Internship Report on Loans and Advances of Pubali Bank Limited
Short Description
Loans and Advances...
Description
Internship Report on Loans and Advances of Pubali Bank Limited Nawabpur Branch Dhaka.
By Sonjoy Kumar Ghosh MBA Program 2004 (6th Batch) Roll No. 327 (Sl No. 222) Stream: Strategic & International Management
Supervisor Mrs.Rubina Maleque Associate Professor Department of Management Studies Faculty of Business Studies University of Dhaka
Department of Management Studies University of Dhaka. Dhaka-1000.
February 15, 2007.
Dated:15 February,2007 1
To Mrs.Rubina Maleque The Internship Supervisor MBA Program Department of Management Studies University of Dhaka
Subject: Solicitation for Acceptance of the Internship Report
Dear Sir/Madam, I have the pleasure to submit an elaborate internship report, one of the most important requirements for the MBA program. I was assigned to work at Pubali Bank Limited-Nawabpur Branch, where I have observed closely & studied different practical aspects of the banking institution. I would like to say has been a great experienced for me to work in Pubali Bank Limited, which enlarges
my
practical
knowledge
about
banking
operations.
I have given my utmost effort to reflect experience, skill and knowledge, which I acquired at the time of orientation in Bank through this report. All of my efforts will be successful if the report can serve its purpose. 2
Thanking You. Sincerely Yours ………………. Sonjoy Kumar Ghosh MBA Program (Major in SIM) Roll No. 327, Serial no.222 Department of Management Studies Faculty of Business Studies University of Dhaka
Acknowledgement
First of all I would like to thank Almighty God because I have completed my study in due time. Then I also give thanks to my honorable Supervisor, Mrs.Rubina Maleque, for providing me the necessary direction to do the study on the topic. I also grateful to Mr. Shym Sundar Banik, Manager of Pubali Bank Limited Nawabpur Branch,I also greatful to Partho Protim Acharzo,Senior Officer of Pubali Bank Limited, Nawabpur Branch, and the other officials of Pubali Bank Limited, Nawabpur Branch, for their cooperation in completing my internship and by providing important information and different materials.
3
Sonjoy Kumar Ghosh MBA Program (Major in SIM) Roll No. 327 Serial No.222 Faculty of Business Studies Department of Management Studies University of Dhaka.
Declaration
I Sonjoy Kumar Ghosh, hereby declared that the presented report of internship named “Internship report on Loans and Advances of Pubali Bank Limited” is prepared by me after
4
successfully completion of 3 months work in Pubali Bank Limited, Nawabpur Branch, Dhaka.
I also conform that the report is only prepared to meet my academic requirement not for any other purpose. It will not act anything that will hamper Bank’s confidentiality and interests. It might not be use with the interest of opposite bodies of Pubali Bank Limited.
Sonjoy Kumar Ghosh
5
Experience In Pubali Bank Limited As An Intern One of the modern concepts of economics is financial development. All over the world the financial development has started with the commercial Banking system and the diffusion or scriptural money through the economy. At the very initial stages of financial development of any country, commercial banks play a major role providing financial services to the economy. Banking studies are divided into two categories, they are Theoretical & practical. Coordination of theory and practical subjects in the field of Banking studies gets due importance at this moment when the whole are taking preparation to enter into a new Millennium. But in spite of this, we find a gap existing between Theory & practical knowledge. To minimize this gap between Theory & practices, MBA program of Dhaka University has introduced practical orientation in different Banks. It is believed that it brings the students concerned with this program closer to practical area of Financial Institution and projection of knowledge.
To fulfill this objective, I have prepared an Internships Report on "Loans & Advances of Pubali Bank Limited”, Nawabpur Branch. During this period, I have gathered various types of banking knowledge from banking experts of respective Bank and tried to apply my academic knowledge as well as personal competence to the best. I have also tried my best to cover all the significant dimension of the topic assigned.
6
I along with other 10 students go to the Pubali Bank Limited head office situated at Motijheeel
and reported to the Senior Officer of Pubali Bank
Limited. The Pubali Bank Limited authority cordially received us.
Then each of us was sent to the different branches of Pubali Bank Limited on 10th Octobor, 2006. I was placed in Pubali Bank Limited Nawabpur Branch for field study from 10th Octobor ’06 to 10th January 2007. I reported to Mr. Shym Sundar Banik, Managing Director of the said Branch and briefed something about his branch and promised me to give any kind of information needed. Then I have started to observe the activities held on that branch and I have found the following major functions:
1. General Banking Various types of deposit A/C, Transfer, Works of Cash Section, Subsidiary Register Day Book, Clean Cash, General Ledger, Remittance (P/O, DD, MT, TT) Bills Department, Clearing House, Pubali Bank Limited General A/C etc.
2. Loans and Advances General Advances, Industrial loan, rural & micro credit etc.
Concerned officers of the branch showed and discuss with me about General Banking. Concerned officers of the Investment Section of the Branch showed the various files and discussed with me how to provide Loan to the Prospective sector of the country.
7
Executive Summary One of the vital parts of MBA program is internship program. At the end academic course work one need to compete the internship to gain practical knowledge
to have
an experience of
implementation of acquired theoretical knowledge. However, at the end of my MBA course work I was placed in Pubali Bank Limited at Nawabpur Branch, the largest commercial bank of the country. During my internship period I have studied almost all the section of the branch. General banking sector, Loans and advance Section etc. At the end of my three months internship, I have gained a thorough knowledge about all of those.
Pubali Bank started its journey as the largest public commercial bank with a great hope and aspiration. But now it is a private Bank. Still this bank controls a significant portion of all banking transactions. With the up gradation of technology the bank is also trying to keep pace.
This report intends to give a comprehensive view of the bank. It consists of seven parts. First part consists of introduction and background of the study. Second part consists of a brief history of
8
Banking . Third part consists of Organizational overview of Pubali Bank Limited. Forth part deals with general banking. Fifth part involves loans and advances. Sixth part involves papers to be submitted to get a loan and finally seventh part consists conclusion and recommendation.
Table of Contents Particulars Page No.
Letter of transmittal Acknowledgement Declaration Experience as an Intern Executive Summary
Chapter I: Introduction of the Report
1.1. Background of the study 1.2. Justification of the report 1.3. Schedule of internship 1.4. Objective of the study 1.5. Methodology of the study 1.6. The flow chart of the study 1.7. Sources of data 6 9
1-6
2 2 3 4 4 5
1.8Limitation of the study Chapter II: A Brief History of Banking
2.1. Introduction 2.2. Evolution of the World Bank 2.3. Emergence of Modern Banking 2.4. Bank Development in Bangladesh
Chapter III: Overview of Pubali Bank Limited
Limited Limited Limited
3.1. History of Pubali Bank Limited 3.2. Performance of Pubali Bank Limited 3.3. Organizational structure of Pubali Bank 17 3.4. Managerial Hierarchy of Pubali Bank 18 3.5. Corporate Branches of Pubali Bank 19 3.6. Highlights
Chapter IV: General Banking Services of Pubali Bank Limited
4.1. Account Opening 4.2. Types of Deposit Account 4.3. Operation of Cheques 31 4.4. Transfer of Account 4.5. Dormant Account 4.6. In-operative Account 4.7. Closing of an Account 4.8. Bank Remittance(DD/MT/TT&PO) 33 10
6 7-10
8 8 9 9
11-24
12 13
20
25-46
26 28
32 32 33 33
4.9. Suspense and Sundry Deposit Account 39 4.10. Establishment 4.11. Dispatch Section 4.12. Local Short Credit 4.13.Short Credit 4.14.Demand Draft Received for Collect 4.15 Transfer Scroll 43 4.16
Clearing
House
43 4.17
Clear
Cash
Book
General
Ledger
44 4.18
The
45 Chapter V: Loans and Advances
5.1. Introduction 5.2. Classification of General Advances 5.3. Credit Policy of Pubali Bank Limited 5.4. Interest Rate Policy 5.5. Total Credit Line 5.6. Restrictions 5.7. Principles of General Advances 5.8. Industrial Credit Department
Chapter VI: Papers to be Submitted to Get a Loan
Firms)
6.1. For Fresh/New Proposal 6.2. For Renewal/ Enhancement Proposal 6.3. Application for Advances(For Individuals& 73 11
47-69
48 52 58 58 59 60 60 67
70-88
71 72
39 39 41 42
6.4. Credit Proposal & Approval Form
79
89-96
Chapter VII: Conclusion
7.1. Problem Findings 7.2. Policy Guidelines/Recommendations 7.3. Concluding Remarks
Bibliography
12
90 92 95
CHAPTER-1
INTRODUCTION OF THE REPORT
13
CHAPTER-1 INTRODUCTION OF THE REPORT
1.1 Background of the study In the age of globalization, the importance of banking sector is beyond description. Banking sector is going ahead with the improvement new technological innovation. Introduction of modern technology has made banking sector user friendly and more competitive. The banks of Bangladesh are not lag behind. The banks of Bangladesh are keeping pace. To survive in the financial market and to play significant role both technological implementation and skill manpower are accessory in which Department of Management Studies of D.U. is playing a significant role. By providing skilled manpower, Department of Management Studies ahs given the banking sector a momentum. And the internship program has made the effective. By studying at the University of Dhaka, one gains an extensive theoretical knowledge and the internship program makes that knowledge effective. Theoretical knowledge has a great value but without having theoretical knowledge it might be vain. In this regard, the internship program is fulfilling the lacking of practical knowledge of the graduates of Department of Management Studies. After completing the internship program the graduates become more effective in that particular field.
1.2 Justification of the Report Due to market economy the competition among nationalized, foreign and private commercial banks and the expectation of the customers become rapidly growing concerning the banking operation & how customer service becomes more attractive. Reciprocating the sentiment, commercial banks are trying to elevate their traditional service to a better standard, to meet the challenging needs. Side by side, these banks have now concentrated their attention towards diversification of their products for better performance of
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their existence. Under the above circumstances, it has become necessary for Pubali Bank, a leading commercial bank, to focus its' attention towards the improvement of the customer service through its' multi-purposeful activities. That is why it is quite justified to make an in-depth study about its operation and evaluate service provided by this bank and scope for its' improvement. This is the exploratory study that evaluates the functions of Pubali Bank. The study may help formulating policy regarding the ideas relating to the feelings of the customers & bankers. Now it is hoped that it may have some significance to Pubali Bank and those who want to develop Pubali Bank.
Since financial area is my preferred area to build up my career, this study will vehemently help me to go forward and improve my career path.
1.3 Schedule of Internship On the very first day at the Pubali Bank, I was welcomed by the Managing Director of Nawabpur Branch, Mr. Shym Sundar Banik. I was assigned for practical orientation at Nawabpur Branch of Pubali Bank. During my practical orientation, I was guided by Mr. Shajhan Mahmood, SPO, of the branch. He gave me some direction in choosing, schedule or orientation at various departments of the branch; I started with General Banking Department. The schedule, although not water-tight has given below:
Date of Orientation (2006)
Departments
10 Octobor ’06- 25November ‘06
General Banking
26November’06-10 January ‘07
Loans & Advances
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1.4 Objective of the Study: Application of theoretical knowledge in the practical field. Understand the real management situation and try to suggest for improving existing problems. To analyze the financing system of the Bank to find out if the Bank has any field to improve upon and to have greater contribution towards country's economy. To examine the profitability and productivity of the Bank. To acquire knowledge about the every day banking operation of Pubali Bank.
1.5 Methodology of the Study While conducting the study, sources were explored for primary information and data. But hardly any updated data could be found. In the absence of updated information or data dependence on secondary data has been inevitable. However, whenever possible primary data has been used. Data were also collected by interviewing the responsible officers and from some documents & statements printed by the Pubali Bank. Pubali Bank also helped me in collecting data providing books and Bank’s annual report.
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1.6 The flow chart of the Study
PLANNING
DESIGNING THE LAY OUT
THE APPROACH QUESTIONNAIRE DEVELOMENT
-THE LITERATURE
COMMUNICATING
REVIEW -THEORIETICAL CONSIDERATION
METHODOLOGY
SECONDARY SOURCES PRIMARY SOURCES
a) Annual report a) Official records of Pubali Bank
b) Working papers
b) Face to face conversation
c) Office files d) Selected Books e) Printed forms
COLLECTING INFORMATION
ANALYZING PREPARING THE REPORT
SUBMISSION OF THE REPORT
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1.7 Sources of Data The following sources have been used for the purpose of gathering and collecting data as required. Primary Data a) Official records of Pubali Bank b) Face to face conversion
Secondary Data a) Annual report b) Working papers c) Office files d) Selected Books e) Printed forms
1.8 Limitation of the study Although I have obtained wholehearted Co-operation from employee of Pubali Bank Nawabpur Branch, they were extremely busy. So they were not able to give much time as they and I would like. Besides, total duration of internship is not sufficient to give me more than a superficial idea of the functioning of the various departments I was rotated through. On they way of my study, I have faced the following problems which may be termed as the limitation/short coming of the study. These are as follows: a) The main constraint of the study was insufficiency information, which is required for the study. b) Since the Bank personnel are very busy with their activities, as a result they failed to co-operate with me to complete this report. c) The major limitation of the study was shorter time period. For an analytical purpose, adequate time is required. But I was not given adequate time to prepare such as in-depth study. d) Such a study was carried out by me for the first time. So, in-experience is one of the main factors that constituted the limitation of the study.
