The report is prepared to analyze to overall performance of IFIC Bank
Executive Summary
The report is prepared to analyze to overall performance of IFIC Bank and evaluate the Credit Financing Department of IFIC Bank. As a private commercial bank all the sectors of financing department are not highlighted in the report. The main ideas and which are more pertained in the bank those analyzed.
At first in the introductory part mainly emphasized on the origin of the report, problem statement, scope and methodology and limitation of the report. In chapter two an overview of IFIC Bank is highlighted and in chapter three General Banking very shortly Literature review has been include. In chapter four all the Credit financing types terms and conditions, rules etc. are analyzed emphasized. In chapter five Foreign exchange are emphasized. There is also one chapter for problem finding of overall banking system and also the problem of the credit department and this is the last chapter, it also include suggestions to improvement of the overall banking system and the credit department.
All over the report there are rules and regulations. Problems are identified. With all those the solutions are govern to improve the overall and the credit financing department, so that the services of the bank will be mere quick and unique, reduce the risk of providing longs by refund on time consider the borrower’s criteria etc., which will help the bank to develop their performances.
Chapter One
Introduction
ORIGIN OF THE REPORT:
This report is originated as the course requirement of the course “PRACTICAL ORIENTATION IN BANK” of MBA program of International Islamic University Chittagong (IIUC) Dhaka campus. As the practical orientation is an integral part of the MBA degree requirement. I was sent to IFIC BANK LIMITED (Motijheel Branch) to take real life exposure of the activities of banking financial institutions.
OBJECTIVE:
The prime objectives of the orientation are
· To study various desk works of the principal Branch of IFIC bank Limited.
· To analyze the performance of the branch as well as IFIC Bank limited as a whole.
· How the practice of banking business is being carried out nowadays.
· To acquainted with the entire branch banking procedures.
· To make a bridge between the theories and practical procedures of banking and to find out whether any
deviations exist between theory and practice.
· To get oneself very familiar with the real banging environment as a student of IIUC.
· SCOPE OF THE STUDY:
IFIC Bank Ltd. is one of the lending First Generation Private Banks of the country. As a result I come to know almost all the banking services and products offered by commercial banks as well as some special and innovative products by the bank itself.
· SOURCES OF DATA:
In order to make the report more meaningful and presentation, two sources of data and information have been used widely.
The “Primary Sources” are as follows—
· Face-to face conversation with the respective officers and staffs of the Branch.
· Informal conversation with the clients.
· Practical work exposures from the different desks of the three departments of the branch
· covered.
· Relevant file study as provided by the officers concerned.
· The “Secondary Sources” of data and information are—
· Different desk manuals published by IFIC Bank Ltd.
· Annual Reports of the Bank.
· Various circulars issued by the Head Office regarding general banking functions, foreign exchange
· operations and credit policies.
· The bank’s website: www.ificbankbd.com
· METHODOLOGY APPLIED:
The methodology of the report is given below:
For the procedure of different banking operations, I had observed the operations and worked with the officers at the same time I had interviewed the IFIC Bank officials for getting more information. For the analysis part, data have been collected from different statement and the annual reports of the bank.
The following table shows the department in which I have observed the deskwork of concerned department and the time I have taken for observing each department.
| Department | Period |
| General Banking | 08th March—-20th March |
| Accounts | 21st March—-31st March |
| Foreign Exchange | 01st April —-15th April |
| Credit | 16th April—-30th April |
LIMITATION OF THE STUDY:
The following limitations are apparent in the report
- Time is the first limitations as the duration of the program was of eight weeks only.
- The bankers who are very much busy with the customers often delay information gathering due to non-availability of time.
Chapter Two
Organizational Overview
THE BANK IN A SKETCH
International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the People’s Republic of Bangladesh with liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/ financial institutions abroad. The Government held the sponsors and general public held 49 percent share and the rest 51 percent. In 1983 when the Government allowed banks in the private sector IFIC was converted into full-fledged commercial bank.
OWNERSHIP STRUCTURE
The Government of the People’s Republic of Bangladesh now holds 35% of share capital of the Bank. Leading industrialist of the country having vast experience in the field of trade and commerce own 34% of the share capital and the general public holds the rest.
COMPOSITION OF THE BOARD
Unlike other banks in the private sector Board of Directors of the Bank is a unique combination of both private and Government sector experience. Currently it consists of 11 Directors. Of them six represent the sponsors and general public and four senior officials in the rank and status of joint Secretary/ Additional Secretary represent the Government. Managing Director is the ex-officio Director of the Board.
CAPITAL AND RESERVES
IFIC Bank has been consistently maintaining the ‘Capital Adequacy Ratio’ as prescribed by Bangladesh Bank. This has been made possible by a policy of building up both capital and reserves. It started with an Authorized and paid-up capital of Tk. 100 million and Tk. 63.20 million respectively in 1986. Authorized and paid-up Capital increased to Tk. 500 million and Tk. 406.39 million respectively in 2004.
