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Analyze of Prime Bank’s Banking System

EXECUTIVE SUMMARY Prime Bank Ltd. (“the Bank”) was incorporated as a public limited company in Bangladesh under Companies Act, 1994. It commenced its banking business with one branch from April 17, 1995 under the license issued by Bangladesh Bank. Presently the bank has 50 branches all over Bangladesh and booth at Dhaka Club, Dhaka. The Bank had no overseas branches as at 31 December 2006. Out of the above 50 branches , 05 ( five ) branches are designed as Islamic Banking Branch complying with the rules of Islamic Shariah , the modus operandi of which is substantially different from the other branches run on conventional basis . The bank is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicity traded company for its general class of shares. The principal activities of Prime Bank Ltd. are to provide all kinds of commercial services to it’s customers through it’s branches in Bangladesh, such as – granting loans and taking deposits from its clients. Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Keeping the network within a reasonable limit, our strategy is to serve the customers through capacity building across multi delivery channels. Our past performance gives an indication of our strength. We are better placed and poised to take our customers through fast changing times and enable them compete more effectively in the market they operate. Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. INTRODUCTION Bangladesh, a land endowed with rich natural resources and a deep-rooted cultural heritage has been steadily improving her socio-economic conditions since its independence in 1971. To bring her economy in line with other developing nations, it is continuously improving and implementing various monetary and fiscal policies. Various important steps towards financial reforms were initiated by the Government of Bangladesh to bring its economy in line with global expansion of the free market and international trading. To streamline the financial sector, the government introduced Financial Institutions Act 1993 (Act 27). As a result, a healthy and stable atmosphere has been created, allowing private sector finance companies to operate smoothly and profitably, in the emerging economy of Bangladesh. There are now 51 (fifty one) commercial banks of which 4 (four) are Nationalized Banks (NCB), 31 (thirty one) private sector commercial banks (PCB), 11 (eleven) foreign commercial banks (FCB), 5 (five) specialized banks and 20 (twenty) Development Financial Institutions (DFI). These banks are controlled by the Bank Companies Act 1991. The country also has 29 (twenty nine) Financial Institutions (FI), 29 (twenty nine) Merchant Banks, 6 (six) Manager to the Issue and one Issue Manager & Underwriter to promote its growing economy.


These institutions are governed by the Financial Institutions Act, 1993 and Merchant Banks & Portfolio Managers Regulation 1996 respectively. The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth. [1] However, there are traces of banking activity even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macula on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome- that of the Imperial Mint. In modern time, the banks are being divided into many categories depending on it’s structure , ownership , forms of business organization , function , clilents and income . One of it’s kind is the “Commercial Bank”. The term "commercial" was used to distinguish it from an investment bank. Since the two types of banks no longer have to be separate companies, some have used the term "commercial bank" to refer to banks which focus mainly on companies. In some English-speaking countries outside North America, the term "trading bank" was and is used to denote a bank. After the great depression and the stock market crash of 1929, the U.S. Congress passed the Glass-Steagal Act 1930 (Khambata 1996) requiring that commercial banks only engage in banking activities (accepting deposits and making loans, as well as other fee based services), whereas investment banks were limited to capital markets activities. This separation is no longer mandatory. And Commercial Banking is a process by which financial institution hold deposites from the clients by different types of account and provide different types of loans from these deposited amount . ORIGIN OF THE REPORT In our BBA program, we have course named Finance and Banking in which we are asked by our Lecturer & Course Teacher Md. Moniruzzaman Khan , to write a report on a particular bank and it’s functions to give a clear view of its activities . So, we have chosen Prime Bank limited to work on because Prime Bank ranks first among all the private bank according to the CAMELS rating and also it is also a reputed bank in Bangladesh. By doing this report on Prime Bank Limited we will get a clear picture of the commercial activities of a private bank. This report is going to help us in gathering not only theoretical but also practical knowledge about commercial banking science we had to approach personnel of the prime bank to get the information’s that were required for this report . OBJECTIVES OF THE REPORT The main objective of this report is to understand commercial banking of Prime Bank limited and to compare with other commercial bank to show how it’s commercial activities differ from other commercial bank. In this report we have also provided some suggestions to prime bank limited which we thought is are necessary to over come it’s lacking . SCOPE OF REPORT While doing this report we have taken all the branches of Prime Bank in Bangladesh under consideration. Our report covers commercial banking sector of Prime Bank not only of a particular area but also all over Bangladesh. By doing so, we have tried to put up a total picture of commercial banking sector of Prime Bank.


METHODOLOGY We have used both primary and secondary types of methodology in our report. In case of primary methodology we have collected facts about commercial banking of Prime Bank from Md. Rakibuzzaman, Management Trainee of Information Technology Division of Prime Bank, who was kind enough to provide us the required an essential data required for this report. We have collected secondary data from web sites. LIMITATIONS While preparing this report we faced some problems which acted as the barrier for us . 1 . First of all we would like to mention about the time limitation problem that we faced .While doing this report , we felt that time allotted to us was just not enough for us .We needed little more time to complete this report more properly . 2 . Then we would like to mention about the topic problem. After choosing the topic for the report , we realized that this particular topic needed to more coverage as this topic ( on Commercial Banking ) is a vast topic . But with the help and cooperation of all our group members, we were able to over this hurdle . 3 . The third problem was identifying whether to do this report on only one branch of Prime Bank Ltd . or to do on the Prime Bank Ltd as whole . 4 . Last y , we were not confident enough to approach the officials of Prime Bank Ltd . as this was our first time to approach the officials of any company or organization . LITERATURE REVIEW We can say that - A commercial bank is a type of financial intermediary and a type of bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses. Commercial Banks have various functions . A: General functions Receive deposits: The first and foremost function of commercial bank is to receive or collect depositing from the public. Generally, deposits are collected from the public in different forms of accounts e.g. current savings and term deposit accounts . No interest is charged in the current accounts lower rate of interest in the savings account and comparatively higher rates given in fixed deposits. This commercial bank builds up customer network. Accepting of Deposits. Deposits are an important source of a bank’s funds. They can broadly be classified into three categories. (a)Savings Deposits . These deposits are of small amounts and are accepted by banks to encourage persons of small means to make savings. Frequent withdrawals are not allowed. (b) Fixed Deposits. These deposits are made with the banks for fixed periods specified in advance. They are also known as term deposits.


(c) Current Deposits . These deposits are repayable on demand. The banks undertake the obligation of paying all cheque drawn against these deposits by the customer till they have adequate funds of the customer . The banks usually do not pay any interest in respect of such deposits. 2. Accommodate loans & advances: Commercial bank attaches much importance providing loans and advances at a higher rate than the deposit rates and thus earns profits on it. For expansion and smooth running of business working capital finance is given to the borrower . In the similar manner, commercial bank extends financial accommodation for the development of agriculture and industry. Credit accommodation is provided to he entrepreneurs and also for reviving sick and old industries as per govt. directives. Thus , commercial bank extends welfare service to the people at large. Lending of Money . A major portion of the deposits received by a bank is lent by it. This is also the major source of a bank’s income . However, lending money is not without risk and , therefore, a banker must take proper precautions in this process. The lending may be in any of the following forms: (a) Loan. It is a kind of advance made with or without security . It is given for a fixed period at an agreed rate of interest . The amount of loan is usually credited to the credit of the customer’s account who may withdraw from there as per his requirements. The loan may be secured or unsecured. (b) Cash Credit. It is an arrangement by which a banker allows his customer to borrow money up to a certain limit against security of goods. (c) Overdraft. It is an arrangement whereby a customer has been allowed temporarily to overdraw his current account. It is without any security. (d) Discounting and purchasing of bills are discounted while demand bills are purchased by the bank in both the cases the banks credit the account of their customers by the amount of bills less any discount or commission charged for such discounting or purchasing or the bills. 3. Create loan deposits: Commercial bank not only receives deposits from public and accommodates loans to public but also creates loan deposits. Example: while paying money in the from of loan deposits to the borrower’s account. The borrower does not withdraw the full amount at a time. The balance left in the account creates loan deposits. 4. Create medium of exchange: Sometimes in the past commercial bank used to issue notes. At present Central bank has got its exclusive right to issue notes. Of late, Commercial Bank creates medium of exchange by issuing cheques. Like notes, cheque is transferable and cheque is popularly transactions. 5. Contribute in foreign trades: Commercial bank plays a vital role on enhancing Imports and exports business in the country. Commercial Bank contributes much in the economy by financing both import and export and thus earns foreign exchange for the country. 6. Form capital: Commercial bank extends financial assistance for the formation of capital in the trade, commerce and industry in the country. Which ultimately expedites its economic development.


7. Create investment environment: Commercial bank plays a significant role in creating investment environments in the country. B. Public Utility Functions: In modern banking commercial bank executes public utility services Remit money Remittance of money to the public from one place to another is one of the functions of Commercial bank. Remittance of money is affected in the form of demand draft , mail transfer, telegraphic transfer through different branches and correspondents home and abroad. 2. Help on trade and commerce: Commercial bank helps in expanding trade and commerce. In inland and foreign trade customers are allowed credit accommodation in the form of letter of credit ,bills purchased and discounted etc. 3. Safe custody of valuables: Commercial bank introduces ‘Lockers’ service to the customers for safe customer of valuables documents, shares & securities etc. 4. Help in foreign exchange business: While opening letter of credit commercial bank obtains report of the suppliers and thus help in expending import &export business. 5. Act as a referee: Commercial band acts as a referee for on behalf of the customers. 6. Act as an adviser: Commercial bank provides valuable advice to the customers on the feasibility of business and industry. 7. Collect utility-service bills: As a social commitment , commercial bank collects utility service bills e.g. water, electricity gas , telephone etc. from the public. 8. Purchase and sale of prize bonds, sanchaya patra etc. Commercial bank undertakes to purchase and sale of sanchaya patra and prize Bonds as part of social commitments. 9. Help people traveling abroad: Commercial bank helps customers in traveling abroad through issuance of travelers cheques, draft etc. C. Agency Functions: Besides above stated functions commercial bank acts as a representative of the customers 1.Collection and payment: Commercial bank collects and pays values of cheque, bill of exchange , promissory notes, pension, dividends, subscription, insurance premium , interest etc. on behalf of the clients. Purchase and sale of shares and securities: Commercial bank is entrusted with the responsibility of purchase and sale of shares and securities on behalf of the customers . Maintenance of secrecy: Maintenance of secrecy is one of the most important functions of commercial bank.