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CHAPTER-2
A BRIEF HISTORY OF BANKING
19
CHAPTER-2 A BRIEF HISTORY OF BANKING
2.1. Introduction:
.
A bank is one, who in the ordinary course of his business receives money,
which he repays by honoring cheques of persons from whom or on whose account he receives it. Banks deal mainly with money and credit. They purchase and sell money and credit.
2.2. Evolution of the Word “Bank”:
Etymology deals with the roots and origin of the word ‘bank’. According to some writers the word bank derived from the word BANCO, BANCUS, BANQUE, and BANC, all of which mean bench upon which the early bankers used to display their coins and transact business in the market place.
According to the some other writers the word ‘bank’ has been derived from the German word ‘BANKE’ which means a joint stock fund. Banking in the ancient times was largely confined to money changing and money lending.
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2.3. Emergence of Modern Banking:
In middle Europe the bankers of Lombardy were very famous. They planted the seed of modern banking in England. Among those prominent bankers we can named one who were famous not only in banking but also in political history in Europe. These Lombardy people were very much disturbed in 13’s by internecine work that was followed by plunder by Kaiser Frederick two. Lombardy people in large number as a result started migrating to more settled countries such as England, French, and Belgium.
2.4. Bank Development in Bangladesh:
During Mughal period, indigenous banking flourished. The Subarna bank the bullion trading community used to do banking in the then Bengal. At the British time banking in the form of agency house, exchanging house started to flourish in kolkata., especially in the wake of the swadeshi movement. In 1947 after the separation of Bengal, bank business faced a severe disaster as non-Muslim bankers migrated to India. In order to rebuild the bank business State bank of Pakistan was established as a central bank of Pakistan in 1948. In 1971 Bangladesh became independent. After liberation “Bangladesh bank was automated with the asset and liabilities of former “State bank of Pakistan”. There were several banks before independence of Bangladesh as follows:
(1) The national bank of Pakistan (2) The bank of Vowalpur ltd. (3) The premier bank ltd. (4) The Habib bank ltd. (5) The commerce bank ltd. (6) The united bank ltd. (7) The union bank ltd. (8) The Muslim commercial bank ltd.
21
(9) The standard bank ltd. (10) The Australasia bank ltd. (11) The eastern mercantile bank ltd. (12) The eastern banking corporation ltd.
Bangladesh Bank nationalization Order promulgated on 26 March in 1972. After the liberation war the above 1st three banks were converted to The Sonali Bank, The 2nd two banks were converted to The Agrani Bank, the next two banks were converted to The Janata Bank, the next three banks were converted to The Rupali Bank, the next one bank was converted to The Pubali Bank and the last bank was converted to The Uttara Bank.
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CHAPTER-3
ORGANIZATIONAL OVERVIEW OF PUBALI BANK LIMITED
23
CHAPTER-3 ORGANIZATIONAL OVERVIEW OF PUBALI BANK LIMITED
3.1 History Of Pubali Bank LImited
Welcome PUBALI BANK LIMITED is the largest Commercial Bank in Private Sector in Bangladesh. It provides mass banking services to the customers through its branch network all over the country. This Bank has been playing a vital role in socio-economic, industrial and agricultural development as well as in the overall economic development of the country since its inception through savings mobilization and investment of funds. During the last 5 years the growth rate of bank's earnings is more than 25% on average.
Head Office
The Bank was initially emerged in the Banking scenario of the then East Pakistan as Eastern Mercantile Bank Limited at the initiative of some Bangalee enterpreneurs in the year 1959 under Bank Companies Act 1913 . After independence of Bangladesh in 1972 this Bank was nationalised as per policy of the Government and renamed as Pubali Bank. Subsequently due to changed circumstances this Bank was denationalized in the year 1983 as a private bank and renamed as Pubali Bank Limited. The Government of the People's Republic of Bangladesh handed over all assets and
24
liabilities of the Pubali Bank to the Pubali Bank Limited. Since then Pubali Bank Limited has been rendering all sorts of Commercial Banking services as the largest bank in private sector through its branch network all over the country.
3.2 Performance of Pubali Bank Limited:
Share Capital: The authorized capital and Paid up Capital of the Bank stood at Tk.5000.00 million and Tk.400.00 million respectively in 2005. Out of total 7591 Shareholders, 4 nationalized institutions including the Govt.of the People's Republic of Bangladesh held shares of Tk. 11.72 million. The remaining shares of Tk.388.28 million were held by various institutions and individuals.
Statutory and Other Reserves: During the previous year the statutory reserve and other reserve of the bank stood at Tk.2107.76 million, out of which statutory reserve was Tk.1250.12 million, other reserve was Tk.857.64 million. During the year under review the total reserve stood at Tk,2481.21 million at the end of the year due to increase of general reserve by Tk.573.45 million from current year's profit.
Deposits: The total deposit at the end of the previous year was Tk. 39789.70million.During the year under review the amount stood at Tk. 44443.03 million which was 11.69% higher than the position of the Previous year.
Borrowing from other Banks: The borrowing from other Bank, for the business purpose, was Tk.320.20 million as on 31.12.2005.Such borrowing during the previous year was Tk.131.62 million.
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Foreign Exchange Business:
Earning from call Loan: Due to active participation in the inter Bank money market ,total earning from call loan during the year amounted to Tk.429.28 million which was high by Tk. 142.83 million over the amount of previous year. a) Import business During the year the bank handled import business worth Tk. 26033.80 million. During the previous year ,the amount was Tk. 18024.30 million.
b) Export business: The Bank handled export business worth Tk. 15271.10 million during the year as against Tk.13670.50million in the previous year.
c) Inward Foreign Remittance: Non resident Bangladeshis sent foreign exchange equivalent to Tk. 14860.30 million during the year ,which was Tk. 11753.00 million during the previous year.
Investments: Total investment of the Bank was Tk. 5742.12 million during the previous year. The sectors of investments were mainly Govt. Bonds , Treasury Bills, Approved Debenures,Shares and Debentures of Private institutions.
Advances: The total advances of the Bank during the previous year amounted to Tk. 27542.33 million which was Tk. 32639.68 million during the current year. The Bank made advances mainly in sectors such as commercial loan, import and export business, term loan to large and medium scale industries, house building loan, consumer's credit loan.
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Position of Profit and Loss:
The total income and total expenditure of the Bank during the year were Tk.4435.90 million And Tk. 3063.27 million respectively resulting in a profit of Tk. 1372.63 million before making provision for bad and doubtful debts and income tax.
Branch Expansion and Modernization: During the year under review 23 branches were shifted to new premises in more suitable places and 19 branches were refurnished and modernized.
Information Technology and Automation:
For providing quick customer service all the 350 branches of the bank have been computerized including branches situated at the remote areas like Sandwip,Mehidigonj etc. As a result , quick and better customer's service is being possible with less manpower .Bank started to develop an improved Multi user client server Architecture System Software called Pubali Integrated Banking System(PIBS) enabling to provide one stop service to its clients. The Bank entered in internet world through introduction of its web-site www.pubalibangla .com as a result , the name of pubali Bank ltd. included in world Electronic Database. To meet the demand of time Pubali Bank Ltd. has entered into ATM World.
Man- power& Training This year, the numbers of officers and employees of the Bank stood at 5088, sixty eight on different subjects were organized at the Bank’s Training Institute and 1740 officials of different levels participated training besides these, Bank utilized the training services rendered by other training institutions. In August 2005 a one- day National Workshop was held at Dhaka which was attended by all the 350 branch Managers, 16 Regional managers and senior executives of Head Office of the Bank. On the occasion, 18 Branch Managers were awarded for their outstanding performance. Audit& Inspection Bank’s Audit Term audited 233 branches & offices during the year under review while inspection of all the 350 branches was conducted by Bank’s Inspection Team.
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Meeting of the Board of Directors& its Committees During the year 2005, 39 meetings of the Board of Directors were held. Policy decisions on different issues were taken in these meeting. Appointment of Auditors M/s. Ahmed & Co., Chartered Accountants, M/s.Syful Alam & Co. Chartered Accounts and M/s.K.M.Alam Khaleque & Co., Chartered Accounts were appointed Auditors of the bank for 2005 in the 22nd Annual General Meeting. But due to dissolution of M/.K>M.Alam Khaleque & co., the other 2(two) Chartered Account firms audited the statement of accounts with Due permission of Bangladesh Bank and Securities exchange Commission. Conclusion The Board of Directors expresses its gratitude to all Clients, Shareholders and Partners for extending support and co-operation in the activities of the Bank during the 2005.the Board of Directors thanks Government of the People’s Republic of Bangladesh and Bangladesh bank for their co-operation and guidance. The Directors also wish to place on record the sincere appreciation and thanks for the sincere and dedicated services and co-operation extended by the officers and employees towards overall performance of the Bank during the year under review.
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3.3 Organizational Structure of Pubali bank limited:
Designation in ascending order Sl. No.
Designation
1.
Managing Director
2.
Deputy Managing Director
3.
Senior Executive Vice President
4.
Executive Vice President
5.
Senior Vice President
6.
Vice President
7.
Senior Assistant Vice President
8.
Assistant Vice President
9.
First Assistant Vice President
10.
Senior Executive Officer
11.
Executive Officer
12.
Principal Officer
13.
Senior Officer Management Trainee
14.
Officer
15.
Junior Officer
16.
Assistant Officer Trainee Assistant
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3.4 Managerial Hierarchy of Pubali Bank Ltd:
Chairman Board of Directors
Top Management
Executive Committee Managing Director
Additional Managing Director Deputy Managing Director Senior Executive Vice President
Executive Level Management
Executive Vice President Senior Vice President Vice President Senior Assistant Vice President Assistant Vice President
First Assistant Vice President
Mid Level Management
Senior Executive Officer Executive Officer Principal Officer
Senior Officer
Junior Level Management
Management Trainee Officer Junior Officer
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3.5 Corporate Branches Of Pubali Bank Limited
CORPORATE BRANCHES INFORMATION Branch Name Agrabad
Police Phone / Station Telex 99, Agrabad Doublemooring 880 31 Comm. Area 716388, Dist. - Chittagong 716409 633116 Bangladesh PBAGB BJ B. B. Avenue 65, B.B. Avenue Motijheel 880 2 9550600 880 Dhaka-1000 Bangladesh 2 9555406 632236 PUBBA BJ C.D.A C.D.A. Building Doublemooring 880 31 P.O. - GPO 611381, Chittagong 634710 Dist. - Chittagong 633117 Bangladesh PBCDA BJ Dhaka 8, D.I.T. Extension Motijheel 880 2 Road Stadium 9555565 Lal Bhaban 632389 Dhaka-1000 PBLDS BJ Bangladesh Motijheel 880 2 Foreign 24, Motijheel 9561858 880 Exchange Comm. Area 2 9550952 Dhaka-1000 632411 Bangladesh PUBFE BJ 880 2 Karwan Bazar Jalalabad Bhaban Tejgaon 8114080 22, Karwan Bazar Dhaka-1215 632322 Bangladesh PBLKR BJ Mohakhali
Postal Addresss
Gulshan
99, Mohakhali Comm. Area Dhaka-1212 Bangladesh
31
880 2 8811044 632287 PBMKH BJ
Motijheel
Principal
Sena Kallyan Bhaban 195, Motijheel Comm. Area Dhaka-1000 Bangladesh 26, Dilkusha Commercial Area Dhaka-1000 Bangladesh
Motijheel
Motijheel
880 2 9551071 880 2 9550635/110 671431 PBMJL BJ 880 2 9557323 880 2 9552449 880 2 9557323 671528 PBLLO BJ
3.6 HIGHLIGHTS
Particulars Authorised capital Paid –up Capital Reserve fund and other Reserve Deposits Advances Investments Import Business Export Business Bridge Finance Total Income Total Expenditure Pre-Tax Profit Net Profit Total Assets Fixed Assets OTHER INFORMATIONS No. of Employees No. of Shareholders No. of Branches Earning per Ordinary Share(Taka)
As at 31st December(in million taka) 2001 2002 2003 2004 2005 5000.00 5000.00 5000.00 5000.00 5000.00 200.00 200.00 200.00 200.00 400.00 1338.29 1740.80 1931.76 2107.76 2481.21 32291.00 23583.00 4165.80 12573.00 11228.00 8.40 3660.20 2488.70 626.50 407.20 39068.30 565.60
33730.10 26189.50 4400.80 10500.00 10214.00 8.30 3823.50 2575.70 724.00 398.20 41895.90 591.30
35852.60 26282.69 4938.86 12141.30 11648.20 7.90 3569.30 2704.10 345.20 189.80 43502.25 582.60
39789.71 27542.33 5742.12 18024.30 13670.50 7.80 3455.32 2830.41 244.90 134.70 46593.28 545.40
44443.03 32639.68 5536.84 26033.80 15721.10 7.29 4435.90 3063.27 1042.63 573.45 52671.44 546.48
5050 6601 349 203.61
4987 6563 350 199.11
4983 6506 350 94.92
4797 6562 350 67.65
5088 7591 350 143.36
Source-Annual Report of Pubali Bank Limited 2005.
32
Source- Annual Report of Pubali Bank Limited 2005.
33
Source- Annual Report of Pubali Bank Limited 2005.
34
Source- Annual Report of Pubali Bank Limited 2005.