In additional to paid-up-capital, the Bank has built up a strong reserve base over the years. As against Tk. 21.20 million only in 1983, reserves and surplus increased to Tk. 737.19 million in 2003. Besides, the Bank had 1% General Reserve worth Tk. 393.31 million as on December 31, 2004.
STRENGTH AND PERFORMANCE
With the active support and guidance from the Government, Central Bank, Clients and patrons, the Bank has been maintaining sound financial strength and showing a steady and impressive business performance. IFIC Bank is one of the few mentionable banks, which maintains capital Adequacy ratio and has more than required provision as per Bangladesh bank Criteria.
Starting with a modest deposit of only Tk. 863.40 million in 1983, the Bank had closed its business with a deposit of Tk. 20774.47 million as of 31st December 2004. Total credit stood at Tk. 21280.88 million as on 31.12.2004 against Tk. 20450.90 million last year. Bank has posted a pre-tax (un-audited) profit of Tk.740.25 million during the year ended 31st December 2004.
CREDIT POLICY AND PORTFOLIO
Credit policy of the bank works within the framework of three main objectives, namely, maintenance and improvement of quality of assets, recovery on time and building-up of an efficient customer oriented credit delivery system.
The portfolio includes working capital financing, project financing, import-export financing and domestic trade financing etc. The Bank continued to extend working capital facilities to customers to ensure smooth and uninterrupted operation of their business. At the same time, it expanded project-financing portfolio to meet the growing demands of economy for long-term finance in a depressed capital market.
Project loans were extended for setting up of new projects and BMRE of the existing projects as well. Due emphasis was given to financing export oriented and export linked industries without loosing sight of the need for long term loans by other domestic market based industries and ventures. So far the bank has financed 343 projects. Among them 48 projects were financed during 2004 amounting to Tk. 1534.57 million. In long-term portfolio, the bank has been diversifying from Textile and RMG industries to steel industries, paper products, CNG filling stations, Shipping, power sector, Micro Credit and health services etc. Moreover the bank has also been financing the Agro-based industries in accordance with Govt. policy. For improved customer services, the Bank now extends one-stop services to corporate clients who require term loan, working capital and import-export financing etc. The bank also participates in syndicate Financing and so far has sanctioned Tk. 1153.00 million in 12 projects.
The bank successfully handled two credit lines viz-IDA credit No.2340 and ADB loan No. 1070 BAN (SF) with recovery rate of 100% and 87% respectively. Under these programs the bank sanctioned loans of Tk. 428.00 million to as many as 53 units. It helped local entrepreneurs to successfully implement small and medium sized industries.
INTERNATIONAL OPERATIONS
International Division at the Head Office is fully equipped with expertise including computerized operations to deal with foreign trade and foreign exchange operations of all kinds including Letter of Credit, Bill, Traveler’s Cheques, Foreign Drafts, TT’s, Remittances from Bangladeshi expatriates abroad and handling students remittances studying abroad etc. Such operations are conducted through 19AD (Authorized Dealer) branches throughout the country. All our 19 Authorized Dealer (AD) Branches have been brought under SWIFT Connectivity.
Corresponding Banking (CB)
IFIC Bank has wide correspondent network covering all major currencies (ACUD, AUD, CAD, CHF, EUR, GBP, JPY, USD etc.) all over the world. A part from traditional Telex Test Key, we have BKE (Bilateral Key Exchange) with most of the correspondents. Major correspondent banks are:
o American Express Bank
o Bank of Tokyo Mitsubishi
o Citibank N.A.
o Commerz Bank AG
o HSBC
o JP Morgan Chase Bank
o Mashreqbank psc
o Standard Chartered Bank
The international Division in maintaining 29 Standard Settlement Instructions (SSI) i.e. Nostro A/C in 8 Foreign Currencies at various major Financial Centers throughout the world. Bank’s dealing room is equipped with REUTERS 3000.
Drawings Arrangement for Inward Foreign Remittance
To facilitate inward foreign remittance in Bangladesh, we have both Draft Drawing Arrangement and Electronic Fund Transfer (EFT) Arrangement with different Exchange Companies and Banks.
List Exchange Companies / Banks with drawing arrangement with IFIC Bank:
· Oman International Exchange LLC-Oman,
· Placid N.K. Corporation, U.S.A
· Vigo Remittance Corporation, U.S.A
· Instant Exchange UK Ltd., UK.
· Doha Bank, Qatar (arrangement under process).
INFORMATION TECHNOLOGY
Since its journey as a commercial Bank in 1983, IFIC Bank has been laying great emphasis on the adoption of latest Information Technology. Bank became pioneer in the field of IT by introducing computerized branch banking right in 1983. Subsequently all the important branches have been computerized. Recently the Bank has upgraded its Banking Software to bring all modules i.e. Deposits, Loans and Advances, Remittances, Foreign Trade, Foreign Exchange and Accounts Under same platform at all our branches. The Bank now runs under Intra-branch and Inter-branch network. Central Mailing System and Web facilities etc are being maintained in an automated environment at the Head Office and Branches.
