Strategy for Customer Satisfaction and Profit Trend of NCC Bank Ltd.
Financial Institutions have historically have been distinguished by the types of services they provide. In recent years Financial Institutions have diversified their services by creating new subsidiaries that perform additional services or by merging with other types of financial institutions. The result has been the creation of financial conglomerates, composed of various units offering specialized services. Diversification also offers benefits to financial institutions.
National credit and commerce Bank Limited was incorporated in Bangladesh as a banking company. I worked in their Kawran Bazar Branch as an intern. This gives me the opportunity to know more on different aspects of the company including the marketing strategy they are following. So, I prepare my internship report on marketing strategy of NCCBL.
Objectives of the Report:
- To understand how the banking transactions take place in the banking sector of Bangladesh.
- To observe the authorities, tasks & responsibilities of the bankers.
- To get familiar with the banking rules and regulations.
- To know the overall banking system of NCCBL
- To understand the Financial and Accounting techniques of NCCBL.
- To have the idea about the communication between the branch office and head office.
- To better understand about the foreign exchange activities.
- To observe the current marketing activities of NCCBL and evaluate the strategies.
- To provide idea of a new product with the marketing plan.
Methodology of the Study:
This report is prepared by two sources:-
- Primary Sources.
- Secondary Sources.
For primary research, conducted a survey among the customers of NCC bank Ltd and its employees. To do this research designed a questionnaire with different types of questions so as to get a range of useful data which helped me to answer my research questions. For conducting survey took the sample size 50. Also took interview of different people related to the NCC Bank Ltd. Top level employees are among them.
Significance of the Study:
This topic is very important for the people who are involved with banking especially for NCC bank Ltd. This project work will help them to understand about their way of marketing, whether they are successful or not. Marketing for bank is very important because customers must have the idea about the products NCC Bank is providing, without banking its quite hard. So, through this project tried to evaluate the marketing strategy of NCC Bank Ltd.
Limitation of the Report:
In brief, I faced following limitations during the time of preparing this report:
i. The bank was not eager to divulge information regarding their service delivery and policy information.
ii. The information used in the report was limited to the Kawran Bazar Branch, Dhaka only.
iii. The availability of adequate data was a major problem in making the report.
iv. There were a few questions which were not exactly answered.
v. Sometimes the customers were in rush, so they didn’t want to provide information willfully.
vi. Time frame for the research was very limited.
vii. Large scale research was not possible due to constraints and restrictions posed by the organization.
viii. The research covers only the customers of Dhaka city.
ix. To protect the organization’s confidentiality, some parts of the report are not in depth.
NCC Bank is providing both general banking and credit banking. So, they provide different types of products for its customers, general and credit banking system. My topic of this project is about NCC Bank’s products they provide and the strategy they have to satisfy the customer which can help the bank to lead towards profit. So, my hypothesis for this project is following:
H0: NCC Bank’s marketing strategies for its products are not satisfying its customers and have positive towards profit trends.
H1: NCC Bank’s marketing strategies for its products are satisfying its customers and have negative towards profit trends
Banking Sector in Bangladesh
Definition of Bank:
Whoever, being an individual firm, company or corporation generally a deal in the business of money and credit is called a bank. Banker means a person transacting the business of accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdrawal by cheques, drafts or otherwise. The purpose of banking is to ensure transfer of money from surplus unit to deficit units. Banks in all countries work as the repository of money. The general public deposit money in the bank for safe custody as well as to earn interest on it.
Entrepreneurs try to obtain money from the banks as project loan for long-term investment. They also obtain working capital from the bank to run their business smoothly. Banking sector these owe a great deal to the deposit holders on the one hand and the entrepreneurs on the other. They are expected to play the role of friend, philosopher and guide for the deposit holders and as wells entrepreneurs.
Since liberation, Bangladesh passed through fragile phases of development in the Banking sector. Some banks were nationalized in the post liberation period to save the institutions and the interest of the depositors. Those handing the banking sector have borne the burden of putting banks on reliable footings. Despite all that was done, some elements of irregularities appeared. With the assertion of the role of the central bank named as Bangladesh Bank, started adopting measures for putting banking institutions on the right track. Yet the performance of public sector management of banks left some negative effects in the money market in particular and the economy in general. The agility among the borrowers manipulates the banking sector as a whole. In effect, a default culture among other effects appeared on the scene.
