Theoretical Analysis on HRM of Investment Corporation of Bangladesh in comparison to the HRM of other Financial Institutions 2.1: Introduction: With the increase in the size and complexity of business organizations, man has become the most important factor in business. Business needs people as owners, employees, and consumers. Organizations need people to make them operate. Business may be operated differently and the objectives of business may differ, but the universal element in all business activities is people. An organization is nothing without human resources. Any human organization- a factory, a hospital, or an association- consists of people working together. According to economists, the factors of production are land, labor, capital and entrepreneurship. Of all the resources, the most important one is human resource, because human begins play a dual role- as resource, as well as a motive force for all other resources by manipulating them, by way of developing, utilizing, commanding and controlling.
2.2: Definition of HRM: The purpose of HRM is to improve the product line contribution of people to the organization in ways that are strategically, ethically & socially responsible. Human resources determine every organizations success. There are many definitions about human resources management (HRM). One of the well known definitions is offered by Micheal Jucious (1984). He defined human resources management or personnel management “as the field of procuring, developing, maintaining and motivating a labor force�. Human resources management concerns the personnel policies & management practices & system that influence the work force regardless of the size or existence of a formal HRM or personnel department - H.John Bernardin.
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2.3: The Objective of Human Resource Management: Managers and HR departments achieve their purpose by meeting objectives. Objectives are benchmarks against which actions are evaluated. Four HR objectives are given below: 2.3. A: Organizational objective: To recognize that HR management exists to contribute to organizational effectiveness. Even when a formal HR department is created to help managers, the managers remain responsible for employee performance. The HR department exists to help managers achieve the objectives of the organization. HR management is not an end in itself, it is only a means of assisting managers with their human resource issues. 2.3. B: Fictional objective: Maintain the department’s contribution at a level appropriate to the organizations needs. Resources are wasted when HR management is more or less sophisticated than the organization demands. 2.3. C: Societal objective: Ethically and socially responsive needs and challenges of society while minimizing the negative impact of such demands on the organization. The failure of organizations to use their resources for society’s benefits in ethical ways may result in restrictions. 2.3. D: Personal objective: Assist employees in achieving their personal goals, at least insofar as those goals enhance the individual’s contribution to the organization. The personal objectives of employees must be met if workers are to be maintained, retained, and motivated.
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2.3: The Human Resource Management Model and Subsystem
1. Frameworks and challenges
2.
5. Employee &Assessment
Preparation & Selection
Objectives Societal Organizational Functional Personal
4. Compensation &Protection
2.4: Importance of HRM:
3. Development & Evaluation
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HRM involves all management decisions and practices that directly influence the people and human resources, who work for the organization. Obviously HRM is concern with the people’s dimension in organization. The core points are: 1. Hire the right person for the jobs:
Human resources management hires the right person for the specific job. Specialized people can done their specific work very properly then any other unspecialized people. 2. Lower turnover:
It reduces turnover, HRM look after the benefits, incentives, compensation, which results reduce the turnover. 3. Make the people of the organization do their best:
When an employee is more skilled & knowledgeable his devotion will be higher & his performance can give the benefits to the organization much effectively. 4. Save time:
If wrong people are selected for organization than organization have to higher new one that is more time wasted process. But HRM practice can save this time by hiring the right person for the right job. 5. Avoid discriminatory actions:
HRM obey the discriminatory rule regarding on the employee rights. 6. Fair remuneration/ Compensation:
HRM determine the salary, wages & compensation fairly according on the basis of position, nature of the duty, responsibility, work time etc. 7. Identify training needs: HRM decide the appropriate training for employee that is
done by on the orientation or other ways can be on the job training & of the job training. 8. Lower unfair labor:
HRM fairly design compensation, so the person who is competent & who has requirement get the proper compensation.
2.5: HRM activities: 4
Simply put, HRM is a management function that helps managers’ recruit, select, train and develops members for an organization obviously. HRM is concerned with people’s dimension in organization. 1. Human resources planning:
HRP systematically forecasts an organization future demand for & supply of employee. HR planning is also called to develop staffing plans that support the organizations strategy by allowing it to fill job openings proactively. 2. Recruitment & selection:
Recruitment is the process of finding & attracting capable applicants for employment. The process begins when new recruits are sought & ends when their applications are submitted. The result is a pool of applicants from which new employees are selected. 3. Placement:
Placement decision is taken offer the selection process. This is the process of put the right person for the right place according to their skills & qualification. 4. Orientation & training:
Employee should be oriented about the organization. How the work is performed that process is called training. It’s the teaching about gaining the practical knowledge. 5. Performance evaluation:
Performance evaluation is a way to measure how well employees perform his work. That is important for increase the effectiveness of the employee’s performance. 6. Compensation & protection:
Employee should be compensated by the wages, salary & fairly. If the compensation is too low then employee face dissatisfaction & if the compensation is too high than it could be against of company low. Deciding appropriate compensation can motivate the employee’s performance. 7. Employee relation & assessment:
It maintains the relationship between whole unions of organization & assesses the work activities.
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2.6: Personnel management VS Human resources management: Although on some key issues- a natural concern for people, and their need, together with finding efficient means to select, train, appraise, develop and reward them, there are some point of dissimilarities between personnel management (PM) and human resource management (HRM). Traditional personnel management tends to be parochial, striving to attend line managers, with a strong proactive stance and a bias towards business. PM has a history of placing emphasis on bureaucratic control often in a reactive sense, i.e., control of manpower and personnel systems. Some would argue that PM represented a highly compartmentalized system. By contrast, HRM makes a determined effort to be a more integrative mechanism in bringing people issue into line with business issues, with a pronounced problem – seeking and problem solving orientation, and a determination to build collaborative organizational systems. The role of top management in setting the agenda for change and development is very much in evidence in HRM. Some personnel managers will no doubt see the growing influence of HR managers as a threat fearing that they may just become custodians of personnel systems. Beer (1997) identified major obstacles in transforming the traditional administrative personnel function and moving to a fully fledged HRM system. He function is that most HR professionals do not possess the requisite analytical and interpersonal skills. In HRM there is a greater emphasis on strategic issues and on the way which the human resource contributes to the achievement of corporate objectives. HRM underlines the importance of flexibility and the ability to react and adapt quickly to changes in the organizational environment. PM can be described as a series of activities related to various aspects of an employee’s relationship with the organization. HRM is also concerned with these issues, but in addition stresses the primacy of business needs. Other points of departure are that HRM embraces
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individual flexibility and congruency between individual and organizational goals, whereas PM is concerned with systems applied to individuals and collectivism.
2.7: Meaning and recruitment: Recruitment is the process of finding and attracting qualified or suitable applications to fill vacancies. This is the process of locating potential candidate for selection. It is the discovering of potential candidate for selection. It is the discovering of potential candidates for actual or actual or anticipated organizational vacancies. During this process, efforts are made to inform the applicants fully about the selection criteria, i.e. the required competences, which will lead to effective performance and the career opportunities the organization can provide for them. Dale Yoder (1986) defines recruitment as a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organization. The process begins when new recruits are sought and ends when their applications are submitted. The result is pool of qualified applicants from which new employees are selected. Recruiting is important because the best- qualified applicants must be found to fill vacancies.
2.8: Objectives of recruitment policy: Objectives are targets and goals. According to Yoder, following are the main objectives of recruitment policy: - To find and employee the best qualified person for each job. -To retain the best and most promising ones. -To offer promising careers and security -To provide facilities for growth and development -To minimize the cost of recruitment -To reduce scope of favoritism and malpractice.
2.10: Factors Affecting Recruitment:
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There are many factors affecting recruitment. These factors may be considered in to two broad groups: Internal factors: These are the factors within organization. These factors are listed down here: - Image of the organization. An origination with poor image cannot attract a large number of applicants. For example, among most university graduates Dhaka University has a positive image. - Image of job or attractiveness of the job. If the job to be filled is unattractive, recruiting a large and qualified pool of applicants will be difficult. -Internal policies. Internal organizational policies such as promote from within will give priority to individuals inside the organization. Such a policy will usually ensure that all positions will be filled form within the ranges. -Trade union requirements. -Recruiting budgets External factors: these are the factors over which organization has little or no control. Some of these are given below: -Demographic factors: gender ratio, age group, and educational level. -Government requirements. -Industrialization: industrialization within the geographical area and geographical concentration will have influence on employment market in recruitment. -labor market: supply of labor may be plenty or shortage. In Bangladesh, supply of labor of unskilled labor is abundant but there is shortage of skilled labor. The right type is difficult to find.
2.11: Sources of Recruitment: There are basically two sources of supply from where potential employees can be drawn. These are internal sources and external sources. 2.11. A: Internal sources: internal source indicate recruiting qualified people from within the organization itself (from the present working force). When reference is made to the number of employees already employed by the organization we speak of the internal
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supply. Whenever any vacancy occurs, someone form within the organization is upgraded, prompted or transferred to another department. 2.11. B: External sources: recruitment form outside the organization is known as external source. All firms more or less rely on external sources.