The bank has already introduced the ATM operations to ensure 24 hours customer services. At present it has 17 ATMs under shared Network in Dhaka City. Besides, 2 ATMs have been installed in Chittagong City and 2 ATMs in Sylhet City. Other major Cities like Khulna, Rajshahi; Bogra will be covered under ATM network gradually. The Bank is also in the process of introducing Credit Cards and various other IT based products.
A new product “ Any Branch Banking” is already in operation to facilitate the anywhere banking. Moreover, the existing stand-alone systems of the branches will be converted to a Centralized Database System soon with a view to introducing the real-time Online Banking facility for the customers of the Bank.
Besides, the Bank has introduced some major IT based functions to maintain a strong infrastructure of IT like (a) Development and maintenance of the official Website (www.ificbankbd.com) and (b) Tele Banking operation in our major branches. All Head Office operations like personnel and Administration, Central accounts Credit, International operations, Share, Establishment and Audit and Inspection are computerized on stand-alone basis.
NEW PRODUCTS
Besides providing traditional services in the areas like, deposit, advance, import-export financing, remittance and collection, treasury operations and lockers, the Bank has in the recent years introduced a good number of new products to meet the increasing demands of the clients and the members of the public. Some of them are: Visa Debit Cards, ATMs (Automated Teller Machine), Phone Banking, Pension Savings Scheme, Death Risk Benefit Scheme, Monthly Income Scheme and Consumer Credit Scheme, Education Assistance Plan (Deposit Scheme).
DOMESTIC BRANCHES OF THE BANK
The branches of the bank cover all the important trading and commercial centers in Bangladesh. At present it has 62 branches within Bangladesh. All the branches are equipped with computers in addition to modern facilities, logistics and professionally competent manpower. Steps are underway to open new branches in important locations in the country during 2005.
JOINT VENTURES ABROAD
Oman International Exchange LLC (OIC):
Oman International Exchange LLC (OIC), a joint venture between IFIC Bank Ltd. and Oman nationals, was established in 1985 to facilitate remittance by Bangladeshi wage earners in Oman. IFIC Bank holds 255 shares, and the Omani sponsors hold the balance 75%. The exchange company has a network of 7 branches and 2 counters covering all the major cities/ towns of Oman. The operations of the branches are fully computerized having online system.
The affairs and business of the company is run and managed by the bank under a Management Contract. 17 Officers of the bank are engaged in the exchange house.
Total share capital of the company is RO 500,000 (equivalent to BDT 76.70 million). The equity of the company stood at RO 684.503 eqvt. BDT 105.00 (provisional figure) as at 31st December 2004.
The performance of OIE was satisfactory during the year 2004. OIE established remittance arrangement with 8(eight) countries viz. Bangladesh, India, Indonesia, Pakistan, Qatar, Srilanka and UAE. In 2004, total remittance of OIE increased by 16.94% to BDT 3,273.28 million from BDT 2,820.91 million in 2003. out of the total remittance, share of remittance to Bangladesh is 76.03% against 79.70% in 2003.
Total pre-tax profit earned by the company amounted to BDT 22.29 million (provisional figure) in the year 2004 as against BDT 8.66 million in the year 2003, showing an excellent growth of 157.39% in 2004.
Nepal- Bangladesh Bank Ltd. (NB Bank)
Nepal-Bangladesh Bank Ltd.(NB Bank), a joint venture commercial bank between IFIC Bank Ltd. And Nepal nationals, started operation with effect from June 06,1994 in Nepal. IFIC Bank presently holds 25% share of NB Bank. The company is managed by IFIC Bank Ltd. under a Technical Service Agreement.
The authorized and paid up capital of NB were NRs. 1,000 million and NRs. 359.92 million respectively as at close of business of Nepali FY As had 2060 (i.e. on 16.07.2003). Total equity of the company stood at NRs 683.92 as on 16.07.2003 against NRs 625.50 as on 16.07.2002.
The Bank has so far opened 17 (seventeen) branches at different important locations in Nepal. The deposit and advance as on 16.07.2003 stood at NRs. 10,581.00 million and NRs. 7,961.51 million respectively. The deposit and advance of the Bank at the end of 2002 were NRs. 9,514.46 million and NRs. 8,083.97 million respectively.
NB Bank made a pre-tax profit of NRs. 191.50 million during 2003 as against NRs. 104.95 million during 2002.
Nepal- Bangladesh Finance and Leasing Company Ltd (N B Finance).
Nepal Bangladesh Finance and Leasing Company Ltd., another joint venture leasing company between IFIC Bank Ltd. And Nepal nationals started its operation on April 18, 1999 in Nepal. The authorized and paid up capital of the company are NRs. 60.00 million and NRs. 30.00 million respectively. Total equity of NB Finance stood at NRs. 346.46 as at the close of Nepali FY Ashad 2060 (i.e. on 16.07.2003). IFIC bank Holds 30% share in the company.