The opening of private and foreign participants to the banking sector was intended to obtain desirable results from banking. The authorization of private bank was designed to create competition among the banks and competition in the form of efficiency within and the productivity in enterprises funded by banks. Unfortunately, for the people at large banking sector is yet to obtain the credit for efficiency, curability and growth.
The clever, among the user of banking services, have influenced the management of bands, for obtaining short term and long-term loans. They sometimes showed inflated equity to get money for investment in business and industry. Few diverted their loan money to purposes different from the loan proposal, and invested in non?profitable units have failed to repay their loans to the banks. For this reason new entrepreneurs are not getting capital while defaulting entrepreneurs have started obtaining either relief in the form of rescheduling of the repayment program of additional invest able money for diversified units.
Banking in Bangladesh Perspective:
Banking is the backbone of national economy; all sorts of economic and financial activities revolve round the axis of the bank. As the industry produces goods and commodities, so does the bank creates and controls money market and promotes formation of capital. From this point of view, ‘banking’ a technical profession can be termed as industry. Services to its customers are the products of banking industry besides being a pivotal factor in promoting capital formation in the country. As all economic and fiscal activities revolve round this important “Industry’, the role of banking can hardly be over emphasized.
Circumstances being such, it becomes imperative to find out the role of banks now playing in the country and analyze its operational aspects so as to ascertain the importance of this delicate financial sector and its over all impact on our national economy. To ascertain the role of banks and to analyze its operational aspects and its overall impacts on our national economy a through study as to its distribution, expansion and contribution is essential to comprehend its past, present and future bearings for the growth and development of the banking sector of the country. In the global context, the role of banks is far-reaching and more penetrating in the economic and fiscal discipline, trade, commerce, industry, export and import all carried through the bank. Banks are the only media through which international trade and commerce are being carried out and entire credit transactions, both national and international.
Banking Scenario of National Credit and Commerce Bank Ltd. (NCC Bank Ltd.):
NCC Bank Limited has been performing continuous progress in all areas of business including deposit collection, advance making and profile earning drive. In the year 2004 NCC Bank has been able to collect deposit of Tk. 16606.92 crore, registering 11.79 per cent growth. The growth in advance and profit was 18.36 per cent and 15.28 per cent respectively. NCC Bank in 2004 invested Tk. 1521.11 crore indifferent industrial and business enterprise against Tk. 1285.08 crore in 2003, registering 18.36 per cent growth the growth in profit of the bank in 2004 is 15.28 per cent by earning gross profit of Tk. 72.04 crore. The gross profit was Tk. 62.49 crore in 2003.
The bank bears a history as an investment company, which upgraded as a bank in 1985. The authorized capital of the bank remain unchanged at Tk. 750 million after inception but the paid-up capital stood at Tk. 607.81 million in 2004 as against Tk. 552.55 million in the previous year. The bank maintained the Capital Adequacy Ratio at 9.01% of risk-weighted assists. The ration of classified loans to total loans was 9.75 during 2003. The bank introduced some collateral free credit products under its small loans program for various sections of people which received tremendous response from the customers. Such loans have good recovery percentage.
With a vies to patronizing Agro-based sector, the bank also extended credit facility to the North Bengal area of the country for maize cultivation, which brought tremendous result and received wide acclamation. Under this program a good number of marginal and small farmers of Dahagram and Angorpota the most remote Bangladesh territory, connected through an Indian corridor, are now farming maize. Not only those satellite communities, NCC Bank is offering a total of 1,600 farmers in Lalmonirhat district maize loan amounting Tk. 27.20 million this year.
NCC Bank started housing finance from last year and has approved Tk. 500 million in housing loan within last four months. Honoring the increasing demand of lease finance NCC Bank is going to open a separate Lease Finance window very soon. Total number of branches of the bank was 48 as on December 31, 2006.
The bank has computerized its operation over the country which is called “Online Banking”. The customers are getting the benefit of ATM services located at Dhaka, Sylhet and Chittagong. The Bank has been launch Credit Card recently, necessary ground works was under way to complete the job shortly.