2.12: Meaning of Selection: Once a pool of suitable applicants is created through recruiting, the process of selecting applicants begins. Selecting means choosing form those applicants who are most likely to succeed in the new job. It is the technique of choosing a new member of the organization from the available candidates. The selection process is a series of steps used to decide which recruits should be hired. Dale Yoder (1972) defines selection as a process by which candidates are divided into class-those who will be offered employment and those who will not. The process begins when recruits apply for employment and ends with the hiring decision.
2.13: Training and Development: Training is continues process of helping employees to perform at a high level. It is a process of acquiring new skills to do job properly. Training changes and modifies employee’s attitude and behaviors that will improve his ability to perform on the job activity. The main purpose of training is given below: •
Training mainly focus on current job
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Its short term and long term oriented.
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Training is given at the beginning of job.
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The reason of training is employee development.
2.13.1: Importance of Training: •
Economy in operation
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Minimization of supervision
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Better performance of employees
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Increase morality
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Uniformity in performance
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Effective control
2.13.2: Training technique: There are two type of training basically given on organization. They are: a) on the job training: b) off the job training
2.14: Compensation and other benefits: Compensation and salary is an amount of money which is given by organization to their employees for performing the recent job. Well compensation structure is help to increase employee’s motivation, and attention to give better performance to their organization. Every organization should select the proper compensation structure for their employees. Compensation or salary amount is depending on the employees post, work activity, work place e.tc. Benefit is indirect financial payment given to the employees for their employment in their organization. Example: health and life insurance, vacation, pension, education plans and discounts on company products etc.
3.1 Historical Background of ICB: Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment bank. As an investment bank is a financial institution, which mobilized fund from the surplus economic units by savings securities and developed funds to the deficit economic unit also by buying or underwriting securities After liberation in view of social economic changes, the scope for private sector investment in the economy was kept limited by allowing investment in projects up to Tk. 25 laces. The new investment policy, which was announced in July, 1972 provides for an expanded role of private sector by allowing investment in a project up to Tk. 3 cores. The ceiling has further being raised to Tk. 10 cores in spite of the adequate facilities and incentives provided to the private sectors encouraging response was not for the coming. One of the reasons among other was the lack of institutional facilities, which provides underwriting support (Like former ICB) to industrial enterprise that was required to raise much need equity fund. Thus, the need for reactivation for capital market, stock market was keenly feel. 10
The Investment Corporation of Bangladesh (ICB) was established on 1 st October 1976, under “The Investment Corporation of Bangladesh Ordinance, 1976” (No. XL of 1976). The establishment of ICB was a major step in a series of measures undertaken by the Government to accelerate the pace of industrialization and to develop a well-organized and vibrant Capital Market particularly securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity gap of the industrial enterprises. In view of the national policy of accelerating the rate of savings and investment to foster self-reliant economy, ICB assumes an indispensable and pivotal role. Though the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (No. of XXIV of 2000), reforms in operational strategies and business polices have taken place by establishing and operating subsidiary companies under ICB.
3.2 Institutional Framework of ICB: Investment Corporation of Bangladesh is a Corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
3.3 Objectives of ICB: The objectives of the corporation are•
To encourage and broaden the base of investments.
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To develop the capital market.
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To mobilize savings.
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To promote and establish subsidiaries for business development.
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To provide for matters ancillary thereto.
3.4 Business Policies of ICB: The business policies of ICB in the following•
To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general.
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To provide financial assistance to projects subject to their economic and commercial viability.
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To arrange consortium of financial institutions including Merchant banks to provide equity support to projects.
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To develop and encourage entrepreneurs.
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To diversify investments.
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To induce small and medium savers for investment in securities.
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To create employment opportunities.
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To encourage investment in Agro-based and ICT sectors.
3.5 Functions of ICB: In order to achieve the previously mentioned objectives, the corporation may carryout the following functions•
Direct purchase of shares and debentures including placement and equity participation.
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Participating in and financing of joint-ventures companies.
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Providing lease finance singly and through syndication.
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Managing existing Investor’s Accounts.
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Managing existing Mutual Funds and Unit Funds.
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Managing Portfolios.
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Conducting computer training program.
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Providing advance against ICB Unit and Mutual Fund certificates.
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To act as Trustee and Custodian.
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Providing Bank Guarantee.
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Providing investment counseling to investors.
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Participating in Government divestment program.
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Introducing new business products suiting market demand.
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Dealing in other matters related to Capital Market.
3.6 Businesses of ICB: 12
3.6. A. Private Placement: ICB is authorized to act as an agent of issuers and investors for private placement of securities. Under this arrangement, ICB places securities to individuals or institutions on behalf of the issuer for which it charges fees. ICB also acquires shares or securities for its own portfolios. 3.6. B. Underwriting: In order to raise long term debt equity from the primary market, the Government bodies, enterprises, corporation or companies may seek intermediary assistance from ICB in the form of underwriting. Because of its long and proven experience, reputation, asset back up and established network of regional offices, ICB is in an excellent position to attract the potential investors to the proposed issue of shares, debenture and other securities for successful floatation of IPO & placement. 3.6. C. Custodian and Bank to the Issues: To act as the custodian to the public issue of open-end & mutual Funds, ICB provides professional services. It also acts as the Banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable. 3.6. D. Merger and Acquisitions: Companies willing to expand their business through mergers or acquisitions or to divest projects that no longer fit into present scale of operation contact the corporation. ICB provides professional services & advice in respect of shaping up the cost and financial structures to ensure best possible operation results. 3.6. E. Corporate Financial Advice: Companies and Government enterprises intending to go public often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provide such services.
3.6. F. Lease Financing:
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ICB provides lease finance mainly for machinery, equipment and transport. ICB is in a position to provide professional advice and financial to the intending clients. The period of lease, rental, and changes and other terms and conditions are determined on the basis of assets and the extent of assistance required by the applicants. 3.6. G. Advanced against ICB Mutual fund Certificates Scheme: Advanced against ICB Mutual Fund Certificates Scheme was introduced in 2003, designed for the ICB Mutual Fund certificate holder to meet their emergency fund requirement. One can borrow maximum of 50% value of last one year’s weighted average market price of certificates at the time of borrowing by deposing his or her certificates under lien arrangement from any of the ICB’s offices. The rate of interest on the loan is reasonable and also competitive. 3.6. H. Bank Guarantee Scheme: As part of ICB’s business diversification Program, the corporation introduced bank guarantee scheme during the year 2002-2003 ICB provides (i) bid bond for enabling the business people to participate in any tender or bidding, (ii) performance bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients, (iii) customs guarantee to solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is tk.2.00 Corer and would be issued against at least 20% cash and 820% easily excusable securities or against 100% cash margin. Re-guarantee from other financial institutional is required for guarantee against the amount exceeding Tk. 2.00 Corer. 3.6. I. ICB Mutual Fund: ICB has so far floated eight close-ended Mutual Funds. The first ICB Mutual Funds was floated on 25 April 1980, while the Eight ICB Mutual Fund was floated on 23 July 1996. The aggregate size of these funds is Tk. 17.5 Corer. As on 30 June 2004, 33646 certificate holders own these funds. Dividends declared on the funds were very attractive ranging from 14.0 to 200.0 per certificate for 2003-2004. Investors show overwhelming interest in all the ICB mutual funds. One can invest in such funds through the stock exchanges with which these
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funds are listed. Through corporate restructuring, new mutual funds are being floated through “ICB Asset Management Company Ltd.” –a subsidiary of ICB. 3.6. J. ICB Unit Fund: It is on open-end mutual fund scheme launched in April 1981, through which the small and medium savers get opportunities to invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared attractive dividends on units every year ranging from Tk. 11.5 to Tk. 25.0 per unit. Investment in units enjoys tax benefits, amount being applicable as per law. However, under the ICB’s restructuring programmed new unit certificates are being sold by ICB’s subsidiary company, the ICB Asset Management Company Ltd.
3.6. K. Investors’ Scheme: The Investors’ Scheme was introduced in June 1977. Over the years, this scheme has grown tremendously. ICB, at its discretion, may grant up to two times loan against the assets of an account subject to a maximum limit of Tk. 3.0lacs. An accountholder may use the combined balance of his or her equities and loan to buy shares or securities. To help the investors to develop diversified and balanced portfolio to minimize risk and earn a reasonable return, ICB provides professional advice and other support services. Under the restructuring Programmed, ICB operates and manages only the old accounts and new accounts are being opened and managed by the ICB Capital Management Ltd.-a subsidiary of ICB.
