General Banking Policy and Performance of Dutch Bangla Bank Limited
Chapter-1: Introduction Background of the Study Being a student of BBA Program, The University of Asia Pacific, I am supposed to do internship in an organization and submit an internship report on a project as required for partial fulfillment of the degree. I am accommodating internship and thus have prepared a project paper on Dutch Bangla Bank Limited (DBBL). DBBL is an online bank which is the largest donor in Bangladesh and also socially responsible bank. I chose the bank for the purpose of increasing my understanding on brand equity and to evaluate how the organization maintain its brand management through various marketing programs, brand elements, brand associations and social responsible activities. Sources of Information The report is largely based on the performance of DBBLs debit card and the customers' feedback about the services provided by the Dutch-Bangla Bank Ltd. For the most part it used primary data, which was obtained from the shared distribution of DBBL and through questionnaires and interviews from the officials and customers of SCB. Besides, journals, website of SCB, SCB bulletins were used as secondary sources. Information also collected from the officials and customers of the following branches: a.
Standard Chartered Bank
b.
Eastern Bank limited
c.
Brac Bank Limited
d.
Dutch-Bangla Bank Limited.
e.
Jamuna Bank Limited.
Origin of the Report The report entitled “Performance Evaluation and general policy of Dutch-Bangla Bank Limited� has been prepared as a partial fulfillment of BBA program authorized by the Register, The University of Asia Pacific Scope of the Report
Being a foreign commercial bank, Dutch –Bangla Bank Ltd does not seem to compete with local banks except for a few new private banks. Besides, Dutch –Bangla Bank Ltd along with other foreign commercial has redefined its marketing strategy given the changing market scenario. The scope of the report is limited within the performance of general banking policy and comparison of consumer satisfaction of the Dutch –Bangla Bank Ltd with other banks. Furthermore, the banks and branches surveyed are all within the geographical location of Dhaka city. The survey included the customers’ ofa.
Standard Chartered Bank
b.
Eastern Bank limited
c.
Brac Bank Limited
d.
Duch Bangla Bank Limited.
e.
Jamuna Bank Limited.
Objectives of the Report 1 Main Objective The main objective of the study is ‘understanding and evaluating the performance of DBBL’. While preparing the project paper, I want to make comprehensive study on performance of a specific organization and it is unsolicited job to evaluate how an organization comes to attitudinal attachment with the people surrounding. 2 Subordinate Objective It requires other subordinate objectives to fulfill the main objective of the study. Subordinate objectives of the study are: i.
Understanding the brand elements of DBBL
ii.
Evaluating the marketing programs of DBBL
iii.
Understanding the performance responsibility of DBBL
Methodology 1 Nature of the Study: Exploratory 2 Sources of Information: Both primary and secondary information sources were used to complete this report. I. Primary Sources: Primary sources were officers and manager of Dutch Bangla Bank Limited, Dhanmondi Branch Dhaka. Following factors were considered to collect information:
a. Face to Face conversation. b. Information Queries: Questions were presented in a paper sheet .
c. Respondent size: 9 respondents. II. Secondary Sources: Secondary information was collected from various books, journals, manuals, and also from the web sites. 3 Sampling Technique: Convenience Sampling. 4 Analysis Techniques: Self study was used to analyze the collected information. 5. Presentation of Information: Collected information and findings of the analysis are presented in both table and graphical form. Limitations •
Limitation of time was one of the most important factors that shortened the present study. Due to time constraints, many aspects could not by discuss in the present study.
•
Lack of comprehension of the respondents was the major problem that created many confusions regarding verification of conceptual questions.
•
Confidentiality of data was another important barrier that was faced during the conduct of this study. Every organization has their own secrecy that cannot be revealed in publics.
•
Rush hours and business was another reason that acts as an obstacle while gathering
•
The findings of the survey were based mostly on the SCB customers’ of Dhaka City, as only all the
data.
customers reachable were included in the sampling framing. The results may not reflect the same for other areas of the country. •
As, I had more dependence on the primary sources, so there might be some level of inaccuracy with those collected information. Though, adequate verification and cross- checking was used, to minimize the error level.
•
Confidential information regarding past profit or product cost, financial information was not accurately obtained. Alike all other banking institutions, DBBL is also very conservative and strict in providing those information. In those cases, I have relied upon some assumptions, which in result have created certain level of inaccuracy. Still, I had tried my best in obtaining that sensitive information, as much as possible.
Chapter-2: Banking Sector of Bangladesh 2.1 THE WORLD ECONOMY In the wake of the new millennium the world economic scenario is fast changing giving rise to various avenues and opportunities as well as the accompanying risks. There are so many avenues for growth, which is the past neither, had to confront with such huge prospects of technological breakthrough and environmental hazards not were there conflicts of such proportions between the ideas of national sovereignty and globalization.
As globalization means grater freedom and prosperity, each and every country is in the process of converging incomes and standard of living driver by large international flow of goods and services to bring about shared prosperity. It is also envisaged that globalization would extricate the poor and backward nations of the developing would out of the economic morass and put them on the fast track of progress as well as rationalizes their level and growth. In a country like Bangladesh globalization has more to do with foreign investment and capital flow that an equitable international trade. The international flow has continued to favor rich countries where as it would have been in the event the case was reversed. Bangladesh is participating in the process of integration of her economy into the global one by opening up to international markets and harnessing foreign investment and trade. The developing countries have seen little profit from the recent boom in international financial flows and are suffering great deal from major cuts due to re-allocation in aid flows from advanced and donor countries. In the concept of privatization the state has a smaller role to play and as such the focus is mainly on the market. During the last century, the state and market went hard in hand and functioned to tandem. Due to globalization the concept of market has undergone rapid changes and is well beyond the geographical boundaries of countries. 2.2 BANGLADESH ECONOMY Although we have entered a new millennium nobody expects there will be any sudden breakthrough in the economy as it is a continuous process. The economic development of a country requires the use of capital through a sound banking system to provide the necessary finance to various development agencies which have not developed up to expectation due to constrains common to the economy of a third world country. The macro economic development during the year 2002-2003 was marked by a healthy GDP growth and moderate inflation. For the second year running bumper rice harvest maintained growth at above 5% and GDP growth during the FY 2000 was at 5.7% which may be considered as the highest since the beginning of the 1990’s. Conversely the growth performance in industry was sluggish with manufacturing growth of 3.3% being one of the lowest rates in recent years. Several adverse factors contributed to this situation, which included disruption in the supply of natural gas, which in turn affected the power supply and production activities. Furthermore, labor disputes during the second quarter of the year badly affected the operation of Chittagong port. In the services sector, growth in transportation, storage and communication contributed to about 13% to the total GDP but growth in trade sector was sluggish due to lower import growth. Investment rate in FY’02 showed some increase and the declining trend in private savings was substantially reserved. The national saving rate increased from 11.9% of GDP in FY’01 to 14.6% in FY’02. This was partly due to increased inward remittances, increase in nominal interest rates and lower rate of inflation. Monetary policy in FY’02 continued to accommodate the borrowing needs of the government. Broad money increased from 8.3% to 11% in FY’02. Current expenditure exceeded the budgetary target by 3.6% due to higher interest payment on domestic public debts, food grain procurements, defense spending and other subsidies allowed by the government as a result of which the current expenditure-GDP ration increased from 8.7% to 8.9% in FY’02. On the revenue side there was a 5% shortfall in revenue collection, which was mainly due to low import growth and progressive weakness in the collection of VAT and income taxes.
