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“Overall Banking System of NCC Bank Limited�.

EXECUTIVE SUMMARY A Bank is an economic institution whose main aim is to earn profit through exchange of money & credit instruments. It is a service oriented as well as profits oriented organization. To perform those two functions simultaneously, the Bank divides its operation mainly in three parts- General Banking, Loan & Advances and Foreign Exchange. Bank also invests their money into different financial security and also in different types of project to diversify the risk and getting more profit. The banking sector of Bangladesh is passing through a tremendous reform under the economic deregulation and opening up the economy. Currently this sector is becoming extremely competitive with the arrival of multinational banks as well as emerging and technological infrastructure, effective credit management, higher performance level and most customer satisfaction. National Credit and Commerce Bank Ltd. is one of the leading private commercial Banks having a spread network of more branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Bangladesh. Have completed internship in the Elephant Road Branch of National Credit and Commerce Bank Ltd. During internship period found here a good job environment and also got a lot of cooperation from every department and every person. It is a great task to prepare a report on a big branch and at this moment feel very happy to complete this. Found that National Credit and Commerce Bank Ltd. gained success very early because they have a very strong backup to provide financial as well as administrative support. Within a very short time this bank has become very much popular. They gained success from the very beginning of their operation and were capable enough to hold the success year after year. ABBREVIATIONS NCCBL- National Credit and Commerce Bank Limited FDR- Fixed Deposit Received SSS- Special Saving Deposit CC- Cash Credit A/C- Account PO- Pay Order L/C- Letter of Credit SOD- Security Over Draft


VAT- Value Ad dated Tax TIN- Tax Identification Number CD- Current Account SV- Savings Account ATM- Automated Teller Machine 1.1 Introduction Financial Institutions have historically have been distinguished by the types of services they provide. In recent years Financial Institutions have diversified their services by creating new subsidiaries that perform additional services or by merging with other types of financial institutions. The result has been the creation of financial conglomerates, composed of various units offering specialized services. Diversification also offers benefits to financial institutions. National credit and commerce Bank Limited was incorporated in Bangladesh as a banking company. worked in the account opening desk, clearing and loan department of NCCBL. This gives the opportunity to know more on different aspects of the company. So, prepare internship report on overall banking system of NCCBL. 1.2 OBJECTIVES OF THE INTERNSHIP WORK AND THE REPORT Every work is done to gain some particular objectives. Internship program also contains certain important objectives. They are given below 1. To understand the Banking business in Bangladesh. How Banking transactions Take place. 2. To observe the authorities, tasks & responsibilities of the bankers. 3. The rules and regulations of private commercial Banks 3. To know the background of the NCCBL 4. To know the Overall Banking system of NCCBL 5. To understand the Financial and Accounting techniques of NCCBL. In fact this is the prime objective and I have chosen this as the topic of my report. 6. To have the idea about the communication between the Branch office and Head office. 7. To better understand about the foreign exchange activities. 8. To learn the Banking Laws. 9. To appraise the total achievements and success of NCCBL


1.3 Methodology of the study This report is prepared by two sources:1. Primary Sources. 2. Secondary Sources. Primary Sources: Basically this type of Sources included interviews with the bankers of NCC Bank Ltd. Secondary Sources: Secondary data were collected in the following ways: • • • • • • •

Data gathered within the organization itself. Data gathered from Texts Internet sources. General reports Annual reports Official documents Credit manual and foreign exchange manual of the bank.

1.4 Scope of the study In spite of limitation also got some facility to complete my internship report. The employees those who held a responsible post in the entire department helped me a lot. They gave me all essential data and conversation with . The university internship supervisor also helped me a lot. The gave a guidelines how to prepare report more attractive and perfect. This bank has given the opportunity to observe the banking environment for the first time indeed. got an opportunity to gather experience by working in the different departments of the branch under the supervision of different departmental heads. 1.5 Limitations In brief, The faced following limitations during the time of preparing this report. Since was an intern NCCBL, was not allowed to stay in all the departments for a long period. That is why it was really a big difficulty for me to prepare art internship report. As per Bank compliance, as an intern was unable to obtain indispensable experiences of different departments. CHAPTER-2 Overview of the Bank 2.1 Banking Sector in Bangladesh Definition of Bank: Whoever, being an individual firm, company or corporation generally a deal in the business of money and credit is called a bank. Banker means a person transacting the business of accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdrawal by cheques, drafts or otherwise. The purpose of banking is to ensure transfer of money from surplus unit to deficit units. Banks in all countries work as the repository of money. The general public deposit money in the bank for safe custody as well as to earn interest on it.


Entrepreneurs try to obtain money from the banks as project loan for long-term investment. They also obtain working capital from the bank to run their business smoothly. Banking sector these owe a great deal to the deposit holders on the one hand and the entrepreneurs on the other. They are expected to play the role of friend, philosopher and guide for the deposit holders and as wells entrepreneurs. Since liberation, Bangladesh passed through fragile phases of development in the Banking sector. Some banks were nationalized in the post liberation period to save the institutions and the interest of the depositors. Those handing the banking sector have borne the burden of putting banks on reliable footings. Despite all that was done, some elements of irregularities appeared. With the assertion of the role of the Central Bank, Bangladesh Bank, started adopting measures for putting banking institutions on right track. Yet the performance of public sector management of banks left some negative effects in the money market in particular and the economy in general. The agility among the borrowers manipulates the banking sector as a whole. In effect, a default culture among other effects appeared on the scene. The opening of private and foreign participants to the banking sector was intended to obtain desirable results from banking. The authorization of private bank was designed to create competition among the banks and competition in the form of efficiency within and the productivity in enterprises funded by banks. Unfortunately, for the people at large banking sector is yet to obtain the credit for efficiency, curability and growth. The clever, among the user of banking services, have influenced the management of bands, for obtaining short term and long-term loans. They sometimes showed inflated equity to get money for investment in business and industry. Few diverted their loan money to purposes different from the loan proposal, and invested in non-profitable units have failed to repay their loans to the banks. For this reason new entrepreneurs are not getting capital while defaulting entrepreneurs have started obtaining either relief in the form of rescheduling of the repayment program of additional invest able money for diversified units. 2.1.1 Banking in Bangladesh Perspective Banking is the backbone of national economy; all sorts of economic and financial activities revolve round the axis of the bank. As the industry produces goods and commodities, so does the bank creates and controls money-market and promotes formation of capital. From this point of view, banking-a technical profession can be termed as industry. Services to its customers are the products of banking industry besides being a pivotal factor in promoting capital formation in the country. As all economic and fiscal activities revolve round this important "Industry', the role of banking can hardly be over emphasized. Circumstances being such, it becomes imperative to find out the role of banks now playing in the country and analyze its operational aspects so as to ascertain the importance of this delicate financial sector and its over all impact on our national economy. To ascertain the role of banks and to analyze its operational aspects and its overall impacts on our national economy a through study as to its distribution, expansion and contribution is essential to comprehend its past, present and future bearings for the growth and development of the banking sector of the country. In the global context, the role of banks is far-reaching and more penetrating in the economic and fiscal discipline, trade, commerce, industry, export and import all carried through the bank. Banks are the only media through which international trade and commerce are being carried out and entire credit transactions, both national and international.


2.2 National Credit and Commerce Bank Ltd. HISTORICAL BACKGROUND OF NCCBL National Credit And Commerce Bank Limited (NCCBL) is a banking company registered under the company Act 1994 as a private commercial Bank. Before launching baking transactions it was established as an investment company at 25 thNovember 1985 in the Name of National Credit Limited. It is converted into a scheduled bank because of many restrictions in both collection and disbursement of fund while it was an investment company. During conversion period all types of transaction were closed for about 14 months from -22nd April 1992. After obtaining permission from the Government of the People’s Republic of Bangladesh and Bangladesh Bank, the erstwhile National Credit Limited, an investment company, was converted into a full fledged Commercial Bank started its Banking operation on the 17th May, 1993 with 16 branches in the name and style of National Credit And Commerce Bank Limited. Now it has 53 branches all over Bangladesh. 2.3 Objectives of the Bank • Achieve value and respect of the customers and maintain harmonious banker- customer relationship. •

Strive for good profit and sound growth

Contribute towards the formation of national capital.

Achieve and sustain in the domestic leading market position in both customer and corporate banking sector.

To become the most efficient bank in terms of technology application.

2.4 Vision of the Bank • To build a sustainable •

Respectable financial institution

To be a leading Commercial Bank

With a social focus, assisting in the economic development of the country.

2.5 Mission of the Bank ● To mobilize resources from within to the development and growth of the country. ● To play a catalyst role in the formation of capital market. ● Anticipating business solutions required by all our customers every where and innovatively supplying them beyond expectation. ● Setting industry benchmarks of world class standard in delivering customer value through our comprehensive product range, customer service and all our activities. ● Maintaining the highest ethical standards and a community responsibility worthy of a leading corporate citizen. ● Continuously improving productivity and profitability and thereby enhancing value.


2.6 Management Hierarchy

Chairman Vice Chairman Director

Managing Director Senior Executive Vice President Executive Vice President Vice President Senior Assistant Vice President

Assistant Vice President Senior Principal Officer Principal Officer Senior Officer Officer gr -1 Officer Junior Officer Assistant Officer 2.7 Structure of the Organization Toafzzal Hossain A.S.M. Main Uddin Monem Md. Nurul Amin Mr.S.M. Shamsul Alam

Chairman Vice Chairman, Board of Directors Managing Director Deputy Managing Director


Mr. Golam Hafiz Ahmed

Deputy Managing Director

Mr.A.K. Md. Siddique

Head of Ctg. Area Office

Mr. Mohabbat Khan

Head of Internal Control Compliance

Mr.T.M. Faruque Chowdury

Head of Human Resource

Mr. Tarikul Alam

Secretary to the Board

Mr. Matiur Rahman

Chief Anti Money laundering Compliance Officer & Head of Credit

Mr. Ihsanul Aziz

Head of International Division & Remittance Service

Mr. Tapan Kantisarkar

Head of Cards & I. T.

Mr. Asim Kumar Shaha

Head of Treasury

Mr. Md. Abdul Bari Sarkar

Financial Admin Division

Mr.S.I.M. Baquer

Share Division

2.8 Present Status of the Bank (NCCBL) THE BANK As part of its goal of maximizing profit by rendering personalized services to the customers, making good advance improving quality of assets and above all recovering Bank's money from defaulters, the Bank has continued its efforts during 2005 with fruitful results which reflects in the operational result as enclosed with this report. However, operational profit stood at Tk.1018.34 million during 2005 against Tk. 720.49 million of 2004 recording an increase of 41.33% over the period. AUTHORIZED, PAID-UP, RESERVE FUND AND OTHER RESERVE The authorized capital of the Bank stood at Tk. 2500.00 million in 2005 while with the issuance of Rights Share, paid-up capital increased a d stood at Tk. 975.04 million in 2005. The reserve fund has also increased to Tk. 562.74 million during thee year recording an increase of 32.34% over the previous year's figure of Tk. 425.22 million. DEPOSIT Bank's deposit as at 31st December 2005 stood at Tk. 21,478.22 million with an increase of 33.66% over last year's figure of Tk. 16,069.23 million. The chart below shows the growth of deposit for last 05 years.