3.7. Milestones of ICB: Particulars ICB Investors’ Scheme First ICB Mutual Fund ICB Unit Fund Second ICB Mutual Fund Third ICB Mutual Fund Fourth ICB Mutual Fund
Date of Establishment/Commencement 1st October 1976 13th June 1977 25th April 1980 10th April 1981 17th April 1984 19th May 1985 6th June 1986
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Fifth ICB Mutual Fund 8th June 1987 Sixth ICB Mutual Fund 16th May 1988 Nomination as country’s nodal DFI in SADF 7th May 1992 Seventh ICB Mutual Fund 30th June 1995 Decision for 100% Automation 14th July 1996 Eighth ICB Mutual Fund 23rd July 1996 Purchase of own Land & Building 11th December 1997 Participation in equity of SARF 16th January 1998 Advance Against Unit Certificates Scheme 12th October 1998 Term Deposit 13th January 1999 Lease Financing 22nd April 1999 “ The Investment corporation of Bangladesh 5th and 6th July 2000 (Amendment) Act 2000” Passed in the Jatiya Sangsad (Parliament) and honorable President’s assent there of Formation & Registration of 3 Subsidiary 5th December 2000 Companies Computer Training Program 25th March 2001 Commencement of operations by subsidiary Companies: ICB Capital Management Ltd. 1st July 2002 ICB Asset Management Company Ltd. 1st July 2002 ICB Securities Trading Company Ltd. 13th August 2002 Registration as trustee with SEC 20th August 2002 Registration as a Custodian with SEC 20th August 2002 Bank Guarantee Scheme 21st June 2003 Advance Against Mutual Fund Scheme 21st June 2003 Consumer Credit Scheme 15th February 2004 ICB’s Organizational Structure and Management
3.8. Institutional Framework of ICB:
Investment Corporation of Bangladesh is a corporate body as per section 3 of
Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
3.9. Regulatory Framework of ICB: As the mentioned earlier the regulatory framework of ICB is the, Investment Corporation Bangladesh Ordinance, 1976. This ordinance and regulations laid under the authority of the ordinance is the source of all power and authority of ICB. Through the recent enactment of 16
“The Investment corporation of Bangladesh (Amendment) Act, 200” (XXIV) of 2000, scope of ICB’s activities through the formation of subsidiaries have been expanded. In addition to these, to resume its duties and functions, it has to compel by Companies Act 1994, Trust Act 1882, Insurance Act 1983, Security and exchange commission Act 1993, banking companies Act 1993, Foreign exchange regulation 1974, Income Tax act etc. It is to note that no provision of law relating to the winding up of companies or bank shall apply to the corporation and the corporation shall not be wound up save by order of the government and in such manner as it may direct.
3.10. Management of ICB: The head office of the corporation as per the requirement of the ordinance of ICB is located at Dhaka. The general direction and superintendence of the corporation is created in a board of directors, which consist of 11 persons including the chairman and managing director of ICB. The board of directors consists of the following directors: •
The chairman to be appointed by the government.
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The directors to be appointed by the government from among persons serving under the government.
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One director to be nominated by the Bangladesh Bank.
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The managing directors, Bangladesh Shilpa Bank, Ex-Office.
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The managing directors, Bangladesh Shilpa Rin Sangstha, Ex-office.
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Four other directors to be elected by the share holders other than the government, BB, BSB, & BSRS.
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The managing directors of ICB to be appointed by the government. The board in discharging its functions acts on commercial consider rations with due regard to the interests of industry and commerce, investment climate, capital market, depositors, investors and to the public interest generally and is guided in question policy by the institutions, if any, given to by government which shall be sole judged as to whether a question is a questio9n of policy or not.
The managing director is the chief executive of the corporation. The corporation has an executive comprised of 5 people including managing director.
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3.11. Board of Directors of ICB: The board is comprised of 11 directors. Exchange managing director, all directors are non-executive and independent and represent government, bank, Insurance Corporation, financial institutions and general public. The board of directors of ICB as on 30 th June 2005 is as follows:
3.12 Administration, Human Resource: Investment Corporation of Bangladesh (ICB) is providing different category of financial and banking services. Nature of the different division departments vary, such that Economic and Business Research (EBR) department requires teamwork, Lone Appraisal division requires professional work. Funds divisions need chain work. Managing director is entrusted with authority to transact the regular business of the organization; he may delegate some authority to officials of the Corporations. However, most of the policy decisions are taken by the different committee with the approval of managing director and where required of the board. It is the discretionary authority of the board to constitute the execute committee and to maintain its Chairman to assist the board in the discharging of the function stated under the ordinance. The board may appoint such other committee (s) as it thinks fit to assist it in the efficient discharge of its function. So far, board has appointed two such committees. Economic and Business Research (EBR) committee and Loan Appraisal committee is headed by General Manager.
3.13. Organization Manpower: The general direction and superintendence of corporation is created in a board of directors, which consists of clever (11) persons including the chairman and managing director of ICB. This is the most powerful board compare to other govt. financial institutions in terms of their experience and knowledge. The managing director is the chief executive of the organization. Two general managers assist him, viz. G.M. (Operation) and G.M. (Admin). Total manpower of ICB at present is 372, of which 241 were officers & 131 subordinate staff. As on 30 June 2005, the total numbers of female e4mployees were 54, including 43 officers, representing 14.52% of the total manpower.
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3.14. Organoam of ICB:
3.15: Functions of various departments 3.15.1: personnel department This department deals with the human resources of the organizational makes the rules and regulation of the right person to the right place. The process may be held two ways: Direct recruitment Promotion This department takes disciplinary action gradually to that employee who volutes the rules and regulation of the organization. This action is two types: Light punishment Heavy punishment the other functions of this department are as follows: -To make necessary rules, regulations, policies for efficient administration of the corporation. -To handle all personnel matters including confirmation, posting, transfer, fixation, leaves -To process all promotion, time scale encashment -To process registration, retirement cases, to deal with retirement benefits including gratuity, pension, provident funds e.t.c - To handle national pay scale, fixation, increment e.t.c - To explore more sources of financing of foreign training, to arrange seminar/symposia/ work shop where experts in the line may be invited to deliver lectures - To procure training equipments and facilities for training manpower - To deal with all matters relating to ICB employees Union and ICB officers Association. 3.15.2: Establishment Department This department deals with purchase and sales of office supplies, office equipment e.t.c. they also maintain the utility service like telephone bill, electricity bill e.t.c. this department dividends cost into two categories. These are: •
Revenue cost
•
Fixed cost
For cost, depreciation is charged at a straight- line basis. There are two purchase commodities the purchase. There remains a quality control committee to examine the quality of the product purchased. For the purchase of products, this department gives tender offer to the listed suppliers. In case selling of scraps and wastage, the tender offer is also followed. 3.15.3 Merchandising department Department under merchandising division are showing in the following figure: Investor department Shares department Transaction department
3.15.4: Investors Department The main task of investors department is to accumulate the investment of small and new investors of capital market by helping them open an investment account in the concern department. This department deals with investor’s scheme. The following are the main functions of this department: -open and maintain investment accounts -sanction loans against deposits in investment account - Buy and sale shares on behalf of investors -Council investors in respect of building up their portfolios -With draw funds and shares from investment accounts -issue income tax certificates, portfolio statement, accounts statement e.t.c -provide service to investment account holder -collect commission as a banker to the issue and brokerage commission from the companies -keep financial records of all investment account -processing of withdrawal of funds -confirm fund position of individual accounts and -posting of all transaction
3.15.5: Shares Department The shares act as the custodian of securities. These department facilities the physical transfer of shares. For performing the above mentioned activities share department is divided into five sections. These sections are: -investors portfolio section -sale and withdraw section -fund’s portfolio section -securities reconciliation section -procurement section 3.15.6: Investors portfolio section: This section deals with the purchase of shares in the investors account. The functions of this section are: -receive shares from transaction department TDS for preservation -send shares and debentures to the companies at the time of book closing -receive shares and debentures from the companies after registration -collect bonus or right shares and allocate to the accounts accordingly 3.15.7 Sales and Withdraw section This section deals with the sale arid withdrawal of share from the investors account. It performs the following activities: -receive sale or withdrawal order from investor department -to examine the actual existence of securities -to make arrangement for the signature of the attorney and filling up of 117 form and spitting up of share into market lot -receiving of sale order from the securities purchase and sale committee -delivering of sold securities to the TDS. 3.15.8: Securities reconciliation section This section is concerned with the reconciliation of securities to check any discrepancy arise to the actual number and the amount in the accounts