35
Source- Annual Report of Pubali Bank Limited 2005.
36
CHAPTER-4
GENERAL BANKING SERVICES OF PUBALI BANK LIMITED
37
CHAPTER-4 GENERAL BANKING 4.1
Account Opening:
4.1.1
The procedures followed for Opening an Account
Account Opening Form: At first you have to fill up a form given by the respective bank where you are going to open an account. This form contains some information such as: a) Name of the Branch. b) Date. c) Title of the Account. d) Special instruction. e) Name of Account folder. f) Occupation. g) Address. h) Description of initial Deposit. i) Verification of the introducer. Specimen Signature: Specimen Signature is very important to identify the drawer. This signature is kept in a special card along with drawer's name. This card contains: a) Title of Accounts. b) Specimen Signature of the guarantor of the Account. c) Allotment of Account number. Pay in slip: It contains filling up of all the particulars of Account and Cash tendered for deposit. Voucher marked new Account. Cheque requisition Slip: It contains: a) Verification of Signature. b) Entry made in cheque issue register.
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Ledger: Ledger contains: a) Entry of Account particulars from account opening form in the ledger. b) Position of the voucher and cheque requisition slip. c) Supervision of this posting by officer in charge Issue of Pass Book Filling up the Account opening form in the appropriate file under custody. 4.1.2 Partnership Firm The consent of all partners. Partnership Deed. Mandate contains: i.
The name of the person who will authorize to operate the Account.
ii.
The extent of authority given to such persons.
iii.
Personal Account and a Firm's Account.
iv.
Creation of mortgage.
v.
The retirement of partner.
vi.
The death of partner.
vii.
The insolvency/insanity of a partner
4.1.3 A Joint Stock Company For opening a company account some documents are needed which are given below: o Certificate of Incorporation in original along with a true copy. o Copy of Memorandum & Articles of Association certified up to date. o Certificate of Commencement of Business original along with a true copy.
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This is not required when i. The company is private limited company. ii.
The Company is registered before the first day of April 1914 & invites the public to subscribe shares.
4.2
iii.
The company is limited by Guarantee
Balance Sheet and profit and loss statement.
The Board Resolution
Mandate
Types of Deposit A/C:
Deposit forms the life-blood of a commercial bank. If can't carry on its business only with as own capital. It accepts deposits from the customers on one side and lends it to other borrowers/ customers. By this way it earns some margin of interest, which is one of the most important remunerative sides of its business. In short we can say, bank is an intermediary, which mobilizes funds from surplus economy to deficit economy. Banks deposits can broadly be classified into the following categories:Demand deposit- These are repayable whenever the customer asks. Time deposit- These are repayable after the expiry of period agreed at the time of opening the deposit account. In a Bank, the following types of accounts are opened: Current Account. Savings Bank Account. Fixed Deposit Account. Call Deposit Account. Deposit Pension Scheme. Special Deposit Pension Scheme.
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Current Account It is purely a demand deposit account. There is no restriction on withdrawing money from this account. As many withdrawals are allowed the customers. It is suitable when funds are to be collected and money is to be paid away at frequent interval. Current Account is most suitable for private individuals, traders, merchants, importers and exporters, mill and factory owners, limited company's etc. For opening of a current Account minimum deposit of Tk. 1000/- is required along with introductory reference, No interest is given the Current Account deposited money. Savings Bank Account This deposit is primary for small-scale savers. The main object of this account is promotion of thrift. Hence there is restriction on withdrawals in a month. Heavy withdrawals are permitted only against prior notice. Minimum amount of Tk. 200.00 is required as initial deposit. Frequent withdrawal is not encouraged. Normally withdrawal not allowed more than 1/4th of the balance with maximum of Tk. 1000/- in a week. 7 days notice is required for withdrawal of large amount. The rate of interest is 6.50% against S.B Account.
Fixed Deposit Account It is popularly known as "Time Deposit". Because these deposits are not repayable on demand but they are withdrawable subject to a period of notice. The prospective fixed deposit holder is expected to till up an application from, prescribed for the purpose, stating the amount and the period of deposit. The application itself contains the rules and regulations of the deposit including the space for specimen signature. Payment made on expiry of agreed period.
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Payment demanded before expiry of agreed date then Penalty is charged. Introducer is not needed. Copies of Party and 2 copies of Nominees photograph is needed. Loan is sanctioned against FDR. Interest Rate Rate of Interest is varies on the period of maturity date. Duration From 3 months and above but less than 6 months From 6 months and above but less than 9 months From 1 years and above but less than 2 year From 2 years and above but less than 3 year
Rate of Interest 7.5% 8% 8.5% 9%
Short Term Deposit Account Short Term Deposit Account is same as Current Account. Here money is kept for a very short time. A notice is needed prior withdrawal of money. • 6% interest is given for the actual period. •
Notice Period is varies from 7 days to 30 days.
Call Deposit Account Mainly opened by organization calling tender in which (the suppliers, contractors etc.) deposit requisite amount of carnets money favoring the organization-calling tenders. It is termed as Call Deposit since organization, which opens these accounts, may call withdrawal of the deposited account any time after the expiry of the tender period. No interest is allowed. Deposit Pension Scheme A depositor can open any Deposit Pension Account for deposit of Tk. 200/-, Tk. 300, Tk. 500/- in each month. And for this the depositor will have to deposit the specified amount of money by the 8th day of each month either in cash or in cheque. The depositor of this account can select more than one nominee for claiming the deposited money after his death. A depositor can withdraw the total amount of deposit (Principal + Interest) at a time after a specific period of 10 or 20 years and for this he will be entitled to get Tk. 26344/- for 10 years & Tk. 1,32,920/- for 20 years, after deposit of Tk. 100/- per month.
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4.3
Operation of Cheques:
A cheque is an unconditional order in writing; Drawn on a specified Banker signed by the drawer requiring the Banker to any on demand a certain sum in money to or to the order of specified person or to the bearer and which does not order any act to be done in addition to the payment of money. Thus a cheque involves Three Parties: •
Drawer
•
Drawee (The Banker)
•
Payer (To whom cheque is to be paid)
The following Procedure in passing a cheque is observed: The cheque receiving clerk scrutinizing the cheque as to date amounts and signature and hand over the presenter with token number which will also written at the back side of the cheque and pass to the ledger keeper after giving a seal. The cheque will again be scrutinized by the ledger keeper who satisfies himself as to the order of the cheque and the amount that does not exceed the credit balance. The ledger keeper then debited the amount from respective account in the ledger book and will pass to the authorized officer who satisfies himself by verifying signature of the account holder very carefully to protect any kind of fraudulence and then pass it to the cash officer for payment. The presenter presents his token in the counter and cashier makes payment receiving the token after verifying the token given by the receiving clerk and will demand a signature to verify with the previous one.
The procedure discussed earlier is fully manual system which is totally absent Nawabpur Branch. Because, the cash payment & receipt system are fully
43
computerized which faster the whole customer service. And as a result, now-a day they are not maintaining their previous system and not keeping any ledger book. 4.3.1 Stopped Cheques • The stopped cheques register will be kept by the manager or the accountant. •
Immediately on receipt of a letter or telegram to stop payment of a cheque, the time of its receipt should be noted thereon under the initial of the manager or the account.
•
The ledger keeper concerned and he passing officials should be informed immediately and particulars of the cheques register under authentication or the manger or accountant. The time of receipts of the recording of the stopped cheques register being noted on the letter also under the initials of the clerk and the manager or accountant.
4.4 Transfer of Accounts: When an account is transferred from one office to another, the account opening form etc. signed at the time of opening account and any forms or documents signed subsequently which are necessary for its proper conduct at the time of transfer, must be forwarded under cover of form, to the office to which card (s) and standing instruction if any, no exchange should be charged on such transfer. Attention is invited in this connection. As far as possible, the fullest, information regarding the character, means standing of the constituents and the way to the account has been conducted must be given to the receiving office. 4.5
Dormant A/C: • All Current accounts which have not been operated upon for six months should be marked in Red ink "CARE-DORMANT ACCOUNT- FIRST WITHDRAWAL TO BE REFERRED TO THE MANAGER". The ledger should be scrutinized for this purpose by a number of the supervising staff in March, June, September & December each year.
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•
All savings accounts which have not been operated upon for one year should also be marked in Red ink.
4.6
In-operative A/C: • No withdrawal what so ever should be permitted on as in-operative account without the specific permission of the manager who will satisfy himself beyond doubt that the withdrawal in order. •
Annually on the 29th June, the balances of all accounts, which have lying in in-operative current account for ten years, should be transferred to the unclaimed deposit A/C.
•
The account opening forms, specimen signature cards, either or survivorship forms and all other documents relating to the inoperative accounts transferred to the unclaimed deposit account must be kept separately in the strong room in the personal custody of the Manger.
4.7
Closing of an Account:
A banker can close the account of his customer or justices the stoppage of the operation of the Account under following considerable circumstances: -
4.8
•
Notice given by the customer himself
•
Death of customer
•
Customer's insanity and insolvency
•
Order of the court.
Bank Remittance (DD/MT/TT & PO):
One of the most important aspects of the Commercial Banks is rending services to its customers. Among different services render by a Commercial Banks to its customer remittance facilities are very well known and popular to the customers. The word "Remittance" means sending of money from one place to another branch within the country. There are two types of Remittance: Inward & Outward.
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The Commercial Banks Remittance facilities to its customer is to enable them to avoid risk arising out of theft or loss in carrying cash money from one place to another or making payment to some one in another places. Banks take the risk and ensure payment to the beneficiary in exchange of a little bit benefit known as Exchange or Commission. Considering the Urgency and nature of transaction, the mode of Bank remittance may be categorized as: Demand Draft (DO) Mail Transfer (MT) Telegraphic Transfer (TT) Payment Order (PO) The following register books are to be maintained for remittance concern: DD. MT. TT Advice Register DD Payment register Day Book TT Payment Register Book Ex-Advice Payment Register Book 4.8.1 Demand Draft: Demand Draft is an instruction payable on demand. It is negotiable instrument issued by the branch Bank containing an order to another branch of the same Bank to pay a certain sum of money to a certain person or order on demand. This instrument can be purchased by a customer from a particular Bank branch for himself or for beneficiary and can handed over to the purchaser for delivery to the beneficiary. The payee or beneficiary will claim the proceeds of the instrument by producing the same to the concerned paying branch. Demand Draft may be paid in cash to the payee on proper identification or the proceeds may be credited to his account. Banks issue drafts for a nominal commission. The commission depends upon the amount to be transmitted. The purchaser of the draft needs not to be a customer or account holder of the Bank. Draft can be crossed also.
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Issuance of Demand Draft While issuing demand Draft, an official must be confirmed about the existence of the Bran where the DD is to be issued or drawn as asked for by the applicant. Application on Banks prescribed form (F-117) for DD be obtained from the applicant duly filled and signed by then. Thereafter, Applicant will be asked to deposit the amount or DD and exchange Commission commuted correctly at the prescribed rate. On receipt of cash voucher will be passed and scrolled by the officers. DD will be issued and recorder to the DD issues register filling the appropriate columns. Test number (if required) is affixed on both DD and Advice as per instruction. It is mentionable here that DD application is treated as Credit Voucher or SBG A/C (IBT A/C) and reported to HO, Recon, Division showing credit entry against contra Branch (paying Branch). For any amount of DD issued, a relative DD Advice and sent to paying branch where the Advice converted into Voucher. The minimum exchange of demand drafts or Bank Drafts is Tk. 17/(including VAT Tk. 2/-) for the amount of Tk. 1 to Tk. 9000. After that that exchange is charged Tk. 1.5 for each Tk. 1000/-. Procedure of Payment Proceeds of Demand Draft is received by the paying bank as and when it responds the relative advise on the receipt of DD Advises from different branches, the paying banker will verity the genuineness of the Advice by way of verifying the number and signature. Beside this, Drafts payable can be made without the Advice of issuing Bank and on that time the payment is called Acceptance Payment. Total amount of advice will be debited to SBG A/C and credited to Drafts payable A/C on production of Demand Draft by the beneficiary payment will be made by Debit to the account credited earlier. If the payment is to be made before receipt of the Advice, DD is paid being recorded in Ex-Advice Register by Debiting the Drafts Payable Ex-Advice A/C (DD paid without Advice). On receipt of the Advice, it will be entered into DD/MT Advice Received Register or Draft Payable Register and the amount will be credited to Drafts Payable A/C. DD paid without Advice as the case may be.
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Before making payment of the DD, the branch will ascertain the genuiness of its issuance as well as the genuiness of the payee. Open Drafts may be paid on proper identification of the payee and crossed Drafts can never be paid in cash over the counter. Cancellation of Draft In some cases, the purchaser of the bank draft may ask the issuing branch to return the amount of DD stating its non-requirement. In these cases, the issuing Branch will obtain written application from the purchaser whose signature must be tallied with the signature obtained earlier. An amount Tk. 25/- be recovered from the purchaser as cancellation charges and will be Credited to the Commission A/C the purchaser will acknowledge receipt of the proceeds writing the words received payment by cancellation and will sign. On revenue stamp to be affixed on the revenue of the Draft. In this case, payment is made by Debit to PBG A/C and a relative cancellation advice is sent to the Issuing Branch.