Total deposit and advance of the company as at the close of Nepali FY 2003 were NRS. 240.42 million and 186.82 million respectively. The company made a pre-tax profit of NRs. Million for the year 2003 against NRs. 1.02 million in 2002.
NDLC – IFIC Bank Ltd. (Pakistan)
IFIC Bank had two branches in Pakistan; one is Karachi and the other in Lahore. Karachi Branch was opened on 26th April 1987, while Lahore Branch was opened on 23rd December 1993. Performance of both the Branches has been excellent.
To meet the Minimum Capital Requirement (MCR) of the State Bank of Pakistan, the overseas branches in Pakistan have been amalgamated with a reputed leasing company in Pakistan named National Development Leasing Corporation Ltd. therefore, the existence of our above Overseas branches has ceased w.e.f. 2nd October 2003 and a new joint venture bank entitle NDLC-IFIC Bank Ltd. (NIB) emerged in Pakistan w.e.f. 3rd October 2003. IFIC Bank holds 20% equity in the Bank.
The authorized and paid up capital of NIB are PKR 1,500 million and PDR 1,229.04 million respectively as on 30th September 2004. The equity of the company on the same date stood at PKR 1,298.11 million.
Total deposit and advance of NIB as on 30th September 2004 stood at PKR 8, 807.77 million and PKR 11,688.93 million respectively. Pre-tax profit earned by the company stood at PKR 30.18 million up to September 2004.
WORKFORCE
Total manpower stood at 1,895 as on December 31,2004. Out of them 1,294 were officers and 601 were non-officer employees. The number of female employees in the Bank on the date was 248. Growth in workforce of the Bank from 1983 to 2004 is given below:
GROWTH IN WORKFORCE
| Year | Officer | Staff | Total | Female Officers & Staff |
| 1983 | 61 | 35 | 96 | 16 |
| 1884 | 152 | 89 | 241 | 21 |
| 1985 | 264 | 168 | 432 | 26 |
| 1986 | 303 | 322 | 625 | 29 |
| 1987 | 334 | 404 | 738 | 38 |
| 1988 | 369 | 458 | 827 | 50 |
| 1989 | 465 | 480 | 945 | 63 |
| 1990 | 512 | 480 | 992 | 74 |
| 1991 | 506 | 556 | 1062 | 78 |
| 1992 | 617 | 626 | 1243 | 196 |
| 1993 | 600 | 720 | 1320 | 106 |
| 1994 | 912 | 513 | 1425 | 119 |
| 1995 | 964 | 601 | 1565 | 132 |
| 1996 | 1009 | 540 | 1549 | 154 |
| 1997 | 1088 | 526 | 1614 | 154 |
| 1998 | 1081 | 543 | 1624 | 162 |
| 1999 | 1124 | 535 | 1659 | 176 |
| 2000 | 1151 | 549 | 1700 | 188 |
| 2001 | 1189 | 548 | 1737 | 200 |
| 2002 | 1201 | 554 | 1755 | 213 |
| 2003 | 1266 | 602 | 1868 | 238 |
| 2004 | 1294 | 601 | 1895 | 248 |
FUNCTIONAL DEPARTMENTATION AT HEAD OFFICE
Managing Director, ex-officio Director of the Board, is the Chief Executive Officer (CEO) of the Bank. Next in the organizational hierarchy is the Deputy Managing Director or through the Deputy Managing Director.
The operations and activities at the Head Office are divided into twelve Groups including the office(s) of the (a) Board Secretariat and (b) MD’s Secretariat. A group Executive heads each of the twelve Groups. Out of these twelve Groups three groups viz. (a) Law, (b) Group (General-I) and (c) Group (General-II) report directly to the Managing Director. Other groups report through the Deputy Managing Director. Other groups report through the Deputy Managing Director. All the Divisions/ Departments at Head office are required to report to the respective Group Executives. Name of the Departments under each Group are given below:
DEPARTMENTS OF HEAD OFFICE
Group (Operations-I):
General Credit Department
Credit Administration Department
Credit Information & Return Department
Project Finance Department
Lease Financing wing
Group (Operations-II):
Overseas & International Banking Relation Department
Garments Department
Foreign Trade Department
Treasury Department
Group (Operations-III):
10. Audit & Inspection Department
Group (Operations -IV):
11. Central Accounts Department
12. General Banking Department
13. Establishment Department
Group (Operations-V):
14. Recovery Department-1
15. Recovery Department-2
16. Recovery Department-3
Group (Operations-VI):
17. Monitoring Department
18. Compliance Department
MANAGEMENT HIERARCHY
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ORGANOGRAM OF THE BRANCH
HUMAN RESOURCE DEPARTMENT
Human Resource Department (HRD) activities aim at fulfilling the Bank’s Mission. One of our four major missions is to: “ Provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for.”