Historical Background of NCC Bank Ltd.:
National Credit And Commerce Bank Limited (NCCBL) is a banking company registered under the company Act 1994 as a private commercial Bank. Before launching baking transactions it was established as an investment company at 25thNovember 1985 in the Name of National Credit Limited. It is converted into a scheduled bank because of many restrictions in both collection and disbursement of fund while it was an investment company. During conversion period all types of transaction were closed for about 14 months from ?22nd April 1992. After obtaining permission from the Government of the People’s Republic of Bangladesh and Bangladesh Bank, the investment company National Credit Limited, was converted into a full fledged Commercial Bank. It started its banking operation on the 17th May, 1993 with 16 branches in the name and style of National Credit And Commerce Bank Limited. Now it has 53 branches all over Bangladesh.
Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere personalized service to its customers in a technology based environment.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business. Its various deposit & credit products have also attracted the clients-both corporate and individuals who feel comfort in doing business with the Bank.
- To assists high quality service to customer and to participate in the growth and expansion of our national economy.
- To set high standard of integrity and bring total satisfaction to our clients, share holder and employees.
- To become the most sought after bank in the country, rendering technology driven innovation services by our dedicated team of professionals.
- Quality earning generated in core markets.
- Providing a very efficient customer services at a competitive price.
- Delivered the highest quality services and performance so those customers choose them first.
- High Standard of corporate and business ethics.
- To be the best for the customer, NCCBL wants to build up a team that would manifest unfailing faith in their bank, show respect for colleagues and commit to the high standard of quality and professionalism.
Nature of Business:
NCCBL is a progressive commercial bank in private sector in Bangladesh. It creates now opportunities for its clients. It gives customized services and maintains harmonious banker – client relationship. It contributes towards formation of national capital, growth of savings and investment in trade, commerce and industrial sectors. It provides different types of commercial banking services to the customers of all strata in the society with in the stipulation laid down in the bank companies Act. 1999, rules and regulations framed by the Bangladesh Bank from time to time.
On 30th December 1999 NCCBL issued 19,50,000 ordinary shares of Tk. 100 each.
|Total issue:(19,50,000 ordinary shares of
Taka 100 each
|Out of which:Pre-IPO placement:
(14,25,000 share @Tk. 100 each)
|Public Officer:(5,25,000 share @Tk. 100 each)||Tk. 5,25,00,000.00|
Underwriters of Share:
The Following banks and financial institutions over served as an underwriters:
* AB Bank Limited
* Prime Bank Limited
* Dhaka Bank Limited
* Bay Leasing and Investment Limited
* Uttara Finance & Investment Limited
* National Life Insurance Co. Limited
* Bangladesh Industrial Finance Co. Limited.
* National Securities & Consultants Limited
* Swedish Investment Mgt. Limited
* Raspit Securities Mgt. Limited
Branches are the terminals through which services offered by the Bank reach to the clients. Each branch is headed by a Head of Branch (HO) who in turn gets the assistance of the Manager Operation (MO) in dealing with several day to day activities of commercial banking. At present, the Bank has 59 branches.
Placement of branches is most important part of customer services. As banking business is based on customer services the place or distribution channel is a most significant here. A bank should design the distribution channel by analyzing customer’s needs. As for example, Head office or any bank should placed in an area from which other branches can easily obtain and send the information as well as transaction. On the other hand a branch needs to be opened in that area where business and sources are available. Keeping all these in mind the management has opened 59 branches through out the important places of the country and many more branches are yet to be opened.
Board of Directors:
At present the Board of directors consists of 13 members including the Chairman and Vice Chairman of the Bank. Out of 26 members 13 of them are the sponsors of the shareholders. Most of the members are reputed industrialist and businesspersons of our country. The Chairman heads the Board. Each of the directors is the member of the Board. The members are obliged to maintain the annual general meeting and declare the dividend pay-out schedule on due time. Moreover, the committee selected by the shareholders represents individual body that then looks after the periodic issue with the management and tries to solve the problems.
