Service Marketing of Private Commercial Bank

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Service Marketing of Private Commercial Bank

CHAPTER-1

1.1 Introduction

Service business, like other business, considers customers as kings and queens. Their competitive power in the industry, even their existence in the same depends on their acceptability to present and potential customers. Customers’ acceptability to any company is the outcome of the ability of that company to provide the customers with superior value. Customers’ value again depends on the level of perception of the service they have received. Whenever, after consumption of service, the perceive level of service customer receive, is perceive less than the expected level of service, the customers become this satisfy. When customers are this satisfy to the respective service providers they may either do nothing or may simply switch to any other service provider of that industry.

Commercial Banks are the most important functionary of financial system of a country. They play a dynamic role in the economic development of a nation through mobilization of savings and allocation of credit to productive sectors. All the policies, programmers and strategies of a Bank must be formulated and implemented to satisfy the needs of the customers in the most efficient manner.

Service is any activities or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Service is completely experience based, intangible, no storable and simultaneous. It is given in a specific location. Moreover it is different from products. Customer service includes the following and much more:

Products, Services, Employees etc.

ð Communicating effectively and if necessary instantly with customers at different levels on different matters.

ð Being close to customers physically or otherwise.

ð Processing customer order efficiently and instantly.

ð Delivering service as per schedule

ð Gaining confidence and trust of customers.

ð Keeping customers satisfaction.

ð Listening to customer complaints and taking action on them.

ð Finding out new requirements of customers and endeavoring to fulfill these requirements.

Mercantile Bank Limited is one of the reputed commercial private Bank of Bangladesh. There are 20 branches of Mercantile Bank Ltd. in Bangladesh and Rajshahi branch is one of the branches. It provides services to thousands of people of Rajshahi district with the activities of special investment as well as general banking, foreign exchange and loan & advance activities. It is necessary to find out the nature of the service facilities and the ways of improving customer services.

1.2 Importance of the study:

Marketing is the performance of the business activities that direct the flow of goods and service from producer to customer or user in order to satisfy customer and accomplish the firm objectives. In order to achieve the customer’s satisfaction product must be available in the right from of the right firm in the right place and the number that will allow customer to obtain possession of the product.

Bank is the symbol of financial stability of a country. It is an institute which is responsible for safeguarding the financial stability of a country. In modern age the role of Banks is very wide as well as comprehensive. Mercantile Bank Limited contributes over all the fields like agriculture, small and middle industry. It take part Trade and commerce, Foreign exchange and foreign trade, poverty alleviation etc. and much more. In last year it can bring a significant change in different internal policies as well as introduce some new financial products. The new financial products are:

1) Lifelong pension scheme.

2) Consumer credit scheme.

3) Small loan scheme

4) Lease financing

5) Doctor’s credit scheme

6) Rural development scheme

7) Women Entrepreneur Development scheme

8) Special saving scheme for service holders etc. So it is very much important to find out the problem and prospects of customer services of Mercantile Bank Limited, Rajshahi Branch

.

After knowing customer opinion about service and Bank performance of Mercantile Bank Limited, Rajshahi Branch will be capable to achieve customer satisfaction. Which problem we have find out from the SWOT analysis the corporate branch will take initiation to solve these problems and gives guideline to Rajshahi branch to be more profitable to ensure how to solve problem.

This study will be helpful for the students of MBA (major in Marketing) to gather practical business knowledge along with their theoretical knowledge. It will also enrich the existing literature of comparative business.

1.3Literature Review:

Mercantile bank limited has been emerged as a new commercial bank that provides efficient service with contributing a significant socio economic development to the country .This bank commerce it operation june 2,1999.Later it expand its branches in all over Bangladesh.

Mercantile bank, Rajshahi branch is newly established in Rajshahi city. It operates its function 1^st February 2000 There is little study on service marketing.

Monowar Jahan (2002) carried out a study “A case study of service Marketing on Mercantile Bank, Rajshahi Metropoliton city” The research indicate the Problem of Mercantile bank, Rajshahi Branch that is space problem, Promotional problem and on line banking problem.

Redwanuzzaman (2003) conducted a study under the supervision of Md Mahabubur Rahman (Associate professor, Department of Marketing) –“Factor influencing the choice of bank service” The main finding is the factor that customer aspect to the service provider.

Md.Shaiduzzaman (2003) conducted a study under the supervision of AKM MOSTAFIZUR RAHMAN(Proffessor, Department of Marketing) “Service Marketing a study on Naogon Branch” The study identified some problem that insufficient instrument of E Banking and modern banking.

