Banking
System
of
NCC
Bank
Limited,
Bangladesh
Chapter- 1 Topic Chapter- 2
About The Internship 1.1) Definition of Internship Internship is a process to achieve practical knowledge about some theoretical lesson. Its most important aspect is to acquire knowledge about the real position. As a practical subject, Management needs some practical knowledge. Marketing of Business studies includes an internship programs for its Bachelor of Business Administration (BBA) programs. According to Polin Efro (1977).Social Research is such a scientific effort which tries to discover new information through some rational and organized system, which tries to examine the reliability of former information, and which tries to make to new theories, systems and conceptions to understand and Explain a human attitude .Practical work is achieved to fulfill our knowledge. In practical work, we can realize some problems and possible determinants of their solution.
1.2) Objectives of Internship Primary objectives of internship are to provide some practical knowledge, which will increase the practical experience with theoretical knowledge managerial efficiency. It helps to achieve real knowledge, perfect investigation, above discussion of known and unknown matter, techniques and experience. However, we can mention the objectives program of internship in the following ways: •
To show the guideline for searching various necessary information to solve the organizational problems.
•
To add new information with established ways.
•
To identify problems and recommends to solve them.
•
To realize what kinds off organization can contribute to the economic development of a country.
•
To determine entire actual situation of the organization.
Another important objective of practical training is to implement the knowledge of practical training in the practical life. •
To prepare pragmatic report about entire management of organization.
•
To make comprehensive solutions of problems to increase the diversification and modification of marketing.
•
To show about the profitability, liquidity and solvency.
•
To investigate the techniques those are used in decision-making.
•
To show about the conditions of the Bank and its goodwill to the public.
•
To identify managerial problems and eradicate those.
1.3) Importance of Internship Goods and services are produced for the purpose of using in daily life. Similarly, Theoretical knowledge is acquired for the purpose of applying in the practical life. The propensity of application of theoretical knowledge in practical life successfully internship program is absolutely necessary because theoretical knowledge will be fruitful if it can be applied in the practical life. When we can implement the theoretical knowledge practically, we can say the knowledge is successful; otherwise the achieved knowledge is valueless. Internship program is the way of implementing the theoretical knowledge practically. However, the importance of internship may be described in the following ways: As internship program is the practical implementation of the theoretical knowledge, it helps to increase the quality and effectiveness of the trainer. We can only know the problems of an organization in directly through theoretical knowledge, but we can know the nature of the problems, problems of the various departments, methods of solving
the problems through the practical training. So it is very important to identify the problems and eradicate the problems. The trend of all activities is an organization becomes growing through practical training. •
To Innovate new technique of management.
•
To realize the present condition of the institution.
•
To make policy for development of the organization.
•
It mentally prepares for their professions.
Internship program acts as a bridge between theoretical knowledge and managerial practice. Internship acts as a guideline during the service period. By internship program students can understand limitations, shortages and practicability of their knowledge and thereby can take necessary action for removing these limitation and shortages.
1.4) Statement of the Problem NCC Bank is playing a remarkable role for the economic and social development of Bangladesh. NCC Bank at Narsingdi Branch is also playing such type of role. The activities of this bank are widely diversified. But I have got only 90 working days for my internship program. These ninty working days programs are not sufficient to acquire complete knowledge about overall activities of the bank. So, it may have some sort of problems in deed besides there may have a big problem in collecting primary and secondary data. It is not abnormal that I may have problem of knowledge. Moreover, it might be said that data have reliable and valid as much as possible. So, I tried my best to prepare my report according to the information available to me. Chapter- 3 About of study
2.1) Introduction Bachelor of Business Administration (BBA) is a professional course. The course is designed with an excellent combination of practical and theoretical aspects. After completing BBA certain times is preserved for internship. As a student of BBA with the requirement of my
course I was assigned to National Credit and Commerce Bank limited (NCCBL) to Narsingdi Branch, Narsingdi for my internship. However, I was very much interested to know how to develop banks. So I chose the research topic as “Overall Banking System and Performance Analysis
of
NCC
Bank
Ltd.”
They intend to ensure the trust and confidence of the customers through focused customer orientation, quality of service and state-of the art technology, transparency in dealing and adopting the best practices of Corporate Governance, achieving excellence in all the endeavors to create value for all the stakeholders. The significant challenge posed before them is the maintenance of the quality of business simultaneously with its information and business consolidation processes. This report is prepared based on the: topic “Overall Banking System and Performance Analysis of NCCBL. Due to this practice the remittance department of NCC Bank has been growing to provide a good participation in the profitability
of
the
Bank.
Basically, this report is highlighted on overview of NCC Bank Ltd, Structure, Analysis, Present status, Performance of NCCBL, Deposit Mobilization, Utilization of Fund, Foreign Exchange,
Own
Experience,
Recommendation
and
conclusion.
2.2) Scope of Study Internship program gives me a great scope or opportunity for gather experience and knowledge in several areas of Banking by which I can evaluate or expose myself. During:-e first few week of my internship period, I was able to communicate most of the employees of the bank. During the first month I was able to accustom and adapted myself with the working environment of NCC Bank Limited. While preparing this report, I had a great opportunity to have an in depth knowledge of all the banking activities practices by the “NCC Bank Ltd”. It also helps me to acquire perspective of a leading private banking in Bangladesh. In term of Bank we can easily understand that the financial institution deals with money.
2.3) Objectives of the Study Though the main objective is to prepare myself in such a manner as though I can equip myself with the practical field as well as I will be able to know the different aspect of the
banking sector and to evaluate how a bank is performing in Loans and Advance sector. In addition, o
the
To
study
know
seeks the
to
achieve
organizational
the
following
framework
of
objectives: the
bank
o To know the work environment and organizational behaviors of the bank o To get through all the departments of the bank and observe the actual work done o
To
find
o
To
see
o
To
acquire
out
how
the
how loans
knowledge
the and
about
general
advances the
banking
are
foreign
provided
exchange
system to
system
works
the
borrowers
of
the
bank
o
To
analyze
the
growth
of
deposits
in
the
bank
o
To
analyze
the
growth
of
advances
in
the
bank
o
To
analyze
investments
in
the
bank
the
growth
of
o To compare the financial performance among several years of the bank and with other banks
2.4) Methodology In collecting the necessary data, a special care has been taken so that all the variables may not affect the objectives of the study. Data needed for conducting the study have been collected from a)
the Primary
b) Secondary source
2.4.1 Primary sources
following source
sources. and
The primary data in this report mainly includes surveying the different departments of the Bank.
It
1)
includes-
Scheduled
2)
Observation
3)
while
Informal
survey
working
in
discussion
different
with
desks professionals
2.4.2 Secondary sources The permanent and printed sources of information. This are-Annual reports of NCCBL 1)
Desk
2)
Brochures
3)
report of
National Different
of Credit
related and
Commerce
department Bank
reference
limited books
4) Study of related books, seminar paper, training papers, Publication of statements. To collect information to prepare this report I have used secondary data analysis and survey method. Most of the information was collected by Secondary data analysis method. And the rest are collected through survey method. Before telling about my methodology, a brief discussion about the survey and secondary data analysis is given below: •
Survey-This is a research method in which information is gathered from respondents by asking questions or by using questionnaire. Direct interviews, telephoning. Mails etc are also survey methods that give primary data.
•
Secondary data analysis-These are data that have been previously collected for some other projects than the one at hand. They can be collected from books, reports, the net etc.
•
In secondary data analysis-I have collected data from the training manual of NCC Bank Ltd. which is written by some of the department head of NCC Bank and faculties of BIBM, various credit manual of NCC Bank, various circular of Bangladesh Bank regarding Loans and Advances, files of loans issued etc.
•
In Survey method-I have talked with the bank officials of credit division of NCC Bank Ltd. Narsingdi Branch. They have informed me about the credit management of NCC Bank and gave me idea how it works. They have also answered me about many things which I thought necessary for my report. Beside that, they have explained me various terms and conditions which I found by doing secondary data analysis.
2.5) Rationale of the Study The word “bank” refers to the financial institution that deals with money transaction. Commercial banks are the primary contributors of the economy of this country. On one hand they are borrowing money from the locals and on the other hand lending the same to the locals as loans and advances. So the people and the government are very much dependent on banks. Moreover, banks are profit earning concerns, as they collect deposits at the lowest possible cost and provide loans and advances at higher rate. The difference between two is the
profit
for
the
bank.
This report basically deals with the loan and advance management of National Credit and Commerce Bank Limited (NCCBL) covering the areas like General Banking, Loan and Advance, Foreign Exchange, Remittance, Financial Performance, Online Banking, etc. The present study is a pioneering attempt in the field of overall activities of NCC Bank Ltd. It is true that, financial performance is really important for realizing original financial position of a bank. In general uses the term fund frequently is used to include (i) Cash (ii) Liquid assets (iii) Current assets (iv) Working capital (v) Total resources Again, According to other fund constitutes the prime importance in starting and operating any business enterprise is the raising and management of funds financial decisions are those which concern the flow of funds from various sources and use of such funds. Efficient management of finance ensures best use of resources to earn profit. Bank finance management is the key to short to intermediate term decision-making in today’s dynamic and volatile banking environment.
This study is taken to enlighten the basic inherent problems of the bank which need a indepth analysis for the survival of the bank in the situation of its chronics financial problems, such as lack of expected loan recovery, huge outstanding loan, large amount of classified loan and excess overdue loan etc. For continued the present condition of this branch it is now essential to verity its efficiency or lack. As student of BBA (in Finance) I have considered all these matter and planned this study.
2.6)
Limitations
of
the
Study
1. Although I have enjoyed full co-operation from employees of NCCBL and they also gave me much time to prepare this report properly in the way of my study, I have faced some difficulties, which can be termed as limitations. They are as follows: 2. It should be certainly mentioned that time constraint is the first limitation of the study. Only three months is not sufficient for gathering perfect knowledge on the vast area of bank. 3. In some cases, they could not be able to supply my topic related data for preparing a more in depth research study. Office secrecy was one of the most important problems. Disclosing of some information was restricted. 4. In case of secondary data collection, there was very little secondary information. There were few support books, reports, journals, etc. moreover, the branch office had very little of this information. That’s why bulk of it had to be collected from the head office. As the officers were very busy with their day to day work, they could provide very little time. I have also faced several problems during the preparation of this repost. Some of the limitations of this report are mentioned below: •
Credit management is too big to cover: Credit management is a too big to cover wholly in this limited scope. It required huge time and huge space to cover. So, I have covered only some important topics of credit management.
•
Time constraint: I had to prepare this report within a period les than three month which was not enough to prepare such a report. Because collection and arrangement of information is a time consuming job. Then again I had to summarize those. So I had to work in haste.
•
Brief Description: As there was page limit, I gave a brief discussion about some topics which require more detailed description. As a result, some topics are not clear properly.
•
Very Little Readymade Information:
The bank hasn’t adequate amount of
readymade information. As a result, I had to find out the information from many files and documents, manuals etc. This job was difficult and time consuming. The problems mentioned above are some of the major problems I have faced during the preparation of this report. In spite of that, I have tried my level best to make the report as good as I can.
Chapter- 4 About The NCCBL
3.1) Company Overview NCC Bank Ltd. is one of the fast growing, leading and prominent bank in the private banking sector which is run by highly skilled professionals.
3.2)
History
of
NCCBL
National Credit and Commerce Bank Ltd. bears a unique history of its own. The organization started its journey in the financial sector of the country as an investment company back in 1985. The aim of the company was to mobilize resources from within and invest them in such way so as to develop country's Industrial and Trade Sector and playing a catalyst role in the formation of capital market as well. Its membership with the browse helped the company to a great extent in this regard. The company operated up to 1992 with 16 branches and thereafter with the permission of the Central Bank converted in to a full fledged private commercial Bank in 1993 with paid up capital of Tk. 39.00 corore to serve the nation from a broader platform. Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere personalized service to its customers in a technology based environment. The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business. Its various deposit & credit products have also attracted the clients-both corporate and individuals who feel comfort in doing business with the Bank. National Credit and Commerce Bank limited came to reality through the “National Credit limited�. Prior to conversion into a scheduled commercial bank, National Credit Limited(NCL) was incorporated as an investment company on 18th November 1985. It made its January on 25th November 1985 at its registered office and first branch at 7-8 Motijheel Commercial Area, Dhaka-1 000 with initial authorized capital of 1k. 30 crores. It was mostly involved in collecting suitable resources and making profitable investments. But within a very short period of time this investment company turned into a scheduled commercial bank. It was turned into a bank because it faced many restrictions both collection and disbursement of funds while it was operating as an investment company. While this turnover was going on all types of transactions were closed for about fourteen months from April 22�, 1992. After
that, with the permission from the government and Bangladesh Bank, NCL was converted in a full fledged commercial bank and started its banking operation on 17thMay 1993, in the name of National Credit and Commerce Bank Limited. It has been registered under the company act-1913, as a private commercial bank with paid up capital of Tk.39 crores to serve the nation along with 16 branches. However, NCCBL runs as per company rule, free from government intervention. Year 1994 & 1995 were the full operation year of the bank. During this period gave emphasis on considering the affairs of the institution as well as expansion of business work. During last 13 years if its operation NCCBL has acquired commendable reputation by providing sincere personalized service to its customers through a technology based environment.
3.3) NCC Bank - At Present Having started its operations as a commercial bank in 1993, recovering from some primary difficulties, NCCB Bank has now emerged as a major player in the financial sector. Listed in both the Dhaka and Chittagong bourses since late 1999 with an IPO that raised the paid-up capital of the bank to Tk.39 crore, the current price levels of its shares and turnover in trading is evidence of its high rating among investors. Banks are the pillars of the financial system. Specially, in Bangladesh, the health of the banking system is very vital because the capital market is little developed here. As the banks are still the major sources of credit and exercise great influence on the financial system, it is extremely important that the country’s banking system should be in good health in the interest of investment activities, meeting the needs of all kinds of finance and related matters. Over the years, NCCB has built itself as one of the pillars of Bangladesh’s financial sector and is playing a pivotal role in extending the role of the private sector of the economy.
The bank has a strong branch network nation wide with 42 branches to effectively address the needs of its cross- segment customer base.
3.4) NCC BANK at a Glance Authorized Capital Paid up Capital General and other Reserve Equity Fund Deposit Loan and Advance Import Business Export Business Investment Operating Profit Profit Before tax Profit after tax Retained earnings Total asset Fixed assets Number of Branch No. of staff EPS Dividend (Cash) Dividend (Bonus) Return on Equity Return on Asset Capital Adequacy ratio Classified loan Provision against Classified Loan Provision against Unclassified Loan Loan / Deposit ratio
250 crore 97.5 crore 88.49 crore 185.99 crore 2147.82 crore 2053.3 crore 1629.6 crore 77.6 crore 301.45 crore 101.8 crore 68.76 crore 35.20 crore 1.03 crore 2611.4 crore 30.81 crore 42 1000 36.11 10% 10% 18.93 1.35% 9.02 98.15 40.57 20.21 95.60 %
3.5) Activities of NCCBL The world economy is going through various crises arising from insurgent activities at various parts of the globe. The turbulence also affected Bangladesh Economy adversely as well. Taka has been devalued. The political unrest caused devastation to the industrial and service sectors. The business community as a whole, apprehending imminent doom, tried to negotiate for a compromise among the various concerned parties. The bank earned a modestly satisfactory result during the year 2008, which contributed in continuing its steady growth in respect of all major indicators, namely Deposit, Advance, Profit, etc. During the year NCCBL has concentrated its focus to a number of income increasing sectors such as SME Financing, Inward Foreign Remittance, etc. Also it has put efforts to bring discipline in
administering Banks Asset through various measures. As a whole, the outcome of these efforts was very positive and encouraging indeed. Prudent handling of Asset-Liability is of utmost importance for keeping up profitability at a satisfactory level of any financial institution. During last few years, with the timely measures taken by the Management under guidance of the Board, it was possible to sustain steady growth through maintaining asset quality. The Bank has separate Credit Administration Department, Recovery Department and also a Task Force for continuous monitoring of difficult loans and advances of the Bank and to propose ways of recovery of Banks dues. This process will continue in upcoming years also. Further, the Bank will pay attention to manage liability also so as to build up a strong deposit base to satisfy investment need of the market. Over the last few years remittance business contributed remarkably in increasing fee based income of the Bank. In order to motivate and inspire the Bangladeshis residing abroad to send their hard earned money through legal Banking channel, NCCBL has taken a number of steps like making remittance arrangements with different money exchange companies all over the world, participating in fairs and meetings with remitters and exchange companies, etc. which brought result beyond expectation. It is a matter of pride that the Bank has been awarded various trophies from exchange companies like Money Gram for its initiatives in motivating people in this part of the world to avail of the opportunity of sending money through these enterprises. The bank started FRPP, a jointly funded project by DFID in partnership with Bangladesh Bank under the grant facility called Remittances and Payments Challenge Fund (RPCF) where Thangamara Mohila Sobuj Shangha (TMSS), an NGO working for empowering the womenfolk of the country is a partner. Under this project the Bank is using not less than 250 outlets of TMSS to deliver remittance to the beneficiaries where it has no Branch. NCCBL plans to continue this project even after expiry of the RPCF, if proved feasible. The Bank has put due emphasis on grooming up its workforce in a technology based working atmosphere for some time. Also to cater the needs of the customers, very recently NCCBL started full-fledged real time On Line Banking System with implementation of Flora Banking UBS Software and introduced Debit Card in the brand name of ³MPower Card. The bank also introduced a foreign remittance payment card in the brand name of ³MBridge Card´. Banks Information Technology Division is always engaged in designing need based software and other programmers to ease the situation for the employees so as to enable them to work more dedicatedly to satisfy the customers. Of late financing in SMEs has been proven to be very beneficial for banking sector.
Banks have paid special focus to this sector to expand scopes of extending credit facilities to enhance sustainable profit. SME has been found to be a very potential avenue of financing, since it is believed that small and medium entrepreneurs are very hard working and sincere in paying back Banks money. Banks are optimistic that investing in this sector would not entail huge volume of default loan like conventional or cooperate financing.
3.6)
Hierarchy
of
NCCBL
Organization Structure of Foreign Exchange Branch
3.7) Management of NCC Bank The twelve members of the Board of Directors are responsible for the strategic planning and overall policy guidelines of the Bank. Further, there is an Executive Committee of the Board to dispose of urgent business proposals. Besides, there is an Audit Committee in the Board to oversee compliance of major regulatory and operational issues. The CEO and Managing Director, Deputy Managing Director and Head of Divisions are responsible for achieving business goals and overseeing the day-to-day operation. The CEO and Managing Director are assisted by a Senior Management Group consisting of Deputy Managing Director and Head of Divisions who supervise operation of various Divisions centrally and co-ordinates operation of branches. A Management Committee headed by the CEO and Managing Director manages key issues. This facilitates rapid decisions. There is an Asset Liability Committee comprising member of the Senior Executives headed by CEO and Managing Director to look into all operational functions and Risk Management of the Bank.