2.3 Overview of Banking Sector Banking Company is defined as a company which transacts the business of banking, an individual firm, company or corporation generally deals in the business of money and credit is called bank. In our country, any institution, which collects money as deposit from people, lending or investing money of its own as well as deposit as credit/advance can be treated as a Bank. The purpose of Banking is to ensure availability of money from surplus units to deficit units. Bank in all countries work as the depository of money. The surplus units/ depositors look for safety of money and extra earning like interest of their surplus money by the Bank. Entrepreneurs try to obtain money from the bank as working capital and also for long term investment. These entrepreneurs welcome effective and forward-looking advice for investment. Banking sector thus owe a great to the deposit holders on the hand and the entrepreneurs on the other. They are expected to play the role of friend, philosopher, and guide for the deposit holders and the entrepreneurs. Since liberation, Bangladesh passed through fragile phases of development in the banking sector. The nationalization of banks in the post liberation period was intended to safe the institutions and the interest of the depositors. Those handling the banking sector have borne the burden of putting banks on reliable footings. Despite all that was done, some elements of irregularities appeared. With the assertion of the role of the Central bank, The Bangladesh bank started adopting measures for putting banking institutions on right track. Yet the performance of public sector management of banks left some negative effects in the money market in particular and the economy in general. The agility among the borrowers manipulates the banking sector as a whole. In effect, a default culture appeared on the scene. The opening of PRIVATE and FOREIGN participants to the banking sector was intended to obtain desirable results from banking. The authorization of private banks was designed to create competition among the banks and competition in the from of efficiency with and the productivity in enterprises funded by banks. Unfortunately, for the people, at large banking sector is yet to obtain the credit for efficiency, credibility, and growth. The clever, among the user of banking services, have influenced the management of banks, for obtaining short-term and long-term loans. They sometimes showed inflated to get money for investment in business and industry. Few diverted their loan money to purposes different from the loan proposals, and invested in non-profitable units have failed to repay their loans to the banks. For this reason new entrepreneurs are not getting capital while defaulting entrepreneurs have started obtaining either relief in the form of rescheduling of the repayment program or additional inevitable money for diversified units. 2.4 The Banking Sector in Bangladesh Domestic banks can be divided into four main groups: Nationalized Commercial Banks (NCBs); Private banks established in the early 1980s; and private banks established in 1999: Nationalized Commercial Banks (NCBs) In general terms; NCBs are large, operationally inefficient and technically insolvent. They are used as vehicles of government directed lending. These banks enjoy an enormous and stable customer deposit base, which provides a cheap source of funding. In addition, most large government related business is routed through these banks; Private Banks, 1980s- set up to service the sectors not being addressed by the larger NCBs. Not subject to state directed lending but have generally suffered from related lending to directors and their extended families.
Generally asset quality is poor with the level of non-performing loans at worryingly high levels. Across the whole banking sector, classified loans, as reported by Bangladesh Bank (BB) in December 2002, the Central Bank, were 34.93%. As a percentage of their own total loan portfolio, nonperforming loans accounted for 38.55% of the NCB s loan book, and 22.01% of private banks (both categories). In October 2002, the provisioning requirements changed for past due loans from 180 to 90 days, now requiring a 20% provision. Generally, provisioning levels are weak, impairing capital. Firstly, the legal position of banks' recourse is weakened once a loan is written-off; and secondly, BB imposes a six-year moratorium on write-offs. Long-term interest rates have traditionally been lower than short-term rates. This inverted yield curve is a fall out from the source of long term lending. Long term lending was traditionally extended by the NCB’s, usually for non-commercial loans, thus setting a low benchmark for longer-term funds. Clearly the banking industry is in a very poor state and it will take years to clean up. The Government and BB have been working with the World Bank to introduce reforms, including related party lending, restricting lending concentrations to 15% of the capital base, capital adequacy and bankruptcy laws. The World Bank has indicated that there are funds available to assist individual banks improve their capital bases, but this depends on them first making full provision for NPL s. Some banks have also successfully raised capital through IPO s. BB has reaffirmed its intention to continue extension of support to banks through rediscounting. However care should be exercised when taking comfort from BB's assertion that it will not allow any bank to fail. While this pledge has held true to date, in effect it means that BB will allow a technically insolvent bank to continue in operation with BB guidance and "technical" support but BB will not provide a capital injection or write-off government related bad loans. Chapter-3: Organization Part 3.1 Brief History of DBBL Dutch-Bangla Bank Limited (the Bank) is a scheduled commercial bank. The Bank was established unde the Bank Companies Act 1991 and incorporated as a public limited company under the Companies Act 1994 in Bangladesh with the primary objective to carry on all kinds of banking business in Bangladesh. The Bank is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. DBBL a Bangladesh European private joint venture scheduled commercial bank commenced formal operation from June 3, 1996. The head office of the Bank is located at Senakalyan Bhaban (4th floor), 195, Motijheel C/A, Dhaka, Bangladesh. The Bank commenced its banking business with one branch on 4 July 1996. Banking is a team work. Generally banking is of two types. One is ‘Manual Banking’ and the other is ‘Online Banking’. Dutch Bangla Bank Limited is totally an Online Private Bank in Bangladesh.
Dutch Bangla Bank Limited
Type Founded Headquarters Key people Industry Products Employees Website
Private (Non-Government), DSE DUTCH BANGL Dhaka, Bangladesh (1995) Dhaka, Bangladesh Mr. Abu Hasnat Md. Rashidul Islam, Chairman, Banking Banking services 1600 [1]
At present DBBL is one of the leading banks in Bangladesh. Its main objective is to give more developed services to the general public in an easy process of banking. Earning profit is not the only objective of this bank. It wants to come more close to the general people. By performing its banking activities and social responsibilities properly DBBL wants to maintain its uncompromising commitment to its customers needs and wants to become their first choice in banking. DBBL is totally a Bangladeshi private bank which is certified by Bangladesh Bank. At present it has about 39 branches in whole Bangladesh. In Dhaka it has about 15 branches. DBBL uses a special kind of software for its online banking which is called FCR Live (Flex Club). This software is specially supplied from India for online banking. Each branch of this bank has various sections which give various important services for its customers such as account opening, western union, loan and advance facilities, share or stock facilities, card facilities, foreign exchange or L/C facilities, cash section etc. Account holders can transfer their money from more than two hundred countries of the world through western union quickly and easily. DBBL is really a trusted partner of the customers. 3.2 Mission Dutch-Bangla Bank engineers enterprise and creativity in business and industry with a commitment to social responsibility. "Profits alone" do not hold a central focus in the Bank's operation; because "man does not live by bread and butter alone". 3.3 Vision: Dutch-Bangla Bank dreams of better Bangladesh, where arts and letters, sports and athletics, music and entertainment, science and education, health and hygiene, clean and pollution free environment and above all a society based on morality and ethics make all our lives worth living.
DBBL's essence and ethos rest on a cosmos of creativity and the marvel-magic of a charmed life that abounds with spirit of life and adventures that contributes towards human development. 3.4 Core Objectives Dutch-Bangla Bank believes in its uncompromising commitment to fulfill its customer needs and satisfaction and to become their first choice in banking. Taking cue from its pool esteemed clientele, Dutch-Bangla Bank intends to pave the way for a new era in banking that upholds and epitomizes its vaunted marques "Your Trusted Partner�. 3.5 Management Pattern (Organ gram) The organization is directed under the Bank Companies Act 1991. The number of members in the Board of directors in DBBL is seven in total and headed by the Chairman. At present Mr. Abu Hasnat Md. Rashidul Islam is playing his role as the Chairman of the managing board. Moreover, other two kinds of committee, Executive Committee and Audit Committee are formed by the combination of board of directors. The organ gram of DBBL is exhibited in the page 12.