Hassan Mahmod (2004) carried out a study under the supervision of Dr.Rafiq Azad,(Associate professor, Department of Marketing,Ru) “Overall performance of Mercantile bank Ltd, Mohakali Branch.” The study fond that the increase its branch and come to a competitive position and achieve 4^th position in various bank.

Kollol Hossain(2005) conducted a study under the supervision of Dr.Md Amjad Hossain (Associate Professor, Department of Finance and Banking,RU) “Credit Management system a study on Mercantile Bank Ltd, Rajshahi Branch” the finding reflected the present credit position of the bank.

Rupok(2006) conduct a research under the supervision of Dr.M Mehrul Islam Khan(Faculty member, Northen university, Rajshahi) “Measurement of Customer Satisfaction, a study on Mercantile Bank, Ltd, Rajshahi Branch” The research state the various customer service and what is thinking customer about the service.

It is evident of the study that is conducted in different time frame. It is very important to design the service. It will help to the scope and the methodology of the present study. So the present research has been undertaken to make an in depth study to enrich the knowledge in the field of service marketing of commercial bank.

1.4 Objective of the study:

It is said that “where there is no objective there is no way to do something”. What over, should be performed depending on any specific objective. This study is not out of the above concept. However the objectives depending on which the research study will be performed as follows:

1. To find out various activities/services rendered by the Mercantile Bank Limited.

2. To measure the marketing activities and problem behind those activities.

3. To know the opinion of the customers regarding the existing services of the Mercantile Bank Limited.

4. To find out service efficiency.

5. To find out latent demand of customer.

6. To identify strength, weakness, threats and opportunity and observe future growth prospect.

7. To observe future growth prospect.

1.5 Hypothesis:

H-1: Ranking of factor that the choice of mercantile Bank Rajshahi by different business man is different from the ranking of executive of MBL, Rajshahi Branch.

H-ll: Ranking of Factor factors that the choice of bank by service holder is different from the ranking of executive of MBL, Rajshahi Branch.

H-iii: Ranking of Factor factors that the choice of bank by other customer is different from the ranking of executive of MBL, Rajshahi Branch.

1.6 METHODOLOGY OF THE STUDY

Methodology provides various strategies and technique to solve research problem. In performing applied research a clear and specific methodology is to be followed “Where methodology is a set of methods in a particular area of activity or research activity”.

Population of the study:

We take Mercantile Bank Limited as population of the study.

Sample:

Sample is a part of portion of whole population which is selected purposively. But the sample must be representative of whole population. The main purpose of sampling may be harmed if the sample selection is not perfect it may give a wrong result of the research. So it is very important to select perfectly.

Sample Area:

Samples are selected only from Rajshahi city corporation area for the study. Sample size:

Sample has been drawn suing the following formula-

Where, N_i is the total number of each sample categories n is the total sample size (60)

N_i is the number of sampled respondents from each categories.

According to this formula the sample of the study is as follows-

Types of Sample Categories		Total # of units in MBLRB	# of sample
Business man	—-	3886	31
Service holder	—-	2256	18
other	—-	1380	11
		7522	60

From Business man =31 service holder = 18 and others =11 respondents (Total 60) have been selected as a sample size and the requiring data have been collected from them by following convenience sampling method.

Fig: Responding Demographics

Source of Data:

In order to make the report more meaningful and presentable two sources of data and information have been used widely which are discussed below.

1. Primary Data: This report has prepared through extensive use of primary data. The source of my primary data is collected from groups of people who are related with this Bank. The primary sources are as follows:

ð Face to face conversation with the respective officers and stuffs of the Branch.

? Information conversation with the clients (Depositors and creditors).

ð Relevant files and documents study as provided by the concerned executives.

2. Secondary Data: I try to search secondary data to sophisticate this report, various books, articles journals, different annual reports, bulletin and information about their organizational profile are used as my secondary data.

Data Collection Method and Procedure:

A questionnaire containing scenarios served as the data collection method the maximum data was collected from respondents in the Bank and observation method has conducted to determine whether the customers are with the service rend end by the Bank.

 Preparing of Questionnaire:

A set of question is essential for colleting primary data from individual sources through interviewing that is why I have to prepare a questionnaire carefully.

1. I have use easy language to easily understand consumer.

2. The size of questionnaire in respect of number minimum as per as possible.

3. I have to avoid dual ward and leading question.

4. Technical question is also avoided.

5. Well design Questionnaire.

Considering the above terms condition I have prepared some open ended and close ended questionnaire for the clients to fulfill my research objectives.

Statistical Tools Used:

This study is designed to investigate into mainly ranking of factors influencing the choice of banks by “Bussiness man, Service holder” and “Others”.