Skilled and dedicated workforce with creative talents, innovative actions are not always readily available. Appreciating the scarcity of such manpower, the Bank from the very beginning laid importance to HRD that conceptually includes activities like pre-recruitment drill, recruitment, induction training in the Academy, job rotation, placement and posting, reward and promotion. The bank plans all these activities in an integrated way aiming at manpower with required technical, managerial, human and conceptual skills.
Management of IFIC Bank not only appreciates the need of skills required for day to day banking but also realizes the need for skills to meet the global and national financial and economic environments that are changing fast. Meeting the needs of new skills arising out of Financial Sector Reforms Programme (FSRP) is also a major concern of the management.
THE ACADEMY
At the very beginning, the Bank laid a foundation by setting up an Academy at Head Office under Human Resource Development Division to develop human resource internally. Equipped with a professional library, modern training aids, professional faculty and other facilities, the Academy of Bank is a leading one among the Banks in private sector.
The Academy regularly conducts foundation courses, specialized courses and seminars in different areas of banking to take care of the professional banking needs. On addition, officers are regularly sent to Bangladesh Institute of Bank Management (BIBM) and Bangladesh Bank Training Academy for professional training. Sending officers abroad for higher training is a regular feature. A Research Department also works in aid of HDR and other operational areas. The Academy has to its credit the experience of conducting several courses for the officers of the Bank of Maldives (BML) and Nepal-Bangladesh Bank Limited. In addition, it built up the training system for the Bank of Maldives Limited.
ACADEMY OBJECTIVES
IFIC Bank Academy, established in 1983 as an in-house training institution, takes care of the training need of the employees of the Bank. The objectives of the Academy are to:
Ü Make available skilled and dedicated workforce within shortest possible time by reducing time required for on- the-job training.
Ü Develop understanding about law and practice of banking through foundation training;
Ü Import technical skill to the operational level officers through case studies/practical
exercises/demonstration/project visit for efficient desk operations;
Ü Develop analytical and decision making skills of the officers;
Ü Develop understanding about human/conceptual skill and organizational culture;
Ü Impart managerial skills to groom future Executives and to keep existing Executives up-to-date with
national and international environment.
TYPE OF PROGRAMMES
For fresher, Foundation Courses on elementary knowledge of banking are organized Specialized Courses on the areas like Credit, Foreign Exchange, Accounts, Inspection, Marketing etc. are meant for officials working in those areas. Senior level courses are run on specific knowledge area. Certain courses are a blend of different knowledge areas.
APPROACHES TO TEACHING
The Academy holds need-based training courses/workshops/seminars etc., which are finalized by HRD Division in consultation with various departments and senior Executives at Head Office. Training inputs are constantly reviewed/modified for achieving the Bank’s objectives. Methods in training including: discussion / lecture / case study / games / role-play / film show / simulation / group work & presentation / project visit and so on.
ON-THE-JOB TRAINING
Foundation courses have two parts: theoretical training in the Academy and job rotation. The officers on probation are required to undergo both in a period of one year. During this period, three-phased training Programme is effective. On theoretical training in, say, General Banking the officers are required to undergo rotation in General banking activities under the supervision of the HRDD. Similar process is followed in case of Credit & foreign exchange. They report to the HRDD weekly about the progress in rotation when problem-oriented discussion takes place for better understanding.
FACULTY
The Academy has built up a pool of professional trainers within the Bank. In addition to permanent and professional trainers, speakers are drawn from operational side so that on-the-job experience may be exchanged and shared. Over and above, speakers from Central Bank, professional training institutions, research organizations and Govt. organizations are also invited to share views and experience. Senior and retried bankers are also regularly invited to enhance effectiveness of training.
LIBRARY
The Academy has a good collection of books, journals and magazines. The books are mainly on subjects like Banking, Economics, Accounting, Management and Marketing etc. As on December 31, 2004 the library had 4,983 books/ titles. The books are issued to the employees usually for one month.
In 1988, the Academy undertook steps to build up Mini Libraries at all the branches outside Dhaka with a view to helping the employees with books and reading materials for updating and upgrading their knowledge. Branches are supplied with books/ journals etc. for their Mini Library from time to time.
Chapter Three
GENERAL BANKING
General banking refers to the core banking facility that is available in any branch throughout the country. The main objective of general banking is to encourage the banking habit of a nation. A like other branches IFIC Motijheel branch also has the full-fledged set up for providing general banking facility. For the purpose, general banking division has three major departments. They are as follows: —
KINDS OF ACCOUNT HOLDERS
? INDIVIDUALS:
Individuals are adult persons of 18 years of age or more who are competent to enter into the contracts. Adult persons include married women, pardanashin women, illiterate persons but lunatics’ persons of unsound mind and bankrupts are not adult persons.
JINT ACCOUNTS:
More than one jointly or adult with minors may constitute joint accounts.
? SOLE PROPRITERSHIP CONCERNS:
A business concern owned and managed by more than one person who may be registered is a partnership firm. Person who have entered into partnership with one another and called individually a “firm” and the name under which there business is carried on is the firm’s name.