First Man (Manager) or Branch in Charge
Second Man
General Banking
A/C Opening
Bills & Remittance
Clearing
Second Man
Cash
Accounts
Loan & Advances
Foreign Exchange
Receive
Payment
Loan
Overdraft
Foreign and Local LC
Remittance
Cash at ATM
Short Term Advances
Trade Related Credit Facilities
Export and Import LC
Exchange
Contingent Facilities
Figure: Organ gram of DBBL 3.6 Financial Structure Dutch Bangla Bank Limited is one of the leading banks in Bangladesh. In 2007 total assets of DBBL amounted upto 45493 million taka which is two and half times more than that of the year of 2002. The amount of investment is 13% of total asset and the major portion loan and advances amounted to 28325 million taka which is 62% of total asset. The bank earned 5181 million taka as total revenue in 2007.
3.7 Products and Services Dutch Bangla Bank Limited (DBBL) gives banking almost all kind of banking service. Individuals and organizations can open here their bank account to operate transaction in a digital form, as it is an online bank. It provides SMS banking, Internet Banking card services, loan services, foreign exchange services, and western union service.The services of DBBL are as follows: •
Account opening services
•
Internet Banking services
•
Western Union services
•
Cash services
•
Online services
•
Card services
•
Foreign exchange services
•
Loan service
Different Kind of Deposits of DBBL Deposit
Term Deposit
1)
Saving Account
Monthly Term Deposit
2)
Current Account
Term Deposit 3 Months
3)
Short Term Deposit
Term Deposit 6Months
4)
Resident Foreign Currency Deposit
Term Deposit 12 Months
5)
Foreign Currency Deposit
Term Deposit 12 Months
6)
Convertible Taka Account
Term Deposit 24 Months
7)
Non-convertible Taka Account
Term Deposit 24 Months 1 year Payout
8)
Exporter’s FC Deposit (FBPAR)
Term Deposit 36 Months
9)
Current Deposit Bank
Term Deposit 36 Months 6 Months Payout
Bills Bill means OBC and IBC. OBC means outdoor bill for collection. When cheques come from various branches of the different banks, “Forwarding Letters” are sent to these different branches of different banks. If cheques come from a branch of a particular bank, where DBBL has also a branch, there forwarding letters are sent to the manager of that branch of DBBL and request him to credit their party account. Forwarding letter is also called DD. On the other hand IBC means Indoor Bill for Collection. Here cheques are sent to clear House for Collection. Remittance Remittance requires various important particulars such as:•
Telegraph Transfer (TT)
•
Demand Draft (DD) encashes from one branch to another branch or one district to another.
•
Pay Order (PO) which encashes by the some branch or issuing branch.
Clearing Clearing is of two types. One is Out warding and another is In warding. When a cheque comes from a branch of a particular bank, forwarding letter is sent. But different banks have many branches. So it is not possible to send forwarding letters to every branch of different banks. For this reason, Bangladesh Bank requires a clearing house every morning and evening, where a representative of
each bank comes with cheques of their branches for clearing. It is called ‘Out warding’. They try to clear their cheques through discussion among them. Which cheques are come back to the branch by representative, the parties of these cheques are called back and talked about the problems of the cheques for which those are not passed or honored . This is called In warding. Volt Register Everyday this register maintains about actual cash in hand as per denomination. Services: DBBL provides various important services such as: • • • • •
Account opening services Internet Banking services Western Union services Cash services Online services
• Card services • Foreign exchange services • Loan service Chapter 4: Brand Elements of DBBL In the last 30 years some of the greatest branding success has come in the area of services. Studies show that going to keep extremes to keep customers happy, although sometimes costly, goes hand in hand with good financial performance. ‘Delighted customers come back again and again. Thus, in today’s competitive marketplace, companies can well afford to lose money on one transaction if it helps to cement a profitable long term customer relationship.” And developing a strong brand gives not only more security against unfortunate loss but also maintain long term benefit to the company. ‘The ability of a strong brand to simplify consumer decision making, reduce risk, and set expectations is thus invaluable.’4 Dutch Bangla Bank Limited (DBBL) which is involved with banking service has developed itself as one of the strong brand in the banking industry. The brand association of the DBBL is leveraged basically on its socially responsible activities. ‘A brand is a name, term, sign, symbol, or design or a combination of these intended to identify its goods or services of one seller and to differentiate them from those of competitors.’ 3 Here the elements of the bank can be identified as follows: a. Brand Name b. Logos and Symbols c. Characters d. Slogans
e. URL a. Brand Name: The brand name is fundamentally important choice because it captures the central theme key associations of a product or service in a very compact and economical fashion. It is the central element of a particular brand. Brand names can be an extremely effective shorthand means of communication. The name of the bank is Dutch Bangla Bank Limited which is said DBBL in abbreviation. Here, the parts of the name are easy to pronounce and spell. The name simply said as ‘Dutch Bangla’ reduces consumers’ cognitive effort to comprehend and process the brand name. b. Logos and Symbols: Although the brand name typically is the central element of the brand, visual brand elements, such as logo plays a critical role in building brand equity, especially in terms of brand awareness and recognition. The symbol of DBBL is developed with combination of three colors, blue, red and green somewhat exhibited like rainbow within a circle. It represented the mission and vision of the bank. DBBL's essence and ethos rest on a cosmos of creativity and the marvel-magic of a charmed life and it is properly presented in the logo.
Fig: DBBL Logo c. Characters: Brand characters can be quite useful for creating brand awareness. It is easy to identify the character of Dutch Bangla Bank Limited as a socially responsible one. By donating comparatively more in health, education, disaster, and so on than other financial institutions in the country, it creates a room in the mind of people. In general the more realistic the brand characters, the more important it is to up-to-date. DBBL is the largest donor in the country. And that is why it is characterized as the strong brand with social bond. d. Slogans Dutch Bangla Bank Limited (DBBL) emphasizes on the credibility and quality performance through its slogans. When we hear as the tagline and slogan “Your Trusted Partner” we can easily conclude on the serviceability of DBBL’s banking service. Chapter-5: The Divisions of Dutch-Bangla Bank
The bank is divided into several divisions which are also further sub-divided. The divisions are mainly based on some services line designed for and provided to targeted customer as well as some divisions and units are to support the business activities of the major service based division. The following is the list of the divisions of Dutch-Bangla Bank Limited. 5.1 Credit Division (Foreign Trade) Principle services of this division are to the people are Import Letter of Credits (L/C), Import Bills for Collection, Back to Back Letter of Credit, Direct Export Bills for Collection, Bulk Letter of Credit Collection, Bonds and Guarantees. 5.2 General Service Divisions Superior retail banking services comprising a wide range of deposit and cash transaction, clearing are offered by the Dutch-Bangla Bank to its individual customers. The General Service division constantly faces challenges and meets them by developing new products and services to fulfill the specific requirements of local and foreign customers. Bank offers a 24-hour service in Bangladesh through its ATM network and Phone-link Phone Banking services. 5.3 International Division (Treasury Back Office) In the past the activities of Treasury Back office and Front office were performed by the same department but there was lack of transparency and the possibility of illegal activities also so high. For this the Treasury Division divided into two unique division. One is Treasury Back Office and other is Front Office. Treasury Back Office does what is assigned or started from the Front office. That means at the ending of the front office task start the back office work. After taking any decision related with treasury like- fixing currency rate for buying or selling, giving any buying or selling order of local or foreign currency, reserve any deposit in hand or other bank etc. gives a note of the decision to the back office and then the back office prepares a formal document and takes the end result of the task that, is the work done properly or not. 5.4 Treasury Division (Front Office) The activities of front office are already discussed. But an important point is any mismatch or weak decision of front office able to destroy a bank at any moment. So the job of the Front Office is very hard, Critical and risky. 5.5 Internal Control & Compliance Division This department deals with internal audit and always tries controlling any type of illegal and false financial information including or disclosing in or from the financial record. So that, this department always verifying all the record time to time and has to submitted the end result and their recommendation to the management. If the committee gets any mistake or wrong information in the record the department takes quick action against the employee or employees who are engage with the task. 5.6 Human Resource Division This department manages recruitment, training and career progression plan. DBBL highlight the importance of developing its people to create a culture of customer service, innovation, teamwork and professional excellence. DBBL mainly recruits people by two ways. One is as Management trainee or probationary officer and other is experienced person as regular basis. DBBL pays attention to recruit high quality staff through proper evaluation and improving their skills through structure training, reward and punishment base on strict performance evaluation and opportunities of promotion is given after every two years as the feature of the personnel policy of