11. Spearman Rank Correlation:

Where, p_s= Correlation between ranks over individuals.

Di= is the difference between ranks associated with the particular item i.

N= is the number of items.

T-test:

Procedure of Analysis:

The procedures followed in analyzing data in this study are described as follows-

a) Ranking of factors influencing the choice of banks: Respondents (Both depositors and borrowers) have been asked to rank eleven factors given in the questionnaire in order to preference considered by them at the time of selecting their banks. On this point MBLRB executives have been also asked to indicate their feelings about their customer rankings. It was observed that respondent mostly ranked only 4 to 6 factors. Thus for analysis, first four factors, chosen by almost all the respondents have been taken into account. Moreover, in determining the rank of each factor the average rank of each factor has been evaluated. The rank of each factor has been determined on the basis of average rank that is, factor getting the minimum average rank has been given the last rank and so on. Both arithmetic mean and mode gave almost the identical ranks.

b) Comparison of Rankings: In comparing the rankings given by different groups of respondents “Spearmen Rank correlation” technique has been used. to measure the reliability and validity of Spearmen rank correlation, T-test has also been used.

1.5 Limitation of the study:

Study project is an unending process. It is also complicated. In this study project process each and every researcher faces a lot of problem. I tried to solve some problem but a number of limitations have been arisen in my study. The limitations are as follows:

rTime is an important issue in data collection and report writing. As I have been given a specific time for submission, observation and learning all the banking operation with is short time was really tough.

rI received co-operation from the concerned officials. They were not always able to give me much time, as they were busy with their own work.

rSome respondents were conservative they did not express their opinion and most of the clients was businessman, so it was very hard to take interviewed properly.

rAs the study was conducted with in Rajshahi branch and it was the first study of the branch so, relevant paper and documents were not which could helpful in writing this report.

rThe data of this study has been gathered from 60 clients. This really a quite few. For the scientific and comprehensive study the number of respondents should increased into a large number.

rConfidential disclosure of data by the bank made it very difficult to obtain relevant information as desired.

CHAPTER-2

2.1 A conceptual model of service quality, customer value and customer cost and customer perceived risk:

Parasuraman and zeithmal’s SERVQUAL includes five dimension of service that is relevant for measuring the service quality of banks by its customers.

SERVQUAl is diagnostic tool that uncover broad weakness and strength’s in the area of service quality. The SERVQUAL instruments are based on five service quality dimension that were obtained through extensive focus group interviews with customers and executive. The dimensions include tangiable, reliability, responsiveness, assurance, and empathy.

The SERVQUAL instrument also consist of two sections: a 22 item section that records client’s expectation and a second 22 items section that measures customer’s perception .SERVQUAL disclose some dimensions that directly influence customer choice in the case of a service oriented organization like bank. The dimension are-

1. The tangibles Dimension: The dimension of SERVQUAL Compares customer expectations with the bank’s performance regarding the bank’ ability to manage the tangible.

2. The reliability dimensions: The reliability dimension reflects the consistency and dependability of a firm’s performance.

3. The response dimension: Responsiveness reflects a service firms commitment to provide its services in a timely manners.

4. The assurance dimensions: The SERVQUAL assessment of a firm competence, courtesy to its service in a timely manners.

5. The empathy dimension: Empathy is the ability to experience another’s

feelings as one’s own. Empathetic firms have not lost touch with what it is like to be a customer of their own firm.

So, a set of key discrepancies or gap exist regarding executive perception

Of service quality and tusk associated with service delivery to customers.

Before selecting a bank each customer expects certain types of service FromTheir bankers. If there is something gap or discrepancies between the customer perception and management perception of bank then it influence the customer. These gap or discrepancies may be created from the following issues that are shown in a figure in below-

FIG: SERVQUAL MODEL

Gap-1: The gap between customer expectation and management perception of those expectations will have an impact on clients evaluation of choice of bank.

Gap-2: The gap between bank management perception of customer expectations and the bank service quality specification will affect the service quality from the client’s view point.

Gap-3: The gap between bank service quality specification and actual service delivery will affect bank service quality from the customer view point.

Gap-4: The gap between actual bank’s service delivery and external communication about the service will affect bank service quality from a clients stand point.

Gap-5: The quality that a consumer perceived in a service is a function of the magnitude and the direction of the gap between expected service and perceived service.