PRIVATE LIMITED COMPANY:
A body corporate formed and registered under companies act, 1913 with limited members and liability having certificate of incorporation given by Register, joint stock companies and Memorandum of Association and Articles of Association.
PUBLIC LIMITED COMPANY:
A body corporate formed & registered under companies Act-1913 with limited liability of the shareholders and with no upper ceiling of shareholding having both Certificate of Incorporation & Certificate of Commencement given By Register, joint stock companies. It must have Memorandum of Association and Articles of association. Corporation, autonomous bodies are organizations created by special acts of the parliament or by Presidential orders.
? CLUBS / ASSOCIATIONS / SOCITIES:
These are organizations created and registered or not registered under societies Registration act. Some of these may be registered under company act.
? NON-GOVT. ORGANIZATION:
Non-Govt. organizations registered are voluntary organizations created and registered under Societies Registration Act or Co-operative Societies Act.
& DIFFERENT TYPES OF DEPOSIT ACCOUNTS AND THEIR FORMALITIES
A/C Opening / Cheques Issue
The branches may open the following types of A/C:
- Current Deposit A/C
- Saving Bank Deposit A/C
- Short Term Deposit A/C
- Fixed Deposit Receipt A/C
- Pension Savings Scheme A/C
- Bearer Certificate Deposit A/c
CURRENT DEPOSIT A/C:
Current Deposit A/C is a non-interest bearing account. Business people usually open this type of account. They can withdraw any amount from their accounts without any restrictions within the banking hours. The account opening is as follows:
· Customer will fill up relevant A/C opening from supplied by the Bank.
· A valued current account holder or a respectable personality acceptable to the bank must introduce the person.
· Two photographs attested by the introducer are required, one of which will be stapled with filled up application form and the other with Specimen Signature (SS) Card.
· The party will put his signature in the SS card in front of deposit in deposit in charge or the officer.
· After the approval of the in charge to admit the signature, the officer will put his signature along with
· ‘Signature admitted’ stamp on the application form and SS card.
· Finally, a number will be allowed and particulars will be entered in the A/C Opening & Closing
· Register.
· The party will deposit at least TK. 10.000/- to his/ her newly opened A/C.
Documents required for the proprietorship, societies, clubs, association etc are:
§ Trade License in case of proprietorship concern.
§ Certified true copy of byelaws rules and regulations constitutes in case of society.
- True copy of resolution authorizing opening and operating of A/C with the branch.
- List of members of executive committee.
- Partnership deed and partnership letter encase of partnership firm.
Documents for limited companies, corporation & autonomous body are:
- Memorandum of Article of Association
- Resolution of Board of Directors authorizing opening of the A/C with the Bank.
- List of Directors.
- Certificate of Commencement of business.
SAVING BANK DEPOSIT A/C:
The minimum balance in savings deposit account is Tk.5, 000 and the rate of interests on its INS 7.508%. Interest is given to the accounts at the time of June and December closing. If the party withdraws more than 25% of his deposited amount or more than two times in a week or more than Tk.2,000 without notice, the concerned account is not considered for the interest. IFIC Motijheel Branch has its own printed application form for opening a savings account. The application form contains the following particulars, which are to be fulfilled by the individual account holder—
· Name of the account holder
· Business or profession of the account holder
· Address of the account holder
· Special instruction regarding the opening of the account
· Instruction by any account holder
· Verification by the concerned officer of the branch.
Documents required for opening a SB deposit account are:
§ Application form;
§ Two copies photographs attested by the introducer;
§ Specimen signature card
STD ACCOUNT:
This account is only for the government, proprietors and autonomous bodies. A short-term notice is to be served to withdraw the amount. The rate of interest on its INS is 5.50%. IFIC, Motijheel branch has its own printed form for opening a STD account. The application form contain the following particulars, which are to be fulfilled by the Account holder—
§ Name of the account holder
§ Business or profession of the account holder
§ Address of the account holder
§ Special instruction regarding the opening of the account
§ Instruction by any account holder
§ Verification by the concerned officer of the branch.
§ Specimen signature card
§ Photograph of the account holder
FIXED DEPOSIT RECEIPT A/C:
No introduction is necessary for opening an FDR account. It is opened for certain period. IFIC, the party can open more than one FDR A/C in the same branch. The party can give special instructions like Solely, jointly, either or Survivor, All of the survivors etc. The bank carefully maintains FDR no, controlling no, SS card and due date diary to encash it at its maturity. It has its own printed application form for opening a Fixed Deposit Account. The application form contains the following particulars, which are to be fulfilled by the account holder.
- Name of the account
- Address of the account holder
- Specimen Signature card
- Amount, period, rate of interest, date and signature.
Table: Rate if Interest in FDR
| Duration | Rate of Interest |
| 3 months and above | 8.00%- 9.00% |
| 6 months and above | 8.25%- 9.25% |
| 12 months and above | 8.50%- 9.50% |
| 24 months and above | 9.00%- 10.00% |
| 36 months and above | 9.50%- 10.50% |
PENSION SAVINGS SCHEME A/C:
IFIC Bank Limited has introduced a Pension Savings Scheme (PSS), which officers the depositor’s 5/10 year’s savings plan with attractive interest and bonus option at maturity. Under this scheme a client is able to save at a rate of Tk. 100/ 300/ 500/ 1000. the account holder can avail himself (maximum 80% of the deposited principle amount) by keeping PSS A/C under lien after two years from opening the A/C.