The Board has appointed the management, which is responsible for the welfare of the banks directors. Some members of the Board have formed the Executive Committee, which organizes a meeting in every week to deal with the minor issues such as promotion of cadre change of a confirmed employee. Conversely at least one meeting of the Board is held in every month to deal with major issues such as modification of the existing policy or major policy reforms
|Managing Director (MD)|
|Additional Managing Director (DMD)|
|Senior Executive Vice President (SEVP)|
|Executive Vice President (EVP)|
|Senior Vice President (SVP)|
|Vice President (VP)|
|Senior Assistant Vice President (SAVP)|
|Assistant Vice President (AVP)|
|Senior Principal Officer (SPO)|
|Principal Officer (PO)|
|Senior Officer (SO)|
|Officer (Grade one)|
|Junior Officer (JO)|
|Assistant Officer (AO)|
Possible Performance Indicators with Their Justification:
- Quality service:
The Bank provides easily accessible and feasible quality service to the clients compared to its other contemporary competitors.
· Efficient business strategy:
Experienced bankers and corporate personnel have formed the management of the Bank, which formulates effective business strategies.
· Automated services:
Some services of the Bank are automated which attracts large number of clients.
· Online banking:
The Bank has very recently introduced on line banking which has enabled it to automate all of its operations. At present, computers perform most of the banking functions. The Bank is also a member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunication) Alliance Access, which enables the Bank to exchange critical financial messages swiftly and cost effectively.
· Customer loyalty:
The bank has earned customer loyalty as organizational loyalty.
· Money Grams:
National Credit and Commerce Bank Limited is only the agent of Money Grams in Bangladesh, which is operating more, then 115 countries.
· Goodwill of the bank:
National Credit and Commerce Bank Limited has already achieved a goodwill among the clients that helps it to retain valuable clients.
· New offers:
NCC bank can also introduce more micro credit business offers and new deposit packages for individual and small business.
· Customer service:
The Bank can introduce more innovative and modern customer services like telemarketing or one point service to raise the customer satisfaction level and better survive in the competition.
· Entrance into untapped sectors:
The bank can diversify its portfolio by introducing new offers and utilizing the untapped sectors.
· Efficient employees:
The Bank can recruit experienced, efficient and knowledgeable workforce who will contribute to raise the performance level of the bank.
· Offering attractive remuneration package to employees:
Attractive compensation package and good working environment will satisfy the existing employees and bring new efficient employees to the bank.
· Opening of new branches:
Many branches can be opened, especially in remote locations, to make the banking service more convenient to the customers.
· Membership of MasterCard & VISA card:
The bank has already obtained principal membership of MasterCard and VISA credit card that enables more opportunities for the bank to earn customer satisfaction.
· ATM service:
Introduction of ATM service will significantly increase the total amount of customers along with the satisfaction level by making the banking service more convenient. The bank is a member of ATM network along with other Banks which enabled the bank to extend modem banking facility to the customer and establish a competitive ATM network.
· Satisfying the shareholders:
Earning shareholders satisfaction is one of the major responsibilities of the bank. So the bank has been pleased to provide 30% Bonus share for the shareholder in the year 2008. And the earnings per share for the year 2008 are BDT 50.20.
· Islamic banking:
Islamic banking system has enormous opportunity in the local market based on mostly Muslim customers and NCC bank didn’t introduce it yet. So introducing new Islamic banking system or combining it with the existing banking system will bring huge profit to the bank.
· Strong marketing activities:
NCC bank lacks of clearly defined marketing objectives. It requires improvement in its current marketing strategies and mass implementation on that. This will contribute in earning more market share in the banking industry.
· Promising market growth:
In developing countries like Bangladesh banking sector is the best sources of financing. So the banking sector itself promises a significant growth for deserving banks. NCC bank can be one of the leading players if it utilizes the opportunity.