3.8) Profile of NCC Bank
NCCBANK
CATEGORY-A
Price
Busin % ess Chang Ope Hig Lo Segm Change e n h w ent
48.7 National Credit And Commerce Bank Limited
4.1
9.19
44.6 49
Outstan 52 ding No of Wk Volum Cap Securit Hig e (mn) ies h 712. 1.2775e 450125 4501.0 00 +06 330
42 Bank
52 Fac Wk e Lo Val w ue 42.0 10. 0 0
Net Prof Reserv Net it Yea Market e & Turno Afte r Capital Surplu ver r En (mn) s (mn) (mn) Tax d (mn )
Mark et Lot 50
Hal f Yea EPS r En d
3.9) Branch Network of NCCBL During the year the bank opened 08 branches which raised the total number of branches to 79.The bank has already taken steps to open 06 (Six) more new branches in 2011.
3.9.1 District Wise Branch Distribution The branches of the Bank cover all the important trading and commercial centers in Bangladesh. As date, it has 65 branches within Bangladesh. All the branches are equipped with computers in addition to modern facilities, logistics and professionally competent manpower. NCC Bank Ltd. is in the process of opening six more branches at important locations in the country.
3.10) Prime Minister Sheikh Hasina handing over a cheque for second year provided by NCC Bank Ltd. Prime Minister Sheikh Hasina handing over a cheque for second year provided by NCC Bank Ltd. to Mrs. Dr. Rowshan Ara Begum, wife of Lt. Col. Lutfur Rahman Khan, an Army Officer killed in the BDR mutiny. Yakub Ali, Chairman and Mohammed Nurul Amin, Managing Director & CEO of NCC Bank and Nazrul Islam Mazumder, Chairman, BAB were also present on the occasion. Mentionable that NCC Bank have been paying Taka Forty thousand per month to the family of Late Lt. Co. Lutfur Rahman Khan for 10 years. The cheque for Taka four lac eighty thousand was handed over formally on last Sunday at Prime Minister’s Office.
3.10.1 RIGHTS OFFER National Credit and Commerce Bank Limited Registered office: 7-8, Motijheel C/A, Dhaka1000, Bangladesh. PABX: 9561902-4, 9566283, 9563981-3, Fax: 880 2 9566290 Cable: NATCREDIT DHAKA, e-mail : nccblit@siriusbb.com Telex: 642821 NCL BJ, Web : www.nccbank.com.bd RIGHTS OFFER This is for kind information of all concerned that the Securities and Exchange Commission (SEC) has accorded approval for issuing of Rights Share for raising the paid up capital of the Bank through issuance of 1,14,24,501(One crore fourteen lac twenty four thousand five hundred one) Ordinary Shares of Tk.100.00 each at par,totaling Tk.114,24,50,100(Taka one hundred fourteen crore twenty four lac fifty thousand one hundred) offered on the basis of 1 (one) Rights share for every 2(two)existing shares held on the Record Date. National Credit and Commerce Bank Limited has made such issuance with the objective to maintain its further growth and strengthen the capital base and to comply with the capital adequacy requirements of Regulatory Bodies and implementation of BASEL-II and other regulatory requirements of Bangladesh Bank. Applications for 1(one) Rights Share against every 02(two) existing shares along with the required amount of money (as per Rights Share Offer Document) shall be received at the under mentioned branches of the Bankers to the Issue from 11th April, 2010 to 6th May, 2010 during banking hours. All transactions above Tk.1.00(one) lac must be effected through Demand Draft/Cross Cheque/Pay Orders drawn on the same city/town where subscription money will be deposited. The ‘Record Date’ for determination of entitlement of Rights Shares will be on
16th March, 2010(Tuesday) Shareholders whose names will appear in the Register of Members of the company or in the Depository on the record date (i.e.on 16th March, 2010) are entitled to the Rights Shares. Shareholders must provide their B.O (Beneficiary Owner) Account Number for allotment of the Rights Share. The Rights Share Offer Document relating to issuance of Rights Share will be sent by post/courier service to the registered address of the Shareholders in due time. If the Rights Share Offer Document is not received in time, the concerned Shareholders are requested to contact Head Office, Share Department of the Bank at 7-8, Motijheel C/A, Dhaka-1000, during office hours.
3.10.2 Price Sensitive Information This is for information of all concerned that the Securities and Exchange Commission (SEC) vides their letter No. SEC/SRMIC/94-09/688 dated 02.11.2010 have given consent to change the denomination of Share value (Face Value) of the shares of National Credit & Commerce Bank Ltd. from Tk. 100/- to Tk.10/- (Taka ten) each with change of market lot thereof from 50
to
250
(two
hundred
fifty
)
shares.
The Board of Directors of the Bank as such, in its 219th meeting held on 2nd November 2010 has fixed the Record Date on 15.11.2010 (Monday) for change of Share value (Face value) of shares of the Bank from Tk.100.00 to Tk.10.00 (Taka ten) each and market lot thereof from 50 shares to 250 (Two hundred fifty) shares.
National Credit and Commerce Bank Ltd. Head Office: 7-8, Motijheel Commercial Area Dhaka-1000, Bangladesh Price Sensitive Information This is for kind information of all concerned that the Security and Exchange Commission (SEC) vide letter No. SEC/CI/RI10/05-367 dated 23.02.2010 has accorded approval for issuing Rights Share by the bank for rising the paid up capital of National Credit and Commerce Bank Ltd. Through issuance of 1,14,24,501 Ordinary shares of Tk. 100.00 each at par, totaling Tk. 114,24,50,100.00 (Taka One Hundred Fourteen Crore Twenty Four Lac Fifty Thousand One Hundred) offered on the basis of 1 (One) Rights share for every 2 (Two) shares held on the record date. The “Record Date� for entitlement of Rights share, the period of subscription and list of Bankers to the Issue will be disseminated within 3 (three) working days from the date of this letter of
approval, as per the Security and Exchange Commission (Rights Issue) Rules, 2006. Dated: Dhaka, February 23, 2010 Sd/- Md. Tarikul Islam Company Secretary.
3.10.3 Price Statistics Price Statistics Open Price Last Trade Price Yesterday Close Price Close Price
: 44.6 : 49 : 44.6 : 48.7
Day's High : Day's Low : No. of Trade : Total Volume : Total Value (mn):
3.10.4 Snapshot of NCCB OPEN
PREVIOUS CLOSE
$61.50 DAY HIGH
$62.50 DAY LOW
$62.40 52 WEEK HIGH
$60.50 52 WEEK LOW
11/25/10 - $84.50 MARKET CAP
03/2/10 - $27.08 AVERAGE VOLUME 10 D
-EPS TTM
1.4M SHARES OUTSTANDING
--
0.0 P/E TTM
NCCB Does Not Pay Dividends
-K = Thousands M = Millions B = Billions
49 42 2232 1277500 60.0968
3.11)
Objectives
of
NCCBL
The main objective is to maximize profit through customer satisfaction which very much reflects the idea of marketing concept. NCCBL has been ensuring maximum profit by avoiding best and improved customer service along with other corporate objectives mentioned •
below:
To provide excellent customer service to its clients, so that they choose NCCBL first for
their
banking.
•
Ensure high return on investment and services with different service products.
•
Making profitable investment and grow in annual profit management.
•
To remain as the market leader through diversification of business and automation of banking operations.
•
Customer driven focusing.
. •
Total commitment of quality of services.
•
Ensure quality human resources inside of the organization.
•
Socio economic change through integration of credit.
3.12) Objective of Corporate Customers Fast and Accurate Services Effective Communication Attractive Pricing (Annual fee 50% discount on card fee) Strong Communication Smiling faces of the Bankers
Good Ambience in the Bank
3.13) Our Corporate Offer
Particular
Small (10-100)
Medium (101-500)
Large (500 above)
Card Fee
50%
50%
(Negotiable)
Rate of Interest
2%
2%
2%
Cash Withdrawal
2%
2%
2%
Purchase
2%
2%
2%
45 Days
45 Days
50 Days
Charges
Charges
Free
Charges
Charges
Free
Charges
Charges
Free
Maximum period of interest free Replacement
Card
Fee Late
Payment
Charge Excess Over Limit Charges
3.14) Vision of NCCBL The purpose of the bank is to become “The Bank of Choice” in the communities we serve. We accomplish this by offering to our customers the financial services they expect while providing a return to our owners. In accomplishing this mission, the bank has now been free from all the natures of a problem bank through fulfilling all the conditions set by the central bank. We proudly say: “NCCBL is’ profit-making and problem-free.” To mobilize financial resources from within and abroad to contribute to Agriculture's, Industry & Socio-economic development of the country and to play a catalytic role in the formation of capital market.
3.15)
Mission
of
NCCBL
To become the Bank of choice in serving the Nation as a progressive and Socially Responsible financial institution by bringing credit & commerce together for profit and sustainable growth. Philosophically, a bank is a financial institution, which accepts depositors’ money for safekeeping and contracts with the depositors to lend this money at interest to individuals who are in need of its use and who can give ample security that the loans will be paid. From the profits made from lending money at interest the banker agrees to pay the legitimate depositors a fixed sum of interest besides safe-guarding the deposits. Moreover the bank follows the followings as its mission: •
Maximize the profit within the shortest possible time
•
Try the best level to satisfy customers
•
Establish NCCBL as the best performing bank in the country.
3.16) BOARD OF DIRECTOR At present the Board of directors consists of 25 members including the Chairman and Vice Chairman of the Bank. Out of 25 members 21 of them are the sponsors of the shareholders. Most of the members are reputed industrialist and businesspersons of our country. The Chairman heads the Board. Each of the directors is the member of the Board. The members are obliged to maintain the annual general meeting anddeclare the dividend pay-out schedule on due time. Moreover, the committee selected by the shareholders represents individual body that then looks after the periodic issue with the management and tries to solve the problems. The Board has appointed the management, which is responsible for the welfare of the Banks directors. Some members of the Board have formed the Executive Committee. Which organizes a meeting in every week to deal with the minor issues such as promotion of cadre change of a confirmed employee? Conversely at least one meeting of the Board is held in every month to deal with major issues such as modification of the existing policy or major policy reforms.
3.16.1 The particulars of the Board are presented as under Name Yakub Ali Md. Harunur Rashid Mohammed Nurul Amin Abu Mohsin
Designation Chairman Vice Chairman Managing Director & CEO. Chairman, Executive Committee of the
Mr..Wazhiullah Bhuiyan
Board Principal Chairman, Audit Committee of the
Mr. Tofazzal Hossain Mr.Abdus Salam Mr. A.S.M. Main Uddin Monem Nurul Islam Mr. K.Z. Mahmud Mr. Md. Shahjahan Mr. Md. Mohamad Ali Mr. Fakrul Anwar Md. Abdul Awal Masuda Begum Amjadul Ferdous Chowdhury Mahbubul Alam Ainul Kabir Mostafizur Rahman Alhaj Md Nurun Newaz Md. Humayun Kabir Din M. Rana
Board Chirman Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director
The particulars of the board are presented as under Managing director Additional managing Sr. Executive vice Executive vice present Senior Executive vice present Executive vice present (VP) Sr. Assistant vice Assistant vice president Senior principal officer principal officer (PO) Senior officer (SO) Officer grade-1 Officer grade-2 Management trainee Junior officer (JO) Assistant officer (AO) ORGANOGRAM OF NCC BANK LTD.
3.16.2 The Board of Directors has recommended stock dividend @ 47% for the year 2009. The Board of Directors has recommended stock dividend @ 47% for the year 2009. Date of AGM: 30.05.10, Time: 11:00 a.m., Venue: Hall of Fame of Bangabandhu International Conference Centre, Sher-E-Bangla Nagar, Dhaka. Record Date: 08.04.10. The Bank has also reported EPS of Tk. 75.26, NAV Per share of Tk. 264.10 and Net Operating Cash Flow Per share of Tk. 86.82 for the year ended on As per clause 30 of DSE Listing Regulations, NCC Bank Ltd.has informed that a meeting of Board of Directors of the Bank will be held on 30.03.2010 at 3:10 PM for consideration of the accounts of the bank for the year ended on December 31, 2009 and for declaration of any entitlement for the shareholders.
3.17) Organizational Structure Organization structures of NCC Bank Ltd. at Narsingdi Branch are as follows: Manager& Assistant Vice President, Assistant of Manager, Junior Officer, Asstt. Officer.
3.17.1 NCC Bank opens Narsingdi branch NCC Bank Limited opened its 70th branch with online facility at Narsingdi on Thursday. Vice-chairman of the bank, Md Harunur Rashid, inaugurated the branch as chief guest, said a news release. Banks managing director and chief executive officer Mohammed Nurul Amin presided over the function while director Khairul Alam Chaklader attended as special guest. Additional managing director Golam Hafiz Ahmed, senior executive vice president TM Faruque Chowdhury and senior vice president Fakhrul Islam Chowdhury were also present on the occasion.
3.17.2 Name of the Chief of the Organization Md. Nazrul Islam Assistant Vice President & Manager of NCC Bank Ltd. at Narsingdi, Branch.
3.17.3 Number of Narsingdi Branch of the NCC Bank The NCC Bank has 79 Branch in Bangladesh. At the Narsingdi branch is 73 numbers Branch of the NCC Bank. This Branch is opened in 2nd September in 2010.
3.17.4 Objectives of NCC Bank Ltd. at Narsingdi Branch The main objectives of NCC Bank Ltd. are as follows:
To earn Profit
To give service
To maximize profit and wealth for the shareholder
3.18) NCC Bank holds managers’ Conference The three-day ‘Executives & Branch Managers’ Annual Conference-2011’ of
NCC
Bank
Ltd,
began
in
Bogra
yesterday.
M. Harunur Rashid MP, vice chairman of the bank, inaugurated the conference as the chief guest,
said
a
press
release.
Mohammed Nurul Amin, managing director and CEO of the bank presided over the conference while former Chairman Tofazzal Hossain, directors Ainul Kabir, Sohela Hossain and
sponsor
M.
A.
Quasem
attended
as
special
guests.
Additional Managing Director Golam Hafiz Ahmed, Deputy Managing Directors A K Md Siddique, Swapan Kumar Das, Mohabbat Khan and T. M. Faruque Chowdhury, other senior executives and branch managers of NCC Bank were also present on the occasion. The conference informed that the bank procured total deposits of Tk 69.11 billion while total loans and advances stood at Tk 63.23 billion at the end of 2010.
Chapter-5
Theoretical Discussion
4.1) Credit The word “Credit” is derived from Latin word “Credo”, which means, “I believe”. It is usually defined as one’s ability to buy with a promise to pay. From a banker’s point of view, credit is the confidence of the lender on the ability and willingness of the borrower to repay the debts at a future date. Banks charge a higher interest for loans than the deposit rate given to customers. The difference in rates is the profit for a bank. 80% of a banks profit comes from the interests. Loans and advances comprise a large portion of banks assets and this is the backbone of a bank’s structure. The strength of a bank is primarily judged by the soundness of its loans and advances. So, the loan and credit department is a very important department of a bank. Credit policy is very important. If a bank takes very strict credit policy, then the amount of loan will be less. If the credit polity is flexible, then the amount of loan will be much. But strict credit policy leads to lesser bad loans. Sometimes, credit policy cannot prevent customer’s bad intention of not adjusting loans. This is why, strict credit policy is very necessary for every banks for the safety of their investments.
The main features of credit policy of NCC Bank Ltd. have focus on the following areas: I. Trade and Commerce II. Industry III. Lease Financing IV. Consumer Financing V. Small & Medium Enterprise (SME) Financing Vi. Agriculture & Agro-based Ventures Vii. Housing Loan Scheme Viii. Real Estate & Civil Construction.
4.1.1
Modes
of
Credit
Credit can be categorized according to the nature and modes of payment. (a) Term Wise Classification: (i)
Short
ii)
Mid
ii)
term
term
Long
(=>1
term
(=<1 year
(>
year)
to 5
5
years)
years&
above)
(b) Nature Wise Classification: i)
Loan:
fixed
in
nature,
for
a
particular
term
or
time.
ii-) Advances: continuous in nature with no fixed repayment schedule but an expiry date, for example:
Cash
Credit
(hypo),
Overdraft
etc.
(c) Purpose Wise Classification: i).Working Capital: For manufacturing units to meet their short-term obligation and day-today
expenditure.
ii)
Fixed
Asset
Finance:
For
acquisition
of
long-term
capital
assets.
(d) Sector Wise Classification: Commercial Lending: for commercial requirements except export. It is for short and medium from of loan. Example: LIM, LTR, PAD, SOD, Cash Credit, Loan General. i.
Industrial
Credit:
ii. Agricultural Credit iii.
Transport
iv
Credit
.House
Building
Loan
(e) Classification based on Fund Involvement: i.
Fund
ii.
Non-Funded
Facilities: Facilities:
where
direct fund
is
money not
extended
involvement directly.
Example:
4.1.2 Letter of Credit, Letter of guarantee, Bank Guarantee etc. (1) Types of Credit in Foreign Trade: i.
Loan
ii.
Payment
iii. iv.
against
against
Imported
against
(LIM)
Documents
(PAD)
Imported
Packing Loan
Merchandise
Credit Trust
(PC) Receipt
(LTR)
v.
Back
to
Back
Letter
of
Credit.
The Bank has made remarkable achievement in recovery of non-performing and classified loans advances during the period under review, As a result, Banks ratio of classified loans to total loans on December 31, 2006 has come down to 5.62 percent, from 5.66 percent of the previous year. This achievement was possible due to continuous monitoring, follow-up and negotiation with the clients.
4.1.3 Parties to a Letter Of Credit A letter of credit is issued by a bank at the request of an importer in favor of an exporter from whom he has contracted to purchases some commodity or commodities. The importer, the exporter and the issuing bank are parties to the letter of credit. There are however, one or more than one banks that are involved in various capacities and at various stages to play an important
role
in
the
total
operation
of
the
credit.
a)
The
opening
Bank.
b)
The
Advising
Bank.
c) d)
The
Buyer The
and
the paying
Beneficiary. Bank.
e)
The
negotiating
Bank.
f)
The
confirming
Bank.
(a) The opening Bank: The opening Bank is one that issues the letter Of credit at the request of the buyer. By issuing a letter of credit it takes upon itself the liability to pay the bills drawn under the credit. If the drafts are negotiated by another bank, the opening Bank reimburses that Bank. As soon as the opening Bank, issuing a letter of credit (L/C), it express its undertaking to pay the bill or bills as and when they are drawn by the beneficiary
under the credit. When the bills are presented to or when antic is received that bills have been presented
to
a
paying
or
negotiating
Banks
its
liability
matures.
(b) The Advising Bank: The letter is sent to the bank by mail or telex and forwarded by it to the exporter. The bank providing this service is known as the advising bank. The advising bank undertakes the responsibility of prompt advice of credit to the beneficiary and has to be careful
in
communicating
all
its
details.
