Prime Bank Ltd

View with images and charts Prime Bank Limited Historical Background: Prime Bank Limited is among the best of Bangladeshi banks which was incorporated in 12 th February, 1995 by a group of entrepreneurs. The bank aims to be the ‘most efficient bank in Bangladesh in terms of customer service, profitability and technological abilities. The bank operates as a scheduled bank under banking license issued by Bangladesh Bank, the central Bank of the country on April, 17, 1995 through opening of its Motijheel branch at Adamjee Court Annex Building, Motijheel Commercial Area, and Dhaka-1000.

The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. The bank has already occupied an enviable position among its competitions after achieving success in all areas of business operation. The growth of the deposit is growing fast. The deposits balance of PDL reached the level of Tk. 70.5 billion during 2007 from Tk. 54.7 billion of previous years. The growth rate is 28.85 percent. And this was possible due to superior customer service delivery at the branch level, expansion of branch network to rural areas where foreign remittance flow is significant.

The Prime Bank Limited, held the third position among the PCBs (Public commercial Bank), earning Tk. 1.93 billion as operating profit during the six months period of June-08 against tk. 1.55 billion of the corresponding periods of the previous year. So, the growth of profit position of the bank is increases 22.09% percent.

At present, the bank has a network of 62 branches strategically located in different cities. All the branches are functioning in computerized environment.

The principal activities of the Bank are banking and related businesses. The banking business include deposits taking, cash withdrawal, extending credit to corporate organization, retail and small and medium enterprise, trade financing, project financing, lease and hire purchase financing, issuance of local and international credit cards etc. The mode of banking includes conventional and Islamic banking. The services are provided through both traditional and modern products. It also provides investment banking and advisory services under the license issued by Securities and Exchange Commission, Bangladesh. Its Subsidiary at Singapore is engaged in providing remittances facilities to expatriate Bangladeshis. Through its Off-shore branch it provides banking business involving Non-resident foreign currency denominated assets and liabilities.

Board of Directors • • • •

Azam J Chowdhury Chairman, Board of Directors Mohammad Aminul Haque Chairman, Executive Committee Capt. Imam Anwar Hossain Chairman, Audit Committee Quazi Sirazul Islam Vice Chairman, Executive Committee

•

Vice Chairperson Shanaz Quashem Hasina Khan • Directors: Razia Rahman Ferdousi Islam Qazi Saleemul Haq Nafis Sikder Saheda Pervin Trisha Mohammad Delwar Hossain • Maksudur Rahman Sarkar Independent Director • M.Shahjahan Bhuiyan Managing Director Corporate Information: • Memorandum and Articles of Association signed by the sponsors • Incorporation of the company• Certificate of commencement of Business • License issued by Bangladesh bank• License issued for opening the first Branch, Motijheel• Formal launching of the Bank- 17.04.1995 • Commencement of Business from the Motijheel Branch• Commencement of Islami Banking Business from IBB, Dilkusha-

05.02.1995 12.02.1995 12.02.1995 20.02.1995 08.04.1995 17.04.1995

18.12.1995 • Initial Public offerings (IPO) - Publication of prospectus29.08.1999 - Subscription opened09.09.1999 - Subscription closed22.09.1999 • Listed with Dhaka Stock Exchange Limited27.03.2000 • Listed with Chittagong Stock Exchange Limited15.11.1999 • Trading of shares on Dhaka Stock Exchange Limited 29.03.2000 • Trading of shares on Chittagong Stock Exchange Limited 29.03.2000 th • Dividend declared in the 5 AGM (First after the IPO)14.03.2000 • Registered as Merchant Banker with securities and Exchange commission29.03.2001 • License issued from Bangladesh Bank as Primary Dealer11.12.2003 • Registered as Depository participant of CDBL29.03.2004 • Trading of shares started in Demat form in stock exchanges15.06.2004 • Agreement with Tremens for core Banking Software T2430.06.2005 • Incorporation of Prime Exchange Co. Pte. Ltd. Fully owned subsidiary of (PBL)06.01.2006 • Prime Exchange Co. Pte. Ltd. formally started business 08.07.2006 • Opening of Off-shore Banking Unit at DEPZ, Savar, Dhaka 15.03.2007 2.3 Vision of the bank:

To be the best private commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity.

Mission of the Bank The two missions of Prime Bank Limited are: • To build Prime Bank Limited into an efficient, market driven, customer focused institution with good corporate governance structure. • Continuous improvement in our business policies and procedures through integration of technology at all levels.

Managerial Hierarchy of PBL Chairman Board of Directors Executive Committee Managing Director Additional Managing Director Senior Executive Vice President Executive Vice President Senior Vice President Vice President Senior Assistant Vice President Assistant Vise President First Assistant Vise President Senior Executive Officer Executive Officer Principal Officer Senior Officer Junior Officer Assistant Officer

Management trainee Trainee Assistant Highlights (Taka in million) Sl. No. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Particulars

2007

2006

Paid-up capital Total capital Capital surplus/ (deficit) Total assets Total deposits Total loans and advances/ investments Total contingent liabilities and commitments Credit deposit ration Percentage of classified loans/ investments against total loans and advances/ investments Profit after tax and provision Amount of classified loans/ investment during current year Provisions kept against classified loans/ investments Provision surplus/ (deficit) against classified loans/ investments Cost of fund Interest earning assets Non-interest earning assets Return on investment (ROI) Return on assets (ROA) Income from investment Earnings per share (Taka) Net income per share (Taka) Price earning ratio (times)

2,275.00 6,382.60 834.13 79,588.43 70,512.37 57,683.02 33,088.73 82% 1.35%

1,750.00 4,409.21 420.08 60,899.48 54,724.08 45,010.22 27,929.55 82% 0.82%

1,400.66 777.22

1,051.89 367.15

478.40

308.52

316.79

94.81

8.41% 72,798.51 6,789.92 12.60% 1.99% 1,294.21 61.57 61.57 15.00

8.15% 55,458.31 5,441.16 7.12% 2.05% 419.50 46.24 46.24 8.80

Market position of Prime Bank Ltd. (Taka in Crore) Sl. No. 01

Name of the Banks Islami Bang Bangladesh Limited

02 03 04 05 06 07 08

Prime Bank Limited AB Bank Limited Pubali Bank Limited Southeast Bank Limited National Bank Limited United Commercial Bank Limited Dhaka Bank Limited

Deposit

Advance

16,400.0 0 7,054.12 5,288.00 5,801.00 5,648.00 4,400.00 4,230.00 4,450.00

17,700.00 550.00 2,761.30 4,037.00 5,058.00 4,753.00 3,200.00 3,757.00 3,997.00

Profit

350.72 335.00 0.6.00 291.00 290.00 215.00 205.00

09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

IFIC Bank Limited BRAC Bank Limited Eastern Bank Limited NCC Bank Limited Mercantile Bank Limited Bank Asia Limited Dutch-Bangla Bank Limited Uttara Bank Limited EXIM Bank Limited BASIC Bank Limited Shahjalal Islami Bank Limited The Premier Bank Limited Mutual Trust Bank Limited ONE Bank Limited Standard Bank Limited Jamuna Bank Limited The Trust Bank Limited Al-Arafah Islami Bank Limited Social Investment Bank Limited First Security Bank Limited

2,989.00 3,741.00 2,200.00 3,575.00 3,632.00 4,450.00 4,208.00 4,200.00 4,158.00 3,035.00 2,262.00 2,714.00 2,377.00 2,440.00 1,930.00 1,968.00 2,785.00 2,433.00 1,970.00 2,350.00

2,833.00 3,247.00 2,970.00 3,266.00 3,238.00 3,997.00 2,988.00 2,650.00 4,019.00 2,210.00 2,062.00 2,368.00 2,227.00 1,968.00 1,730.00 1,624.00 1,800.00 2,290.00 1,688.00 1,925.00

202.00 192.00 189.00 175.00 160.00 160.00 150.00 150.00 140.00 132.00 130.00 100.75 100.00 96.00 90.00 90.00 86.00 80.00 65.00 33.00

Banani Branch of Prime Bank Limited 2.8.1 A brief profile of Prime Bank, Banani Branch: Date of Opening: August 27, 2003.

Manager: Mr.QuaziA.S.M. Anisul Kabir, Executive Vice President.

Manager of Operation: Mr. Wali Ul Morshed, Assistant Vice President.

Credit In-charge: Mr. Syed Delwar Hossan, First Assistant Vice President.

Foreign Exchange In-charge: Mr. Ali Md. Nurul Huda, First Assistant Vice President.

General Banking In-charge: Mr. Md. Humayun Kabir, Executive Officer.