DBBL. Every year all employees are gotten physical ful check up facility by the bank's own financing. Every employee gets yearly earn leave facility. The employees are given different types of training time to time to progress their professional efficiency. 5.7 Credit Administration Division This department always concerns about the loan amount those are given by the bank it may be small or medium or large in size. Every member of the division are assigned to concern about the sanctioned loan and advance- for what purpose it is given, in which sector it is given, what is the transaction performance of the loan etc. 5.8 IT Division. IT Division deals with all IT program of the Bank. The bank uses flex cube which is used by Dhaka Bank, Estarn bank. All information of the bank is store in 3 steps. First it is stored in the branch, secondly in the Head office or IT department and lastly for final backup it is stored in main storage in Uttara. 5.9 Marketing & Development Division Marketing & Development Division's task is to modify their products, introducing new and unique product, survey the market, research with the consumer demand and want etc. Though DBBL mainly deals with the corporate banking but also going to introduce more new consumer products with the old products like- credit card, all saving account holder are given debit cart facility by the ATM card. This division also research about prospect of the introducing product. 5.10 Credit Monitoring & Recovery Division After the sanctioned the loan the Credit Monitoring & Recovery Division time to time monitors the loan and the transaction of the loan. After giving the loan if there is occurred no transaction then the authority becomes award about the loan and takes it seriously to monitor the credit. If the credit crosses the time limit without any transaction or repayment then the monitoring division becomes hard with the client and for recovering the division may take any legal action against the client. 5.11 Corporate Banking Division Corporate Banking meets the needs of companies, banks and other financial institutions. DBBL provides a full range deposit and loan products to its corporate clients. Rapid decision taking is an important feature of DBBL’s services to international and domestic companies doing business in Bangladesh. All a/c are assigned to the head of the branch manager to look after the clients need. Each manager keeps close contact with the client obtaining in-debt knowledge of the client's business and providing timely advice. All kinds of supervision and monitoring of the corporate banking services are done by the direct handling of the Corporate Banking Division. The large portion of the income of DBBL is come from the corporate banking. So the liability of this division is very high to run the banking service smooth and well. 5.12 Card Division Card Division deals with the card facility of the DBBL. DBBL provides debit card to all the deposit holders. There are many debit card booths in Dhaka city and out side the Dhaka city. By this card the card holder is gotten 24 hours banking facility from the booth. And there are some shops and clinics are given extra facilities to the card holder. There is only one time the bank takes 200 TK charge for the facility where other banks like SCB take charge for every transaction of the debit card.
5.13 Product Division There are different divisions for targeting different type of customers. Mainly consist of two divisions, that is Consumer Banking Division (C B) and other is Corporate Banking Division named Corporate and Institutional Banking (C & I). Consumer banking division meets the needs of individual customers with various products like Current Deposit Account, Savings Account, Short term Deposit Account, Fixed Deposits, Resident Foreign Currency Deposit, Foreign Currency Deposit, Consumer Credit Scheme, Personal Loans, Cash Line, Installment loans, etc. Corporate and institutional banking meets the needs of companies, banks and other financial institutions. DBBL provides a full range deposit and loan products to its corporate clients. Rapid decision-making is an important feature of DBBL’s services to international and domestic companies doing business in Bangladesh. All accounts are assigned to a Manager to look after client needs. Each manager keeps close contact with the client obtaining in-depth knowledge of the client's business and providing timely advice. Chapter-6: Operational process & Products of Dutch- Bangla Bank Limited As a financial institution, Dutch-Bangla Bank Limited serves General Banking facilities, Credit & Advance facilities as well as Foreign Exchange facilities. By this way we can say that the banking services of the DBBL is served by the three Departments. Those are: 1. General Banking Department 2. Loan and Advance Department 3. Foreign Exchange Department 6.1 ATM & POS DBBL's ATM: You can find DBBL ATMs beside your home, in your office premise, nearby market, kacha bazar, university, college & school premises, Airport, Railway stations etc., throughout the country. All the ATMs can accept DBBL-NEXUS ATM / POS card, DBBL-Maestro/Cirrus Debit card and DBBL Credit card. Using any of the DBBL ATM pools any where in the country, you can perform the following: • • • • • • • • • •
Account balance enquiry Cash withdrawal – 24 hours a day, 7 days a week, 365 days a year Cash deposit to a certain number of ATMs any time Mini statement printing Statement request PIN (Personal Identification Number) change Request for Cheque Book Fund transfer within your own accounts Payment of mobile/T&T phone, Gas, Electricity, Water, Internet, Credit Card bills from your savings/current account Payment of School/College/University fees by debiting your savings/current account
•
Purchase of activation number for Mobile/ Internet pre-paid cards
DBBL's POS: You can find DBBL POS terminals in almost all the district towns/cities, your nearby shops, restaurants, hotels, schools, colleges, universities, bus terminals, railway stations, travel agencies, etc., throughout the country. All the POS terminals can accept DBBL-NEXUS Debit card, DBBL-Maestro/Cirrus Debit card and DBBL Credit card. You can use DBBL-Maestro/Cirrus Debit card from any Maestro/Cirrus network worldwide. This would open access to more than 300,000 Cirrus ATMs in around 100 countries. You can make payments for purchases in more than 800,000 Maestro outlets (POS terminals) worldwide. Merchant, being customer of DBBL, will get his bills credited to his account automatically. Submission of bill is not required. You will enter into the era of Plastic money through DBBL card services. This will eliminate the risk and hazard of carrying cash. Low annual/replacement/renewal fee for DBBL cards Low commission for the merchant for all types of transactions by DBBL cards. All the POS terminals and ATMs are controlled by the world famous, secured & robust switching software – IST/Switch of Oasis Technology Ltd., Canada. 6.2 Internet Banking: Account Summary The Customer will be able to view the list of Current, Saving, Term Deposit and Loan accounts with the current balance. Account Details The Customer can choose a particular account and see the account details including unclear fund, limit, interest accrued etc. Account Activity The customer can see or print his transaction activity in a given account for a particular period. 6.2 Transfer Funds The customer can transfer funds from one of his accounts to another of his accounts within the bank. Third Party Transfer The customer can transfer funds from one of his accounts to another customer’s account within the bank. 6.3 Pay Bills
The customer can pay his utility bill (like Electricity, WASA, GAS, Telephone, Mobile, ISP etc.) 6.4 Standing Instructions The customer can setup, modify or delete standing instructions for transferring fund from one of his account to another account (his account or 3 rd party). Open/Modify Term Deposit The customer can open a term deposit by transferring funds from one of his current or savings accounts with the bank. He can also modify the TD and redeem / part-redeem it. Loan Repayments The customer can make payment of the loan installment from his CASA account. Statement Request The customer can make a request for account statement for a required period. The bank will manually service this request. Cheque Book Request The customer can make a request for a Cheque book. Cheque Status Inquiry The customer can choose an account and enter the Cheque number for which the status should be viewed. Stop Payment Cheque The customer can mark his Cheque leaf as stop payment. Interest Rate Inquiry The customer can query on the interest rates on CASA & Term Deposit Products. Foreign Exchange Rate Inquiry The customer can query on the Foreign Exchange (FX) Rates using this function. Refill Pre-Paid Card The customer can buy a refill number for his pre-paid mobile phone or ISP link. Change Password The customer can change his Internet Banking Password using this function. 6.5 Extra Features for Corporate Customer Letter of Credit The customer can initiate the LC application through Internet Banking. Bank Guarantee The customer can initiate the Bank Guarantee through Internet Banking. Limits Query The customer can view his Loan Limits and Limits Utilization through Internet Banking. 6.5 Utility Bill Payment Utility Bill Payment is a feature that provides the option of paying your Telephone, Mobile, Electricity, Water, Gas, Tuition Fees, Credit Card Bill, ISP Bills. from different channels of DBBL..