4.Act as a trustee: Commercial bank acts as a trustee on behalf of the customers. 5. Economic development and welfare customer Commercial bank contributes much for the welfare and economic development of the country. Creation of deposit by loan of commercial bank: Through credit extending Through bill discounting Through O/D Through investment

Documents / Instruments of commercial bank loans: Promissory note Bill of lading Warehouse receipt Trust receipt Shares and debentures Others assets and policy Sources of fund of commercial bank: Paid up capital Reserve fund Collection of deposit Borrowing PROJECT PART Introduction In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, Prime Bank Ltd. was created and commencement of business started on 17th April 1995. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile and finance to energy etc. As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a highly professional and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it repositions itself in the changed market condition. Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation. Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail


Banking and Consumer Banking right from industry to agriculture, and real state to software. The bank has consistently turned over good returns on Assets and Capital. During the year 2006, the bank has posted an operating profit of Tk. 2131 million and its capital funds stood at Tk 4409.21 million. Out of this, Tk. 1750 million consists of paid up capital by shareholders and Tk. 2659.21 million represents reserves and retained earnings. The bank’s current capital adequacy ratio of 9.95% is in the market. In spite of complex business environment and default culture, quantum of classified loan in the bank is very insignificant and stood at less than 0.82%. Prime Bank Ltd., since its beginning has attached more importance in technology integration. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Keeping the network within a reasonable limit, our strategy is to serve the customers through capacity building across multi delivery channels. Our past performance gives an indication of our strength. They are better placed and poised to take Their customers through fast changing times and enable them compete more effectively in the market they operate. Prime Bank also has a branch named as Prime Exchange Pte in Singapore to provide its banking facilities there


BRANCHES We have 61 existing branches and some other proposed branch all over the Bangladesh to provide better service to our valuable customers. Some of the branches in Dhaka is given below

Motijheel Branch Adamjee Court Annexe Building-2 119-120, Motijheel C/A, Dhaka-1000. Phone : (02) 7175491-2, 9567225 Fax : 88-02-9567223 Telex : 671543 PBLMJ BJ SWIFT: PRBLBDDH001 Email : mukter@prime-bank.com

Foreign Exchange Branch Al-Haj Mansion 82,Motijheel C/A, Dhaka -1000. Phone : (02) 9551682, 9564976 Dhaka Club Booth: (02) 8627138 Fax : 88-02-9553078 SWIFT: PRBLBDDH019 Email : pblfebl@yahoo.com

Islamic Banking Branch

Mohakhali Branch

19, Dilkusha C/A, Dhaka -1000. Phone : (02) 9567227, 7169071 Fax : 88-02-9567228 Telex : 671560 PBLIB BJ SWIFT: PRBLBDDH005 Email : primeibb@dhaka.net

69, Mohakhali C/A, Dhaka-1212 Phone : (02) 9882291, 8826483 Fax : 88-02-9888873 Telex : 632355 PBLMK BJ SWIFT: PRBLBDDH007 Email : pblmhk@gmail.com

Kawran Bazar Branch 54, Kawran Bazar C/A, Dhaka-1215. Phone : (02) 9145394, 9145397 Fax : 88-02-9129004 Telex : 671595 PBLKB BJ SWIFT: PRBLBDDH010 Email : primekrn@dhaka.net

Mouchak Branch Manhattan Tower (1st Floor) 83, Siddheswari Circular Road, Malibagh, Dhaka-1217 Phone : (02) 9338883, 9347757 Fax : 88-02-9338883 SWIFT: PRBLBDDH013 Email : primemou@cyberbangla.net

Elephant Road Branch Ananta Plaza 136, Elephant Road, Dhaka-1205 Phone :(02) 9662776-7, 9673786, 9673783 Fax : 88-02-8622591 Telex : 642430 PRMER BJ SWIFT: PRBLBDDH011 E-mail: primeele@bol-online.com

Gulshan Branch Plot # 01, Block # CEN(H), Road # 109 Gulshan Avenue, Dhaka-1212 Phone : (02) 9886171, 9890898, 8829975, 8815885 , 9862937 Fax : 88-02-8820276 Telex : 642447 PBLGL BJ SWIFT: PRBLBDDH016 Email : primegl@cyberbangla.com

Bangshal Branch

Narayanganj Branch


Uttara Branch House # 2/A (1st Floor), Road # 13, Sector # 4, Uttara Model Town, Dhaka.-1230 Phone : (02) 8916233, 8924248 Fax : 88-02-8924248 SWIFT: PRBLBDDH021 Email : hanifprime@yahoo.com

Sat Masjid Road Branch House No: 99 (1st floor), Road No: 11/A,

New Eskaton Branch 133, New Eskaton Road, Dhaka Phone : (02) 9354044, 9354738 Fax : 88-02-9359683, 9354044 Telex : 632189 PBNEB BJ Email : primeneb@bttb.net.bd

Madhabdi Branch Plot # 17, Madhabdi Bazar, Narsingdi-1604. Phone : (06257) 56682 Fax : 88-06257-56683

Banani Branch House # 62, Block # E, Kemal Ataturk Avenue, Banani, Dhaka-1213. Phone: (02) 8852899, 8850329, 8815754 Fax : 88-02-8853616 SWIFT: PRBLBDDH020 E-mail: primebanani@banglamail.net

Islamic Banking Branch Mamoni Tower, 1244, East Monipur, Begum Rokeya Sarani,

Pragati Sarani Branch

Shimrail Branch Haji A. Rahman Super Market (1st Floor) Holding No. 96, Shimrail Morr, Chittagong Road Chowrastha, P.O.Sanarpar, P.S.- Siddirgonj, Narayangonj Phone: (02) 7607013, 7691670,7691671 Fax : 88-02-7691671

Facilities Tower, Kha-199/2 Maddhya Badda, Dhaka. Phone: (02) 8860685, 8860689 Fax : 88-02-8860685 Email : primepragati@yahoo.com

Dhanmondi R/A, Dhaka-1209 Phone : (02) 9122374, 8124258 Fax : 88-02-8121652 SWIFT: PRBLBDDH023 Email : primedhn@gmail.com

Mirpur, Dhaka-1216. Phone: (02) 8057681-2, 8058371 Fax : 88-02-8075441

Asad Gate Branch Family World Tower, 2/6 Sir Syed Road Mohammadpur (Mirpur Road) Dhaka. Phone: (02) 9144646, 8142106, 8142134 Fax : 88-02-9125400 Email : pblasad@yahoo.com

Tongi Branch

Panthapath Branch Firoz Tower, 152/3B, Green Road, Panthapath, Dhaka-1205 Phone: (02) 8128100, 9142879, 8152852

Dhanmondi Branch Momtaz Plaza (1st floor) House No # 7, Road No # 4 Dhanmondi R/A, Dhaka

Sena Kalyan Commercial Complex 9/F, Tongi, Gazipur Phone: (02) 9813835, 9813874


Email : pblpath@bdmail.com

Phone: (02) 8622304, 9662704 Fax: 88-02-9662705

SBC Tower Branch Sadharan Bima Tower (Ground Floor) 37/A, Dilkusha C/A Dhaka Phone: (02) 9561221, 9559943 Fax: 88-02-9564189

Jaydevpur Chowrasta Branch Shapla Mansion (1st Floor) Joydevpur Chowrasta, P.O. Chandana Dhaka-Tangail Road, Gazipur Phone: (02) 9264142, 9264103, 9264135 Fax: 88-02-9264097

Mirpur-1 Branch Rabiul Plaza (1st Floor) Plot # Shee-1/Kha, Section -1 Mirpur, Dhaka-1216 Phone: (02) 8034126

Tangail Branch, Tangail Word No: 6 Holding No: 414-417 Main Road P.S + P.O: Tangail Dist: Tangail

Management & Human Resource Prime Bank Limited recrutes very efficient and able persons . Their personnels are mentioned below – Mohammed Aminul Hoque Chairman Quazi Sirazul Islam Vice Chairman In Management , Prime Bank Ltd has – M. Managing Director

Shahjahan

Bhuiyan

Nasiruddin Ahmed Additional Managing Director

Mahbubul Alam Deputy Managing Director R.Q.M Forkan Deputy Managing Director M. Shahidul Islam Senior Executive Corporate Credit Operation & Corporate Marketing Md. Mukhter Hossain Senior Executive Vice President Md. Mehmood Husain

Vice

President


Senior Executive Vice President Ahmed Kamal Khan Chowdhury Senior Executive Vice President Financial Administration Manash Kumar Ghosh Executive Vice President Board Secretary In Board of Directors , Prime Bank Ltd has – Azam J. Chowdhury Chairman Shahnaz Quashem Vice Chairperson Hasina Khan Vice Chairperson Mohammed Aminul Hoque Director Quazi Sirazul Islam Director Capt. Imam Anwar Hossain Director Qazi Saleemul Huq Director Razia Rahman Director Ferdousi Islam Director Nafis Sikder Director Saheda Pervin Trisha Director Mohammed Delwar Hossain Director Maksudur Rahman Sarkar Director M. Shahjahan Bhuiyan Managing Director Financial Products and services: Deposit Products: Contributory Savings Scheme


Monthly Benefit Deposit Scheme Special Deposit Scheme Education Savings Scheme Fixed Deposit Scheme Prime Bank Money Scheme Prime Bank Insured Fixed Deposit Scheme Saving Deposit Account STD Account Multi Currency Account Foreign Currency Deposit Account Non Resident Taka Account NFCD(Non Resident Foreign Currency Deposit Account) NITA (Non Resident Investor’s Taka Account) Loan Products: Consumers’ Credit Scheme Lease Finance Hire Purchase Small and Medium Enterprise Credit Scheme Loan Against Shares and Securities House Building Financing Scheme Financing Scheme For Contractors Computer Software Financing Scheme Prime Bank Maser Card Credit Card Prime Bank VISA Credit Card Working Capital Financing Import Financing Export Financing Industrial Financing Other Products/Services: Online Banking Services SWIFT Services L/C Delivery Services Locker Services PROGRESSION OF PRIME BANK Ltd. Performance at a glance ( Taka in Million)


Particulars Income Statement Interest Income Interest Expense Net Interest Income Non-interest Income Non-interest Expense Net Non-interest Income Profit before provision and tax Provision for loans and assets Profit after provision before tax Tax including deferred tax Profit after tax Balance Sheet Authorized Capital Paid-up Capital Total Shareholder's equity Deposits Long-term liabilities Loans and advances Investments Property, Plant and Equipment Earning Assets Net current assets Total assets Current ratio Debt equity ratio Other Business Import Export Remittance Guarantee Business Inland letter of credit Capital Measures Total risk weighted assets Core capital (Tier-I) Supplementary capital (Tier-II) Total Capital Tier-I capital ratio Tier-II capital ratio Total capital ratio Credit Quality Non performing loans (NPLs) % of NPLs to total loans and advances