Deposite Growth Figure (in Million) 25000 20000 15000 10000 5000 0

16062.35 15153.9 16069.23 12848.71

2001

2002

2003

2004

21478.22

2005

CREDIT Bank's credit policy has been reviewed and revised during the year 2005 to make the same need-oriented and also to comply with Bangladesh Bank directives conveyed through guidelines for Core Risks Management and Prudential Guidelines for Consumer Finance. As a result, Bank's credit activities could be made more organized. With the support of various non conventional products like Small Loan Scheme, Housing Loan Scheme, Festival Loan, etc. Bank's lending base could be expanded further which contributed to the profitability during the year. Banks SME lending and credit facilities extended to maize producers of country's northern area's farmers also received good response and acclamation in the financial sector. During the year total advance of the Bank stood at Tk. 20,533.13 million with an increase of 34.98% over the last year's figure of Tk. 15,211.15 million and Advance Deposits ratio being 0.96: 1 in 2005.

Advance Growth Figure (in Million) 25000 20000 15000 20533.13

10000 5000 10788.61 0

2001

13147.72 12850.85 15211.15

2002

2003

2004

2005


INVESTMENT Banks investment in Government approved Securities, Treasury Bills etc. during the year stood at Tk 3,010.45 million as against Tk. 4,385.23 million of the previous year. Investment

5000 4000 3000 2000 1000

1756.89

2909.15

3204.01

2002

2003

4385.23 3010.45

0 2001

2004

2005

FOREIGN EXCHANGE BUSINESS The Bank put due care to its Foreign Exchange Business which is one of the major sources of income and contributes notably towards its profitability. Under the purview of Bank's Credit Policy and Government Policy, the Bank tries to cater the needs of Exporters and Importers of the country. With the expertise of the concerned officers at the Head office and Branches, Bankers business in this sector recorded notable development during 2005. The amount of export and import business handled by the Bank in 2005 was Tk 7,776.30 million & Tk16, 296.30 million respectively as against Tk 5,771.65 million & Tk. 13,274.08 million in 2004. Import Figure (in Million)

20000 15000 10000 5000

13754

13579.5

13089.9

13274

2001

2002

2003

2004

16296.3

0

Export F igure ( in M illio n)

10000 8000 6000 4000 2000

4504

4559

4967.3

2001

2002

2003

5772

2004

7776.3

0 2005

2005


CREDIT ADMINSTRATION Credit Administration Department has been strengthened further by assigning competent and expert officers to monitor/supervise both pre and post sanction activities. To make the Department an independent, one In charge has also been assigned. The department is now engaged in ensuring proper documentation of Loans/Advances and timely recovery of the same. Recovery Department is also laying its expected role in realizing Bank's dues from defaulting borrowers.

Chapter 3 Types of Account & Account Opening 3.1 Information of General Banking Deposits are the foundation upon which banks thrive and grow. They are unique items on a bank's balance sheet that distinguishes it from other types of business firms. The ability of a Bank's management and staff to attract checking and savings accounts from businesses and customers is an important measure of the bank's acceptance by the public. Deposit provides most of the raw material for bank loans and thus represents the ultimate source of bank profits and growth. Deposits generate cash reserves, and it is out of the excess cash reserves a bank holds that new loans are created. 3.2 NCCBL Products & Services: •

Time Deposit Scheme

Monthly Savings Scheme

Deposit Insurance Scheme

Inward & Outward Remittances

Traveler's Cheques

Import Finance

Export Finance

One stop Service

Working Capital Finance

Loan Syndication

Underwriting and Bridge Financing

Trade Finance

Industrial Finance

Foreign Currency Deposit A/C

NFCD (Non Resident Foreign Currency Deposit Account) Consumer Credit.


3.3 Types of Deposits offered by the Bank: Today, Bank offers different types of Deposits. The number and range of deposit services offered by banks is impressive. They are: CURRENT DEPOSIT ACCOUNT, SAVING DEPOSIT ACCOUNT, TERM DEPOSIT, and FIXED DEPOSIT, SPECIAL SAVING SCHEME. CURRENT DEPOSIT ACCOUNT Amount Deposited under this account gives the facility of withdrawal from the amount without any restrictions and within the funds available on credit. Ordinary no interest is paid on the amount deposited in this account. SAVING DEPOSIT ACCOUNT These are interest bearing deposit accounts. The drawing are restricted in respect of both the amount of withdrawal and frequency thereof so that the payment and of interest and does not become non-compensating for the banker. Interests are paid half yearly on the amount deposited. These accounts are suitable for individual person. TERM DEPOSIT ACCOUNT Deposits are also accepted by the bank against acknowledgement in the form of receipts for the specified amount and fixed periods. In Term Deposit Interest rate depends on period of deposit. The longer the period the higher is the rate of interest on them. The receipts are not negotiable and not transferable. Sometimes encashment of a receipt before maturity is allowed upon surrender of interest. FIXED DEPOSIT RECEIPT Fixed deposit accounts are repayable after the expiry of the predetermined period fixed by the customer. The period of the FDR ranges from three months to one year. Longer the period, the rate of’ interest is higher. Amount of FDR is payable once a time. If the client does not withdraw the amount and give’ further instructions for renewal within one month from the date of maturity, then the FDR account would get renewed for a further three months and the rate of interest would L prevailing rote for fixed deposit. Rate of Interest on Deposit offered by the Bank Types of Deposit •FDR for 1 months •FDR for 3 months •FDR 6 months •FDR for 12 months •Short Term Deposit •Savings Bank Deposit •Special Saving Scheme

Rate of Interest (0/0 per annum) 8.00 11.50 11.75 12.00 6.00 7.00 12.00

3.4 SERVICES PROVIDED UNDER GENERAL BANKING There are some customer’s oriented services in the field of general banking. There are different types of customer services. Like Cash, Account Opening and Closing, Remittance and Clearing. These are described below.


CASH: In cash section Banks provide service to the customer or client by providing cash or receiving cash against proper document and identification. ACCOUNTS OPENNING Bankers have to follow some rules for opening an account. The bankers must keep some records and particulars of each Account holder. The particulars are essential for identification for the account holder. Particulars For all types of Accounts some Common particulars are needed. These are as follows: •

Proper Identification

Recent Photographs

Passport Photocopy/ Nationality certificate

• Transaction Profile • Introducer imam Some other necessary additional particulars are also needed for some Accounts. They are as follows CD - Proprietorship --Trade License, VAT, TIN is required. CD - Partnership. Partnership deed and Trade License CD - Joint Account The deed (This types of account is always discouraged by the Bank) CD – Limited Company - Trade license, Memorandum of association, Up to date director list. (For private and public Limited Com.) ACCOUNT OPENING FORM Each bank has its own printed forms supplied by the head office to its branches to distribute them for applying an account. Different types of forms are provided for different types of accounts and for different forms of business. It means different application process is applicable for different ownership system of the business. For example, Proprietorship, Partnership, Company limited by shares private or public. Who can open Account? Any one can open an account with the banker, if he is not incapable of entering into a valid contract and the bank is satisfied of his bonfires and is willing to enter into the necessary business relations with them. A minor is not capable of opening an Account under the prevalent rules and regulations. Withdrawal of Deposit The deposits accepted by the banker is withdraw able checks or by remittance or by transfers under written instructions of the customers.


Issue of Cheque Book The account holder should make a written request for issuing a check book for the first time. After finishing the first check book there is a printed format inside of a cheque book which presented to the banker for next check book. While issuing a check book the account number is noted. Immediately after the issue of check book, its serial number is noted on the check book issued register and in online branch the number must be posted. CLOSING OF AN ACCOUNT For closing an account, client must give a written application including why he want to close the account and give a charge for closing the account. 3.5 Clearing Section Clearing stands for mutual settlement of claims made in among member banks at an agreed time and place in respect of instruments drawn of each other. Clearing House is an arrangement under which member banks agree to meet, through their representatives, at the appointed time and place to deliver instruments drawn on the other and in exchange to receive instruments drawn from them. The nit amount payable or receivable as the case may be, is settled through an account kept with the controlling bank (Bangladesh Bank / Sonali Bank). Clearing (outward) Process: First tire Collecting Branch Second tire Principal Branch / Local Office. Third tire Clearing House (Bangladesh Bank / Sonali Bank). 3.6 TYPES OF CLEARING: OUTWARD CLEARING When a particular branch receives instruments drawn on the other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch. This branch is known as collecting branch. INWARD CLEARING Clearing returns (inward) consists of those instruments which were presented by us to other banks for payment but have been returned and unpaid by them due to specified reason through the clearing house. Procedures of Outward Clearing: FIRST TIRE: COLLECTING BRANCH The instrument is deposited duly entered in the pay-in-slip or voucher. The instrument is checked for any apparent discrepancy and is compared with the particular noted in the pay-in-slip. In case an order instrument is being deposited in second payee's account guarantee is obtained from the second payee and is attached to the pay-in slip.


In case the payee's name on the specially crossed instrument differs slightly that of the depositor, the instrument may be accepted but only from customers well-known to the bank and after obtaining an indemnity which is attached to the pay-in-slip. * Stamping: * Special Crossing: on the instrument * Clearing Stamp: Both on instrument & pay-in-slip. * Endorsement: Back of the instrument. Dully signed and return of counterfoil to the customer, The particulars of the instrument and voucher are entered in the Outward Clearing Register / Computer. The Register is balanced; the vouchers are separated from the instruments. Prepare voucher: Dr. Suspense A/ C Clearing adjustment. Cr. All pay-in-slips/Vouchers. Voucher to be passed on the following working day. Sorting of instruments bank-branch wise and accordingly prepares submission schedules. Prepare House page according to main schedules. Tallied house page with Outward Clearing Register. The house page with instrument sent to Principal / Local Office / Main branch (2nd tire). In the following working day prepared voucher (SL No. 9) is to be passed. if any return and unpaid instrument is received from principal branch, in addition to above voucher the following voucher will be passed. Dr. Party A / C Cr. Suspense A/ C Clearing adjustment. When Advice is received from Principal / Local Office, the following Voucher is to be passed. Dr. Head Office A / C Cr. Suspense A/ C Clearing adjustment. SECOND TIRE: PRINCIPAL BRANCH / LOCAL OFFICE / MAIN BRANCH. INSTRUMENT RECEIVED BY THIS OFFICE: Same as previous. LODGMENT BY THIS BRANCH: Received house pages with instruments from the branches. Recorded the amount in a Register from house page. The instruments with schedules are rearranged bank-branch wise and prepare main schedules for each bank. Prepare house page. The instruments with schedules, house page and the house book are sent to the clearing house through bank representative.


