Theoretical Analysis on HRM of Investment Corporation of Bangladesh in comparison to the HRM of other Financial Institutions
With the increase in the size and complexity of business organizations, man has become the most important factor in business. Business needs people as owners, employees, and consumers. Organizations need people to make them operate. Business may be operated differently and the objectives of business may differ, but the universal element in all business activities is people. An organization is nothing without human resources. Any human organization- a factory, a hospital, or an association- consists of people working together. According to economists, the factors of production are land, labor, capital and entrepreneurship. Of all the resources, the most important one is human resource, because human begins play a dual role- as resource, as well as a motive force for all other resources by manipulating them, by way of developing, utilizing, commanding and controlling.
2.2: Definition of HRM:
The purpose of HRM is to improve the product line contribution of people to the organization in ways that are strategically, ethically & socially responsible. Human resources determine every organizations success.
There are many definitions about human resources management (HRM). One of the well known definitions is offered by Micheal Jucious (1984). He defined human resources management or personnel management “as the field of procuring, developing, maintaining and motivating a labor force”.
Human resources management concerns the personnel policies & management practices & system that influence the work force regardless of the size or existence of a formal HRM or personnel department – H.John Bernardin.
2.3: The Objective of Human Resource Management:
Managers and HR departments achieve their purpose by meeting objectives. Objectives are benchmarks against which actions are evaluated. Four HR objectives are given below:
2.3. A: Organizational objective:
To recognize that HR management exists to contribute to organizational effectiveness. Even when a formal HR department is created to help managers, the managers remain responsible for employee performance. The HR department exists to help managers achieve the objectives of the organization. HR management is not an end in itself, it is only a means of assisting managers with their human resource issues.
2.3. B: Fictional objective:
Maintain the department’s contribution at a level appropriate to the organizations needs. Resources are wasted when HR management is more or less sophisticated than the organization demands.
2.3. C: Societal objective:
Ethically and socially responsive needs and challenges of society while minimizing the negative impact of such demands on the organization. The failure of organizations to use their resources for society’s benefits in ethical ways may result in restrictions.
2.3. D: Personal objective:
Assist employees in achieving their personal goals, at least insofar as those goals enhance the individual’s contribution to the organization. The personal objectives of employees must be met if workers are to be maintained, retained, and motivated.
2.3: The Human Resource Management Model and Subsystem
2.4: Importance of HRM:
HRM involves all management decisions and practices that directly influence the people and human resources, who work for the organization. Obviously HRM is concern with the people’s dimension in organization. The core points are:
- Hire the right person for the jobs:
Human resources management hires the right person for the specific job. Specialized people can done their specific work very properly then any other unspecialized people.
- Lower turnover:
It reduces turnover, HRM look after the benefits, incentives, compensation, which results reduce the turnover.
- Make the people of the organization do their best:
When an employee is more skilled & knowledgeable his devotion will be higher & his performance can give the benefits to the organization much effectively.
- Save time:
If wrong people are selected for organization than organization have to higher new one that is more time wasted process. But HRM practice can save this time by hiring the right person for the right job.
- Avoid discriminatory actions:
HRM obey the discriminatory rule regarding on the employee rights.
- Fair remuneration/ Compensation:
HRM determine the salary, wages & compensation fairly according on the basis of position, nature of the duty, responsibility, work time etc.
- Identify training needs: HRM decide the appropriate training for employee that is done by on the orientation or other ways can be on the job training & of the job training.
- Lower unfair labor:
HRM fairly design compensation, so the person who is competent & who has requirement get the proper compensation.
2.5: HRM activities:
Simply put, HRM is a management function that helps managers’ recruit, select, train and develops members for an organization obviously. HRM is concerned with people’s dimension in organization.
- Human resources planning:
HRP systematically forecasts an organization future demand for & supply of employee. HR planning is also called to develop staffing plans that support the organizations strategy by allowing it to fill job openings proactively.
- Recruitment & selection:
Recruitment is the process of finding & attracting capable applicants for employment. The process begins when new recruits are sought & ends when their applications are submitted. The result is a pool of applicants from which new employees are selected.
Placement decision is taken offer the selection process. This is the process of put the right person for the right place according to their skills & qualification.
- Orientation & training:
Employee should be oriented about the organization. How the work is performed that process is called training. It’s the teaching about gaining the practical knowledge.