2.2 A conceptual model of customer perception of value:

A conceptual frame works that customer expectation and perception is related with the customer value that renders customer priorities to select a bank. Customer value represents a trade of between the perceived benefit of the service to be purchased and the perceived sacrifice in terms of the cost to be paid. Total customer cost includes monetary cost, time cost, energy cost and psychic cost. Monetary cost is paid for service where as other cost reflects the time and trouble the customer has to endure to acquire the service. Similarly total customer value extends beyond product value and includes service, personal value and image value.

It has been shown in below:

Fig: Customer perception of value

Total customer cost is an the indicator sacrifice relative to value, then price will have negative or repelling effect and may reduce demand of a bank. If the signal sent by the price is an indicator of benefit or value, then price will be an attractor and may increase the demand of a bank.

From the literature review discussed in the earlier chapter it is found that the former study conducted in banking sector have ignored the customers’ perceived risk when they consider to gat a bank service. This perceived risk is related with the customer choice factor to bank. The idea of customer perceives risk to bank have been identified based on five different kinds of outcomes such as financial, performance, physical, social and psychological.

Financial risk assume that financial loss could occur if the dealings with a bank goes wrong or fail to operate correctly. Performance risk related to the idea that the item or service of a bank purchase will not perform the task which it was purchased. The physical risk for a service of a bank can emerge if something does go wrong. Social risk suggests that there might be a loss or personal social status associated with a particular purchase. Psychological risk pertains to the influence of the bank service purchase on the individual’s self- esteem.

CHAPTER-3

Company profile

3.1 HISTORICAL BACKGROUND OF MERCANTILE BANK LIMITED

Mercantile Bank limited, a private commercial bank with head office at 61 Dilkusha C/A Dhaka, Bangladesh started operation on 2^nd June, 1999. The Bank has 20 braches spread all over the country. The special objective of bank was to exploring a new horizontal of banking and provides a wide range of quality products and service comparable with those available with any modern bank in the world. Its authorized capital was TK. 800 million and a paid up capital of TK. 245 million contributed by sponsors. 100 percent private sponsors own the total share of capital. The numbers of sponsors are 30.

3.2 BACKGROUND OF MBL, RAJSHAHI BRANCH:

Rajshahi Branch is the 7^th branch of Mercantile Bank Limited. It located in Shaheb Bazar zero point, which is central position of Rajshahi. The formal commerce minister and chairman of the Bank Mr. Abdul Jalil inaugurated this branch on the 1^st February of 2000. and the activities of the branch has started from the next day. This branch has established to consider the business man banking needs including L/C.

Mercantile Bank Limited, Rajshahi Branch, Rajshahi has started it’s business from 1^st February, 2000 as 7^th branch of the Bank. Since inception of the branch, we had tried our best to expedite overall business in Rajshahi. From the very beginning of the branch, we have always looked forward for concur business with a diversified perspective. Meanwhile, our deposit increased up to TK. 5004.18 lac, advance up to 3565.97 lac, import up to 906.10 lac & profit up to 104.08 lac in the year 2006.

Substantial number of clients of deposit & loan account has also increased. We had also achieved all types of business targets that given by our Head Office for the last three years.

Major features of the branch:

• Manpower : 22
• Deposit : Tk.5059.55 Lac ***********
• Advance : Tk.4663.81 Lac
• Import : Tk.1006.10 Lac
• Profit :Tk.224.08 Lac

We are hopeful that the business target for the year 2007 which is going to be set will also be achieved as continuation of previous year.

3.3 Mercantile Bank Limited, Rajshahi Branch Progress at a Glance:

Particulars	2004	2005	2006
Income	570.63	762.47	888.28
Expenditure	404.43	582.86	618.24
Deposit	3087.63	4036.20	5059.55
Advance	2861.76	3786.28	4637.81

3.4 Organizational structure:

Mercantile bank ltd. Rajshahi Branch

Saheb Bazar,Rajshahi

CHAPTER-4

 CUSTOMERS SERVICE MIX OF MERCANTILE BANK LTD. RAJSHAHI BRANCH

4.1 Opening of Account:

By opening of an account a person/s becomes a customer of a bank. It is a legal contract between the bank and the customer. An account opening from is the contractual document. It is the legal basis of banker – customer relationship. The rules and regulations for opening of an account vary from customer to customer.

4.2 DEPOSIT SCHEMES TAILORED FOR VARIOUS TYPES OF ACCOUNTS

Now a days, it is very risky for people to carrying cash in hand and keeping money in the house so, these people can be safe by keeping their in the bank. Mercantile bank mobilize deposit through the following accounts.

4.3 A) Demand deposit:

ð Current Account:

Current account is most suitable for private, individuals, traders’ merchants, importer and Exporters mill and Factory owners etc. For opening of a current account minimum deposit of Tk. 1000 is required along with introductory reference. No interest is given the current account deposited money. One can enjoy maximum flexibility and convenience when he/ she open current account with MBL

This account offer-

ð Any number of transactions in a day.