HIRD TIRE: CLEARING HOUSE (BANGLADESH BANK / SONALI BANK The instruments are delivered to the respective banks. Proceeding of Inward Clearing FIRST TIRE: CLEARING HOUSE (BANGLADESH BANK /SONALI BANK The instruments are drawn on our bank are received from other banks in the clearing house. The amount and number of instruments received are entered in the house book from the main schedule of respective banks. The amount of instruments delivered, received and the differences are written on a figure slip provided in the clearing house. Second tire: Principal Branch / Local Office / Main Branch • • • • •

The instruments with schedules are arranged branch wise. The amount of each schedule received is entered in the house pages of the respective branches. The respective house pages are totaled and check the amount amounts of instrument received from all banks. The instruments are sent to respective branches with the slip showing total amount and number of instruments. The instrument sent to the branches concerned for clearance and Advice are collected from them for honored cheques.

Third tire: Paying Branch • • • • •

Particulars of the instruments are compared with the schedule. The instruments are sent to the respective departments for honoring them. For the total value of honored cheques pass the following vouchers: Dr. Party A/C (already debited by instruments) Cr. Head Office A/C Dishonored cheques if any with reason memo and Credit Advice sent to Principal Br.

3.7 Foreign Remittance:

These remittance services are provided for exchanging foreign currency. Those services are as follows: Foreign Remittance 1. Foreign Demand Draft 2. Traveler’s Cheque 3. Money Gram 4. Habib Quarter 5. Dhaka Janata


Foreign Demand Draft: NCCBL accepts the charges for TOFEL, SAT, GMAT etc through FDD. For that client has to open a student file to issue FDD maintaining the rule of BB. Before issuance of FDD, bank will ask the client to fill up the TM form, which contains the following particulars: • Name of the student • Address of the student • Amount of FDD in foreign currency • Purpose of remittance • Address of the institution to which the FDD will be favored • Country receiving payment • Passport no of the student with date of issue • Signature of the student .Traveler’s Check: Traveler’s cheques are issued by banks to avoid the risk of loss or inconvenience in having to carry large amount of cash while traveling. The salient features of T.C. are: • The buyers of T.C. need not to be a client of NCCBL. • The buyer has to deposit money with the branch of NCCBL equivalent to the amount of the T.C. he wants to buy. • Each T.C. is signed by the buyer at place marked “when countersigned below with this signature”, before the NCCBL officer • T.C. is issued in single name. It is not issued in joint names or name of clubs, societies or companies. • There is no expiry period for the T.C. Accounting entry: • Accounting treatment for the issuance of T.C. is as follows: Cash or customer’s A/C Dr. Issuing bank’s A/C Cr. Money Gram: It is the new concept of transferring foreign remittance to Bangladesh. One person residing in the abroad can remit his money through the process of money gram. There are more that 22,000 money gram agents in over 100 countries are linked worldwide. Only NCCBL is authorized to do this kind of business. This kind of business is permitted by BB because of foreign remittance is coming to our country. For such transaction client doesn’t have to maintain any account in NCCBL. They will only take Tk. 0.07/$ as a commission. There are some features of Money Gram: • Faster: When a person transfers money through money gram service his money gets there fast, usually in 10 minutes or less. Other services often take day or even weeks. • Convenient: There are more than 22,000 money gram agents over 100 countries. Therefore, a person can easily transfer his fund. • Secured: People use the money gram service thousands of time a day all over the world. It is a trusted guaranteed and reliable thoroughly personal way to transfer money. • Easy: Just one simple form and computerized money transfer network will speed a person’s funds to destination throughout the world quickly.


Money Gram processing: * Sender will go to money gram agent to transfer his/her money to any country (suppose Bangladesh) * Sender gets receipt and notifies recipients of the transaction reference number. * Recipients go to the money gram agent (NCCBL) in Bangladesh, fill the “Receive form� to request funds and shows proper identification. * Receiving agents contract the money gram transaction center (Head office on NCCBL) to obtain authorization to pay recipient. * Eventually receiver will get the money 3.8 ADVANCE SECTION The prime asset of any financial Institution consists of its loans and Advances and other investments. These assets are created primarily out of funds received from the depositors, loans and some other liabilities. The depositors as well as the investors in the institution are interested in real / realistic value of the assets of the institution as often, contradiction is unfolded between written value and realistic value of the assets. The creditors are interested as they want to know the dept of risk on their deposits, while the equity holders desire to be acquainted with viability of their source of income. The management of the institution as well as their supervising authority i.e. The Central Bank evaluates the assets of the institution keeping in view the aforesaid aspects. This evaluation at stipulated intervals is called "Classification of Advances". What is Classification of Advances? It is in fact placing all loans and advances under pre-determined different Heads/Classes basing on the depth of risk each and every loan has been exposed to and to bring discipline in financial sector so far risk elements are concerned credit portfolio of banks. Bangladesh Bank, by issuing a circular, has introduced the self classification system on some norms, with effect from 31.12.1987. At present Loans and advances are classified under three heads according to degree of risk element involves --------- 1 # SUB-STANDERD 2# DOUBTFUL 3# BAD/LOSS. Good loans are classified as "UN- CLASSIFIED" loans. Naturally, depth of risk is more in Doubtful or Bad Loans than unclassified ones so far realization/ serving is concerned. Creation of classification Formally loans used to be classified by Bangladesh Bank on qualitative aspects only. Under the revised system status of loans are determined on the basis of following five criterions: Overdue Criteria Required -payment in required period i.e. analysis of payment position of the loan within stipulated period. Legal action i.e. analysis of possibility to realize a loan by legal action. Limit overdrawn Criteria. Qualitative Judgments. Different Types of Bank Credit and features May be short or long term Sanctioned for a fixed period of time. May be a demand loan repayable on demand. Entire sum is debited to loan account of party and credited in this current or savings account for withdrawal as per need of Loanee. Where disbursable in installments, amount of each installment is released as above. No cheque book is issued. No subsequence debit excepting for charging interest or incidental charges.


Amount repayable either in lump sum or in installments. Interest is charged on debit balance at quarterly rests. Small Loan Scheme There are three types of Small Loan. 1. Personal Loan (only for salaried person.) There are some obligations of salaried person. The person should be the employee of Government, Corporation, autonomous, Multinational Company and any well reported organization. 2. Small Business Loan House repairing and Renovation Scheme. 3.9 REQUIREMENT: Personal Loan: Guarantee of Salaries disbursement authority. Spouse Guarantee. Post dated cheque. Small business loan: Guarantee of Land lord. Position Agreement Deed Somity Certificate. Up to date Trade License. Stock Report and five years experience. House Repairing Photo -Three dimension and /Equitable mortgage. OVER DRAFT (OD) Customers having current account are accommodated by overdraft facility against security. Permission is given to overview current account up to sanctioned limit. IT is continuous revolving credit & the borrower may operate any number of times within sectioned limit up to validity period of the limit. Two types of Overdrafts are allowed SOD (FO) & SOD(General). SOD (FO): SOD (FO) is allowed by making lien (duly discharge) on financial obligations (FO) like FDR, Other Term Deposit, SDS, PSP, BSP, WEDB etc. SOD (General): SOD (General) is allowed against assignment of bills of a particular work order/supply order and obtaining adequate acceptable collateral securities. Its interest is charged on debit balance of daily products. And it’s a short term credit arrangement & renewable.


Chapter 4 The Internship Position and Responsibilities 4.1The Internship Position and Responsibilities The worked mainly of the General banking Section. Sometimes the worked in the foreign exchange, money gram, Loan and advances department and cash counter. Mainly general banking section the worked account opening, deals with the clients about to open a new account, Forms of Deposit. Actually in our country the bank deposits take three different forms. • • •

Current or Demand Deposit. Saving Deposit Fixed Deposit

Fill up the Form The person desiring to open a current account with the bank has to make application in the prescribed form. This form must be properly filled up and signed by the applicants. Deposit Book Wit a view to facilitate the receipt of credit items paid in by a customer, the bank will provide him /her pay-in- slip either loose or in book forms. The customer has to fill up the pay in slip at the time of depositing the money with the bank. The cashier with his/her initials and stamps will return the counterfoil to the customer on the receipt of the money. Chequebook To facilitate withdrawals and payments to third parties by the customer, the bank will also provide a chequebook to the customer. But it is noted that to get a chequebook, the customer has to dully fill up the cheque requisition slip to the banker. Some days I was worked in Loan and advanced department. Mainly loan and advanced department worked deals with client about the loan conditions of the NCCBL. Chapter 5 Loans & Advance 5.1 Loans and Advance In common parlance the loan “document” means any written record which serves as an evidence in respect of a transaction and be described as anything obtained for recording a transaction. Documentation may be described as the process or technique of obtaining the relevant documents. A banker must obtain proper documents executed from the borrower to protect himself against willful defaults. Moreover, when money is lent against security of some assets, the documents must be got executed in order to give to the banker a legal and binding charge against those assets. Documents contain the precise terms of granting loans and advance and they serve as important evidence in law counts if the circumstance so require. It is, therefore, absolutely necessary for a banker to obtain proper documents from the borrower while granting a loan or advance to him. In banking system, loan interest is calculated in daily basis. Types of loan: Generally we find two types of loan Loans • Continuous Loan • Term Loan


Continuous loan: Within a fixed amount and fixed period of time, one can receive and deposit money several time. NCCBL provide different types of continuous loan: Secured Over Draft-financial obligation Secured over Draft- general Cash credit- hypothecation Cash credit- pledge Secured over Draft- financial obligation: Bank will give loan against any type of instruments such as FDR, SSS etc. It is not mandatory that the deposited instrument must be issued from the issuing bank. Borrower may not have any instrument in any bank then s/he can use third party for issuing the loan. If third party gives permission of taking loan by depositing his/her instrument only then bank will sanction loan. If the instrument is issued from another bank, loan issuing bank will send a Letter for seeking permission for lien that as security. When bank gets positive replay, loan issuing bank will sanction loan. Client must have a SB/CD a/c in the bank. Credit ceiling: Bank will sanction loan depending on the reliability of the client. But maximum amount is 80% to 90% of the instrument. Interest rate: 3% above from the instrument rate. Interest will be charged on quarterly outstanding. Payment period: The loan is to be repaid within a specific period of time. Security: Any type of instrument such as FDR, SSS, SDS etc. Procedure for application: Fill up the application with required documents Two passport size photographs duly attested by an officer of the branch. Discretionary power: The issuing branch can sanction this type of loan. Disbursement of loan: Against FDR in borrower’s name: D.P notes Letter of continuity FDR duly discharged by holder on revenue stamp under the words “Received payment” on the back of the FDR Agreement for pledge of securities Security delivery letter Revival letter Letter of authority to appropriate the proceeds of pledged FDR. Letter of authority to debit borrower’s account for incidental changes Letter of acceptance of the terms of the loan. In case the pledged FDRs stand in the third party’s name: Double party D.P. note D.P. note delivery letter Letter of continuity Agreement for pledge of securities Security delivery letter