4.8.2 Mail Transfer The facility of transforming money by Mail is available to customers having some sort of an account with the Bank. The remitter deposits the amount to be transferred with small commission with the remitting Branch. It is an Advice issued by a Branch to another Branch for crediting the specified amount to the account of the payee maintained with them. It is a non-negotiable instrument and generally is not handed over to the customer rather sent through Post Office to the concerned Branch for credit to the respective amount. In some cases, proceeds of MT. may be paid to the beneficiary by issuing Payment Order (PO) if he maintains no account with that branch. In such cases, Full Address of the beneficiary requires to be mentioned by the applicant. On that time, MT itself treated Advice as well as credit voucher also of the paying branch, no separable advice is issued by the issuing branch. On receipt of the MT genuineness is determined by means of verification of signature and test number (if any payment is made by debit to issuing branch through PBG A/C and reported to Head Office for reconciliation.
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Remittance or money by Mail Transfer is relatively cheaper, quite safer and convenient. Mail Transfer is affected not only for remittances within the country but also for international remittances. MT for local transfer (say, within the area of Dhaka) a special MT register book is maintained as in the case like DD. MT normally issued from branch to branch of the same Bank. An extra document is needed for Mail Charge. Normally the Mail is given Tk. 25/- for the amount Tk. 50,000/- and above. Below 50,000/- there is no any Mail Charge. The commission charged for MT is given below Tk 1 up to Tk. 49,000/-
Tk. 15/-
Tl. 50,000/- and above
Tk. 40/-
Specimen Receipt (MT/TT)
Date: ...................... Payees Name: ................................................................ Branch Name: ............................................................... Amount: ................................... Exchange................... Commission: ........................ Postal Charge: ...............
4.8.3 Telegraphic Transfer Telegraphic transfers are affected by telegram, telephone, or telex as desired by the remitter. Transfer of founds by telegraphic transfer is the most rapid and convenient but expensive method. For this, telegraphic need to be available in all the areas. In this case, the issuing branch sends a message telegraphically to credit the specified amount to the beneficiary through his A/C maintained with them or by issuing TT, PO, if A/C is not maintained by the beneficiary, Telegraphy message may be codes but must be tested. Paying branch will decode the TT being satisfied on the contents will make payment by debit to issuing branch entering the TT into TT Register and preparing a credit voucher for credit to the payees A/C. But, for big amount of TT or in case of any doubt, confirmation must be obtained before making payment.
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4.8.4 Payment Order Bank's payment order is an instrument which contains an order for payment to the paid to effect local payment whether on behalf of the Bank or its constituents. In the beginning stage, PO was issued only to effect local payments of Bank own obligations. But, at present, it is also issued to the customers which they can purchase to deposit as security money or earnests money. The Bank's payment orders are in the form of receipts and issued by joint signature of two officials. It ensures payment to the payee as the money deposited by the purchaser of O is kept in the Bank's own A/C named "Payment Order A/C". Payment of this instrument to be made from the branch it has been issued. It is not transferable and, therefore, it can only be paid to: •
The payee on identification.
•
The payee's Banker, who should certify that the amount would be credited to payee's A/C.
•
A person holding the letter of authority from the payee whose signature must be authenticated by the payee.
•
The purchaser by cancellation provided the original PO is surrendered by him to the Bank.
Duplicate PO As Bank's Payment Order is not transferable, Duplicate thereof is issued to the purchaser without obtaining letter of indemnity provided they confirm in writing that the originals have been lost and that these will be returned to the Bank whenever traced. Duplicate DD In some cases, it may be happened that the DD is lost and reported to the concerned Branches. In this case, issuing Branch will communicate with the paying Branch and will obtain confirmation regarding non-payment of the DD & Payment Branch will exercise cautions against payment of DD including caution marking on the respective DD advice with the words "Care Reported Lost" issuing Branch will then issue a duplicate DD on obtaining of indemnity bond from the Applicant signed by two persons known to the Bank s sureties. In such case, duplicate DD be marked with the words: "DUPLICATE IN LIEU OF ORIGINAL NO ......."
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Insurance of duplicate DD be noted against the entry of original one. 4.9 Suspense and Sundry Deposit A/C: Under Bank's regulations not more than two suspense accounts shall be kept at any branch. The only accounts of this nature allowed are, therefore, suspense account for debit items and suspense account for credit items, the former being a general ledger account and the latter a current account.
4.10 Establishment: Maintenance of salary Register & Preparation of salary voucher & returns, Provident Fund, Pension Found Rules, Medical Facilities, Leave Rules Records, Income Tax, T. A rules, Group Insurance. Beside this, the total branch information Targeting Profit, Achieved Profit, Total Outstanding loans and Advances etc. maintained here.
4.11 Dispatch Section: Dispatch section is fully controlled by the Establishment Department. Any kind of letter DD, TT, MT, Cheque and Telex also are transferred and received through this section, There are two types of letter they continuously received. They are: a) Inward (Registered/ Unregistered) letters b) Outward (Registered/ Unregistered) letters At first recording is required whether it is Inward or Outward Registered/ Unregistered letters. Then, letters are disbursed to their respective destination. Inward letters are firstly segmented according to their different sections and after that an entry is given to the Inward Register book. For local letters which area is not far from the branch are delivered through Messengers. In such cases, firstly the entry is to be made in Dispatch register Book and then a Peon
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Book is to be maintained which contains only Dispatch No... and Receiver's Address. For this, the Messenger will get Tk. 20/- as convince. A special Register Book is to be maintained for TT, MT, DD, P/O and for Cheque another book is reserved. Stamp, Envelope which is kept under cash officer and in a small box can be inspected at any time. to meet the expense of Stamp and envelope a Dr. Voucher is needed for withdrawal money from the Branch Account. For registered letters, Vouchers are to be recorded here as document. Books Maintained Local Dispatch Khata (including Peon Book). Register Dispatch Khata (For Registered Letters). Ordinary Register Khata (For Unregistered Letters). Inward Register Books. Special Register Books for DD, MT, TT etc. and for Cheque respectively. 4.12 Local Short Credit (LSC) If a cheque or bill comes to Pubali Bank from another branch of Pubali Bank or other than Pubali Bank outside the Clearing Area, then Pubali Bank Collects that Check from that Pubali Bank or through nearest Pubali Bank of that Bank. The collecting Pubali Bank collects by the process of LSC from other Bank and sends a TRA (Transfer Responding advice) to the payee Bank. For example, if a customer of Pubali Bank Dilkusha Corporate Branch, Dhaka, deposits a cheque of Rupali Bank Ltd., Pabna then the procedure done by the collecting Pubali Bank is as follows: a) The cheque is first deposited through a received seal with the help of a slip. b) The collecting bank gives a crossing with "Pubali Bank Dilkusha Corporate Branch". It indicates that the mentioned Bank is the collecting Bank.
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c) Entry for outward Clearing register is given with clearing seal and giving the cheque a "S" (subsidiary) seal. d) The cheque is then registered in SC register and a SC number is given. e) Endorsement is given like "Payee's A/C will be credited on realization. The agent of collecting branch will do as follows: i)
Entry has to be given to LSC register along with number.
ii)
Then the instrument is sent to clearing for collection. For this case, the accounting procedure is
Clearing A/C of Payee
Dr.
Clearing Adjusting A/C iii)
Cr.
If the instrument is honored, then
Clearing A/C of Payee
Dr.
Pubali Bank General A/C
Cr.
If any payment is dishonored then the Payee Branch sends a non-payment Advice to the Collecting Branch.
4.13 Short Credit Customers deposit (cheque, drafts etc.) for collection along with deposit slip. Instruments within the range of clearing are collected through Local clearing House but for outside the clearing house ranges are collected through SC. For example, customer of Pubali Bank Dilkusha Corporate Branch, Dhaka, deposits a cheque of Pubali Bank, Pabna Branch. For this purpose, the collecting Bank Pubali bank Dilkusha Corporate Branch, Dhaka will do as follows: i)
The cheque is first deposited through a Received seal with the help of a slip.
ii)
The collecting Bank gives a crossing with "Pubali Bank Dilkusha Corporate Branch". It indicates that the mentioned Bank is the collecting Bank.
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iii)
Entry for forward Clearing Register is given with Clearing seal and giving the cheque a "S" (subsidiary) seal.
iv)
The cheque is then registered in SC Register and a SC number is given.
v)
Endorsement is given like "Payee's A/C will be credited on realization".
Accounting procedure after SC collection: Pubali Bank General A/C
Dr.
Customers A/C Customer A/C
4.14
Cr. Dr.
Commission A/C
Cr.
P & T A/C
Cr.
Demand Drafts received for Collect:
a) All the Inward Demand Drafts will be received by the Managers or Accountant and examine by him to ensure that there is no unreasonable gap between the dates of purchased receipt at branch. Cases of delay will be reported to the Head Office & a copy to the Regional Office of the purchase office. These will be numbered with D.D.R numbers, promptly acknowledge, entered individually in the Demand Draft received for realization register, without passing any entries. b) Clearing cheque and cheque on the branches will be paid or returned unpaid the same day. Other Demand Drafts entered in the register will be presented or payment to the drawee through the cash department. c) On realization the proceeds together with the overdue interest, if any Demand Draft will be credited to the purchasing offices in the Pubali Bank General Account sending Transfer Responding, Advises (TRA)
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and reported to Head Office on schedule. Unpaid DDR's will be returned to the purchasing offices along with the objection Memo.
4.15
Transfer Scroll:
a) The Bank transfer scroll the object of which is to balance the transfer vouchers before the Clean Cash Book is posted will be written up by a clerk. The clerk responsible for presentation of the vouchers will enter in the transfer sheet simultaneously ant the supervising official passing the transfer vouchers will authenticate the entries. b) All cheques and transfer vouchers will be entered in the transfer scroll sheet and numbered with their scroll number under initials of the scroll writer. All transfer vouchers, including those which are not individually entered in the transfer scroll/sheet, will be branded with the paid or received date stamp.
4.16 Clearing House As a cheque payment order or bill come from a Bank within the range of local Clearing House then it is sent for collection through Clearing House. The Cheque may be crossed or not, if a customer of Pubali Bank deposits a cheque of another Bank which is within clearing, then Pubali Bank will Credit his Account and collect it (cheque). Though the amount is credited in the customers account but will not get the money until the cheque is honored. Collection procedure for clearing: i)
The cheque is first deposited through a received seal with the help of a slip.
ii)
The collecting Bank gives a crossing with "Pubali Bank Dilkusha Corporate Branch". It indicates that the Mentioned Bank is the Collecting Bank.
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iii)
Then an entry has to be given in the Outward Clearing Register along Clearing and an "S" (subsidiary) Seal.
iv)
After that, the cheque has to be sent to Pubali Bank Local Office along with other cheques (if any). These sorts of vouchers are prepared for this purpose.
If the cheque is drawn on other branch of Pubali Bank within the same Clearing area then it needs be collected through inward Clearing House of Pubali Bank itself.
If the cheque is or other than Pubali Bank then the Cheque has to be sent to the Bangladesh Bank Main Clearing House through Pubali Bank Local Office clearing house.
4.17 Clear Cash Book The clean cash book which is the abstract of cash day's transactions classified under the general ledger headings, will be compiled from the totals of the various books subsidiary to the clean cash book including the day books in which the relative vouchers have been entered in details under authentication and will be cheeked there form by unauthorized official. Clean Cash Book is written to: Test the arithmetical accuracy of one day transaction. Consolidate one try transaction. Help position in the general ledger. Test the closing cash balance of the branch. Procedure: The clean cash book writer must see before taking the total in the clean cash book from the subsidiary books/ day books that the books duly checked and authenticated by the authorized officials.
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The clean cash book will be checked daily from the subsidiary registers/ day books by an authorized supervising official who will agree the entries under each head the respective registers/ day books. Bach morning the Manger will scrutinize the whole of the previous day's vouchers. After the daily balance all vouchers should be collected by the clean cash book writer and handed over to a supervising official who will lick them up overnight, under protection from Fire, together with all current records. 4.18
The General Ledger:
The Accounts to be kept in Branches General Ledgers are as under: Pubali Bank General Account Fixed Deposit Account Short Term Deposit Account Fixed Deposit Interest Account Savings Bank Account Call Deposit Account Current Account Pay Order Account Drafts Payable Account Drafts Payable Ex-advice Account Demand Loan Account Cash Credit Account Foreign Bill Purchase & Negotiable Account Bill for Collection Account Force Loan Against Back to Back L/C Account Advance Against Merchandise Account
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Discount Account Interest Account Exchange Account Commission Account Charges Account Profit & Loss Account Stationery Account Observation: Performance of General banking of this Branch is good. This is one of the profitable branch or Pubali Bank. Customer service is good. Cash section is fully computerized and free from Y2K problem and as a result money transaction occurs very quickly.