2002

2003

2004

2005

2006

1620 1055 565 631 448 183 748 51 697 279 418

2159 1408 751 841 591 250 1001 232 770 394 375

2641 1616 1025 946 824 121 1146 82 1064 452 612

3446 2271 1175 1232 886 346 1520 320 1201 633 568

5199 3698 1500 1732 1101 631 2131 390 1741 689 1052

1000 600 1526 16482 5350 12687 1996 219 15125 437 19359 1.00 8.56%

1000 700 1732 20483 7052 16492 2750 256 19335 583 24249 0.96 8%

1000 1000 2240 28069 7371 23220 3084 322 27131 (1299) 32362 1.06 7%

4000 1400 2808 36022 11406 31916 3940 372 36727 31 41506 1.00 7%

4000 1750 3860 54724 16877 45010 7844 412 55458 5286 60899 0.88 7%

19564 12190 1252 3659 1523

25441 16490 3063 4248 3729

36747 19502 2140 4085 4267

40303 28882 3688 5303 5405

52639 41801 15050 5386 10174

13389 1526 139 1665 11.409 1.04 12.44

16455 1782 176 1958 10.83 1.07% 11.90%

23050 2240 236 2476 9.72 1.02 10.74

31890 2808 369 3177 8.80 1.16 9.96

44324 3860 549 4409 8.71 1.24 9.95

188.22 1.48%

326.53 1.98%

352.73 1.52%

308.21 0.96%

367.15 0.82%


CAMELS Rating among the Commercial Banks


The bank has been categorized as “1” rated Bank under Capital, Asset, Management, Earnings & Liquidity (CAMELS) Rating by the Bangladesh Bank and Composite status is rated as "Strong" Last year . RATING RATIONALE Prime Bank has been profitable since the first year of its operations. Profits were low in 1998 as the bank incurred losses on its stock market operations. Management described this as a ‘learning experience’ and has since refrained from stock trading activities. Indeed the bank’s profitability has been exceptional compared with its Bangladeshi counterparts, and it reported an average ROE of 41% (ROE at end-2002 was 30%) between 1999 and 2002. We were informed that the ‘promoter shareholders’ expect the bank’s ROE to be around 30%, and unless the bank gets into trouble due to unforeseen reasons, management expects to deliver similar returns over the next few years. Similarly, Prime Bank’s ROA (2.34% in FY02, and close to or above 3% in previous years) was significantly superior to most other local banks. Net Interest Revenue: Prime Bank’s net interest income has ranged between 43% and 47% of total income for the past four years (47% in 2002). This seems relatively low for conventional commercial banks in developing countries, where such proportion is usually around 70-75%. One reason for this is that the bulk of the bank’s customers are exporters, which enjoy relatively low rates of export finance, but the customer relationships are nevertheless remunerative for the bank as it also earns reasonable amount of fee income (discussed in subsequent paragraphs). Besides relatively low loan yields, cost of funds is also relatively higher for private banks compared with government banks. Even so, Prime Bank’s net interest margin at around 3.5% is satisfactory, particularly compared with the state banks whose NIM is either negative or only marginally positive on account of the large no accrual drag due to their poor asset quality. Non-Interest Income: Prime Bank’s non-interest income has historically been more than 50% of its total income. Thanks to the fact that export finance is a large part of its business, the bank is able to realize relatively large amount of foreign exchange gains due to a healthy spread between the customer quotes and the inter-bank foreign exchange market. Exchange gains constituted 28% and 37% of the bank’s non-interest income in FY02 and FY01. The bank also earns reasonable amounts of commission on letters of credit, bills and guarantees and such commissions constituted nearly 29% of the bank’s non-interest income in FY02. Interestingly, interest income on the bank’s treasury bills portfolio is not booked as interest income but as ‘income from investments’. This further tends to boost the share of non-interest income; if such an adjustment were to be made to the bank’s FY02 numbers, net interest income would approximate 58% of total income, instead of the reported 47%. Operating Expenses: The bank’s operating expenses have been rising in line with the growth in its businesses, and salaries in particular rose by 36% during FY2002. While personnel expenses as a proportion of average earning assets were about 1.5% (similar to that of state banks which are hugely overstaffed but much larger in size), Prime Bank’s cost-income ratio at 38% was much lower than that of government banks (around 90%), or even most of the other private banks. Operating expenses may however rise as the bank attempts to improve its technological capabilities and expand its retail banking activities. The bank has a budget of BDT150m for its IT initiatives, which include adding alternate delivery channels such as on-site ATMs (and off-site ATMs in about two years) and phone banking and Internet banking. The bank is also currently working on changing its core banking platform and telecommunication systems. Despite an absolute rise in operating expenses, with net income continuing to grow at reasonable rates, the bank’s cost-income ratio should nevertheless not substantially exceed 40% in the near-term. Loan Loss Provisions: Prime Bank debited an identical amount of BDT 51m as loan loss provisions in FY02 and FY01 (specific provisions were BDT 15m in 2002 and BDT 30m in 2001). With an asset quality that is excellent by Bangladesh banks’ standards, Prime Bank’s loan loss provisions are modest and have rarely the past five years (0.46% in 2002 and 0.6% in 2001). Similarly, loan loss provisions as a proportion of preposition profits have typically been below 10% (except in FY2000 when they were 11.22%); they were 6.7% in 2002. Unless Prime Bank’s asset quality unexpectedly deteriorates significantly, the Banks


Prime Bank: December 2003-4 bank’s loan loss provisions should remain modest in the near to medium term. Half-Yearly Results: Bangladeshi banks report extremely brief half-yearly results (which are unsuited) and therefore, their utility is somewhat limited. Even so, Prime Bank’s financial results as at June 2003 indicate that the bank continued to grow rather rapidly; loans grew by an annualized 30% since end-2002 and profits before tax were almost76% of the full years’ profit in 2002. The NPL ratio too rose slightly to 1.89%, but as mentioned elsewhere in the report, this is extremely low compared with that of most other local banks. Prospects: Size is a crucial issue in banking and Prime Bank, being a very small bank has its limitations. With an equity base of only BDT 1.5bn (USD 26mn), Prime Bank does not have the critical mass to cater to large borrowers or expand its business (including its proposed consumer banking initiatives) beyond a certain level. To be fair, the bank has so far done an excellent job in catering to the requirements of its traditional customers, the small to medium exporters, despite operating in a challenging environment. The bank has tentative plans to strengthen its equity to BDT 5bn, but the time frame is somewhat uncertain, and it is unclear whether it will be through fresh equity infusion, or through retained earnings over the years. As for all Bangladeshi private banks, Prime Bank’s shareholders are individuals, and their ability to infuse large amounts of capital is unclear. Nevertheless, in the near-term, Prime Bank should continue to perform satisfactorily, even as its high growth rate (albeit from a smaller base) is a slight concern. However, it is difficult to comment on the longer-term prospects of the bank (three years and beyond). Although there is some recognition amongst policy makers that there were too many (private) banks in the country, and a consolidation at some stage may be desirable, their near-term priority seems to be to address the huge asset quality problems of the state banks, and possibly privatize some of those. Therefore, consolidation amongst private banks does not appear likely over the next 23 years. BUSINESS DESCRIPTION Prime Bank is among the best of Bangladeshi banks. Our Individual rating reflects its reasonably sound financial condition but also its relatively short history, as well as the challenging operating environment in Bangladesh. Although it has grown rapidly since its inception, it has maintained a far healthier financial profile than the problematic state banks or other private banks. PB has been profitable since its first year of operations. Profits were low in 1998 when the bank incurred losses on its ill-timed stock market investments, but PB has reported an average ROE of 41% (2002 ROE: 30%) between 1999 and 2002. The fact that the average inflation in Bangladesh has been around 6% during this period, the bank's real return has been strongly positive. PB's asset quality is remarkable compared with its peers. The banking system average NPL ratio has been around 35% in recent years, and even for the private banks it has been around 20%. Prime Bank's NPL ratio in contrast was just 1.48% at end-2002 (1.89% at June 2003) and has rarely been above 2% in the past. The bank maintains higher loan loss provisions than regulatory stipulations, and its NPLs were 73% covered by specific reserves at end-2002 (more than 100% in 2001). Together with general reserves, which were nearly 1% of unclassified loans as at end-2002, total reserves covered 135% of the bank's NPLs. However, PB's NPL ratios are somewhat flattered by the dilution effect of its rapid loan growth, which has averaged about 35% between 1999 and 2002. Also, inclusive of restructured loans, the bank's NPL ratio at June 2003 may be about 2.5%, but nevertheless, extraordinarily low compared with its peers. On the negative side, nearly 72% of the bank's NPLs (which grew by 86% in absolute terms during 2002) are in the 'loss' category, but as


noted above, our concerns are somewhat muted thanks to the bank's ample reserves. PB is well capitalized by local standards with a Total CAR of 12.43% (although this ratio has been declining since 1999) and an equity to assets ratio of 7.6% at end-2002. Prime's low-cost customer deposits are understandably smaller compared with larger banks, but with about 22% of its assets deployed in government securities and deposits with banks, its liquidity position appears satisfactory. PB is primarily a corporate bank focusing on trade finance. Its loan distribution is about 40% towards large companies, 35% to SMEs, and 10% to small companies. Consumer lending is very small. FINANCIAL ANALYSIS The financial position of Prime Bank Ltd. is quite remarkable. Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. The progression of Financial position of Prime Bank Ltd. is explained in the next pages with the help of Balance Sheet and some other important documents.

COMMERCIAL banking DEPARTMENT Types of Account: Prime Bank Ltd. has the following types of accounts: Current Account Savings Account Fixed Deposit Account Procedure to open an Account To open an account, firstly the an account holder have to apply for opening an account by filling up account opening form. Account opening form consists of the name of the branch, type of account, name of the applicant(s), present address, permanent address, passport number (if any), date of birth, nationality, occupation, nominee(s), special instruction (if any), initial deposit, specimen signature(s) of the applicant(s), introducer’s information etc. The customer should be properly inform the followings: An existing customer of the bank. Officials of the bank not below the rank of Assistant Officer. A respectable person of the locality who is well known to the manager or authorized officer. Two copies of passport size photograph duly attested by the introducer. Signature of the prospective account holder in the account opening form and on the specimen signature card duly attested by the introducer. Then the concerned authority will allocate a number for the new account. The customer than deposit the “initial deposit” by filling up a deposit slips. Initial deposit to open a current account in PBL is Tk. 10000.00 and saving account is Tk. 5000.00.