- Performance evaluation:
Performance evaluation is a way to measure how well employees perform his work. That is important for increase the effectiveness of the employee’s performance.
- Compensation & protection:
Employee should be compensated by the wages, salary & fairly. If the compensation is too low then employee face dissatisfaction & if the compensation is too high than it could be against of company low. Deciding appropriate compensation can motivate the employee’s performance.
- Employee relation & assessment:
It maintains the relationship between whole unions of organization & assesses the work activities.
2.6: Personnel management VS Human resources management:
Although on some key issues- a natural concern for people, and their need, together with finding efficient means to select, train, appraise, develop and reward them, there are some point of dissimilarities between personnel management (PM) and human resource management (HRM). Traditional personnel management tends to be parochial, striving to attend line managers, with a strong proactive stance and a bias towards business. PM has a history of placing emphasis on bureaucratic control often in a reactive sense, i.e., control of manpower and personnel systems. Some would argue that PM represented a highly compartmentalized system.
By contrast, HRM makes a determined effort to be a more integrative mechanism in bringing people issue into line with business issues, with a pronounced problem – seeking and problem solving orientation, and a determination to build collaborative organizational systems. The role of top management in setting the agenda for change and development is very much in evidence in HRM.
Some personnel managers will no doubt see the growing influence of HR managers as a threat fearing that they may just become custodians of personnel systems. Beer (1997) identified major obstacles in transforming the traditional administrative personnel function and moving to a fully fledged HRM system. He function is that most HR professionals do not possess the requisite analytical and interpersonal skills.
In HRM there is a greater emphasis on strategic issues and on the way which the human resource contributes to the achievement of corporate objectives. HRM underlines the importance of flexibility and the ability to react and adapt quickly to changes in the organizational environment.
PM can be described as a series of activities related to various aspects of an employee’s relationship with the organization. HRM is also concerned with these issues, but in addition stresses the primacy of business needs. Other points of departure are that HRM embraces individual flexibility and congruency between individual and organizational goals, whereas PM is concerned with systems applied to individuals and collectivism.
2.7: Meaning and recruitment:
Recruitment is the process of finding and attracting qualified or suitable applications to fill vacancies. This is the process of locating potential candidate for selection. It is the discovering of potential candidate for selection. It is the discovering of potential candidates for actual or actual or anticipated organizational vacancies. During this process, efforts are made to inform the applicants fully about the selection criteria, i.e. the required competences, which will lead to effective performance and the career opportunities the organization can provide for them.
Dale Yoder (1986) defines recruitment as a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organization. The process begins when new recruits are sought and ends when their applications are submitted. The result is pool of qualified applicants from which new employees are selected. Recruiting is important because the best- qualified applicants must be found to fill vacancies.
2.8: Objectives of recruitment policy:
Objectives are targets and goals. According to Yoder, following are the main objectives of recruitment policy:
– To find and employee the best qualified person for each job.
-To retain the best and most promising ones.
-To offer promising careers and security
-To provide facilities for growth and development
-To minimize the cost of recruitment
-To reduce scope of favoritism and malpractice.
2.10: Factors Affecting Recruitment:
There are many factors affecting recruitment. These factors may be considered in to two broad groups:
Internal factors: These are the factors within organization. These factors are listed down here:
– Image of the organization. An origination with poor image cannot attract a large number of applicants. For example, among most university graduates Dhaka University has a positive image.
– Image of job or attractiveness of the job. If the job to be filled is unattractive, recruiting a large and qualified pool of applicants will be difficult.
-Internal policies. Internal organizational policies such as promote from within will give priority to individuals inside the organization. Such a policy will usually ensure that all positions will be filled form within the ranges.
-Trade union requirements.
External factors: these are the factors over which organization has little or no control. Some of these are given below:
-Demographic factors: gender ratio, age group, and educational level.
-Industrialization: industrialization within the geographical area and geographical concentration will have influence on employment market in recruitment.
-labor market: supply of labor may be plenty or shortage. In Bangladesh, supply of labor of unskilled labor is abundant but there is shortage of skilled labor. The right type is difficult to find.
2.11: Sources of Recruitment:
There are basically two sources of supply from where potential employees can be drawn. These are internal sources and external sources.