ð Cheque book.

ð Statement of account at any desired frequency.

ð Phone banking.

ð Online banking

Saving account:

The saving account is primarily for small – scale savers the main objective of this account promotion of thrift. Hence there is restriction on with drawls in a month. Heavy withdrawals are permitted only against prior. Minimum amount of Tk. 500 is required as initial deposit. Frequent withdrawal not allowed. The role of interest is 6.5%.

STD Account (Short Term Deposit):

This kind of account is opened normally various big companies, organizations Government department etc. This account is operated like current account. If 7 days written notice is placed before the bank is gives interest at the rate 6.00% per minimum.

4.4 (B) Time Deposit:

Deposits are life blood of a commercial Bank. Since commercial bank deals with other people’s money, without deposits there is no business for the commercial Bank. Accepting deposits is one of the main functions of MBL.

4.5 (C) Fixed Deposit Receipt:

Fixed deposits are the deposits in which an amount of cash is deposited in Bank for a fixed period specified in advance. These deposits are time deposits. Normally the money on a fixed deposit is not repayable before the maturity date of a fixed period. At the time of opening the deposit account, the banker issues a receipt acknowledging the receipt of money on deposit account. It is popularly known as FDR.

FDR interest rate (Blackwood):

Time BELLOW 1cr ABOVE 1cr1(one) month 8.00% 9.00%

3(three) month 9.25% 9.50%

6(six) month 10.00% 10.50%

1(one) year 10.75% 11.75%

If any depositor wishes to withdraw his / her money before maturity he / she are allowed to do so. But be given according to the prescribed rate for that term. This instrument is also accepted as primary security or collateral security against any advance or loan subject of the Bank.

To collect huge mount of time deposit mercantile Bank Ltd. operate some attractive product or scheme. The figure of various time deposit products described as follows:

Monthly saving scheme:

Objectives:

1. To generate saving intension.
2. To make attraction small savory
3. Saving for terrible time
4. Opportunity for large profit

It is a best saving scheme for the small savers through savings of fixed amount of money every month. One can get a lucrative lump sum amount of money after five, eight or ten years. The installment size range is given below.

The final figure Table amount of monthly saving scheme project:

Monthly Premium Duration	250	500	1000	1500	2500	5000
5 Years	20625	41250	82500	123750	206250	412500
8 Years	40375	80750	161500	242250	403750	807500
10 Years	57500	115000	230000	345000	575000	115000

The features of this scheme:

ð Move than one account is opened by one man.

ð Premium rate is given ten days in a month.

ð Loan is given agent savings.

ð Advance premium is taken.

Digun Bridhi Amanat Prakalpa:

It is highly yielding saving scheme money doubles in 6 years. TK. 1.00.000 becomes TK. 2.00.000 in 6 years.

The project summery as follows:

Double Benefit Deposit Scheme:

Particulars	Deposit	Period	Benefit
Previous	100000	7 years	200000
Presents	100000	6 years	200000

By depositing the amount of TK. 57,500 or any coefficient value of this amount can deposit to any personal name or institution name for five years and the depositor can get a fixed amount monthly until a certain time.

The requirement of project

Masik Munafa Prokalpa:

Particulars	Previous	Present
Deposit	1,15000	1,00,000
Profit Per Month	1,000	1,000

ð The deposit is kept here 5 years or over 5 years

ð Loan is given against savings

Special saving scheme:

Objectives:

1. To help industrialization by increasing investment.

2. Making a dynamic economy.

3. Reducing foreign dependability.

Five thousand and amount to TK. Multiply any digit by five thousand is depositing under this project for eleven years. One can get three times on maturity. A depositor may withdraw his/ her depositing money after one year in any time of then project time interval.

The benefit of the scheme:

Year	Saving Amount
	5,000	10,000	50,000	1,00,000
01				1,09,000
02				1,19,355
03				1,31,293
04				1,45,083
05				1,61,051
06				1,78,610
07				1,97,365
08				2,18,287
09				2,42,633
10				2,68,961
11				3,00,000

ð More than one account is opened by one man.

ð Every coefficient amount of 5 thousand taka is saved.

ð Loan is given against savings.