Total number of Employee: 33 Address of the Branch: House # 62, Block-E, Kamal Ataturk Avenue, Banani, Dhaka-1212.

Department of Banani Branch: There are three department exist at Banani Branch of Prime Bank Limited.

These departments are: > General Banking Department. > Credit Department. > Foreign Exchange Department.

Managerial Hierarchy of Banani Branch Executive Vice President (E.V.P)  Assistant Vice President (A.V.P)  First Ass. Vice President (F.A.V.P.)  Seminar Executive Officer (S.E.O)  Executive Officer (E.O.)  Principal Officer (P.O)  Seminar Officer (S.O)  Junior Officer (J.U)  Assistant Officer (A.O)  Management Trainee (M.T)  Trainee Assistant (T.A)

Prime Bank Limited, Banani Branch Flow Chart

General Banking General Banking department performs the majority functions of a bank. It is the core department.

In fact, bank operates with the people’s money. And this process starts with the General Banking department. The activities of the General Banking Department of PBL are mainly divided into the following categories: • • • • • • • • •

Account Opening Section, Local Remittance Section, Online Branch Banking Section, One Stop Utility Services Section, Deposit Schemes Section, Clearing Section, Collection Section, Cash Section, Accounts Section,

Account Opening Section: To establish a Banker and customer relationship Account opening is the first step. Opening of an account binds the Banker and customer into contractual relationship. But selection of customer for opening an account is very crucial for a Bank. Indeed, fraud and forgery of all kinds start by opening account. So, the Bank takes extremely cautious measure in its selection of customers.

Types of Account: Banani Branch has the following types of accounts: • Current Account • Savings Account • Fixed Deposit Account Procedure to open an Account: 1. For opening an account, at first the prospective account holder will apply for opening an account by filling up account opening form. Account opening form consists of the name of the branch, type of account, name of the applicant(s), present address, permanent address, passport number (if any), date of birth, nationality, occupation, nominee(s), special instruction (if any), initial deposit, specimen signature(s) of the applicant(s), introducer’s information etc.

2.

3.

4.

5.

The prospective customer should be properly introduced by the followings: An existing customer of the bank.

Officials of the bank not below the rank of Assistant Officer.

A respectable person of the locality who is well known to the manager or authorized officer.

6. Two copies of passport size photograph duly attested by the introducer.

7. Signature of the prospective account holder in the account opening form and on the specimen signature card duly attested by the introducer.

8. Then the concerned authority will allocate a number for the new account.

9. The customer then deposit the “initial deposit” by filling up a deposit slips. Initial deposit to open a current account in PBL is Tk. 10000.00 and saving account is Tk. 5000.00.

After depositing the initial deposit, the account is considered to be opened. PBL maintains all of its accounts in computer. After depositing the initial deposit, PBL records it in the computer by giving new account number. Then it issues cheque book requisition slip by the customer. Then it distributes all relevant papers to respective department.

Activities & papers necessary for opening an account: (A) Joint Account: If the account is a joint account, then the joint account holder should submit a declaration and operational instructions of the account along with their signature. The declaration is “Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability whatsoever incurred in respect of this account shall be joint and several.”

(B)

Partnership firm:

The following documents have to be submitted for preparing an account of a partnership firm: i) ii)

(C)

Partnership deed. (a) If the partnership firm is a registered one, then one copy of registration forms. (b) If not, then a copy of certificate from the notary public.

Limited Company:

For the opening of an account of a limited company, following documents have to be submitted: • • • • • • •

A copy of resolution of the company that the company decided to open an account in the Prime Bank.

Certified true copy of the Memorandum & Articles of Association of the Company.

Certificate of Incorporation of the company for inspection and return along with a duly certified Photocopy for Bank’s records.

Certificate from the Registrar of Joint Stock Companies that the company is entitled to commence business (in case of Public Ltd. Co. for inspection and return) along with a duly certified Photocopy for Bank’s records.

Latest copy of balance sheet.

Extract of Resolution of the Board/General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/Managing Director of the company.

List of Directors with address (a latest certified copy of Form-XII).

(D)

Club/Society:

Following documents have to be obtained in case of the account of the club or society: i) ii)

Up to date list of office bearers.

Certified copy of Resolution for opening and operation of account.

iii) iv) (E)

Certified copy of Bye-Law and Regulations/Constitution.

Copy of Government Approval (if registered).

Cooperative Society:

Following documents have to be obtained in case of the account of Cooperative Society: i) Copy of Bye-Law duly certified by the Co-operative Officer. ii) Up to date list of office bearers. iii) Resolution of the Executive Committee as regard of the account. iv) Certified copy of Certificate of Registration issued by the registrar, Cooperative societies.

(F)

Non-Govt. College / School / Madrasha / Muktab:

Following documents have to be obtained in case of the account of non-govt. college / school / madrasha / muktab: i) ii)

(G)

Up to date list of Governing Body/Managing Committee.

Copy of Resolution of the Governing Body/Managing Committee authorising opening and operation of the account duly certified by Gazetted Officer.

Trustee Board:

Following documents have to be obtained in case of the account of trustee board: i) ii)

(H)

Prior approval of the Head Office of PBL. Certified copy of Deed of Trust, up to date list of members of the Trustee Board and certified copy of the Resolution of Trustee Board to open and operate the account.

Minor’s Account:

Following documents have to be obtained in case of the account of minor: i) ii) iii)

Putting the word “MINOR” after the title of the account.

Recording of the special instruction of operation of the account.

The AOF is to be filled in and signed by either the parents or the legal guardian appointed by the court of law and not by the minor.

3.2Local Remittance Section: Local remittance is one of the main components of general banking. The activities of local remittance are --i. ii. iii. iv.

Telegraphic Transfer, Demand Draft issue, Saving Certificate Issue (Sanchaypatra issue), Pay order.

• Telegraphic Transfer: It is an order from the issuing branch to the drawee bank / branch for payment of a certain sum of money to the beneficiary. The payment instruction is sent by telex and funds are paid to the beneficiary through his account maintained with the drawee branch or through a pay order if no account is maintained with the drawee branch.

Procedure of issuing TT: Following procedures are followed while issuing of TT: i) ii) iii) iv) v) vi) vii)

The applicant fills up the relevant parts of the prescribed application form in triplicate, duly signed the same and gives it to the GB. GB will fill up the commission part for bank’s use and request the applicant to deposit necessary cash or cheque at the cash booth.

The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket. The third copy will be handed over to the applicant as customer’s copy.

GB will prepare telex in appropriate form, sign it and send it to the telex operator for transmission of the message.

GB will prepare necessary advice. Debit advice is sent to the client if clients account is debited for the amount of T.T. T.T. Confirmation Advice is sent to the drawee branch.

Credit Ticket (second copy of the application form) is used to credit the PBL General Account.

• Demand Draft (DD) Issue: Sometimes customers use demand draft for the transfer of money from one place to another.

For getting a demand draft, customer has to fill up an application form. The form contains date, name and address of the applicant, signature of the applicant, cheque number (if cheque is given for issuing the DD), draft number, name of the payee, name of the branch on which the DD will be drawn and the amount of the DD. The form will be duly signed by the applicant and by the authorized officer. PBL charges .15% commission on the face value of DD as service charge.

Process of issuing Local Draft: Following procedures are followed while issuing local draft— i)

Get the application form properly filled up and signed by the applicant.

ii)

Complete the lower portion of the form for the bank’s use.

iii)

Calculate the total amount including the bank’s commission.

iv)

If the cheque is presented for of the local draft, the officer should get the cheque duly passed for payment by the authorised person and record the particulars of local draft on the back of the cheque.

v)

If the client wants to debit his account for the payment of the draft amount, the officer should get the account holder’s signature verified properly, from signature card on record of the branch and debit clients account for the total amount including commission.

vi)

The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket and kept by the GB. The third copy is handed over to the applicant as customer’s copy.

• Pay Order: For issuing a pay order, the client is to submit an application to GB in the prescribed form.

This form should be properly filled up and signed. The procedure of the issuing pay order is similar to that of the Local Draft. For issuing pay order PBL charges commission on the following rate— # For Tk. 1 to 100000, the commission is Tk.25. # For Tk. 100000 to 500000, the commission s Tk. 60. # For Tk 500000 to above, the commission is Tk. 75.

Payment of Pay Order: The pay order is presented to the bank either through clearance or for credit to the client’s account. While payment, relative entry is given in the pay order register with the date of payment.

Online Branch Banking Section: Prime Line: The Bank has set up a Wide Area Network (WAN) across the country to provide Online Branch Banking facility to its valued clients. Under the Scheme, clients of any branch shall be able to do banking transaction at other branches of the bank.