(c) The Buyer and the Beneficiary: The importer at whose request a letter of credit is issued is known as the buyer. On the strength of the contract that he makes with the exporter for the purchase of some goods that the letter of credit is opened by the opening bank. The exporter in whose favor the credit is opened and to whom the letter of credit is addressed is known as the
beneficiary.
d) The paying Bank: The paying bank only pays the drafts drawn under the credit but under takes no opening bank, by debating the latterâ&#x20AC;&#x2122;s accounts with it if there is such an account or by
any
other
measured
up,
between
the
two
bankers.
e) Negotiating bank: The negotiating bank has to be careful in scrutinize that the drafts and the documents attached there to be in conformity with the condition laid down in the L/C. Any discrepancy may result in refused on the part of the opening bank to honor the instruments is such an eventuality the negotiating bank has to look back to the beneficiary for refund of the amounts paid to him. f) The Confirming Bank: Sometimes an exporter stipulates that a L/C issued in his favor be confirm by a bank in his own country. The opening this country to add its confirming to the credit the bank confirming the credit is known as the conflrmin~ bank and the credit is known as
confirmed
4.1.4 Documentary Letter Of Credit (Import/Export Documentation)
credit.
Documentary letter of credit is such kinds of commercial letter which a bank issue on behalf of foreign seller (exporter) according to the direction of the (importers) purchasers. The documents shown under are known as export documents form the importerâ&#x20AC;&#x2122;s side. These are: (I) Bill of exchange: The bill of exchange is that particular instrument through which payment
is
effected
in
trade
deals
internal
and
international.
(ii) Bill of lading: A bill lading is a document of title to goods entitling the holder to receive the goods as beneficiary or endorsee and it is with the help of this document on receipt from the exporter that the importer takes possession of the goods . from the carrying vessel at the port
of
destination.
(iii) Airway bill I Railway receipt: When goods to be transported are small in bulk or requiring speedy delivery or those are perishable in nature on the deal is in between the neighboring countries then mode of transports other than shipping may be resorted to far the carriage of the goods Airways bill / Railway receipt take place of Bill ~of lading depending on the nature of the carrier. (iv) Performa invoice: It is the sellerâ&#x20AC;&#x2122;s bill for the merchandise. It contains a description of goods, the price per unit at a particular location, total value of the goods, packing specifications, terms of sale, letter of credit, bill of lading number etc. There is no standard form far a commercial invoice. Each exporter designs his own commercial invoice form. The invoice is made out by the seller under his signature in the name of the buyer and must be submitted in a set of at least 3 copies. Its main purpose is to check whether the appropriate goods have been shipped and also that their unit price, total value, marking on the package etc.
are
consistent
with
those
given
in
other
documents.
(v) Insurance policy: In the international trade insurance policy is a must to cover the risk of loss on consignments while they are on seas, roads, airways. The insurance is the responsibility of the buyers (consignee) under FAS, FOB and C&F contracts and of the seller (consignor) under CIF contract. The policy must be of the type as specified in the relative contract / credit. The policy would be for the value of CIF price plus 10 (ten) percent to cover the expenses and that is required to be obtained in the same currency as that of the credit and dated not later than the date of shipment with claims* being payable at the destination. It
must be properly stamped. Like a bill lading it must be negotiable and be endorsed where it is payable
to
order.
(vi) Certificate of origin: This is a certificate issued by a recognized authority in exporting country certifying the country of origin of the goods. It is usually by the Chambers of commerce. Some times, it is certified by local consul or Trade Representative of the importing
country
as
per
terms
of
the
credit.
vi) Packing list: The exporter must prepare an accurate packing list showing item by item, the contents of the consignment to enable the receiver of the shipment to check the contents of the goods, number and marks of the package, quality, per package net weight, gross weight measurement
etc.
(viii) Wightmans and Measurement: Issued by recognized authority (like chambers of commerce and industry) in exporting country certifying correct weightment and measurement of
the
goods
exported.
(ix) Bill of entry: A bill of entry is a document which contains the particulars of the imported goods as well as the amount of customs duty payable.The negotiating bank after received the above documents / papers then this bank scrutiny the documents. The negotiating bank sends the original shipping documents to the L/C opening bank and keeping the second copy with the negotiating bank Payment against Documents (PAD) Banks deal in documents and not in goods. If the shipping document against the L/C is in order then the L/C opening bank must have to payment to the foreign bank within 3 days according as Uniform Customs and Practice for Documentary
Credit
(UCPDC)
500
of
revision
of
ICC.
If the shipping documents have any discrepancy, then the L/C opening bank informed to the negotiating bank within 7 days. Otherwise, the shipping documents have not discrepancy. If the importer have not adequate founds in the bank account then the bank payment to the foreign
bank
against
the
shipping
documents
4.1.5 Payment Procedure of Import Documents Payment
procedures
of
NCCBL
involve
the
following
tasks:
(a): Date of Payment: Usually payment is made within seven days after the documents have been received. If the payment is deferred, the negotiating bank may claim interest for making delay. (b): Preparing Sale Memo: As sale memo is made at B.C. rate to the customer. As the T.T & 0. D rate is paid to the ID, the difference between these two rates is known as Exchange Trading. Then an Inter Branch Exchange Trading Credit advice is sent to Inter ID. Requisition for the foreign currency For arranging necessary fund for payment, a requisition is sent to the ID.Transmission of telex: A telex is transmitted to the correspondent bank ensuring
that
payment
is
being
made.
NCCBL is the well reputed and established bank in the private sector. All the branches are computerized
and
people
are
getting
quick
benefit
from
the
bank.
4.1.6 Additional Confirmation Commission on Letter of Credit: The amount of Additional Confirmation Commission on Letter of Credit handled by the Bank in 2002 and 2003 was nearly same but in 2004, this amount was increased huge amount. Later on 2005, this amount was decreased huge amount and the difference between 2004 and 2005 was -55.96%. But 2005 and 2006 is nearly same. The chart below shows the growth of Additional Confirmation Commission on Letter of Credit for last 05 years.
4.1.7 A i)
letter
of
credit
Form (L/C)
Revocable
ii) Irrevocable letter of credit.
may
of be letter
Letter two
forms.
Of These of
Credit as
below: credit.
(i) Revocable L/C: If any letter of credit can be amendment or change of any clause or canceled by consent of the exporter and importer is known as revocable letter of credit. A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice to the beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the documents have been honored by the issuing bank or its correspondent. Thus a revocable credit does not usually provide adequate
security
for
the
beneficiary.
(ii) Irrevocable L/C: If any letter of credit can not be changed or amendment without the consent of the importer and exporter is known as irrevocable letter of credit. Irrevocable credit constitutions a firm undertaking by the issuing bank to make payment. It therefore, gives the beneficiary a high degree of assurance that he will paid to his goods or services provide he complies with terms of the credit.
4.2) The importance of Securities in Credit Securities play a vital role in sanctioning credit. Security means things deposited as a guarantee of the undertaking or loan to be forfeited in case of failure to repay the same. The customer/ guarantor should own it. In other words, the assets against which banks allow credits are called Securities. Good and strong securities help a bank to take decision about sanctioning credit. It also minimizes the risk. The type of securities offered may be, Government bonds, share, assignment of book debt or bills receivables, raw material and finished goods, fixed deposit receipts, land, factory building and other movable and immovable assets of the borrower. If a borrower becomes unable to adjust his loan, then bank can recover the loan amount by selling securities. That is why the role of securities is very important in credit system.
4.3)
Sanction
of
Credit
When a Branch Manager writes a letter to accepting all terms and conditions of loan, it is called loan sanction. After the completion of all the formalities of financing a loan proposal, an advising letter is sent to the customer for the credit facilities along with all terms and
conditions. The conditions, which are included in the loan sanctions, are given bellow: a) Limit b)
Primary
Securities
c)
Collateral
Securities
d)
The
Rate
e)
of
Interest
Expiry
Date
f) Repayment
4.4) Types of Credit Card National Bank Limited offers mainly two type of credit card according to the geographical area. These are Local credit card and International credit card. According to the level of income the local and international credit cards are divided into two categories viz. Gold card and
Silver
card.
These
types
of
credit
cards
are
described
below:
(a)Local credit card: Local credit card is valid only in Bangladesh. Out side Bangladesh, the card is invalid. Local card are two types. They are Gold local card and Silver local card. The card limit of gold local card is Tk.50000 to Tk. 100000 and silver local card is below Tk.5 (b)
International
Credit
Card:
International credit card is valid mainly outside Bangladesh. But for the payment of roaming facilities for Grameen phone, cardholders can use international credit card in Bangladesh. International credit cards are of two types. These are gold international credit
card and silver international credit card. The card limit of gold international credit card is $2000
to
4.5)
$4000
and
silver
Yearly
international
Charges
credit
on
card
below
credit
$2000.
card
National Bank Limited receive card fee for new card and renew card from the cardholder. The rate of card fee for new card and renew card are the same. In case of new card the bank receives the card fee with the next monthâ&#x20AC;&#x2122;s bill. The rate of card fee are given Yearly
in charges
Type
below: on
credit
of
International
card
Gold
International
Silver
Local
Gold
fee
Card card
card US$70.00
US$ card
35.00 Tk.2000.00
Local Silver Card Tk.1200.00
4.6) NCC Bank Visa Credit Card NCC Bank has launched its Visa Credit Card Service on August 22, 2005 and we are offering three types of cards which are Visa Classic, Visa Gold (Local) and Visa Dual Currency Card (Globally and locally). Since then were able to reach 5000 cards, both corporate and general.
4.6.1 Why NCC Bank Credit Card? Lowest interest rate in the country (2% per month) Dual Currency Visa Credit Card One supplementary card free of cost for lifetime (Spouse only) Treasure point facilities including foreign part Shortest process for Dual Currency card, only 24 hours Roaming Mobile Phone bill payment facilities Use of additional 142 ATMâ&#x20AC;&#x2122;s Booth and 600 POS of Dutch-Bangla Bank
4.6.2 Balance Transfer Facilities If anyone holds other Bank Credit Card, then NCC Bank will issue a credit card with equivalent limit and will issue a pay order by debiting card A/C from balance transfer option for the equivalent amount of total outstanding in order to full settlement and cancellation of other Bank A/C.
4.6.3 Our Commitments We promise the followings in our services: Dedicated service at your door steps Sporty Faster service Security of cards Team work Patient at our services Transparency Quick decisions
4.7) How to transfer funds from NCC Bank account 1. Log in at E-Banking: Select the branch where you maintain your account, type your Customer Code, First Password and press Sign In. 2. Go to Act Now menu for Balance Transfer, Third Party Transfer and Utility Payments. You will require the Second Password for all such transfer transactions. 3. The options are elaborated as follows:
4.7.1)
For Balance Transfer:
This option allows customer to transfer balance from one account into another account of same branch. Funds can be transferred to the linked accounts only as filled up in the application form. • Select the linked account • Enter the amount to be transferred • Write the description • Press the “Submit” button.
a. For Third Party Transfer: This option allows customer to transfer Balance from one account into another account within any branch. • Select the desired branch • Enter the account number • Enter the amount to be transferred • Write the description • Press the “Submit” button. b. For Utility Payments: Utility payments option allows customers to pay various bills like telephone, electricity, mobile bills, school bills etc. The options available for utility payments at present are as follows:
4.7.2 NTC PSTN Bill: Users can pay their NTC PSTN bill from the Internet Banking Service provided by the bank. The process is similar as above. It’s done as follows: • Select the option from the drop box
• Select the bank account to be debited • Enter the amount to be paid • Enter NTC PSTN number (8 digits with area code and telephone number i.e.14444444). • Press the “Submit” button.
4.7.3 NTC Post-Paid Mobile Bill: Paying your NTC Post-Paid Mobile bill is also a very simple process as described below: • Select the option from the drop box • Select the bank account to be debited • Enter the amount to be paid • Enter your NTC Post-Paid Mobile number ( the number should be filled up continuously without any gap,
4.7.4 Recharge E-Sewa Account: E-Sewa is first online payment gateway for utility services which customers can access anywhere at any time. eSewa Bank Partners customers having account with any bank will have the ease in bill payment transactions. For customers who do not have account with eSewa Bank Partners, the option to recharge their account by a prepaid utility card is also available. The process for recharge through a bank account is as follows: • Select the option from the drop box • Select the bank account to be debited • Enter the amount to be transferred • Enter your E-Sewa Id • Press the “Submit” button.
4. After pressing the Submit button you will be asked to confirm the transfer. 5. Then a confirmation message will show that the transfer has been successful and the transaction posted. 6. Then you could print the advice or receipt as required
4.8) Wide Range of Acceptance NCC bank Visa Credit Card is accepted at over 5,000 merchant outlets around the country. Our wide range of merchants include Hotels, Restaurants, Airline and Travel Agents, Shopping Malls, Hospitals, Jewellery Shops, Mobile Phone and Internet Service Providers, Petrol Pumps and many more! Now NCC Bank Visa Credit Cards can also be used at all 142 ATMâ&#x20AC;&#x2122;s
Booth
and 600 POS (Point of Sale) of Dutch-Bangla Bank.
a) Instant Cash Advance You do not need to carry cash any more if you have a NCC Bank Credit Card. You can withdraw cash up to 50% of your credit limit from any ATM across the country that shows Visa logo. b) Credit Facilities NCC Bank Visa Credit Card offers you free Credit facility up to 45 days and minimum of 15 days without any interest (Purchase only). c) Supplementary Card NCC bank Visa Credit Card holder can also enjoy spouse Credit Card free of cost for lifetime and issue more Supplementary card.
d) Reward Programs As a NCC Bank Visa Credit Card holder, you will accumulate Treasure points for every purchase made by using Visa Credit Card. For every Tk. 50 and USD 1 spent on your Credit Card, you will earn 1 and 1.5 Treasure Point accordingly and be closer to redeeming the reward of your choice. e) Flexible Payment Option With the NCC Bank Visa Credit Card, you have the convenience to pay as little as 5% of your outstanding (or Tk. 500, whichever is higher) on the Card account every month, thus having the power and flexibility to plan your payments.
f) Auto-Debit Payment Facility With the NCC bank Credit Card, you no longer have to stand in long queues for paying your monthly bill. You can pay your monthly bill through NCC Bank Account by instruction Auto-Debit. g) Corporate Visa Credit Card Corporate is characteristic of individuals acting together; “a joint identity”; “the collective mind”; “the corporate good”. The new dimension of NCC Bank Visa Credit Card is Corporate Credit Card which has already started to benefit the Corporate Houses.
4.9) Reach Us National Credit and Commerce Bank Ltd. Card
Division
Peoples
Insurance
36,
Dilkusha
Building Commercial
(10th
Floor), Area,
Dhaka-1000, Phones: Email:
Bangladesh
+88.02.955.0575
;
+88.0.955.0557
cardncc@dhaka.net
24
;
Hours
+88.02.955.0521
;
Website: Call
;
Fax:
+88.02.955.0611
www.nccbank.com.bd Center:
+88.02.956.9029
+880.181.714.0369
4.9.1) Brokerage House Member, Dhaka Stock Exchange Ltd. Full Service Depository Participant
4.9.2) Treasury Service Primary Dealer of Govt. Approved Securities
4.9.3) Key developments for (NCCB) National Credit & Commerce Bank Limited Announces Executive Changes 07/4/2010 National Credit & Commerce Bank Limited has promoted Golam Hafiz Ahmed to additional managing director. Prior to this assignment, he was the bank's deputy managing director. National Credit & Commerce Bank Limited Promotes Swapan Kumar Das as Deputy Managing Director 03/15/2010 Swapan Kumar Das has been promoted to deputy managing director of National Credit and Commerce (NCC) Bank. Prior to the appointment, he was the senior executive vice president and Chittagong area in charge of the bank. Das started his banking career as probationary officer for Janata Bank in 1979 and later joined National Bank in 1983 and NCC Bank in 1985.
4.9.4) Products & Services The Bank has wide range of product line to suit the need of the strata. In addition to convention product both Asset and liabilities sides the Bank offers special credit products for its customer. This are•
Consumer
Financing
•
Lease
Financing
•
Small
loan
•
Festival
loan
•
Housing
loan
•
Long-term
•
Syndication
•
Real
&
Estate
SME & Agro based
4.9.5) Deposit Products Current A/C Savings Bank Deposit A/C Special Notice Deposit (SND) A/C Term Deposit A/C Premium Term Deposit A/C Instant Earnings Term Deposit A/C Special Savings Scheme Special Fixed Deposit Scheme
short
term
&
loan
Civil
financing
construction
NFCD RFCD Money Double Program
4.9.6) Loans and Advance Products Working Capital Financing Commercial and Trade Financing Long Term (Capital) Financing House Building Financing Retail and Consumer Financing SME Financing Agricultural Financing Import and Export Financing
4.9.7) Concept Analysis Credit Management: Credit management is the part of bank management which decides what type of lending product will be offered, to whom it will be offered, how much it will be offered and analyze and measure the credit risk on loans and manage all the activities regarding the loans. The aim of the credit management is to have a secured loan portfolio so that the bank can earn profit by keeping the depositors savings secured. The entire job regarding that consist the credit management. Loan: Loan means lending a fixed amount of money to borrower for a certain period time. The borrower must repay the loan within the given time period. In Loan, the disbursement will take place only for one time. The borrower can repay the loan all at a time or by installment. Advance: Advance is a little bit different than Loan. In Advance, the borrower is allowed and credit limit for a given period of time. In that given period, the borrower can withdraw money as many times as he want but he cannot exceed the credit limit. Again he can repay
several times whenever he wants. In Advance, disbursement and repayment occurs several times. But at the end of the period, whole credit amount must be repaid to the banks. This type of credit is allowed to business for their working capital requirement. Credit Risk Grading Model: This is model to grade the credit risk. Using that model, banks rank the credit risk and decide whether they would lend or not. Here, a borrower is judged from different point of view. After judging, if the borrower has a satisfactory grade or mark then he/she can have the loan.
4.10) Findings and Analysis 4.10.1) The
Lending lending
officers
are
Authority: broadly
categorized
as
follows-
1. Managing director 2. Deputy 3. Executive 4. Senior
Managing
director
vice
president
vice
president
5. Vice 6. Senior 7. Assistant vice president
4.10.2) Lending Products: i.
Continuous Loan
president assistant
vice
president
a) Secured over draft Against Financial obligation b) Secured over draft against Work order/Real Estate etc. c) Cash Credit(Hypothecation) d) Cash Credit(pledge) e) Export Cash credit ii.
Demand loan a) Loan general b) Demand loan Against ship breaking c) Payment Against Document(PAD) d) Loan Against Imported Merchandise(LIM) e) Loan Against Trust receipt(LTR) f) Forced Loan g) Packing Credit h) Secured Over Draft Against Cash Incentive i) Foreign Documentary Bills purchased(FDBP) j) Local Documentary Bills purchased(LDBP) k) Festival Business Loan
iii.
Term Loan a) Project Loan b) Transport Loan c) House Building Loan d) Small Business Loan e) Consumer Finance Scheme f) Lease Finance g) Personal Loan
Cash Credit (Hypothecation): This type of advance is made against the hypothecated possession and ownership of goods or assets. In Hypothecation, the real possession remains to the borrower. Loan disbursement and loan repayment occurs several times for a given amount of money for a given period of time.