Ajiban pension scheme:

Ajiban masik pension is get under this project, after depositing a certain amount of money in the project scheme time. This account is also open by minor name. The project summery as follows:

Ajibon Pension Scheme
Monthly Installment	10 Years							15 Years
	Pension Per Month			Lump sum				Pension Per Month		Lump sum
	Pervious		Present	Previous		Present		Previous	Present	Previous	Present
1,000	2,500		2,000	2 lac		1.8 lac	5,000		4,000	4.0 lac	3.6 lac
Monthly Installment	20 Years							25 Years
	Pension Per Month			Lump Sum				Pension per month		Lump Sum
	Previous	Presents		Previous	Present			Previous	Present	Previous	Present
1,000	10,000	8,000		8.0 lac	7.25 lac			20,000	16,000	16.0 lac	14.75 lac

The benefits for Installments of Tk. 2,000, Tk. 3,000 Tk. 4,000 and Tk. 5,000 are Proportionate with Installment of Tk. 1,000.

ð Installment is deposited in date of ten per month.

ð Advance installment is deposited

ð Monthly pension will be given after 30 days of deposit last installment

ð Ajiban monthly amount of pension and ageist pension one time paid him or her nominee.

ð Depositor can enjoy life time benefit

ð In exchange of monthly pension contemporary specified amount can with drew after duration.

ð Depositor can with draw total specified amount in any time at enjoying person.

ð After data nominee can with draw contemporary specified amount pension.

Transfer of accounts:

Account holder may transfer his account from one branch to another for this he / she must apply with proper reason to the manager of the branch where he/ she are maintaining the account. Manager requests to the account holder want to transfer his account holder wants to transfer his account. Besides, he / she also send original copy of ‘Account opening form, and “specimen signature card and photocopy” of application for transferring the account with the balance remained in the account.

Closing of an Account closing of account may happen for the following reasons-

ð Customer desires to close the account.

ð Customer’s insolvency.

ð Death of customer or insanity of the customer.

ð The bank finds that the account is inoperative for a long period.

To close the account, the Cheque book is to be returned to branch.

BILLS and Remittance:

Remittances of funds one of the most importance aspects of commercial private banks is rendering service to its customers. Among various service rendered by a commercial bank to its customers, remittance facilities are very well known and popular. The word remittance means sending of money from one place to another through past and telegraph. Bank expands this facility to its customers by means of receiving money from one branch of bank and making arrangement for payment to another branch with in the country. In general there are two types of bank remittance

ð In ward remittance

ð Out ward remittance

Bank takes the risk and ensures payment to the beneficiary by charging the customer commission. Mercantile bank branch gives their customers the opportunity to different kinds to billing and to remit fond from one place to another the instruments which are used to remittance and billing are, D. TT. SDR and pay order.

Demand Draft (DD):

Demand draft is a negotiable instrument issued by a particular branch of a bank containing an order to another branch of the same bank to pay a fixed sum of money to a certain person or order on demand. This instrument can be purchased by a customer from a particular bank’s branch for himself or for beneficiary and can be handed over to the purchase for delivery to the beneficiary bank issue drafts for a nominal commission. The commission depends upon the amount to be transmitted mercantile bank charges the commission on DD 0.1% and minimum charge is TK 25.

Telegraphic transfer (TT):

Telegraphic transfers quicker than a transfer of amount by DD. TT is the most rapid and con veining but expensive method. Telephone, Telex, Fax is different made of TT. If an applicant wants to remit the amount urgently to the payee is another city or district he/ she may request the banker to send it by TT. The Branch generally recovers from the telex charge in addition to usual service charges.

Security Deposit Recite (SDR):

SDR is one kind of bill which use the government tender, From SDR Bank earns a big amount. Mercantile Bank Rajshahi branch give credit facility against on SDR.

Pay order (PO):

Payment order is a written document. This pay order can be enacted on that Branch from where it is insured. Several suppliers, organizations use this P.O. it is issued locally.

Services provided for depositors: Rajshahi branch provides there services that are as follows:

ð Collection of out station Cheques / bills (Clean / Documentary)

ð Collection of local Cheques.

ð Collection of pour water bill

ð Bills of exchange and promissory

The charges of various types of services are as follows.