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CHAPTER-5
LOANS AND ADVANCES
59
CHAPTER-5 LOANS AND ADVANCES
5.1 Introduction: Pubali Bank Limited, being one of the largest Commercial Bank, had some prejudice to finance directly on priority basis to Agriculture, Industry and Commerce sector for strengthening the economic base of the country. Pubali Bank Limited plays the key role to oil the Economic Wheel of the Country. Beside this, Pubali Bank has been maintaining all Government Policies its Pioneer position in extending loans to Government Bodies, sector corporations and private enterprises. The Bank gave predominance to the Govt. policy of financing men or small means with enterprising spirit of investment and provided finance as easy terms and a logical rate or interest as was during the last few years. Pubali Bank Limited continued to extend its lending operation in the productive and priority sectors both public and private covering agriculture, industry, trade and commerce. The granting of advances is one of the most important functions of a Bank and the test of a Bank's strength depends considerably on the quality of its advances and the proportion they bear to the total deposit. Although receipt from Exchange, Commission and Bank's Charges contribute a fair amount of the profits of Commercial Bank, its earnings are chiefly derived from interest charged on loans and discounts. A wise and prudent in regard to Advances is, therefore, considered an important sector inspiring confidence in the depositors and customers of a Bank. Following are the basic principles or sound lending which each banker follows when considering an advance proposal. Safety The first guiding principles of a Banker should be "Safety First", so far as his advances are considered, because the very existence of a Bank depends of the Safety of its outstanding which should never, therefore, he sacrificed to the
60
profit earning capacity of its advances. Consequently, to maintain a Banking concern in sound condition, it is very essential that the safety of its advances to customers should be above suspicion. Extreme care should be taken that the fund rent out are not subject to any risk or being lost. The Banker is to ensure in the best possible manner that the money advanced by him goes to the right type of borrower and is utilized in such way that it will not only be safe at the time of lending but will remain so throughout, and after a useful purpose in the trade or industry where it is employed, is repaid with interest. Liquidity Bank's can invest in two types of terms viz. Long term and Short term. Banks feel very risky in long-term investment. So, they normally invest in Short term investment to maintain the liquidity of the Bank. The Liquidity of an Advance means its repayment on demand or on due date or after a short notice. The loan must stand fair chances or repayment according to the requirement achieve. It is almost important that Bank loan must be repaid as they become due otherwise; the liquidity position of the Bank is endangered. The major cause of Bank's failure has been had liquidity. The period of the advance and the case with which it will be repaid are very important. Even in the case of fully secured advances if it is feared from the very beginning that the advances would only he recovered by selling the securities it is not considered a good advances. It must, therefore, always ensure that the advance will be repaid from resources other that the securities pledged. The basic problem in advance Viz. Graduate Reeducation and eventual repayment is the crux of the while matter. A Banker would be failing in his duty to safeguard the interest of his depositors and the shareholders if his credit policy does not take full cognizance of this problem and not provide a method for gradual repayment and final recovery of the money advance. Profitability Equally important is the principle of profitability in Bank advances. Like other Commercial institutions, Banks must make profit where there is no profit banks do not invest. Firstly, they have to pay interest on the Deposits received
61
by them. They have to incur expenses on establishment stationery etc. They have to make provision for depreciation of their fixed assets and also for any possible bad or doubtful debts. After meeting all these items of expenditure, which enter the running cost or Bank, a reasonable profit must be made. The landing rate of Bank is based on all these considerations. It is sometimes possible that a particular transaction may not appear profitable in itself, but there may be some ancillary business available, such as deposit from the borrower other concerns or his foreign exchange business, which may highly remunerative. In this way, the transaction may on the whole be profitable for Bank. Purpose Another significant principle which is to be kept in view when advancing is the Purpose. The purpose for which lending is made should he productive as to ensure definite source or repayment. Banks discourage advances for Harding Stocks or for Speculative activities. There are obvious risks involved therein apart from the antisocial nature of such transactions. The Banker must closely scrutinize the purpose for which the money is required and ensure as far as he can, that the borrower applies the money borrowed for a particular purpose accordingly. Purpose has assumed a special significant in the present-day concept or Banking. Diversification of Risks The security consciousness of a Banker and the integrity of the Borrower are not adequate factors to keep the Banker on safe side. What is more important is the diversification of Risk. This means, he should not lend a major portion of his loan able funds to any single Borrower or to an Industry or to one particular Region. In fact, the entire Banking business is one of taking calculated risks and a successful banker is an expert in assessing such risks. He is keen on spreading the risks involved in lending over a large number of Borrowers, over a large number of Industries and Areas, and over different types of securities; the advances must not be in one particular Industry. Too many eggs should not be placed in one basket, because any adversity faced by
62
that particular Industry will have serious effect on the Bank. Slump does not normally affect all Industries and business simultaneously. Security Whenever a money lender lends money he must be consider carefully the changes of his being repaid by the Borrower and is therefore not normally content to rely on the obligation or the Borrower alone but wants some tangible security from which he can obtain repayment in case the Borrower is unable to meet his obligations. Without taking such security the business of money lending would be too speculative. The Banker also making advances and loans naturally wants to secure him by some reliable security. Security is considered as insurance or a caution to fall back upon in case of emergency. Bankers may realize it and reimburse themselves if the well calculated and certain source of repayment unexpectedly fails. It is, however, incorrect to consider an advance proposal from the point of view of security alone. An advance is granted by a good banker on its own merits, that is to say with due regard to its safety, capacity liquidity purpose etc. and after looking in to the character, capacity and capital or the Borrower and not only because the security is good. Sources of Repayment A sound credit is one where timely repayment is assured. So, before giving financial accommodation, a Banker should consider the source from which repayment is promised. In some instances, debentures, which are to be redeemed in few month times or a lire policy, which is to mature in near future, may be offered as security. Advances against such security give no trouble. Sometimes customers may apply for loans for additional Working Capital for their business and undertake to repay out of the profits over a period. In such cases, the Rate at which the customer can reasonably hope to repay should be ascertained. An examination of the audited accounts may guide the Banker in knowing the repayment capacity of the customer.
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Suitability
Even when an Advance satisfies all the aforesaid principles it may still not be suitable. The Advance may be encountered to National interest. These Principles may have to be amended to a certain extent. Suitability of Advance from National viewpoint has therefore come to be regarded as a basic principle of Lending. The Integrity & Reliability of the Borrower The last and the most fundamental principle of lending are the integrity and reliability of the borrower. To avoid bad debt, it is the basic factor before any loan proposal can be considered. The success of any business depends upon the ability of the Banker to study borrowers. The study of a borrower involves the study of the five C's of the Party. This five C's refer to Parties: Character Capacity Capital Conduct & Capability Instead of five C's some authors mention the five R's. This five R's indicates Parties: Reliability Responsibility Resources Respectability & Return 5.2
Classification of General Advances:
Bank is service as well as profit oriented organization. So, making of loans and advances have always been prominent and profitable function of a bank. Sanctioning Credit to customers and others out of the funds at its disposal is
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one of the Principle services of a modern Bank. Advances made in Pubali Bank in different natures, such as, Cash Credits (CC), Overdrafts, Small 1loans, Demand Loans, Bills purchased & discounted, House building Loans and Staff Loans etc. Pubali Bank deals with the money from the depositors repayable on demand. So, it can't afford to lend their funds for long periods. 5.2.1 Cash Credit (CC): A cash credit is an arrangement by which the customer is allowed to borrow money up to a certain limit. This is a parliament arrangement and the customer need not draw the sanctioned amount at once, but draw the amount as and when required. He can put back any surplus amount, which he may find with him. Thus, Cash Credit is an active and continuous process in which Deposits and Withdrawals going on frequently. Interest is charged only for the amount withdrawn and not for the whole amount charged. It is operated in the same way s a current account on which an Overdraft has been sanction. Cash Credit accounts are, however, maintained in a separate ledger. Primary securities under consideration in case of Case Credit are goods, produce and merchandise. This is the most favorite of borrowing by large commercial and industrial concerns. On account of the advantage that a customer need not borrow at once. He can either draw or repay, in whole amount or in part, the amount advanced at any time to suit his convenience. Cash Credits are of two Types, such as: Hypothecation In case of "Hypothecation", possession of goods not transferred to the Bank & therefore such all advances can thus only be granted to a person in whose integrity the Banker has full confidence and Cash Credit in the form of "Hypothecation" is normally accompanied with Mortgage of Immovable Properties. Cash Credit is the favorite mode of Borrowing by traders, Industrialists, Agriculturists etc. for meeting their working capital requirements. This type of facility is always against Pledge of goods, produce and merchandise. In a manufacturing company, whose stocks of raw materials and manufactured goods constantly fluctuated, it is difficult for the bank to control such charges; so "Hypothecation" facilities are allowed to them. The same is true of the
65
small traders and small industrialists who can't offer their stocks for Pledge but can only hypothecate the stock in their shop. In this case, Ownership and Possession of the goods remain with the borrower although by virtue of the "Hypothecation" agreement. The Bank can take Possession of the goods if the Borrower defaults.
Pledge In case of "Pledge" the possession of the goods is delivered to the Creditor i.e. Banker. It is therefore, regarded as the most secured type of Advance. Cash Credit in its truest sense is against pledge of goods. It is a separate ledger. In addition, Goods Ledger, Go-down Register, Go-down Key register, Go-down Index Card etc. are also maintained. Deliveries of goods are made on the strength of delivery order issued by the Banks and goods are received through goods Challans deposited Borrower. The person who transfers the goods is called Pledger (Party) and to whom it is transferred is called the Pledge (The Banker). Duties of the Banker (Pledge) The Pledge is bound to take that much care of the goods pledged which an ordinary prudent man would take of his own goods under similar circumstances. The Pledge must make use of the goods pledged according to the agreement is entitled to terminate the contract and claim damages, if any. The Pledge must deliver the goods to the Pledge on repayment of the debt. It is duty of the Pledge to deliver the goods according to the direction of the Pledge. The Pledge must deliver to the Pledge any increase or profit which may have occurred from the goods bailed for example, dividend on shares. The Pledge is responsible to the Pledge for any loss, destruction or deterioration of the goods is not returned at the proper time.
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5.2.2 Overdraft In case of Advance sanctions by way of overdrafts, the customer is sanctioned a limit up to which he can overdraw his current account within a stipulated period. This is a fluctuating account here in the balance some times may be in credit and sometimes in debit and overdrawn amount must always remain within the sanction limit. From the customer point of views, this arrangement is advantageous, as he is required to pay interest on the amount actually used by him. Overdraft facilities are generally Granted to Businessmen for expansion their business against securities of stock in trade, Shares, Debentures, Government Promissory notes, fixed Deposit, Life Insurance Policies, Gold and Gold ornaments etc. In some cases, where the overdraft is allowed with no other security except the personal security of the borrower. 5.2.3 Small Loans It refers to the lending allowed to small traders, collage industries, small-scale industries and self-employed persons. The maximum ceiling for this loan is at present Tk. 5000/- for small traders and self employed persons. Tk. 2,00,000/for cottage industries and small-scale industries, such loans are generally production/ development oriented rather than security oriented & this is the way of emphasis in these cases is on the purpose of the advance as well as skill regulation and capacity of the Borrower. The security requirements are substituted are substituted the end-use and frequent supervision of the credit. 5.2.4 Demand Loan This is the fixed type of lending in its original form. The entire amount is paid to the debtor at on time, either in cash or by transfer to his current or savings bank account. No subsequent debit is ordinarily allowed except by way of interest, incidental charges, insurance premium, expenses incurred for the protection of the security etc. A separate ledger is used for the maintenance of this account and as no subsequent withdrawal is allowed, no cheque is issued into this account. The following types of demand loan: Secured Demand Loan against Stock Exchange, Paper Securities, Goods, Produce and Merchandise.
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Staff Demand loan.
5.2.5 Staff Loan Pubali Bank provides advances to the staffs for buying Motorcycles and bicycles, for wedding their sons or daughter etc. It is called Staff Loan. Bank provides this advance of this sector under installments. At the end of each amount, when the staffs withdrawn there salary, Bank takes Tk. 525/- of the salary from the concerned staffs in any advances.
5.2.6 House Building Loan House Building Finance Corporation (HBFC) is the main institution to meet the requirement in the field but Pubali Bank also supplement to this sector Advances for construction of residential houses against real states as primary securities as allowed by Banks up to Tk. 500 lacks per party (including cost of land) minus any loan taken from HBFC for these purpose. Pubali Bank may grant advances for construction of commercial Building also against Teal states. The rate of interest for all such loans is 16% per annum and Maximum repayment period is 12 years. In such cases, parties have to pay down payment of 30% of the total amount and rest of the amount should be repaid within 2 years. 5.2.7 Purchase and Discount of Bills Purchase and discount of Bills is also a special form of advances. Pubali bank normally purchase demand Bills of exchange that are called drafts accompanied by documents or title to such as Bill of lading, Railway of Truck receipt. The purchase of bills of exchange drawn at an issuance i.e. for a certain period maturing on a future date and not payable on demand or sight is termed as discounting a Bill and the charge recovered by Bank for this is called "Discount". This is not very common in our country and is normally limited with the discount of Foreign Bills; inland Bills are rarely discounted of an organized Bill market.