Cash Credit (Pledge): When any advance is made against the pledge of goods or assets then it is known as Cash Credit (Pledge). The possession and ownership passes to the Bank. Bank takes the control of the assets or goods. Loan disbursement and loan repayment occurs several times for a given amount of money for a given period of time. Loan General: When any loan is made in lump sum repayment in fixed monthly installment or in lump sum repayment only to the bank officers or employers of NCCBL then it is known as Loan general. Loan against Trust Receipt: This type of loan is given to importer to pay the credits against imported goods. This type of loan is given on the basis of personal guarantee or reputation of the borrower. Loan against Imported Merchandise: This loan is given to pay the credits to importer after taking imported goods under bankâ&#x20AC;&#x2122;s control. Loan against Packing Credit: In packing credit, the banks give loan to exporter to prepare the goods for export against a certain L/C. Payment against Document: To pay the foreign exporter after receiving the goods and proper documents, the bank creates a loan account on the name of the importer and from that account pay to the foreign exporter. Foreign Documentary Bills Purchased: When any loan is given to exporter against any foreign documentary bills then it is known as Foreign Documentary Bills Purchased. Local Documentary Bills Purchased: When any loan is given to seller against any local documentary bills then it is known as Local Documentary Bills Purchased. House Building Loan: This type of loan is given to build house against the mortgage of that property. This type of loan is repaid in monthly fixed installment. Personal Loan: When any loan is given for any personal purpose not for business against any security then it is known as Personal Loan.
Project Loan: When any long term loan is given to any project or for stating any project then it is known as Project Loan. Transportation Loan: When any loan is given to purchase vehicle against personal guarantee of borrower then it is known as Transportation Loan.
4.10.3) Principle of Sound lending It is imperative precept of banking everywhere that advances are made to customer in reliance on his promise to repay, rather than the security held by the banker. Security is required by the banker as a protection against unexpected default in repayment by the customer. So it is necessary for any bank to develop sound and safe lending policies and practicing principles of sound lending. Principles of sound lending are: I.
Safety
II.
Liquidity
III.
Profitability
IV.
Purpose
V.
Security
VI.
Dispersal/ Spread, and
VII.
National interest
Safety Safety first should be guiding principle of a banker. So far as his advances are concerned, because the very existence of a bank depends on the safety of its outstanding, which should never be sacrificed to the profit earnings capacity of its advances. This has led people to believe that a bank never advance any loan unless it is fully secured. To maintain a banking concern in sound condition, it is very essential that the safety of its advances to customers should be its first principle. There payment capacity of a borrower depends on the borrowers a) capacity to pay and b) willingness to pay. Liquidity
Liquidity is the availability of bank funds on short notice. It is not enough that the money will come back, it is also necessary that it must come back on demand or in accordance with agreed terms of repayment. The borrower must be in a position to repay within a reasonable time after a demand for repayment is made; otherwise, the liquidity position of the bank is endangered. Profitability Commercial bank has to distribute its resources in a manner hat they meet the twin requirements of liquidity and profitability. A banker has; therefore, to see that major portion of the assets owned by it are not only liquid but also aim at earning a good profit. The working funds of a bank are collected mainly by means of deposits from the public and interest has to be paid on these deposits. Purpose A banker would not through away money for any purpose of which the borrower wants. The purpose should be productive so that the money not only remains safe but also provides a definite source of repayment. The banker should study the purpose for which the loan is required and the resources from which the borrower is expected to repay. If the funds borrower is employed for unproductive purposes like marriage ceremony, pleasure trip, repayment of old debts etc., or speculative activities, there payment in the normal course will become uncertain. Bankers also discourage advances for a hoarding of stocks. Security It is the practice of banks not to lend money without any security. The security offered for an advance is insurance or a cushion to fall back upon in case of need. A banker would not normally like to recover the advance from the safe of the security. They would prefer an advance to come back from the normal source. Security serves as a safety value for an unexpected emergency. Security may be of i) Primary security and ii) Collateral security Dispersal/Spread The advances should be as much broad-based as possible and must be in keeping with the deposit structure. The advance must not be in one particular direction or to one particular industry; because any adversity faced by that particular industry will have serious repercussions on the bank. Again advance must not be granted in one area alone.
There should be spread of advances against different securities, industries as well as areas. Thus, by a diversification of the advance a banker will be able to spread his risks and considerably improve the safety of advance. National interest National interest banking industry has significant role to play in the economic development of a country. The banker would lend if the purpose of the advance is for overall national development plans necessitating flow of credit to propriety sector in the larger national interest.
4.11) Interest Rates and Fees of Loans Interest Rates of Different Loans and Advances Types of Loans SOD(Against FDR) SOD(SSS/DPS) Cash Credit(Hype) Cash Credit(Pledge) Agriculture Loan(General) / Term Loan (Large and Medium scale Industry) Loan(General) / Term Loan (Small cottage Industry) Working Capital to industry Packing Credit Export Cash Credit Payment against Document Loan against imported merchandise Loan against trust receipt Local Documentary bill purchased Foreign Documentary bill purchased Housing Loan House Building Loan Scheme Small Business Loan House Repairing / Renovation Loan Personal Loan Consumer Finance Scheme Lease Finance
Interest Rate 3% above the FDR rate 16% 16% 16% 11.50% 14% 14% 14% 7% 7% 15%-16% 15%-16% 15%-16% 14.50% 14.50% 14% 14.50% 16% 16% 16% 16% 16%
4.11.1) Fees of Loans and Advances: Pre Sanction Charge: o 3 copy CIB inquiry from tk.50 each o Survey Report Charge: Tk.2000 and above (based on collaterals value and number) o Legal opinion charge about the security offered to mortgaze. Post Sanction Charge: o Stamp charge: Tk.150 to Tk.550 o Mortgage Fee: From Tk.5000 to above (Based on collateral assets’ value ) o Insurance of hypothecated goods(If goods are pawned as security): Insurance charge on the hypothecated goods’ value. o Service Charge: 1% o the total loan amount. o Security Charge (For Small Business Loan, House Renovation and Repairing Loan, Personal Loan): 1% on total loan value. o Risk Charge (For Small Business Loan, House Renovation and Repairing Loan, Personal Loan): 1% on total loan value.
4.12) Credit Analysis Credit analysis is the analysis of financial statement of business/customers for the purpose of lending. Credit analysis are conducted to determine whether the customer is creditworthy and whether the customer has sufficient cash flows and back up assets to repay the loan. The main purpose of credit analysis is to ascertain whether the loan can be serviced by the customer and whether the bank is adequately protected to realize the loan in the event of default by the borrower to repay loan.
Major issues/questions analyzed/ examined in credit analysis: a) Is the borrower creditworthy? b) Whether purpose of the loan is consistent with bank’s credit policies and Govt. Regulations
c) Whether customer/or his business have the ability to generate enough cash to repay the loan? d) Whether sufficient security ha been offered, so that in the event of default bankâ&#x20AC;&#x2122;s fund can be recovered. Whether bankâ&#x20AC;&#x2122;s claim on that security can be established without risk/ with low risk. e) Fixing of amount of loan, loan terms and conditions, documentations, etc. meet the needs of the borrower and to protect the interest of the bank.
Is the borrower creditworthy? a. Character: -
to determine whether the borrower has responsible attitude towards borrowed funds and whether he will have every effort to repay what is owed.
-
Responsibility, truthfulness, serious purpose ad serous intention to repay loans make up the characters of the borrower.
b. Capacity: -
whether customer requesting loan has the authority to request a loan and have the legal standing to sign loan agreement and documents (minor / resolution of the Board of Directors in case of limited company, partnership deed in case of partnership firms, etc)
c. Economic Condition/Assets: -
whether borrower has sufficient asses to repay the loan the loan (cash business assets plus other immovable and movable properties)
-
other loans and liabilities of the borrower
d. Credit history/credit habit: -
whether loans borrowed by the customers previously and how those earlier loans were handled.
-
whether there is any loan default earlier
-
whether legal action has ever been taken against him for recovery of default loan.
e. Credit rating: -
Credit rating of the borrower by Credit Rating Agencies.
Purpose of loan: -
customer must have an well-defined purpose for requesting the loans
-
the purpose of the loan must be consistent with the bank’s existing credit policy.
-
The purpose of the loan also should have consistent with Govt. regulations.
Business position: a. Cash flow: -
three sources to repay loan: i) cash flows generated from sales income, ii) the sale or liquidation of assets, or iii) funds raised by issuing debt or equity securities. Bank’s prefer cash flow as the principle source of loan repayment because assets sales can weaken a borrowing customers and make the bank’s position as creditor less secured.
-
Cash flow = Net profits (revenues less expenses) + Non cash expenses (Depreciation).
-
History of earning and sales- whether there is history of steady growth in earnings or sales and whether there is high probability that such growth will continue.
b. Condition: - analysis of recent trends in the borrower’s business/ industry and whether changing economic condition might effect business or loan. (effects or recession
or
inflation,
etc.)
c. Control: -
whether there is chances of changes in Govt. policy or law which could adversely affect borrower’s business.
Security of Loan: Three securities of loan: i) most preferred is business’s income cash flow from which the customers will repay loan, ii) second security consists of customer’s balance sheet / his assets that can be liquidated or adjustment of loan and iii) Guarantees from owner’s from a third party. Primary security: Collateral security: Collateral security serves two purposes for a lender first, if the borrower can not pay, the collateral gives the lender the right to seize or sell those properties to cover the amount of loan default. Secondly, collateral security gives the lender a psychological advantage over the borrower. Borrowers in this situation feel more obligated to word hard to repay the loan to avoid loosing valuable asses. Loan amount / Loan terms and conditions / Loan documents: -
loan amount should be fixed such a way that it will require the needs of the customer or his business. Proper accommodation of a customer may involve lending more or less money than asked for over a longer or shorter period than requested. May customer don not know their own financial needs.
-
Loan terms and conditions should be framed in such a way that they will protect bank’s interest as well as customer’s purpose. The loan agreement must be structured in such a way that the borrower may be able to service the loan and be able to comfortably repay the loan as per schedule.
-
Loan documents must be executed properly, so that bank can establish its claim against the assets or earnings of the customer to recover the bank’s funds rapidly at low cost and with low risk, in the event of default by the borrower.
-
If necessary, certain restriction (covenants) may be imposed on the borrower in loan agreement so that the borrower may bot indulge to such activities which could threaten the use and recovery of bank’s fund.
-
The process of recovering bank’s funds - when and where can taking action to get its fund retuned also must be carefully spelled out in loan agreement.
4.13) Borrower Selection Process Character: The character of a borrower means the ability of the borrower to earn money by using the borrowed fund and repay the loan timely with interest. The character of a borrower can be measured by analyzing two things – •
Integrity: To measure analyze the Integrity following things should be considered: o Past activities of the Borrower: It can be done only for those who had taken loan from the earlier. Whether the loan taken earlier was repaid timely, described collateral matched with the actual, the transactions were done by maintaining the rules of the bank, the financial statements provided were correct - by analyzing those things a banker can have a idea about the past activities of the borrower. o By collecting and analyzing various information: Generally by visiting the area where the borrower resides or his business organization exists, by talking with local people, by taking personal interview of the borrower, collecting information from newspaper and local authority various information about the borrower can be collected. o Analyzing collected documents: A borrower has to submit a lot of documents. By examine the documents where they show the actual information, a banker can have a idea about the integrity of the borrower. o Transaction analysis: Generally a borrower is an account holder of the bank. By analyzing the transaction of his account, a banker can have idea about the borrower’s integrity. Whether he deposit money regularly, write check by considering his balance, collect funds from others for a short a period to show a good balance to bank etc. – by analyzing those things the integrity of a borrower can be known. o Analyzing the period of relation with the bank: If the Borrower carry out transaction with the bank with good reputation, the banker can have a idea
about his/hr integrity than the borrower who is doing transaction with the bank recently. •
Reliability: Reliability is the inclination to do any work with any person or organization by believing on the activities or behavior of a that person or organization. Borrower should be a person or organization, whose activities or behavior would create trust in banker’s mind that they would have their loan back. Analyzing the following things, reliability on a borrower is created: •
Fulfillment of promise or repayment of earlier loans properly
•
Proper usage of earlier loans
•
Social Status
•
Realistic Business plan
Capacity: Business Capacity: The main source of earning money is business. If the borrower can not earn money from business, he/she would not be able to repay the loan. In this circumstance, to select the borrower the most important thing is Borrower’s business. From the followings, one can have idea about the business capacity: •
Business’s previous growth: By analyzing the previous years’ production, sales, profit growth the idea about the business’s growth can e generated.
•
Competitive advantage: Analyzing the price of the product, quality, production, growth rate of sales & profit, per unit cost and market share the competitive advantage of any business can be known.
•
Adopted method and capacity to implement: In competitive market the success of a business depends on adopted method and ability to implement
that.
There
should
be
similarity
of
taking
and
implementation of method In every stage of the business. The bank should have confidence on the methods taken in the business.
•
Ability to use the strength and remove the weakness: A business may have several strength and weakness on which the success of a business depends. The business should have the capacity to use the strength and remove the weakness.
•
Cash flow: By analyzing the cash flow, the source of cash and use of cash can be known. The ability to use the cash and earn cash is the key to future success.
Management Capacity: The capacity of the owner, director, managers depends on the following things: •
Physical Ability
•
Educational qualification
•
Training
•
Experience
•
Willing to work
•
Perseverance
•
Self-confidence
•
Self-reliability
•
Presence of mind etc.
The ability of work with staff/ workers depends of the following: •
Organ gram
•
Change in Management
•
The relation of staff/ workers with management
•
Time to take decision
•
Ability to take right decision
Analyzing the above things, one can have the idea about the owner, director, managers. Capital: Capital is the backbone of a business. Adequate capital helps to run the business with efficiency. In case of any accident, if the amount of capital is high, then the accident can
be recovered by the capital. That is why capital of a business is compulsory item to run the business. To know the condition of capital the following things are analyzed: •
Asset and liability Position: Analyzing the current and fixed assets the utilization of capital and loans can be known if all the capital is invested in fixed assets then working capital would be colleted by loans. In this case, the success of business depends heavily on the mentality of the lender. Again there should be similarity between the equity and liabilities of the business. If the liability is higher than equity there would be hassle of getting the loan, increase of interest expense which will lead the business to loss. Equity should be higher than liabilities because if the liability is higher than equity than there would higher probability of default. These things should be considered.
•
The probability of owner to provide additional capital: In future the business may require money for any reason. Then if the owner can not provide additional capital, the business organization would not be able to maintain its regular activity. As a result, the business may fail. So, it is required to know whether the owner has desire or ability to provide additional capital for business expansion or if necessary.
•
Ratio Analysis: By doing ratio analysis, one can have idea about the capital condition of the business. From various ration one can know whether the business have adequate capital or the capital is being used properly etc.
Condition: In selection of borrower, one of the most important thing is analyzing the condition of the associated businessman and the business. Because if in a condition when the business face serious competition and as a result it’s business goes down, in this situation the borrower may not be able to repay the loan. That’s why analyzing the related condition of the business and owner is so important. The following things should be considered to have an idea about the related condition of the business: •
Growth of the Industry: Whether the industry of the particular business has any growth potentiality that has to be considered. Because if the industry does not have any growth potentiality, the business will not be able to make profit in long run. SO analyzing the growth of an industry is very necessary.
•
Competitive condition: What is the competitive advantage, who are the competitors, what is the growth of the business compare to competitors, what is the competitive price, quality, and production amount, process etc. – these are things necessary to analyze before sanctioning of a loan.
•
Threat of new entry: If any new firm enters in an existing industry the competition increase. Because of increased competition the borrower may fail and the loan would not be repaid. That’s why before making any loan to any business the entry and exit barrier should be considered of that industry to have an idea about the threat of new entry.
•
Government assistance: Sometimes the success of a business depends on whether the government wants to encourage or discourage the business. By imposing / waiving tax or tariff government encourage or discourage any particular business. Whether the borrower/ related business have any government assistance or not that has to be considered.
•
Demand of the product: The demand of any product may be limited to any particular area. In this case, the business of the product depends on the particular area or particular group. Again the product distributed through few dealers. In this case, the distribution / business depend on those particular distributor group. These things has to considered before making any loan.
Collateral: Which assets are acceptable as collateral can be known by analyzing the following things: •
Whether there would be favorable judgment if case is filed to sale the associated assets: To have a favorable judgment the following things should be considered:
Whether the ownership of property and documents of ownership are correct?
•
Whether the connected assets can be mortgaged?
Whether the borrower can influence the legal authority/
Whether the assets can be taken over after having judgment: To take over the assets the following things should be considered:
The assets should have real existence.
The size, type, and location should be such that it can be taken over.
Whether any other person or organization has taken over the assets by force?
Whether the owner is so powerful that to take over the assets the help of law making authority will not be available?
•
Whether the assets can be sold: Whether the assets is saleable can be known by analyzing the following things:
The asset will have existence during sale.
The assets has to have such quality, quantity so that it can be sold.
The assets has to have demand in the market.
There should be customer for the assets and the customer will not face any problem during purchase of asset.
•
Whether the sale proceed of assets I adequate enough to adjust the loan: For that the analyzing of followings is necessary:
How much time will be required to sale the assets by taking legal steps?
What would be the approximate sale price during sale?
How much would be the expenditure to sale the asset?
What is the present value of the money which would be received at the time of sale?
By analyzing the above things, one should decide whether any particular assets can be taken as collateral
4.14) Credit Risk Grading Model To measure the credit risk, the NCCBL follows the CRGM (Credit Risk Grade Model) provided by the Bangladesh Bank. In this model the whole loan is measured in five criteria. And there are assigned points for every criterion. And the total grade point of all the criteria is 100. The criteria and their assigned points are mentioned below: i.
Financial Risk
- 50
ii.
Business/ Industrial Risk
- 18
iii.
Management Risk
- 12
iv.
Security Risk
- 10
v.
Relationship Risk
- 10
A credit will be considered as ‘Good’ if it scored more than 85, ‘Acceptable’ if it scored between 75-84, ‘Marginal / Watch List’ if it scored 65-74, ‘Special Mention’ if it scored 5564, ‘Sub-standard’ if it scored 45-54, ‘Doubtful’ if it scored 35-44, ‘Bad & Loss’ if it scored less than 35. A borrower whose credit risk grade is above 75 which means minimum “Acceptable”, will get the loan. The Credit Risk Grading Score Model is explained below with an example of a imaginary Borrower Mr. X.
4.14.1) Credit Risk Grading Score Sheet
Borrower: Group Name (if any): Branch: Industry/Sector: Date of Financials: Completed by: Approved by:
Mr. X
Aggregate Score: 76
YYY
Risk Grading:
Number
Grading
Short
1
Superior
SUP
Acceptable
Score Fully
cash
secured,
secured
Government/International 2 3 4 5 6 7 8 Criter ia
Good
Acceptable Marginal/ Watch list Special Mention Substandard Doubtful Bad & Loss
Weight
Parameter
GD ACCPT MG/WL SM SS DF BL
by
Bank
Guarantee 85+ 75-84 65-74 55-64 45-54 35-44 <35 Score
Score Obtained
A.