2.11. A: Internal sources: internal source indicate recruiting qualified people from within the organization itself (from the present working force). When reference is made to the number of employees already employed by the organization we speak of the internal supply. Whenever any vacancy occurs, someone form within the organization is upgraded, prompted or transferred to another department.
2.11. B: External sources: recruitment form outside the organization is known as external source. All firms more or less rely on external sources.
2.12: Meaning of Selection:
Once a pool of suitable applicants is created through recruiting, the process of selecting applicants begins. Selecting means choosing form those applicants who are most likely to succeed in the new job. It is the technique of choosing a new member of the organization from the available candidates. The selection process is a series of steps used to decide which recruits should be hired.
Dale Yoder (1972) defines selection as a process by which candidates are divided into class-those who will be offered employment and those who will not. The process begins when recruits apply for employment and ends with the hiring decision.
2.13: Training and Development:
Training is continues process of helping employees to perform at a high level. It is a process of acquiring new skills to do job properly. Training changes and modifies employee’s attitude and behaviors that will improve his ability to perform on the job activity. The main purpose of training is given below:
· Training mainly focus on current job
· Its short term and long term oriented.
· Training is given at the beginning of job.
· The reason of training is employee development.
2.13.1: Importance of Training:
· Economy in operation
· Minimization of supervision
· Better performance of employees
· Increase morality
· Uniformity in performance
· Effective control
2.13.2: Training technique:
There are two type of training basically given on organization. They are:
a) on the job training:
b) off the job training
2.14: Compensation and other benefits:
Compensation and salary is an amount of money which is given by organization to their employees for performing the recent job. Well compensation structure is help to increase employee’s motivation, and attention to give better performance to their organization. Every organization should select the proper compensation structure for their employees. Compensation or salary amount is depending on the employees post, work activity, work place e.tc.
Benefit is indirect financial payment given to the employees for their employment in their organization. Example: health and life insurance, vacation, pension, education plans and discounts on company products etc.
3.1 Historical Background of ICB:
Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment bank. As an investment bank is a financial institution, which mobilized fund from the surplus economic units by savings securities and developed funds to the deficit economic unit also by buying or underwriting securities After liberation in view of social economic changes, the scope for private sector investment in the economy was kept limited by allowing investment in projects up to Tk. 25 laces. The new investment policy, which was announced in July, 1972 provides for an expanded role of private sector by allowing investment in a project up to Tk. 3 cores. The ceiling has further being raised to Tk. 10 cores in spite of the adequate facilities and incentives provided to the private sectors encouraging response was not for the coming. One of the reasons among other was the lack of institutional facilities, which provides underwriting support (Like former ICB) to industrial enterprise that was required to raise much need equity fund. Thus, the need for reactivation for capital market, stock market was keenly feel.
The Investment Corporation of Bangladesh (ICB) was established on 1st October 1976, under “The Investment Corporation of Bangladesh Ordinance, 1976” (No. XL of 1976). The establishment of ICB was a major step in a series of measures undertaken by the Government to accelerate the pace of industrialization and to develop a well-organized and vibrant Capital Market particularly securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity gap of the industrial enterprises. In view of the national policy of accelerating the rate of savings and investment to foster self-reliant economy, ICB assumes an indispensable and pivotal role. Though the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (No. of XXIV of 2000), reforms in operational strategies and business polices have taken place by establishing and operating subsidiary companies under ICB.
3.2 Institutional Framework of ICB:
Investment Corporation of Bangladesh is a Corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
3.3 Objectives of ICB:
The objectives of the corporation are-
- To encourage and broaden the base of investments.
- To develop the capital market.
- To mobilize savings.
- To promote and establish subsidiaries for business development.
- To provide for matters ancillary thereto.
3.4 Business Policies of ICB:
The business policies of ICB in the following-
- To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general.
- To provide financial assistance to projects subject to their economic and commercial viability.
- To arrange consortium of financial institutions including Merchant banks to provide equity support to projects.
- To develop and encourage entrepreneurs.
- To diversify investments.
- To induce small and medium savers for investment in securities.
- To create employment opportunities.
- To encourage investment in Agro-based and ICT sectors.
3.5 Functions of ICB:
In order to achieve the previously mentioned objectives, the corporation may carryout the following functions-
- Direct purchase of shares and debentures including placement and equity participation.
- Participating in and financing of joint-ventures companies.
- Providing lease finance singly and through syndication.
- Managing existing Investor’s Accounts.