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5.2.8 Mid term Loans Pubali Bank or Commercial Banks because of their Capital structure constitution and liquidity consideration are advancing for short term on Principle. But Modern Banks have stated lending a safe proportion of their demand and time liabilities for fairly long periods to House Building. Industrial Agricultural, Transport and many other sectors. Such loans are repayable by installments over a number of years ranging from 2 to 12 (Agricultural Loans ranging from 6 to 15 months), so far as, nature and conduct are concerned those loans and time to be fixed from advancing with minor variations as though limits are not withdraws by a time and these are allowed to be payable on installments or phases but no subsequent debit transactions are allowed to the Borrowers in the account beyond the disbursement of sanctioned limit. 5.2.9 Consumer Credit Technological improvement around the whole world is increasing day by day. But, the per capita income restricted the consumer from enjoying such improvement. In Bangladesh most of the people are standing below the minimum standard of living. As a result, they can't always do whatever they like or they can't buy whatever they want. For Example if we see the Television or computer market, we will find a huge expense behind this. On the other hand, it is very hard to live without Television now-a day. To solve this problem, various Commercial Banks offering various types of loans to the consumer so that they can enjoy these innovation and fixed a very easy installment process to repay that money. Pubali Bank also offering loan calling Consumer Credit Scheme in various types of goods like Television Mobile Phone etc. 14% interest is allowed in this scheme. 5.2.10 Transport Loan Advances are allowed against Hypothecation of power driven vehicles (PDV) including water crafts for genuine transport business to sufficient credit parties at 30% margin and suitable guarantee from persons of sufficient and standing where considered necessary mortgage of urban immovable property registered equitable are also to be obtained by way of additional securities or in suitable case. In case of acceptance of mortgage, the minimum may be reduced up to
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10 percent. These loans should be repayable within maximum period of two years, which is subject to renewal with approval from Head Office. There are, however, restriction of Bangladesh about extending discredit facilities existing capacity and capital assets that is running Buses, Cars, and all other taps of vehicles or Launches. Advances are allowed only for creating additional capacity such as acquisition of new Buses, Trucks, Coasters, and Taxies etc. 5.3 Credit Policy of Pubali Bank Limited: The credit policy pursed by Bangladesh Bank is to be aimed at ensuring development of scare Bank resources in the best possible manner for increasing Production, employment and Real income within its objectives. Both selective and qualitative credit can't were adapted to the socio-economic priorities, distributive and justice need for containing money supply within a safe limit. Pubali Bank takes the policies, which help the development of several sectors of the country under general credit division and for achieving the proposed goals of the principles of Agricultural, Economical, Industrial and Trade.Following the guide lines of Bangladesh Bank, this is the credit policy of Pubali Bank.
This policy is changeable. If Bangladesh Bank resists
providing credit in any sector Pubali Bank does not provide any credit in those sectors. 5.4
Interest Rate Policy:
Bank takes the policy of the rate of interest only for encouraging the rural savings or investment. If the rate of interest is low, the velocity of money will be increased.
5.4.1 Bank Rate Bank rate is decreased from 8 percent to 7.5 percent by Bangladesh bank and which the Governing Body of Pubali Bank approves also.
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5.4.2 Savings Rate In order to increase the savings, Pubali Bank offered 7.75 percent against savings deposit.
5.4.3 FDR against Loan: Keeping margin 10 percent of face value, bank provide loan against 90 percent of residual FDR. Rate of interest is now 8.5 percent. It is a kind of short-term loan for 12 months.
5.4.4 Staff Loan Bank provides this loan according to the grade of the staffs for their housing, buying motor cycle and bicycle, children's education and marriage ceremony etc. Its rate of interest is 6.5%.
5.4.5 Shares Against Bank provides loan against shares which 50 percent of previous 6 months to the customers. It's rate of interest in 16 percent and not more than 12 months. 5.5
Total Credit Line:
There are various types of loans in the credit under General Advance Division excluding public sector. Chemical Industry: It includes the soap, on and chemical factory. Rice, flour and oil mills: To install action of machine and working capital. Steel and engineering concern including re-rolling mills. Hides and skins: Here it sanction and processing. House Building Loan: Generally it is known as second mortgage loan. Additional money was supplied after the loan given near House Building Finance Corporation. Jute Loan: Cash Credit and segregate both are sanctioned to the private jute industry.
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Spinning Mills: Here also Cash Credit and segregate loan are sanctioned as working capital. Small Loan: All types are working capital below two lacs in any trading concern. Credit to Textile Mills. 5.6
Restrictions:
General Advances are restricted in the following sectors: Frog leg Leather of Deer Leather of Snake Hemp Wine Opium Elfish etc.
5.7
Principles of General Advance:
The principles of general advances management policy of any Banking institution is needed to be very systematic. It needs to have certain accepted standards and flexibility so that the policy can change in different realities and situations. Beside this, L.C. Mathur says that "An ideal advance is one which is granted to a reliable customer for an approved purpose in which that customer has adequate experience, safe in the knowledge that the money will be used to advantages and repayment will be made within a reasonable period from trading receipts or known maturities due or on about given date". The accepted standards relate to Safety, Liquidity and Profitability of the Advance where as the dynamic factors relate to aspects such as the nature and extend or risk. Head Office issues General Principles about the conduct of advance. In all types of Business dealings, officers and employees must be guided by the Principles or honesty, integrity and safeguard the interest of the
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depositors and shareholders of the Bank. They should strictly adhere to the Banking laws Rules and Regulations of the govt. of Bangladesh, the instruction issued by Bangladesh Bank Head Office from time to time that affects business practice of the bank. However, the key to safe, liquid, health and profitable credit operation depends in the quality of judgment used by the officers making lending decisions. The principles are described below precisely:
5.7.1 Credit Investigation Before sanctioning any credit to the Borrower the concern Branch of that Bank firstly investigate about the Borrower, Project, acceptability, market situation etc. Various types of investigation are discussed below:
Purpose: Purpose should be the primary guiding principle, which is kept in view. The purpose for which lending is made should be productive as to ensure definite source of repayment. Banks discourage advances for Harding stocks or for speculative activities. There are obvious risks involved there in a part from the antisocial nature or such transaction. Banker must closely scrutinize the purpose for the borrower applies a particular purpose accordingly. Purpose has assumed a special significance in the present day concept of Banking.
Selection of the Borrower: A Banker would select Borrower/ Entrepreneurs who would take loan from the Bank for their Business purpose or industry purpose. A prudent Banker should always notice background, Character, Capital, Capacity and Purpose of the Borrowers/Entrepreneurs. An entrepreneur who does not live at the commanding area and what is has social status. The Banker should consider this decide to pay loan to the Entrepreneurs.
Verification of the Primary Securities: Whenever a moneylender lends money he must consider carefully the changes of his being repaid by the Borrower and is therefore not normally content to
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rely on the obligation of the borrower above but wants some tangible security from which he can obtain repayment, in case the borrower is unable to meet his obligations. The Banker also, making advances and loans, naturally wants to secure himself by some reliable security. Security is considered as an insurance to fail back upon in case or emergency. Bankers may realize it and reimburse themselves if the well calculated and most certain source or repayment unexpectedly fails. An advance is granted near a good Banker on its own Merits, that s to say with due regard to its Safety, Liquidity purpose etc. and looking after into the character, capacity of the borrower and not because the security is good. In the case of advances against Hypothecation or stock, stock statement is to be or twice a month as per terms of sanction. The certificate at the foot of the state should be signed by an Authorized person to operate the Account. These statements are to be carefully verified to see the turnover of stock, the price of the Goods, Quality of goods etc. The price must be made market price or invoice price whichever is lower. A copy of the statement is kept at the Branch and the other one is sent to Head Office/regional Office.
Verification of the Cultural Security Collateral Security is a security, which is Immovable from one Place to another. A Branch Manger always should notice the verification of the collateral securities that Bank sanctioned to the Borrower. A Manger should verify: Location Possession Situation Present market Value Force sale value of the security as if the Bank can sale the security when the borrower fail to repay.
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5.7.2 Requirements of Loan Proposal Following items are required to prepare a Loan proposal: Loan Application (4 copies). Photograph and Educational Certificates (4 copies). Required Papers as per ownership of the firm. Scheduled of Mortgage Properties and relevant Papers. Nationality Certificate & Trade license. No objection letter from his superior (if he is n Govt. Employee). Declaration of Tangible/intangible Assets/liability. Actual deed of Land/building as Collateral Security. No objection letter from Environmental Department. Permission letter from local Authority in establishment of the Project. Current year tax Payment Receipt of Union council. Thorn less certificate of 12 years from Sub-Register Office. In case of BUSIC, actual allotment and possession letter is needed from BISIC. Documental evidence on behalf income and Testimony of Tax payment. No objection letter from the Govt. or any other Authority about the Land mortgaged to the Bank as security of credit which is sanctioned by the Same Authority. In the case of Company Attested copies of Memorandum of Articles, Articles of Association, Certificate of Incorporation, Commencement of Business. Audited Profit & Loss Account of last three years of his any running business. Declaration about the source of equity of his own. Sight plan of the project and root plan of the proposed loan.
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Feasibility study/ Viability study of the project from different aspect such as Technical, Management, Socio-Economical, Economical aspect. Tender sheet (including Catalogue, Detail specification) need to be submitted through local Intender. Permission letter from PDB/REB/GAS/Electricity authority (if needed). 5.7.3 Sanction of Loan When a Branch Manager writes a letter to accepting all terms and conditions of loan, it is called loan sanction. The conditions which are included in the loan sanctions these are given bellow: a) Limit. b) Primary Securities. c) Collateral Securities. d) The Rate of Interest e) Expiry date. f) Repayment. g) Documentation. h) Others Condition. 5.7.4 Charge Creating with Joint Stock Company The following terms and conditions are included in the charge creation with a Joint Stock Company: Simple Mortgage Deed Form 'L' Floating Charge Personal Guarantee List of Machineries Letter of Continuity
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Board Resolution Articles or Association & Memorandum or Association 5.7.5 Disbursement of Loan Loan disbursement has to be made after completion documentation and observance of the sanctioning terms against rising of equity by sponsors as laid down. Disbursement against import is to be made through an opening or Irrevocable L.C favoring the foreign supplier on execution or contract. Disbursement against local Machinery and Building construction is to be made to the supplier of Equipment's through Inland L/C. Each Phase of loan Disbursement to be supervised by Bank official so that Borrower is given scope of diversion funds to anywhere tends to purpose other than the project and the phase of implementation of the project to be effectively supervised and borrowers persuaded for completion or Project in time. There are mainly three most important factors in the loan disbursement, such as: Completion of Documentation. Verification of Stocks. All Important Documentation 5.7.6 Supervision Supervision is very important in the aspect of Loan /Sanctioning and Disbursing process. Because, if the Bank failed to identify the real borrower , Bank will incur the total loss. In this context, Branch Manger will exercise his commonsense and proper case in handling advances by them or any other appropriate authority. This has to realize by the Manger that he is the corner stone of the Bank and the overall success of Bank depends to large extent upon him. His total work represents himself to the local public and the Management as a successful or unsuccessful Branch Manager. Only he can control Advances judiciously to save the Bank fro-falling Losses. The entire necessary document has been duly failed in stamped and correctly executed by the borrower. He has to alert about the following things:
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A proper authority covering operation and conferring power to overdraw is held in respect of accounts of permeated upon by persons other than the borrowers themselves. It should be seen by him that the Advance does not contravene and law directed by Bangladesh bank or the lending policy of the Bank. Security is correctly valued and is easily salable. Proper storage and custody are made. Stipulated margin is maintained. Adequate Insurance, where necessary has been taken. There is quick turnover of stocks. Operations of customers account. The Balance of the account remains very near or goes beyond the drawing limit or there is no good turnover. The Balance is stagnant. Cheque drawn by the party is returned for storage of fund. Post-date cheques are issued by the Party. Cheques drawn by the Party are frequently countermanded financial position. 5.7.7 Recovery Advance is such kind of arrangement that its clients are repayable this either on demand at the expiry of fixed period or as per repayment schedule agreed upon while granting the facilities. If a loan is repayable on installment is not repaid on due date. Overdraft and Credit are legally repayable on Demand, although the Bank seldom exercises the right but in certain customers. In the case, when loan is repayable in installment, entire loan usually becomes immediately recoverable of at the option of the Bank. Banks generally feel Risky their advances under the following cases: I)
If the death occurs either of the Borrower or of the Guarantor.
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II)
If the Borrower is reported to have committed as act of insolvency or has filed and application for his insolvency.
III)
Dissolution the Partnership.
IV)
Liquidation the Borrowing Company.
V)
Failure to renew the documents sufficient before the expire of the limitation.
VI)
If there any serious deterioration in the financial position of the Party.
VII)
If the Borrower failed to maintain the stipulated margin.
VIII) Change the Bank policy of lending. IX)
The policy of the selective credit control by Bangladesh Bank.
X)
5.8
Detection of any other undesirable feature in the Account.
Industrial Credit Department (ICD):
Industrial credit department are advanced three types of credit they are: Pubali Bank Industrial Credit Scheme (Project) Pubali Bank Industrial Credit Scheme (Working Capital) Pubali Bank Industrial Credit Scheme (Agro. Based) 5.8.1 Preparation of Loan Proposal To get Advances or loans from Banks, it is not very easy way to acquire. It demands some preparation from the Borrower. Because, which the amount is sanctioning by the banks is not of its own. The public deposits this amount, so it is very risky for Bank to lend this to the Borrower. If the Bank fails to recovery that money then it should be paid from its own fund. As a result, Banks fixed a systematic way to minimize this lending risk and try to proper use of the money. Proposal requires: Loan Application. Required Paper as per Ownership of the Industry.
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Schedule of Mortgage Properties and Relevant Papers. Market reputation. Other Bank opinion about the previous money Lending. Feasibility Study. Lending Risk Analysis. Financial spread sheet analysis. Credit scoring. Forwarding. Valuation of Certificate. Trade License & CIB Report. Commercial Invoice. Certificate of Origin. Memorandum of Association & Articles or Association. No objection Certificate from Local Authority and from Ministry of Environment. C.S, R.S & S/A of Land. Mutation Certificate. Affidavit and Personal Guarantee.