Mercantile Bank Limited

Head Office

61, Dilkusha C/A, Dhaka

Schedule of Charges for Inland Transaction:

	Types of service	Nature of Charges	Charges
	Current Account	a) Service Charges	@ Tk. 50/- half yearly on each account irrespective of Balance
		b) Closing Charges	Tk. 100/-
	Savings Account	a) Service Charges	@ Tk. 25/- half yearly on each account irrespective of Balance
		b) Closing Charges	Tk. 50/-
	Collection
	a) Collection of local Cheques	Commission	i) Where there is a clearing house free. ii) Where there is no clearing house…. Actual conveyance min. Tk. 10/-
	b) Cheque returned unpaid from clearing house.	Commission	Tk. 50/- (Flat) per instance from the account of the Depositor of Cheques.
	c) Bounced Cheque drawn on us(cash, Clearing or transfer)	Commission	Tk. 50/- (Flat) per instance from the account of the Drawer of Cheques.
	d) Collection of outstation Cheques/ bills(clean / documentary)	Commission	Upto TK.25,000=TK (a) 0.15% min 15=
			From TK., 25,000/= 161 lac (a) 15% min 50
			From Tk=1,00,001/= to Tk 5 lac @ 15% Min, Tk. 1000/-
			iv) Over Tk. 500001 0.10%, Min, Tk. 500/=, Max, Tk. 2500/-
	e) Postage (Regd.)	Postage Charges	Actual, Min. Tk. 20/=
	f) Telegram	Telegram Charges	Actual, Min. Tk. 30/=
	g) Telex	Telex Charges	Tk. 30/= per minute, Min. Tk. 30/=
	h) Telephone	Telephone Charges	Actual, Min. Tk. 30/=
	Issuance of Cheque Books
	a) Current Account	i) For 10 leaves ii) For 20 leaves iii) For 50 leaves	Tk. 12.50/= Tk.25/= Tk. 62.50/=
	b) Savings Account	Cheque Book of 10 leaves	Tk. 12.50/=
	Remittance (inland)
	a) DD/TT/MT issuance	Commission	@0.010%, Min. Tk. 10/=
	Telegraph charge for T. T. issued	Telegraph Charges	Actual, Min. Tk. 25/=
	Telex Charges for T. T. issued	Telex Charges	@ Tk. 30/= per minute.
	Telephone Charges for T. T issued	Telephone Charges	Actual, Min. Tk. 30/=
	b) Cancellation of DD/TT/MT	Commission	Tk. 20/=
	c) Cancellation of P.O.	Commission	Tk. 10/=
	d) Issuance of duplicate instrument	Commission	Tk. 50/=
	e) Pay- order issuance	commission	Up to Tk. 100000/= Tk. 15/=
			From Tk. 100001/= to Tk. 1000000 Lac, Tk. 25/=
			From Tk. 1000000/= and above Tk. 50/=
	Discounting of bills & instrument	commission	i) Upto Tk. 1.00 Lac @ 1.00%m Min. Tk. 25/= ii) From Tk. 100001 to Tk. 5.00 Lac @1.00%, Min. Tk. 1000/= iv) Over Tk. 5.00 Lac @ 1.00%, Min. Tk. 2500/-
	Postage	Postage Charges	Actual, Min. Tk.20/=
	Telegram	Telegram Charges	Actual Min. Tk. 30/=
	Telex	Telex Charges	Tk. 30/= per minute
	Telephone	Telephone Charges	Actual. Min. Tk. 30/=
	Standing instruction	Commission	Tk. 20/= for compliance of each instruction.
	Issuance of guarantee	Commission/ service Charges	@ Tk. 0.50% per quarter or part thereof, Min. Tk. 250/= When 100% margin is provided @ 0.25% per quarter or part thereof with a minimum of Tk. 200/=
	Locker	Rent	a) Small Tk. 500/= yearly.
			b) Midium Tk. 1000/= yearly.
			c) Large Tk. 1500/= yearly.
	Inland letter of credit other than inland back to back letter of credit
	a) Advising	Advising Charges	Tk. 150/=
	b) Opening	i) Commission	For 1st quarter @ 0.05% For each subsequent quarter or part thereof @ .030% Min. Tk. 150/=
		ii) Postage Charge	Tk. 150/=
		iii) Telex Charge (Full operative)	At actual plus 10%, Min. Tk. 500/=
		iv) Telex charge (Short & non operative)	At actual plus 10%, Min. Tk. 200/=
	c) Amendment
	i) By mail	Postage Charges	Tk. 100/=
	ii) By Telex	Telex Charges	At actual plus 10%, Min. Tk. 150/=
	iii) Increase in value or extension of time.	Commission, postage, telex, etc.	As mentioned ‘b’ above.
	d) Negotiation Documents	i) Commission	i) 0.20%, Min. Tk. 100/=
		ii) Postage Charges	ii) Tk. 50/=
	e) Any other service not mentioned above.	Necessary Charges	To be realized at actual.

Credit policy of Mercantile Bank:

Mercantile Bank, like other private sector banks, is sponsored by the private industries that are strongly motivated by profit motives. So being a private sartor Bank Mercantile Bank has sat its credit operation and management functions keeping in view the objectives of its sponsors. Despite these acts, it has the objectives of operating as a partner of development by extending credit facilities to the intending borrowers in the field of trade commerce and industry.