BEARE CERTIFICATE DEPOSIT A/C:
o No A/C opening form of SS card is required.
o The party will deposit the cash/ Cheques through a credit voucher to the BCD A/C.
· Then a BCD certificate containing serial no, date and maturity, rate of interest and amount will be given to the party.
· The particulars shall also be written into the BCD register and due date diary.
Table: Different Types of Accounts:
| CURRENT | 1237 |
| SAVINGS | 3248 |
| STD | 75 |
| FDR | 661 |
| BCD | 112 |
| PSS | 1485 |
| TOTAL | 7163 |
STATEMENT OF ACCOUNT:
§ In case of SS A/C, Pass Book (GB-28) or statements of accounts which ever are applicable and in case
of CD A/C, statements of accounts shall be prepared and sent to A/C holders within seven days of the following month.
§ In a statement / pass Book, the transactions are shown clearly and request the party to inform the Bank if there is any discrepancy.
- For the SOD loan A/C, parties are requested to return the copy of the statements with signature.
CASH TRANSACTION DEPARTMENT ACCOUNTS DEPARTMENT
CASH RECEIPT:
Bank mobilizes direct cash form customers deposit in their account both deposit and loan account by Pay-in-slip, against remittance and other banks. Customers generally deposit cash to their accounts or any other purpose over the customer. The cash officer will check the account title and A/C no. and amount in words and figure. After receiving the cash, he will write the denominations of the currency on the backside of the voucher/pay-in-slip. He will enter the particulars of the voucher in the Cash Receiving register (GB-18) according to serial. Then he will put his/her signature along with date seal on the pay-in-slip/voucher. After that he/she will send the voucher& register to officer-in-charge.
The following slips or vouchers are used in this purpose:
o Pay-in-slip
o Credit Vouchers
o Cash receiving register.
CASH PAYMENT
Steps are as follows:
· After receiving the instrument the cash officer should check it for any apparent discrepancy, date of the check, amount in words & figure etc.
· The cash officer will send the instrument to the cancellation officer. He will examine the apparent tenor of the Cheques very carefully and compare the signature of the Cheques with SS card.
· It will be posted in the computer to debit the C/A.
· If fund is available, the cancellation officer will cancel the Cheques and put a seal ‘PAY CASH’.
· Double cancellations are necessary for the amount more than Tk. 5000.
· After getting the cancelled instrument the cash officer will pay the cash to the party.
· He will make an entry into the ledger and write the denominations on the backside of the Cheques.
· The he will affix ‘CASH PAID’ seal.
· At the end of the day the total amount entered in the paying cash register will agree with the total paid amount.
· The in charges will Cheques the entries and instrument to find out the correctness of the payment and put an initial against each entry.
· Finally the instruments will be sent to the accounts department
· If the Cheques are returned unpaid, it will be given back to the bearer marking the cause of the ‘Return Memo’ after posting into the ‘Cheques Return register’.
CLEARING SECTION AND BILLS DEPARTMENT ACCOUNTS DEPARTMENT
Cheques clearing section of IFIC Motijheel branch receives Cheques, Demand Draft (DD) and pay order from their clients clearing section examines.
· Whether the paying Bank within Dhaka city ;
· Whether the paying Bank outside Dhaka city ;
· Whether the paying Bank of their own Branch ;
· THE PAYING BANK WITHIN DHAKA CITY
The clearinghouse was established in London in 1775. There are 52 scheduled banks in the clearinghouse situate in Bangladesh Bank. These are of two types:
Outward Clearing
Inward Clearing
Outward Clearing:
o The instruments drawn on other Banks received from the clients are sent to the clearinghouse for collection called out ward clearing.
o The particulars of the instrument and the voucher are entered into the outward clearing register.
o The register is balanced
o The instruments are suitably discharged / endorsed.
o The instruments are arranged bank-branch wise.
o Schedules are prepared for each branch of a bank and main schedule for a bank.
o The total of the schedules is taken and agreed with that of the register.
o The house page is prepared in duplicate.
o In case of other branch an IBDA is prepared debiting the Motijheel Branch. With the amount of the instruments and parties A/Cs are credited.
o The instruments along with IBDA and house page are sent to the clearinghouse.
Finally, a single debit voucher debiting IFIC General A/C is prepared and sent it to the A/Cs department along with third copy of IBDA and deposit slips.
Inward Clearing:
· The Cheques or other instruments drawn on branch received from other banks through clearing house are
· checked whether they are crossed or endorsed properly.
· For payment of the instruments all formalities for Cheques payment are maintained.