General Irrevocable Power of Attorney.
Loan Sanction, Disbursement and Recovery Procedure almost same as General Advances. Working Capital Management involves the financial and Management of the Current assets of the Firm/industry. A Firms/industries ability to properly manage Current assets and the associated liability obligations may be determine how well it is able to survive in the short run, When a Firm/industry is unable to meet its current assets (payment of labor, raw materials etc.) then the Firm/Industry to the Bank for Working Capital. After proper investigation, Bank sanctions Working Capital for that Firm.
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Since 1973-74 Pubali Bank started to disburse in Agricultural Credit Program. The lion share of the disbursed credit goes for crop; the credit is being disbursed in a limited scale for the income group under various programs.
Interest Rate Policy The interest rate on Loan and advances has been rescheduled according to the following table effective from 1 August approved in the 877th board meeting of Director held on 13 July 2006 and all other interest rates which were effective before will be deemed invalid. Nature of deposit/loans & advances
Rescheduled interest rate (effective from 0108-06)
1. Savings Deposit
7.75%
2. Short Term Deposit
6%
3. From 3 months and above but less than 6 months From 6 months and above but less than 9 months From 1 years and above but less than 2 year From 2 years and above but less than 3 year 4. DPS
7.5% 8% 8.5% 9% 10%
5.Loans more than 3 years a) 5 Year Term
11%
b) 10 Year Term
12%
c)No loan is given again share. d)Demand loan @12% e)Loan against provident fund @10% f)Loan against own contribution in provident fund @12@ g)HBL-House building loan@ 15%
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CHAPTER-6
PAPERS TO BE SUBMITTED TO GET A LOAN
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CHAPTER-6 PAPERS TO BE SUBMITTED TO GET A LOAN 6.1
FOR FRESH / NEW PROPOSAL (PAPERS TO BE SUBMITTED/ ENCLOSED)
BY BANK: 01. FORWARDING 02. FL-60 (in prescribed form) 03. FL-56: HYPOTHECATION OF STOCKS 04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR ) 05. DECLARATION OF LIABILITY FROM THE BANK 06. PHYSICAL VERIFICATION REPORT 07. VALUATION CERTIFICATE 08. OTHER BANK’S OPINION 09. CERTIFICATE OF OBTAINING OF PARTICULARS 10. CIB FORM (in prescribed form)
BY THE BORROWER: 01.
APPLICATION OF THE BORROWER
02.
FL-59 (in prescribed form)
03.
HYPO OF STOCKS FROM THE BORROWER
04.
PROFIT-LOSS & BALANCE SHEET STATEMENT
05.
LIABILITY DECLARATION IN THE BORROWER’S PAD
06.
PERSONAL NET WORTH (in prescribed form)
07.
CONSENT LETTER OF CO-SHARER ( IF ANY )
08.
PHOTOGRAPHS
PHOTOCOPY: 01. SHOP RENT RECIEPT / COPY AGREEMENT 02. RENT RECEIPT OF THE LAND 03. INCOME TAX CERTIFICATE 04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA) 05. TRADE LICENSE 06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR) 07. LEGAL OPINION FROM BLA 08. COPY OF NON-ENCUMBENT CERTIFICATE 09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA
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6.2
FOR RENEWAL/ ENHANCEMENT PROPOSAL (PAPERS TO BE SUBMITTED/ ENCLOSED)
BY BANK: 01. FORWARDING 02. FL-60 (in prescribed form) 03. FL-56: HYPOTHECATION OF STOCKS 04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR ) 05. DECLARATION OF LIABILITY FROM THE BANK 06. PHYSICAL VERIFICATION REPORT 07. VALUATION CERTIFICATE 08. CERTIFICATE OF OBTAINING OF PARTICULARS 09. CIB FORM (in prescribed form)
BY THE BORROWER: 09. APPLICATION OF THE BORROWER 10. FL-59 (in prescribed form) 11. HYPO OF STOCKS FROM THE BORROWER 12. PROFIT-LOSS & BALANCE SHEET STATEMENT 13. LIABILITY DECLARATION IN THE BORROWER’S PAD 14. PERSONAL NET WORTH (in prescribed form) 15. CONSENT LETTER OF CO-SHARER ( IF ANY ) 16. PHOTOGRAPHS
PHOTOCOPY: 01. SHOP RENT RECIEPT / COPY AGREEMENT 02. RENT RECEIPT OF THE LAND 03. INCOME TAX CERTIFICATE 04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA) 05. TRADE LICENSE 06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR) 07. LEGAL OPINION FROM BLA 08. COPY OF ENCUMBENT CERTIFICATE 09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA 10. COPY OF PREVIOUS SANCTION LETTER
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PUBALI BANK LIMITED 6.3
APPLICATION FOR ADVANCES (FOR INDIVIDUALS AND FIRMS)
Sl. No. ..................................... ........................................ Copy Date .......................................
Photo
The Assistant General Manager Pubali Bank Limited Nawabpur Road Branch Dhaka
Dear Sir, I / We request you to kindly grant / renew / enhance / extend me / us an advance in the form of Cash Credit / Overdraft / Demand Loan / Bank Guarantee amounting to Tk. ......................... (Taka .........................................................) on usual terms and conditions. I / We state the following particulars and bind myself / ourselves to furnish you with any other information & comply with required formalities which you may at any time require:-
:-
1. (a) Name of the applicant / firm (in block letter) (b) Father’s name & age of the applicant (in case of individual)
:-
(c) Name, age and official status of husband if the applicant is a lady
:-
2. (a) Business address with phone no. if any.
:-
(b) Present residential address
:-
3. Name / style of the A/c. and Number with date of opening with the Branch.
:-
4. Nature of the applicant (individual/ proprietorship/ partnership firm)
:-
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5. Permanent address with father’s / husband’s name of individual/ proprietor / partners.
:-
Name and Father’s / husband’s name
Details of assets held with value Comprising of Value
a) Mr. .................................................... S/o. ................................................... Address: ........................................... .........................................................
i) ii) iii) iv)
Less Liabilities
Net Worth
Tk. ........................... . Tk. ........................... . Tk. ........................... .
Contd. ..................... P/2
Page No. 2
b) Mr. .................................................... S/o. ................................................... Address: ........................................... .........................................................
i) ii) iii) iv)
Less Liabilities Net Worth
c) Mr. .................................................... S/o. ................................................... Address: ........................................... .........................................................
Tk. ............................ Tk. ............................ Tk. ............................
i) ii) iii) iv) Tk. ......................... ...
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Less Liabilities
Net Worth
6. Nature of Business (Whole Seller/ Retailer/ Manufacturer)
:-
7. Capital (own investment)
:-
8. Borrowing powers (in case of partnership firm).
:-
9. a) Name & address of other bankers & borrowing, if any, from them with full particulars of Credit facility b) Name and address of the previous Bankers, if any
:-
10. G.I.R. No. / T.I.N. No.
:-
:-
11. Trade licence No. 12. How long in the particular business or industry 13. Purpose for which the facility is required
::-
14. Items of manufacture or trade
:-
15. Amount of facility required
:-
16. Mode of repayment
:-
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Tk. ......................... ... Tk. ......................... ...
a) Copy of partnership deed (to be attached) b) Copy of decision taken for the proposed loan / advance duly signed by all the partners (to be attached).
Contd. ..................... P/2
Page No. 3 17. Nature of security offered a) Description of stocks to be pledged / hypothecated
:-
b) Full description of immovables offered for mortgage with location, Area & nature of construction & Present market value/ estimated forced sale value
:-
c) Name & Father’s/ husband’s name of the owner of property proposed to be mortgaged.
:-
d) Relationship of the owner of the property with the borrower
:-
18. Property of the firm
Details a) Movable
:-
b) Immovable
19. a) Name of the guarantor(s) if any
:-
b) Father’s name
:-
c) Present occupation
:-
d) Present Address
:-
e) Permanent address
:-
20. Present financial position of guarantor
:-
List of Assets Comprising of
i) ii)
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Value Tk. ................. .......... Tk. ................. ..........
Value of Asset
iii) iv) Tk. ............ ............ .. Less liabilities with other guarantees
Net worth
21. Liabilities of sister concerns (if any)
22. Present liabilities in different accounts
:
:
Contd. ..................... P/3
Page No. 4 22. i) Net worth as per last year’s balance sheet dated ............... or statement of affairs dated .............. (to be enclosed)
:-
ii) Last year’s total purchase/ productions
:-
iii) Last years total sales
:-
iv) Last year’s total gross/ net profit/ loss
:-
24. Others relevant particulars, if any
:-
25. Declaration :
89
Tk. ............ ............ .. Tk. ............ ............ ..
a) with our bank
:
b) with other bank
:
a) with our bank
:
b) with other bank
:
I/
We
........................................................................
............................................................... ...............................................
P.S.
permanent /
Thana
S.o./
W.o.
resident
of
..........................
Dist
.......................... by occupation .................................................................. by faith ......................................................... at Present carrying on business of .................................................................................... partnership
basis
under
the
on
name
proprietorship/ and
style
................................................................................................ ................................................................ ............................................................................
at P.S./
Thana
................................................... Dist ......................................... do hereby solemnly on oath declare and affirm as follows:-
1. That I/ We have not taken any loan or enjoyed any facility in my/ our personal name or in the name of my/ our proprietorship/ partnership firm from any other branch of Pubali Bank Ltd. or any other Commercial Bank save and except as stated under 9 (a) & (b) above.
2. That the statement made above is true and nothing has been concealed and if at any time it transpires that I/ We have suppressed fact regarding availing of a loan facilities from the bank, I/We shall be criminally liable.
Date: .................................. .............................................
SIGNATURE
(Price of each set in quadruplicate is Tk.35/- only for individual & Tk.100/- for firms).
90
N.B. : Original and Duplicate to be forwarded to H.O. by branch through Regional Office with proposal. Triplicate to be kept with the branch while the 4th copy
.
is for applicant.
F.L.-60 (REVISED) PUBALI BANK LIMITED (CREDIT PROPOSAL AND APPROVAL FORM) 6.4
NAWABPUR ROAD BRANCH, DHAKA
Branch Ref. ................................................................................................ Regional Office Ref. ..................................................................................
01. Customer’s Name
:
02. Account : No. 03. Date of a/c opened : 04. Date of first sanction :
05. Address with phone no. : Present Address
Permanent Address
Factory/ Business
No. Date ...................... .............. No. Date ...................... ..............
:
:
91
06. Legal Status
: Individual/ Proprietorship/ Partnership/ Private Limited Company/Public Limited Company
07. Date of Establishment/ Incorporation ............................................................................................................ G.I.R./ TIN No......................................................................................................................... .......................... 08. Name of the Proprietor/ Partners/ Directors: Age Share Position Personal Name & Residential address with holding in Net % Worth Father’s/ Husband’s name & Phone (details No. attached) Tk. Tk. Tk.
09. Capital structure : a) For Limited Companies: Authorised Capital Paid-up Capital Total Capital Funds (Net worth) b) For Individuals, Proprietorship & Partnership: Investment in Business (Net worth)
: : :
Tk. Tk. Tk.
:
Tk.
Contd.-.........................Page no.-2
PAGE NO. -2 10. (a) Nature and details of Business/ Products:
(b) Market/ Place of business/ Areas of main operation:
(c) Sales:
92
Actual Sales
Sales ⇒ Products ⇓
2003
2004
Tk.
Tk.
2005 Tk.
Estimat ed Sales 2006 Tk.
Total Sales 11.
Date of application by the customer ............................... (Amount in Taka) Existing Limit Proposed Limit Amount of Date of Limit Limit Expiry Outstandi approa recommLimit expiry ng ched ended for
(a) PRESENT PROPOSAL (Fresh/ Renewal/ Enhancement)
Nature of facilities
Cash Credit (Pledge) Cash Credit (Hypo) Overdraft Loans LIM LATR Packing Credit Export Bill Purchased (F.B.P.) Inland Bill Purchased (I.B.P.) L/C (Sight) L/C (Usance) Back to Back L/C Bank Guarantee Others (Specify) TOTAL Enclose: Indent/ Proforma Invoice where applicable. For L/C, LIM & LATR proposal, amount of Duty, VAT etc. Landed cost & approximate market price to be mentioned.
93
Contd.-.........................Page no.-3
PAGE NO. -3 11. (b) Credit facilities granted to subsidiary/ affiliates/ associates/ sister companies with extent of interest of the applicant borrower: Name of the Borrower Nature of Limit Outstandin Expiry Security/ facilities g collatera ls
Extent of share holding
11. (c) Details of other business of the applicant not included in 11(b) above: Name of the Business/ Firm Nature of Extent of Investment in Business share holding the Business (in Taka)
11. (d) Total Facilities (Limit) in favour of the group: Existing Cash Contingent
12.
:Tk. :Tk. . Tk. .
Particulars of the proposed limit: (a) Purpose of the Limit:
12. (b) Securities Value (i) Details of Primary Securities
94
( in Taka) Proposed Total (Fresh/ Enhancement) :Tk. :Tk. :Tk. :Tk. . . Tk. Tk. . .