50%
Actual
Financ
Paramete
ial Risk 1. Leverage: (15%)
r
Less than 0.25×
15
0.26× to 0.35 x
14
Debt Equity Ratio (×) -
0.36× to 0.50 x
13
Times
0.51× to 0.75 x
12
Total Liabilities to Tangible
0.76× to 1.25 x
11
Net worth
1.26× to 2.00 x
10
2.01× to 2.50 x
8
All calculations should be
2.51× to 2.75 x
7
based on annual financial
More than 2.75×
0
Greater than 2.74×
15
2.50× to 2.74 x
14
Current Ratio (×) - Times
2.00× to 2.49 x
13
Current Assets to Current
1.50× to 1.99 x
12
1.10× to 1.49 x
11
0.90× to 1.09 x
10
0.80× to 0.89 x
8
0.70× to 0.79 x
7
Less than 0.70× Greater than 25%
0 15
20% to 24%
14
15% to 19%
13
10% to 14%
12
7% to 9%
10
4% to 6%
9
Sales
1% to 3%
7
4. Coverage: (5%)
Less than 1% More than 2.00×
0 5
More than 1.51× Less 4
.36
13
3.64
15
17.50%
13
43.64
5
statements of the borrower (audited preferred). 2. Liquidity: (15%)
Liabilities
3. Profitability: (15%) Operating Profit Margin (%) Operating Profit ×100
Interest Coverage Ratio (×)-Times
than 2.00×
& Tax (EBIT) Interest on debt Total Risk
Score–Financial
More than 1.25× Less 2 than 1.50×
Earning Before Interest
3 0
More than 1.00× Less than 1.24×
Less than 1.00× 50
46
Weight
Criteria B. Business/Industry
Score
Parameter
Risk 18% 1. Size of Business (Sales in BDT
> 60.00
5
30.00 – 59.99
4
The size of the borrower’s business
10.00 – 29.99
3
measured by the most recent year’s
5.00 - 9.99
2
Preferably based on
2.50 - 4.99
1
< 2.50 > 10 years
0 3
The number of years the borrower
> 5 - 10 years
2
has been engaged in the primary line
2 - 5 years
1
< 2 years Favorable
0 3
A critical assessment of the medium
Stable
2
term prospects of the borrower,
Slightly Uncertain
1
taking into account the industry,
Cause for Concern
0
market share and economic factors. 4. Industry Growth
Strong (10%+)
3
Good (>5% - 10%)
2
Moderate
1
crore)
total sales.
audited financial statements 2. Age of Business
of business. 3. Business Outlook
(1%
5%) 5. Market Competition
Score-
Parameter
Obtained
< 2.50
0
7 Yrs.
2
Stable
2
Good
2
1
No Growth (<1%) Dominant Player
2
Moderately
Moderately
1
Competitive
Total
Score
0
Competitive
6. Entry/Exit Barriers
-
Actual
0
Highly
Competitive Difficult
2
Average
1
Easy
0 18
Average
1
8
Business/Industry Risk
Criteria C. Managem ent Risk
Weight 12%
Parameter
Score
Actual Paramete r
Score Obtained
1. Experience
More than 10 years in the related
5
line of business
(Manageme nt & Management
5–10 years in the related line of
3
yrs.
In
the
line
1–5 years in the related line of
3
related
business
Team) The quality
5-10
2
of
business
business
of
management
based
on
aggregate
No experience
0
Ready Succession
4
Ready
Succession within 1-2 years
3
Successio
Succession within 2-3 years
2
n
Succession in question Very Good
0 3
Moderate
Moderate
2
Poor
1
Regular Conflict
0 12
the number
of years that the Senior Management Team has been in the industry. 2.
Second
Line/
Succession
3. Team Work
Total
Score-
4
2
9
Management Risk Criteria D. Security Risk
Weight 10%
1. Security Coverage (Primary)
Score Parameter
Fully
Parameter pledged
facilities/substantially
4
cash
Registered Hypothecation
on / lien on 3
(1st charge/1st Pari passu charge)
2nd Charge/Inferior charge
2
Simple hypothecation/
1
negative lien on assets.
No security
Simple Hypothecati
covered/Reg. Mortg, for HBL
Actual
0
assets
Score Obtaine d 1
Criteria Weight 2. Collateral Coverage
(Property Location)
Registered Municipal
Mortgage
on
4
No collateral
0
Corporation/Prime
area property.
Registered
Mortgage
Pourashava/semi-urban Parameter property
on area
3 Score
Score
Actual
Obtaine
Parameter
Equitable Mortgage or No
d
2
property but plant & machinery as collateral
3. Support (Guarantee)
1
Negative lien on collateral
0
No collateral Personal guarantee
2
high
net
worth
or
with
Personal
Strong
guarantee
Corporate Guarantee
Personal Corporate
with
Guarantees Guarantee
or with
1
strong
eria E.
Corporate
No Support/Guarantee
Guarantee 0 10
Total Score- Security Risk Crit
high
net worth or
average financial strength
2
3
Weight 10%
Rela
Actual Parameter
Score
tions
Parame ter
Score Obtained
hip Risk 1. Account Conduct
More than 3 (three) years accounts
5
with faultless record
4
Less than 3 (three) years accounts with
2 Accounts
having
satisfactory
with some late payments Frequent Past dues & Irregular dealings in account
than
3
yrs.
In
s
with
faultless
dealings
5
account
faultless record
More
0
record
Crit
Weight eria 2. Utilization of Limit (actual/projection) 3. Compliance of Covenants / Conditions
4. Personal Deposits
Parameter More than 60% 40% - 60%
2Score 1
Less than 40% Full Compliance
0 2
Actual Score More Parame 2 Obtained than ter 60% Fully 2
Some Non-Compliance
1
complia
No Compliance
0
nce
Personal accounts of the key
1
The extent to which the
business
bank maintains a personal key
Sponsors/ Principals are maintained
of
the
key
business bank, with significant deposits
sponsors/principals.
1
accounts
banking relationship with in the the
Personal
0
No depository relationship
business Sponsors / Principal s
are
maintain ed in the bank, with significa nt deposits Total
Score-Relationship
Risk Grand Total- All Risk
10
10
100
76
4.14.2) Definition of Risk Grading: Risk Grade Superior
Score Definition Fully cash secured, Facilities are fully secured by cash secured
Good
by deposits, government bonds, or a counter
Government/Internati
guarantee from a top tier international
onal Bank Guarantee
bank. All security documentation should
85+
be in place. The repayment capacity of the borrower is strong. The borrower has excellent liquidity and low leverage, consistently strong earning and cash flow and
Acceptable
75-84
unblemished credit risk. Adequate financial condition though may not be able to sustain any major or continued setbacks. These borrowers are not as strong as “Good” grade borrowers but should still demonstrate consistent earnings, cash flow, and have a good
Marginal/
65-74
Watch list
track record. These borrowers
warrant
greater
attention due to condition affecting the borrower, the industry or the economic environment. These borrowers have an above average risk due to strained
Special
55-64
Mention
liquidity, higher inconsistent earnings. These borrowers have potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in a deterioration of
Substandard
45-54
the
repayment
prospect
of
the
borrower. Financial condition is weak and capacity or inclination to repay is in doubt. These weaknesses jeopardize the full settlement
Doubtful
35-44
of loans. Full repayment of principal and interest is unlikely and the possibility of loss is extremely
high.
specifically
is
However, identifiable
due
to
pending
factors, such as litigation, liquidation procedure or capital injection, the asset is Bad & Loss
<35
not yet classified as Loss. These assets are long outstanding with no progress in obtainng repayment or in the late states of wind up / liquidation.
4.15) Policy on Loan Classification and Provisioning: Loan Classification: Loan classification means giving each and every loan case a status like Unclassified (Standard & Special Mention Account), Substandard, doubtful and bad/loss through verification of borrower’s repayment performance on a particular date while provisioning means setting aside fund from the profit against possible loan loss. This is done for safeguarding the depositor’s owners’ equity and ensuring proper recycling of funds so as to accelerate the economic growth of a country. Besides, a proper loan classification and provisioning system ensures credibility of the financial system that in turn restores trust and confidence in the minds of the depositors.
Categories of Loans for Classification: All loans and advances will be grouped into four categories for the purpose of classification, namely •
Continuous loan
•
Demand loan
•
Fixed Term loan
•
Short Term Agricultural and Micro Credit
Continuous Loan: The loan accounts in which transactions may be made within certain limit and have an expiry date for full adjustment will be treated as continuous loans. Demand Loan: The loans that become repayable on demand by the bank will be treated as Demand Loan. If any contingent or any other liabilities are turned to forced loans (i.e. without any prior approval as regular loan) those too will be treated as Demand Loan. Fixed Term Loan: The loans, which are repayable within a specific time period under a specific repayment schedule, will be treated as Fixed Term Loans. Short Term Agricultural Credit: Short Term Agricultural Credit will include the short term credits as listed under the Annual Credit Program issued by the Agricultural Credit Department of Bangladesh Bank. Credits in the agricultural sector repayable within less than 12 months will also be included herein. Short term Micro Credits will include any microcredits for les than Tk.10000 /= and repayable within less than 12 months, be those termed in any names such as Non-agricultural credit, self-reliant credit, Weaver’s credit of bank’s individual project credit.
4.15.1) Basis for loan Classification:
A. Objective Criteria 1. Any Continuous Loan if not repaid/renewed within the fixed expiry date for repayment will be treated as irregular just from the following day of the expiry date. This loan will be classified as Special Mention Account (SMA) if it is kept irregular for 3 months, Substandard (SS) if it is kept irregular for 6 months or beyond but less than 9 month, as
‘Doubtful’ if for 9 months or beyond but less than 12 months and as ‘Bad-Debt’ if for 12 months or beyond. 2. Any Demand Loan will be considered as Special Mention Account (SMA) if it remains unpaid for 3 months, Sub-standard if it is remains unpaid for 6 months or beyond but not over 9 months from the date of claim by the bank or from the date of forced creation of the loan; likewise the loan will be considered as Doubtful and Bad/loss if remains unpaid for 9 months or beyond but not over 12 months and for 12 months and beyond respectively. 3. In case any installment(s) or part of installment(s) of a Fixed Term Loan is not repaid within the due date, the amount of unpaid installment(s) will be termed as ‘defaulted installment’ & will be considered as Special Mention Account (SMA) if it remains unpaid for 90 days and above but less than 180 days. 10.1.1.1 In case of Fixed Term Loans, which are repayable within the maximum five years of time:If the amount of ‘defaulted installment’ as equal to or more than the amount of installment(s) due within 6 months, the entire loan will be classified as ‘Sub-standard’. If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within 12 months, the entire loan will be classified as ‘Doubtful’. If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within 18 months, the entire loan will be classified as ‘Bad-Debt’. 10.1.1.2 In case of Fixed Term Loans, which are repayable in more than five years of time:a) If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within 12 months, the entire loan will be classified as ‘Substandard’. b) If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within 18 months, the entire loan will be classified as ‘Doubtful’. c) If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within 24 months, the entire loan will be classified as ‘Bad-Debt’. 10.1.2. The Short Term Agricultural and Micro Credit will be considered irregular if not repaid within the due date as stipulated in the loan agreement. If the said irregular status
continues the credit will be classified as ‘Sub-standard’ after a period of 12 months, as ‘Doubtful’ after a period of 36 month and as ‘Bad-Debt’ after a period of 60 months from the stipulated due date as per loan agreement. B. Qualitative Judgment: If any uncertainty or doubt arises in respect of recovery of any Continuous Loan, Demand loan or Fixed Term Loan, the same will have to be classified on the basis of qualitative judgment be it classifiable or not on the basis of objective criteria. If any situational changes occur in the stipulations in terms of which the loan was extended or if the capital of the borrower is impaired due to adverse conditions or if the value of the securities decrease or if the recovery of the loan becomes uncertain due to any other unfavorable situation, the loan will have to be classified on the basis of qualified judgment. Besides, if any loan is illogically or repeatedly rescheduled or the norms of re-scheduling are violated or instances of (propensity to) frequently exceeding the loan-limit are noticed or legal action is lodged for recovery of the loan or the loan is extended without the approval of the proper authority, it will have to be classified on the basis of qualitative judgment.
4.15.2)
Classification
of
loans
and
advances
Bank is an institution where clients keep their surplus deposits and these deposits are invested in trade, commerce and industries in the form of Loans & Advances to earn profit. Apart from earning profit, by lending to priority sector, Bank also helps country’s economic development. Lending activities of the Commercial Banks are of two natures: (A)
Continuous
Credit.
(B)
Term
Loan.
In continuous credit the client is given a credit limit for a specified period mostly for 1 (one) year. The borrower is allowed to make transaction up to that limit. In other word, he can deposit
and
withdraw
up
to
the
fixed
limit
in
revolving
manner.
On the other, in case of Term Loan, Loan is first disbursed at a time or in phases. Then it is borrowerâ&#x20AC;&#x2122;s turn to repay the Loan after a certain fixed period at a time or in installments fixed for
within
(A)
a
certain
Continuous
(i)
credit
Cash
(ii)
Cash
(iii)
Credit Credit
SOD
(iv)
period.
(Hypothecation) (Pledge)
SOD
(Financial
Obligation)
SOD
(v)
(General)
OD
etc
(i) Cash Credit (Hypothecation): This facility shall be available both for Trading Houses and. Manufacturing concerns against primary security of hypothecated inventory/ stocks of Finished, Raw Materials and machineries. However, as the primary security remains at the disposal of the borrower with practically no control of the lending institution, NCCBL shall extend such facility only against retention of adequate eligible Collateral Security favoring bank. Criteria of such Eligible Security shall be as per circular of Head Office and within the guideline
set
by
Bangladesh
Bank
in
this
regard
(ii).Cash Credit (Pledge): NCCBL shall retain the provision to extend WC finance under the head. As the Primary Security i.e. Finished or Raw by regulation is supposed to be under strict control of the bank, the arrangement on practical experience eventually proves cumbersome due to numerous difficulties in maintaining the formalities related to strict supervision and monitoring. Therefore, NCCBL shall prefer to consider such facility only under Hypothecation unless assurance and arrangements are available about compliance on the spirit of the portfolio.
(iii) Secured Overdraft (Financial Obligation): Credit Facility in the form of Loan and Overdraft can be considered against Lien of various Financial Obligations subject to credit restriction or any directive as imposed by regulating authorities or Head Office. Necessary guidelines with regard to extension of the facility shall be as per direction of the Head Office/ Bangladesh Bank. (iv) Secured Overdraft (General): NCCBL shall consider facilities under the portfolio against valid Work Order/Supply Orders payment against which shall be duly assigned favoring the bank by the work awarding office/ agency. The portfolio in nature shall be of a Loan type and not continuous. The WO shall be construed as Primary Security in this regard. However, as the nature of facility carries inherent risk, NCCBL shall prefer Collateral Securities while considering facilities under the head.
(B) Term Loan (i)
Project
(ii)
Loan
House
(iii)
Building
Loan
Packing
Credit
(iv) LIM (Loan against Imported merchandise) (v)
LTR
(vi)
against
Trust
Transport
(vii) (viii)
(Loan
Loan
Lease PAD
(Payment
Receipt)
Finance against
Documents)
(I) Project Loan: NCCBL shall allow Loans for longer duration to enable its investment to
be returned by way of repayment after detailed assessment and feasibility study as per its guideline for entrepreneurs and investors willing to come to an arrangement in setting up industries and different production unit complying to rules and regulations of governmentâ&#x20AC;&#x2122;s Investment
&
industrial
policy.
As investment shall be for longer duration and fraught with unforeseen risks, bank shall obviously seek adequate eligible securities to cover itself. Acceptance of such securities shall be as per laid down principles of the bank and Bangladesh Bank guidelines in this regard. (ii) House Building Loan: Bank shall allow credit facilities under such portfolio strictly as per PPG within the Prudential Regulations of Bangladesh Bank for Consumer Financing. (iii) Packing Credit: This facility also relates to financing at Pre shipment stage. NCCBL shall consider such facility under defined guidelines against export of various commodities. (iv) Loan against Imported Merchandise (LIM): Loan against the security of merchandise imported through bank shall be allowed against Pledge of goods. The procedure and conditions for allowing such facility under prior arrangement or forced circumstances shall be strictly as per related guideline of the bank. Due to inherent complexities, the portfolio should be discouraged. (v) Loan Against Trust Receipt (LTR): Bank shall be selective in extending the facility but shall prefer due to comfort in binding the customer legally. Generally such facility shall be against arrangement and preferable against collateral security favoring the Bank. (vi) Transport Loan: NCCBL may extend Transport Loan on close scrutiny of the purpose, Feasibility, experience of the borrower, credit/trust worthiness and above all security aspect as
per
its
guidelines
in
this
regard.
(vii) Lease Finance: An entrepreneur, under this scheme may avail of lease facilities to procure industrial machinery and equipments, Vehicles etc. (without having to purchase it by down payment) with easy repayment schedule on case to case basis. Rate of interest under this Scheme is 16% P.A.
(viii) Payment against Documents (PAD): This facility originates against payment of Import Bills on lodgment of CLEAN shipping documents received from Foreign Correspondent
against
Letter
of
Credit
opened
on
behalf
of
the
customers.
(ix) IBP & FBP (Inland &Foreign Bills Purchased): The facility relates to extension of credit at the post Shipment stage. NCCBL shall consider facility under the portfolio to relieve the exporter strictly on complying standing conditions attached to it. NCC Bankâ&#x20AC;&#x2122;s Special Credit: Itâ&#x20AC;&#x2122;s based on the common credit requirement of the society. Besides, these products have The
expanded. Bank
with
diversified
source
of
income.
These
are:
(a) Small Business Loan (b) Personal Loan (c) House Renovation Loan (d) Consumer Finance (e) Festival Business Loan. (f) Festival Personal Loan. (g) NCC Bank Housing Loan Scheme.
4.15.3) Claim of guarantee In case the guarantee is presented for encashment and balance of customers account including cash margin held is sufficient to cover the amount of guarantee, the same should be paid by pay order to the debit of customers account. It the balance is not sufficient the customer should be asked to deposit the amount of shortfall immediately, and in case of his failure, the bank must pay the claim by forced loan in borrowers account before statement of claim under
guarantee furnished by the banks it must be ensured that the claim is justified as per term of guarantee. The customer shell also be informed as usual before settlement of the claim.