These channels include over the counter, ATM, Internet Banking. However, we are in process of signing agreements with various service organizations/ providers. Recently, DBBL has made an agreement with GrameenPhone and Bangla Link to accept their mobile bills over these channels. Utility Bill Payment Through Internet Banking One of the excellent features offered to the customers through the Internet banking of DBBL is payment of Utility Bill. This module of our Internet Banking is a convenient way of paying your various utility bills such as Electricity bill, Gas bill, WASA bill, Land line and Mobile phone bills etc. It is a wastage of your valuable time to stand in a long queue to pay your bills. Moreover, you have to go to different bank counters as all the bills can not be paid in a single bank. DBBL Internet Banking is going to solve all your problems and agony. The Post-paid subscribes will enjoy the facility of paying his/ her monthly bill, pay security deposit, advance payments etc. to the GrameenPhone and Bangla Link through Internet Banking Module. Open/ Download the following link for Bill Payment Procedure of Post-Paid customer through Internet Banking.. Bill Payment of Post-Paid customer of GrameenPhone Bill Payment of Post-Paid customer of Bangla Link Utility Bill Payment Through ATM Foreign Exchange Department Providing International Trade & Communicating with the world. 6.6 Definition of Foreign Exchange: Foreign
Exchange
means
foreign
currency
and
it
includes
any
instrument
drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies. Foreign Exchange Act. 1947 defines foreign exchange as "foreign currency and includes deposits, credits, and balances payable in foreign currency as well as drafts, travelers cheques, letter of credit, bills of exchange drawn in local currency but, payable in foreign currency". According to Dr. Paul Einzig, "Foreign exchange is the system or process of converting one national currency into another and transferring money from the country to another." Foreign exchange deals with foreign trade and foreign currency. 6.7 Definition of Foreign Trade: No country is self-sufficient in all the goods. Some countries have special advantage to produce some items. Bangladesh can manufacture readymade garments easily due to lower cost of labor. So Bangladesh is exporting readymade garments to USA where as USA is exporting machinery to Bangladesh due to their favorable transaction to that item. These kinds of cross border transaction or exchange of goods are called foreign trade.
For conducting these foreign dealings the respective banks need authorization of the central bank. The respective Banks need "Authorized Dealer License" for conducting this foreign correspondence. The bank which hold this license is called authorized dealer. Bangladesh Bank issues this license by seeing the bank's performance and also the parties that deals with. Authorized Dealers: Authorized Dealer means a Bank, Authorized by Bangladesh Bank to deal in Foreign Exchange under the Foreign Exchange Regulation (FER) Act 1947. But there are some persons or firms, authorized by Bangladesh Bank to deal in Foreign Exchange with limited scope are called Authorized Money Changers. To get a license for authorization a bank will apply the General Manager, Foreign Exchange Policy Department, Bangladesh Bank, Head Office, Dhaka complying the subsequent conditions: The Bank must have adequate manpower trained in Foreign Exchange. Prospect to attract reasonable volume of Foreign Exchange business in the desired location. The bank meticulously complies with the instruction of Bangladesh Bank. The bank will commit to deal in Foreign Exchange within the limit & will submit periodical returns as instructed by Bangladesh Bank. Functions of Authorized Dealer: Authorized Dealer can handle all kinds of Foreign Exchange transaction as per Foreign Exchange Regulation (FER) Act 1947 under the instruction of Bangladesh Bank. Following are the main function of an Authorized Dealer: •
Exchange of Foreign Currencies.
•
To make arrangement with Foreign Correspondent.
•
Buying & Selling Foreign currencies.
•
Handling of Inward & Outward Remittance
•
Opening of L/C & Settlement of Payment.
•
Investment in Foreign Trade.
•
Opening & Maintenance of Accounts with Foreign Banks under intimation to Bangladesh Bank
•
Export Documents handling.
Wings of Foreign Exchange: A Bank's Foreign exchange department has three definite wings through which foreign exchange transactions are conducted. Foreign Exchange
Import Section Export Section Remittance Section 6.8 Import Department Introduction: Import trade of Bangladesh is controlled under the import & Export control Act (IEC) 1950. Authorized Dealer Banks will import the goods into Bangladesh following import policy, public notice, F, E circular & other instructions from competent authorities from time to time. Definition on Import: Buying of goods & services form foreign countries for sales is considered as import. The person or organization who import the goods & services form foreign countries is known Importer and from which goods & services are imported is known as Exporter. In case of Import, the importers are asked by their Exporters to open a Letter of Credit (L/C). So that there payment against goods & services is ensured. General Provision for Import: Regulation of Import – Import of goods under this order shall be regulated as under: Free Importable Items: The items which are not included either in the Banned list or Restricted list shall be freely importable: In addition to the conditions mentioned in the Restricted and Banned Lists the conditions restrictions and procedures for import of various items mentioned in the test portion of this Order, shall as usual apply in case of import of those items. General conditions of Import Goods: Import Trade Control Schedule Numbers- For import purpose use of new ITC Numbers with at least six digits corresponding to the classification of goods as given in the Import Trade Control Schedule 1998, based on the Harmonized Commodity Description and Coding System shall be mandatory. Types of Importer: Goods are imported for personal use, commercial or industrial purpose. So there are three kinds of importer such as: •
Personal Importer.
•
Commercial Importer.
•
Industrial Importer.
Letter of Credit (L/C):
Letter of Credit (L/C) is a payment guarantee to the seller by the issuing bank on be half of the importer. In other words, it is a letter of the Issuing Bank to the beneficiary undertaking to effect payment under some agreed conditions. L/C is called documentary Letter of Credit, because the undertaking of the Issuing Bank is subject to presentation of some specified documents. Through the L/C Buyers & Sellers enter into a contract for buying and selling goods/ services and the buyer instructs his bank to issue L/C in favour of the seller. Here bank assumes fiduciary function between the buyer and seller. Mechanism of L/C: The subsequent diagram brings out clearly the operation of L/C:
Contract Sale (1)
Exporter London (Beneficiary)
Forward L/C To (4)
Ships Goods To (5)
Presents Docs & Obtains Payment s From (6)
Midland Bank, London Advising / Negotiating Bank.