The employees of the bank have ranked the performance indicators according to the importance of their occurrence on different levels (5=most important; 4=more important; 3=medium important; 2=less impotent; 1=least important) which are as follows:
|Possible performance indicators||Most important (5)||More important (4)||Medium important (3)||Less important (2)||Least important (1)|
|ii.Efficient business strategy||5|
|vii.Goodwill of the bank||4|
|x.Entrance into untapped sectors||2|
|xii. Offering attractive remuneration package to employees||4|
|xiii.Opening of new branches||5|
|xiv. Membership of MasterCard & VISA card||2|
|xvi.Satisfying the shareholders||3|
|xviii.Strong marketing activities||3|
|xix.Promising market growth||4|
I considered the possible performance indicators with ranking 5 & 4 as the bank’s Key Performance Indicators. The Key Performance Indicators are as follows:
The Intervening Conditions with Their Justification are as Follows:
The common attitude of Bangladeshi clients to default can be a problem to the bank’s profit trend.
- The impact of centralized authority:
Delegation of authority is centralized which makes the employee to realize less responsibility.
Thus the employee morale is deteriorated.
· Bureaucratic hassles in loan department:
The credit proposal evaluation process is lengthy. Therefore sometimes valuable clients are lost and Bank becomes unable to meet targets.
- Absence of employee evaluation:
No substantive use of Annual confidential Report to reward or to punish employees. Hence, the employees become inefficient.
· Ineffective portfolio:
The portfolio of Bank is not that much diversified because it inverts major portion of its fund on Government securities.
· Untouched rural sector:
The bank does not go for rural banking. But rural people are bankable which NCCBL can get from the activities of the NGOs.
· Lacks in promotional activities:
The Bank lacks aggressive advertising and promotional activities to get a broad geographical coverage.
· Impact of competitor’s strategies:
Multinational banks with various attractive means of providing commercial banking services can take the Bank’s lucrative clients away. Local competitors can also capture a huge market share by offering similar products and services provided by the Bank.
· Problems resulted from illegal micro credit firms:
Opening the recent no permitted new banks or micro credit firms, without implementation of the needed reforms, could lead the unethical competition and horse-trading in the local banking sector.
· Limited ATM service:
The bank has only a few ATM booths but not in mentionable places. So, the scope of the use of ATM card is limited and competitors can capture the potential market for ATM service.
· Preference to traditional methods:
Compared to its competitors the bank does banking activities through traditional methods and the management is not open minded enough to follow up with the new methods.
· Inefficient employees:
According to the employees remarkable portion of the total human resources is inefficient.
· Absence of R&D department:
The Bank does not have any research and development division which can react to the developing customer demands or competitor’s strategies.
· Impact of banking rules:
Bangladesh Bank sometimes require private Commercial Banks (PCBs) to be abide by such rules and regulations which is not suitable every commercial banks
- Limited branches:
NCC bank’s total numbers of branches are Lower then other competitors.
- Lack of proper customer service:
The customer service of the Bank is not too good like other banks. In the Foreign Banks, there are customer service department. But there is no Customer service department in NCC bank.
The intervening factors in the Occurrence/ Probability matrix
a) The intervening factors are rated in accordance with their status of occurrence:
|ii. The impact of centralized authority||3||2||1|
|iii. Bureaucratic hassles in loan department||3||2||1|
|iv. Absence of employee evaluation||3||2||1|
|v. Ineffective portfolio||3||2||1|
|vi. Untouched rural sector||3||2||1|
|vii. Lacks in promotional activities||3||2||1|
|viii. Impact of competitor’s strategies||3||2|
|ix. Problems resulted from illegal micro credit firms||3||2||1|
|x. Limited ATM service||3||2||1|
|xi. Preference to traditional methods||3||2||1|
|xii. Inefficient employees||3||2||1|
|xiii. Absence of R&D department||3||2||1|
|xiv. Impact of banking rules||3||2||1|
|xv. Limited branches||3||2||1|
|xvi. Lack of proper customer service||3||2||1|
a) The intervening factors are rated in accordance with their probability of impact:
a) The factors are plotted in a matrix based on their ratings:
Status of Occurrence\
Probability of impact
General Banking Department:
General banking creates a vital link between customers and bank. It’s really a classic as crucial department for the bank. It is the introductory department of the bank to its customers. The NCCBL Kawran Bazar branch has all the required sections of general banking. Every day it receives deposits from customers and meets their demands for cash by honoring instruments. General banking department is that department which is mostly exposed to the maximum number of bank customer.