- Managing existing Mutual Funds and Unit Funds.
- Managing Portfolios.
- Conducting computer training program.
- Providing advance against ICB Unit and Mutual Fund certificates.
- To act as Trustee and Custodian.
- Providing Bank Guarantee.
- Providing investment counseling to investors.
- Participating in Government divestment program.
- Introducing new business products suiting market demand.
- Dealing in other matters related to Capital Market.
3.6 Businesses of ICB:
3.6. A. Private Placement:
ICB is authorized to act as an agent of issuers and investors for private placement of securities. Under this arrangement, ICB places securities to individuals or institutions on behalf of the issuer for which it charges fees. ICB also acquires shares or securities for its own portfolios.
3.6. B. Underwriting:
In order to raise long term debt equity from the primary market, the Government bodies, enterprises, corporation or companies may seek intermediary assistance from ICB in the form of underwriting. Because of its long and proven experience, reputation, asset back up and established network of regional offices, ICB is in an excellent position to attract the potential investors to the proposed issue of shares, debenture and other securities for successful floatation of IPO & placement.
3.6. C. Custodian and Bank to the Issues:
To act as the custodian to the public issue of open-end & mutual Funds, ICB provides professional services. It also acts as the Banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable.
3.6. D. Merger and Acquisitions:
Companies willing to expand their business through mergers or acquisitions or to divest projects that no longer fit into present scale of operation contact the corporation. ICB provides professional services & advice in respect of shaping up the cost and financial structures to ensure best possible operation results.
3.6. E. Corporate Financial Advice:
Companies and Government enterprises intending to go public often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provide such services.
3.6. F. Lease Financing:
ICB provides lease finance mainly for machinery, equipment and transport. ICB is in a position to provide professional advice and financial to the intending clients. The period of lease, rental, and changes and other terms and conditions are determined on the basis of assets and the extent of assistance required by the applicants.
3.6. G. Advanced against ICB Mutual fund Certificates Scheme:
Advanced against ICB Mutual Fund Certificates Scheme was introduced in 2003, designed for the ICB Mutual Fund certificate holder to meet their emergency fund requirement. One can borrow maximum of 50% value of last one year’s weighted average market price of certificates at the time of borrowing by deposing his or her certificates under lien arrangement from any of the ICB’s offices. The rate of interest on the loan is reasonable and also competitive.
3.6. H. Bank Guarantee Scheme:
As part of ICB’s business diversification Program, the corporation introduced bank guarantee scheme during the year 2002-2003 ICB provides (i) bid bond for enabling the business people to participate in any tender or bidding, (ii) performance bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients, (iii) customs guarantee to solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is tk.2.00 Corer and would be issued against at least 20% cash and 820% easily excusable securities or against 100% cash margin. Re-guarantee from other financial institutional is required for guarantee against the amount exceeding Tk. 2.00 Corer.
3.6. I. ICB Mutual Fund:
ICB has so far floated eight close-ended Mutual Funds. The first ICB Mutual Funds was floated on 25 April 1980, while the Eight ICB Mutual Fund was floated on 23 July 1996. The aggregate size of these funds is Tk. 17.5 Corer. As on 30 June 2004, 33646 certificate holders own these funds. Dividends declared on the funds were very attractive ranging from 14.0 to 200.0 per certificate for 2003-2004. Investors show overwhelming interest in all the ICB mutual funds. One can invest in such funds through the stock exchanges with which these funds are listed. Through corporate restructuring, new mutual funds are being floated through “ICB Asset Management Company Ltd.” –a subsidiary of ICB.
3.6. J. ICB Unit Fund:
It is on open-end mutual fund scheme launched in April 1981, through which the small and medium savers get opportunities to invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared attractive dividends on units every year ranging from Tk. 11.5 to Tk. 25.0 per unit. Investment in units enjoys tax benefits, amount being applicable as per law. However, under the ICB’s restructuring programmed new unit certificates are being sold by ICB’s subsidiary company, the ICB Asset Management Company Ltd.
3.6. K. Investors’ Scheme:
The Investors’ Scheme was introduced in June 1977. Over the years, this scheme has grown tremendously. ICB, at its discretion, may grant up to two times loan against the assets of an account subject to a maximum limit of Tk. 3.0lacs. An accountholder may use the combined balance of his or her equities and loan to buy shares or securities. To help the investors to develop diversified and balanced portfolio to minimize risk and earn a reasonable return, ICB provides professional advice and other support services. Under the restructuring Programmed, ICB operates and manages only the old accounts and new accounts are being opened and managed by the ICB Capital Management Ltd.-a subsidiary of ICB.