FDR duly discharged by holder on revenue stamp under the words “Received payment” on the back of the FDR Letter of authority to appropriate the proceeds of pledged FDR Letter of guarantee Revival letter-1&2 Letter of authority to debit borrower’s account for incidental changes Letter of acceptance of the terms of the loan. Informal proposal format sanctioned by department in charge: Proposal for sanction of an SOD (FO) limit for “proposed amount” against lien an “any instrument” for total “amount of that instrument” a/c borrower’s name. The above named borrower has approached us to sanction an SOD (FO) limit for Tk. “proposed amount” against lien an “any instrument” for total Tk. “amount of that instrument”. It is mentioned that the party has been maintaining a SB a/c with us bearing no-”a/c number”. The detail of the proposal is as follows: • Name & present and permanent address of the borrower • Nature of advance • Amount of limit • Margin • Rate of interest • Validity • Details of security Name of the holder

Nature & no of sec

Date of issue

Date of maturity

R.O.I

Issuing advice

Face value

• All formalities including marking of lien have been completed. • Place for approval. Secured over Draft- general: Bank will sanction loan against work order. Borrower can request bank guarantee for the amount which is financed by them. Client must have a CD A/C in the bank. Credit selling: Bank will sanction loan depending on the reliability of the client, but maximum amount is 20% to 30% of the total work order. Interest rate: For SOD (G) client has to pay 12.5 to 15% interest. Payment period: Suppose one party get a work order of Tk. 1, 00, 00,000 and receive their payment part by part. They borrow Tk. 20, 00,000 from bank as loan. From the first payment Tk. 20, 00,000 banks will take Tk. 5, 00,000 and return Tk. 15, 00,000 to the client. By this way bank will receive the repayment of loan. Security: Work order will be kept as primary security Collaterals such as building; land etc will be kept as secondary security 5.2 Procedure for application: Fill up the application with required documents Two passport size photographs duly attested by an officer of the branch.


Discretionary power: The head office can sanction this type of loan. Disbursement of loan: D.P. note Letter of continuity Agreement for hypothecation of supply bills General irrevocable power of attorney for collection of bills, security deposit etc. Properly executed by the borrower and registered in the District Registrar/Sub Registrar’s office should be lodged with the department concerned who award the contract! Paying authorities and their written confirmation obtained to the effect that all payment against the bills, security deposits etc. on account of the party concerned will be made direct to the bank for credit to party’s account through account payee check drawn in favor of the bank’s a/c. A letter of undertaking from the borrower to the effect that they will not receive the proceeds of the bills/security deposit etc. directly from the paying agencies concerned and in case any check/payments come is their possession the same will be placed to the bank fort with. Supply bills to be accompanied by: Inspection note duly signed by the authorized official of the paying authority Consigner’s receipt for the goods supplied duly signed by their authorized official Letter of authority to debit borrower’s account for incidental changes Letter of acceptance of the terms of the loan. Cash credit-hypothecation: This type of loan is issued for business person. Bank will issue loan against the products of the shop. Party has the possession of those products but bank has the control over those products. Requirement of the clients Party has to submit monthly report of their product Product should be insured the prospective borrower must have a CD A/C with the branch of the bank from where s/he wants to avail the loan Bank procedure: Bank will collect all required information from CAB (Credit information Bureau) Credit ceiling: Loan amount depends on the total product of the shop. Bank will sanction a marginal amount among the product. Suppose one party has a shop with Tk. 40, 0000 then bank may sanction 50% margin amount means Tk. 2, 00,000. Interest: Interest may vary from 12.5% to 15% and it will be charged on quarterly outstanding. Security: Bank kept collateral as building, land. Disbursement of loan: D.P. note Letter of arrangement Letter of disbursement Simple deposit of original title deed of the ownership of the shop or possession deed/agreement or lease deed of agreement with personal guarantee of the landlord in case of rented premises. Guarantee bond on Tk. 150/- non-judicial stamp as per our approved format from the guarantor acceptable to the bank. Acceptance of the terms and conditions of the loan. Letter of authority to debit the account with incidental and other changes •

Up to date trade license

Mortgage deed

Mortgage property

Biya deed

Cash credit-pledge: In CC-pledge both control and possession are under bank. Part by part party will repay the loan and receive/ release their products.


Requirement of the clients: Party has to submit monthly report of their product Product should be insured The prospective borrower must have a CD A/C with the branch of the bank from where s/he wants to avail the loan. Bank procedure: Bank will collect all required information from CAB (Credit Information Bureau) Credit ceiling: Loan amount depends on the total product of the shop. Bank will sanction a marginal amount among the product. Suppose one party has a shop with Tk. 4, 00,000 then bank may sanction 50% margin amount means Tk. 2, 00,000. Interest: Interest may vary from 12.5% to 15% and it will be charged on quarterly outstanding. Security: Bank kept collateral as building, land. Disbursement of loan: D.P. note Letter of arrangement Letter of disbursement Simple deposit of original title deed of the ownership of the shop or possession deed/ agreement or lease deed of agreement with personal guarantee of the landlord in case of rented premises. Guarantee bond on Tk. 150/- non-judicial stamp as per our approved format from the guarantor acceptable to the bank. Acceptance of the terms and conditions of the loan. Letter of authority to debit the account with incidental and other changes. Up to date trade license. Mortgage deed. Mortgage property Biya deed 5.3 Term loan: Borrower will take the whole amount at a time and has to deposit/ repay loan within specified time. NCCBL provides different types of term loan: • Consumer finance scheme • Small business scheme • House repairing/ renovation loan scheme • Personal loan scheme for salaried person • Project loan • Lease finance Consumer finance scheme: To help salaried person to purchase household goods such as refrigerator, computer, car etc this type of loan is introduced. Client must have a SB A/C in the bank. Credit ceiling: Bank will sanction loan depending on the reliability of the client. Maximum Tk. 3, 00,000 for car purchase and Tk. 1, 00,000 to purchase any other goods. Suppose a person want to buy a product which will cost Tk.1, 00,000. Among this amount client has to give 25% of the total amount and rest of the money will be financed by the bank means 75%. When client will deposit their required money only then bank will give him/her loan.


Interest rate: Interest Application fees Risk fund Service charge Stamp charge

@15% at quarterly Tk. 100/@1% 1% Tk. 210/-

Payment period: A car loan receiver can repay their money maximum 3 years 36 installments. Other goods purchaser can repay their money maximum 2 years/ 24 installments. Repayment will start one month of availing of the loan. Borrower has to repay monthly installment within 10th day of a month. If s/he didn’t do it then bank will deduct that money from their SB a/c. Cheque will be issued to the name of that shop or organization Car registration will be done jointly by the bank and the client. Security: Quotation of the purchased goods. Salary certificate of the borrower and the guarantee Spouse guarantee and photograph Procedure for application: Fill up the application with required documents Two passport size photographs of borrower and guarantor duly attested by an officer of the branch. Discretionary power: The head office can sanction this type of loan. 5.4 Small business scheme: To help an entrepreneur this type of small business loan scheme has been introduced. This type of loan is given one time disbursement basis. Requirements of the clients: A business person must have a least 5 year working experience They must have any security to offer against the loan Borrower must have a CD A/C with the branch of that bank Credit ceiling: Maximum amount of loan under this scheme will be Tk. 5 lac. Interest Application fees Risk fund

Interest and other charges:

@15% at quarterly Tk. 500/@1% minimum Tk. 500

Payment period: The loan is to be repaid by equal monthly installments including interest within 3-5 years. Calculation of monthly installment under “Small business loan scheme” @15% Amount of loan 1 year 2 year 3 year 4 year 5 year One lac 9,050 4,850 3,500 2,800 2,400 Two lac 18,100 9,700 6,950 5,600 4,800 Three lac 27,100 14,550 10,400 8,350 7,200 Four lac 36,150 19,400 13,900 11,150 9,550


Five lac

45,150

24,250

17,350

13,950 11,900

Banker will decide borrower’s grace period depending to their transaction. But usually borrower’s repayment procedure starts from the 2nd month of availing of the loan. Loan installments will have to be paid within 10th day of every following month. If any three installments are not paid, the borrower will be treated as a defaulter and penal interest @1% month will be charged on the defaulted amount. Security: Possession deed/ agreement or ownership or lease deed of agreement of the shop or any other security acceptable to the bank Personal guarantee from two respectable person of society acceptable to the bank Hypothecation of the stock in trade Post dated cheques of the borrower’s CD A/C maintained with the financing branch for all installments to be deposited in advance. Procedure for application: Application in prescribed form duly filled in and signed by the applicant. Two passport size photographs attested by an officer of the branch Recommendation by the Head of Local Chamber of Commerce and Industry or related business association or society or similar body. Discretionary power: A SBS loan can be sanctioned by following way: Branch manager Area chief! SEYP Managing director

Up to Tk. 1,00,000/Up to Tk. 3,00,000/Up to Tk. 5,00,000/-

5.5 Disbursement of loan: Branch manager will disburse the loan after sanction and completion of all formalities and documentation The following documents must be obtained before disbursement of the loan: D.P. note- negotiable items Letter of arrangement Letter of disbursement Possession deed! Agreement or ownership or lease deed of agreement of the shop or any other security acceptable to the bank. Guarantee bond on Tk. 150/- non-judicial stamp as per our approved format from the guarantor acceptable to the bank Acceptance of the terms and conditions of the loan. Letter of authority to debit the account with incidental and other changes. Up to date trade license Letter of hypothecation- One kind of collateral over products of the shop Post dated cheques for all installments Undertaking from the borrower to the effect that party will pay monthly installments within 10th day of every following month. Party will pay the bank’s dues including interest in full. Party will neither sell nor transfer the ownership of the business until bank’s dues are fully paid and without prior permission! NOC from the bank witnessed by the land lord of the shop/ building. Party will inform the bank immediately, if the borrower or his guarantor changes address or profession.