Functions of General Banking Department:
1. Account opening.
2. Account closing.
3. Cheque book issuing.
4. Telephone receiving
5. Account enquiry.
6. Providing accounts statement
7. Solvency certificate issuing
8. Account transfer.
- Account opening :
A person is treated as a customer when he/she opens an account on that bank. Then it becomes a contractual banker customer relationship. The account opening section of NCCBL Kawran Bazar branch is a very important section. This section takes care of all the relevant duties related to the opening of an account.
Account opening process:
|Step-1||Receiving filled up application in bank’s prescribed from mentioning what type of account is desired to be opened.|
|Step-2||1. The form is filled up by the applicant himself/herself.2. Two copies of passport size photographs from individual are taken; in case of firms photographs of all partners are taken.
3. Applicants must submit required documents.
4. Applicant must sign specimen signature sheet and give mandate.
5. Introducer’s signature and account number-verified by legal officer.
|Step-3||Authorized officer accepts the application.|
|Step-4||Minimum balance is deposited only cash is accepted.|
|Step-5||Account is opened and pay-in-slip book is given.|
|Step-6||A cheque book is issued based on the requisition slip or acknowledgement letter.|
There are different types of account facilities provided by this branch. These are:
a) Current Deposit (CD):
Current deposit is an account where numerous transactions can be made by the account holder within the funds available in its credit. No interest is paid on these deposits. Current account is mainly suitable for businessmen though no body is debarred from opening such an account for any purpose. For opening CD account the initial deposit that is to be of minimum Tk. 5000 in NCCBL and the introducer must be current account holder. Different types of current deposits are as follows:
1. Individual current account
2. Joint account
3. Proprietorship account
4. Partnership account
5. Limited company account.
b) Saving Deposit (SD) :
To encourage saving habit amongst the general public, banks allow depositors to open savings accounts. As the name indicates, these accounts are opened for the purpose of savings. Interest is awarded on the balance of the account. For opening a savings account minimum Tk. 500 is taken as deposit. NCCBL offers attractive rate of profits of its saving deposits.
c) Fixed Deposit Receipt (FDR) :
The bank receives deposits for a fixed period ranging form 1 month to 3 years and above. Although the minimum period, for which a sum is received as a fixed deposit, is one month there is no maximum time limit for opening fixed deposit account but bank generally does not accept deposits, say 10 years. Interest on fixed deposit varies form maturity period. For opening a fixed deposit minimum Tk. 50000 is taken as deposit. Duration of this deposit is 5 years.
d) Short Term Deposit (STD) :
STD accounts are purely a time deposit account. The formalities for opening of this account are similar to those required for current account. The account runs like an ordinary current account with the exception that seven days notice is required to be given to the bank before each withdrawal interest is paid at prescribed rate. Generally Government, semi- Government, Autonomous Bodies etc maintain STD account. NCCBL offers attractive rate of profits to its shot-term deposits.
- Account Closing :
A customer may close out his / her account at any time by submitting an application to the branch. The customer should be asked to draw the final cheque for the amount standing to the credit of his account less the amount of closing and other incidental charges and surrender the unused leaves of the cheque book. In case of joint account all the joint account holder should signed in the application for closing the account. On receipt of the application the following steps are taken:
A. The signature of the account is verified.
B. The number of unused leaves of the cheque book shall be noted thereon.
C. The manager will approve the application and incidental chares should debited the account.
D. The account holder is advised to draw the remaining balance from the account.
- Chequebook issuing :
a) The In-charge of departmental stock of the chequebook will get know and to allow entering the departmental chequebook issued register.
b) Separate folios in the register are allotted for CD account of chequebook of 20 leaves and SB account chequebook of 10 leaves.
c) At the time of opening an account the customer is required to sign a chequebook requisition slip (No. S.F. 73). If the account opening form is found complete in all respect a chequebook is issued to the client.
d) The account number is written in each of the chequebook and its requisition slip.
e) The name and account number of the customer is also entered in the chequebook issued reregister against the particular chequebook series and is also recorded to the computer.
f) The requisition slip should be preserved as voucher.
