advance against ICB Unit Certificates Scheme was introduced in 1998, especially designed for the ICB unit- holders to meet their emergency fund requirements. One can borrow maximum 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 issued. The rate of interest on the loan is reasonable and competitive.
2.14.6 Consumer Credit Scheme:
As part of business diversification program, ICB has introduced “Consumers Credit Scheme” in 2003-04 considering at the need of various household commodities of different employees of govt., semi-govt., autonomous bodies and some established private sector organizations. Under this scheme one can enjoy minimum Tk 1.0 lac but maximum 5 lac credit facilities. The rate of interest on the loan is reasonable and competitive which is fixed by the board of directors of ICB considering the bank rate and with the guidelines of Bangladesh Bank. Under this scheme the cumulative amount of loan disbursed up to 30 June 2010 was Tk. 10.95 crore. No amount has been disbursed during 2009-10
2.14.7 Venture Capital Financing:
With a view to encourage rapid industrialization of high risk but potential industries of the country ICB as part of business diversification has launched venture capital financing scheme. Up to 30 June 2010 ICB has received 5 applications for financing of Tk. 76.62 crore.Among these 5 projects, 3 are electricity generation project in new technology, 1 of investing car without fuel and yhe other is a project for providing air-conditioning facilities by a new technology.
2.14.8 Equity and Entrepreneurship Fund (EEF):
The Government of Bangladesh (GOB) had set up an Equity Development Fund (EDF) in the budget 200-01 known as Equity and Entrepreneurship Fund (EEF) with a view to encouraging the investors to invest in the rather risky but promising two sectors, namely, software industry and food-processing/agro-based industry. Initially the management of the fund was vested to Bangladesh Bank. Subsequently a sub-agency agreement was signed between ICB and Bangladesh Bank on 1st June 2009. According to this agreement, the management of the fund has been devolved on ICB.
2.14.9 ICB Mutual Fund:
Mutual Funds are also known as close ended Mutual Funds. The issued capital of a Mutual Fund is limited, that is, a Mutual Fund offers a limited number of certificates for sale to the public. The amount of capital and the number of certificates of each Mutual Fund remains unchanged. ICB Mutual Funds are independent of one another. A Mutual Fund being listed is traded on the Stock Exchanges. Price of Mutual Fund certificates after IPO is determined on the Stock Exchanges through interaction of supply and demand. The market price of a Mutual Fund certificates is available in Stock exchange quotations and in newspapers.
2.14.10 ICB Unit Fund:
ICB Unit Fund was established on April 10, 1981. Its main objective is to mobilize savings through sale of its units to small investors and invest these funds in marketable securities. The schemes provides a potential source of equity and debt to industrial and commercial concerns and thus contribute to the industrial development of the country.
Unit fund is an open ended Mutual Fund. It provides an opportunity to the unit holders to invest their funds in a well managed and diversified portfolio with a high degree of security of capital and reasonable yearly returns.
2.14.11 Investors’ Scheme:
The Investors’ Scheme was introduced in 1977 with the objective of broadening the base of equity investment through mobilizing savings of small and medium size savers for investment in the securities market. In addition to Head Office, Investment Accounts are also operated at the 7 branch offices of ICB located at Dhaka, Chittagong , Rajshahi, Khulna , Barisal , Sylhet, and Bogra. However in view of strategic changes in policy reform, from 01 July 2002 ‘ICB Capital Management Ltd.’ started opening and managing investment accounts. ICB will continue to provide services to its existing accounts only.
Further steps were undertaken to enhance the quality and speedy service under the scheme like computerization of all activities and installation of merchandizing operation management software. This enables the management to offer better and quick service to the investors including instant supply of the financial statement, portfolio, balance of the accounts, etc. Installation of telephone banking system in Investors’ Account enabling investors to collect information and operate their account over telephone was at the final stage of operations. Besides, installation of Electronic display system of DSE online trading on the floor of ICB was in progress.
2.14.12 Bank Guarantee Scheme:
ICB introduced Bank Guarantee scheme in 2002-03. ICB provides
Bid Bond for enabling the business people to participate in any tender or bidding;
Performance Bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients; and
Customs Guarantee for solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is Tk. 2.00 crore and would be issued against at least 20% cash and 80% easily encashable securities or against 100% cash margin. Re-guarantee from other financial institution is required for guarantee against the amount exceeding Tk. 2.00 crore.
2.14.13 Managers and Acquisitions:
Companies willing to expand their business through mergers or acquisitions or to Disinvestment projects that no longer viable into present capacity of operation can contact the Corporation. ICB provides professional services & advices in respect of shaping up the cost and financial structures to ensure best possible operational results. Besides, in case of divestment, the corporation, through network and established business relationship, bring buyers and sellers together, help them to negotiate final agreement and advice on the emerging corporate structure.