3.7. Milestones of ICB:
|Particulars||Date of Establishment/Commencement|
|ICB||1st October 1976|
|Investors’ Scheme||13th June 1977|
|First ICB Mutual Fund||25th April 1980|
|ICB Unit Fund||10th April 1981|
|Second ICB Mutual Fund||17th April 1984|
|Third ICB Mutual Fund||19th May 1985|
|Fourth ICB Mutual Fund||6th June 1986|
|Fifth ICB Mutual Fund||8th June 1987|
|Sixth ICB Mutual Fund||16th May 1988|
|Nomination as country’s nodal DFI in SADF||7th May 1992|
|Seventh ICB Mutual Fund||30th June 1995|
|Decision for 100% Automation||14th July 1996|
|Eighth ICB Mutual Fund||23rd July 1996|
|Purchase of own Land & Building||11th December 1997|
|Participation in equity of SARF||16th January 1998|
|Advance Against Unit Certificates Scheme||12th October 1998|
|Term Deposit||13th January 1999|
|Lease Financing||22nd April 1999|
|“ The Investment corporation of Bangladesh (Amendment) Act 2000” Passed in the Jatiya Sangsad (Parliament) and honorable President’s assent there of||5th and 6th July 2000|
|Formation & Registration of 3 Subsidiary Companies||5th December 2000|
|Computer Training Program||25th March 2001|
|Commencement of operations by subsidiary Companies:|
|ICB Capital Management Ltd.||1st July 2002|
|ICB Asset Management Company Ltd.||1st July 2002|
|ICB Securities Trading Company Ltd.||13th August 2002|
|Registration as trustee with SEC||20th August 2002|
|Registration as a Custodian with SEC||20th August 2002|
|Bank Guarantee Scheme||21st June 2003|
|Advance Against Mutual Fund Scheme||21st June 2003|
|Consumer Credit Scheme||15th February 2004|
ICB’s Organizational Structure and Management
3.8. Institutional Framework of ICB:
Investment Corporation of Bangladesh is a corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
3.9. Regulatory Framework of ICB:
As the mentioned earlier the regulatory framework of ICB is the, Investment Corporation Bangladesh Ordinance, 1976. This ordinance and regulations laid under the authority of the ordinance is the source of all power and authority of ICB. Through the recent enactment of “The Investment corporation of Bangladesh (Amendment) Act, 200” (XXIV) of 2000, scope of ICB’s activities through the formation of subsidiaries have been expanded. In addition to these, to resume its duties and functions, it has to compel by Companies Act 1994, Trust Act 1882, Insurance Act 1983, Security and exchange commission Act 1993, banking companies Act 1993, Foreign exchange regulation 1974, Income Tax act etc.
It is to note that no provision of law relating to the winding up of companies or bank shall apply to the corporation and the corporation shall not be wound up save by order of the government and in such manner as it may direct.
3.10. Management of ICB:
The head office of the corporation as per the requirement of the ordinance of ICB is located at Dhaka. The general direction and superintendence of the corporation is created in a board of directors, which consist of 11 persons including the chairman and managing director of ICB. The board of directors consists of the following directors:
- The chairman to be appointed by the government.
- The directors to be appointed by the government from among persons serving under the government.
- One director to be nominated by the Bangladesh Bank.
- The managing directors, Bangladesh Shilpa Bank, Ex-Office.
- The managing directors, Bangladesh Shilpa Rin Sangstha, Ex-office.
- Four other directors to be elected by the share holders other than the government, BB, BSB, & BSRS.
- The managing directors of ICB to be appointed by the government. The board in discharging its functions acts on commercial consider rations with due regard to the interests of industry and commerce, investment climate, capital market, depositors, investors and to the public interest generally and is guided in question policy by the institutions, if any, given to by government which shall be sole judged as to whether a question is a questio9n of policy or not.
The managing director is the chief executive of the corporation. The corporation has an executive comprised of 5 people including managing director.