Importer Dhaka (Applicant)
Recovers Amount From (8)
Obtaining Reimbursement From (7)
Opens L/C and Sends it to (3)
Applies for Opening of L/C (2)
DBBL Dhaka (Issuing Bank)
Classification of L/C: There are many kinds of L/C. Few of them are briefly discussed below: Irrevocable L/C: Irrevocable L/C cannot be amended or cancelled without the consent of the beneficiary or any other interested parties. Revocable L/C: It can be amended or cancelled by the Issuing Bank, without the consent of the Beneficiary or any other interested parties. If it is not indicated in the L/C whether it is Revocable or Irrevocable then the L/C to be treated as Irrevocable. Add-Confirmed L/C: When a third Bank provide guarantee to the beneficiary to make payment, if Issuing Bank fail to make payment, the L/C a third Bank adds their confirmation to the beneficiary, to make payment, in addition to that of Issuing Bank. Confirmed L/C gives the beneficiary a double assurance of payment. Clean Clause L/C: It is a Normal Caused L/C without third Bank’s confirmation. Revolving L\C: It is an L\C, where the original amount restores after it has been utilized. How many times and how long, the amount will restore must be specified in L\C. Transferable L/C: If the word “Transferable” incorporated in an L/C, then the L/C is transferable. Transferable L/C can be transferred by the 1 st beneficiary to the 2 nd beneficiary. But 2nd beneficiary cannot transfer it further to another beneficiary. Transfer may be done to more than one beneficiary partially, if not prohibited in the L/C Clean Letter of Credit: This is a commercial letter of credit wherein the Issuing Bank does not ask any documents as evidence of execution of the deal under the L/C. Under the said L/C only Bill of Exchange may be negotiated or may be paid without any supporting documents. Clean letter of Credit is not permissible in our import policy. Documentary Letter of Credit: All the commercial letter of credits, where export related documents such as invoice, B/L etc are required to present with the bill of exchange, is called Documentary Credit. Under this L/C, bill of exchange will not be honored without other required documents. Other Classification of L/C: On the basis of fund L/C may be classified as follows:
Back to Back L/C: Back to Back L/C is backed by another Export L/C. Where Import of the goods to be made to execute the export L/C & payment of Back to Back bills to be made normally from related export proceeds, the import L/C is called Back to Back L/C. Cash L/C: Where payment of import bill under L/C is being made form (i) Foreign Currency reserve in Bangladesh Bank or (ii) F.C account with Authorized Dealer the L/C is called Cash L/C. Barter L/C: Where final settlement is being made through commodity Exchange between the nations, the L/C is called Barter L/C.L/C Under Commodity Aid, Loan, Credit or Grant: Where final settlement of import payment are made through Commodity Aid, Loan, Credit or Grant. Chapter-7: Brand Building of DBBL 7.1 Customer Equity: Customer Based brand Equity (CBBE) is formally defined as the different effect that brand knowledge has on the consumer response the marketing of the brand. DBBL arouse in the banking industry 11 years ago created simply brand awareness among the people of the country. By spending more in socially devoted activities it tried with best to make a significant room in the people’s mind. As per in modern theory of branding the power of brand lies in the mind of consumers or customers, and what they have experienced and learned about the brand over time. And thus brand knowledge is the key to creating brand equity, because it creates the differential effect that drives brand equity. To know about the brand equity of DBBL, we first come to the proper understanding of brand equity. Blattberg and Deighton define customer equity in terms of ‘optimal balance between what is spent on customers acquisition versus what is spent on customer retention.’ 5 In this sense, the bank is operating its service soundly that the rate of retention of current account holder is somewhat cent percent. Consequences of providing expected services to valued client the bank is getting brand imagery. 7.2 Sources of Brand Equity: For branding strategies to be successful and brand equity to be created consumers must be convinced that there are meaningful differences among brands in the products or service category. That is why the general banking service of DBBL is to said of representing Points of Parity (POP) in the banking industry. Needs satisfaction of customers of DBBL conversely produce Points of Difference (POD) among them as they are not only merely satisfied by getting online service but also articulating words of mouth that add something invaluable to the overall marketing program of DBBL But the brand equity of occurs with its strength when the consumer has a high level of
awareness and familiarity with the brand and holds some strong favorable and unique brand association in memory. So the brand awareness and brand knowledge is the cornerstone of brand equity. 7.3 Brand Awareness: Brand awareness consists of recognition and brand recall performance. From the personal interview which was ‘blind test’ in nature, it has discovered that DBBL stands 4 th as online bank. Respondents were asked to name five online banks in rank order. They named Standard Chartered first, HSBC second, and then BRAC bank and DBBL in rank respectively. Brand awareness is created by increasing familiarity of the brand through repeated exposure that is the more consumer experiences. 7.4 Brand Performance: Brand performance is the intrinsic part of building brand equity. Brand performance of DBBL can be described with its primary characteristics and secondary features, service reliability, durability, service effectiveness and efficiency, style and design and its price. 7.5 Brand Imagery: DBBL’s brand image, the extrinsic part of brand, itself represent the meaning of DBBL brand ‘what is it’. Brand image comprises of profiles of clients, situations of receiving services, personality and values of customers, history, heritage and experiences. From the sense of DBBL brand imagery it takes on personality traits. A brand like a person, and can be characterized as being ‘modern’, ‘old fashioned’, ‘’lively’, or ‘exotic’.
Brand Resonance Loyalty Attachment Community Engagement
Consumer Judgment Consumer Feelings Quality Warmth Credibility Fun Consideration Excitement
Superiority
Security Self Respect
Social Approval
Brand Performance Brand Imagery Primary Characteristics User Profiles And Secondary Feature Purchase and Usage Situations Service Reliability, Personality and Values Durability and Serviceability History, Heritage, and Experiences Service Effectiveness Efficiency and Empathy Style and Design Price Brand Salience Category Identification Needs Satisfied Fig: Brand Building Blocks 7.6 Feelings: ‘Brand feelings are customers’ emotional responses and reactions with respect of the brand.’ 6 Types of brand building feelings of DBBL can be listed as security, social approval, self respect and warmth. 1. Memorable Easily recognized Easily recalled 2. Meaningful Description Persuasive 3. Likable Fun and interesting Rich visual and verbal imagery Aesthetically pleasing 4. Transferable Within and across product categories Across geographic boundaries and cultures 5. Adaptable Flexible Updateable 6. Protect able
Legally Competitively
FIGURE: Criteria for Choosing Brand Elements: Chapter-8: Corporate Social Responsibilities (CSR) The ethos of DBBL for pursuing its activities in social arena has got further momentum with your enthusiasm and support. Dutch-Bangla Bank Foundation (DBBF) is consistently pursuing its objective of being active in those social areas where it is needed most. The Foundation carries out diverse social and philanthropic activities in the field of education, health, conservation of nature, creation of social awareness, rehabilitation of distressed people and such other programs to redress human sufferings. It also promotes different socio-cultural and sports activities. Your Board of Directors in order to discharge its corporate social responsibilities in a greater perspective continued its contribution amounting to 5.00% of Bank's profit after charging loan loss provision to Dutch-Bangla Bank Foundation (DBBF).
It is important that citizens of a society enjoy the full benefits that society offers. A society, in turn, flourishes when its citizen can contribute their fullest potential. The well-being of individuals is jeopardized when normal developmental processes are interrupted by personal crisis, poverty, unemployment, poor health and inadequate education. Dutch-Bangla Bank Limited (DBBL) is the first Bangladeshi-European joint venture bank in Bangladesh addresses social concerns that threaten the structure of society and redress social conditions that adversely affect the well-being of people and society. DBBL practice thus encompass the professional activities of helping individuals, families, groups, organizations, and communities to enhance or restore their capacity for optimal social functioning and of .creating societal conditions favorable to this goal. Dutch-Bangla Bank Foundation (DBBF) was established on 3rd June, 2001 to perform humanitarian works like rehabilitation of the destitute and neglected portion of the society especially grassroots level poor in right track. 8.1 Areas of Social Responsibility Are Expanding The widening circle of social responsibility is illustrated by Figure below. The inner circle represents the traditional responsibility of business for its basic economic functions. This traditional responsibility has some social implications, such as the need to provide employment and to refrain from restraint of trade, but it is primarily an economic activity. The intermediate circle represents the widening area of responsibility that arises directly from performance of the basic economic
functions. These responsibilities have quickly become significant and are represented by such issues as equal employment opportunity and prevention of pollution from business operations. The outer circle represents an area that is still not well defined, but there is a rising public expectation for business to modify its singular pursuit of economic goals and help society with some of its unsolved general social problems. Business operations may not directly cause these problems, but they are indirectly involved in some instance; so the feeling is that since business is a major institution controlling major social resources, it should work as a corporate citizen to help society with its general social problems. Business will not have primary responsibility for solving these problems, but it should provide significant assistance. Examples are prevention of urban decay and training hardcore unemployed. The extent of the intermediate and outer circles is represented by the following summary of areas of social involvement that have been proposed. It is clear from this list that society is proposing a significant change in the social contract between business and society. Society is asking business to engage in a broader range of social activities that serve a winder area of social needs. Emphasis is shifting from the economic quality of life to a more nebulous social quality of life.