Under this system a client will to be able to do following type of transactions: •

Cash withdrawal from his/her account at any branch of the Bank irrespective of location.

•

Cash deposit in his/her account at any branch of the Bank irrespective of location.

•

Cash deposit in other's account at any branch of the Bank irrespective of location.

•

Transfer of money from his/her account with any branch of the Bank.

•

Any amount can be deposited or transferred under Prime Line. In the system, however, at present there is a limit for cash withdrawal through bearer or by account holder himself.

Requirement of Prime Line service: The Clients who has account in prime bank or who will open account in prime bank and would be interested to maintain substantial deposits in Savings, Current or STD accounts, will be eligible to get Prime Line Service.

Intending and eligible clients have to apply in prescribed application form to the branch to get the online service from the bank. The client should submit two copies photographs and signature cards along with the application form.

Online Transaction Membership Fee: Membership fee of Tk. 50/- per month for the Online Branch Banking Service.

Transaction Limit:

01. Maximum ceiling of cash withdrawal by self is Tk. 10,00,000/- (ten lac) only per transaction.

02. Maximum ceiling of cash withdrawal by third party (bearer) per transaction is below Tk............... Only (Account holder will determine the amount).

03. Cash deposit/transfer by online transaction is unlimited.

3.3.4 Charges for Online Transaction: 01. There will be no charge for transaction within the city where the account is domiciled.

02. Fee Tk. 50/- will be realized from the customer’s account for each remote transaction (inter-city) for amount upto Tk. 1, 00,000 (one lac).

03. Fee at the rate of 0.075% will be realized from the customer’s account for each remote transaction of amount more than Tk. 1,00,000 (one lac).

One Stop Utility Services Scheme Section: Like any other country of the world, the people living in the urban areas of our country lead a very busy life. Time is very valuable to them. Despite this, they are to waste their valuable time at the counter of different Banks and other Institutions for payment of their monthly bills of different utility services like Electricity, Telephone, Water, Gas etc. They, as such, face enormous difficulties for payment of their monthly bills in time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the bills of various utility services at One Point.

Scope of Services: With this end in view, Prime Bank Limited has introduced a Scheme entitled “ONE STOP UTILITY SERVICES SCHEME”. The scheme is designed to provide all the required services to the customer in making payment of their following bills on their behalf from the counter of the Bank: I. II. III. IV.

To pay Electricity Bills Cash deposit in his/her account at any branch of the Bank irrespective of location.

Cash deposit in other's account at any branch of the Bank irrespective of location.

Transfer of money from his/her account with any branch of the Bank.

Any amount can be deposited or transferred under Prime Line. In the system, however, at present there is a limit for cash withdrawal through bearer or by account holder himself.

Transaction Limit: 01. Maximum ceiling of cash withdrawal by self is Tk. 5,00,000 (five lac) only per transaction.

02. Maximum ceiling of cash withdrawal by third party (bearer) per transaction is below Tk. 5,00,000 (five lac) only.

03. Cash deposit/transfer by online transaction is unlimited.

Deposit Schemes Section: Bank is the largest organization of mobilizing surplus domestic savings. For poverty alleviation, we need self-employment, for self-employment we need investment and for investment we need savings. In the other words, savings help capital formations and the capital formations help investments in the country. The investment in its turn helps industrialization leading towards creation of wealth of the country. And the wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the nation.

PBL has formulated the following Savings Schemes: • • • • • • • • • • • • •

Prime Millionaire Scheme Double Benefit Scheme Lakhopati Deposit Scheme House Building Deposit Scheme Monthly Benefit Deposit Scheme Contributory Saving Scheme Education Saving Scheme Fixed Deposit Scheme Short Term Deposit Foreign Currency Deposit Account Non-Resident Taka Account Non-Resident Foreign Currency Deposit Account (NFCD) Non-Resident Investor’s Taka Account (NITA)

Prime Millionaire Scheme 1. Monthly installment shall be Tk. 12,465.00/ Tk. 7,890.00/ Tk. 4,570.00 for the tenor of 5/7/10 years respectively.

2. Terminal amount on maturity shall be Tk. 10.00 lac.

Size of monthly Investment Tenor After the deposit (in Taka.) (in Year) investment Tenor the terminal value of the scheme (in Taka) 12,465/5 1,000,000/7,890/7 1,000,000/4,570/10 1,000,000/-

Pension size of installment according to the years invested (in Taka) 21,748/17,137/13,786/-

3. The depositor will have the option to choose any installment size at the time of opening of the A/C. and will not be allowed to change the size of installment afterwards.

4. The depositor will have the opportunity to take loan upto 80 percent against this deposit scheme.

5. This scheme can be opened for the minor persons.

2. Double Benefit Deposit Scheme

Silent features of this scheme are: 1. At maturity after 06 (six) years double the amount of deposit will be paid to the depositor.

2. The instrument shall be issued for 06(six) years term.

3. Deposit of Tk. 25,000/- (Taka twenty five thousand) and multiples thereof but maximum limit of Tk. 25,00,000/- (Taka twenty five lac) at a time will be acceptable under the scheme.

4. The age limit of the applicant would be 18 to 60 years.

3. Lakhopati Deposit Scheme 1. Monthly installment size, tenure and terminal value of the scheme will be as follows: Monthly Installment size Tenure (Taka) 250/15 years 500/10 years 1,285/5 years 2,400/3 years

Amount to be paid after maturity (Taka) 1,00,000/1,00,000/1,00,000/1,00,000/-

2. Account in the name of minors can be opened too under the scheme as per standard procedure for minor accounts.

3. Loan may be allowed up to 80% of the deposited amount against lien on the same where the deposited amount shall be at least Tk. 50,000/- and the interest rate of the loan shall be as per prevailing commercial lending rate of the bank.

4. House Building Deposit Scheme At first Prime Bank Limited has brought this house building deposit scheme facility in Bangladesh.

The salient features of the scheme are given below: 1. The tenor of the House Building Deposit Scheme will be 5/7/10 years.

2. Minimum Equity building amount shall be Tk. 10.00 lac.

Size of monthly Investment Tenor After the deposit (in Taka.) (in Year) investment Tenor the terminal value of the scheme (in Taka) 4,570/4,705/10 7,890/8,045/7 12,465/12,640/5

Pension size of installment according to the years invested (in Taka) 1 1 1

3. The depositor will have the opportunity to take house building loan facility less than 0.25% interest rate of HBL. 4. The depositor will get the facility to pay any service charge for credit card for 1 year.

5. HBL facility shall be considered on maturity upon application upto three times the loan on compliance of loan formalities

5. Monthly Benefit Deposit Scheme This is a Deposit Scheme where the depositor gets monthly benefit out of his deposit.

The scheme is designed for the benefit of the persons who intend to meet the monthly budge of their families for the income out of their deposit.

The salient features of the scheme are given below: 1. Deposit of Tk. 25,000.00 (Taka twenty five thousand) and multiples thereof, but maximum Tk. 25,00,000/- (Taka twenty-five lac) shall be acceptable under the scheme.

2. The Deposit shall be for a period of 5 (five) years. The Principal amount is refundable on maturity.

3. The depositor will have the opportunity to take loan facility.

6. Contributory Savings Scheme This is a Savings Scheme in which a person gets the opportunity to build up savings by contributing monthly installments and receives an attractive fixed amount at the end of a specified term.

The scheme is designed to help the fixed income group to save money and build up a sizable fund with which they can go for some income generating venture to improve the quality of their life and or meet any future financial obligations.

The salient features of the scheme are given below: • Minimum size of monthly installment shall be Tk. 500/- and multiples of Tk. 1000/Maximum installment size shall be Tk. 25,000/• The Deposit shall be for a period of 5 years.

• Account in the name of minors can be opened too under the scheme.

• The Depositor will have the opportunity to take loan facility.

7. Education Savings Scheme The educational expenses particularly the expense for higher education are sharply increasing day by day in our country. Sometimes, the children are deprived of getting the desired level of education because of the inability of the parents to meet their educational expenses. But the parents would not feel any difficulty to defray such expenses if a proper financial planning is made much ahead of time.

The salient features of the scheme are given below: 1. Deposit of Tk. 50,000/- and multiples thereof but maximum limit of tk. 5,00,000/- at a time will be acceptable under the scheme.

2. The instrument shall be issued for a period of 5 years term.

8. Fixed Deposit Scheme This type of deposit should be kept for a fixed term or period. Prime Bank Limited deals with the following terms deposit.

Sl. No.