3.15.9: Procurement section This section is engaged with the collection of dividends interest etc. declared by the companies whose shares are held by ICB and its other accounts. This section update the statements related to book closure, dividend declaration etc. after collecting dividends, this department distributes it to the concerned shareholders and different portfolio. It transfers bonus and right shares to the investors and fund section after collection. 3.15.10: Transaction department Transaction department executes the sales and purchase order of shares of following different portfolios, ICB, Unit fund and Government portfolio and the order from investors of investment arid the order from ICB’s branches. For the portfolio order the securities purchase and sale committee take decision every morning what share be bought and what should be sold for that day. The sale and purchase orders of the investors constitute demand for execution in this regard. Before execution in case of sale this department has to get aware about the physical existence of shares from the share department. 3.15.11: Funds Division Department under funds divisions are showing in the following figure: 1. Mutual Funds Department 2. Unit Sales Department 3. Unit Registration and Procurement Department
Mutual Funds Department Broadly the functions of Mutual Funds Department consist of: -act as manager of all mutual funds -maintenance of ledger with the name, address and number of certificates along with distinct folio number for each mutual funds separately -verify the signature of the share holders in the 117 forms -preparation of dividend list from the ledger position
-Issue dividend warrants to the certificates Distribution of final dividend warrants to the certificate holders after completing necessary formations -incase of change of ownership of mutual funds certificate holder facilities the transfer process -make arrangement for re-issue or duplicate copy of certificate in case of loss or damages of certificates -receiving application for the change of address, correction of names and forwarding the same to the computer department - Arrangement for splitting the share scraps as and when necessary in accordance with the stock exchange rules Arrange for revalidating the date of payment of dividend on dividend warrants. Unit Sale Department ICB unit is an open end Mutual Fund through which the small and medium savers get opportunity to their savings in a balanced and the relatively low risk portfolio. It ensures continues and regularly flows of incomes for the holders and is easily excusable. The responsibility undertaken for managing the fund, management fee charges@ TK.1.00 per unit sold. Units are sold through ICB offices & other authorized bank branches. In lieu of cash dividend, one can reinvest his/her dividend income under Cumulative Investment Plan [CIP] to purchase additional units with a price rebate. ICB stopped selling of unit certificates form 1st day of July after the business operation starts of ICB Asset Management Company Limited. The main functions of this department are to sale, repurchase and transfer of unit certificates. -act as manager of Unit Fund -Promotion sales of Unit Certificates -Sell & issue Unit Certificates to the applicants -Repurchase Unit Certificates -Issue new Unit Certificates in lieu of mutilated, lost or defaced Unit Certificates -Reconcile the amount receive and Unit Certificates send to the agents -Transfer the units if applied for the prescribed form -Issue & distribution of CIP certificates
-Making of lien on units, if necessary Unit Registration & Procurement Department The following are the functions of this department: -registration and transfer Unit Certificates -maintain a separate register for unit holder under CIP -verify signature of transfer deed -issue dividend warrants and CIP certificates to the holders -procure unit certificates of various denominations from the printing press -issue Unit Certificates to ICB sale officers/branches as well as appointed bank branches. 3.15.12: Account and Finance Division Departments under account and finance division are showing in the following figure: Account and finance Central account department Project loan department Central Account Department: All kinds of receipts and payments of ICB are done by the Central Account Department. The bill of all departments end destination is account department. Account department holds and maintain all accounts separately. For this reason adjustment and rectification of any transaction of all departments become easier to this department. The functions of this department are to: -preparing income tax return and matters relating to accounts -preparing bills including projects accounts and maintenance of project accounts -prepare salary statements, overtime statements e.t.c -prepare final accounts -keep accounts of Unit and Mutual funds -Keep accounts of govt. loan and debentures -make correspondence with the Government, financial institutions, branches e.t.c -maintain liaison with external audit and commercial audit -maintains of investors accounts and portfolio ledgers
-calculating of quarterly interests -posting and balancing of ledgers -furnishing of information to other departments related to investors scheme -determine sources of fund, rising of fund ensure proper utilization of fund -prepare fund flow statement of the corporation -ensure proper budgetary and cost control Project Loan Accounts Department: The function of this department is to maintain project loan accounts and supply the management up to-date relevant information of the project. In addition to this the department is to: -issue check to the project after getting disbursement order from the project implementation department and any recoverable amount in the disbursement. -calculating interested on the disburse amount. -maintain loan ledger, interest suspense ledger e.t.c -classify the loan as per as rules and make appropriate provision -prepare necessary statement related to project loan -make necessary account adjustment for interest waved as per decision of authority 3.15.13: Computer Division System analysis department The main functions of this department are: -system administration of the entire network setup -performing system analysis wherever ICB feels the need for periodic change in computerization set up -performing miscellaneous small hardware and software related servicing tasks on the many workstations, network system, server and other components and provide training to staff of other departments about computer usage -any other assignment given by the management 3.15.14: Programming department The following are the main functions of this department are: -developing new software for ICB
-customization the software developed in the present computerization phase according to the changes of the requirements of the ICB with time -provide active assistance to the staff of system analysis department for training of the staff of other department about computer usage -handling peak load of data entry and processing work for all other department of ICB 3.15.15: Data management department: The following are the functions of this department: -handling peak load of data entry and processing work for all other department of ICB -any other assignment given by the management 3.15.16: Loan appraisal department: ICB provide credit facilities to the public limited companies to meet heir equity gap. There are two modes by which ICB provides credit facilities to the prospective public limited companies, through: Direct underwriting for BMRE and Underwriting through bridge financing The main functions of loan appraisal department are: Received investment proposal from sponsors -place appraisal reports to the board -apprise management on technical aspect of the projects -prepare appraisal report on project appraisal committee -issue sanction letters to the projects -conduct meeting of the project appraisal committee -To develop capital market -placement of share and debenture -participating in bond financing -act as on debenture on behalf of the bondholder 3.15.17: Planning Research and Business Development: In a simple term PRBD is the spokesman of ICB. Basically it is decision making decision. The major functions of this department are. -to take part in the portfolio management decision
-collect information about OS Li, CS Li, public issue and half yearly accounts of the listed companies etc -prepare and distribute annual report of ICB, Mutual funds and unit funds -conduct meeting of the securities purchase and sales committee -convey securities sales or purchase decisions to the merchandising division -prepare 5 years performance appraisal reports of the listed companies -prepare board memo regarding declaration of divisions on ICB’s own portfolio, unit and mutual fund -make arrangement for offloading of government portion of shares in different companies and state owned institutions -maintain liaison ministry of finance, Bangladesh Bank and provide ICB related information ton interested parties. 3.15.18: Public issue department: Recently ICB has adopted certain strategic changes in sanctioning bridge loan to unsatisfactory recovery of loans sanctioned by corporation, bridge loan would only be considered for very selective sectors. Priority has given to direct underwriting, direct investment in debenture and equity participation through placement of share. The ultimate objective of providing direct underwriting and placement of shares is to help the projects to go for public issue.
3.15.19: Law department: Law department handles any kind of legal affairs of ICB. The functions of this department are as follows: -prepare legal document, advance agreements, share agreements, demand promissory notes, memorandum and deposit of little etc. -arrange
exception
of
underwriting-cum-advance
agreement,
underwriting
agreement and supplementary documents etc. -process litigation cases, prepare legal notice and refer cases to legal advises and coordinate with legal advisor in court. -prepare necessary memos for placement in the board meeting related litigation and legal affairs
-handle the legal issue related to employee’s loan facilities and other issues related to law.
3.16. Capital Structure: The particulars and capital structure of ICB are as followsParticulars Authorized Capital Paid-up Capital Reserves Retained Profit Long-Term Govt. Loan Debentures Others Total
(Tk. in Crore) Increase / decrease (Percentage,)
As on 30 June 2005
2004
100.00 50.00 84.11 5.36 5.25
100.00 50.00 69.11 3.24 5.25
21.70 65.43 -
61.80 24.89 231.41
76.03 27.40 231.03
-18.72 -9.16 0.16
Capital Structure
-2005 Capital Structure
-2004
Paid-up Capital 24.89
50
27.4
Reserves
50
Retained Profit 61.8 Long-Term Govt. Loan 5.25 5.36
84.11
76.03
Debentures
69.11 5.25
Others
3.24
Fig3.16: Capital Structure of 2005 and 2004
3.17. Shareholding Position: The shareholding position as on 30 June 2005 was as follows – S erial No. 1. 2.
Shareholders Government of Bangladesh Nationalized Commercial Banks
No. of No. of Percentag shareholder shares e of s shareholdings 1 13500 27.00 00 4 11372 22.74 20
3.
Development Financial Institutions 4. Insurance corporations
2
5.
1
6. 7. 8. 9. 10
Bangladesh Bank Denationalized Private Commercial Banks Private Commercial Banks Foreign Commercial Banks 0.14 First BSRS Mutual Fund 0.54 Other Institutions
. 11
9.08
0.57
1.4
0
3
6 0
2
3
3 2 1 9
68155
13.63
61828
12.37
60000
12.00
45426 9.08 Government of Bangladesh 28286
0.57
6900
0.14
Nationalised 26531 0.53 Commercial Banks Development 26949 0.54 Financial Institutions
General Public
927
Total 12
955
.
27
70015 1.40 Insurance Corporations 5000000
100.00
Bangladesh Bank Denationalised Private Commercial Banks Private Commercial Banks
12.37
13.63
22.74
First BSRS Mutual Fund Other Institutions General Public
Fig 3.17: Share Holding Pattern as on 30 June, 2005
3.18. Share Price:
Share price of ICB varied from lowest Tk. 122.0 to highest Tk, 219.5 in the stock
exchanges during the year. as on 30 June 2005, the market price of share was Tk. 200.0 and Tk. 201.25 in the DSE and CSE respectively. The price movements of ICB’s share on DSE are shown graphically in below:
Fig 4.3: Price Movement of ICB’s Share on DSE.