Responsibilities for aid With general social problems
Responsibilities which arise from performance of basic function
Performanc e Of basic economic functions
FIGURE : A widening circle for business’s social responsibilities. 8.2 Dutch-Bangla Bank Foundation has adopted various programs to make fruitful the aims and objectives: 1. Health
2. Education 3. Information Technology 4. Disaster To grant, pay or give, award scholarship, stipends, prizes, rewards, allowance and other financial assistance or help in cash or kind to students with a view to help them in prosecuting their study in universities, schools, colleges, educational institutions, technical institutions, art schools, institutions of teaching commercial and training, research or educational works in Bangladesh or abroad subject to such terms and conditions as shall from time to time be prescribed by the Board of Trustees for advancement and promotion of education. 1. To foster and encourage education and training in the field of banking among the persons employed in banking sector or who wishes to partake training with a view to be engaged in banking service and to establish and found institutions imparting such education and to establish, maintain, support or .help by monetary gifts or otherwise, centers and institutions for such education and training. 2. To meet traveling, boarding and lodging expenses for students going abroad for higher commercial and technical education, especially in banking subject(s). 3. To open, found, establish, promote, set-up, run, maintain, assist, finance, support and I aid or help in setting up and / or maintaining and / or running hospitals, clinics, maternity and child care centre, boarding houses, libraries, reading-rooms, gymnasium and other training and vocational institutes. 4. To publish and or publishing books, pamphlets, periodicals, and newspapers in Bangladesh or outside for the spread and advancement of education and culture. 5. To establish, promote, set-up, maintain, assist, financial support and / or aid to or to help in the setting up and / or maintaining and / or running schools and other institutions, orphanages, widow homes, lunatic, asylums, old homes, poor houses or other establishments for relief and / or help to the poor, old and infirm people and / or destitute or to give, provide and / or render help and assistance in cash or kind to poor and or destitute, widows, etc; or to give, provide and I or render help and assistance to and / or implement any scheme for providing livelihood and enlistment of the poor.
6. To give, provide and I or render food, medicine and other help find assistance in any shape or form to the poor deserving and needy persons. 7. To give, provide and I or render monetary and / or other help and assistance for the relief of persons and animals affected by natural and other calamities such as flood, fire, famine, cyclone, earth-quake, storm, accident, pestilence, drought, epidemic, etc. 8. To open, found, establish, promote, set-up, run, maintain, assist, finance, support and / or aid or help in the setting up and / or maintaining and / or running institutions, centre, auditoriums and the like for the running of welfare and other services to the public and to provide meeting-room for socially useful activities and functions. 9. To promote, organize, administer, establish, support, maintain, and / or grant to any person, institution or society or organization whatsoever having for its objects or charitable purposes and or incur expenditure in connection therewith. 10. To promote sports and culture through establishment of Clubs for sports, recreational and cultural activates and introduce awards, shields, medals etc. and also organize debates essay and sports competitions to achieve this object. 11. To organize meetings, seminars, symposia etc. to create awareness among the people aimed at spreading and upholding the ideals, values and spirit of the Banking and related products and services. To work in collaboration with other Trusts, Foundations, Associations and bodies having activities, programs, and projects aimed at establishing, spreading and upholding the ideals of Dutch-Bangla Bank Foundation. Education: 1. Scholarship program for the meritorious and needy students 2. Blind Education and Rehabilitation Organization (BERDO) 3. DBBL donates books for Bangabandhu Sheikh Mujib Medical University 4. DBBL donated a Pick-up Van to Bangladesh Agricultural University 5. DBBL donated books for Dhaka University Central Library 6. DBBL awards scholarships to the meritorious and needy Students 7. International Mathematical Olympiad-2006 Chapter-9: Financial Analysis of DBBL Financial Highlights
Financial information are much more sophisticated and sensitive than any other information. Because from the financial information only, we can grasp the core theme of any topic, particularly the financial position of a particular institution. So, to know about many important issues like capital, reserve fund, deposits, advances, investment, foreign exchange, operating profit, profit before tax, profit after tax, total assets, total liabilities, net assets per value, Earning per share etc. we normally use to make focus on financial highlights. Here also I use this Financial Highlights of DBBL to know the above-mentioned important issues. 2006 Balance Sheet (As at 31 December) Authorized capital 400.00
400.00
400.00
Paid-up share capital
202.14
202.14
202.14
Share premium
11.07
11.07
11.07
Total capital
664.35
1,474.50
1,909.26
Capital surplus/(deficit)
27.90
204.74
217.90
Reserve fund
117.47
352.89
590.46
Retained earnings
170.64
407.24
579.24
Deposits
11,457.76 21,067.56
27,241.11
Loans & advances
' 8,044.43 14,976.06
20,134.74
Lease receivables
-
2,242.85
Import
11,215.04 25,974.44
26,029.01
Export
4,800.62
13,581.71
22,144.17
Total assets
13,463.23 24,560.55
32,339.55
Total earning assets
12,387.63 22,161.76
28,705.58
Total non-earning assets
1,075.60
2,398.79
3,633.97
Total contingent liabilities
3.640.22
11.588.25
15,890.15
/Total operating income
1,299.27
2,366.92
3,434.73
Total operating expense
902.01
1,734.51
2,495.15
Total income from 58.17 investment Profit before provisions 397.26
126.62
183.57
632.41
939.58
Total provision
122.72
106.44
215.56
Profit before tax
274.54
499.02
687.82
Provision for tax
111.74
262.67
320.00
2007
951.17
2008
Bicome Statement
Net profit (after tax)
162.80
236.35
367.82
Return on equity (ROE%)
37.85
26.03
31.01
Capital adequacy ratio (%)
8.20
10.45
10.16
Loan deposit ratio (%)
70.00
71.09
73.91
Amount of classified Advances (Taka) Provision kept against Advances (Taka) 6.94 Provision surplus/(deficit) (Taka) Classified loans to total loans (%) Return on assets (ROA%)
41.19
23.24
357.35
classified 19.04
123.77
Ratios & Statistic
-
13.70
-
0.51
0.16
1.77
1.59
1.06
1.29
Return of Investment 7.74 (R01%) CostofFund(%) 7.86
6.22
5.25
6.90
7.48
Earning Per Share (Taka)
80.54
116.93
181.97
Dividend Per Share (Taka)
17.50
22.50
25.00
Price Earnings (P/E) Ratio (Times) Net Asset Value (NAV) per share (Taka) Market price per share (Taka) Number of shareholders
5.30
15.84
12.02
248.01
506.53
667.18
427.00
1852.50
2,187.50
588
403
583
Number of employees
309
431
548
Number of branches
11
19
28
*Proposed Geographical Location Wise Loan & Advance (Urban) Geographical Location wise Loan & Advances(Urban) 20000000000 15000000000
Series1
10000000000
Series2
5000000000
Series3
0 A) Urban:
Dhaka Region
Chittagong Region
Geographical Location Wise Loan & Advance (Rural)
Khulna Region
Sylhet Region
Geoeraphical Location wise Loan & Advances(Rural) 1400000000 1200000000 1000000000 800000000
Series1
600000000 400000000
Series3
Series2
200000000 0 Dhaka Region
Chittagong Region
Sylhet Region
Noagoan Region
As a commercial bank DBBL always concern about their safety of loan and for city oriented branches the bank gives more loan to urban area than rural area. Investment Year Investment
2006 951.17
2007 2242.85
Investment
Amount
3000 2000
Year
1000
Investment
0 1
2
3
4
Year
Import Business The bank uses it fund for investment in lease financing and other sectors. And the amount of investment amount is increasing from 2006 to 2007. Year 2004 Import Business 25974.44
2005 26029.1
2006
2007 27098.60
30425.33
t n u o m A
Import Business 30000 25000 20000 15000 10000 5000 0
Import Business Year
1
2
Year
3
4
Export Business Year
2002
2003
2004
2005
Export Business
5015.94
7659.17
13581.17
22144.17
Export Business 2006
30000
2004
20000
2002
10000
2000
0 1
2
3
Year Export Business
4
Financing in export import sector is very profitable for a bank because it is less risky an any other investment. For this reason DBBL prefers corporate banking. Chapter-10: SWOT Analysis The acronym for SWOT stands for •
STRENGTH
•
WEAKNESS
•
OPPURTUNITY
•
THREAT
The SWOT analysis comprises of the organization’s internal strength and weaknesses and external opportunities and threats. SWOT analysis gives an organization an insight of what they can do in future and how they can compete with their existing competitors. This tool is very important to identify the current position of the organization relative to others, who are playing in the same field and also used in the strategic analysis of the organization Strength •
DBBL’s Banking Experience for more than 10 years provides DBBL the strength of being the reliability in the foreign banking sector. This strength of DBBL is founded in very few bank of its
generation in Bangladesh, as the long term success of a bank heavily depends on its reputation while dealing with every sensitive commodity like money. •
DBBL is one of the banks in Bangladesh to issue ATM card. As a market Competitor, they showed the most substantial corporate strength among the JOINT-VENTUR banks.