Particulars

Interest rate

Interest rate

1 2

1 (one month) 3 (three) months i) ii) iii)

3

7.50 Below Tk. 1.00 ccore 11.50% Below Tk. 5.00 crore 12.50% Tk. 5.00 crore & 12.50% above

6 (six) months i) ii) iii)

Below Tk. 1.00 ccore Below Tk. 5.00 crore Tk. 5.00 crore & above 1 (one) year & above i) Below Tk. 1.00 ccore ii) Below Tk. 5.00 crore iii) Tk. 5.00 crore & above

4

11.50% 12.50% 12.50% 12.00% 12.50% 12.50%

9. Short Term Deposit •

A short term deposit (STD) account is a running account with amounts being paid into and drawn out of the account continuously.

• These accounts are called Demand Deposits or Demand Liabilities since the banker is under obligation to pay the money in such deposits on demand.

• These accounts are generally opened by Business organization, Public institution, corporate bodies.

Current interest rate on STD account is presented in the following table: Particulars Below Tk. 1 crore Tk. 1 crore and above

Interest Rate 5.00% 6.00%

3.6 Clearing Section: According to the Article 37(2) of Bangladesh Bank Order, 1972,the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the chouse drawn upon one another through the clearinghouse. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the chouse.

The representatives of all the banks meeting at a specified time, for exchanging the instruments and arriving at the net position regarding receipt or payment. The place where the banks meet and settle their dues is called the Clearinghouse.

3.6.1 Activities of the Section: (a) Preparation of Clearing Outward and Inward Lodgment and record maintenance of the same. (b) Batch posting as and when required.

On receipt of instruments, the same is endorsed here. Then clearing section will sent IBDA to head Office for clearing purpose and on receipt of IBCA from Head Office amount is

credited to customers account and vice versa. If the instrument is return then the same is given back to the customer.

3.7Collection Section: Checks, drafts etc. are drown on bank located outside clearing house are sent for collection.

Banani Branch collects its client’s above-mentioned instruments from other branches of PBL and branches other than PBL. In case of out ward bills for collection customers account is credited after finishing the collection processor. And in case of in ward bills customers account is debited for this purpose. So it place dual role as follows: • Collecting Banker • Paying Banker.

There is one Officer working over desk in this department.

3.7.1 Activities of the Section: • Preparing of Outward and Inward Collection Item.

• Inter-Branch Transfer.

• Batch posting and checking as and when required.

• Other works as and when require.

•

Collection is done when Paying Bank is located out side Dhaka City.

•

Paying Bank is other branches of PBL situated inside Dhaka City.

3.7.3 Commission for Collection: Up to 1 lac --------------------------------------------- 0.15% Above 1 lac--------------------------------------------- 0.10% Above 5lac ----------------------------------------------0.05% Maximum charge is Tk. 1200 and minimum charge is Tk.10.

3.8Accounts Section: In banking business transactions are done every day and these transaction are to be recorded properly and systematically as the banks deal with the depositors’ money. Any deviation in proper recording may hamper public confidence and the bank has to suffer a lot. Improper recording of transactions will lead to the mismatch in the debit side and credit side. To avoid these mishaps, the bank provides a separate department whose function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery. This department is called Accounts Department.

3.8.1 Functions of Accounting Department: We can divide the functions of accounting department into two categories. One is day-to-day task and another is periodical task. a. Day to day functions: Here day-to-day function refers to the every day tasks. Accounting department of PBL performs the following day to day functions: • •

Recording of transaction in the cashbook, general and subsidiary ledger.

Preparing the daily position of deposit and cash.

• • • • •

Making the payment of the expense of the branch.

Recordings of inter branch fund transfer.

Checking whether all the vouchers are correctly passed.

Recording the voucher in the voucher register.

Packing and maintains the total debit and total credit vouchers.

b. Periodical functions: Periodical functions of accounts department include the preparation of different weekly, fortnightly, monthly, quarterly and annual statement. The accounts department prepares the following statements: • • • • • •

Monthly statement of deposits, loans and advances, profit and loss etc.

Quarterly statement of deposits, loans and advances, profit and loss etc.

Yearly statement of deposits, loans and advances, profit and loss etc.

Yearly statement of classified Loans and Advances.

Statement of Affairs.

Yearly Budget of the Branch, etc.

Cash Section: Cash section is a very sensitive organ of the branch and handle with extra care. Operation of this section begins at the start of the banking hour. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remain in the cash counter is put back in the vault and known as the closing balance.

Money is received and paid in this section.

3.9.1 Cash Receipt: • At first the depositors fill up the Deposit in Slip. For saving account and current account same Deposit in Slip is used in this Branch.

• After filling the required deposit in slip, depositor deposits the money.

• Officers at the cash counter receives the money, count it, enter the amount of money in the register kept at the counter, seal the deposit in slip and sign on it with date and keep the banks’ part of the slip. Other part is given to the depositor.

• In this branch, i.e., Motijheel Branch, two different officers maintain two different books for entering such entries. All deposits of saving account are maintained by one officer and other accounts by another officer.

• At the end of the day entries of both of these registers are cross checked with the register kept at the cash counter to see whether the transactions are correct or not.

Cash Payment: • When a person comes to the bank to cash a cheque, (s)he first gives it to the computer desk to know the position of the check and posting of the cheque. If the account has sufficient fund the computer in charge will post it into the computer, will sign it and seal it.

• This cheque is then sent to the concerned officer. There are two officers who verify the cheques – one for savings and similar types of account and another for current and similar types of account.

• After receiving the cheque respective officer first checks it very carefully for any kind of fraudulent activity. (S)he also checks the date of the cheque, amount in word, amount in figure and signature of the drawer.

• • • •

If the instrument is free of all kind of error the officer will ask the bearer to sign on the back of it.

He will then put his/her initial beside the bearers’ signature. (S)he will also sign it on its face, will write down the amount by red pen.

Then the cheque will be sent to the cash counter. At the cash counter bearer will be asked again to sign on the back of the instrument.

The cash officer will then enter the details of the cheque in his/her register and will pay the money to the bearer. At the end of the day these registers will be compared to ensure the correctness of the entries.

Credit Department: Granting of advances is the primary function of a bank. A major portion of its funds is used for this purpose and this is also the major sources of bank’s income. However, lending money is not without risk and, therefore, a banker must take proper precaution in this process.

Salient features of Prime Bank Credit Policy • Assets are built based on customer’s deposit, which should not exceed 80% of customers based deposit.

• Rate of interest is variable based on customer’s integrity and risks associated.

• Type of security varies on the basis of risks associate din credit, location, size of credit, sectors and sub sectors etc.

• Credit operations are carried out in branch through branch credit committee as per authority delegated to head of branch and through head office credit committee in respect of credit sanction authority delegated to the CEO. • No credit should be allowed for a period not exceeding 5 years.

• Aggregate long term credit facilities shall not exceed 20% of total credit portfolio.

• Single customer’s exposure should not exceed 50% of the Bank’s capital funds.

• LRA is done is most cases.

• Assessment of volume or amount of credit properly.

• Utmost care is taken in proving loans to directors.

• Funded facility 25% of paid up capital.

Loan and advances of Prime Bank Limited covering following four areas: • Corporate • Small and medium enterprise • Retail • Credit Card.

Credit Department of Banani Branch of Prime Bank Limited can be divided in to two parts: 1. Retail credit 2. Corporate credit.

Retail Credit: Modern life is full of numerous wants and desired in this customer oriented world of ours.

The whole family has individual needs. In a developing country like Bangladesh the limited and fixed income group especially service holds are not capable of fulfilling all the desires.

For this reason there are many banks specially the private banks introduces a new credit

scheme named consumer credit scheme to extent credit facility to the limited and fixed income group to improve their standard of living PBL achieved a very strong growth of 110 percent during the year 2007.

• Swapna Neer • Car loan • Doctor’s loan • House hold durable loans • Any purpose loan • Education loan • Hospitalization loan • Marriage loan • Advance against salary • Travel loan • CNG conversation loan.

Process Flow Chart of Retail Loan Processing: Application received From Customer Sales/ branch scrutinizes the application Application meets basic PPG criteria Yes

No Application declined and returned to customer

Sales Officer/ Manager recommends the loan recommends the loan and sends to credit Application is received at credit and assessed Credit Approved?

Yes

No Application sent back to source

Application sent to loan admin No Loan disbursed and Yes application and charge dox lodged in safe custoday Performance of Retail Loan:

Documents in order?

Application: The first stage of credit assessment and approval process is a customer application. The application must provide adequate information to enable the Bank to assess the credit. As a minimum, the application must request for sufficient information to verify the existence of the individual and to facilitate the collection effort, including skip tracing and security checks. The information in the application must also establish “Know Your Customer” (KYC). Specific information should include: • Telephone and address contract details • Employment/business details • Income details • Income & Expenditure Statement • Personal Net Worth Statement • Residence details • Credit references and guarantors details.