The loan will be disbursed in the form of Term loan. A separate ledger will be introduced for the purpose. Follow up of loan: If any loan installment is defaulted, the branch manager will immediately contact the borrower personally or through letter/ phone for regularization of the loan. If the borrower fails to pay three installments, the matter shall be transferred to the notice of the guarantor by letter/ personal contact/ phone for realization of all the installments. Miscellaneous: Monthly statements of disbursement and recovery during the month shall be sent to the VC, HO, to reach within 10th day of every following month. Application forms will be sold be keeping proper record in a khata where register mentioning date, form no, serial no, name and address of the applicant etc. The register’s SL. No. and name of the applicant should be written on the top of the application authenticated by an officer. Cost of application form and processing fee will be credited to bank’s income a/c “Service and other charges”. At last they will entry all the information into the computer. 5.6 House repairing/ renovation loan scheme: This type of loan is introduced to help self employed persons to repairing/ renovation house/ building/ flat for better living or increasing rental income. The full loan amount is repaid part by part Requirements of the clients: Only the genuine residential house owners may avail of the opportunity to repair, renovate their own house/ building/ flats according to their need and repayment capacity. Bank will reserve the right to accept or reject any application without assigning any reason whatsoever. Borrower must have a SB A/C with the branch of that bank. Credit ceiling: Maximum amount of loan under this scheme will be Tk. 5 lac. Interest and other charges: Interest Application fees Risk fund Processing fees

@15% at quarterly Tk. 500/@1% minimum Tk. 500 1% of the amount of loan sanctioned is to recovered at the time of disbursement of the loan

Payment period: The loan is to be repaid by equal monthly installments including interest within 3-5 years. Calculation of monthly installment under “House repairing loan scheme” @15% Amount of loan One lac Two lac Three lac Four lac

1 year 9,050 18,100 27,100 36,150

2 year 4,850 9,700 14,550 19,400

3 year 3,500 6,950 10,400 13,900

4 year 2,800 5,600 8,350 11,150

5 year 2,400 4,800 7,200 9,550


Banker will decide borrower’s grace period depending to their transaction. But usually borrower’s repayment starts from the 4th month of availing of the loan. The client will enjoy 3 months grace period. Loan installments will have to be paid within 10th day of every following month. If any three installments are not paid, the borrower will be treated as a defaulter and penal interest @1% month will be charged on the defaulted amount. Security: Equitable mortgage by way of simple deposit of original title deed with chain of documents. Personal guarantee from two respectable persons of society acceptable to the bank. Post dated cheques for all installments to be deposited in advance. Personal guarantee of spouse to be obtained. Procedure for application: Application in prescribed form duly filled in and signed by the applicant. Two passport size photographs attested by an officer of the branch Estimated cost of the proposed expenditure for repairing/ renovation of the house. Discretionary power: A SBS loan can be sanctioned by following way: Branch manager Area chief! SEVP Managing director

Up to Tk. 1,00,000/Up to Tk. 3,00,000/Up to Tk. 5,00,000/-

Disbursement of loan: Branch manager will disburse the loan after sanction and completion of all formalities and documentation The following documents must be obtained before disbursement of the loan: D.P. note- negotiable items Letter of arrangement Letter of disbursement Equitable mortgage by way of simple deposit or original title deed. Guarantee bond on Tk. 150/- non-judicial stamp. Acceptance of the terms and conditions of the loan. Letter of authority to debit the account with incidental and other changes. Up to date rent receipt, municipal tax, purchase, mutation and plan. Undertaking to pay monthly installments in banks prescribed form post dated cheques for all installments. Undertaking from the borrower to the effect thatParty will pay monthly installments within 10th day of every following month Party will pay the bank’s dues including interest in full even if the house is not completed within the sanctioned loan amount due to increased price of materials or any other reason. Party will allow the bank’s official to inspect any time. Party will neither sell nor transfer the ownership of the business until bank’s dues are fully paid and without prior permission! NOC from the bank party will inform the bank immediately, if the borrower or his guarantor changes address or profession the loan will be disbursed in the form of Term loan. A separate ledger will be introduced for the purpose. After sanction and on completion of documentation, the loan will be disbursed in 4 equal installments. Follow up of loan: If any loan installment is defaulted, the branch manager will immediately contact the borrower personally or through letter/ phone for regularization of the loan. If the borrower fails to pay three


installments, the matter shall be transferred to the notice of the guarantor by letter/ personal contact/ phone for realization of all the installments.

Miscellaneous: Monthly statements of disbursement and recovery during the month shall be sent to the VC, HO, to reach within 10t1~ day of every following month. Application forms will be sold be keeping proper record in a khata where register mentioning date, form no, serial no, name and address of the applicant etc. The register’s SL. No. and name of the applicant should be written on the top of the application authenticated by an officer. Cost of application form and processing fee will be credited to bank’s income A/C “Service and other charges”. At last they will entry all the information into the computer. 5.7 Personal loan scheme for salaries person: To meet emergency financial expenses of the service holder this type of loan has been introduced. Emergency such as medical treatment, marriage, admission of children, maternity etc. Requirements of the client: Any permanents salaried officer/ employee aged between 20 to 50 years and working in offices (government, semi govt., corporate bodies etc) is eligible to get loan. They must have any security to offer against the loan. Borrower must have a SB a/c with the branch of that bank. Credit ceiling: Maximum amount of loan under this scheme will be Tk. 1 lac. Borrower has to repay the within 6 month (minimum) but not exceeding 3 years. Interest and other charges: Interest Application fees Risk fund Penal interest Penal interest Service charge

@15% at quarterly Tk. 500/@1% minimum Tk. 500 @1% of per month of the defaulted amount of installment but not less that Tk. 100. @1% of per month of the defaulted amount of installment but not less that Tk. 100. @l% of the amount of loan sanctioned to be recovered only once at the time of disbursement

Payment period: The loan is to be repaid by equal monthly installments including interest. Calculation of monthly installment @15%” Amount of loan 6 month 20,000 3,500 25,000 4,400 30,000 5,250 35,000 6,100 40,000 7,000 50,000 8,750 60,000 10,450 70,000 12,200 75,000 13,100

under “Personal loan scheme for salaried person 1 year 1,850 2,300 2,750 3,200 3,650 4,550 4,450 6,350 6,800

1½ year 1,250 1,600 1,900 2,200 2,500 3,150 3,750 4,400 4,700

2 year 1,000 1,250 1,500 1,700 1,950 2,450 2,950 3,400 3,650

2½ year 850 1,050 1,250 1,450 1,650 2,050 2,450 2,850 3,050

3 year 700 900 1,050 1,250 1,400 1,750 2,100 2,450 2,600


80,000 13,950 7,250 5,000 3,900 3,250 90,000 15,700 8,150 6,650 4,400 3,650 1,00,000 17,450 9,050 6,250 4,850 4,050 Banker will decide borrower’s grace period depending to their transaction. But repayment starts from the next month of availing of the loan.

2,800 3,150 3,500 usually borrower’s

Security: Letter of authority to make lien on the applicants fund, gratuity etc. Guarantee bond in bank’s prescribed format on Tk. 150! - Non-judicial stamp. Guarantee on the bank’s standard format from the spouse of the borrower. Letter of confirmation from the salary disbursing authority. Post dated cheques of the borrower’s CD a/c maintained with the financing branch for all installments to be deposited in advance. Procedure for application: Application in prescribed form duly filled in and signed by the applicant. Two passport size photographs attested by an officer of the branch. Employer’s certificate stating the net salary of the applicant Discretionary power: A SBS loan can be sanctioned by following way: Branch manager Area chief! SEVP Managing director

Up to Tk. 25,000/Up to Tk. 50,000/Up to Tk. 1,00,000/-

Follow up of loan: If any loan installment is defaulted, the branch manager will immediately contact the borrower personally or through letter/ phone for regularization of the loan. If the borrower fails to pay three installments, the matter shall be transferred to the notice of the guarantor by letter/ personal contact/ phone for realization of all the installments. The letter should be sent by marking “First reminder”, “Second reminder”, “Final notice” etc. as the case may be on the top of the letter. Miscellaneous: Monthly statements of disbursement and recovery during the month shall be sent to the VC, HO, to reach within 10th day of every following month. Application forms will be sold be keeping proper record in a khata where register mentioning date, form no, serial no, name and address of the applicant etc. The register’s SL no and name of the applicant should be written on the top of the application authenticated by an officer. Cost of application form and processing fee will be credited to bank’s income a/c “Service and other charges”. 5.8 Project loan: If any client has been assigned to do a project (such as hotel construction) can apply for project loan. Requirements of the clients: Client has to submit a feasibility report over their project and they must have a CD a/c. Credit ceiling: Amount maintained in the application. Depending on the present condition of the project, bank will decide how much they will invest in that project. Interest: Usually 15% interest is charged for project loan. Repayment period: The loan is to be repaid by equal monthly installments including interest. Grace period vary from project to project. It may be seen that one company has already finished 70% of their work. In this situation party can start their activity quickly so their grace period will be short.


Loan installments will have to be paid within 10th day of every following month. If any three installments are not paid the borrower will be treated as a defaulter and penal interest @1% month will be charged on the defaulted amount. Security: Collateral such as land, building which is registered against general irrigable power of attorney to sale the property Every thing inside the building Personal guarantee from the owner Original and chain of documents Post dated cheques of the borrower’s CD a/c maintained the financing branch for all installments to be deposited advance Procedure for application: Application in prescribed form duly filled in and signed by the applicant. Two passport size photographs attested by an officer of the branch Procedure for sending proposal and sanction: Party will apply for loan with required information as how much loan they need, repayment period, present condition of their project etc. Depending on that bank will prepare a proposal which contain project’s present condition and their required need. This proposal will be send to HO. Credit proposal and approval form will be send to HO and another copy will be kept in the branch. After getting the approval bank will calculate monthly installment rate and give one copy to the party. Follow up of loan: If any loan installment is defaulted, the branch manager will immediately contact the borrower personally or through letter! Phone for regularization of the loan. If the borrower fails to pay three installments, the matter shall be transferred to the notice of the guarantor by letter/ personal contact! Phone for realization of all the installments. Lease finance: To purchase any machinery, car etc for business purpose once can take this loan. Requirements of the clients: Party must have a CD a/c in the bank. Purchaser has to buy the product to the name of the bank. Credit ceiling: The party will finance 20% and the bank will finance rest of the amount. Interest: Interest rate is 14%. Repayment period: Repayment period depends on loan amount. If the amount is big then it will take long time for repayment. If the amount is small then it will take short time. Security: Bank will take collateral as security. Following steps will be taken against a defaulter: • Reminder the parties to repay the loan after validity date • Send final notice • Send legal notice • Eventually sue a case against the party 5.9 Bank guarantee: Suppose one party get a project or construction work then employer may want guarantee. This guarantee is required because whether party can give financial support to finish the whole work or not. Bank will give such guarantee against their client it is also called contingent liability. There are three type of bank guarantee: Bank Guarantee 1. Bid Bond