· Incase of other branch if any instrument returned unpaid for any reason shall be given to the sending bank
· through Motijheel branch with a return memo.
· For the amount of returned Cheques IFIC, Motijheel branch will give an IBDA to the concerned branch.
This department maintains the following vouchers, scales and registers—
- Crossing Stamp
- Endorsement Stamps
- Outward Clearing Register
- Inward Clearing Register
- Main Schedule
- The sub-main Schedule
- The House page
- Guarantee Form
- THE PAYING BANK OUTSIDE DHAKA CITY
The bank receives crossed Cheques only to get statutory protection as per sec. 131 if N.I. act. Collecting banker recesses the bills for the collection in the following two ways—
1. Outward bills for collection (OBC)
2. Inward bills for collection (IBC)
Outward bills for collection (OBC)
IFIC Motijheel Branch there receives outward bills of two different banks or the Cheques of two branches of the same bank. To send the bills to the paying bank the following procedures are maintained—
o Only account holder’s Cheques are received.
o It is received with the pay-in-slip.
- OBC round seal is given on both the Cheques and pay-in-slip.
- Counter foil is given back to the customer.
- Necessary are duly endorsed.
- Forwarding schedule is prepared and attached with the Cheques and sent the paying bank.
- Pay-in-slip is kept in OBC outstanding file.
- After getting advice from the paying bank the proceeds of the Cheques is deposited to the
account of the customer.
o Balancing is done for the outstanding amount.
o Monthly statement is prepared if the outstanding is more than two months.
Inward Bills for Collection (IBC)
For the inward bills for collection, the bank maintains the following procedures—
o Cheques along with forwarding schedules are received by the manager.
o The manager sends the said instrument to the Bills in Charge.
o The bills in charge examine the endorsements, signatures of the officers and the officers and
P.A.No. and gives necessary entries to the register.
o The banker presents the Cheques to the customers.
o After realization the amount from the customer the officer sanctions IBC No. against the OBC
No. and prepares a credit advice to the collecting bank.
- THE PAYING BANK OF THEIR OWN BRANCH
IFIC, Motijheel branch has a special arrangement to settle the inter branch claims within the Dhaka city. IBTD section of this branch collects Cheques from different branches of the city. The branch debits IFIC General A/C and credits the related branch. The head office gives interest on the debit balance at the end of the year. For the Cheques other than Dhaka city IFIC Motijheel branch follows the procedure of Outward Bills for Collection (OBC) to get Inter Branch credit Advice (IBCA) from the paying branch. If the paying bank dishonors the instrument, the branch returns it to IFIC Motijheel Branch describing why the instrument is dishonored.
REMITTANCE SECTION DEPARTMENT
IFIC Motijheel branch earns a lot through remittance business. The following instruments are used for this purpose—
DEMAND DRAFT (DD)
Demand Draft (DD) is an instrument containing an unconditional order of the issuing branch upon another branch of the same bank known as drawee branch, for the payment of a certain sum of money to the payee or to his order on demand by the beneficiary presenting the draft itself.
- ISSUANCE OF DEMAND DRAFT
A customer intending to purchase Demand draft applies to the concerned branch to issue4 a DD through the printed application form of the bank. After filling the application form, the purchaser pays the equivalent amount of the DD plus bank charges at the @ 1.5 per thousand with a minimum Tk .25 on it. After that the branch issues the DD giving a serial number on it. For the issuance of DD over Tk.25000/- test number is applied on the upper portion of the draft withy the red ink so that the Drawee Branch can immediately make payment of the DD on presentation if the test agrees.
§ PAYMENT OF DEMAND DRAF
The issuing Branch sends Inter Branch Credit Advice (IBCA) after the issuance of DD to the paying Branch. When a DD is presented for payment at the paying branch, its details are to be carefully examined with reference to the following points:
· Whether IBCA is received or not
· Whether the DD is drawn on their branch
- Whether the DD is crossed or not
- The payee is to be properly identified in case of cash payment
- The amount of DD should not exceed the amount protect graphed on the top of the DD
- The signatures of two authorized officers of the Issuing Branch must be verified with the specimen signature booklet to be sure that DD is genuine.
If the above points are in order, the paying branch makes payment to the purchaser.
- STOP PAYMENT OF DEMAND DRAF
The issuing Branch instructs for stop payment of a DD when the purchaser approaches the Issuing Branch to do the same through an application.
- CANCELLATION OF DEMAND DRAF
The purchaser can request the Issuing Branch to cancel the DD. After getting instructions from the Issuing Branch, the paying Branch can cancel the DD.
TELEGRAPHIC TRANSFER (T.T)
It is an order of the issuing branch to the paying Branch to pay a certain sum of money to the beneficiary. TT transaction is done in between the two branches of the same bank only. The beneficiary should maintain an account with the IFIC Bank to get this facility. Before sending the message, the Issuing Branch must be sure that there is a test arrangement for authenticating the Telegraphic / Telex message with the branch designated to make payment.
· ISSUING OF TELEGRAPHIC TRANFER (T.T)