In case of applying for retail credit some documents are provided retail credit unit.

Required Document for Businessman: 1) Bank Statement Last 1 year (Company & Personal) 2) Trade License of Business 3) TIN Certificate 4) Passport/ Commissioner/ Driving License 5) 4 Photographs of customer duly attested by the guarantor & Visiting Card.

6) 1 Photograph of guarantor duly attested by the customer & visiting card.

7) Car Quotation duly accepted by the customer.

8) Memorandum of Article with certificate incorporation (if limited company) 9) Telephone Bill (Home + Office) 10) Gas Bill (if owned house).

Contact Point Verification: Verification is a key part of application process. Contact Point verification shall be for all applicants except for the High Net Worth individuals or the customer having good account relationship with the bank. The objective is to confirm the declared/undeclared information of the applicants. CPV includes: • Applicant’s Residence, Business/ Office address, phone, status.

• Guarantors Information Verification • Bank Statement & other Income Documents Verification.

Assessment Methods: The process will be used to assess the lending requests. It is the policy of the Bank to use the method of assessment that provides the highest level of control and risk prediction for a particular group of customers. There are two major assessment methods will be used for consumer financing and the order of preference will be: • Credit Scoring Matrix • Judgmental Decision Credit Scoring: Credit scoring is a method used for predicting the creditworthiness of applications. This scoring is based on the concept that applicants will perform is a similar way to existing

customers with a similar demographic profile. Key items of application information such as occupation, residence status, income details etc are assigned point values. The total of these point values i.e. final score represents the repayment probability, generally expressed as an odd or risk quote between good or bad accounts. Genially the higher the score, the more likely the applicant will not experience delinquency and, conversely, the lower the score the more likely the applicant will experience delinquency. A format of Credit Scoring Matrix is attached here: Credit score matrix Sl. Items No. 1.

Profession

2

3.

4 5 6.

Points allotted Fixed salaries person (of Govt./ reputed 5 organization) Professionals 3 Monthly net cash flow: Points allotted Tk. 5,000-Tk. 6,000 30 Tk. 6,001-Tk. 8,000 33 Tk. 8,001- Tk. 10,000 35 Tk. 10,001-Tk. 15,000 40 Tk. 15,001-Tk. 20,000 43 Tk. 20,2001-Tk. 25,000 45 Tk. 25,001 –Tk. 30,000 48 Tk. 30,001 –Tk. 40,000 50 Tk. 40,001-Tk. 50,000 53 Tk. 50,001-Tk. 60,000 55 Tk. 60,001-Tk. 80,000 58 Tk. 80,000 and above 60

Ownership of Car Ownership of house in Municipal Are Ownership of T & T Telephone at residence Customer of our Bank having other well performed credit facility/ considerable deposit/ CCS loan availed earlier and repaid as per terms 7 Other mentionable regular Income/ 0-3 Earning by Spouse 8 Guarantors status 0-2 9 Social status/ Reputation of the customer 0-3 10 Holding of Passport 1 11 Income tax Payer 0-2 12 First Class club Member 1 13 FDR/ Sanchaya Patra in the form of 10 Security 14 Reputation of Supplier 0-2 Total Points

Point Assigned 5

60

3 3 2 3 3 2 3 1 2 1 10 2 100

Point Scored

Judgmental Decisions: Applications meeting the minimum cut off score and meeting any other credit criteria should be further reviewed for judgmental decision. Judgmental approval involves the assessment of an applicant’s character, capacity and collateral, which are defined as: • Character-an applicant’s willingness to meet past obligations.

• Capacity-an applicant’s willingness to meet current and future obligation • Collateral-the value of the items being financed or collateral being offered.

An applicant required to be living at his/her present address for a minimum of one year unless the applicant is an established bank customer holding an account for longer than 6 months.

The applicant must provide utility bills for verification.

Debt Burden Consumer credit products traditionally have incorporated an assessment of the applicant’s debt burden based upon the minimum income level or maximum credit limit established for the product.

The calculation should be: Total monthly Expenses (TME)/ Net Monthly Income (NTMI) TME = Living Expenses + Credit Card Repayments (including payments to other banks) + Loan Repayments (including payments to other banks and payment of current loan applications) NIMI = Total monthly income (i.e. Salary/ business + other monthly income e.g. house rent, dividend etc) – deductions.

Credit Approval Process: Applications are received at Credit Assessment & Approval unit from sales team/ branches.

Applications are evaluated/ assessed by Credit analysts/ Managers. The evaluation process is carried out based on the agreed and standard guidelines for different loans product and the documents checklist as per the product program guideline (PPG). The detailed credit and risk assessment should be conducted prior to the approving of any loans. Sales Team/ Branches must complete a documentation checklist to ensure all documents have been properly obtained.

The sales team/ branch staff responsible for loan sales as well as the customer relationship, and must be help responsible to ensure the accuracy of the loan application submitted for approval.

The credit approval function is completely separated from the marketing / sales function.

Approvals must be evidenced in writing. Approval records must be kept on file with the Credit Applications.

Credit approval authority are as follows: 1. The Board of Directors 2. The Executive Committee of the Board 3. The Managing Director 4. The Deputy Managing Director 5. Retail Credit Committee.

Disbursement Loan Administration dept in head office/ regional office/ branches will disburse the loan amounts under loan facilities only when all security documentation is in place. CIB report is obtained, as appropriate, and clean.

Collection steps: The collection process for personal loans starts when the account holder has failed to meet one or more. Contractual payment (Installment).

The collection steps are as follows Days Past Due (DPD) 1-14 15-29 30-44 45-59

60-89

90 and above

Collection Action Letter, follow up & persuasion over phone 1st Reminder letter & Sl. No. 1 follows 2nd reminder letter + Single visit * 3rd reminder letter (Appendix 11) * Group visit by team member * Follow up over phone * Letter to Guarantor, Employer, Reference all above effort follows * Warning on legal action by next 15 days * Call up loan * Final Reminder & Serve legal notice * Legal proceedings being * Repossession starts * Telephone calls/ Legal proceedings continue * Collection effort continues by officer & agent * Letter to different banks/ Association

This procedure has been designed to enable the collection staff to systematically recover the dues and identify/ prevent potential losses, while maintaining a high standard of service and retaining goods relations with the customers. It is therefore essential and critical, that collection people are familiar with the computerized system, procedures and maintain effect liaison with other departments within the bank.

Classification of Loan: According to Bangladesh Bank there are four types of loan If any borrower fails to repay his amount or installment within the following time period then it will fall under the following classification status.

• •

If 3 to 9 installments due then the entire loan will be classified as ‘Special Mention” If the numbers of due installments is 6 to 9 then the entire loan will be classified as ‘Sub standard’.

• If the number of due installments is 9 to 12 then the entire loan will be classified as ‘doubtful’.

• If the number of due installments is 12 to 18 then the entire loan will be classified as ‘bad debt’.

Details of consumer Products: Table: Name of the Products

Loan Limit

Interest Rate

Car loan (new)

8,00,000

16%

Maximum term of loan (Year) 6

Car loan (reconditioned) Doctors loan (Specialist) Doctors (General Practitioner) Swapna Neer (Home Loan)

15,00,000 10,00,000 5,00,000 50,00,000

16% 16% 16% 15%

Hospitalization Loan Education Loan Loan Against Salary Marriage Loan Travel Loan House Hold Durables Loan Any Purpose Loan CNG Conversion (individual) CNG (corporate bodies)

5,00,000 3,00,000 3,00,000 3,00,000 2,00,000 5,00,000 1,50,00 60,00,000 1,00,000

16% 16% 16% 16% 16% 16% 16% 16% 15%

5 5 5 20 (including 6 to 18 months grace period) 2 2 3 3 3 4 3 1.5 1.5

In case of all the Products the repayment method is equal monthly installments.

Car Loan 1. Customer segment: Any Bangladeshi individual who has the means and capacity to repay the loan. In specific terms, the target customers should cover salaries executives of multinational companies, middle to large size local corporate, government officials, officials working in semi government, tax paying businessmen, having a reliable source of income, educational institutions.

2. Purpose: Purpose of non-commercial new and reconditioned vehicles for personal use only by an individual.

3. Nationality Bangladeshi only 4. Age limit *Minimum age (years) * Maximum age (years)

25 60 years at the time of maturity of loan

5. Minimum income Tk. 20,000 for salaries individuals and Tk. 40,000 for businessman 6. Loan to price ratio Loan amount will not exceed 90% of the vehicle price 7. Security/ Collateral Hypothecation over the car (Registration of the vehicle in the name of the bank.