2. Performance 3. Advance payment Bid bond: This type of BG is issued only for tender. Performance guarantee: Depending on the reliability of the client’s transaction bank will sanction guarantee. Advance payment guarantee (APG): It may be happened that one party doesn’t complete their work within the fixed time. And this client already issued a BC from bank. In this circumstances party may request advance payment from their employer. If bank sanction APG against that party employer may give advance payment to them. This type of loan is sanctioned only few reliable parties. Requirements of the clients: Client must have SB/CD a/c in that bank. Interest and other charges: No interest is charged for BC. Bank charge commission @ 0.5% over the total amount! Quarter and VAT (commission @15%) and stamp cost. Security: After getting approval of the BC a margin amount will be transfer from parties CD/SB a/c as security. At the time of issuing BC a liability will be created to the party a/c. The liability amount is equal to the amount they are showing as BG. Counter guarantee: Bank will take a counter guarantee document from the party as a security. By this way bank will receive guarantee form the party. Discretionary power: BC will be sanctioned from the Head Office. Returning procedure: After finishing the work party will return the BC to the bank. Bank will reverse the liability and return margin to party a/c. Staff loan: There are three type of staff loan: House loan: Those employees who are working in this bank from last 10 years they are eligible to apply for this loan. This loan will be sanction in 7% interest rate. Car loan: Above the post of AVP can apply for the loan. Bank will charge 5% interest for this type of loan. Provident fund loan: Those employees who have a provident fund can apply for this loan. Bank can give maximum 80% of PF as loan with 6% interest. HO will decide what would be the installment amount for each month. 5.10 Loan Classification: Loan classification attempts to categorize the debt information in a systematic manner. Loan classification is defined in terms of degree of risk associated with loans. Classification of loans mean and include only such assets of the balance sheet of a bank which do not yield interest income and which have remained past due for some quarters. Loans are generally categorized in two types:


Loan Classified Loan Unclassified Loan

Classified loan: If any continuous credit is not adjusted/ renewed within expiry date, the loan will be treated as classified/ irregular loan from the next day of the expiry date. Loans are classified which are judge to have a reduced chance of repayment. Classified loan can be three types: Classified loan Substandard Doubtful Bad/ loss Substandard: If the loan unadjusted for six months or more but less than nine months, the loan will be treated as “substandard”. Doubtful: For nine months and above but less than twelve months the loan will be treated as “doubtful”. Bad: If the period is twelve months or more, the loan will be classified as “bad”. The above time frame is applicable in respect of demand loan also. Unclassified loan: Unclassified loan are those which are repay regularly. Objectives of loan classification: Find out net worth/ adjust capital of a bank Help for assessing financial soundness of a bank. Calculate the required provision and the amount of interest suspense Put the bank on sound footing in order to develop sound banking practice in Bangladesh. Importance of loan classification: Strengthen credit discipline Improve loan recovery position Make planning for future course of loan Basis for loan classification: All loans and advances are classified on the basis of two criteria: Objective criteria Qualitative judgment criteria Objective Criteria Status Type of loans Definition 1 Unclassified All Current loans with required! adequate eligible securities 2 Sub- Continuous Overdue is more than 3 months but less than 6 standard months Demand Overdue is more than 3 months but less than 6 months from the date of serving notice! creation of forced loans Term (less than 5 If the defaulted amount of installment is equal years) to installment! installments payable in 6


Doubtful Doubtful

Bad/ loss

months Term (More than If the defaulted amount of installment is equal 5 years) to installment! installments payable in 12 months Short term Overdue is more than 12 months but less than agriculture! micro 36 months Continuous Overdue is more than 6 months but less than 12 months Demand Overdue is more than 6 months but less than 12 months from the date of serving notice! creation of forced loans Term (Up to 5 If the defaulted amount of installment is equal years) to installment! installments payable in 12 months Term (More than If the defaulted amount of installment is equal 5 years) to installment/ installments payable in 18 months Short term Overdue is more than 36 months but less than /micro 60 months Continuous Overdue is more than 12 months Demand Overdue is more than 12 months from the date of serving notice! creation of forced loans Demand Overdue is more than 12 months from the date of serving notice! creation of forced loans Term (Up to 5 If the defaulted amount of installment is equal to installment! installments payable in 18 years) months Term (More than If the defaulted amount of installment payable in 24 5 years) months Short term/ micro

Overdue is more than 60 months

Qualitative Judgment Criteria Status

Type of loans

Definition

Sub- standard

All

A loan is considered “Sub-standard” when the degree of risk of non-payable is so high and there is reasonable prospect that the loans condition can be improved

Doubtful Bad/ loss

Chance of recovery is uncertain All

No security held. Borrower not traceable. Time barred loan cases. No hope of recovery.

Calculation of interest on classified advances: Interest on sub-standard and doubtful loan accounts should be credited to “Interest Suspense Account” instead of crediting the same to the interest income account. Calculation of interest on Bad/loss loan accounts should be deferred instead of calculating the same on those accounts.


If there is any recovery on the above accounts that recovery/ portion of recovery will be treated as interest recovery, not principal recovery. After adjustment of interest due, principal portion of respective loan account will be adjusted later on.

Chapter -6 Foreign Exchange (Import) 6.1 Import & Letter Of Credit The import and export trade of our country is regulated by Chief Controller of Import and Export (CCI&E). No person who has been granted registration by the CCI&E shall indent, import or export any thing into or out of Bangladesh except in cases of exemption issued by the government. Business person in our country can import product from another country, for this transaction they transfer Letter of Credit. In this part we will discuss about import procedure as general basis because this procedure is accepted world wide. Letter of Credit: Letter of credit is a written undertaking issued a bank (Guaranteeing payment) at the request of buyer (Importer) to the seller (Exporter) to pay at sight or a determined future date, up to a stated sum of money, within a prescribed validity of the instrument (L!C) and against stipulated shipping documents. 6.2 There are different types of L/C: Circular letter of credit: It is issued by a bank at the request of this customer for availing credit facility from beneficiary or draws his traveling expenses from banks in different places. But with the introduction of Travelers Cheques and Credit Card, issuing of circular L/C is now outdated. Revocable credit: It is credit, which can be revoked or cancelled at any time without the consent or notice of the beneficiary. Irrevocable credit: This credit cannot be revoked, revised or amended/ changed without the consent of all the parties i.e. the buyer, seller, issuing bank and confirming/ advising bank. Red-clause or packing credits: Which bears an endorsement by opening bank on the credits in “RedInk” a clause authorizing the confirming or negotiating bank to pay the beneficiary against his drafts alone coupled with his simple promise to provide the documents in future. “Packing” because the merchandise bought in the interior is shipped to the ocean port, assembled and packed for over as shipment. Subsequently, bank can reimburse the amount by negotiating the shipping documents plus interest accrued. Revolving credit: An L/C can be revolving credit provided the wording will permit the amounts of drawings to be again available to the beneficiary within the validity period. Clause of opening bank to advising bank. The amount paid under this credit become available to you upon your receiving from us advice to this effect. The amounts paid under this credit are again available to you automatically until the total of the payments reaches a fixed amount. L/C opening branch doesn’t need to get permission from HO to open L/C each time if it is in the limit. Stand by letter of credit: It is a contractual agreement between one bank to another or a bank to its customers to provide agreed amount of funds as per arrangements set in the agreement. Applicable


only in case of subsidiaries of a bank abroad when they like to borrow from others in that country since Parents Company is restricted by the law of the land to issue guarantee for its subsidiary company. 6.3 Participants of L/C opening: Importer: A company can import finished goods or purchase raw materials to produce the product. Exporter/ Beneficiary: Those who supply raw material or finished goods. Issuing bank: L/C opening bank is called issuing bank or L/C opening bank. Some time issuing bank also does the work of advising. Advising bank: Advising bank will receive the L/ C and send it to exporter or negotiating bank Negotiating bank: On behalf of exporter negotiating bank do all the formalities with the issuing bank. Reimbursement bank: Issuing bank can pay to the negotiating directly or through reimbursement bank. In this bank, issuing bank has an account, which is called “a/c. in this a/c issuing bank deposit required amount for L/ C payment. Add confirmation: Supplier may want to receive payment from a specified and reputed organization through that bank they will collect their payment. Syndicate financing: It may be difficult for a small bank to finance for a big amount of L/C. In this, few banks may finance circumstances L/C. Indenter: An exporter may have an agent in the importing country. Then they do all process and they send “Indent” to the importer. Indent includes all information required by importer as types of product, price, quantity, shipment date, negotiating bank etc. 6.4 Import procedure: At the request of the buyer, issuing bank opens L/C on behalf of importer. Advising bank in the seller’s/ exporter’s country advice L/C to the beneficiary. The issuing bank may also request advising bank to confirm the credit. The advising bank will advise/ inform the exporter that the L/C has been issued. As soon as the seller/ exporter receive L/C and are satisfied with the terms and conditions, they take initiative for shipment of goods. After making shipment, the exporter submits documents to negotiating bank for negotiation along with L/C copy. Negotiating bank scrutinizes the documents and if satisfied, then they send the documents with forwarding letter to the L/C opening bank. After receiving documents, the opening bank checks the documents and if no discrepancy is found, makes payment directly to the negotiating bank or through reimbursement bank. 6.5 Required documents for L/C opening: A request letter for L/C opening with margin, amount of product and total cost IRC (Import Registration Certificate): It is issued by CCI&E, which will certify that the company has included itself as an importer. TIN (Tax Identification No): Company gives their tax regularly or not, this information will be known from tax identification no. Pro-forma invoice/ Indent: Three copies duly accepted. Exporter sends “Performa Invoice” to the importer, which contains types of product, price, quality, shipment date, negotiating bank etc. Insurance cover note: An insurance company must insure imported product. VAT registration: Whether company submit VAT on their product or not. Trade license: A valid trade license if expiry date is over they must renew it. Membership certificate by Chamber of Commerce & Industry or Register trade association. L/ C application (Provided by bank) LCA form (L/C authorization form) IMP form (Import permission): It is issued by CCI&E which will identify whether the product is authorized to import or not. Banker’s solvency certificate