3.11. Board of Directors of ICB:
The board is comprised of 11 directors. Exchange managing director, all directors are non-executive and independent and represent government, bank, Insurance Corporation, financial institutions and general public. The board of directors of ICB as on 30th June 2005 is as follows:
3.12 Administration, Human Resource:
Investment Corporation of Bangladesh (ICB) is providing different category of financial and banking services. Nature of the different division departments vary, such that Economic and Business Research (EBR) department requires teamwork, Lone Appraisal division requires professional work. Funds divisions need chain work. Managing director is entrusted with authority to transact the regular business of the organization; he may delegate some authority to officials of the Corporations. However, most of the policy decisions are taken by the different committee with the approval of managing director and where required of the board. It is the discretionary authority of the board to constitute the execute committee and to maintain its Chairman to assist the board in the discharging of the function stated under the ordinance. The board may appoint such other committee (s) as it thinks fit to assist it in the efficient discharge of its function. So far, board has appointed two such committees. Economic and Business Research (EBR) committee and Loan Appraisal committee is headed by General Manager.
3.13. Organization Manpower:
The general direction and superintendence of corporation is created in a board of directors, which consists of clever (11) persons including the chairman and managing director of ICB. This is the most powerful board compare to other govt. financial institutions in terms of their experience and knowledge. The managing director is the chief executive of the organization. Two general managers assist him, viz. G.M. (Operation) and G.M. (Admin). Total manpower of ICB at present is 372, of which 241 were officers & 131 subordinate staff. As on 30 June 2005, the total numbers of female e4mployees were 54, including 43 officers, representing 14.52% of the total manpower.
3.14. Organoam of ICB:
3.15: Functions of various departments
3.15.1: personnel department
This department deals with the human resources of the organizational makes the rules and regulation of the right person to the right place. The process may be held two ways:
This department takes disciplinary action gradually to that employee who volutes the rules and regulation of the organization. This action is two types:
Heavy punishment the other functions of this department are as follows:
-To make necessary rules, regulations, policies for efficient administration of the corporation.
-To handle all personnel matters including confirmation, posting, transfer, fixation, leaves
-To process all promotion, time scale encashment
-To process registration, retirement cases, to deal with retirement benefits including gratuity, pension, provident funds e.t.c
– To handle national pay scale, fixation, increment e.t.c
– To explore more sources of financing of foreign training, to arrange seminar/symposia/ work shop where experts in the line may be invited to deliver lectures
– To procure training equipments and facilities for training manpower
– To deal with all matters relating to ICB employees Union and ICB officers Association.
3.15.2: Establishment Department
This department deals with purchase and sales of office supplies, office equipment e.t.c. they also maintain the utility service like telephone bill, electricity bill e.t.c. this department dividends cost into two categories. These are:
For cost, depreciation is charged at a straight- line basis. There are two purchase commodities the purchase. There remains a quality control committee to examine the quality of the product purchased. For the purchase of products, this department gives tender offer to the listed suppliers. In case selling of scraps and wastage, the tender offer is also followed.
3.15.3 Merchandising department
Department under merchandising division are showing in the following figure:
3.15.4: Investors Department
The main task of investors department is to accumulate the investment of small and new investors of capital market by helping them open an investment account in the concern department. This department deals with investor’s scheme.
The following are the main functions of this department:
-open and maintain investment accounts
-sanction loans against deposits in investment account
– Buy and sale shares on behalf of investors
-Council investors in respect of building up their portfolios
-With draw funds and shares from investment accounts
-issue income tax certificates, portfolio statement, accounts statement e.t.c
-provide service to investment account holder
-collect commission as a banker to the issue and brokerage commission from the companies
-keep financial records of all investment account
-processing of withdrawal of funds
-confirm fund position of individual accounts and
-posting of all transaction
3.15.5: Shares Department
The shares act as the custodian of securities. These department facilities the physical transfer of shares. For performing the above mentioned activities share department is divided into five sections. These sections are:
-investors portfolio section
-sale and withdraw section
-fund’s portfolio section
-securities reconciliation section
3.15.6: Investors portfolio section:
This section deals with the purchase of shares in the investors account. The functions of this section are:
-receive shares from transaction department TDS for preservation
-send shares and debentures to the companies at the time of book closing
-receive shares and debentures from the companies after registration
-collect bonus or right shares and allocate to the accounts accordingly
3.15.7 Sales and Withdraw section
This section deals with the sale arid withdrawal of share from the investors account. It performs the following activities:
-receive sale or withdrawal order from investor department
-to examine the actual existence of securities
-to make arrangement for the signature of the attorney and filling up of 117 form and spitting up of share into market lot
-receiving of sale order from the securities purchase and sale committee
-delivering of sold securities to the TDS.