3.19. Transfer of Shares:
The volume of shares transferred increased substantially during the year. 36269 shares were transferred during 2004-05 as against 16085 shares transferred in 2003-04 showing an increase of 125.48 percent.
3.20. Achievements of ICB during 2004-2005: (Tk. In Crore) Particulars Income Net profit Earnings per share (Tk.) Return on Equity (%) Net Asset Value (Tk.) Value Added Provisions made Debt-Equity ratio Capital Adequacy ratio Transaction of Securities: Trustee to the issue of bonds: No. of Companies Amount Trustee to the issue of debentures:
Consolidated position 2004-05 2003-04 187.82 143.49 31.68 21.68 63.36 46.41 20.91 16.94 305.65 279.17 116.28 111.04 65.50 27.25 30:70 38:62 18.59 15.33 1065.63 1057.59 4 104.86
1 30.00
Growth (percentage ) 30.89 46.13 36.52 23.44 9.49 4.72 140.37 21.27 0.76 300.00 249.53
No. of companies Amount Recovery of loans & advances and others Dividend performance (Tk): ICB ICB Capital Management Ltd. ICB Asset Management Company Ltd. ICB Securities Trading Company Ltd. ICB Unit fund First ICB Mutual Fund Second ICB Mutual Fund Third ICB Mutual Fund Fourth ICB Mutual Fund Fifth ICB Mutual Fund Sixth ICB Mutual Fund Seventh ICB Mutual Fund Eighth ICB Mutual Fund ICB AMCL First Mutual Fund ICB AMCL Unit Fund ICB AMCL Islamic Mutual Fund ISB AMCL Pension Holders’ Unit Fund
5 140.00 263.81
181.56
12.00 15.00 18.00 30.00 12.00 210.00 55.00 52.00 48.00 27.00 18.50 16.00 15.00 16.00 12.00 5.00 9.00
10.00 10.00 12.00 25.00 11.50 200.00 50.00 50.00 45.00 24.00 17.50 15.00 14.00 12.00 10.00 -
45.30
20.00 50.00 50.00 20.00 4.35 5.00 10.00 4.00 6.67 12.50 5.71 6.67 7.14 33.33 20.00
4.1: Personnel department (PD) of ICB Human resource or personnel department is very common term for every organization .organization cannot perform well without practice of HRM. From establishment HRM practice of Bangladesh, ICB started its personnel department. ICB has two main wings. They are operation wing and administration wing. Administration wing has five divisions. They are administration, accounts and finance, legal affairs, implementation & recovery and branch & subsidiaries control division. Administration division has two departments. They are personnel department and establishment department.
4.2: Objectives of PD of ICB Objectives are predetermined goals at which individual or group activity in an organization is aimed. The central focus for HR management must be on contributing to organizational success. The objectives of human resources department of ICB are given below:
1. To maintain and sustain organizational peace. Without peace, prosperity is not
possible. It is true for a nation as well as for a business organization. Without industrial peace, all resources remain under utilized. 2. To improve the productive contribution of people to the organization. In a
competitive environment, productivity improvement is very significant. Productivity is the function of ability and motivation. Training and education can improve ability. Excellent companies of USA also encourage productivity through people. 3. To attract and secure appropriate people capable of performing effectively and
efficiently the organization’s specific tasks. This is important for obtaining and sustaining competitive advantage. 4. To generate maximum individual development of the people within the organization.
Individuals get internally developed through training and experience. 5. To recognize and satisfy individual needs. 6. To maintain a high morale and better human relationship inside the organization.
4.3: Organ gram of PD of ICB: AGM
SPO
PO
O
AGM: Assistant General Manager SPO: Senior Principle Officer PO: Principal Officer O: Officer JO: Junior Officer DECO: Data Entry Control Officer.
4.4: Functions of PD of ICB:
JO
DECO
HR managers are performing a variety of functions. The functional areas of HR managers are changing as the time goes on. The main functions of personnel Department of ICB are given below:
4.5: Recruitment and selection process of ICB Responsibility for recruitment and selection usually belongs to the HR or personnel department. This department works to find and attract capable applicants. Job description and specifications provide the needed information upon which the recruitment process rests. Line and staff cooperation in recruitment is essential. The HR manager who recruits and initially screens for the vacant job is seldom the one responsible for supervising its performance. So he needs the help of line personnel. Personnel Department (PD) of ICB uses both internal and external sources of supply for recruitment and selection of employees. Though their authority is limited, they have done it by the following ways
4.6: Recruitment Process: 1.
Finding out Vacancy: The steps for recruitment process of ICB, they first find out the vacancy by forecast processing.
2.
Approval of Ministry: When ICB find out vacancy they give the proposal to government. Governments take the finale decision and give approval. If ministry approved it then ICB can take further steps for recruitment.
3.
Advertisement: After approved by the ministry, the PD of ICB prepares two advertisements on in Bangle and another one is English. Then they publish them in the well known daily newspaper of Bangladesh.
4.
Collection of applications: After advertisement, they collect applications from potential candidates.
4.7: Selection Process: Selection is a decision making process. Once a pool of suitable applicants is created through recruitment, the process of selecting applicants begins. The PD of ICB follows the following procedures for selecting appropriate candidates: 1.
Short Listing Selection process of ICB starts through sorting out candidates by comparing applications with recruitments. They make a short list from the applicants. For Short listing there is a committee. It consists of five members that include GM, DGM etc.
2. Written Test Tests are devices that assess the probable match between applicants and job recruitments. These tests are conducted in order to improve the selection decisions. Tests are a screening device. Some are paper and pencil tests; others are exercise that stimulates work conditions. After short listing, candidates are called for written test. This written test is taken either by member of selection committee or by professional body or institution which name is BRC. If it is taken by the professional body of institution, they have all responsibility relating written test. 3. Interview Interviews are most widely used device for selection. It summarizes and integrates all information concerned with the candidates. Strauss and Sayles (1989) define an interview as a purposeful exchange of ideas, the answering of questions and communication between two or more persons. The interviewer’s goal in selection is to match human characteristics and abilities with the demands of the jobs. For the appointment of employees the qualified candidates of written test are called for interview. There is a committee which is called promotion committee. It consists of 4 members that include MD, GM, DGM and secretary. 4. Preparation of Panel After taking interview, the promotion committee prepares a panel of candidates based on merit by considering the marks obtained in written test and interview.
5. Offer and acceptance The promotion committee sends the list of qualified candidates to the Personnel Department (PD). Then PD sends appointment letters to the qualified candidates and a contract of employment is given to the successful candidates. If the successful candidates accept the appointment letter, they join in the organization.
4.8: Placement:
Placement is the assignment or reassignment of duties to employee. It may take
different forms. PD has done the following thing relating placement: ⇒ To handle all personnel matters including confirmation, posting, transfer, fixation,
leaves etc. ⇒ To process all promotion, time- scale encashment ⇒ Ro process A.C.R. confirmation of employees etc. ⇒ To control attendance
4.9: Compensation: Compensation is the reward or price for labor. The goal of compensation administration are to design the lowest cost pay structure that will attract, motivate and retain competent employees, and that also will be perceived as fair by these employees. PD has to handle national pay scale, fixation, increment etc.
4.10: Resignation and Retirement: PD of ICB has done the following thing relating resignation and retirement: ⇒ To process resignation, retirement cases; ⇒ To deal with retirement benefits including gratuity, pension, provident fund etc.
During 2005-06, one officer resigned, one employee was given forced retirement. 3 officers retired from the services of ICB and one officer died during the year.
4.11: Disciplinary action: Discipline refers to a condition in the organization when employees conduct themselves in accordance with the organization’s rules and standard of acceptable behavior. This
department takes disciplinary action gradually to that employee who violates the rules and regulations of the organization. This action is two types: 1. Light punishment 2. Heavy punishment
4.12: Training and development: Training is a continual process of helping employees to perform at a high level. It is a process of acquiring new skills to do job properly. Training changes and modifies employee attitudes and behaviors that will improve his ability to perform on the job PD of ICB have done the following thing relating training and development: ⇒ To prepare long term and short term plans for executive development in the
corporation. ⇒ To explore more sources of financing of foreign training. ⇒ To arrange in service training where, among other, foreign trained officers will in
turn train other officers through lectures. ⇒ To arrange training of new recruits. ⇒ To run training institute of the corporation. ⇒ To arrange seminar/symposia/workshop where experts in the line may be invited to
deliver lectures. ⇒ To procure training equipment and facilities for training manpower.
During 2005-06 as part of resource development programmer ICB endeavored to develop the skill, knowledge and professional competence of its manpower by arranging various local training equipment courses. During the year, 13 officers received local training and joined in different workshops on different subjects including Enhancement of professional standards of Market intermediaries.