Bank has a wide network of branches all over the country and offers various types of remittance facilities to the public. They serve as best media for remittance of funds from one place to another. This service is available to both customers as well as non-customers of the bank. The followings are some of the important modes of transferring funds from one to another bank. These are:
1) Demand Drafts (DD) :
This is an instrument through which customers money is remitted to another person/firm / organization in out station (Outside the clearing house area) from a branch of one bank to an outstation branch of the same bank of to a branch of another bank (with prior arrangement between that bank with the issuing branch).
This is an order instrument in which the issuing branch gives instruction to the payee / drawer branch to pay certain amount of money to the order of certain person / firm / organization.
The payee or drawer branch on receipt of the message decodes the tested massage and being fully satisfied, pays the amount by crediting the payee’s account (if account is maintained with the payee branch). Telegraphic transfer may also be issued favoring the beneficiary who maintains account with other banks. In such case the payee branch issues pay order favoring the payee and hand over the P.O. to the concerned bank branch for effecting payment to the payee.
Procedures of Issuing DD:
· Obtain Demand draft application from duly filled in and signed by the purchaser / applicant.
· Receive the amount in case / transfer with prescribed commission and postage amount.
· Issue the DD duly filled in and signed by the authorized signatories.
· Insert test number (where applicable).
· Enter in the DD register.
· Issue credit advice to the issuing branch.
Procedure of Payment DD:
a) Examine genuinely of the DD viz. Amount; verify signature, test, series etc.
b) Enter in the DD payable register.
c) Verify with the IBCA / test etc.
d) Pass necessary vouchers.
2) Telephonic Transfer (TT) :
This is mode of transfer / remittance of customer’s money from a branch of one bank to another branch of the same bank of to a branch of another bank (with prior arrangement between those banks with the TT issuing branch) through telephonic message. The issuing branch used to send the massage of such remittance / transfer to the drawer / payee branch through telephone adding certain code number of test number on the basis of text key apparatus developed by the concerned bank for its different branches.
Characteristics of TT:
a) Issued by one branch to other branch and massage is tale communicated.
b) Remittance / transfer of money is done through tested tale massage.
c) Remittance is affected on the basis of tested massage.
d) Test key apparatus is required.
Procedure of Issuing TT:
a) Obtain TT application form duly filled in and signed by the purchaser / applicant with full account particulars of the beneficiary.
b) Receive the amount in cash / transfer with prescribed commission, postage, telephone / telex etc. charge.
c) Prepare TT massage inserting test number (code number).
d) Enter in TT issue register.
e) Issue credit advice to the payee branch.
Procedure for payment TT:
a) Note the TT massage and verifying the test number and confirm if TT serial no
Etc. is ok.
b) If ok, into TT payable register.
c) Pass necessary vouchers for payment.
3) Payment order / pay order (PO):
This is an instrument issued by the branch of a bank for enabling the customer / purchaser to pay certain amount of money to the order of a certain person / form / organization / department office within the same clearing house area of the pay order issuing branch.
Procedure for Issuing Payment Order:
a) Obtain PO application form duly filled in and signed by the purchaser / application.
b) Receive the amount in cash / transfer with commission amount.
c) Issue PO.
d) Enter in PO register.
Procedure of payment of PO:
a) Examine genuinely the pay order
b) Enter into PO register and give contra entry
c) Debit it fund ok for payment.
4) Mail Transfer (MT) :
MT is an instrument issued by a remitting bank to the paying bank advising in writing to make payment of certain amount of the specific beneficiary.
Cheque clearing section of NCCBL, Kawran Bazar branch receive cheque, demand drafts and pay orders of their clients. Upon the receipt to the instrument the cheque clearing section examines:
a) Whether the paying bank is within Dhaka city.
b) Whether the paying bank is out side Dhaka city.
c) Whether the paying bank is from their own branch.
When The Paying Bank Is Within Or Outside Dhaka City:
The cheque clearing section of NCCBL, Kawran Bazar Branch sends inter Branch Debit Advice (IBDA) to the head office on the receiving day of the instruments. The main branch takes those instruments to the clearinghouse on the following day. If the instruments are dishonored, head office of NCCBL sends IBDA to the NCCBL, Kawran Bazar Branch. The total procedure takes three days to encase the instrument of everything goes orderly.