After depositing the initial deposit, the account is considered to be opened. PBL maintains all of its accounts in computer. After depositing the initial deposit, PBL records it in the computer by giving new account number. Then it issues cheque book requisition slip by the customer. Then it distributes all relevant papers to respective department. Types of deposits There are various types of deposits taken by Prime Bank form general public, some of which are given belowContributory Savings Scheme Education Savings Scheme Short Term Deposit Double Benefit Deposit Scheme Resident Foreign Currency Deposit Account Non-resident Taka Account House Building Deposit Scheme Monthly Benefit Deposit Scheme Fixed Deposit Scheme Lakhopati Deposit Scheme Foreign Currency Account Non-resident Foreign Currency Deposit Account Prime Millionaire Scheme Contributory Savings Scheme This is a Savings Scheme in which a person gets the opportunity to build up savings by contributing monthly installments and receives an attractive fixed amount at the end of a specified term. The Scheme is designed to help the fixed income group to save money and build up a sizable funds with which they can go for some income generating venture to improve the quality of their life and/or meet any future financial obligations. The salient features of the Scheme are given below: 1. Minimum size of monthly installment shall be Tk. 500/- and multiplies of Tk. 1000/-. Maximum installment size shall be Tk. 25,000/2. The Deposit shall be for a period of 5 years. 3. Lump sum amount shall be paid after maturity or monthly Pension shall be paid for the next 5 years according to the size of deposit. A brief chart of lump sum amount and monthly pension installments payable are shown below: Size of monthly deposit (Taka)

Terminal value after 5 years Pension for next 5 years (Taka) (Taka)

500/-

40,000/-

870/-

1,000/-

80,000/-

1,739/-

2,000/-

1,60,000/-

3,478/-

3,000/-

2,40,000/-

5,217/-

4,000/-

3,20,000/-

6,956/-

5,000/-

4,00,000/-

8,695/-


6,000/-

4,80,000/-

10,434/-

7,000/-

5,60,000/-

12,173/-

8,000/-

6,40,000/-

13,912/-

9,000/-

7,20,000/-

15,651/-

10,000/-

8,00,000/-

17,390/-

11,000/-

8,80,000/-

19,129/-

12,000/-

9,60,000/-

20,868/-

13,000/-

10,40,000/-

22,607/-

14,000/-

11,20,000/-

24,346/-

15,000/-

12,00,000/-

26,085/-

16,000/-

12,80,000/-

27,824/-

17,000/-

13,60,000/-

29,563/-

18,000/-

14,40,000/-

31,302/-

19,000/-

15,20,000/-

33,041/-

20,000/-

16,00,000/-

34,780/-

21,000/-

16,80,000/-

36,519/-

22,000/-

17,60,000/-

38,258/-

23,000/-

18,40,000/-

39,997/-

24,000/-

19,20,000/-

41,736/-

25,000/-

20,00,000/-

43,475/-

4. At present Income Tax on interest will not be applicable but in future for any change in Govt. rule of taxation, the Bank reserve the right to deduct Income Tax. 5. The depositor will have the option to choose any installment size at the time of opening of an Account and will not be allowed to change the size of installment afterwards. 6. Account in the name of minors can be opened too under the Scheme. 7. A person can open more than one account for different size of installments at any branch of the Bank. 8. The specified amount on maturity at any slab shall be paid after one month from the date of deposit of the final installment. 9. Normally savings due to certain unavoidable reasons before 5 years, he/she will be allowed to do so, in the following manner: (a) No benefit or interest shall be allowed for pre-mature encashment within one year. (b) If the account is closed after one year of its opening, interest shall be allowed on the deposit at prevailing Savings Deposit rate.


10. The monthly installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installments is acceptable. 11. When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or maximum Tk. 500/-. 12. When a depositor fails to pay 3 (three) consecutive installments at any point before five years term, the customer will cease to remain within the purview of the scheme and scheme will be treated as a Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB account rate subject to completion of 1 (One) year of its opening. 13. Loan may be allowed up to 80% of the deposited amount against lien on the same after at least 2 (Two) years of regular payment of installments and minimum limit of the loan shall be Tk. 50,000/-. 14. In case of death of a depositor, the account will cease to be operative and the amount deposited so far shall be paid to the nominee, and in absence of nominee, to the legal heirs of the deceased as per rules in force. 15. The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme. 16. The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service. 17. Normally no statement of the account will be served to the depositor, in case of need of any depositor, charge @ Tk. 10/- per year / per statement shall be realized as cost of paper. 18. At the time of opening account under CSS customer shall refer his/her SB account number for transferring his/her pension amount or may open SB A/C at the time of maturity for getting monthly pension amount. Education Savings Scheme The educational expenses particularly the expenses for higher education are sharply increasing day by day in our country. Sometimes, the children are deprived of getting the desired level of education because of the inability of the parents to meet their educational expenses. But the parents would not feel any difficulty to defray such expenses if a proper financial planning is made much ahead of time. Moreover, we are receiving demands from the Islamic minded people of our country for an attractive Savings Scheme on the basis of Islamic Sariah so as to encourage them to save in Islamic way for education of their children. With this end in view, Prime Bank Limited has introduced a Savings Scheme entitled “Education Savings Scheme� in accordance with the principles of Islamic Sariah i.e., on the basis of profit and loss sharing. The scheme provides a unique opportunity to the parents to make a future provision for the educational expenses of their children when they enter into Schools, Colleges and Universities out of the benefit of a small amount of savings with the Bank at an opportune moment. The salient below: features of the Scheme are given 1. The Scheme shall be implemented through all our branches, though it is specially designed for Islamic Banking branches. 2. Deposit of Tk. 50,000/- and multiples thereof but maximum limit of Tk. 5,00,000/- at a time will be acceptable under the Scheme. 3. A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR. Branches shall use the ESS receipts that used for existing scheme.


4. The instrument shall be issued for a period of 5 years term. 5. On maturity a lump sum amount of Tk. 85,382/- shall be payable or education allowance @ Tk. 1,854/- per month per Tk. 50,000/- shall be payable on the basis of deposit amount for next 5 years starting from the completion of the term as per following table. Income Tax @10% on interest may be deducted at source at the time of payment of lump sum amount. Initial Deposit (Taka) 50,000/1,00,000/1,50,000/2,00,000/2,50,000/3,00,000/3,50,000/4,00,000/4,50,000/5,00,000/-

Lump sum amount payable atAmount of Education maturity (Taka) allowance per month (Taka) 85,382/1,854/1,70,763/3,705/2,56,145/5,558/3,41,526/7,410/4,26,908/9,263/4,69,704/11,115/5,47,988/12,968/6,26,272/14,820/7,04,556/16,673/7,82,840/18,525/-

6. To avail the monthly allowances the depositor is required to surrender the savings instrument to the Bank duly discharged with a written instruction to the Bank to pay the installments to his ward on monthly installment basis as stipulated in the scheme. 7. Separate Application form specially designed for the purpose shall be obtained duly filled in and signed by the depositor. 8. Photograph of the Nominee and Ultimate Beneficiary, if any, duly attested by the depositor, shall be obtained at the time of opening the account. 9. Normally no withdrawal will be allowed before maturity. But if any depositor intends to withdraw his/her deposit before maturity, the following rules will be applicable: (a)No benefit including interest shall be allowed for pre-mature encashment within one year. (b)If the accounts/deposits are closed/enchased after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate. 10. The instrument will be acceptable as collateral security against any investment subject to registering lien with the issuing Branch. 11. In case of death of the depositor, the amount of instrument will be paid to the nominee or, in the absence of a nominee, to the legal heirs of the depositor on production of succession certificate. 12. But if the nominee after the demise of the depositor intends to continue the deposit to enjoy the monthly educational allowance for five years, as admissible under the rules of the scheme, the receipt should be surrendered to the Bank on maturity duly discharged by the nominee and duly authenticated by the legal guardian. 13. In case of instrument is lost the procedure for issuance of the duplicate will be the same as applicable in case of loss of FDR.


Short Term Deposit 1. A short term deposit (STD) account is a running account with amounts being paid into and drawn out of the account continuously. 2. These accounts are called Demand Deposits or Demand Liabilities banker is under since the obligation to pay the money in deposits on demand. such 3. These accounts are generally opened by Business Organization, Public Institution, Corporate Bodies. 4. An STD account may be opened by an individual person. 5. It is an interest bearing deposit. Interest is calculated on daily basis as per Banks Prescribed Rate and is credited to account on half yearly basis. Current interest rate on STD account is presented in the following table Particulars Interest Rate Below Tk. 1 crore 5.00% Tk. 1 crore and above 6.00% N.B. Senior Citizen will get 0.50% higher rate than usual. Double Benefit Deposit Scheme 1. The Scheme shall be implemented through all the branches of Prime Bank Limited. 2. Deposit of Tk. 25,000/- (Taka twenty five thousand) and multiplies thereof but maximum limit of Tk. 25,00,000/- (Taka twenty five lac) at a time will be acceptable under the scheme. 3. The instrument shall be issued for 06 (six) years term. 4. At maturity after 06 (six) years double the amount of deposit will be paid to the depositor. 5. Photograph of Nominee, duly attested by the depositor, shall be obtained at the time of opening the account. 6. No benefit including interest/profit shall be allowed for pre-mature encashment within one year Normally no withdrawal will be allowed before maturity. But if any depositor intends to withdraw his deposit before maturity, the following rules will apply: (a) No benefit including interest/profit shall be allowed for pre-mature encashment within one year. (b) If the accounts / deposits are closed / encashed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate. 7. The instrument will be acceptable as collateral security against any investment subject to registering lien with the issuing branch. 8. In case of death of a depositor, the amount of instrument will be paid to the nominee, to the legal heirs of the depositor on production of succession certificate. 9. In case of instrument is lost the procedure for the issuance of a duplicate receipt will be the same as applicable in case of loss of FDR. 10. Under the scheme depositor can get free insurance facility. 11. Insurance coverange is only applicable to personal accident and serious illness related insurance policy.


12. At present no income tax will be deducted from the interest earned. But in future for any change in the government policy Bank reserves the right to deduct income tax. Resident Foreign Currency Deposit Account Persons ordinarily resident in Bangladesh may open and maintain Resident Foreign Currency Deposit (RFCD) accounts with foreign exchange brought in at the time of their return from travel abroad. Any amount brought in with declaration to Customs Authorities in form FMJ and up to US$ 5000 brought in without any declaration can be credited to such accounts. Proceeds of export of goods or services from Bangladesh or commission arising from business deals in Bangladesh shall not be credited to such accounts. Balances in these accounts shall be freely transferable abroad. Fund from these accounts may also be issued to account-holders for the purpose of their foreign travels in the usual manner (i.e. with endorsement in passport and ticket, upto US $ 1500 in the from of cash currency notes and the remainder in the form of TC).. These accounts may be opened in US Dollar, pound sterling, Euro or Japanese yen and may be maintained as long as the account holders desire. Interest in foreign exchange shall be payable on balances in such accounts if the deposits are for a term of not less than one month and the balance is not less than US$ 1000 or ÂŁ 500 or its equivalent. The rate of interest shall be one quarter percent (0.25%) less than the rate at which interest is paid on balances of bank in their foreign currency clearing accounts maintained with Bangladesh Bank. Non Resident Taka Account The Taka accounts maintained with banks in Bangladesh by private individuals, firms and companies resident outside Bangladesh are known as Non-resident Taka Accounts. The accounts of foreign nationals residing in Bangladesh and foreign firms and companies located and operating in Bangladesh and accounts of U.N. and its organizations are, however, treated as resident accounts and kept outside the scope of Exchange Control. The accounts of Bangladesh nationals who leave the country except those who hold office in the service of Bangladesh Government are required to be treated as non-resident Taka account so long they remain outside Bangladesh. Prior permission of Bangladesh Bank is necessary for opening non-resident Taka accounts Non-resident Taka account may, however, be opened without prior permission of Bangladesh Bank for crediting the proceeds of remittances received from abroad through normal banking channel. House Building Deposit Scheme The salient features of the Scheme are given below: 1. The tenor of the House Building Deposit Scheme will be 5/7/10 years. 2. Minimum Equity building amount shall be Tk. 10.00 lac.