First party comprehensive insurance or the car (Policy must be renewed every year and copy of the policy must be submitted to the bank. post dated cheques based on the loan tenor.

Additional security in the form of personal guarantee may be obtained of

Spouse/parents or an individual having minimum solvency/ income not less than that of the borrower supported by income proof.

8. Legal Documents Duly field in Car Loan Application form terms and conditions signed Demand promissory note Letter of set off Irrevocable letter of authority to repossess the vehicle Ownership transfer from signed by customer Letter of offer with full terms and conditions started therein and duly accepted.

9. Disbursement Mode After loan approval vendor will receive a facility confirmation letter. On the basis of the bank. Upon submission of Registration vendor will be paid the total value of the vehicle in the form of Pay order. Customer should pay the down payment / total value prior to issuance of facility confirmation letter.

10. Disbursement precondition: Comprehensive insurance coverage and registration document must be in place before giving the pay order.

11. Debt Burden Ratio (DBR %) Debt Burden ratio to be maintained at maximum 33% at all times.

12. Verification of Personal Details and Quotation Details of an applicant to be verified by a third party/ internal assessment officers.

Before an approval is accorded.

Letter from employer with details of employment and salary Borrower and Guarantors (if any) details (address-bothpresent and permanent, all telephone numbers of residence, office & mobile No).

Personal net worth statement Car quotation Refree details (if any) Bank statement 13. Substantiation of Income Proper substantiation of income will be mandatory.

All or any of the following original / true copy of original (accepted only after seeing the originals) documents are accepted for the purpose • Bank statements for minimum last 6 months • Personal net worth statement • Any other document that may stand as a proof of income such as last tax return, deed of tenant agreement etc.

Doctors Loan 1. Customers segment Any Bangladeshi Citizen who is a graduate in Medical Science/ Dentist/ Eye/ Allopathic as self employed or salaried people has the means and capability to repay the loan.

2. Purpose Small scale purchase of different medical equipments, machineries, tools or other relevant items to support professional needs (e.g. run or set up a clinic / hospital/dispensary).

3. Nationality Bangladeshi only 4. Age limit Minimum age (years) : 25 Maximum age (years) : 65 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, must be confirmed employees of an established organization.

For self employed individual, a professional experience of minimum 2 years.

6. Minimum Income Tk. 10,000 for salaried individuals and Tk. 25,000 for self employed 7. Loan Size Tk. 500,000 for General Practitioner Tk. 1000,000 for specialist doctor i.e. holding post graduation degree 8. Loan to price Ratio Loan amount will not exceed 90% of the instrument/ item price.

9. Security/ Collateral Hypothecation over purchased assets.

Attested photocopy of the Certificate of the last degree and BMDC/BMA membership certificate.

Comprehensive insurance over the assets (Policy must be renewed every year and copy of the policy must be submitted to the bank) Post dated cheques based on the loan tenor.

Personal guarantee from two persons having minimum solvency/ income not less than that of the applicant supported by income proof.

10. Legal Documents Duly filled in the loan application form terms and conditions signed Demand promissory note Letter of set off Irrevocable letter of authority to repossess the asset Letter of offer with full terms and conditions stated therein and duly accepted Letter of guarantee 11. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the vendor will be paid the total value of the item in the form of pay order.

12. Disbursement pre-condition: N/A 13. Debt Burden Ratio (DBR %) Debt Burden ratio to be maintained at minimum 33% at all times.

14. Other charges: Service charge: 1% on loan amount or tk. 1,000/= whichever is higher + 15% VAT on Service charge Risk Fund: 1% on loan amount Stamp Charge: tk. 470/Household durables Loan 1. Customers segment Any Bangladeshi individual who has the means and capacity to repay the loan. In specific terms the target customers should cover salaried executives of multinational companies, middle to large size local corporate, government officials, officials working in Semigovernment. Autonomous and reputed NGOs (Non Government Organization), international aid agencies 8 UN bodies, any tax paying business of repute, any employed/ self employed tax paying individual having a reliable source of income.

2. Purpose Purchase of household durables like Television, Refrigerator, Air Conditioner, Washing Machine, Computer, other household furniture etc. for personal use only.

3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 60 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum service length of 1 year and must be a confirmed employee.

For self employed individual, a business record of minimum 3 years.

6. Minimum Income Tk. 10,000 for salaried individuals and Tk. 25,000 for businessman.

Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his / her own or family residence) 7. Loan to price Ratio Loan amount will not exceed 90% of the quotation value 8. Security/ Collateral Hypothecation over the purchased assets.

Post dated cheques based on the loan tenor.

9. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note

Letter of set off Irrevocable letter of authority to repossess the asset Letter of offer with full terms and conditions stated therein and duly accepted.

Letter of guarantee.

10. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the vendor will be paid the total value of the item in the form of Pay Order.

11. Debt Burden Ratio (DBR %) Debt Burden ratio to be maintained at minimum 33% at all times.

12. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever si higher + 15% VAT on service charge Risk Fund: 1% on loan amount Stamp Charge: Tk. 470/Marriage Loan 1. Customers segment Employees of reputed Multinational companies and large local corporate.

Employees of medium sized or mid range local companies such as reputed school & colleges, pathology labs, hospitals, restaurants, hotels, newspapers, airlines, real-estate developers of repute, insurance & leasing companies, NGOs, aid agencies, UN bodies, reputed trading firms and business establishment and all other salaried employees including employees of government, semi government & autonomous bodies.

Any tax paying businessmen of repute, any employed/ self employed tax paying individual having a reliable source of income.

2. Purpose To meet the financial need for marriage purpose 3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 60 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum service length of 1 year and must be a confirmed employee.

6. Minimum Income Tk. 10,000 for salaried individuals and Tk. 25,000 for businessman (for rented people) Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his / her own or family residence)

7. Security/ Collateral Letter of introduction from the employer Post dated cheques based on the loan tenor Personal Guarantee from two persons having minimum solvency / income not less than that of the applicant supported by income proof 8. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note Letter of set off Letter of offer with full terms and conditions stated therein and duly accepted.

9. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the branch will credit the approved loan amount to the said SB account opened by the applicant.

10. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever is higher + 15% VAT on service charge Risk Fund: 1% on loan amount Stamp Charge: Tk. 320/Any purpose Loan 1. Customers segment Employees of reputed Multinational companies and large local corporate.

Employees of medium sized or mid range local companies such as reputed school & colleges, pathology labs, hospitals, restaurants, hotels, newspapers, airlines, real-estate developers of repute, insurance & leasing companies, NGOs, aid agencies, UN bodies, reputed trading firms and business establishment and all other salaried employees including employees of government, semi government & autonomous bodies.

2. Purpose Miscellaneous personal financial requirements. The customer has to declare the purpose of the loan but submission of supporting document is not mandatory. Purpose may be as follows: Hose renovation Marriage in the family Advance rental payments Hospitalization or other emergency medical needs Trips abroad Purchase of miscellaneous household appliances Purchase of personal computers Purchase of electronic items Purchase of furniture

Other acceptable purpose not mentioned above but no facilities can be granted for purposes that are legally in contradiction with the law of the land. It is therefore advisable that the dealing offer knows the purpose of the facility and records the same.

3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 60 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum total service length of 2 years Govt. employees must be confirmed on job.

6. Minimum Income Tk. 10,000 for salaried individuals and Tk. 25,000 for businessman (for rented people) Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his / her own or family residence) 7. Security/ Collateral Letter of introduction from the employer Post dated cheques based on the loan tenor Personal Guarantee from two persons having minimum solvency / income not less than that of the applicant supported by income proof 8. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note Letter of set off Letter of offer with full terms and conditions stated therein and duly accepted.

Letter of Guarantee 9. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever is higher + 15% VAT on service charge Risk Fund: 1% on loan amount Stamp Charge: Tk. 320/Education Loan 1. Customers segment Employees of reputed Multinational companies and large local corporate.

Employees of medium sized or mid range local companies such as reputed school & colleges, pathology labs, hospitals, restaurants, hotels, newspapers, airlines, real-estate developers of repute, insurance & leasing companies, NGOs, aid agencies, UN bodies, reputed trading firms and business establishment and all other salaried employees including employees of government, semi government & autonomous bodies.

Any tax paying businessmen of repute, any employed/ self employed tax paying individual having a reliable source of income.

2. Purpose For educational purposes like study in abroad or within the country 3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 60 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum total service length of 2 years Govt. employees must be confirmed on job 6. Minimum Income Tk. 10,000 for salaried individuals and Tk. 25,000 for businessman (for rented people) Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his / her own or family residence) 7. Security/ Collateral Letter of introduction from the employer Post dated cheques based on the loan tenor Personal Guarantee from two persons having minimum solvency / income not less than that of the applicant supported by income proof 8. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note Letter of set off Letter of offer with full terms and conditions stated therein and duly accepted.

9. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the branch will credit the approved loan amount to the said SB account opened by the applicant.

10. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever is higher + 15% VAT on service charge Risk Fund: 1% on loan amount Stamp Charge: Tk. 320/Hospitalization Loan 1. Customers segment Employees of reputed Multinational companies and large local corporate.

Employees of medium sized or mid range local companies such as reputed school & colleges, pathology labs, hospitals, restaurants, hotels, newspapers, airlines, real-estate developers of repute, insurance & leasing companies, NGOs, aid agencies, UN bodies, reputed trading

firms and business establishment and all other salaried employees including employees of government, semi government & autonomous bodies.

Any tax paying businessmen of repute, any employed/ self employed tax paying individual having a reliable source of income.

2. Nationality Bangladeshi only 3. Age limit Minimum age (Years) : 21 Maximum age (years) : 65 years at the time of maturity of loan 4. Minimum service/ length of business For salaried individual, minimum service length of 2 years Govt. employees must be confirmed on job.

5. Minimum Income Tk. 10,000 for salaried individuals and Tk. 25,000 for businessman (for rented people) Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his / her own or family residence) Tk. 10,000 for employees of government, Semi government and autonomous bodies.

6. Security/ Collateral Letter of introduction from the employer Post dated cheques based on the loan tenor Personal Guarantee from two persons having minimum solvency / income not less than that of the applicant supported by income proof 7. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note Letter of set off Letter of offer with full terms and conditions stated therein and duly accepted.

Letter of Guarantee 8. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the branch will credit the approved loan amount to the said SB account opened by the applicant.

9. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever is higher + 15% VAT on service charge Risk Fund: 1% on loan amount Stamp Charge: Tk. 320/Swapna Neer 1. Customers segment

Any Bangladeshi (Singly or jointly with other co-owners/ co-borrowers e.g. spouse/ son). To be more specific the following group of people will be eligible for Prime Bank ‘Swapna Neer’ Lona: Salaried people: a) Employees of govt./ Semi govt./ Autonomous body b) Employees of financial institution c) Employees of different public limited company/ Private Limited company having corporate structure. d) Teachers of any school/ co0llege/ university.

Professional: a) Doctor b) Engineer c) Accountants Self-Employed Business (in business at least for five years).

2. Purpose a) Purchasing apartment/ house (if old not older than 10 years) b) Constructing new house c) Taking over of house building loans from other banks/ Non banking finance institution 3. Nationality Bangladeshi only 4. Age limit Upto 60 years ( Repayment age) Note: At the time of sanctioning loan, the age of the borrower s well as cash flow/ repayment capacity of the borrower, should be such to ensure full adjustment of the loan within 60 (Sixty) years of age. However Head office may relax age of the borrower as and when deem fit but not exceeding 65 years.

5. Minimum Income Loan amount, debt-equity ratio etc. hall be decided on a case to case basis considering location of the project, prospect of rental income, repayment capacity, financial and social standing of the customer, other source of income, size of family, income of the family members, other debts, age of the borrower etc.

6. Loan to Price Ratio a) At least 40% of the total cost of construction of home b) At least 30% of purchase price of new apartment/home.

At least 50% of purchase price of old apartment/ home and repairing cost, if any.

7. Security/ Collateral Under construction apartment: Under supervision of Bank’s Panel Lawyer, a tri-partite agreement will be signed among the customer, the developer and Prime Bank Limited to the effect that the developer will handover property related documents directly to Prime Bank Limited being the financer of

the apartment. Subsequently, the apartment will be registered mortgaged in the name of Prime Bank Limited.

Construction of house: Registered mortgage of the concerned property Registered IGPA to sell/ foreclosure of the mortgage property without intervention of the court; Note: The building / apartment/ land to be financed be secured by registered mortgage along with registered power of attorney to sell the property directly without referring the same to the borrower/ court in case of default.

8. Legal Documents i. D.P. Note ii. Housing Loan Agreement iii. Letter of disbursement iv. Letter of authority of the Employer to pay monthly installment by deducting from salary/ service benefit in case of salaried person; v. Letter of installment vi. Land documents 9. Disbursement mode For purchasing apartment Firstly, the customer shall pay the equity portion to the developer. Later on, the remaining amount will be provided by the bank.

For construction of building The customer will have to invest the equity portion first for having disbursement from the sanctioned loan. Bank’s Civil Engineer will ascertain whether the customer’s equity is rightly invested or not.

Any cost overrun of the projected cost shall be borne by the customer.

10. Disbursement pre-condition: The quantum of loan shall be such to ensure monthly installment size world not exceed 40% of the gross income or 80% of the residual income (after deducting all expenses except present rental expense) with ever is lower.

11. Other charges: Service Charge: 1% on loan amount Risk Fund: .50% on loan amount Loan Against Salary 1. Customers segment Employees of reputed Multinational companies and large local corporate.

Employees of medium sized or mid range local companies such as reputed school & colleges, pathology labs, hospitals, restaurants, hotels, newspapers, airlines, real-estate developers of repute, insurance & leasing companies, NGOs, aid agencies, UN bodies, reputed trading firms and business establishment and all other salaried employees including employees of government, semi government & autonomous bodies.

2. Purpose To meet the financial need for any acceptable purpose 3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 65 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum total service length of 2 years Govt. employees must be confirmed on job 6. Minimum Income N/A 7. Security/ Collateral Post dated cheques based on the loan tenor Employer Certificate incorporating to pay the monthly installments by deducting salary of the concerned applicant.

8. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note Letter of set off Letter of offer with full terms and conditions stated therein and duly accepted.

9. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the branch will credit the approved loan amount to the said SB account opened by the applicant.

10. Other charges: Service Charge: 1% on loan amount + 15% VAT on service charge Risk Fund: Nil Stamp Charge: Tk. 320/Travel Loan 1. Customers segment Employees of reputed Multinational companies and large local corporate.

Employees of medium sized or mid range local companies such as reputed school & colleges, pathology labs, hospitals, restaurants, hotels, newspapers, airlines, real-estate developers of repute, insurance & leasing companies, NGOs, aid agencies, UN bodies, reputed trading firms and business establishment and all other salaried employees including employees of government, semi government & autonomous bodies.

Any tax paying businessmen of repute, any employed/ self employed tax paying individual having a reliable source of income.

2. Purpose To meet the financial need for travel purposes.

3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 65 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum total service length of 2 years

Govt. employees must be confirmed on job 6. Minimum Income Tk. 12,000 for salaried individuals and Tk. 25,000 for businessman (for rented people) Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his/her own or family residence) Tk. 10,000 for employees of Government, Semi Government and Autonomous bodies.

7. Security/ Collateral Letter of introduction from the employer Post dated cheques based on the loan tenor Personal Guarantee from two persons having minimum solvency / income not less than that of the applicant supported by income proof 8. Legal Documents Duly filled in the loan application from terms and conditions signed Demand promissory note Letter of set off Letter of offer with full terms and conditions stated therein and duly accepted.

Of Guarantee 9. Disbursement mode After loan approval vendor will receive a facility confirmation letter. On the basis of that customer will open a SB account with the branch nominated by the customer. Then he/she will deposit the amount of down payment, service charge including VAT, risk fund, stamp cost. After that the branch will credit the approved loan amount to the said SB account opened by the applicant.

10. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever is higher + 15% VAT on service charge Risk Fund: 1% on loan amount Stamp Charge: Tk. 320/CNG Conversion Loan 1. Customers segment Any Bangladeshi individual who has the means and capacity to repay the loan. In specific terms the target customers should cover salaried executives of multinational companies, middle to large size local corporate, government officials, officials working in Semigovernment. Autonomous and reputed NGOs (Non Government Organization), international aid agencies 8 UN bodies, any tax paying business of repute, any employed/ self employed tax paying individual having a reliable source of income.

2. Purpose For converting vehicles from carbon based fuel to compressed natural gas system.

3. Nationality Bangladeshi only 4. Age limit Minimum age (Years) : 21 Maximum age (years) : 65 years at the time of maturity of loan 5. Minimum service/ length of business For salaried individual, minimum total service length of 2 years Govt. employees must be confirmed on job For self employed individual, a business record of minimum 4 years 6. Minimum Income Tk. 12,000 for salaried individuals and Tk. 25,000 for businessman (for rented people)

Tk. 10,000 for salaried individuals and Tk. 15,000 for businessman (who are residing in his/her own or family residence) Tk. 10,000 for employees of Government, Semi Government and Autonomous bodies.