4.15.4) Accounting Procedure of the interest of classified loans: Of any loan pr advances is classified as SMA, ‘Sun- standard’, and ‘Doubtful’, interest can be charged in the loan account; but the interest thus charged cannot be transferred to income account. The total interest charged in the SMA, Sub-standard, and Doubtful loan account will have to be preserved in the ‘Interest Suspense Account’. If any loan or advances is classified as ‘Bad Debt’, charging of interest in the same account will be suspended in case of filing a law-suit for recovery of such loan, interest for the period till filing of the suit can be charged in the loan account loan in order to file the same for the amount of the principle plus interest. But interest thus charged in the loan account has to be preserved in the ‘Interest Suspense’ Account. If any interest is charged in any ‘Bad Debt’ account for any other special reason, the same will be preserved in the ‘Interest Suspense’ account. If classified loan or part of it is recovered i.e. real deposit is effected in the loan account, first the interest charged and not charged is to be recovered from the said deposit and the principal to be adjusted afterwards. A Continuous credit, Demand loan or a Term loan which will remain overdue for a period of 90 days or more, will be put into the “Special Mention” account and interest accrued on such loan will be credited to ‘Interest Suspense’ account , instead of crediting the same to Income Account.
4.16) Maintenance of Provision:
A. Banks will maintain provision at the following rates in respect of Classified, Continuous, Demand loan, and Fixed Term Loans: Loan classification system (rate of provision)
(As per BRPD circular letter no.08 dated: 16.09.2005 & BRPD circular dated 06.122005) Overdue
Status of CL
Procedure
Less
than
Stac
and
Micro All other Credit
Credit Rate of Provision on Rate of provision on 3 Standard
base for provision 5%
months
base for provision General provision: @1%
(Except
Small
Enterprise Financing) @25 Small Enterprise Financing @5%Consumer 3
months
& Special
above
5%
Financing 5%
5%
20%
5%
50%
100%
100%
Mention
(SMA) 3 months or Submore but less Standard than 6 months More than 6 Doubtful months less
than
but 12
months 12 months or Bad/Loss more
B. Provision will be made maintained at the above rate on the balance to be ascertained by deducting the amount of â&#x20AC;&#x2DC;Interest Suspenseâ&#x20AC;&#x2122; and the value of eligible securities from the outstanding balance of classified loan. General provision @1% against unclassified loans is also to be mentioned.
C. In the definition of Eligible Securities mentioned in the above paragraph the following securities will be included: List of eligible securities with their percentage of value: (as per BRPD circular letter No-05 dated 27.04.2005)
Eligible Securities % to be considered Market value of gold/ornaments kept in the bankâ&#x20AC;&#x2122; 100% custody Duly discharged financial instruments like FDR,(PSP 100% Government bonds) Guarantee made by the government/Bangladesh Bank Easily marketable goods pledged under banks custody Market value of mortgaged land and building Duly discharged share certificates considering the face
100% 50% 50% 50%
value or last six months average market value whichever is lower
4.17) Deposit Mobilization General banking department is the heart of all banking activities, especially to mobilize the deposits. All other departments are linked with this department. It plays a vital role in deposit mobilization of the branch. National Bank Limited provides different types of Accounts, locker facilities, special types of saving scheme and flexibilities of remittance under general banking. This department performs the general function of banking. In National Bank Ltd. For performing the operation of this department a good number of people are allotted for the purpose of Deposit Mobilization. The general banking department of National Bank (Foreign Exchange
Branch)
consists
1.
of
the
Dispatch
2.
Accounts
3.
Cash
following
section: section
opening
section
Management
section
4.
Remittance
section
5.
Deposit
section
6.
Clearing
section
7. Credit Card section
1.
Dispatch
section
Dispatch division operates the function of dispatching the intimation letter to the client, IBCA, IBDA, and OBC to the other banks for internal transaction with bank. The officer engaged in the dispatch division maintains two types of register books to entries for record of these
documents
These
two
1.
types
of
particulars. register
Inward
books
are: registers.
2. Outward mail registers.
2.
Accounts
opening
section
Opening Different Types of Accounts Account opening is the very first and preliminary job for a bank. As NCCBL does not make any business contract unless having an account on their bank, so account opening is the most important work of the general banking division. (I)Current Deposit (CD) Account (A/C): Any businessman, firm, limited companies, local bodies, corporate bodies, etc. can open a current A/C with NCCBL. Current deposit is 100% demand deposit and account holder can deposit/withdraw his/her deposits frequently without any
limit.
Requirements for openining CD A/C: Requirements may vary from types of the organization, such as: Individual â&#x20AC;˘ â&#x20AC;˘
Personal Copy
of
a
Passport
or
ID ward
commissioner
certificate
• •
Any
introducer
Fill
up
Know
of
that
respective
Your
Customer
bank
(KYC)
form.
Joint Owner •
Trade
• •
license
Proprietor’s Any
introducer
of
ID that
respective
bank
• Fill up Know Your Customer (KYC) form. Limited Company •
Memorandum
•
Association
• Features
of of
Certificate of
CD
(1).Submitting
A/C:
(MOA)
Articles
(AOA)
of CD
Tk.5000
Articles
accounts to
open
Incorporation.
have
the a
following current
features: account.
(2).It is understood that the balances at credit will not less than Tk.5000. A minimum charge Tk.
100
must
be
paid
on
all
operative
accounts.
(3).Only the form of cheque book supplied by the bank should be used. Cheques materially altered will not be paid unless such alteration bears the signature of the drawer in full. (4).The account holders must give the same signature for withdraw money that deposited in the bank previously.
(ii) Saving Bank Deposit (SB): Any individual person, local bodies, club, society, association house wife, student, non-profitable organization, etc. can open a saving bank deposit account with NCCBL. Savings bank deposit is both time and demand deposit, of which 10% is demand and 90% is time deposit and the account holder can withdraw his/her deposits twice in a week up to a certain limit. Requirements for opening SB A/C: Requirements may vary from types of the organization, such
as
Individual •
Personal
•
Copy
•
Any
•
Nominee’s photograph
•
Fill up Know Your Customer (KYC) form.
ID of
a introducer
Passport
or of
ward
commissioner
certificate
that
respective
bank
Joint Owner •
Trade
•
Proprietor’s
•
Any
•
Fill up Know Your Customer (KYC) form.
Limited Company
license ID introducer
of
that
respective
bank
•
Memorandum
•
Association
•
Certificate
Features
of
of of
Articles
(MOA)
Articles
(AOA)
of SB
A/C:
SB
Incorporation
accounts
have
the
following
features:
1) Any matured but not unsound mind can open a savings account. 2) One account holder can transfer his or her account in the branch to another branch without 3)
any Minimum
cost
if
he
or
deposit
Tk
5,00
to
she open
interested. an
A/C
4) SB A/C offers 6% interest charges semi-annually to the depositor’s account. 5) One time at least within 6 months an A/C holder must transaction with the bank to continue
the
A/C.
6) Charges Tk.250 for close (iii)
Fixed
Deposit
Account
(FDR):
Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies, etc. can open Fixed Deposit A/C with NCCBL. FDR is 100% time deposit and A/C holder can usually withdraw his/her deposits after maturity of the fixed deposit. However, depositors of FDR can withdraw their deposits before maturity if they desire. FDR is also known as time liabilities or term deposits. Higher rate of interest is given on this
type of deposit. Fixed deposits generally constitute more than half of the total deposits with the bank. Requirements Minimum
for requirement
openinR Tk.50,000
to
FDR:
make
a
FDR
Above Tk.5, 00,000 in case of FDR, a report regarding FDR must be sent to Bangladesh. Interests
&
other
Time
charjies:
Interest
1
month
3
Rate 8%
p.a.
months
6
11.50%p.a.
months
12
11.75%
p.a.
months
12%p.a.
Government tax: Government will charge 1 0% income tax on the amount of income from interest. (iv) Short Term deposit (STD): Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies, etc. can open a short term deposit account with NCCBL. STD is 100% time deposit and an account holder can withdraw his/her deposits with prior notice to the bank. For that reason STD is also called a Special Notice Deposit A/C. (v) Special savings Scheme (SSS): Any individual person can open a special savings scheme deposit account with NCCBL for a tenure of 5/10 years with monthly deposit of Tk.500 and multiple
of
Tk.500
up
to
Tk.10000.
SSS
A/C
is
100%
term deposit and account holder can withdraw his/her deposits after maturity of SSS/A/C. (vi) Special deposit Scheme (SDS): Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies, etc. can open a SDS A/C with NCCBL. SSS is a term deposit with payment of interest is payable on monthly basis. An account
holder
can
withdraw
his/her
deposits
after
maturity
of
SDS
A/C.
3. Cash management section Cash management section of any bank plays vital role in general banking department because it deals with the most liquid assets. The proper management of this section entails overall effectiveness of any bank. NBL has a very equipped cash section. This section is responsible for
the
1.
Receipt
2.
Making
following
function:
of
deposit.
payment
to
the
customers.
3. Management of vault of the branch. 1. Receipt of deposit This section receives deposit or funds from the customer and the collection
procedure
as
follows:
•At first the amount is counted and if ok then verified the purity of the note paid if there is any
confusion
•word
of
over
the
the
teller.
deposit
slip.
•At last the receiving officer/ teller signed the deposit slip and by the sign of the authorized officer
the
deposit
of
fund
finished
in
favor
of
a
customer.
•In case of received of clearing cheque, the cheque is scrutinized at first whether the cheque is authenticated as per the NI Act. If satisfied then a crossing is marked so that this cheque never
been
enchased
over
the
cash
counter
•Then the amount is kept apparently deposited in the customers account and the cheque proceeds
to
the
clearing
house
accordingly.
2. Making payment to the customer: The payment is made to the customer only against a valued authentic cheque. the teller has to follow the following steps in making such payment:
•Receiving
the
cheque
•Examining
from
the
customer.
the
cheque.
In case of examining the cheque, the teller is predated then the date is to be sure about the folipwing (ii)Amount
questions: is
written
in
word
and
in
figure
and
both
is
valued
same;
(iii)Signature is installed and it is as it is the signature kept in the bank; (iv)There is sufficient amount in the customer’s accounts for making payment. •Finally the “cash paid” seal is marked over the cheque leaf for the collection of the cheque after
making
the
payment
to
the
customers.
3. Management of the vault: The cash section also manages the vault of the branch. The manager of cash section is the in charge of the necessary liquid money in the vault for the payment of the customer.
Chapter- 6 Remittance & Others
5.1) Remittance Products Special Interest rate on Savings and Term Deposits Wage Earners Welfare Deposit Pension Scheme Loans for Real Estate (Land purchase and House construction/renovation) Advance against Regular Remittance
5.2) Remittance Service Correspondence arrangement with more than 330 Financial Institutions all over the World For Wage Earners Remittance we have Agency arrangement with 12 reputed Exchange Houses covering major Locations of our Expatriates
5.3) Mode of Remittance The modes of remittance by the wage earned are: 1. T.T – Telegraphic transfer. 2. M.T – Mail transfer. 3. F.D – Foreign Draft. 4. T.D.D – Taka demand Draft. 5. T.C – Traveler cheque. 6.
Foreign currency notes.
5.4) Foreign Exchange Foreign Exchange is a process which is converted one national currency into another and transferred money from one country to other countries. Foreign exchange is the rate of exchange In
NCCBL,
in the
the Foreign
both Exchange
country’s Department
has
currency. two
sections
â&#x20AC;˘Import
section
â&#x20AC;˘Export
section
1) Import Section
Import of merchandise involves two things: bringing of goods physically into the country and remittance of foreign exchange towards the cost of the merchandise and services connected with
its
dispatch
to
the
importer.
Import Procedure for obtaining IRC (Import Registration Certificate) Submission of LCA (Letter
of
Credit
Authorization)
Opening 1)
Form
distribution:
LC:
Examination
of
import
documents
sent
to
the
foreign
exporter
2) Payments against documents of release order from the bank 3)
Receiving
the
Post
documents
Import
Finance:
LTR (Letter of Trust Receipt): Letter of Trust Receipt occurs when an importer fills up the LTR form and applies for it LTR is permissible only if the importer is a reputed, trust worthy and having done business with the particular bank for a long time. LTR creates an option for the
importer
to
pay
due
by
future
installment.
Loan against Imported Merchandise (LIM): Loan facility up to a satisfactory limit to the traders customers by the bank against security of the value of the given only to the selective customers
who have
been doing
business
with
the bank
for a long time.
Payment against Documents (PAD): After receiving the documents sent by the foreign exporter which include bill of exchange, shipping documents etc. the importer pays the dues against the documents received by the bank and latter on releases the merchandises from the port. So, after due payments, which include commissions, product price, charges for SWIFT, and miscellaneous, the party is eligible to take the release documents from the bank on this payment
is
called
PAD.
2) Export Section The import and export trade of Bangladesh is controlled under the Import and Export Control Act, 1950. No person who has been granted registration by the Chief Controller of Imports and Exports shall indent, import or export any goods into or out of Bangladesh except in cases of exemption issued by the government. The registration number should be quoted on the relative export forms. There are a number of formalities, which an exporter has to fulfill before and after shipments of goods. These formalities or procedures are enumerated as follows: ~
The
~
Preparations
>
the
Send
~
Export
Get
the
Shipping
Advice
of name
Documents Goods
of
Realization
Exporters
of
Negotiation
~
>
of
of
Dispatch
>
~
Registration
Documents Export
of
the
Proceeds Importer/Buyer: Price/Quotations:
~
Communicate
~
the
Obtain
Export
Acceptance: Code
Number:
Keep the goods ready for dispatch: Inspection of Goods Getting Shipping Space. Get in touch with the Port Authorities Are required to be forwarded to the opening banker along
with
the
bill,
Function
the
credit
is
of
called
a
documentary
Foreign
credit.
Exchange:
The Bank actions as a media for the system of foreign exchange policy. For this reason, the employee who is related of the bank to foreign exchange, specially foreign business should have
knowledge
i) ii) iii) iv)
of
How
of
the
rate
Forward Methods
of
quoting
Premium Risk
vii)
Causes
of Exchange
works.
spot
rate.
exchange
rate.
and of
functions exchange.
exchange
and of
vi)
ix)
following
Rate
v)
viii)
these
discount. exchange exchange
rate. rate. control. Convertibility.
x)
Intervention
xi)
Foreign
xii) xiii)
money. exchange
Foreign Export
xiv)
transaction.
exchange
and
import
Non-commercial
trading.
letter letter
of
credit.
of
trade.
xv) Financing of foreign trade. xvii)
Nature
xviii)
Rules
and
function
and
Regulation
xix)
5.4.1)
of
foreign used
exchange in
market.
foreign
Exchange
Foreign
Exchange
trade. Airtime
takes
place
in
NCCBL.
Remittance means transferring of fund through different instruments other than cheque. The Types
following of
two
types
remittance:
of
Remittance
Remittance
are is
performed basically
by
NCCBL.
two
types:
1)
Local
remittance.
2)
Foreign
remittance.
Local
remittance
Remittance is significant part of the general banking> The bank receives and transfers
various types of bills through the remittance within the country. Obviously the bank charges commission on the basis of bills amount NCCBL remittances is safe, swift, inexpensive and simple. Types of local Remittance of NCCBL: The local remittance includes the following: a)
Pay
Order(PO)
b)
Demand
Draft(DD)
c)
Telegraphic
Transfer(TT)
d)
Transfer(MT)
(a) Pay Order(PO): Pay Order is an instrument that contains an order for payment to the payee only incase of local payment whether on behalf of the bank or its constitution. Unlike cheque there is possibility of dishonoring Pay Order. NCCBL charge different amount of commission on the basis of Pay Order amount.
(b)
Demand
Draft:
By DD any person can send money from one branch to another branch of NCCBL. To send the money he/she must fill up the NCCBLâ&#x20AC;&#x2122;s prescribed form of DD and paid charge/commission and receives DD block. The following information are included in the DD
block:
â&#x20AC;˘Name Name
of and
account
the of
the
sender party
who
receives
branch the
money.
•For security purposes a confidential test number are included in the DD block •Amount
of
money
•Name
to
of
(C)
be
transferred
receiver
Telegraphic
branch
Transfer:
• To send money urgently NCCBL may be requested for TT on payment of a nominal charge and
telegram
charge.
• Any person urgently sends money from one branch to another branch within NCCBL through
TT.
When a message of TT sends through phone from one branch to another branch in that time the message received by the authorized officer who has a right of power of attorney. After that, he/she fills up the TT form. Following things are included in the TT form: i).
TT
ii). iii). iv). v).
number
IT Name Power
of The
and attorney
test account number
number of
amount
the to
sender
number of and be
the receiver
payee of
TT.
transferred.
vi) After fill up the TT form, he tests the test number of TT. If he ensures througli testing the test number then he credits the account of the payee. On the other hand, if the test number is not proved then he calls back to the sending branch of TT and request to send a new TT. (d)
Transfer:
Money can be sent through mail transfer to any body who has an account in any other branch of the same bank for this purpose the sender shall have to furnish the details like: •The
name
•The
of
the
beneficiary
amount
•The
name
of
the
and
to branch
his
account
number
be
where
the
account
transferred is
Foreign
maintained
remittance
NCC Bank is the member of Money Gram and SWIFT networks. Using the services of this global network, non-resident Bangladesh nationals can send money from abroad to their home country within a few minutes without any risk. Types of Foreign remittance (i) Money Gram: Money Gram is represented in over 115 countries and is available at more than 25,000 locations worldwide. In the USA alone Money Gram is available at inore than 15,000
locations.
• Sender completes a “send” form and gets a receipt. Money Gram Agent gives a Ref: No. Which has to be passed to the receiver? NCC Bank makes an enquiry on the Money Gram computer network to obtain authorization to
pay
recipient
and
recipient
receives
the
fund.
Money Gram is one of the fastest ways to transfer money. Customers using Money uGram can
send
or
receive
money
usually
within
10
minutes
from
any
world.
• To get the money the recipient need not to have a bank account with NCC Bank Ltd.
NCCBL does not levy extra charge. It gives better exchange rate to the recipient. (ii) Placid Express: In March 2002, the bank has entered a Taka drawing arrangement with Placid Express, for home remittances of Bangladeshi expatriates in the United States. (iii) X-press money: The X press Money Services would like to welcome NCCBL to their network. X press Money (XM) is a web-based person-to-person money transfer system that allows an individual to send/receive money through any of our network agents instantly. All transactions are done through secure servers using 128-bit encryption technology so as to provide maximum security (iv)Al Fardan: Al Fardan Exchange, the pioneer in money exchange and worldwide remittance services in the U.A.E., established in 1971, is a trusted name for millions of residents and expatriates. A modern exchange house with advanced infrastructure and Courteous staff, has an extensive network of correspondent banks all over the world to facilitate faster, completely reliable transactions. (v) Habib express: Habib express is another important medium through which wage earner remittance is accepted by NCC Bank. Here head office at first enter in system server and received necessary information about the amount of remittance, beneficiary who will receive the amount and any reference number which work as security for Bank as well as beneficiary. Head office gives information through fax to it respective branch from ~where receiver will receive money. (vi) Dhaka Janata: Dhaka Janata are introduces to provide remittance fucilities to emigrant and other people of Bangladeshi who work as contractual basis in the Italy. Here Dhaka Janata also maintain same procedure of getting information from system server including the name, referance number, amount, Phone number etc.Here head office sends information through fax to all respective branch. All receivers when come to bank,respective branch check
his
information
with
information
received
from
head
office.