Size of monthlySize of monthlyInvestment Tenor (inAge Limit deposit in Tk.deposit in Tk.Year) (in Year)* (without Insurance) (with Insurance)

After the investment Tenor the terminal value of the Scheme (in Taka)**

4,570/-

4,705/-

10

18 to 35

1,000,000/-

7,890/-

8,045/-

7

18 to 38

1,000,000/-

12,465/-

12,640/-

5

18 to 40

1,000,000/-

9,135/-

N/A

10

18 to 35

2,000,000/-

15,770/-

N/A

7

18 to 38

2,000,000/-

24,925/-

N/A

5

18 to 40

2,000,000/-

1. Age upper limit will be applicable for HBL facilities only 2. Insurance Coverage will be restricted to terminal amount of Tk. 1,000,000/-(Taka Ten Lac) only, here the age limit will be from 18 years to 60 years. 3. Income Tax on interest amount shall be as per Government rule on taxation and the Bank reserves the right to deduct Income Tax. 4. The depositor will have the option to choose any installment size at the time of opening of the A/C. and will not be allowed to change the size of installment afterwards. 5. Account in the name of minors can be opened too under the Scheme but without insurance coverage. 6. A person can open more than one account but House Building Loan facility shall be on one account only. 7. The installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installments is acceptable. 8. Normally no withdrawal shall be allowed before maturity, if any depositor intends to withdraw his/her equity due to certain unavoidable reasons before maturity, following should be applicable for accounts covering insurance: (a) On or before completion of one year , No interest (Saving) shall be paid and Advance Insurance Premium paid to the Insurance Company shall be deducted from the final settlement. (b)On or before completion of two years, No interest (Saving) shall be allowed and No deduction will be made. (c)On completion of three (03) years, Saving Interest rate on the deposited amount may be allowed for accounts not covering any insurance: (a) On or before completion of one year , No interest (Saving) shall be paid.


(b) After completion of one year Saving Interest rate on the deposited amount may be allowed. 9. When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or maximum Tk. 500/10. When a depositor fails to pay 3 (Three) consecutive installment at any point of time before 2 years term, the customer will cease to remain within the purview of the scheme and scheme will be treated as a Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB A/C rate subject to completion of 1 (One) year of its opening. 11. HBL facility shall be considered on maturity upon application up to three times the equity but not exceeding Tk. 50.00 lac on compliance of loan formalities. 12. In case of death of a depositor, the A/C. will cease to be operative and the amount deposited so far shall be paid to the nominee, and in the absence of nominee, to the legal heirs of deceased as per rules in force. 13. The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme. 14. The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service. 15. Normally no statement of the account will be served to the depositor. Incase of need of any depositor, charge @Tk.10/- per year / per statement shall be realized as cost of paper.


Monthly Benefit Deposit Scheme This is a Deposit Scheme where the depositor gets monthly benefit out of his deposit. The scheme is designed for the benefit of the persons who intend to meet the monthly budget of their families from the income out of their deposit. Investment of fund of Trusts and Foundations, which award monthly scholarships/ stipends to students, etc. The salient features of the Scheme are given below: 01. Deposit of Tk. 25,000.00 (Taka twenty five thousand) and multiples thereof, but maximum Tk. 25,00,000/- (Taka twenty-five lac) shall be acceptable under the Scheme. 02. The Deposit shall be for a period of 5 (Five) years. The Principal amount is refundable on maturity. 03. Profit shall be paid on monthly basis @ Tk. 1,000.00 per Tk. 1,00,000.00. 04. Payment of monthly profit shall start from the subsequent month after a clear minimum gap of 30 days from date of deposit. 05. In case of death of a depositor, the account shall cease to be operative and the amount deposited so far shall be paid to the nominee, and in the absence of nominee, to the legal heirs of deceased as per rules in force. 06. Normally, the deposit will not be encashable before 5 (Five) years. But if any depositor intends to withdraw his deposit before maturity due to certain unavoidable reasons, he would be allowed to do so in the following manner: a. No benefit including interest shall be allowed for pre-mature encashment within one year. b. If the accounts / deposits are closed/ encashed after one year of its opening, benefit shall be allowed on the deposit at existing normal Savings Deposit rate.

07.

08. 09. 10. 11. 12.

c. If the amount of monthly profit already paid exceeds the amount payable at normal Savings rate, the difference shall be realized from the principal deposit amount, if and when necessary. Separate Application Form specially designed for the purpose shall be obtained duly filled in and signed by the depositor. In addition to this, the depositor must have a separate Savings Bank Account with the branch wherein the benefit on the amount so deposited shall be credited every month. A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR. The Receipt will not be transferable. Advance against lien on such Receipt can be allowed up to 80% of the deposit bearing normal rate of interest prevalent at the time on Overdraft/ Loan. During the period of such Overdraft/ Loan, the monthly benefit shall be credited to the concerned Overdraft/Loan. Payment will be made after deduction of taxes as fixed by the Govt. from time to time.

13. In case the instrument is lost, the procedure for issuance of a duplicate will be the same as applicable in case of loss of FDR. N.B. Senior Citizens will get 0.50% higher rate of interest as permissible for all other deposits of our Bank. Monthly benefit shall be Tk. 1042/- per Tk. 1,00,000/- per month for Senior Citizens.


Fixed Deposit Scheme This type of deposit should be kept for a fixed term or period. Prime Bank Limited deals with the following terms deposit. Sl. No.

Particulars

INTEREST RATE

1

1 (One) month

8.00 %

3 (Three) months 2

i)

Below Tk. 5.00 crore

11.00 %

ii)

Tk. 5.00 crore & above

11.50 %

6 (Six) months 3

i)

Below Tk. 5.00 crore

11.00 %

ii)

Tk. 5.00 crore & above

11.50 %

1 (One) year & above 4

i)

Below Tk. 5.00 crore

11.50 %

ii)

Tk. 5.00 crore & above

11.75 %

N.B. For Senior Citizenship Scheme 0.50% higher rate may be offered. Lakhopati Deposit Scheme 01.

02. 03. 04. 05.

Monthly Installment size, tenure and terminal value of the scheme will be as follows: Monthly Installment Tenure Size (Taka)

Amount to be paid after maturity (Taka)

250/-

15 years

1,00,000/-

500/-

10 years

1,00,000/-

1,285/-

5 years

1,00,000/-

2,400/-

3 years

1,00,000/-

At present no income tax will be deducted from the interest earned. But in future for any change in the government policy Bank reserves the right to deduct income tax. The depositor will have the option to choose any installment size and period at the time of opening of the account and will not be allowed to change the size of installment afterwards. Account in the name of minors can be opened too under the Scheme as per standard procedure for minor accounts. A person can open more than one account for any size of installment in any branch of the


06. 07.

Bank. The specified amount on maturity at any slab shall be paid after one month from the date of deposit of the final installment. The installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installment is acceptable.

08. Normally no withdrawal shall be allowed before maturity, if any depositor intends to withdraw his/her savings due to certain unavoidable reasons before 3 years, 5 years, 10 years and 15 years, he/she will not be allowed any benefit if the premature encashment takes place before completion of 1 year. But the depositor shall be allowed interest on the prevailing Savings Deposit rate after completion of 1 year from the date of opening of the account. 09.

10.

11.

12.

13. 14.

15.

When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or Tk. 20/- whichever is higher. If a depositor fails to pay 3 (three) consecutive installments he will have to pay 5% fine of the overdue installments to regularize the account. If he fails to pay more than 3 (Three) installments he will cease to remain under the purview of the scheme and the deposit will be treated as Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB A/C rate subject to completion of 1 (one) year of its opening. Loan may be allowed up to 80% of the deposited amount against lien on the same where the deposited amount shall be at least Tk. 50,000/- and the interest rate of the loan shall be as per prevailing commercial lending rate of the Bank. In case of death of a depositor, the account will cease to be operative and the amount deposited so far shall be paid to the nominee, and in absence of nominee, to the legal heirs of deceased as per rules in force. The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme. The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service. Normally no statement of the account will be served to the depositor, in case of need of any depositor, charge @ Tk. 10/- per year / per statement shall be realized as cost of paper. This charge may be changed from time to time.

Foreign Currency Account Bangladesh nationals residing abroad, foreign nationals residing abroad or in Bangladesh, foreign firms registered abroad and operating in Bangladesh or abroad, and foreign missions and their expatriate employees in Bangladesh can open Foreign Currency (FC) accounts. Foreign exchange earned through business done or services rendered in Bangladesh can not put into this account. Credits to a foreign currency account may be made against inward remittances of foreign exchange in any form or by transfer from another FC account. Local as well as foreign payments may be made freely from foreign currency accounts. No payment in foreign exchange can be made to or on behalf of any resident in Bangladesh. Payments from these accounts received by residents, unless generally or specifically authorized by Bangladesh, must be converted into Taka. Banks may pay interest on such accounts at rates determined from time to time.


FC Accounts of Overseas Bangladesh Nationals Bangladesh nationals working abroad or proceeding abroad to take up employment may open foreign currency accounts. No initial deposit is required to open this account. Account holder may operate the account himself or nominate other persons in Bangladesh for this purpose. The account may be opened in pound sterling, US dollar, Euro or Japanese yen. The account may be maintained as long as the account holder desires. These accounts should ordinarily be fed by remittances by account holder himself but funds sent by other wage earners may also be placed to the credit of such accounts. Sale proceeds of currency notes, traveler’s cheques, drafts etc. brought into Bangladesh by the account holder while on temporary visit to Bangladesh provided foreign exchange in excess of US$ 5000 (or its equivalent) is duly declared to the Customs on Form FMJ at the time of their arrival. Funds lying to the credit of FC accounts of Bangladesh nationals can be utilized for import of goods and commodities as per Import Policy announced by the Government from time to time. FC Accounts of Duty Free Shops Foreign Currency Account in the names of the Diplomatic Bonded Warehouse (duty free shops) licensed by the custom authorities may be opened on the following conditions: Foreign exchange received only on account of sale of merchandise may be credited to this Account. Foreign exchange may be sent abroad only for the purpose of import of merchandise by the bonded warehouse. For the same purpose foreign exchange may also be transferred from these account to foreign currency account maintained with other banks. Foreign exchange from these accounts may be freely converted into Taka at current exchange rates. FC Accounts of Joint Venture Contracting Firms Local and joint venture contracting firms employed by foreign donors/international donor agencies to execute projects in Bangladesh may open foreign currency accounts as per terms of the approved contracts. Only foreign exchange received from the donors/donor agencies to meet expenses of the project can be credited to these accounts. All expenses in foreign exchange as per relevant contract may be met from these accounts. FC Accounts of Bangladeshis Working in Foreign organizations Foreign currency accounts may be opened in the names of resident Bangladesh nationals working in foreign/ international organizations operating in Bangladesh provided their salary is paid in foreign currency. Such accounts may be credited only with the foreign currency portion of the salary and debited for all approved current transactions like cost of travel, education for children, medical treatment etc. Foreign currency accounts may also be credited with consultancy fees/honoraria received in foreign currency by the above mentioned category of residents, debits to such accounts being subject to same conditions as mentioned above.