2.14.14 Corporate Financial Advice:
Government enterprises and Companies intending to go public issue often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provide such services through its expertise.
2.15 ICB’S ORGANIZATIONAL STRUCTURE AND MANAGEMENT:
2.15.1 Institutional Framework of ICB:
Investment Corporation of Bangladesh is a corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
2.15.2 Regulatory Framework of ICB:
As the mentioned earlier the regulatory framework of ICB is the, Investment Corporation Bangladesh Ordinance, 1976. This ordinance and regulations laid under the authority of the ordinance is the source of all power and authority of ICB. Through the recent enactment of “The Investment corporation of Bangladesh (Amendment) Act, 200” (XXIV) of 2000, scope of ICB’s activities through the formation of subsidiaries have been expanded. In addition to these, to resume its duties and functions, it has to compel by Companies Act 1994, Trust Act 1882, Insurance Act 1983, Security and exchange commission Act 1993, banking companies Act 1993, Foreign exchange regulation 1974, Income Tax act etc.
It is to note that no provision of law relating to the winding up of companies or bank shall apply to the corporation and the corporation shall not be wound up save by order of the government and in such manner
as it may direct.
2.15.3 Management of ICB:
The head office of the corporation as per the requirement of the ordinance of ICB is located at Dhaka. The general direction and superintendence of the corporation is created in a board of directors, which consist of 12 persons including the chairman and managing director of ICB. The board of directors consists of the following directors:
The chairman to be appointed by the government.
The directors to be appointed by the government from among persons serving under the government.
One director to be nominated by the Bangladesh Bank.
Four other directors to be elected by the share holders other than the government, BB, BSB, & BSRS.
The managing director is the chief executive of the corporation. The corporation has an executive comprised of 5 people including managing director.
2.15.4 Board of Directors of ICB:
The board is comprised of 11 directors. Exchange managing director, all directors are non-executive and independent and represent government, bank, Insurance Corporation, financial institutions and general public. The board of directors of ICB as on 30th June 2010 is as follows:
Dr. M.Khairul Hossain
Professor, Department of Finance
University of Dhaka
Ms. DinaAhsan (Additional Charge)
Md.Fayekuzzaman (Took the charge on 11 July 2010)
Kazi Shofique Azam
Army Head Quarter, Ministry of Finance
Government of the people’s republic of Bangladesh
Brigadier General Arif Ahmed Chowdhury
Sana Kallyan sangstha
Abu Hena Mohd. Razee Hassan
Mr. Md. Mizanur Rahman
Bangladesh Shilpa Bank
Mr.Md Humayan Kabir
Managing Director & CEO
Sonali Bank Ltd
Sayed Abdul Hamid
Managing Director & CEO
Arani Bank Ltd
Mr.S.M Aminur Rahman
Managing Director& CEO
Janata Bank Ltd
Sadharan Bima Corporation
2.15.5 Administration & Human Resource:
Investment Corporation of Bangladesh (ICB) is providing different category of financial and banking services. Nature of the different division departments vary, such that Economic and Business Research (EBR) department requires teamwork, Lone Appraisal division requires professional work. Funds divisions need chain work. Managing director is entrusted with authority to transact the regular business of the organization; he may delegate some authority to officials of the Corporations. However, most of the policy decisions are taken by the different committee with the approval of managing director and where required of the board. it is the discretionary authority of the board to constitute the execute committee and to maintain its Chairman to assist the board in the discharging of the function stated under the ordinance. The board may appoint such other committee (s) as it thinks fit to assist it in the efficient discharge of its function. So far, board has appointed two such committees. Economic and Business Research (EBR) committee and Loan Appraisal committee is headed by General Manager.
2.15.6 Organization Manpower:
During 2009-10, 10 officers and 20 supporting staff joined services of the Corporation at different levels. Moreover, recruitment of 60 officers was under process. On the other hand 5 officers resigned and 1 supporting staff retired from the services of the Corporation. During the period, 9 employees including 2 supporting staff retired from the services of the Corporation and 1 employee died. As per direction of the government, the retirement age of the freedom fighters has extended by 2 years to 59 years. According to this direction retirement date of 5 employees of the Corporation has been extended. The total work force as on 30 June 2010 was 478 which was 464 on the same date of the previous year. Out of 478 employees, 290 were officers and 188 were supporting staff. The total number of female employees was 72 including 44 officers representing 15.06 per cent of the total manpower. During the year, 6 officers and 7 supporting staff of the Corporation were promoted at different levels.
2.15.7 Organogram of ICB:
2.16 DEPARTMENT OF ICB:
2.16.1 Personal department:
The main functions of this department are:
For making a well trained administration must me selected the rules and regulation.
Appoints the manpower in the corporation.