5.16)
Deposit
Section
Deposit is the lifeblood of a bank. From the history and origin of the banking system, deposit collection is the main function of a bank.
Accepting
deposits:
The deposits that are accepted by NBL like other banks may be classified in to,a)
Demand
b)
Deposits
Time
Deposits
(a) Demand deposits: These deposits are withdrawn able without notice, e.g. current deposits. National Bank Limited accepts demand deposits through the opening of, o
Current
account
o
Savings
account
o
Call
deposits
from
the
fellow
bankers
(b) Time deposits: A deposit which is payable at a fixed date or after a period of notice is a time deposit. National Bank Limited accepts time deposits through Fixed Deposit Receipt (FDR), Short Term Deposit (STD) and Beared Certificate Deposit (BCD) etc. While accepting these deposits, a contract is done between the bank and the customer. When the banker opens an account in the name of a customer, a contract arises between them. This contract will be valid one only when both the parties are competent to enter into contract. As account opening initiates the fundamental relationship & since the banker has to deal with different kinds of persons with different legal status, National Bank Limited officials remain very much careful about the competency of the customers.
5.17) Schedule of Charges
A) Foreign Exchange Transactions:
S/N Type of Services
Nature of Charges
1
LC opening at sight
2
LC opening under deferred payment/Usance
3
LC opening at 100% cash margin
4
LC opening under Back to Back
5
For Transmission of LC, Amendment of LC, Confirmation, Cancellation, Foreign Correspondent charge LC Advising Charge LC amendment advising charge LC Transfer Charge Acceptance commission of Drafts/Bills under deferred payment/Usance LC including garments related BTB LC Confirmation charge for local LC Foreign Correspondent
Commission: For first quarter and subsequent each quarter or part thereof Commission: For first quarter and subsequent each quarter or part thereof Commission: For first quarter and subsequent each quarter or part thereof Commission: For first quarter and subsequent each quarter or part thereof Courier Charge (Local) At actual Courier Charge (Foreign) Mailing Charge Telex/SWIPT FC Charge if charges are on applicants account Commission Commission
6 7 8 9
10 11
Charges to be revised as per Bangladesh Bank instruction @ 0.40%
@ 0.50%
@ 0.25%
@ 0.40%
At actual
Tk.750/Tk.750/-
Commission Commission: For f i r s t quarter and subsequent each quarter or part thereof
Tk.750/@ 0.40%
Commission
@ 0.20% Nil
12 13 14 15
16 17 18 19 20 21
Charges (FCC) Local part Data Max Charges Handling Charges Copy Document Endorsement Charges LC cancellation or expired unutilized LC charges Export Bill Negotiation Export Bill Collection Issuance of certificate for Back to Back LC C&F Certificate issue charge Issuance of PRC FDBP
Nil Nil Nil Nil
Commission
Fees
@ 0.15% quarter @ 0.15% quarter Tk.500/-
Fees
Tk.500/-
Fees Overdue Interest
Tk.500/ln case the exporter submits export documents complying credit terms under irrevocable sight letter of credit and bank negotiates documents, no overdue interest is to be charged on exporter's account as per 'Export Policy 200609'
Commission
per per
B) General Banking:
S/N
Type of Charges
1
Service Charge on Accounts: i. Current Deposit/STD ii. Savings Deposit iii. All Loan Accounts
2 3
Charges to be revised as per Bangladesh Bank instruction Free Free iii. Tk.500.00 half yearly on each loan account except Agri-Loan.
4
Account Maintenance Fee
5
Account Closing Charges
6 7
Account Transfer Fee Balance Confirmation Certificate (BC)
Free for Agri-Loan account. i. SB Account Tk.300.00 On half yearly basis ii. CD Account Tk.500.00 On half yearly basis i. STD/CD: Tk.300.00 ii. SB: Tk.200.00 iii. FDR & Other Schemes: Nil (For premature encashment Free Regular two half yearly : Free Tk.200.00 for issuance of additional BC other than regular half yearly.
C) Advance & Other Charges:
S/N
Type of Charges
1
Issuance of certificate for "Beneficiary Owner's Account" Early settlement fees of loan Counter Transaction Fee Charge documents on Agri-Loan
2 3 4
Charges to be revised as per Bangladesh Bank instruction opening Tk.100/@2% Nil At actual, not exceeding Tk.500.00
5.18)
Clearing
Clearing is a system by which a bank can collect customers fund from one bank to another through
clearing
house.
(A) Outward Clearing: When the branches of a bank receive cheque form its customers drawn on the other banks within the local clearing zone for collection through Clearing House,
it
is
Outward
Clearing.
(B) Inward Clearing: When the branches of a bank receive cheque drawn on them from other banks in the Clearing House, it is Inward Clearing. 3.1.6.2 Clearing House: Clearing House is a place where the representatives of different banks get together to receive and deliver cheque with another banks.
5.18.1) Types of c1earing house There
are
two
A)
of
Normal
B)
day
house:
1st
house: house
clearing
Normal 1st
clearing
clearing
Same
(A) 1)
type
house
clearing
house
normally
stands
at
house: 10
am
to
11
am
2) 2~K~ house: 2nd house normally stands after 3 p.m. and it is known as return house.
(B) 1)
Same 19iouse:
1st
house
day normally
clearing stands
at
11
am.
house: to
12
p.m
2) 2~k house: 2nd house normally after 2 p.m. and it is known as return
5.18.2)
Return
house
Return House means 2nd house where the representatives of the Bank meet after 3 p.m. to receive and deliver dishonored cheque, which place in the 1 g Clearing House. Cheque may be 1)
dishonored
for
any
one Insufficient
of
the
following
reasons: fund.
2)
Amount
in
3)
Cheque
out
4)
Payment
5)
Payee’s
6) 7)
and
word
differs.
of
date/
post-
dated.
stopped endorsement
Drawer’s Crossed
figure
by irregular/illegible
signature
cheque
the
to
be
/
differ presented
drawer. required.
/
required.
through
a
bank.
8) Other specific reasons not mentioned above.
5.18.3)
Bills
Collection
In modern banking the mechanism has become complex as far as smooth transaction and safety is concerned. Customer does pay and receive bill from their counterpart as a result of transaction. Commercial bank’s duty is to collect bills on behalf of their customer. Types a)
of
Bills
Outward
for Bills
Collection for
of
Clearing
Collection
(OBC)
b) Inward Bills for Collection (l B C)
(a)
What
is
OBC?
OBC means Outward Bills for Collection. OBC exists with different branches of different banks
outside
1)
OBC
the with
local
clearinghouse. different
Normally branches
two of
types other
of
OBC: banks
2)
OBC
with
different
branches
Procedure 1)
the
same
of Entry
2)
of
Put
in OBC
OBC:
the number
bank
OBC in
register. the
cheque.
3) “Crossing seal” on the left corner of the cheque & “payees account will be credited on realization” seal on the back of the cheque with signature of the concerned officer. 4)
Dispatch
(b)
Inward
the
bills
OBC
cheque
for
with
collection
forwarding.
(IBC)
when the banks collect bills as an agent of the collecting branch, the system is known as IBC. In this case the bank will work as an agent of the collection bank. The branch receives a forwarding
letter
and
the
bill.
Procedure of IBC: 1) IBC against OBC: To receive the OBC cheque first we have to give entry in the IBC Register. The IBC number should put on the forwarding of the OBC with date. 2) Deposit of OBC amount: OBC cheque amount is put into the “sundry deposit sundry Creditors account”, prepare debit & credit vouch of it. If the OBC cheque is honored, send credit advice (IBCA) with signature & advice number of the concern branch for the OBC amount. 3) If the OBC cheque is dishonored, the concerned branch is informed about it. Again place in the clearing house or send the OBC cheque with Return Memo to the issuing branch according to their information.
5.18.4)
Others
Utilization
Activities
of
Fund
As a private commercial bank, NCCBL has some inherit commitments to its society. By utilization the fund from the mobilized deposit NCCBL is fulfilling its commitment which can gear up the economic activity. NCCBL has been extending credit facilities to the potential, productive and priority sectors as per instruction from Bangladesh bank. For a bank, good loans and advances are most profitable asset. A big portion of operating income is derived from lending. This activity is done by the loans and advance department.
5.19) About of LIC On behalf of the importer if the bank undertakes to make payment to the foreign bank is known as documentary credit or letter of credit. The letter of credit is issued against payment of amount by the importer or against satisfactory security.
5.19.1) Application for Opening LIC At first, an importer will request banker to open L/C along with the following documents: 2.
Indent
3.
Import
4.
Taxpayer
5. 6.
or
Proforma
Registration Identification
Insurance
cover A
note
with bank
Invoice
Certificate
(IRC)
Number
(TIN)
money
receipt account.
7.
Membership
of
chamber
of
commerce
L/C Application NCCBL provides a painted form for opening of L/C to the importer. The importer gives the following information is that form: • • •
Full
name
Date
&
The
mode
&
place of
address
of
expiry
transmission
of
of
importer.
of
document
the
credit.
(courier/mail/telex)
• Whether the confirmation of the credit is requested by the beneficiary or not. •
Whether
•
The
•
Brief
•
Availability
•
Within
•
the
partial
type
of
description of
she Sales
the
specific
is
loading of
credit
shipment
time
(loading
the
by sight duration
goods payment *the
terms
allowed on to
acceptance
document
(FOB/CIF/C
or
not.
boarding).
be
imported.
/deferred
should
be &
payment. presented. F).
•
Account
number.
•
L/C
amount.
•
Shipping
mark.
•
H.S.
code
number
of
the
goods
to
be
imported.
•
IRC
number.
•
LCA
number
•
Insurance
•
Country
The
above
information
cover
note.
of
is
given
along
with
origin. the
following
documents:
• Proforma Invoice, which gives description of the goods including quantity, Unit price. • •
Four The
insurance
set cover
note,
of issuing
IMP
company
&
the
insurance
form. number.
Importer’s Application for L/C Limit/Margin: To have an import L/C limit, an importer submits an application to NCCBL. In that application he/she gives full detail of the following: Full •
particulars
bank
Nature
accounts.
of
•
Required
amount
•
Payments
terms
business. of &
limit. condition
•
Goodstobe
imported
•
Offered
security
â&#x20AC;˘
Repayments
schedule
LC Margin: LC margin is the amount of down payment or deposit to open the LC. This is a sort of security for the LC purpose. Usually the margin varies from importer to importer. Generally a regular importer enjoys a lower margin facility from 10%-20% and for a new customer â&#x20AC;˘
of
the
Charges:
bank
the
Handling
margin
charge
Accepted
may
per
be
80%-100%.
document
Tk.1000
Commission:
Duration Commission 90 Days (Pt Quarter) 0.60% 120
Days
(2fld
Quarter)
0.90%
180
Days
(3Tc~
Quarter)
1.20%
Postage
charge-
Stamp
charge-Tk.
SWIFT
charge-Tk.3
Transmission
of
L/C:
i)
150
500 ways
of
per
transmission
of
L/C
document are
Through
ii) iii)
The
Tk.200
DHL
follows SWIFT
Through Through
as
Telex or
FEDEX
iv) Through Emergency Mail Service (EMS)
5.20)
Back
to
Back
or
Countervailing
Credit:
The beneficiary of a documentary credit may, for the purpose of fulfilling his obligation under the credit, open a counter credit in favour of another party to ship the goods of his purchaser (importer). This is known as Back to back credit and is issued conditional terms
except prices and invoices. The difference in the prices goes to the benefit of the original beneficiary.
5.21) SWIFT NCC Bank is a member of society for inters bank financial telecommunication. Worldwide. It ensures secure messaging having a global reach of 6495 Banks and Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average 4 million message daily and estimated average value of payment
messages is USD 2 trillion.
SWIFT is highly secured messaging network enables Banks to send and receive fund transfer, L/C related and other free format messages to and from any bank active in he network. Having SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C,
payment
Chapter- 7
and
other
messages.
MARKETING
STRATEGY
AND
MANAGEMENT OF A NEW PRODUCT
6.0 MARKETING STRATEGY
The bank has concentration for developing new products and services according to its customer demand. I have found some new product ideas from respondents. And from those I have tried to develop a marketing strategy for a product â&#x20AC;&#x153;Mobile Bankingâ&#x20AC;?, which is not so much familiar in our country. So if it is possible to lunch by NCC bank limited then they can take competitive advantages. First of all the market will be segmented according to demographic market segmentation. Because the consumer needs, wants, and usage rate often very closely with demographic variables. To select target market segment undifferentiated marketing strategy will be used. And it will be positioned by providing more consumer value than competitors at reasonable price.
6.1 MARKET ANALYSIS Bangladesh is amongst the poorest countries in the world, with 50% of people living in poverty and a gross national income (GNI) per capita of $470. Despite of the difficult business environment, the mobile communications sector is growing rapidly and is cited as the fastest growing industry in Bangladesh. The mobile communications sector began in Bangladesh with the licensing of a single company, Pacific Bangladesh Telecom Ltd (PTBL) in 1991. In 1996, three national GSM (Global System for mobile communication) licenses were granted and this opened upon the mobile communications sector to a wider subscriber base. Currently, six mobile network operators are currently licensed to operate in Bangladesh. Geographic coverage increased from 48% in December 2004 to over 85% in December 2007 including rural and Chittagong Hill Tract areas. In Bangladesh the numbers of GSM mobile subscribers 44.64 million at the end of January, 2009 while number was 36.42 million at the end of January 2008. So, mobile devices become prominent to every level of people of Bangladesh. And gradually people accept mobile not only their communication device but also an information transfer media which is highly necessary for their livelihood. The fall in prices of handsets, SIM and calling services, primarily due to reductions in handset import duties and the SIM activation tax alongside the impact of competition, has increased the affordability of mobile telephony and lead to the observed increase in penetration rates. Among different services of mobile phones short Messaging Service (SMS) has become the most popular and cheapest service. It permits us sending message of alphanumeric characters between mobile phones.
Considering these issues, SMS technique can be integrated in Bangladesh banking sector. It is the nature of human being to get services within short time. In our country, several private banks such as Dhaka Bank Ltd, Dutch –Bangla Bank Ltd, Eastern Bnak Ltd, Brac Bank Ltd and STB have introduced the facilities of online banking, phone banking and at last SMS banking with too limited services. But national banks such as Sonali Bank, Janata Bank, Agrani Banks and other specialized financial institutions like Krishi Bank do not provide such facilities. A huge amount of our country people are the clients of these banks. So there is a great opportunity for NCC bank to penetrate their market by offering m-banking facilities and increase revenue.
6.2 STRATEGIC INTENT Mobile Banking will fulfill four major objectives, which are closely related to each other.
i.
i.
Increasing Sales Volume
ii.
Increasing Revenue
iii.
Reducing Costs of Distribution
iv.
Increasing Customer Satisfaction
Increasing Sales Volume Mobile Banking can contribute to achieve this goal by following means: a) Anytime, anywhere access to banking services; b) Availability of push services to suggest transactions on an urgent basis, e.g. to sell certain stocks when a crisis erupts;
ii.
Increasing Revenue Mobile Banking can also serve as a source of revenue. Mobile services can be offered on a premium basis. The price, in this case, should be reasonable enough so that customers are willing to pay them but at the same time they should be – from a financial point of view – higher than the costs incurred by the bank. Additional revenues can be generated in two ways: a) Offering innovative, premium services to existing customers;
b) Attracting new customers by offering innovative services. Where by new customers contribute to revenue generation not only by utilizing mobile services but also by using other conventional distribution channels.
iii.
Reducing Costs of Distribution Due to increased competition a distribution channel must organize business processes efficiently so as to reduce distribution costs. Mobile Banking can contribute to achieve this goal by following means: a) The Bank doesn’t need to open more branches, because customers will get services through mobile. b) As against Internet Banking, Mobile Banking makes it possible to offer ubiquitous, semi personal consulting services in real time. c) Increasing Customer Satisfaction Mobile Banking may help increase the customer satisfaction by following means: Innovative “anywhere, anytime” services customized for individual preferences and current geographic location of the customer provide value-added to the customer; Customers don’t need to wait for services in a queue.
6.3 TARGET MARKET STRATEGY At first the market will be segmented according to demographic market segmentation. Because the target market of the product will be middle class & lower middle class people. Core target groups of Mobile Banking are often divided in three categories: i.
The Youngsters: The segment of 15-20 years old youth has acquired an important role in the growth of mobile telecommunications and related services. This group is willing to experiment with innovative products and services. The younger, often on the move, demand ubiquitous, anytime service. Though the younger as a group is hardly relevant for banks from a financial perspective, they represent the prospective clientele of working tomorrow and need to be cultivated in the middle to long-term marketing strategy of the banks.
ii.
The Young Adults: Also this segment is thought to be technology- and innovation friendly. Though this group too is financially not very strong, many members of this
group are known to be involved in stock market activities. Further, this group can be expected to enter in short to medium-run a professional carrier so that it needs to be cultivated in order to retain customers of this age-group even after they enter professional lives. iii.
The Business People: This group of customers, generally in the age-group of 26-50 years, is thought to be the most important one for Mobile Banking. Members of this group are generally well educated and economically well-off. They need to be professionally often on the move and carry mobile devices to ensure accessibility. For this reason they are ideal candidates to use services offered via mobile devices. From the banks’ perspective this group is particularly attractive on account of its relative economic prosperity and the need for financial services, e.g. home loans for young families. In order to fulfill the requirements of these customer groups banks tend to look at
Mobile Banking as a promising option. However, these services also have their own utility for the banks.
6.3.1 TARGET AREA At first Dhaka city will be main targeted area. (After that it will be extended in other cities, (Dhaka, Chittagong, Shylet, Rajshahi, Khulna, and Barisal).
6.4 POSITION IN MARKET Based on current market situation we can start competing from 8th position in the market basis on efficient service.