Non Resident Foreign Currency Deposit Account

All non-resident Bangladesh nationals and persons of Bangladesh origin including those having dual nationality and ordinarily residing abroad are entitled to maintain interest bearing time deposit account named "Non-Resident Foreign Currency Deposit (NFCD) Account" with the Authorized


Dealers (ADs). These accounts may be maintained in US dollar, pound sterling, Euro or Japanese yen; initially with minimum amount of US$ 1000 or pound sterling 500 or equivalent. Accounts may be opened against remittances in other convertible currencies after conversion of those into US Dollar, pound sterling, Euro or Japanese yen. Foreign nationals and companies / firms registered and/or incorporated abroad, banks, other financial institutions including institutional investors and 100% foreign owned (A -Type) industrial units in the Export Processing Zones in Bangladesh, are also allowed to open and maintain NFCD account. The minimum amount of time deposits in such cases should be US$ 25,000 or its equivalent in pound sterling, Euro or Japanese yen. Bangladesh nationals serving with Embassies/High Commissions of Bangladesh in foreign countries as also the officers/staff of the Government/semi-Government departments/nationalized banks and employees of body corporate posted abroad or deputed with International and Regional agencies like IMF, World Bank, IDB, ADB etc. during their assignments abroad may open such accounts. Crew members of the Bangladeshi shipping companies are not entitled to open such accounts, but shore staff posted abroad may open such accounts. The account is in the nature of term deposits maturing after one month, three months, six months and one year. Accounts may also be opened with funds transferred from existing foreign currency accounts maintained by the wage earners with the ADs in Bangladesh. The branch may pay interest on deposits into account at euro-currency deposit rates advised by the Head Office. In case of premature repayments, the amount of interest may be forfeited to the branch.

The interest of deposits into this account is exempt from the Tax payable under Income Tax Act. The account holder may be allowed to freely repatriate the balance and the interest accrued thereon in foreign exchange to the country of his residence or anywhere he chooses and may, at his option, convert the balance into Taka at the prevailing exchange rate. Prime Millionaire Scheme

The salient features of the Scheme are given below:


01.

02.

03. 04. 05. 06. 07.

08.

09.

10.

11. 12.

13.

Monthly installment shall be Tk. 12,465.00 /Tk. 7,890.00 /Tk. 4,570.00 for the tenor of 5/7/10 years respectively Terminal amount on maturity shall be Tk. 10.00 lac.

Size of monthly Investment After the deposit (in Tenor (in Year) investment Tenor Taka) the terminal value of the Scheme (in Taka)

Pension size of installment according to the years Invested (in Taka )

12,465/-

5

1,000,000/-

21,748/-

7,890/-

7

1,000,000/-

17,137/-

4,570/-

10

1,000,000/-

13,786/-

Income Tax on interest amount shall be as per Government rule on taxation and the Bank reserves the right to deduct Income Tax. The depositor will have the option to choose any installment size at the time of opening of the A/C. and will not be allowed to change the size of installment afterwards. A person can open more than one account. The installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installments is acceptable. Normally no withdrawal shall be allowed before maturity, If any depositor intends to withdraw his/her deposit due to certain unavoidable reasons before maturity (Min after one year) interest on the prevailing Savings Deposit rate may be allowed. When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or maximum Tk. 500/. When a depositor fails to pay 3 (Three) consecutive installment at any point of time before 2 years term, the customer will cease to remain within the purview of the scheme and scheme will be treated as a Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB A/C rate subject to completion of 1 (One) year of its opening. In case of death of a depositor, the A/C. will cease to be operative and the amount deposited so far shall be paid to the nominee, and in the absence of nominee, to the legal heirs of deceased as per rules in force. The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme. The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service. Normally no statement of the account will be served to the depositor. Incase of need of any depositor, charge @Tk.10/- per year / per statement shall be realized as cost of paper.

Types of Loans


There are various types of loans given by Prime Bank to the genaral public, some of which are given belowGeneral Loan Scheme Lease Finance House Building / Apartment Loan Scheme Small and Medium Enterprise (SME)

Consumer Credit Scheme Hire Purchase Advance against Share

General Loan Scheme

Depending on the various nature of financing, all the lending activities have been brought under the following General Loan: Short term Loan Medium term Loan Long term Loan The loans are allowed to individual/firm/industries for a specific purpose but for a definite period and generally repayable by installments fall under this head. This type of lending are mainly allowed to accommodate financing under the categories (i) Large & Medium Scale Industry and (ii) Small & Cottage Industry. Very often term financing for (1) Agriculture (ii) Others.

Lease Finance

Lease financing is one of the most convenient long term sources of acquiring capital machinery and equipment. It is a very popular scheme whereby a client is given the opportunity to have an exclusive right to use an asset, usually for an agreed period of time, against payment of rent. Of late, the lease finance has become very popular in almost all the countries of the world. An obvious advantage of the lease is to use an asset without having to buy it. The lessee is obligated to make lease payments until the expiration of the lease agreement, which corresponds to the useful life of the asset. In a capital scarce economy like ours, Lease Financing is suitable for firms to acquire Capital Machinery, Equipments, Medical Instruments, Automobiles etc. And thereby employ their own resources more advantageously in some other investments. Lease financing also helps a firm to reap significant economic benefit through tax saving and by reducing the risk of the equipments becoming obsolete due to the technological advancement.

Objective : Prime Bank Ltd. has introduced the lease finance with the following objectives: 01. To assist the genuine and capable entrepreneurs for acquiring Capital Machinery and Equipments to undertake enterprises without equity. 02. To encourage the new and educated young entrepreneurs to undertake productive venture and demonstrate their creativity and thereby participate in the national development. 03. To participate in the industrial development of the country.


Lease Items / Equipments : Prime Bank Limited offers lease finance for acquiring the use of capital machinery, equipments, medical instruments, etc. The customers are entitled to decide the specification, price and model of the lease item/equipment. Bank will purchase the item (s) in accordance with the specifications given by the clients. However, the suppliers of the items must ensure after sales services and warranties. The price should be competitive and acceptable to the Bank. Eligibility for Availing Lease finance : All genuine entrepreneurs having adequate experience and expertise are eligible to apply for Lease Finance under the scheme. The amount of Lease Finance will not generally exceed Tk. 1.00 crore, but in exceptionally good cases, the limit can reasonably be exceeded on condition that the Bank will depute an officer for close and intensive supervision of the project. In other cases of Lease Finance for amount below Tk. 1.00 crore, an officer of the Bank will supervise a number of projects at a time according to convenience. Documents & Security : The entrepreneur will be required to provide the following securities: 01. The lease items will remain in the name of the Bank i.e., Bank will be the sole owner of the leased items. Collateral securities having liquidation value covering at least 100% of the amount of 02. finance. 03. Deposit of listed Shares, National Savings Certificates, ICB Unit Certificates, Assignment of Life Insurance Policies, Bank Guarantee, Insurance Guarantee etc. will also be acceptable as collateral securities. 04. In case of existing industrial units requiring BMRE, charge may be created on the existing Fixed Assets as collateral securities for the finance. In case of existing Automobile enterprises, creation of charge on the existing vehicles will also be acceptable as collateral securities. 05. i) In case of default in payment of lease rental for consecutive 2 (two) months, the Bank will take over the lease items without giving any prior notice. ii) In case of taking over the lease items by the Bank before maturity, the lessee will be liable for the loss, if any, caused to the Bank of such premature taking over. iii) the Bank will exercise close and intensive supervision of such projects. An Officer of the Bank will be engaged separately for supervision of such projects to ensure proper utilization of the lease items and timely repayment of the monthly rentals.

House Building / Apartment Loan Scheme Loans allowed to individual/enterprises for construction of house (residential or commercial) fall under this type of advance. The amount is repayable by monthly installment within a specified period. Such advances are known as Loan (HBL-GEN). Loans allowed to our Bank Employees for purchase /construction of house shall be headed Staff Loan (HBL-STAFF). Small & Medium Enterprise (SME)


Bangladesh is a densely populated country. Job opportunity here is very scanty; Unemployment rate is approximately 40%. Population below poverty line is 36%. Therefore, it is the prime concern for the nation to generate income through creation of job opportunity & employment. Creation of job opportunity at large scale by us is not possible. What can be done better is to help self-employment through financial support. There are many small and medium entrepreneurs in the country that have innovative idea, spirit and potentiality to do something productive for local consumers as well as export abroad. They can generate income and contribute to the GDP. They may also provide employment to other people. Development and growth of Small and Medium Enterprise is vital for national development. Such type of beneficial enterprises borrower can not go a long way for want of financial support because they have no access to institutional credit facilities, as they cannot provide collateral security as demanded for such credit facility. Prime Bank Limited, is committed to play positive role in the overall socioeconomic development of the country. There is also a statement in the objective clause of Memorandum of Association of Prime Bank Limited as under: To advance or lend money to the unemployed persons for self employment and rehabilitation in the Society. To finance the Small and Cottage Industries for Industrialization and also to create employment opportunities”. It may be mentioned here that as per decision of the Board of Directors in its 78th meeting held on 17.11.1999 a “Small & Medium Enterprise (SME) Cell” has already been established at Head Office under the Credit Division. In respect of small businesses, an eminent American scholar Mr. John Nesbit in his book “Rethinking the Future” remarked as under: Now you can replicate quality anywhere in the world. So, the competitive differentiation comes from swiftness to market and innovation. And in this regard, small companies right down to the individual can beat big bureaucratic companies ten out of ten times. It is the small companies who are creating the global economy, not the fortune-500. 50% of United States exports are created by companies with 19(nineteen) or fewer employees. The global economy of the 21st century will be dominated by Small and Medium sized players.” If we look at South East Asia, China, Taiwan, Hong Kong, South Korea etc we will find that Small and Medium Businesses are the real engine of growth in those countries. In view of the above a credit scheme titled “Small and Medium Enterprise Credit Scheme” has been formulated as follows. It may also be mentioned that USAID has approved our bank to receive their guarantee facility to lend money to Small and Medium business Houses. 50% of losses, if any, be paid by USAID. Brief details are enclosed at Annexture-A. Objective 01. To provide credit facilities to the small and medium size entrepreneurs located in Urban & Sub-urban areas and easily accessible by our Branches. 02. To encourage the new and educated young entrepreneurs to undertake productive venture and demonstrate their creativity and thereby participate in the national development. To flow credit for creation of employment and generation of income on a sustainable basis through development of small & medium enterprises. 03. To assist potential entrepreneurs to take part in economic activities so that they can improve their living standard. 04. To reduce dependence on money lenders; 05. To make the small & medium enterprises self– reliant; 06. To develop saving habit and making acquaintance with banking facilities. 07. To inspire for undertaking small projects for creation employment through income generating activities.