Transfer, selects the salary, pension vacation, promotion, confirm the job, etc are the personnel related works.
Processing the promotion, time scale, vacation related works.
Processing the retirement.
Personnel’s give the facilities when they are going on retirement such as–gratuity, pension, provident fund are processed and control the attendance.
To maintain the national salary scale, select the salary, pension, increasing the annual salary etc.
The function which are related with the annual secret reports of the personnel’s.
Function of personnel discipline.
Take short term and long term development planning for the executive of a corporation.
Maintained the relation with the ministry.
Functions which are all related with the officers union.
According to need, others functions which are given by administration.
2.16.2 Human Resources department: The main functions of this department are:
To give and complete the different steps of training for the officers/personnel’s in the corporation.
Inventing the foreign training and organize the training in the foreign countries.
To organize the internal training for personnel.
To organize the training for new appointed personnel.
To maintain the official training center.
To organize the seminar/workshop, symposium, if needed take specialist.
To collect the training tools and give facilities of the trainee.
To select the officer/personnel for attending the different type of important meeting, seminar and workshop.
According to need, others function given by administration.
2.16.3 Establishment department:
This department deal with purchases of office supplies, office equipment etc, also maintain the utility services like telephone bill electricity bill etc. The cost of this department is divided into two categories revenue cost and fixed cost. For fixed cost, depreciation is charged at straight-line method basis. There are two purchase committees to accomplish the purchase. There remains a quality control committee to examine the quality of the product purchased. For the purchase of the product, this department gives tender notice to the listed supplies. Quality control committee is formed with two Deputy General Manager (DGM), one Assistant General Manager (AGM) and members from the Establishment Department. In case of selling of scraps and wastage the tender offer in same way.
2.16.4 Secretary’s department:
The main functions of this department are:
Arrange meetings of the Board of Directors, Executive Committee and other Committee.
Communicate with the directors of the Corporation.
Call board meeting.
Prepare work schedule of directors meeting and collect signature of the Chairman.
Send work schedule to Govt. and board of directors.
Send decisions of the meetings for implementation of concerned department.
Maintain attendance registers of directors.
Preserve the registration of shareowners.
Share transfer, transmission, split, issue duplicate share and dividend warrant.
Call Annual General Meeting.
Send work schedule of AGM to Govt. and other directors of corporation.
Distribution of dividend to the shareowners.
Communicate with shareowners.
Function related to issuance of right share of corporation.
2.16.5 Public Relations department:
The main functions of this department are:
Maintain close liaisons with the Ministry of Finance and other concerned officers.
Help publish all types of official advertisements.
Furnish management with the relevant newspaper cuttings.
Help focusing ICB through mass media.
Meet all adverse comments about the Corporation published in Different newspapers and periodicals.
Publish internal newsletter or journal.
2.16.6 Shares department:
The department, subject to act as, a custodian of ICB portfolio and investors accounts. It maintains IPO shares, right shares, bonus shares and secondary shares. When sales order placed to the concern department, it needs to justify the physical existence maintain by four volts. As by rule, shares must be delivering within three days of transaction, but in some case fluctuation may be seen because of share’s transfer registration.
2.16.7 Securities Reconciliation department: This department is involved in reconciliation of the securities if any discrepancy rises among the settle number of securities and the balance of the ledger. In case of sale concern department go through by the help of shares department for the conformation of physical existence of shares.
2.16.8 Dematerialization department: The main functions of this department are:
Paper share converted to electronic share.
70-75 Companies share has completed to dematerialization.
Converted to electronic share this department take custody fee.
2.16.9 Investor’s department:
The main task of Investors Department is to accumulate the investment of small and new investors of the capital market by helping them open an investment account in the concern department. This department deals with ‘Investors scheme’. The following are the main functions of this department:
Open and maintain Investment Accounts.
Sanction loans against deposits in Investment Accounts.
Buy and sale shares on behalf of the investors.
Counsel investors in respect of building up their portfolios.
Withdraw funds and shares from Investment Accounts.
Issue income tax certificates, portfolio statement, accounts statement etc.
Provide service to Investment Accounts Holder.
Keep financial records of all Investment Accounts.
Processing of withdrawal of funds.
Confirm fund position of individual accounts and
Posting of all transactions.
2.16.10 System Analysis department:
The main functions of this department are:
System administration of the entire network setup.
Performing system analysis wherever ICB feels the need for periodic change in computerization setup.
Performing miscellaneous small hardware and software related servicing tasks on the many workstations, network system, sever and other components and provide training to staff of other departments about computer usage.
Any other assignment given by the management.
2.16.11 Programming department:
The following are the main functions of this department are:
Developing new software for ICB.
Customizing the software developed in the present computerization phase according to the changes of the requirements of the ICB with time.
Provide active assistance to the staff of system analysis de