6.4.1 PROPOSED POSITION
Provide Fast and efficient service
Ensure security and more committed
HOW TO TAKE THIS CHALLENGE:
The bank had to take some strategies according to marketing mix strategies (7p) to achieve goal that are, Product policy, Pricing policy, Promotion policy, Distribution policy, Physical evidence, People and Process. Those are shown in below:
6.5 PRODUCT STRATEGY Now a day’s customers are really want much more than just products, like environment of bank and behavior of the bank officers. So the product has to be designed by considering these factors. The name of the product is “Mobile Banking”. “Mobile Banking refers to provision and availment of bank-related financial services with the help of mobile telecommunication devices. The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customized information.” Mobile Banking, as defined above, includes a wide range of services. These services may be categorized as following: a) Mobile Accounting
Mobile Accounting is sometimes characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices. Not all Mobile Accounting services are however necessarily transaction-based. A more precise definition of Mobile Accounting would therefore characterize it as “availment of account-specific banking services of non-informational nature”. Mobile Accounting services may be divided in two categories to differentiate between services that are essential to operate an account and services that are essential to administer an account. Services in Mobile Accounting Account Operation Money remittances & transfers Standing orders for bill payments Money transfer to sub-accounts Subscribing insurance policies
b) Mobile Brokerage
Account Administration Access administration Changing operative accounts Blocking lost cards Cheque book requests
Brokerage, in the context of banking- and financial services, refers to intermediary services related to the bourse, e.g. selling and purchasing of stocks. Mobile Brokerage can be thus defined as transaction based mobile financial services of non-informational nature that revolve around a securities account Mobile Brokerage divided in two categories to differentiate between services that are essential to operate a securities account and services that are essential to administer that account. Services in Mobile Brokerage Account Operation
Account Administration
Selling & purchasing financial
Access administration
instruments (e.g. securities)
Order book administration
c) Mobile Financial Information
Mobile Financial Information refers to non-transaction based banking- and financial services of informational nature. Mobile Financial Information services include subsets from both banking and financial services and are meant to provide the customer with anytime, anywhere access to information. The information may either concern the bank and securities accounts of the customer or it may be regarding market developments with relevance for that individual customer. The information may be customized on the basis of preferences given by the customer and sent with a frequency decided by him. The information should be provided, ideally, on both, pull and push basis. Information services are an integral part of Mobile Accounting and Mobile Brokerage but they may also be offered as a stand-alone, independent module, i.e. Mobile Financial Information can be offered without offering Mobile Accounting or Mobile Brokerage but vice versa is not feasible. Services in Mobile Financial Information Account Information Balance inquiries / Latest transactions Statement requests Threshold alerts Returned cheque / cheque status Credit card information Branches and ATM locations Helpline and emergency contact
Market Information Foreign exchange rates Market and bank-specific interest rates Commodity prices Stock market quotes and reports Product information & offers -
Information on the completion status
-
“Today’s customers want to organize banking transactions while on the move,
irrespective of opening hours”. Banks are responding to this development by introducing mobile services. For the first time NCC bank Ltd will offer SMS based Mobile banking and service in mobile financial information.
6.5.1 S TEPS OF MOBILE BANKING Mindful of their previous experience, many banks are cautious in their approach to this new generation of consumer banking products. There are many technological and behavioral obstacles to overcome—some analysts predict that it could take 10 years for mainstream adoption. But in order to participate in this market, banks need to get started now, or risk losing customers. Drawn from its collective experience in this space, there are five steps to mobile banking, as well as key underlying concepts for each stage. i.
Short- message service (SMS) banking
Typically, the first step banks take when creating a mobility service is to enable some form of SMS alerts. SMS is easy to use and deploy, and it’s available on virtually every handset. After registering a cell phone by sending a short code to the bank’s SMS address, consumers can use the system to get alerts—for example, if their balance falls below a certain level, or a check above a certain amount is processed. Some banks offer a two-way service, enabling consumers to make balance inquiries. But SMS does have limitations. Messages are limited to 160 characters in total length, and confidentiality can be a concern because all information is sent as clear text. ii.
Simple banking
Functionality beyond SMS can be enabled using a more robust application environment, which allows more complex activities, such as request transaction histories and transfer funds between different accounts at the bank. In general, there are two ways of doing this: •
Use the wireless application protocol (WAP): WAP is similar to HTML, and is designed for a mobile phone. Consumers use the browser in their phone to access a specialized Web site, entering and receiving any information while connected.
•
Use Java technology MIDlets, which are a simple application runtime technology that offers an enhanced user experience by taking advantage of the unique characteristics of a particular handset—for example, a large screen or more function keys.
iii.
Complex banking
With more robust security and transaction capabilities in place, the next step is the ability to pay one-time bills (positive payment). A customer is alerted that a one-time bill is due, payment is enabled, and the payment is confirmed. At this stage, other bank services and financial information, such as credit card management, foreign currency exchange rates, interest rates, can also be made available. iv.
Person-to-person payments
Transferring funds from one user to another via mobile phones is the next step. This is an appealing capability, because there is a large, existing market of people who are paying fees to make person-to-person payments (or remittances). The infrastructure requirements are much more demanding, as trust, security, and interoperability must reach from one cell phone across one or more bank systems, to another cell phone. This stage demands robust security, as it is very difficult to reverse a transaction in case of fraud. v.
Mobile commerce
The mobile banking end game is more than checking balances and paying bills. The goal for mobile banking initiatives is to replace credit and debit card products with cell phones—mobile commerce. Multiple credit cards, debit cards, and any other current form of transactions, along with membership cards, library cards, and loyalty cards can be conducted with a specially-enabled cell phone or PDA. Mobile commerce is expected to allow banks to generate greater electronic payment volume through the combination of electronic loyalty programs, mobile marketing, and contactless payments. Mechanisms to instill and maintain trust are needed at this stage. Consumers are understandably concerned about the safety of their bank accounts, and banks need to trust all partners, and protect data as it moves across the network to multiple partners and service providers. •
Bank and cell phone providers are in very early trial stages with near field communication (NFC) payment chips, similar to PayPass, embedded into cell phones. Customers can enable transactions at new POS terminals by placing the phone near the terminal.
Additional transaction approval can be authorized by entering a PIN on the handset. Pilot tests show that consumers enjoy a greater sense of security with this technology. •
Companies act as a “Trusted Service Manager” is working to provide a firewall between the multiple back-end entities, enabling banks, and carriers to control customer data.
INITIAL SERVICES WILL BE OFFERED BY NCCBL NCCBL will start there m-banking with SMS banking, which is the easiest and secure. There are several types of operations that can perform by SMS Banking. Some example of SMS format shown in below: SMS Account Details – SAD Message Format
Example
SAD <MIN> <Short Acc. No.>
SAD 6699 203.280.6996
SMS Account Balance - SAB Message Format
Example
SAB<MIN> < Short Acc. No.>
SAB 6699 203.280.6996
SMS Statement Request – SST Message Format
Example
SST <MIN> <Short Acc. No.> <Start Date> SST 6699 203.280.6996 2006-01-28 2006-02<End Date>
28
Note: Start Date and End Date are in YYYYMMDD format, i.e. 28th February, 2006 would be 20060228 SMS Cheque Book Request – SCB Message Format
Example
SCB <MIN> <Short Acc. No.>
SCB 6699 203.280.6996
SMS Stop Cheque Request – SSC Message Format
Example
SSC <MIN> <Short Acc. No.> <Start Chq. SSC 6699 203.280.6996 1727979 1727931 No.> <End Chq. No.>
Note: If only a single cheque is to stop, then you can skip the <End Chq. No.> portion SMS Cheque Status Inquiry – SCS Message Format
Example
SCS <MIN> <Short Acc. No.> <Chq. No.>
SCS 6699 203.280.6996 1727979
SMS Bill Pay – SPB Message Format
Example
SPB <MIN> <Short Acc. No.> <Payee ID> SPB 6699 203.280.6996 GP BIL 1200 <Payment Mode> <Bill Amt.> <Memo>
0171500646
Chapter- 8 Financial Policy
7.1) Trade Finance & Correspondent Bank
Successful companies today are fully aware that they need to be able to rely on the services of a bank that can handle international trade with a good hand. Ever since its conversion into a full-fledge bank in 1993, NCC Bank has been an accomplished Trade Finance´ bank. With a highly professional team experienced and competent professionals we are able to provide a wide range of services to companies engaged in international trade. NCCBL has also positioned itself as an established correspondent Bank. Through a worldwide network of 260 correspondent Banks, NCCBL is present in all key areas of the globe. Our ambit of correspondents includes top ranking international banks with a global reach.
7.2) Authorized capital The authorized Capital of the bank remained unchanged at TK. 5000 Million in the last four years (2006-2009)
7.2.1) Paid up capital The bank raised its paid up capital from Tk. 1757.62 million to Tk. 2284.90 million during the year, through issuance of 47% bonus share.
7.2.1) Reserve Fund The reserve fund increased toTk. 3749.64 million in 2009 from Tk. 2863.62 million in 2008 registering a growth of 30.94%.
7.3) Capital Market Operation The Bank continued to par ticipateint he day to day transactions of Dhaka Stock Exchange as a memionber of DSE and expect to earn substantial income through capital market operation in future. The Bank has already established a separate Brokerage House with a view to
facilitating the investors to operate the cap it al market in a hassle free atmosphere. The Bank al so bought membership of Chittagong stock exchange.
7.3.1) Operation result The operational Profit of the bank during 2009 was Tk. 3137.70 million as against Tk. 2363.49 million in 2008 recording an appreciable growth of 32.75 percent which was possible due to prudent lending and efficient management of funds. The net profit thus stood at Tk. 1719.50 million.
7.3.2) Network of branches The bank has planned to expand its business network to reach large section of the potential Clients living in remote areas. The Total number f branches were 74th as on22th November, 2010.
7.4) Trade & commerce This broad category encompasses large business houses dealing with imported consumer items, medium and small import business houses trading in similar item and finally, shop keepers, distributors, whole sellers, retailers and small manufacturers scattered across the country. While allowing facilities under the segment of trade & commerce, bank shall ensure that mere increase in the volume of business portfolio and relevant income generated from it is not the prime consideration as it involves payment in costly foreign exchange in case of foreign trade. Therefore, trading in non-essential items shall be discouraged for the greater interest of the country.
7.5) The domain of industry financing of NCC Bank Ltd The domain of industry financing of NCC Bank Ltd. basically comprises of:Capital financing in the form of term loan Working capital financing; & Financing of small cottage industries.
Financing for establishment of new industries or reinvestment to existing industries is a specialized function of the bank. NCCBL policy would be a selective approach to term loan financing to small scale industries and export oriented or import substitute industries which enjoy high degree of national economic priority. In case of financing in this sector bank would prefer syndication with other banks to keep a balanced portfolio. The core of NCCBL lending activities shall be the working capital financing to large and medium scale industries as well as small scale industries. Track record of operational performance of the industries, credit worthiness of the entrepreneur, and reasonable security coverage shall form the basis of lending policies. Working capital financing to newly set up industries will also be considered on careful examination of validity, cash flow prospects, and entrepreneurial competence.
7.6) Lease financing NCC Bank Ltd. to keep its contribution to the growth of national GDP, accelerate the total economic development by infusing the fund in productive sector in more efficient and effective way, diversity its portfolio and satisfy the customers need would go for leases finance for: I.
Setting up of small and cottage industries/projects.
II.
Financing of existing projects.
III.
Transports (both road & marine).
7.7) Consumer financing In order to help the fixed income group in fulfilling their demand to upgrade the standard of living NCCBL has launched some consumer credit scheme such as: I.
Personal Loan Scheme
II.
Festival Personal Loan Scheme
III.
Education Loan Scheme
IV.
Household appliance
V.
Furniture & fixture
VI.
Air conditioner
VII.
Fax machine & cellular phone
VIII.
Motor cycle/car
IX.
Other equipments
7.8) Small & medium enterprises financing According to ACSPD circular no.8 dated 26/05/08 of Bangladesh Bank Small &Medium Enterprise are defined taking into account that the basic criteria for both type of business concern will not be public limited company. A large section of our business community consists of small and medium business owners who are conducting there business with own resources without availing much support from financial institutions. Banks major concentration shall be under this sector under the following categories: I.
Small Business Loan
II.
Festival Small Business Loan
III.
Earnest Money Financing Scheme
IV.
Financing of Service Concern
V.
Financing of Trading Concern
VI.
Financing of Manufacturing Concern
7.9) Financial Performance of NCC Bank Earning Year
2010 2009 2008 2007 2006
per share 75.26 50.20 50.09 39.88
Net Asset Value Per Share
Net Profit After Tax (mn)
Price % % Earning Dividend Dividend Yield Ratio
26.400 230.73 218.83 177.64
1719.50 882.28 677.17 479.22
15.26 9.47 8.81 7.25
47 30 30 10.0012.5 3.46
2005 2004 2003 2002 2001 2000
36.11 46.92 79.12 44.47 48.34 34.30
168.77 202.30 155.39 170.48 122.61 122.63
352.08 285.16 79.12 213.68 232.28 96.94
6.45 6.67 14.40 4.27 4.23 6.36
1010 30 10.0010 15 18.0012 10.0010
4.30 4.85 8.81 11.45
7.10) SWOT Analysis for the Branch SWOT analysis was done to identify the factors affecting profitability of our branch business. Strength. I.
Congenial working environment of the branch.
II.
Quality manpower who wants to serve customer well.
III.
Branch situated in a prime location of the city.
IV.
Online facility
Weakness I.
Imbalanced rank and profile of staffs in the branch; Manager is a Sr.Vice President and Deputy Manager is only Senior Officer.
II.
In adequate training facility to improve managerial skills
III.
No any branch clearing facility
IV.
Inadequate manpower in cash, general banking, and advancesdepartment.
V.
At least an ATM booth is required adjacent to branch.
Opportunity II.
Trade finance business.
III.
Increase small savings
IV.
Lease finance to professionals-doctor, finance to small and cottage industry.
Threat I.
Latest technology adoption- ATM, Alert Banking, Phone Banking- by competitors.
II.
Small segment of large-scale business concern in the city.
III.
Risky SME financing due to borrowers easy access to NGO loan, whichmay lead to over finance and reduce borrowersâ&#x20AC;&#x2122; credit worthiness.
IV.
CIB report is not available to trace out NGO loan made to borrower.
V.
Customer preference to deposit to FDR which increase cost of fund.
VI.
Intense competition among competing banks to grab business, which maylead to unsecured financing.
7.11) Share of NCC Bank November 15, 2010 NCCBANK Following the change of the denomination of shares and market lot with effect from 15.11.10 (record date), the new face value of the shares of the Bank will be Tk. 10.00 instead of Tk. 100.00 per share, market lot will be 250 shares instead of 50 shares and the new adjusted open price of shares will be Tk. 70.80 per share. a. Share Percentage of NCC Bank
Share Percentage Electronic Listing Directorr Share? Year /Sponsor Govt. Institute Foreign Public Yes 2000 46.39 0 21.22 0.3 32.09
7.12) Profit and Loss Account of NCCBL in 2010
7.13) Statement of change in Equity of NCCBL in 2010
7.16) Financial Ratio Analysis of the NCC Bank Ltd.
Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a bank's financial statements. The level and historical trends of these ratios can be used to make inferences about a bank's financial condition, its operations and attractiveness as an investment. For this assignment I select NCC Bank to calculate and compare between 2008 and 2009
7.17)
Conclusion
Modem Commercial Banking is exacting business. The reward are modest, the penalties for bad looking are enormous. And Commercial banks are great monetary institutions, important to the general welfare of the economy more than any other financial institution. It has a vastly sobering
and
exacting
responsibility.
National Credit and Commerce Bank Limited (NCCBL) playing a vital role in financing import and exports of the country. Without Bankâ&#x20AC;&#x2122;s co-operation, it is not possible to run any business or production activity in this age. Exports and import need finance in various stages of their activities. Export and import financing are letter of credit (L/C), payment against documents (PAD), loan against imported merchandise (LIM) etc. All these facilities are provided by NCCBL. For this purpose Bankâ&#x20AC;&#x2122;s consider the borrowerâ&#x20AC;&#x2122;s business standing, integrity, liability with the bank term and conditions of the L/C. There is lot of risks involved in foreign business. So, the National Credit ant commerce Bank Limited (NCCBL) has to clearly justify the customers from a neutral point and gather the current information about the market. I have worked only in the Elephant Road branch. So I am not able to know about head office activities regarding credit and others. Branch officers have to work within limited boundaries and time to time they have to take permission from the head office. Taking permission from the
head
office
is
time
consuming.
From my observation I have found that peoples are interested about that job which gives them more salary and other facilities. NCC bank should give its employees more salaries, job
security and others facilities to hold its existing expert and trained officers.
7.18)
Recommendation
As the study was done in the specific area, so recommendations have been covered in respect of those areas. NCC Bank authority among which most of them has been mentioned as suggestion to improve service quality. For the improvement of the service the following measures
should
be
taken:
Customerâ&#x20AC;&#x2122;s Convenience: For customerâ&#x20AC;&#x2122;s convenience, NCC Bank should provide more personnel
to
deliver
faster
services
to
their
honorable
customer.
Human Development: Development of human resources should be ensured to increase efficiency
in
work.
Communication System: Ensure proper communication system and maintenance of file & machineries
like
phone,
computer,
fax,
and
photocopier.
Interest: More interest should be paid on deposit account so that customers are convinced to deposit
their
money
in
bank.
Margin Rate: To decrease margin rate for all clients. This is very risk for the Bank but if the Bank
wants
to
target
many
clients,
this
is
very
important
Computerization: To ensure error free fast task bank should be fully computerized. R & D: Research & Development wing must be more extensive & rich. Strategy:
Effective
strategies
must
be
undertaken
against
defaulter.
Project Management: Project Management must be practiced in case of investing in the project. Feasibility of the project, project planning ,monitoring & evaluation should be
undertaken. Managerial Function: NCC Bank must have to follow the management functions (from planning
&
controlling)
strictly
in
all
of
their
business
activities.
Financial Policy: Branch should have a separate section to analyze the financial statement for
fining
its
profitability
&
ownership
GLOSSARY NCCBL
(National Credit & Commerce Bank Limited)
A/C
(Account)
BOE
(Bill of Exchange)
SB
(Savings Account)
CD
(Current Account)
DD
(Demand Draft)
DP Note
(Demand Processing Note)
FC
(Foreign Currency)
FDD
(Foreign Demand Draft)
IBC
(Inward Bills for Collection)
IBCA
(Inter Branch Credit Advice)
ratios.
IBDA
(Inter Branch Debit Advice)
L/C
(Letter of Credit)
OBC
(Outward Bills for Collection)
PO
(Payment Order)
TC
(Travelers Cheaqe)
TIN
(Tax Identification Number)
TT
(Telegraphic Transfer)
STD
(Short Term Deposit)
FDR
(Fixed Deposit Receipt)
CC
(Cash Credit)
C&F
(Clearing & Forwarding)
IBCT
(Inter Branch Credit Transfer)
SOD
(Secured Overdraft)
SSS
(Special Saving Scheme)
SSD
(Staff Saving Deposit)
OBT
(Online Balance Transfer)
M-Banking
(Mobile Banking)
GSM
(Global System for Mobile Communication)
GPRS
(General Packet Radio Service)
PDU
(Protocol Data Unit)
SMSC
(Short Message Service Center)
XML
(Extensible Markup Language)
AT
(Attention Commands)
GSM
(Global System for Mobile Communication)
GPRS
(General Packet Radio Service
ASCII
(American Standard Code for Information Interchange)
DPS
(Deposit Protection Service)
GNI
(Gross National Income)
PTBL
(Pacific Bangladesh Telecom Ltd)
WAP
(Wireless Application Protocol)
MIN
(Mobile Identification Number)
PIN
(Personal Identification Number)
BIBLIOGRAPHY
o www.nccbank-bd.com o www.bangladeshbank.org o http://www.iajet.org/webfile/current_1.3_2010/Push%20Pull%20Services %20Offering%20SMS%20Based.pdf o
http://www.mblbd.com/html/sms.php