Concepts Small Enterprise Small Enterprise refers to those enterprises: • where goods are produced, recycled, repaired or traded in traditional way; • where total bank investment is limited to Tk.250,000; • where 10 or less workers are engaged on wages or commission basis; Medium Enterprise Medium Enterprise refers to those enterprises:Where goods are produced, recycled, repaired or traded applying some capital machinery; Where 20 or less people are engaged on wages or commission basis; Where total bank investment does not exceed Tk.75, 00,000. The net fixed assets (excluding land and buildings) of borrowers may not exceed Tk. equivalent of US $250,000.

Target Group Initially, Small & Medium Size Entrepreneurs located within the accessible area of our branches will be the target area under this program. The Entrepreneurs should have an existing profitable business or a viable business plan. Eligibility for Credit Facilities The following criteria have to be met by the applicant to qualify for a loan from Prime Bank Limited under its SME Credit Scheme: 01 The entrepreneurs must be literate i.e. capable of reading & writing. . 02 The entrepreneurs should be skilled in managing his / her business and has experience of . successfully managing the business for at least 02(two) years. 03 The age of the entrepreneurs must range between 25 years to 50 years. . 04 If the applicant is an individual, he must be a national or permanent resident of Bangladesh. If . the Borrower is a company/firm or other business entity it must be registered in Bangladesh and majority shares owned by Bangladeshi’s. 05 The applicant must be 100% privately owned, controlled and operated; . 06 The applicant’s principal place of business must be in Bangladesh; . 07 If acceptable collateral security cannot be provided, the borrower should arrange for 02(two) . guarantors acceptable to the Bank. The type of guarantors depends on size of the loan and business. In accepting a person as guarantor his social standing, income and asset shall be considered. Any default loanee or unreliable person shall not be accepted as guarantor. However, guarantor will be determined on a case to case basis. 08 The project shall be financially viable and socially desirable. . 09 The Sponsor/applicant shall have reputation in the society. . 10 There should be some innovation / creativity in the project. . 11 Proper utilization and timely repayment of previous loan will be considered as proven track


. record of the applicant for renewal & enhancement of credit facility.

Period of Loan a. In case of continuous loan b. In case of Term Loan :

: 01(one) year. Maximum 05(five) years.

Mode of Repayment 01. In case of continuous loan credit turnover in the account must be equal to the limit in a quarter and full adjustment within the validity period. 02. In case of term loan, the loan should be repaid by monthly installments through post-dated checks as per amortization Schedule. 03. Sale proceeds should be deposited in the account regularly. Loan Monitoring and Review This is a supervising credit scheme. The success of the scheme depends on the extensive and intensive post disbursement supervision, follow-up & monitoring. It must be ensured that the loan fund is not diverted, the sponsors are very serious to the operation of the project, quality is updated and marketing effort is effective. Regular repayment must be ensured.

Visit to the establishment must be done at least once in a month. During visit of the project motivational work to be done with a view to strengthening the spirit & morale of the sponsors. A visit report should be recorded in credit file against each visit. Supervision will be done by the respective branches, which will be monitored by SME Cell, Credit Division, Head Office. A signboard shall be displayed at the shop / factory with writing “Financed by Prime Bank Limited”.

Recovery System a. If any borrower fails to adjust the loan within validity period or to repay his monthly installment then the responsible loan-monitoring officer of the concerned branch will arrange for adjustment of the overdue installments from the loanee’s savings account if there is adequate balance. The officer shall regularly follow up for recovery and take any measure including legal action for recovery. b. If any loanee fails to repay his consecutive 02(two) monthly installments, then the Branch’s loan monitoring officer will investigate into the actual causes of default and report to the Branch Manager with a copy to SME Cell, Head office for further action and advice for recovery/regularization of the loan. Other Conditions


01. 02.

The borrower shall maintain a non-withdrawal savings account with the concerned branch where he shall make compulsory deposit of @ 0.5% of outstanding loan amount per month for building up his own fund. The borrower must not change the nature of business and place of business without prior permission of the Bank.

Allocation for the Scheme Initially a sum of Tk.10 crore may be allocated for disbursement of loan under the scheme, which will be revised from time to time as per performance of loans under the scheme. Processing of Credit Proposal Under the Scheme 01. Initially, SME Cell, Head Office shall process the credit proposals under the scheme and Head Office Credit Committee shall approve the same. As per desire of the customer the sanction advice will be sent to the concerned branches for documentation and disbursement. 02.

SME Cell/Branch will work very closely with JOBS program for evaluation of credit proposals.

03.

The rules and regulations of USAID must be fully complied with for extending loan to Small and Medium Business Enterprise.

Restricted Business 01.

Production, Marketing, Trading of alcoholic, narcotic and other intoxicating drug or liquor.

02. 03.

Production and Trading of any item banned by the Government. Any activity not permissible by the law of the land.

Loan Ceiling 01. For small enterprise : Maximum Tk.2, 50,000/02. For medium enterprise : Maximum Tk.75, 00,000/No loan proposal for less than Tk.1, 00,000/- be entertained. Purpose Working capital; Capital machinery;

Delivery Van / Transport for business purpose; Refurbishing office/Business premises.

Mode of Finance 01. Cash Credit (Hypo/Pledge); 02. Hire purchase/ Lease Finance; 03. Term Loan. Loan Renewal Successive loans depend on track record of previous loan. Usually, repayment behavior and expansion of business by the borrower are the main considerations for renewal and enhancement of the loan amount. Interest 8% above Bank Rate. Presently 15%


Penal Interest: If any borrower fails to adjust loan within validity period or to repay consecutive 02(two)-installments, penal interest @0.25% per month shall be charged on the defaulted amount. Securities It is a supervisory credit scheme. Tangible security in the form of mortgage may not be available in all the cases. So mortgages will not be mandatory. Security will be stipulated on a case to case basis interalia as under(one or several of the following): 01. Registered mortgage of land & building. 02. Mortgage/Assignment of possession right. 03. Assignment of security money, advance rent, if any. 04. Assignment of Trade Receivables not older than 90 days. 05. Hypothecation of machineries, equipment, vehicles, stock-in-trade, raw materials, work-inprocess and finished goods. 06. Personal Guarantee from persons acceptable to the Bank. 07. Post dated checks. 08. Lien on deposits/saving certificates/financial obligations. 09. Any other securities to be deemed suitable by the Bank depending on the situation like Insurance Guarantee, Corporate Guarantee, As signment of Contract, Security Money etc. 10.

Guarantee of USAID for 50% of the exposure.

Consumer Credit Scheme Advance Against Salary This scheme is for salaried Bangladeshi person in Govt./Semi govt. /Autonomous bodies/ Multinational Co. / Banks / Insurance / Financial Inst. / Educational Inst. with confirmed 3-years service ahead. A Letter of introduction including name, fathers name, designation, date of birth, date of joining, place of posting, date of last promotion, date of retirement, basic salary, total emolument, total in PF, take home salary etc. will be required. Loan limit is 8 times of gross salary who have Salary A/C with us and 6 times of gross salary who have not Salary A/C with us subject to highest Tk. 3.00 lac. Loan Limit and Period of Loans Type of Customer Salaried Person

Loan Limit Tk. 3,00,000

Required Documents 01. Employer Certificate

03.

02.

04.

Photocopy of Tin Certificate, if any

Duration of the Loan 2-yrs

Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any

Security 01. Undated Cheques 02. Lien on Service benefit of the concerned employee from the employer


Any Purpose Loan This scheme is to meet the emergency need for fund by fixed income group of salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./ Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead. Letter of introduction including name, fathers name, designation, date of birth, date of joining, place of posting, date of last promotion, date of retirement, basic salary, total emolument, take home salary etc. will be required. This scheme is only for service holder. Loan Limit and Period of Loans Type of Customer Salaried Person

Loan Limit Tk. 1,50,000

Required Documents 01. Employer Certificate 03. 02. Photocopy of Tin Certificate, if any04.

Duration of the Loan 2-yrs

Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any

Security 01. Undated Cheques 02. Lien on Service benefit of the concerned employee from the employer

Car Loan Car Loan will be sanctioned against Registration of the Vehicle in the name of the Bank. Instead of down payment, the Customers shall have option to avail loan against their FDR or any other savings instruments up to 90% of the loan amount. Eligible Items / Articles 01. Car 02. Jeep 03. Station Wagon 04.

Any other vehicles for own use

05. Pick up Van 06. Cover Van 07. Bus / Truck for Corporate Bodies (own use) Ambulance for Corporate Bodies / Medical 08. Professionals

Loan Limit and Period of Loans Name of the Item Loan Limit New Vehicle Tk. 40,00,000 Recondition Vehicle Tk. 15,00,000 Bus / Truck for Corporate Tk. 40,00,000 Bodies for own use only

Duration of the Loan 5-yrs 4-yrs 5-yrs


Required Documents Employer Certificate 01. Holders Trade

for

Service

02.

Photocopy of Businessmen

License

03.

Photocopy of Tin Certificate, if any

for

04.

Bank Account Statement of last six months

05.

Photocopy of Passport, Telephone(T&T) Bill, if any

02.

Registration of the vehicle in the name of the Bank

Security 01.

Undated Cheques

CNG Conversion Loan This scheme is to meet the funds requirement for CNG conversion of vehicles for those who are salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead, businessman having adequate cash flow and corporate Bodies.

Loan Limit and Period of Loans Type of Customer Loan Limit Owner / Valid user of the Tk. 60,000 vehicle Corporate Bodies Tk. 1,00,000

Required Documents Employer Certificate for Service 01. 05. Holders Photocopy of Trade License for 02. 06. Businessmen 03. Photocopy of Tin Certificate, if any 07. Bank Account Statement of last six 04. months

Duration of the Loan 1.5-yrs 1.5-yrs

Photocopy of Passport, Telephone(T&T) Bill, if any Photocopy of the Blue Book etc. Photocopy of the registration of the Vehicle

Security 01. 02.