Approval of Drug Administration in case of importing pharmaceutical raw material and packing materials etc. Banker will consider following documents to open a L/ C: Proper assessment of applicant’s credit worthiness, integrity, past performance etc. Supplier’s credit worthiness Competitive price of goods- Bank will consider minimum three competitive company’s market price for this Demand of goods in the market Durability of goods 6.6 Proposal for L/ C opening: If all required document is clear then issuing branch will prepare the proposal by following way: Proposal for L/ C opening Reference No: ________________ Date: (proposal preparation date) Senior Executive Vice President (Name of the Bank) Head Office Dhaka. Re: - Proposal for allowing permission to open L/C (Sight)/ days deferred for (FC) e.g. $6,138 Equivalent to Tk. e.g. 3,72,000 at 10% margin and subsequent LIM/LTR/Term loan facility for Tk. e.g. 3,72,000 a/c Name of the company At the request of our above-mentioned client we would like to request you as under ------ To allow us permission to establish the letter of credit(s) as per the following details: Among of L/C (FC) e.g. $6,138@ Tk. 59.80 (Exchange rate) Eqv. Tk. e.g.3,72,000margin 25% (sanction by HO). Sanction of subsequent LIM/LTR/Term loan for Tk. e.g. 3,34,800 for 45 days 1. Particulars of the clients: Name of the account: Name of the company Address Business: Office: Factory: Account no and date of account opening: (Info filled by bank) Maximum balance: Minimum balance: Average balance; Date of first sanction : (Info filled by bank) Constitution/ legal status : Private/Public/Others Date of Incorporation/Establishment : Date of commencement of business : Date of issuance license TIN no : (Info filled by bank) Nature of business : e.g. deep tube well Net worth of business : Info given by party Market/ place of business/ area of : Operation : Relationship history : Relationship with bank (E.g. company has been maintaining a CD a/c since 2000 and enjoying various credit facilities) Capital structure (for ltd. Company) Authorized capital : Capital investment in the business Paid up capital : Deposited amount is BB at the establishment period of the company Investment in business : Invested amount in the market. IRC no : Valid up to :


Type of IRC : Commercial/ Industrial 2. Name of the proprietor/partners/ directors: Name Father’s/ Permanent Present Age Share Status Mother’s/ add with add (%) Husband’s phone no with name Phone no 3. Particulars of the guarantor: Guarantor’s name Address Permanent Present Relationship of the guarantor with the applicant Guarantors back ground Net worth of the guarantor Liabilities with our bank/other banks and status: Name Name Nature Amount Validity Present Classification of of Of of limit outstanding status account bank Advance 4. Liability position of the client! Allied concern with our bank: Name of

Name the of

branch Funded Non-

account

Nature

Amount

of

of limit

Validity

Present

Overdue

Net worth

Security

outstanding

advance

Funded Total I. Break up liability LIC: Name of a/c allied a/c

L/C no, date and Amount

Description of goods

Margin held

Shipment validity

HO sanction reference

ii. PAD/ABP: Nam

PAD!

e of a/c allied a/c

ABP no, date of creation

Amoun Present Maturity Over t of outstanding date due PAD! ABP

Item

Date of

Related

& relate d L/C no

arrival of goods at the port

HO sanction no

Iii. LIM/LTR: Nam

LTR/LI

e of a/c

M no, date of

Amoun Present t of outstanding LTR/

Maturity

Over

Item &

Whether LIM

date

due

related L/C

goods are under effective control


allied a/c

creation

LIM

no

5. Liability position of the client! Allied concern with our bank: Name Name of Nature Amount Validity Present of the the of of limit outstanding bank borrower Advance b. CIB information: 7. Global exposure: Nature

of Amount

Outstanding

Overdue

of the branch

Over due

Classification status

Classification

advance of limit status Funded Non-funded Total 8. Performance of the client/ allied concerns (last 3 years) with our bank: Import Year L/C opened Documents retired Outstanding No Amount No Amount Export Year

9. Year

Export made

Proceeds realized

Proceeds yet to be realized

Others

Earning from the client/allied concerns during last 3 years: Interest Commission Others Total

10. Particulars of L/C: Description of the commodity Quantity Unit price Total price Sales term CFR or C&F (Cost & freight): C&F is a contractual trade term indicating that the price quoted includes cost of goods and transit costs. I.e. freight up to the named port of destination. FOB (Fright on board): Deliver the goods on board a ship at a port of shipment named in the Sale L/C at his own cost and risk. Seller is also to provide a clean bill of lading under this contract. Buyer’s primary responsibility is to take delivery of the goods after payment of freight, duty and taxes, port dues etc and bring the goods in his own premise at his own cost and responsibility. CIF (Cost, Insurance and Freight): The cost of the goods, the insurance and the freight to the destination are included in the contract price. Under this trade term, the seller, besides, cost of goods and freight has the added obligation to arrange/ procure insurance against the risk of loss and damage to the goods during the carriage up to the named port of destination. H.S code no : Whether this product is valid to import or not Country of origin : Manufacturing country Name &address of the beneficiary: Status report of the beneficiary Obtained/ not obtained Mode of shipment e.g. truck Port of shipment Last date of shipment:


Utilization of the goods: Trading! Own utilization Marketing arrangements: Margin proposed by the party: Margin recommended by the branch: Branch’s total exposure on the proposed item of import Branch’s total exposure on the proposed item of account of the client 11. Calculation of landed cost: C&F value Tk. Add 1% insurance premium Tk. Sub total Tk. Add 1% port fees on (A) Tk. Assessment value Tk. Tariff value, if any Duty on (B) Tk. Supplementary duty% on (B)Tk. Sub total Tk. VAT 15%on© Tk. AIT 3% on (B) Tk. DSC ~ on (B) Tk. Others 1% on (B) Tk. Misc. 5% on © Tk. Total landed cost Tk. Total landed cost is : __________% of L/C value Landed cost per unit: Tk. Market price per unit : Tk. 12. Arrangement for retirement of relative import bill: Cash LIMLTR Term loan others 13.

In case of cash retirement of documents:

14. If post import finance is required: Amount of post import finance : Tk. Margin : Tk. The post import finance is Value / landed cost : Tk. Duty, VAT and all other incidental charges will be borne by the client/ bank. 6.7 Elements of L/C: Field 1: Sequence of total- If ½ is written means it may be revocable or irrevocable L/C. Field 2: Form of documentary credit-Revocable L/C or Irrevocable L/C Field 3: Date of issuing L/C Field 4: Date and place of expiry- Date of expiry and name of negotiating bank Field 5: Applicant- Name of importing firm with address and telephone no. Field 6: Beneficiary- Name of exporting firm with address and telephone no Field 7: Currency code- In which currency transaction will be occurred. Field 8: Maximum credit amount- Declared amount shouldn’t be exceeded. Field 9: Available with be- Name and address of any bank in beneficiary’s country by negotiation Field 10: Drafts at- Sight (exporter can demand payment after delivering the draft)! DP (Payment will be done at a specific date). Field 11: Drawer- Name of the L/C issuing bank. Field 12: Partial shipment- Exporter can sent product at a once or part by part. Field 13: Transshipment- Product will reach to its destination by changing transportation or not. Field 14: On board! DISP! Taking charge at/F- Product exporting country. Field 15: For transportation to- From which check post product will reach to its destination.


Field 16: Latest date of shipment- During the specified time exporter has to finish the shipment Field 17: Description of product with price and quantity. Field 18: Charges Field 19: Period for presentation- Date for submission of all required document. Field 20: Confirmation instruction Field 21: Instruction of payment/ Acceptance/ Negotiating bank. Field 22: Sender to receiver information- Issuing and negotiating bank must follow internal rule. Field 23: Documents required Field 24: Additional requirements Accounting entry: At the time of opening L/C following voucher will be passed Reversal of Contra voucher: Banker’s liability for L!C Cr. Customer liability for L/C Dr. Party debit voucher: Margin (Bank will deduct a percentage of total amount it is called margin), VAT, commission, postage, telex, stamp charge. Single credit voucher: Sundry deposit a/c for margin and VAT Income a/c for commission, postage, telex Stamp and stamp from in hand a/c All information will be register in the L/C opening register: Date L/C Name, add & Equivalent Descriptio # IRC on of Foreign of taka n of goods party currency amount

Tenor

Shipment expiry date

Negotiating expiry date

Amount of margin

Commission

Postage

Country of Advising bank origin bank

Telex

Sign

Name of reimbursement bank

During L/C opening liability will be Dr. and margin will be Cr. Liability created against the L/C Date L/C# Dr. Cr.

Balance Initial

Margin Date L/C# Dr. Cr. Balance Initial Party has to pay commission of total amount @ 0.6% at the time of L/C opening Reimbursement authority: L/C issuing bank will send all the required documents to reimbursement bank through telex or SWIFT (Society for World Wise Inter Bank). Required documents are: Name of negotiating bank Name of beneficiary A/c no of beneficiary


Pre-shipment Inspection (PSI) document preparation: PSI is introduced to delivery imported product faster. For this purpose government has started three PSI companies. They divide the whole world into three blocks. Name of those three companies are: Block A- M/S Inserted Testing Service (ITS) Block B- M/S Inspectorate Griffith Ltd. Block C- M/S BIVAC International Bureau Verities Group Required documents for PSI are: Inspection order from dully filled in Copy of insurance cover note Copy of amendment- From starting to the ending of the transaction all report will be submitted by the exporter to the issuing bank. Depending on that they will prepare amendment to find is there any discrepancy or not. Copy of L/C Copy of pro-forma invoice/ indent. After the inspection PSI company will prepare “Clean Report of Finding (CRF)” and send it to issuing bank. Document Checking: Through negotiating bank exporter will send all required documents to issuing bank. Exporter may send original or copy documents. If issuing bank endorses the copy document then importer can release their product using it. It is very important to check all documents carefully because one small discrepancy may occur a big problem. Required documents are: Currier receipt Forwarding letter Bill of exchange- An instrument is writing containing an unconditional order, addressed by one person or concern to another, duly signed by the marker as drawer of the instrument, directing a certain person or concern i.e. addressee as drawer to pay a certain sum of money only to the order, or to the bearer of the instrument on demand or at a fixed or at a determinable future time. Bill of leading- A document signed either by the master of the ship or the owner, or their agents acknowledging the receipt of goods for carriage to a stated destination from the specified ports of shipment, the condition under which the goods accepted for carriage with an undertaking to deliver the goods to the consignee in the like order as received. Insurance copy Amount Certificate of origin Packing list Invoice Any type of phytozanitary, insecticides, fumigation certificate If every thing is clear then issuing bank will send money to the required bank mentioned in the forwarding letter. 6.8 Types of post import finance: If L/C issuing bank get original document first they will check the documents. Post import finance can be: Cash: Party can repay their money in cash. LIM (Loan against merchandise): LIM may be created at the request of the importer while he is not in a position to take delivery of import bills by making full payments of entire bank dues. In such a case PAD is transferred to LIM a/c and the overdue interest from the negotiation date to the date of transfer to LIM a/c is charged. Margin on the landed cost is ascertained and customs duty, sales tax etc are to be borne by importer. After clearance, consignments are stored in bank’s go down or party’s go down under bank’s effective control. Goods are delivered against proportionate payment and adjusted within the validity. Validity for commercial items is 30-45 days and for industrial item 90 days.