4.14: Trade Union: Trade union is an organization of workers, acting collectively, who seek to protect and promote their mutual interests through collective bargaining. ⇒ To deal with all matters relating to ICB employees Union ⇒ To deal with all matters relating to ICB officers Association.
4.15: Grievance
PD has to develop appropriate machinery for handling grievances and arrive at a solution.
4.16: Conclusion It is true that human resources management is a complex and rapidly developing field of practice in Bangladesh. Despite its comparatively recent origins and drawing upon both overseas and local influences. HRM is crucial factor in the success of the organizations. The PD of ICB tries their best to perform their functions successfully. But their tools and techniques of managing human resources are too much traditional so that can not perform properly. So, the PD of ICB should be restructured in a way so that it can contribute to the performance of the total organization.
5. 1 Human Resource Department (HR) of HSBC The Human Resource Manager currently heads this department. The major functions of this department are strategic planning and policy formulation for Compensation, Recruitment, Promotion, Training, and Developments, Personnel Services, and Security. The HR department is very much concerned with the discipline that is set up by the HSBC group. HSBC group has got strict rules and regulations for each and every aspect of banking, even for non-banking purposes; i.e. the Dress Code. All these major personnel functions are integrated in the best possible way at HSBC, which results in its higher productivity. The Human resource officer monitors the employee staffing and administration activities. The Training officer supervises training, development, & rotation activities. The structure of the HR department is shown below: Development Officer
Human Resource Manager Human Resource Officer
AO Staffing AO Administration AO Training AO Appraisal
Figure 5.A.1: Structure of Human Resource Department HSBC activities are performed through functional departmentalization.
So, the
departments are separated according to the functions they perform. Within the major departments there are some other subsidiary departments that allow smooth operation of their own major departmental functions.
HR Issues Recruitment and selection process: HSBC Bangladesh limited follows a standard procedure for recruitment and selection. However there is no set time period when this recruitment and selection takes place. Each departmental head places the requisition for recruitment to the Human resource officer, if any vacancy is created due to (1) Retirement, (2) Resignation (3) Death, or (4) Extra workload. The process for the recruitment of personnel for managerial and non-managerial level differs slightly but the basic steps are same in both the cases. Before mentioning the steps of the selection process it is worth mentioning that there is a unique policy in the HR department which states that a person will not be eligible to apply for any vacancy if his or her first-cousin, brother/sister or spouse works in any of the branches of HSBC. The steps areI. Initial screening II. Screening by departmental heads III. Filling of the HSBC job application form IV. Screening on the basis of SAF V. Initial Interviewed VI. Selection for written test
VII. Written test VIII. Evaluation of test papers IX. Selection of final interviewees X. Final interview XI. Documentation Check XII. Medical examination XIII. Probationary appointment XIV. Confirmation
Training and Development In order to enhance the efficiency of the employees, HSBC gives emphasis on the both theoretical and practical training for its personnel. All the training and development programs are aimed at two basic reasons - (1) Skill development (2) Motivation through counseling and persuasion to change value system. For the top management or senior managers there is provision for overseeing training arranged by HSBC group. For the midlevel manager or other managerial level there is provision for regional training courses. Besides, for non-management level there are training programs arranged in different institution and also within the organization. For the operatives, various on the job-training program are conducted within the company. HSBC Bangladesh limited follows a performance based promotion system for all levels of its employees. They give the training on three ways. They are: 1. Formal training- formal training arranges when they launch any new product, for
new recruit, for new rules and regulation. The time or place is fixed from before. Branch to branch this training is provided. Capable or experienced people are member of this training team. Sometimes foreign trainers are also present for giving training because it is a multinational bank. 2. Informal training- Informal training is not any organized training. Motivate fir better
service is the main reason for arrange this type of training. 3. Problem solution- Mystery shopper survey finds out the problem or lakings. This
training is given according to the solution of problem
Performance Appraisal:
The company follows both rating and descriptive systems for the performance appraisal. Although the appraisal system is non-participative, the employees are annually assessed with a joint consultation with their immediate supervisor and departmental head. I. Rating is mainly done on the following factorsII. Knowledge of work III. Accuracy and reliability IV. Speed V. General intelligence VI. Sense of responsibility and duty VII. Diligence VIII. Initiative and self confidence IX. Readiness to work for and with others.
Welfare Activities: HSBC has many well-structured welfare policies for its employees. These include wellstructured wage & salary policy, medical facility, sports & cultural facilities, provision for loans, free uniform etc. These welfare policies aim at strengthening the relationship of the employees to the organizations and make them more responsible in their respective positions. The brief description of the major welfare policies are stated below
Wages and Salary Administration: HSBC follows a well-defined wage structure and fringe benefits for its employees. The wage structure is updated periodically (Two years terms) by the management. The major deciding factors arei)
Profitability of the company
ii) Average cost of living in the country due to year to year basis inflationary
trend iii) Status of wage earners in similar organization iv) Restrictive conditions given by the government from time to time v) Financial benefits status in the company vi) Components of existing wage structure:
vii) Base basic structure and conveyance allowance
5. 2: Human Resource Department (HR) of First Security Bank In today’s competitive business environment, only the quality of human resource makes the difference. The bank is committed to attract the best person to work for it and the adoption of the latest information technologies is reflected in the efforts of the bank in development of human resources. The bank believes in professional excellence and considers its working force as the most valuable asset and the basis of efficiency and strength. This department consists of 14 employees & 8 staffs. HR department of First Security Bank Ltd. does not involve directly in strategic planning. Mainly the Board of Directors plans it. HR provides information to help them to take necessary decision. But HRD does a separate planning for their internal work.
Recruitment: If First Security Bank Ltd. plans to introduce new branches or services then they go for recruitment. They also recruit employee if any post vacant within the bank.
Process of Recruitment: When the vacancy occurs the department sends a requisition form to HR Department. The HR manager asks for the qualifications and other information. On the basis of given information the HR manager plans his strategy and write a memo to the Board of Directors. If they give the PRC approval then First Security Bank gives advertisement in Newspaper.
Vacant / New Position Occurs HRD is informed Prepare memo
Send to board of Directors
Approved by the Board Newspaper Advertisement Generate Application Pool
Recruitment Process of First Security Bank Ltd. is the following-
Sources of recruitment: The HR department of First Security Bank Limited follows two ways to recruit new employees. They are:
a) Internal recruitment b) External recruitment
a) Internal Recruitment: As First Security Bank recruit highly qualified and experienced applicant they prefer to recruit mid-level and upper level employees internally. When any post vacant they search for right people for the right place within the organization. Their Human Resources Department maintains Human Resources Information System (HRIS) for internal recruitment so they can fill up vacancy by a person of known quality. They also use internal recruitment as a motivational tool for the employees. While recruiting employees internally the bank often experiences ripple effect that is – when a vacancy is filled internally in the mean time another vacancy occurs. b) External Recruitment: If First Security Bank cannot fill the vacancy internally or cannot find right people for the right post with their organization then they go for external recruiting. Sometimes if they need very experienced person for their upper levels then they think about external recruitment.
There are also some reasons why First Security Bank prefer external
recruitment
To overcome ripple effect with the bank.
When they need new ideas and viewpoints
To avoid riffle effect within the bank.
Method of recruitment: External Recruiting is used to attract a large pool of applicant. To recruit externally First security Bank follows the following methodNewspaper Advertisement: The bank spending heavily in ads because recruitment ads have a large audience of whom only 10-20% is actually looking for jobs. Therefore the bank target 100% rather than 10-20%. First Security Bank Ltd. does not use any blind advertisement to newspaper. They clearly mention the job description to their advertisement. They usually place their recruiting advertisement to national dailies and business magazines.
Selection process: First Security Bank follows a specific strategy for selecting new employees. The human recourse department made this strategy. At the entry level of new employee the selection team considers education, experience and qualification of the candidate’s. This procedure begins after evaluating the applications. First Security Bank follows Multi Hurdle Approach for selecting the applicants. The selection process of FSB is the following-
Written Test Interview Matching Bio-data Reference Selected
First Security Bank selects applicants from their Bio-Data. After selecting applicant, First Security Bank takes a written test. Experts of BIBM and IUB prepare the questionnaire of written test. After that applicant are to face interview
Board of directors and the HR manager takes the interview.
Then they check the reference and select applicant. First Security Bank follows unstructured interview of the candidates. A committee
conducts the interview. It consists of five members-three from the Board of Directors, the Managing Director and the Head of the HRD. In interview, the committee is not only emphasizing on the response of the
questions but also observes how they respond, their attitudes, behavior, smartness and appearance. On the above components the members of committee give a number to each
candidate. Then they make an average number of all candidates, and select the desired employee.
Selection of executive: Mainly the Board of Directors selects the top executive of First Security Bank. Sometimes the shareholders give their opinion in the Annual General Meeting for selecting top executives. The mid level executives are selected internally by their better performance and experience. Some executives are selected externally but their ratio is low.