•
In Bangladesh DBBL has wide range of customer base and is operating efficiently in this country Which is increasing day by day.
•
DBBL has a bulk of qualified, experienced and dedicated human resources & DBBL has the reputation of being the provider of good quality services to its potential customers
Weakness •
DBBL has fewer branches than their competitors. Such as DBBL have only 39 branches whereas Uttara Bank Limited has 198 branches and 12 regional offices.
•
DBBL often has problem with market share as ATM machines. Customers often complain that the ATMs are out of order.
•
DBBL hasn’t that much good market share as other bank. It’s as because DBBL’s marketing strategy is not aggressive they always follow defensive/ conservative strategy. This may be considered as weakness.
Opportunity •
The activity in the secondary financial market has direct impact on the primary financial market. Investment is a national socio economic activity. And activity in the national economy controls the bank.
•
Bangladesh has a huge consumer base for maintaining several accounts. So DBBL has the opportunity to keep these customers by reducing its current fees and charges and introducing more new products.
Threat •
In today’s economy, substantial amount is remaining idle and currently the investment in the secondary market by foreign is relatively low. These economic situations of the country indicate political threats.
•
Increased competition by other foreign banks is also another threat to DBBL. At present SCB, HSBC and CITI Corp are posing significant threats to DBBl regarding retail and business banking respectively. Furthermore, the new comers in private sector Prime Bank,EXIM Bank, BRAC Bank, Southeast Bank, Mercantile Bank, Social Investment Bank, Islami Bank are also coming up with very competitive force.
Findings
While studying about the performance of DBBL a number of problems have been identified. The insufficient exposure of the performance in the communication media to towards the people can be considered as the number one problem. Though DBBL is the largest donor among the financial institution, people don’t know it well. The problems of DBBL found in the study are listed below: 1. The availability of banking service of DBBL is not good. DBBL’s branches are not sufficient. It has no branch in abroad. 2. For the purpose of creating brand awareness, the frequency of exposure of the brand, DBBL is insufficient 3. Though its services are online, but here employees are not sufficient. So some times services can not be given at the right time to the customers. 4. Customers have to maintain various rules and procedures for account opening here, which sometimes decrease their interest. 5. Loan facilities are not so wide here. 6. Sometimes ATM booth can not require sufficient money for which customers can not make transaction though ATM booth. 7. DBBL’s promotional programs are not strong enough to attract customers Recommendations From the beginning of its operation of banking service Dutch Bangla Bank Limited involves with the socially involved activities. Within 12 years of its banking service it creates a room in the mind of people. DBBL donates in a number of sectors, such as education, disasters, health and information technology. The organization runs in the banking industry with not only for gaining profit but also for social wellbeing. It comes to the side of disable people which represent itself as the bank for humane. Though it has passed its 12 years, the number of branches in the country is insufficient. It builds the unique selling proposition by giving online banking service in full fledge. In spite of its success in the field of business and social activities, DBBL should revitalize the branding elements it has at present. But the question is how the company will revitalize existing brand. The following figures No- 1 and 2 exhibit the procedure of revitalizing brand.
1
3
2
Communication
Current Brand Knowledge
Desired Brand Knowledge
1. What is your current brand knowledge? Have you created a detailed mental map? 2. What is your desired brand knowledge? Have you defined optimal points of parity of difference and brand value? 3. How does the communication option help the brand get from current to desired knowledge with consumers?
FIGURE -1 Simple Test for Marketing Communication Effectiveness The investment in brand building can not be termed as loss or expense but the bridge between past and future. In the science of branding, it is said that marketing investments dictates appropriate and inappropriate future directions for the brand.
Consumer response to PAST marketing Activity Brand awareness and brand image
Consumer response to CURRENT marketing activity
CHANGED brand awareness and brand image
Consumer response to FUTURE marketing activity FIGURE -2 Subsequent Marketing Decisions for Managing Brand It can also be suggested the organization for taking proper steps to overcome the problems identified. It will be helpful to follow guidelines as means of maximizing customer equity developed by Blat Berg and Dighton. Conclusion In retrospect of the marvelous growth of FI revenue over the previous years and contemplating the intensity of competition yet to come, it is crucial for DBBl to rethink its strategies and marketing plan to sustain the growth of FI revenue. Corporate banking service providers domiciled in Bangladesh are expected to be fighting for a bigger pie, as the growth prospect of the country’s corporate banking business is limited. One of the ways to achieve that objective is to maximize FI revenue generated from local clients and introduces more local products. Because, there is a huge potentials for inbound revenue.
However, export growth dropped while import soared in 2007/2008, putting pressure on trade deficit. Although special incentives were extended to the garment, jute, and leather sectors in the national budget, export income has been affected due to flood damage, which has disrupted transport and communications and lowered industrial output and distribution. Increase in import payments was due to drastic surge in imports of food grains and capital machinery. Foreign exchange reserve position will remain stable. Guidelines 1. Invest in highest value customers first 2. Transform product management in to customer management 3. Consider how add on sales and cross selling can increase customer equity 4. Look for ways to reduce acquisition costs 5. Track customers equity gains and losses against marketing programs 6. Relate branding to customer equity 7. Monitor the intrinsic trainability of customers 8. Consider writing separate marketing plans- or even building to marketing organizations for acquisitions and retention efforts. References: 1. Kevin Lane Keller, Strategic Brand Management, second edition, p.16 2. Philip Kotler & Gary Armstrong, Principles of Marketing, 11 th Edition p.16. 3. Philip Kotler & Gary Armstrong, Principles of Marketing, 11 th edition, p.243. 4. Kevin Lane Keller, Strategic Brand Management, second edition, p.2). 5. Robert C.Blattberg and Deighton, “Manage Marketing by the Customer Equity Test”, Harvard Business Review, July-August, 996. 6. Kevin Lane Keller, ‘Strategic Brand Management’, second edition, p. 90 7. Greg Farell, “Marketers Put a Price on Your Life”, USA Today, July 7, 1999 8. Thomas O Jones and W. Earl Sassar Jr. “Why Satisfied Customers Defect”, Harvard Business Review, Nov-Dec, 1995