Force LIM: If it so happens that the importer does not proceed to retire import bill in spite of repeated request/ reminders and the imported goods incur demurrage at the port and further will expose more demurrage along with possibility of damage/ pilferage, bank take initiative to create forced loan in the form of LIM and keeps consignment in its go down for adjustment of liability through sale proceed of goods. LTR (Loan against trust script): Bank has to part with the goods of the bill of lading without receiving the amount due from the customers, it is essential that bank should take a “Trust Receipt” signed by the customer, agreeing to hold goods or their sale proceeds in trust, for the bankers, so long as the entire amount due to the borrower is not paid off. If a customer who has signed such Trust Receipt fails to hand over to the banker, the salt proceeds of the goods sold, the former will be liable for criminal breach of trust. LTR may be sanctioned at the request of confide customers of the bank. After sanctioning LTR import bills are handed over to the importer who will clear the goods from custom authorities by making payment of custom duty, VAT and other charges. The goods will remain at the custody of the importer. LTR is allowed for 30-90 days. It should be covered by collateral security and post dated cheques. Composite limit: Now a days it is common practice for the bank to sanction composite limit for big customers in the form of CC (H), L/C limit, LTR etc. In this case sanction from HO is taken only once in a year. So it promotes customer’s service. Lodgment against original document: 1.Reversal of contra voucher: Customer’s liability for L/C Cr. Banker’s liability for L/C Dr. 2. IBTA HO-ID Cr. PAD (Payment against document for sight L/C) a/c or ABP (for DP L/C) A/C Dr. 3.If party pay cash, voucher will be prepared up to this stage PAD a/c Cr. Sundry deposit-margin A/C Dr. 4.PADa/c LIM/ LTR

Cr. Dr.

5.LIM/ LTR margin (This margin amount will be deducted at a percentage of total LIM/LTR amount) A/C Cr. CD/CC A/C Dr. If party applies for LIM/ LTR, bank will charge an interest of 12.5-15% on daily basis. It is applicable for normal cash payment also. It means from L/C document receiving by the bank to the receiving by the party, bank will charge interest. Lodgment for copy document: In this situation bank cannot create PAD a/c because they didn’t get original document of L/C. If party pay cash then lodgment will be done following way: 1. Reversal of contra voucher: Banker’s liability for L/C Customer’s liability for L/C

Dr. Cr.

2. Party’s CD/ CC A/C Dr. Sundry deposit margin A/C Cr When bank will gat the original document then they will create PAD A/C and adjust it using exchange rate of that day and create. It there is any variation with paid amount and PAD amount bank will adjust it using CD/ CC A/C.


During L/C closing liability will be Cr. And margin will be Dr. Liability created against the L/C Date L/C# Dr. Cr. Margin Date L/C# Dr. Cr.

Balance Initial Balance Initial

Bill of entry: For all type of L/C importer must collect bill of entry it is an evidence that importer has receive their product or not. Customs supply it to importer from port. Importer has to submit it to issuing bank. Chapter-7 The SWOT Analysis, Recommendations, Finding and Conclusions. 7.1 SWOT ANALYSIS OF NCCBL SWOT analysis is an important matter to know the present status of Strength, Weakness, Opportunities and Threats of NCCBL. The analysis also helps the company management to take relevant measure to make up its weaknesses and to face the external threats of the competitors. The term SWOT includes the following: S - STRENGTHS W-WEAKNESSES 0 - OPPORTUNIITIES T - THREATS Now we shall discuss the strengths, Weakness, Opportunities and Threats in the following paragraphs. 7.2 STRENGTHS NCCBL enjoys the following strengths The banking service is easily accessible and feasible. Banks are the only media through which international trade and commerce emanate and entire credit transaction, both national and industry. The authorized capital of the bank stood at Tk.2500.00m in 2005. Paid up capital of the bank is tk 975.04 m in2005. The Reserve fund of the bank increased to tk 562.74 m in 2005 as against tk 425.22 m of previous year, increase being 32.34%. Deposit of the bank at the end of the year 2005 was tk 21478.22 m registering an increase of 33.66% over previous year's figure. * The advances growth of the Bank in increasing rapidly. * The bank is a member of ATM network along with other Banks which enabled the bank to extend modem banking facility to the customer. * The bank has been pleased to recommend 10% cash and 10% Bonus share for the shareholder. * The bank has already obtained principal membership of MasterCard and VISA credit card. 7.3 WEAKNESSES


* Lack of clearly defined marketing objectives. * Lack of -promotional objectives and strategies. * Lack of implementing IT technology. * Numbers of branch are Lower then other competitor. * Absence of attractive remuneration package and motivation for the employees. 7.4 OPPORTUNITIES In developing countries like Bangladesh banking sector would be the only sources of financing. They can diversify their portfolio by introducing new sectors like Leasing, Introducing ATM machines of there own, one point service, Tele banking, Credit card, etc. The banking sector of Bangladesh is growing very fast. The banking can also start micro-credit business for individuals and small business like Gramen Bank. Going for Islamic banking system, as Bangladesh a Muslim nation. 7.5 THREATS The most of the threats for the company are coming from the competitors. Bank has a chance to lose its market share to the competitors if it does not take necessary actions. Opening of the recently permitted new banks, without implementation of the needed reforms, could lead to unethical competition and house trading in the country's troubled banking sector. The size of the market and the present state of economic activity did not provide adequate scope for business for a large number of banks with poor management and backdated operating system. The customer service of the Bank is not too good like other banks. In the Foreign Banks, there are customer service department. But in this bank there is no Customer service department. ONLINE Banks are providing more threats on the banks which are not yet on lined like this bank. Political imbalance system of Bangladesh 7.6 RECOMMENDATION As per earnest observation some suggestions for the improvement of the situation are given below: O To attract more clients NCCBL has to create a new marketing strategy, which will increase the total export Import business. O Effective and efficient initiatives are necessary to recover the default loans. O Attractive incentive -package for the exporter will help to increase the Export and accordingly it will diminish the balance of payment gap of NCCBL. O Different types of training very much required for the bank officials. O Computerized banking system and latest communication device are the most important elements for this century. So, for the sound and stable Banking operation, NCCIBL has no alternative but the modernization. O Foreign exchange operations of other banks are more dynamic and less time consuming. NCCBL should take some initiative to compete with those Banks.


O Bank can provide foreign market report, which will enable the exporter to evaluate the demand for their products in foreign countries. O The Bank must be to introduce On Line Banking between all branch. O Number of branches is very limited of this Bank. They have to increase the number of branches at various key points of the country. 7.7 FINDINGS To do the internship in the National Credit and Commerce Bank Limited, work with the officers and observe many things. And with those observations, description as well as analysis of the topic, find some factor those are particularly applicable for the NCCBL. Those are given below:

1.

The NCCBL has online banking system for providing better service to the customers. But, the online bank is not implied in all the branch of NCCBL. Mainly, busy cities’ branches (Area like Foreign exchange branch in Motijheel, Dhaka, and Chittagong) have that kind of facilities. Having manual and online banking at the same time, the bank sometime find some problem to do their inter branch activities.

2.

To do the online banking, NCCBL use MICROBANKER a banking software to run a banking operation. This software has lot of option to do, but still it has some lacking. To this system, only limited use can login at a same time. So, all the employees of the bank can not work with this software at a time, and some time it becomes slow to take the entry. And some statement can not be provided by this software which other bank’s system can do, such as the MIROBANKER is not able to provide the statement of Fixed Deposit.

3.

Only a few officers know, entirely, how to operate the MICROBANK (online banking software of NCCBL). Most of the officers only know the some portion of the software which they use to work.

4.

Currently, one of the most profitable products for NCCBL is Money Gram which is used to send foreign remittance. Money Gram is less charge and time than the Union Money Transfer and other money transfer agent which normally attract the growing market of foreign remittance. At the some time, the bank is providing the service Money Express, UK money speed.

5.

The NCCBL is using SWIFT (Society for Worldwide Inter Bank Financial Telecommunication) to provide better service for the customer of foreign trade and exchange. This allows doing many businesses with the foreign market. And it always gives change to the bank to update the foreign financial currency and market information regularly.


6.

The accountability is working in the NCCBL. Every day they have finish their transaction and if there is any miss match, the employees have to explain it and even have to pay for it. So the condition of transparency is good here. This job use to do the Accounts and Administration Department.

7.

The NCCBL has a training institute to build a better work force. When a provisional officer joint

the bank, the bank arrange some training course associate with Bangladesh

“ Institute of Bank

Management” to improve the officer’s skill 8.

The bank had introduced its ATM card to the market and it has only a few ATM Booths right

now. Inefficiency of the management decision makes the scope of the ATM services limited. 9.

NCCBL has introduced the Visa Card to the market in the last year, 2005. It gives the customer

access to the local and foreign market. NCCBL providing this service with comparatively low interest and charge. 10. The NCCBL is showing their growth by increasing the number of branch. In 2000, it had 27 branches. The management of the bank able to find of the need of the client mainly the middle class business owner. Though the strategy of bank is conservation, by selecting the right target group the bank has increase growth of their market. Currently they have 53 branches all over the country. 7.8 Conclusion National Credit Commerce Bank Limited (NCCBL) is serving the market with almost full range of services. As the number of branches implies, still Bank has limited operation in our country, but it should also be noted that within the next few years from its establishment, no bank could make as good standing as NCCBL has now done. While going through the different reports it is found that authorized and paid up capital, reserve fund, Savings, Loans and advances, Loan Management, investment foreign trade, treasury activities, capital market activities, no. of Branches! Dividend Good corporate governance, compliance of the regulations provided by Security and Exchange commission etc. are moving towards a highly positive trend at the satisfactory level. The Bank is run by a group of professionals who are well-organized and committed to the bank. Now it is gradually moving towards automation and which will not allow any sort of discrepancies. Bank now aggressively looking and establishing Foreign partners at abroad, to make easier and shorter the time for the remit of NBR. All the above implies that they are successful in gaining the trust of the people and business entities of our country. BIBLIOGRAPHY * Annual publication of NCCBL (2004, 2005) * Skinner, Steven J. (2003) “Business for 21st Century” * Kotler, Philip (2003-2004) “Marketing Management” 11th Edition,


Person Education (Singapore) Pte Ltd. * Rose, Peter. S; “Commercial Bank Management” Fourth Edition; Irwin- McGraw-Hill; 1999 WEBSITES * NCC Bank Limited: www.nccbank.com.bd Retrieved May 28, June 14 2008. * Bangladesh Bank: www.bangladeshbank.org Retrieved June 1, 2008. * Search engine: www.google.com Retrieved May 13, 2008.

APPENDIX


Overall banking system of ncc bank limited