Mercantile Bank is functioning mainly in the city areas of the country. The rural people are almost outside the credit network of Mercantile Bank. Its credit operations are dominated to short term cash credit. Secured overdraft etc. and short terms trade financing. The long- term credit operation of this Bank is not significant, as the Bank is eager to expend short term rather than long term risky investment. It is important to mention that Mercantile has no prescribed and written credit policy. It sanctions loans and advances within the scope of instructions and guidelines of Bangladesh Bank. It can sanction loans and advances up to their loan able fund. Loan able fund indicates 80% of their total deposits (20% is the statutory requirement). Statutory requirement consists of:

– 5% cash (minimum) with Bangladesh Bank

– 15% in the form of:

– Cash in hand

– Balance with Bangladesh bank.

– Treasury bill

– Other approved securities.

– Procedure of loan sanctioning

Loan sanctioning does not depend on a particular credit committee, rather being empowered by the Board offices at different level, sanction loans and advances the sectors presided.

Discretionary power of Loan Sanctioning:

Branch Marriages can sanction loans and advances against financial obligations like Bangladesh Sanchay Patra, FDR etc. Sanctioning power of Loans and advances varies sector to sector for the officials of Mercantile Bank.

Branches receive loan application and then forwarded to the Head office in the cases chare head office approved is required. After scrutinizing and filling a prescribed from where emphasis is given on the following point.

– Name of loans and advances

– Purpose of loans and advances

– Amount sought

– Particular to securities offered and their value.

– Mode of repayment

– Existing friability position in case of old barrows.

Consideration factors

Consideration is given on business volume, security, goodwill. If it is a renewal case, last one year performance is obtained and strongly considered. For a new loan sanctioning, the applicant for borrowing should have and account with the bank for at least six month to be an eligible applicant. This six months cash flow in addition to the considerations given on renewal given case is strongly monitored for sanctioning new loan.

Loan proposal for one crore end about requires lend ding risk analysis (LRA) as directed by Bangladesh Bank. But banks may go for LRA for loan proposals of any amount at their discretion.

It the loan proposal is accepted i.e. loan is sanctioned then a sanction advice is forwarded to the borrowers though branch points are mentioned.

-Amount at limit

– Purpose at limit

– Margin equity

– Rate of interest

– Disbursement schedule

– Repayment schedule

– Expiry date of the limit

– Security details with value

– Other terms and conditions

Foreign Exchange transactions:

Foreign trade financing is an internal part of banking business. With the globalization of economies internal trade has become quite competitive timely payment for exports, quicker delivery of goods is a therefore a prerequisite for the success of international trade operation.

The MBL, Rajshahi brunch works as an ‘Authorized Dealer’ for the financing of foreign trade and dealing with foreign currency. This branch has a good reputation with the importers and exporters. In MBL, Rajshahi branch ‘Foreign Exchange Department’ is mainly active on import Function. This branch operates Export Function. But export business of this branch is not mentionable.

Import section:

Import of merchandise involves two things brings of goods physically into the country and remittance of foreign exchange towards the cost of merchandise and services. In case of import, the importers are asked by their exporters to open a letter of credit. So, that their payment against goods is ensured. Documentary credit has emerged as a vital system of trade payment. It is a key player of foreign trade.

Letter of Credit is (L/ C):

Letter of Credit is a payment guarantee to seller by the buyer’s Bank. It is a credit contract whereby the buyer’s bank of behalf of the buyer is committed to pay and agreed amount of money to the seller under some agreed conditions. If the conditions of the credit do not require for presentation of specified documents, it is called ‘Clean Credit’. On the other hand, if the presentation of specified document is obligatory, the credit is called a ‘Documentary Credit’. Documentary Credit is an assurance of payment by the Bank. It is an arrangement to make the payment to the seller provides documents are submitted. Buyer and seller enter into contracts for buying and selling of goods/ service and the buyer instructs his Bank to issue L/C in favor of the seller. Here the Bank assumes fiduciary function between the buyer and seller.

Import Procedure:

An importer is required to fulfill some conditions/criteria to be eligible as an importer as per provisions of Import policy order and guidelines for foreign exchange transaction. An importer is required to submit the following documents along with L/C application to get a license to import goods through MBL Bank Limited

An account with MBL Rajshahi Branch

Import Registration Certificate

Performa Invoice/ Indent

Tax paying Identification Number

Membership Certificate from recognized Chamber of Commerce & Industry

Letter of Credit Authorization Form duly attested

L/C Application duly signed by the importer.<