3.15.8: Securities reconciliation section
This section is concerned with the reconciliation of securities to check any discrepancy arise to the actual number and the amount in the accounts
3.15.9: Procurement section
This section is engaged with the collection of dividends interest etc. declared by the companies whose shares are held by ICB and its other accounts. This section update the statements related to book closure, dividend declaration etc. after collecting dividends, this department distributes it to the concerned shareholders and different portfolio. It transfers bonus and right shares to the investors and fund section after collection.
3.15.10: Transaction department
Transaction department executes the sales and purchase order of shares of following different portfolios, ICB, Unit fund and Government portfolio and the order from investors of investment arid the order from ICB’s branches.
For the portfolio order the securities purchase and sale committee take decision every morning what share be bought and what should be sold for that day. The sale and purchase orders of the investors constitute demand for execution in this regard. Before execution in case of sale this department has to get aware about the physical existence of shares from the share department.
3.15.11: Funds Division
Department under funds divisions are showing in the following figure:
- Mutual Funds Department
- Unit Sales Department
- Unit Registration and Procurement Department
Mutual Funds Department
Broadly the functions of Mutual Funds Department consist of:
-act as manager of all mutual funds
-maintenance of ledger with the name, address and number of certificates along with distinct folio number for each mutual funds separately
-verify the signature of the share holders in the 117 forms
-preparation of dividend list from the ledger position
-Issue dividend warrants to the certificates
Distribution of final dividend warrants to the certificate holders after completing necessary formations
-incase of change of ownership of mutual funds certificate holder facilities the transfer process
-make arrangement for re-issue or duplicate copy of certificate in case of loss or damages of certificates
-receiving application for the change of address, correction of names and forwarding the same to the computer department
– Arrangement for splitting the share scraps as and when necessary in accordance with the stock exchange rules
Arrange for revalidating the date of payment of dividend on dividend warrants.
Unit Sale Department
ICB unit is an open end Mutual Fund through which the small and medium savers get opportunity to their savings in a balanced and the relatively low risk portfolio. It ensures continues and regularly flows of incomes for the holders and is easily excusable. The responsibility undertaken for managing the fund, management fee charges@ TK.1.00 per unit sold. Units are sold through ICB offices & other authorized bank branches. In lieu of cash dividend, one can reinvest his/her dividend income under Cumulative Investment Plan [CIP] to purchase additional units with a price rebate. ICB stopped selling of unit certificates form 1st day of July after the business operation starts of ICB Asset Management Company Limited. The main functions of this department are to sale, repurchase and transfer of unit certificates.
-act as manager of Unit Fund
-Promotion sales of Unit Certificates
-Sell & issue Unit Certificates to the applicants
-Repurchase Unit Certificates
-Issue new Unit Certificates in lieu of mutilated, lost or defaced Unit Certificates
-Reconcile the amount receive and Unit Certificates send to the agents
-Transfer the units if applied for the prescribed form
-Issue & distribution of CIP certificates
-Making of lien on units, if necessary
Unit Registration & Procurement Department
The following are the functions of this department:
-registration and transfer Unit Certificates
-maintain a separate register for unit holder under CIP
-verify signature of transfer deed
-issue dividend warrants and CIP certificates to the holders
-procure unit certificates of various denominations from the printing press
-issue Unit Certificates to ICB sale officers/branches as well as appointed bank branches.
3.15.12: Account and Finance Division
Departments under account and finance division are showing in the following figure:
Account and finance
Central account department
Project loan department
Central Account Department:
All kinds of receipts and payments of ICB are done by the Central Account Department. The bill of all departments end destination is account department. Account department holds and maintain all accounts separately. For this reason adjustment and rectification of any transaction of all departments become easier to this department. The functions of this department are to:
-preparing income tax return and matters relating to accounts
-preparing bills including projects accounts and maintenance of project accounts
-prepare salary statements, overtime statements e.t.c
-prepare final accounts
-keep accounts of Unit and Mutual funds
-Keep accounts of govt. loan and debentures
-make correspondence with the Government, financial institutions, branches e.t.c
-maintain liaison with external audit and commercial audit
-maintains of investors accounts and portfolio ledgers
-calculating of quarterly interests
-posting and balancing of ledgers
-furnishing of information to other departments related to investors scheme
-determine sources of fund, rising of fund ensure proper utilization of fund
-prepare fund flow statement of the corporation
-ensure proper budgetary and cost control
Project Loan Accounts Department:
The function of this department is to maintain project loan accounts and supply the management up to-date relevant information of the project. In addition to this the department is to:
-issue check to the project after getting disbursement order from the project implementation department and any recoverable amount in the disbursement.