The Paying Bank of their own Branch:
The Cheque clearing section of NCCBL, Kawran Bazar Branch sends outward bills for collection (OBC) to the concerned paying branch to get Inter Branch Credit Advice (IBCA) from 13th paying branch. If the paying branch dishonors the instrument, the paying branch returns it to the NCCBL, Kawran Bazar Branch describing why the instrument is dishonored.
Types of Cheque Collected by Clearing Department:
- Transfer Cheque: Transfer cheques are those cheques, which are collected and paid by the same branch of NCCBL.
- Local bills collection cheques (LBC): Local bills collection cheques are those cheques, which are collected and paid by two different branches of a bank situated in the same city.
Outward Bills Collection Cheques (OBC):
OBC cheques are those cheques, which are collected and paid by two different branches of same of different bank situated in the outstation.
Clearing House is an arrangement under which member banks agree to meet, through their representatives, at an appointed time and place to deliver instruments draws on the other and in exchange, to receive instruments drawn on themselves. The net amount payable or receivable as the case may be, is settled through an account kept with the controlling bank.
Common procedure for all kinds of cheques etc:
a) Receiving and scrutinizing the cheque and other deposit instruments, and the pay-in-slip at the counter.
b) Affixing the stamps.
c) Scrutiny and receipt by the authorized officer.
d) Returning the counter-foil to the depositor.
e) Separate the cheques into transfer, LBC and clearing cheques.
Types of Clearing:
- Outward clearing: Outward clearing means when a particular branch receives instruments drawn on the other bank within the clearing zone and those instruments for collection through the clearing arrangement is considered outward clearing for that particular branch.
- Inward Clearing: when a particular branch receives instruments, which on them and sent by other member bank for collection are treated as inward clearing.
Loans & Advance Department
The main business of Bank is to settle loan & advance. Bank collects deposits of saving from one kind of people of society and invests these deposits as loan, subject to conditions, to other kind of people. Bank not sanction cash loan but also credit its good reputation, coincidence faith etc. To settle loan by the bank is called credit or loan and advance.
It can be mentioned that banks do business by savings or deposits collected from local people. So before settle loan the band must ensure about the security of the disbursed amount (loan) and he also ensures about the repayment of the loan.
Different Types of Credit Facilities:
All types of credit facilities can be broadly classified into two ways:
· Non- Funded
A funded credit facility that a bank offers to a customer result in a actual disbursement of cash to the customer of to any designated supplier of the customer. l on order to provide funded facility to a customer the bank has to incur real liability before hand, i.e. the bank has to arrange for funds primarily through accepting deposits or otherwise. Funded facility affects the balance sheet of the bank both in terms of increase of liability and increase of assets. Types of Funded Credit are as follows:
1. Loans: Loans may be a demand loan of time loan or term loan demand loan is payable on demand which is allowed for a short period to meet short- term working capital need. Time loan is payable within one year and term loan is allowed for one year to five years, usually for capital expenditure such as construction of factory building purchase of new machinery, modernization of plant etc.
Types of loans:
· Loan general
· House building loan
· Loan against trust receipt (LTR)
· Loan against imported merchandise.
2. Cash credit: Cash credit facility is allowed against pledge or hypothecation of goods. Under this arrangement the borrower can borrow any time within the agreed limit and can deposit money to adjust whenever he does have surplus can in hand.
Types of Cash Credit:
· Cash credit (Hypothecation)
· Cash credit (Pledge)
· Cash credit (export)
- Overdraft: Overdraft is an arrangement between a banker and his customer by which the latter is allowed to withdraw over and above his credit balance in his current account. This is a temporary accommodation of fund to the client. Academically, Basic difference between cash credit and overdraft is that businessmen use cash credit for longer period on yearly renewal basis, while overdraft is allowed occasionally and for short-term duration.
Types of Overdraft:
· Secured overdraft (FD)
· Secured overdraft (RE)
· Temporary overdraft
4. Bill discounted and purchased:
· In land bill purchase
· Foreign bill purchase
· Foreign documentary bill purchase
· Payment against document
Discount: Banks allow advan