Human Resources Development and Training: Training program is a regular basis program of First Security Bank. It is done for both lower level and mid level management. Every year the bank spends a lot for the training of employees. The amount in not fixed, it depends according to their demand. Sometimes it is used as the motivational tool within the bank. 5. B.8.1: Reasons for training:
To orient the hires to organization
To teach them how to perform initial assignment.
To improve current performance of employees
To prepare employees for future promotion or upcoming changes.
To introduce employees with the new technology, if the bank going to use it.
5 .B.8.2: Methods of training: Security Bank Ltd. follows –
•
On The Job Training
Off The Job Training
On The Job Training:
First Security Bank provides on the job training for the new recruited employees. It is basically training for one year. During the training period the employees do not get any specific position. Every employee has to move round the desks. In this training First Security Bank provides a training program smellier Job Rotation system. First Security Bank gives more importance in this training phase. In this training the new employees get a practical experience. According to the Job Rotation, the trainee has to expand more time in “Central Accounts Returns Department”. It is about 10 weeks. Then they give importance to other departments. Off The Job Training:
•
First Security Bank arranges a training program when they recruit new employees. They train their employees to their own training center which is at 23, Dilkhusha C/A, Dhaka. Here they provide formal training program. All the employees have to do it. This program is conducted by following ways-
During the training period teachers of Institute of Business Administration
(IBA) and Bangladesh Institute of Bank Management (BIBM) teaches the employee. They come as Guest teachers. They give lecture related to banking subjects.
Sometimes First Security Bank provides off the job training to motivate the
employees. They send employees to abroad for training. Employees who work for a long period of time with the bank and very loyal to the organization gets the benefit of being trained in oversees.
Sometimes First Security Bank sends their employees for training to various
multinational banks within the country. Employees of First Security Bank are satisfied with their training program but some of them think that they need a well-decorated large training center.
Performance Appraisal: First Security Bank does not consider Performance Appraisal as punishment tool. They actually do it to review the employees’ performance throughout the year and to have a basic idea about each branch. First Security Bank uses both formal and informal processes to do performance appraisal.
•
Formal
Firstly Security Bank Ltd. uses some written instruments or paper. ACR is a kind of form by which the bank can evaluate all types of employee performances. The bank normally uses two types of form one for officers and the other one are for executive level. All superior evaluates his/her subordinates. •
Informal Sometimes bank use informal evaluation of the employees. Every superior gives
verbal information about his subordinates. On the basis of the superior’s information the management measure Performance Appraisal.
Compensation: Normally First Security Bank provides three benefits or incentives in a year without monthly salary. Among them there are two festival bonuses and one incentive based on ACR form. Sometimes they give promotion, increment (based on target sales) and enhance salary. All incentives are paid individually and they do not provide any group incentives. First
Security Bank provides compensation & benefits on the basis of employees’ performance and ranking.
Disciplinary Action: Discipline is the management action taken to enforce organizational standards. Every organization should follow some discipline. FSB follows some discipline to run their operation.
If any employee breaks the rule of FSB, then the organization takes the
disciplinary action.
They take the action according to the “Service Rule Book.”
If anyone complains against any employee of FSB then they send an inquiry
team.
If the inquiry team finds that the employee is guilty then they give an oral or
written reprimand. And also keep a record in employee’s personal file. 4.
3: HR Functions of EXIM Bank
Introduction How does a bank or the as usual organizations manage their people? Both executives and academics believe that human capital management and investment is essential to the competitiveness of firms, but there is a wide variation of opinion about how best these complex organizational activities are implemented in practice. This can be a raft of leading or best practices that are common across many companies, and certain practices that are unique.
The HR Function The EXIM bank have adopted similar forms of administrative HR provision such as shared services, HR intranets, self service HR and to a lesser extent, outsourced HR, all enabled by significant advances in administrative process and information-capture technology. These
moves have been made in the interests of efficiency gains and also for the purpose of enabling a smaller core of HR staff to pursue sore “strategic” activity. For this strategic work, there are a number of examines of HR as internal consultants, aiming to add value through thought leadership, particularly around issues of change and also process expertise. The HR director is a member of the executive committee of the organization, which is an important structural signifier for the value of HR. There is recognition in the organizations that “change readiness” in employees is important for the revitalization of the firm. Therefore the centrality of the HR function is crucial. Talent management as an overarching concern, ensuring the linkages between component parts of staffing, performance of management and development are aligned, shoes the importance of managing the system of practices. The understanding of employee’s power demographics and the implications for the talent pool is held to be crucial for long term and long term trends in usually downstream from the business strategy, and one issue that consistently emerges is the lack of real depth in viewing the long term, particularly in terms of job market scanning.
Human Resource Division in EXIM This department manages recruitment, training and career progression plan. EXIM Bank highlights the importance of developing its people to create a culture of customer service, innovation
teamwork
`and
profess excellence.
Recruitment EXIM bank recruits people by two ways. One is a “Management Trainee” that has a probation period of six months and after the probation period the trainees will be counted as officers and they will do the different kinds of managerial works. Second one is “Non Management Trainee” which does not have any fixed probation period. Time required for training is department on the recruited person’s performance. In case of Non management Trainee, two ways of recruitment is taken place. They are taken by signing a contract with some outside organization for three months and after three months the contract may be renewed or not depending upon the employee’s performance. These people coming through outside contract are called “Out Source”.
They are taken by signing a contract with the bank for the three months and after three months the contract may be renewed or not, depending on the performance. These people coming through bank contract are called “In Source�. a) Reference
As like other organization EXIM Bank values those candidates whose reference is better persuasive that other candidates. Reference helps deferent way such as, an employee is referred by the top level manager or even officer, and as a result the employee will be liable for the entire performance. In that case the employee is self controlled. c) Advertisement
Whenever the Bank needs an employee or somehow the Bank discovers the vacancy for the new one, advertisement is another way to encourage much more candidates to drop CV to the head office. EXIM Bank publishes its advertisement campaign on the dailies and on its web site.
d) Internship
EXIM Bank allows each and every student of the University level who comes for internship placement. The Bank doesn’t pay any incentive to internee but if any internee shows his performance as well there is scope to be an employee of the Bank latter at a time when the Bank feels the vacancy.
Selection Selection is the process of matching between the skills of the individual and the requirements of the job. The selection is the process plays a pivotal role in the entire human resource issue.
Amongst all the factors that combines to contribute towards the success of an organization, none counts as much as people. EXIM Bank believes it in letter and spirit. As such in order to select right type or people the bank maintaining a very transparent and neutral mood operation as regards recruitments. Recruitments are usually done through open invitation of the applications by advertisement in the national dailies. Candidates are required to go through stringent examination and tests, some of which are conducted by Institute of Business Administration of Dhaka University.
Selection process of EXIM Bank contents six steps. 3. Reference & Background Check
Out of Selection Process 1. Sorting CV
2. Interview 4. Realistic job preview 5. Medical Test 6. Final Selection to provide appointment letter
1. Sorting CV Applicant’s Curriculum Vitae will be sorted out by the human resource official to find out appropriate candidate. 2. Interview The organization may take a viva test or written test or both for testing the capacity of the chosen candidates. Accept the selected other will be sorted out from the process. 3. Reference and background Check People who pass the interview, their family and past background will be checked to verify that they are from good culture and society. 4. Realistic job preview A typical work exercise is simulated so that a candidate’s ability to do the work effectively can be assessed.
5. Medical Test Any job requires basic physical fitness of the candidate. A part from this, certain jobs demand greater physical stamina, clear vision, etc.
6. Final selection After all the above steps are completed, the management makes the final decision as to hire the candidate. This is the past step of the selection process. Here the management issues an appointment latter in the name of the candidate and with offering the job.
Training Training methods consider the choice of method for employee training. With training objectives defined and learning principles in mind. Methods of training are basically two types such as on the job training and off the job training. a) On the job training The initial stages in the planning and design of an on the job training at EXIM Bank are: a. Refer to the agreed objectives for the training as produced in the initial
planning stages. b. Consider the identified target learning population and how they might
affect the training design. c. List the ways in which each objective might be met. d. Decide whether the learning might be best achieved by an on the job or
off the job training. b) Off the job training Off the job training is conducted in a location specifically designated for training. It may be near the work place or away from work, at a special training center or a resort. Conducting the training away from the work place minimizes distractions and allows trainees to devote their full attention to the material being thought.
Placement: Placement of employee is done by HR department it’s a important part of decision making that’s why higher authority are involved here.
Conclusion EXIM Bank has converted all of their systems and policies of traditional banking to Islamic Banking and now it is a Shariah Based Islamic bank. EXIM Bank has emerged itself as one of the most disciplined and promising bank in the commercial banking sector in
Bangladesh under the active supervision of its competent Human Resource management Team.