One or two personal guarantee from family member (effective member i.e. spouse / father / mother / brother / earning son, Corporate guarantee in the case of Company or as the case may be acceptable in the bank). Undated cheques in favor of the Bank covering the whole amount


Doctors Loan Any Bangladesh citizen who is a graduate in Medical Science / Dentist / Eye / Allopathic / General Practioners desiring to set up chamber, medical store with necessary medical equipments and to become self-employed have the opportunity to take this loan.

Loan Limit and Period of Loans Type of Customer Loan Limit General Practitioner Tk. 5,00,000 MBBS/BDS/ Specialized Doctor Tk. 10,00,000

Required Documents Employer Certificate 01. Holders

for

Service

02.

Photocopy of Tin Certificate, if any

03.

Bank Account Statement of last six months

04. 05.

Duration of the Loan 4-yrs 5-yrs

Photocopy of Passport, Telephone(T&T) Bill, if any Attested Photocopy of the Certificates of the last degree and BMA membership certificate

Security The ownership of medical equipments to be purchased must be hypothecated to the Bank 01. under hire purchase mode 02. Two personal guarantee 03. Undated cheques

Education Loan This scheme is for meeting the fund requirement for higher education of children of salaried persons in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead and businessman having adequate cash flow. Loan Limit and Period of Loans Type of Customer Salaried Businessman

Required Documents

Person/

Loan Limit

Duration of the Loan

Tk. 3,00,000

2-yrs


01. 02. 03.

Employer Certificate for Service 04. Holders Photocopy of Trade License for 05. Businessmen Photocopy of Tin Certificate, if any 06.

Security 01. Undated Cheques

02.

Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Evidence thereof Two personal guarantee

Hospitalization Loan

Hospitalization loan will be provided for treatment purpose or surgery where hospitalization is necessary. The loan shall be available for the salaried person, i.e., employee of the Govt. Organizations / Semi-Government Organizations / Autonomous Bodies / Multinational Companies / Banks / Insurance Companies / Educational Institutions / Corporate Bodies.

Loan Limit and Period of Loans Type of Customer Salaried Person

Loan Limit Tk. 5,00,000

Duration of the Loan 2-yrs

Required Documents 01. Employer Certificate 02. Photocopy of Tin Certificate, if any 03. Photocopy of Passport, Telephone(T&T) Bill, if any Security 01. Personal guarantee from an individual having means, standing and social status acceptable to the bank and another from his/her family 02. Undated cheques in favor of the Bank covering the whole amount 03. Letter of Assurance from the Employer / Authority.

Household Durable Loan Household durable loan will be sanctioned against guarantee of third parties acceptable to the bank or pledge of FDR, Saving instrument of Banks and assignment of salary where applicable. Eligible Items / Articles 01. 02. 03. 04.

Motor Cycle Personal Computer Photocopier / Fax Machine Small PABX System

07. 08. 09. 10.

Refrigerator Audio-Video Equipment Other Home Electric Appliance Furniture


05. 06.

Television Mobile Phone Set

11.

Any Other Household Durables

Loan Limit and Period of Loans Name of the Item Motor Cycle PC/Lap Top Photocopier/Fax Other Item/Furniture

Loan Limit Tk. 1,00,000 Tk. 1,00,000 Tk. 1,00,000 Tk. 5,00,000

Required Documents Employer Certificate for Service 01. 04. Holders Photocopy of Trade License for 02. 05. Businessmen 03. Photocopy of Tin Certificate, if any Security 01. Two Personal Guarantee

02.

Duration of the Loan 2-yrs 2-yrs 2-yrs 3-yrs

Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any

Undated Cheques

Marriage Loan This scheme is to meet the fund requirement for marriage purpose of salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead and businessman having adequate cash flow. Loan Limit and Period of Loans Type of Customer Salaried Businessman

Person/

Loan Limit

Duration of the Loan

Tk. 3,00,000

3-yrs

Required Documents Employer Certificate for Service 01. 04. Holders Photocopy of Trade License for 02. 05. Businessmen 03. Photocopy of Tin Certificate, if any 06. Security 01. Undated Cheques

02.

Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Evidence thereof Two personal guarantee


Travel Loan This scheme is for meeting fund for travel purpose of salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead and businessman having adequate cash flow. Loan Limit and Period of Loans Type of Customer Loan Limit Salaried Person/ Tk. 2,00,000 Businessman

Required Documents Employer Certificate for Service 01. 04. Holders Photocopy of Trade License for 02. 05. Businessmen 03. Photocopy of Tin Certificate, if any 06. Security 01. Undated Cheques

02.

Duration of the Loan 3-yrs

Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Evidence thereof Two personal guarantee

Hire Purchase Hire Purchase is a type of installment credit under which the Hire Purchase agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of Principal as well as interest for adjustment of the loan within a specified period. Advance Against Share In order to contribute to the development of the Capital Market of the country Prime Bank Limited extends credit facilities against pledge of Shares to the individuals as well as to the Member of DSE & CSE. Terms & Conditions: 01. 02.

03. 04. 05. 06.

07.

For availing of credit facilities against pledge of shares the intending borrowers shall deposit shares of at least three (3) Companies which are preferably registered in his/her name. Credit facilities in the form of Secured Overdraft (SOD) Limit may be allowed upto 50% of the Value of shares pledged calculated on the basis of current market prices or previous 6 months' average market prices, whichever is lower. In case of ICB Unit Certificates SOD limit upto 80% of the face value Certificate may be extended. The Share Certificates must be accompanied by Form -117 containing the signature of the Shareholders duly checked and verified. The maximum ceiling shall be Tk. 20.00 Lac for individual borrowers. The Stock Brokers of DSE & CSE are eligible for availing of the SOD facility against pledge of shares upto Tk.50.00 lac & Tk.15.00 Lac respectively. They will be required to keep lien of the original copy of the Licence issued by SEC. Interest rate will be charged @ 15% P.A with quarterly rests or as may be amended from


08. 09. 10.

11.

time to time. The intending borrowers shall have to open a CD Account with our Motijheel Branch for availing of the SOD facility. Credit facility is extended only against Shares which are in market lots. Borrowers can withdraw or deposit shares and vary their limits/exchange Shares/enhance limits etc. at any time during banking hours. Handling charge of Tk.100.00 is realized per transaction. The loan facilities under this scheme are presently available at bank's Motijheel Branch, Dhaka and Agrabad Brach, Chittagong.

Prime Line (Any Branch Banking) Online Branch Banking The Bank has set up a Wide Area Network (WAN) across the country to provide Online branch banking facility to its valued clients. Under the Scheme, clients of any branch shall be able to do banking transaction at other branches of the bank. Under this system a client will to be able to do following type of transactions: Cash withdrawal from his/her account at any branch of the Bank irrespective of location. Cash deposit in his/her account at any branch of the Bank irrespective of location. Cash deposit in other's account at any branch of the Bank irrespective of location. Transfer of money from his/her account with any branch of the Bank. Any amount can be deposited or transferred under Prime Line. In the system, however, at present there is a limit for cash withdrawal through bearer or by account holder himself. Terms & Conditions of Online Branch Banking Service ONLINE BRANCH BANKING SERVICE is designed to serve its valued clients. Under this system, you shall be able to do the following type of transactions: Cash withdrawal from your account at any branch of the Bank. Deposit in your account at any Branch of the Bank. Transfer of money from your account to any other account with any Branch of the Bank. Transaction Limit 01. Maximum ceiling of cash withdrawal by self is Tk. 10,00,000/- (ten lac) only per transaction. 02. Maximum ceiling of cash withdrawal by third party (bearer) per transaction is below Tk............... only (please mention the limit you wand to place). 03. Cash deposit/transfer by online transaction is unlimited. Online Transaction Membership Fee Membership fee of Tk. 50/- per month for the Online Branch Banking Service. Charges for Online Transaction 01. There will be no charge for transaction within the city where the account is domiciled. 02. Fee Tk. 50/- will be realized from the customer’s account for each remote transaction (intercity) for amount upto Tk. 1,00,000 (one lac). 03. Fee at the rate of 0.075% will be realized from the customer’s account for each remote transaction of amount more than Tk. 1,00,000 (one lac).


OTHER SERVICES Other than just providing loans and acceptsting deposites , Prime Bank Ltd provide other non profitable work for the society , viz – It provides scholarships to the good students . It donates generously during the flood . It acts as the sole sponsorer of Bangladesh national golf and hockey team . It holds art competition . FINDINGS Strengths: We have found out that Prime Bank has very capable management. It has adequate capitalization. It has good profitability. It also has above-average asset quality. It has extremely rapid growth. It also has Online Branch Banking. It has small classified loans amount. We have also noticed some weaknesses of Prime Bank Ltd. , and some of them are given below Weaknesses: No personal ATM at present . Lack of experienced employees in junior level management. Most of the branches are not well decorated. Past missteps into equity investment raise concern.

RECOMMENDATIONS The first thing that we would like to recommend to the Prime Bank Ltd. is that they should open up ATMs as much as possible to make banking little easier for the general public . They should recrute more skilled personnel to get better out put from them . They should look into the matter of more proper advertising and decorating of their branches to have a good impression on their clients . It should get involved more into the non-profitable or charitable work more frequently . It should providing more industrial loans so that our society and economy is benefited . CONCLUTION In modern time, when all the organizations are looking for just to make profit , Prime Bank Ltd stands out as one of those banks which dose not believe in just profit making but provide unconditional help to the society . It helps many students to complete their education by providing scholarships . It also helps the society by hosting many charitable art competition . BIBLIOGRAPHY While doing this report on an interesting topic "Commercial Banking" we took lots of help from various places. Our report will be incomplete if we do not mention the sources of our help.


We had taken a great deal of help from websites such as -www. Google .Com, www. Prime bank.Com, www.Scotiabank.Com, www.Earlyamerica.Com. We had also taken help from many books, Such as- "The lecture Sheet" and Power point . ACCRONIMES There are several accronimes and abbriviations that have been used in this report , and some of those are given below – Bd = Bangladesh Ltd = limited CEO = Chief executive officer A/C = Account FC = Foreign Currency HBL = House building Loan HBL-STAFF = House building loan foe the employees CD = Current deposit SB = Saving Bank CAMELS = Capital Adequacy Asset Qualty Management Quality Earnings Liquidity Sensivity . CNG = compressed natural gas LPG = Liquid petrolium gas BDR = Bangladesh Rifels Asstt = Asstistant Int. = institution STD = short term deposit RFCD = Resident foreign Currency Deposits MAS = Monetary Authority of Singapore NPL = Non Performing Loan MJF = Melvin Jones Follow DEPZ = Dhaka Export Processing Zone UN = United Nations LC = Letter of Credit IMF = International Monetary Fund AD = Authorized Dealers NITA = Non-resident Investor’s taka Account NFCD = Non-resident Foreign Currency Deposit =.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.=.


Analyze of prime bank’s banking system  

Bangladesh, a land endowed with rich natural resources and a deep-rooted cultural heritage has been steadily improving her socio-economic co...

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