-calculating interested on the disburse amount.
-maintain loan ledger, interest suspense ledger e.t.c
-classify the loan as per as rules and make appropriate provision
-prepare necessary statement related to project loan
-make necessary account adjustment for interest waved as per decision of authority
3.15.13: Computer Division
System analysis department
The main functions of this department are:
-system administration of the entire network setup
-performing system analysis wherever ICB feels the need for periodic change in computerization set up
-performing miscellaneous small hardware and software related servicing tasks on the many workstations, network system, server and other components and provide training to staff of other departments about computer usage
-any other assignment given by the management
3.15.14: Programming department
The following are the main functions of this department are:
-developing new software for ICB
-customization the software developed in the present computerization phase according to the changes of the requirements of the ICB with time
-provide active assistance to the staff of system analysis department for training of the staff of other department about computer usage
-handling peak load of data entry and processing work for all other department of ICB
3.15.15: Data management department:
The following are the functions of this department:
-handling peak load of data entry and processing work for all other department of ICB
-any other assignment given by the management
3.15.16: Loan appraisal department:
ICB provide credit facilities to the public limited companies to meet heir equity gap.
There are two modes by which ICB provides credit facilities to the prospective public limited companies, through:
Direct underwriting for BMRE and
Underwriting through bridge financing
The main functions of loan appraisal department are:
Received investment proposal from sponsors
-place appraisal reports to the board
-apprise management on technical aspect of the projects
-prepare appraisal report on project appraisal committee
-issue sanction letters to the projects
-conduct meeting of the project appraisal committee
-To develop capital market
-placement of share and debenture
-participating in bond financing
-act as on debenture on behalf of the bondholder
3.15.17: Planning Research and Business Development:
In a simple term PRBD is the spokesman of ICB. Basically it is decision making decision. The major functions of this department are.
-to take part in the portfolio management decision
-collect information about OS Li, CS Li, public issue and half yearly accounts of the listed companies etc
-prepare and distribute annual report of ICB, Mutual funds and unit funds
-conduct meeting of the securities purchase and sales committee
-convey securities sales or purchase decisions to the merchandising division
-prepare 5 years performance appraisal reports of the listed companies
-prepare board memo regarding declaration of divisions on ICB’s own portfolio, unit and mutual fund
-make arrangement for offloading of government portion of shares in different companies and state owned institutions
-maintain liaison ministry of finance, Bangladesh Bank and provide ICB related information ton interested parties.
3.15.18: Public issue department:
Recently ICB has adopted certain strategic changes in sanctioning bridge loan to unsatisfactory recovery of loans sanctioned by corporation, bridge loan would only be considered for very selective sectors. Priority has given to direct underwriting, direct investment in debenture and equity participation through placement of share. The ultimate objective of providing direct underwriting and placement of shares is to help the projects to go for public issue.
3.15.19: Law department:
Law department handles any kind of legal affairs of ICB. The functions of this department are as follows:
-prepare legal document, advance agreements, share agreements, demand promissory notes, memorandum and deposit of little etc.
-arrange exception of underwriting-cum-advance agreement, underwriting agreement and supplementary documents etc.
-process litigation cases, prepare legal notice and refer cases to legal advises and coordinate with legal advisor in court.
-prepare necessary memos for placement in the board meeting related litigation and legal affairs
-handle the legal issue related to employee’s loan facilities and other issues related to law.
3.16. Capital Structure:
The particulars and capital structure of ICB are as follows-
(Tk. in Crore)
|Particulars||As on 30 June||Increase / decrease (Percentage,)|
|Long-Term Govt. Loan||5.25||5.25||–|
Fig3.16: Capital Structure of 2005 and 2004
3.17. Shareholding Position:
The shareholding position as on 30 June 2005 was as follows –