Figure: 6.4 (a)
Figure: 6.4 (b) Figure:6.7 7.1: Summary of the findings: a) Personnel Department: • Computer shortage is their problem that’s why their maximum organization related paper is written or printed copy. • They have employee shortage for personnel department. • Personnel department has no authority for taking decision. They just give the proposal to management and management sends it to government for approval. • ICB’s all decision making process is too lengthy because they need government approvals for taking decision.
b) HR Planning: • •
They have HR forecast planning but it’s not so much developed or organized. HR planning is depending on the government decision.
c) Recruitment process: • • • • •
They follow very simple steps for recruitment. ICB is not involved directly with the recruitment process. BERC (Bangladesh Energy Regularity Commission) is a institution who hire the people on behalf of ICB. Boards of the Directors are the responsible for decision of recruitment. ICB’s recruitment process is free from corruption.
d) Selection process: BERC (Bangladesh Energy Regularity Commission) take the written exam of applicants. Who are successfully passed written exam they only selected for finale interview. • Boards of the Directors are arranging meeting with selected applicants and take the finale interview for selection. • ICB’s selection process is also free from corruption.. e) Compensation process: • ICB’s compensation budget for employees is too low than other organization. They follow national pay scale. • ICB gives the quarter for all employees who at least 3 years work with ICB. • ICB give the festival bonus for their employee. • ICB also give medical allowance for their employee but this amount is fixed for every month. • ICB give the benefit to their employee by giving a handsome amount of loan. •
f) Training and development: • ICB’s training budget is yearly 8 to 10lacs but it is changeable for every year. • This low amount is not enough for employees foreign training. • Training system is not so developed. • They mainly follow short term training process for their new recruit employees. • They have no own training institution. g) Disciplinary actions: •
ICB takes disciplinary action quickly against those employees who are breaking the rules and regulations of ICB.
•
PD if ICB handle all personal matters including confirmation, posting, transfer. Fixation leaves etc.
H) Placement decision:
i)
advertisement:
•
ICB’s advertisement about financial transaction or annual conference is very clear but there recruitment advertisement is not so details.
7.2: SWOT Analysis: 7.2.1 Weakness: 1. PD of ICB does not use modern tools and techniques of human resources management but as a private organization other bank’s follow or use modern tools and techniques. 2. PD of ICB tends to be parochial, striving to attend line managers on the other hand others Bank give much emphasizes on all the managerial sector of their organization. 3. PD of ICB emphasizes on bureaucratic control. It represented a highly compartmentalized system. But other private banks are not emphasizes on bureaucratic control. 4. PD of ICB has a very few man power. But other private bank has different sector of HRM and they have enough man power for running HR department and they always try to add new or moderate system for giving better service for their customer. 5. All the functions of PD of ICB have done on the basis of predetermined way. As a result there is no chance of creativity of the employee. Private Banks most of the time follows immediate decision which they feel to need for their customer. Bank also done their work on the basis of pre determined way but they also try to include new operating system to provide better service for their 6. The management of ICB takes no risk when they give loans to their clients. They are very slow in decision-making. They sometimes fail to take the current opportunities for this slow decision making process. On the other hand other banks can take decision more easily because they are not waiting for government approval. 7. There is no function of performance appraisal of the employees of the ICB. But performance appraisal is a common term for private Banks that’s why their employees are more motivated with the compare of ICB. 8. PD has less authority to take decisions. But in case of private banks HR they Play the role of creating new rules and regulation to satisfy their customer.
9. ICB’s training budget is only 8-10 lack yearly but other private banks keep
huge
budged for training purpose. That’s why the employees of private bank can do their work much effectively. The range of training cost for private bank 30-80 lack. 10. ICB does not provide any foreign training, recent they include this training with their HR but it’s not so strong position. On the other hand private banks most of the time sends their employee to abroad for better training. 11. Remuneration is too law along with the contrast of other organization. That could break the attention of employees about their recent job. Employee’s motivation level could also destroy.
7.2.2: Strength of ICB: 1. Last year ICB’s profit is near around 101 cores. As a government organization this is very big achievement of them. 2. Skilled manpower and efficient employees are being involved with their organization. 3. Employees get the opportunity to involve with direct share business that’s why they are satisfied with their income and this is the reason, employees are not involved with corruption. 4. ICB’s recruitment process is very fair that’s why more skilled person they can hire. The management does not face any pressure for hiring unskilled people.
7.2.3: Opportunities of ICB: 1. In case of Bangladesh perspective here is high demand for loan ICB can take this opportunity and can expand their business by increasing their money supply. 2. ICB is a government organization that’s why people have much faith on them then other private organization that is their opportunity to achieve their target goal. 3. New generation is much familiar with technology. ICB is converted their share as electronic share that is their opportunity to spare their business to new generation. 4. Venture capital is new term for ICB. They started to finance on venture capital from last year. This is the way of taking high risk for gaining high return.
8.1 Recommendations for ICB:
The management should take immediate decision to take the current
opportunities.
Staff meetings and departmental meetings at the branch level must be
increased to develop service quality as well as problem solving
It is important to use modern tools and techniques of human resources
management. So they need to appoint such person who has better knowledge about HRM.
ICB needs to appoint more skilled people for PD.
ICB can encourage creativity of the employees of the PD.
ICB needs to introduce the function of performance appraisal of the
employees. It will increase the productivity of employees.
ICB can provide more authority to PD.
. Rules and regulation can be relaxed.
Payment to the workforce should be such that will encourage the employees
to work more. Remuneration package must be impressive and inconsistent with work performance.
ICB may recruit HRD employees having HR background so that they will
make working people more productive and satisfied.
The organization’s strategic plan and business plan must be sound.
The organization must specify characteristics that are necessary to perform
a job.
Selection, training and promotion procedure must be well structured and
applied properly.
Realistic Job Preview (RJP) must be provided to the employees to get rid of
early turnovers and other crucial aspects related to job.
HR’s main focus must be on employees rather than anything else.
They recruit employees externally for the junior officer and provisional
officer, which can be discouraging & de motivating to current employees.
For decision-making in selection the company may follow a combination of
all approaches to get a hybrid approach, which is very effective.
They may use semi-structured interview tool known as cone approach in
selection process, which is far better than the one they use.
They must follow assessment canter approach for selecting managers,
which can predict both long & short-term success and advancement in management position.
They must get a larger training center.
Training process must be satisfactory for the employees.
ICB can trains almost all the employees, which is a very good sign of
success.
The organization must assess need for training to refrain from uselessly
spending money for problems for which training is not the answer.
As a large organization they have must have both formal & informal
methods of performance appraisal (PA) and performance feedback (PF).
The advertisement should contain job description and job specification so that the
applicants can be easily short listed

The screening of the application should be done carefully following a standard
method.
8.2: Conclusion There are very few government owned organizations in Bangladesh that can earn profit. Investment Corporation of Bangladesh (ICB) is one of them. It was established in 1976 with the objective of encouraging and broadening the base of industrial investment.. Human Resource Management is the set of activities directed at attracting, developing, and maintaining the effective work force necessary to active a firm’s objective. HRM deals with the design of formal systems in an organization to ensure the effective and efficient use of Human talents to accomplish organizational goals. Investment Corporation of Bangladesh (ICB) has a human resource department, which is called Personnel Department (PD) It is true that human resources management is a complex and rapidly developing field of practice in Bangladesh. The PD of ICB tries their best to perform their functions successfully. But their tools and techniques of managing human resources are too much traditional so that they cannot perform properly.
8.3 List of Abbreviations
1. ICB = Investment Corporation of Bangladesh. 2. SEC = Securities and Exchange Commission. 3. DSE = Dhaka Stock Exchange. 4. SEC = Chittagong Stock Exchange. 5. EBR = Economic and Business Research. 6. CDBL = Central Depository Bangladesh Limited. 7. IPO = Initial Public Offering. 8. ICT = Information and Communication Technology. 9. BB = Bangladesh Bank.
10. BSB = Bangladesh Shilpa Bank. 11. BSRS = Bangladesh Shilpa Rin Sangstha. 12. IAS = International Accounting Standards. 13. OTC = Over the Counter. 14. ICML = ICB Capital Management Limited. 15. AMCL = Asset Management Company Limited. 16. ISTCL = ICB Securities Trading Company Limited. 17. CDS = Central Depository System. 18. ICAB = Institute of Chartered Accountants of Bangladesh. 19. ITS = Internal Transfer of Shares. 20. IT = Information Technology. 21. MIS = Management Information System. 22. CMDP = Capital Market Development Programmer.
8.4: Bibliography:
1. ICB, Annual Report, 2004-05, 2003-04, 2002-2003. 2. Ordinance and General Regulations of ICB. 3. Various journals kept in the ICB library. 4. Annual Report of DSE. 5. Annual Report of CSE. 6. Conversation with Various Departmental Heads. 7. Bangladesh Gazette. 8. Marketing Research - Noresh K. Malhotra. 9. Business Communication - Lasiker & Pettit. 10. Human Resource and Personnel Management- Willam B.Werther, Jr.Keith Davis.