(ii) Details of Collaterals (As per valuation certificte in details attached herewith)
Total Value of Collaterals Tk. .................................... Force Sale Value Tk. ................................. 12. (c) Repayment arrangement:
Contd.-.........................Page no.-4
PAGE NO. –4 13. (a) Account performance: ( for the period from ................................... to ............................... ) (in Taka) Nature of Account Debit Credit Balance Summation Summation Maximum Minimum Deposit Accounts C/C (Pledge) C/C (Hypo) Loans Overdrafts Margin Deposits LIM/ LATR/ PAD* Total L/Cs opened (Foreign) Total L/C opened (Local) Total Guarantee issued
Nos. Nos. Nos.
Total Foreign Bills purchased Total Inland Bills purchased (*Detailed statement should be attached) 13. (b) Account Profitability: (For the same period as above) Nature of Account Interest Commission Deposit Account Margin Account Cash Credit Loans
95
Tk. Tk. Tk. Tk. Tk.
Other revenue
Total
Overdrafts Export Bills Import L/Cs Local L/Cs/ G’tee Collection/ Remitt. Others (Specify) TOTAL 14. History of Relationship with the Customer: (How and when the relationship started?/ State if the repayment/ adjustment have been regular etc.)
Contd.-.........................Page no.5
PAGE NO. –5 15. Bank/ Trade checking/ CIB report (Brief Synopsis).
16. Opinion on Customers Management: (Education, Training background and past experience of key Management Personnel to be mentioned.)
17. Other Bankers, Extent of relationship, facilities available, outstanding etc.: Name of the Bank Name of the Nature of Validity Securit Outstand- Status of y Value ing account & Branch Customer facility (Whethe r classifie d or regular)
96
18. Industry Condition: (How others in the same business/ industry are doing, name of 2/3 Leading Companies)
19. Competitive position of the Customer: (Pricing/ Marketing/ Special Advantage and any other)
20. Any adverse comments from Last Inspection/ Audit Report. (Our Bank & Bangladesh Bank)
21. Future Business Projection:
22. If there is any Guarantor, details of Guarantor’s Background, Net worth and Liabilities with the Bank.
Contd.-.........................Page no.6
PAGE NO. –6 23.(a) Comments on the financial statements for the last 3 (three) years: (State whether audited or unaudited) Name of the Audit Firm if a/cs are audited: SALES/ PROFITABILITY:
Audited/ Unaudited 2003
Audited/ Unaudited 2004
Audited/ Unaudited 2005
Sales Cost of Goods Sold*
Tk. Tk.
Tk. Tk.
Tk. Tk.
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GROSS PROFIT Selling General, Admin, Financial Expense & Depreciation OPERATING PROFIT/ LOSS Add Other Income Less: Other Expenses Net Profit/ Loss before Income Tax
Tk.
Tk.
Tk.
Tk. Tk. Tk. Tk. Tk.
Tk. Tk. Tk. Tk. Tk.
Tk. Tk. Tk. Tk. Tk.
Income Tax
Tk.
Tk.
Tk.
NET PROFIT/ LOSS after Income Tk. Tax
Tk.
Tk.
Tk. Tk.
Tk. Tk.
INVENTORY/ RECEIVABLES: Inventory/ stock in trade Receivables
Tk. Tk.
EQUITY: Assets Tk. Tk. Tk. Liabilities Tk. Tk. Tk. Equity (= Assets minus Liabilities) Tk. Tk. Tk. * For trading Firms Cost of Goods sold to be ascertained as under:Costs of goods sold = Opening stocks + Purchase + Carriage inward/ Freight – Closing stock CASH FLOW: Net Profit Depreciation + Write offs Accounts Payable Incr./ (Decr.) ** Receivables (Incr.) / Decr. *** Inventory (Incr.) / Decr. **** Other (Uses) / Sources NET OPERATING CASH FLOW
2004
2005
Tk. Tk. Tk.
Tk. Tk. Tk.
Tk.
Tk.
Tk.
Tk.
Tk. Tk.
Tk. Tk. .
.
** If the Current years figure is higher than previous years figure then the difference amount is increase in cash flow & vice versa. *** If the Current years figure is higher than previous years figure then the difference amount is decrease in cash flow & vice versa. **** If the Current years figure is higher than previous years figure then the difference amount is decrease in cash flow & vice versa. Contd.-.........................Page no.7
PAGE NO. –7
98
23. (b) Important Ratios:
2003 Current Assets Current Liabilities
i) Current Ratio
:
ii) Quick Ratio
: Current Assets – Inventory Current Liabilities
=
iii) Leverage
: Liability
=
2004
2005
=
Equity iv) Inventory Turn over in days
: 365 X Inventory Cost of Goods Sold
=
v) Receivables Turn : 365 X Receivables over in days Sales
=
vi) Total Assets Turn over
: Net Sales Total Assets
=
vii) Gross Profit to Sales
: Gross Profit X 100 Sales
=
viii) Net Profit to Sales
: Net Profit X 100 Sales ix) Selling, Selling General & general, Admn. Expenses X 100 & Admn. Sales : Expenses to sales (%) x) Return on Equity : Net Profit X 100 (%) Equity
=
=
=
Please enclose Balance sheet, Trading/ Manufacturing & Profit and Loss Account of the applicant firm/ company for the last three years. 24. Details of Fixed Assets with valuation: (For Limited Companies search be made with Registrar of Joint Stock Companies to Ascertain any encumbrances) Value Date / Year Description Written down as Acquired Market per Balance Sheet
99
Encumbran ce if any
25. Any special consideration/ significant information about the customer/ transaction:
Contd.-.........................Page no.8
PAGE NO. –8 26.
(a) (b) (c) (d)
(e) (f) (g)
All procedures in respect of opening of account have been complied with All necessary documents establishing the borrowers legal entity have been obtained Existing Securities/ Banking documentations and collaterals with their valuation have been checked and they are in order Documents establishing that proposed advance is within authorisation and borrowing powers of the applicant have been obtained. All assets offered as security/ collateral have been verified to be free from all encumbrances. Security documents as prescribed have been obtained/ will be obtained alongwith complete set of borrowing documents The borrower is a director/ shareholder of our Bank, if yes, the extent of share holding (value Tk. ...................................... )
27. RECOMMENDATION OF BRANCH MANAGER:
AUTHORISED OFFICER
MANAGER
Name:
Name:
100
YES / NO YES / NO YES / NO YES / NO YES / NO YES / NO YES / NO
Designation:
Designation:
(Separate sheets may be attached to give detailed information for any column)
28.RECOMMENDATION OF REGIONAL OFFICE:
AUTHORISED OFFICER
REGIONAL MANAGER
Name:
Name:
Designation:
Designation:
101
CHAPTER-7
CONCLUSION
102
CHAPTER-7 Conclusion
7.1. Problems Findings: There are several problems which I practically observe of PBL as follows: 1. Lack of Segmentation: The Bank has no segmentation to handle different type of customers. They are equally treating of all the customers to provide service. But high status clients seek on extra honor from Bank or institution.
2. Lack of Up to Date Decoration: The Branch is not decorated with ultra modern facility and not so nice to look at. Their furniture’s and relevant materials are not so high standard.
3. Work Environment is not so suitable: The work environment is noisy and full of crowd sometimes. It is bad for any financial organization and also bad for security. There is no siting arrangement of good no of people.
4. Hard Rules & Regulation to Open A/C: The procedures to open an account are full of hard & fast rules and regulations (as per Bangladesh Bank). But compare to other Bank prime bank is not as flexible as they are doing to open A/C or attract customers.
5. Root level Clients are deprived From Deposit: Many root level customers come and back to pavilion with a frustration. So they are neglected and deprived to get banking service.
103
6. Lack of Sufficient Computers & Technology: Computers are carrying need of any organization in the age of technology. But the branch has only 4 computers to use by almost 27 employees. This is very few to run the task through computer. Lack of good software and format PO, DD are manually prepared in the branch.
7. Non-quality Photocopy Machine: The branch has only one photocopy machine which is sometimes in clinical death. The output of this machine is not ensuring the quality of original documents. So it is an image problem of the Bank.
8. Un Smart Peon, Messenger, Security & Tea Bay: It is a matter of great regret that the peon staffs of the branch are lazy, whimsical, and above all illiterate to behave and work with someone.
9. Customer Objectives: Many customers complain to me to improve and first the service as well as behavior of the staff as it is a private bank.. Customers require especially quick, accurate service and good behavior from bankers.
10. Lack of Good Cooperation: Every organization has this type of problem. But it should be minimized to faster the service as it is the financial institution and one depends to another to complete a process fully. 11. Some Sort of Ego: Some employees of this branch feel always some sort of ego that they are something different. But this is not a symbol of good sign. Ego drive is harmful for team work specially.
12. Lengthy Procedures & Process: The scheduled activities of the bank like A/C opening A/C closing and issuing of solvency certificates are delay sometimes due to lack of proper initiates. This tendency is bad for banking good service.
104
CSS maturity and closing require 3 days, which is an image of Govt. Bank.
13. Low Interest Rate Cannot Attract Customers: Compare to many others Banks prime Bank offer low interest rate to depositors. So they are not interested to keep there money in low rate of interest. The PBL management is only hunting to ward low cost and no cost deposit.
14. Customers’ Complains: Customer’s all complains are related with lengthiness and time consuming of tasks. The small depositor like CSS A/C holder claim to receive money instantly. But it is not possible for slow and lack of cordial interruption of the management.
7.2. Policy Guidelines / Recommendations: On the basis of theoretical analysis and practical experience of 3 months internship program. I may suggest the following issues: 1. Provide Up To Date Technology: The branch should be more technologically rich than present time. Then all manual tasks will be converted into computerized system
2. Information Cell Establishment: Each and every branch should establish an information cell with one/two dump smart executives who will be able to provide all sort of information regarding banking and respective branch. In my question Almost 200 responded are agreed with my proposal.
3. Provide Nice Decoration: Now a day’s private Bank is an image building and most nice environment organization. So the decoration should be unique and better than our competitors.
4. Handling Customers Well: I think the staffs of the branch should be trained up how to handle different type of customers. The training should not limit only GB, Credit, And Foreign exchange etc.
105
5. Behavior Modification of the Employees: Very few employees’ behavior should be modified enough to maintain positive attitude toward banks. They should always think it is a private bank and fully service oriented organization. “Customer is the king / Queen” they should remember it almost every time in office or out side the office.
6. Maintain Service Quality: We believe in quality not quantity. Quality is an important phenomenon of service organization always quality should achieve the pick of standard. If quality of service is good then 50% problem will be automatically reduced.
7. Offer Competitive Interest Rate: PBL should offer high competitive interest rate to attract depositor to increase the liquidity. Then it will able to deal with call money business in the age of fluting rate of exchange.
8. Site Selection of Branch: Management should carefully consider the location to set up a new branch. Because it is a question-which is vital to deal business? Answer is location, location and location.
9. Deposit Mobilization: Prime Bank has to increase their deposit mobilization growth. Also AB bank has to take necessary action to maintain and improve their deposit mobilization growth rate.
10. Operating Income: For the maximizing the operating income, prime bank should try to take necessary action to increased the operating income. 11. Reduce Expenditure: Very essential to reduce the expenditure of the prime bank. Prime bank expenditure is very high other than two banks. 12. Remove Slow Rate of profit:
106
Prime bank profit is increased previous year but grow rate is low. So take necessary steps to increase the profit. 13. Foreign Trade: Foreign trade increase is the essential for the prime bank. The maximum amount of total earning comes from foreign trade. 14. Performance Increase: Prime Bank should increase their performance by engaging efficient decision maker in the managerial level. 15. New Planning: All commercial banks including both nationalized and private should introduce operational
performance efficiency
planning or
system
purpose
for
the
increasing following
their other
recommendation: •
It should utilize properly idle money, because idle money is one of the major problems of banking sector.
•
Proper standard should be set by the movement for comparative performance measurement.
•
Proper decision should be taken for banking sector which should not be changed rapidly.
•
Proper training should be given in order to create efficient personnel.
•
World Bank’s prescription for banking reform programmed should bee analysis before implementing.
16. Proper Autonomy: Private Banks should be give proper autonomy and be kept free from political and other sorts of intervention. Though, autonomy does not mean lack of monitoring by the authority, yet it has advantages of being quick and flexible in implementing different plans and programs.
107
7.3. CONCLUDING REMARKS:
From the detail discussions above I can easily conclude that In spite of all problems Pubali Bank Ltd. is the fastest growing private commercial bank in the country. The bank is already at the top slot in terms of quality service to the customers and value addition for the shareholders because, despite difficult circumstances, the Bank closed the year of 2005 with a number of achievements. The Bank also made satisfactory progress in all areas of business operation up to June 2006. The Bank further expanded and consolidated its customer base in both of its core businesses and General Banking Services.
108
7.4
Bibliography
1. Annual Report, Pubali Bank Ltd, 2004 2. Annual Report, Pubali Bank Ltd, 2005 3. Different Instructions Circular,Issued by Pubali Bank Head Office. 4. Website: www.pubali-bangla.com
Advices & Suggestions are given by the following persons: Mr. Shym Sundar Banik,Managing Director of Pubali BankLimited,Nawabpur Branch Mr. Shajhan Mahmood, Principal Officer, Pubali Bank Limited,Nawabpur Branch Mr. Partha Pratim Acharja, Senior Officer, Pubali BankLimited,Nawabpur Branch
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