7. Other charges: Service Charge: 1% on loan amount or Tk. 1,000/- whichever is higher + 15% VAT on service charge Risk Fund: Nil Stamp Charge: Tk. 320/Corporate credit: PBL’s corporate business provides tailored services to corporate, institutional clients.

Commercial lending comprises of major type of corporate credit and continued to remain the major segment of the business. PBL’s strategy is to Provide comprehensive service to the clients of this segment who are the large and medium size corporate customers. Corporate clients include sole proprietors, partnership, incorporated businesses and publicly quoted companies.

Corporate loans include the following: • Export financing • Import financing • Industrial financing • Lease financing • Hire purchase • Loans against shares • Infrastructure financing • Working capital financing • Cash Credit (Hypothecation) • Cash credit (Pledge) • PAD • SOD (Export) • SOD (Others) • Packing Credit • LIM • FDBP (Foreign) • FDBP (Local) • Lease Finance: Lease financing is one of the most convenient sources of acquiring capital machinery and equipment whereby a customer is given the opportunity to have an exclusive right to use an asset usually for an agreed period of time against payment of rent.  Working Capital: Loans allowed to the manufacturing units to meet their working capital requirements, irrespective of their size-big medium or small, fall under this category.  Hire Purchase: Hire purchase is a type of installment credit under which the customer agrees to which is inclusive of the repayment of principal as well as interest for adjustment of the loans within a specified period.  Export Financing:

Credit facilities allowed to facilitate export of all items against letter of credit and/or confirmed export orders fall under this category.

• Secured Overdraft (SOD- Export): Advance allowed for purchasing foreign currency for payment against L/Cs (Back to Back) where the exporters do not materialize before the date of import payment. This is also an advance for temporary period which is known as export finance and falls under the category “Commercial Lending”.

• Secured Overdraft (SOD- Others): Advances allowed against assignment of work order for execution of contractual works falls under this head. This advance is generally allowed for a definite period and specific purpose i.e. , it is not a continuous credit. It’s fall under the category “Others”.

• Foreign Documentary Bills Purchased (FDBP): Payment made to a customer through purchased/negotiation of a foreign documentary bills falls under this head. This temporary advance is adjustable from the proceeds of the shipping/export documents. It fall under the category “export credit”.

• Foreign Documentary Bill Purchased Local (FDBP- Local): Payment made against documents representing sale of goods to local export oriented industries which are deemed as exports and which are denominated in local currency/foreign currency falls under this head. This temporary liability is adjustable from proceeds of the bill.

• Cash Credit: A Cash Credit is an arrangement by which a banker allows his customer to borrow money upto a certain limit. Cash Credit is allowed against pledge or hypothecation of commodities.

Hypothecation: In hypothecation the goods remain in the possession of the borrower and are equitably charged to the lender under documents.

Pledge: In pledge the goods are pledged in custody of the bank with its name on the godown where they are stored.

• Loan Against Imported Merchandise (LIM): Advances allowed for retirement of shipping documents and release of goods imported through L/C taking effective control over the goods by pledging goods in godown under bank’s control fall under this type of advance.

• Packing Credit (P.C):

Advance allowed to a customer against specific L/C/Firm contract for processing/packing of goods to be exported falls under this head and is categorized as Packing Credit. The advances must be adjusted from proceeds of the relevant exports within 180 days. • Small and Medium Enterprise Credit Scheme: To advance or lend money tot eh unemployed persons for self employment and rehabilitation in the society PBL officers SME credit scheme. The another reason to offer SME credit scheme is to finance the small and cottage industries for industrialization and also to create employment opportunities.

Small enterprise refers to these enterprise where investment is limited to Tk. 250,000 and where 10 or less workers are engaged on wages or commission basis Medium Enterprise refers to those enterprises where total bank investment does not exceed Tk. 75,00,000 and where 20 or less people are engaged on wages or commission basis.

Mix of Lending for the Bank 4361.52

5484.63

650

Taka in crore

500 284.76

350 135.58

200 50

YTD Dec-06

YTD Dec-07

Corporate Credit

Retail Credit

Share of Different Banks in Retail Loan Market in 2004 1.78% 1.89%

0.43%

42.73% 47.18%

Nationalized

Specialized

Foreign

Private

PBL

Share of different banks in Retail Loan Market in 2005 11.41% 2.69% 0.37%

45.18% 40.35%

Nationalized

Specialized

Foreign

Private

PBL

Share of Different Banks in Retail Loan Market in 2006 9.30% 8.85%

0.41%

38.63%

48.81%

Nationalized

Specialized

Foreign

Private

PBL

Share of Different Banks in Retail Loan Market in June 2007

3.50%

8.00% 3.20%

29.30%

55.90%

Nationalized

Year Wise Comparison

Specialized

Foreign

Private

PBL

Comparison of growth from 2001 to 2007-Retail Loans

80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

2001

2002

2003

2004

2005

2006

2007

Deposit and Loans & Advance Taka in Million 70512

70000

45010

50000 36022 31916

40000 30000

57683

54724

60000

20483

20000

2806923220 16492

10000 0

2003

2004 Deposit

2005

2006

2007

Loans & Advance

Deposit increased by 28.85% and loans & advance increased by 28.16% Higher than industry average FOREIGN EXCHANGE DEPARTMENT Introduction

The term “Foreign Exchange’ has different connotations in different contexts. Sometimes it is referred to as the Process of conversion of one currency into another, sometimes as the Process of transferring money from one country to another. In Bangladesh it has a legal definition too. In terms of section 2(d) of the Foreign Exchange Regulation (F.E.R.) Act 1947, as adapted in Bangladesh, foreign exchange means foreign currency and includes instruments expressed in foreign exchange, all deposits, credits and balance payable in foreign currency as well as foreign currency instruments such as Draft, TC, Bill of Exchange, Promissory note, and Letter of Credit Payable in any foreign currency.

Foreign Exchange Department is the international department of the bank. It deals globally and facilitates international trade through its various modes of services. It bridges between importers and exporters. Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign country. This department mainly deals with foreign currency. This is why this department is called foreign exchange department.

Some national and international laws regulate functions of this department. Among these, Foreign Exchange Act, 1947 is for dealing in foreign exchange business, and Import and Export Control Act, 1950 is for Documentary Credits. Governments’ Import &Export policy is another important factors for import and export operation of banks.

5.2 Legal Basis of Foreign Exchange Transactions Foreign Exchange transactions are Performed under some legal regulations, as follows: • Foreign Exchange Regulation Act – 1947 • Import and Export Control Act – 1950.

• Customs Act – 1969.

• The Uniform customs and Practices for documentary credit (UCPDC) – 1993 revision and International chamber of commerce publication no – 500, is also an important law for settlement of terms and conditions between exporter and importer in international trade.

• Import policy issued by ministry of commerce.

• Export policy issued by Ministry of commerce.

• International rules issued by international chamber of commerce (ICC)/ Uniform Rules and Practices.

• Different foreign exchange circulars issued by Bangladesh Bank.

Functions of This Department

Foreign Exchange Imports Opening of L/C

Exports Payment against Document (PAD)

Export L/C Advising

Pre-Shipment Finance

Foreign Bills for Collection (FBC)

Loan against Trust Receipt

Loan against Imported Merchandise (LIM )

Post-Shipment Finance

Inward Bills (For Collection)

Guarantees Inland & Foreign

Export Certificates

Dealing Section Quoting Rates of Exchange

Forward Cover (Booking of Contract)

Reconciliation (Foreign Bank A/c)

Guidance on rates trends to customer Travel

Issue & Sales of Foreign currencies & TC

Purchase or encashment foreign currencies & TC

Realization

Remittance Inward Remittance

Out ward Remittance FDD, MT, TT

Returns Returns to Bangladesh Bank

Other Returns HO (IBD)

The above mentioned functions are done by three sections namely: • Import Section • Export Section • Foreign Remittance Section Import Section: Import is the flow of goods and services purchased by economic agent staying in the country from economic agent staying abroad. Import section helps business and other people to import goods. In international environment, buyers and sellers are often unknown to each other. So seller always seek guarantee for the payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its ‘Letter of Credit’.

When a buyer goes to import some goods from a foreign buyer, he requests his bank make payments to the exporter of goods. And the bank recovers the amount from the importer.

Letter of Credit:

Letter of credit is a guarantee or undertaking on commitment to the beneficiary exporter for making payment issued by the issuing bank on behalf of the importer upon fulfillment of some conditions.

Letter of credit (L/C) can be defined as a “Credit Contract” whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. Since the agreed conditions include, amongst other things, the presentation of some specified documents, the letter of credit is called Documentary Letter of Credit. The Uniform Customs & Practices for Documentary Credit (UCPDC) published by international Chamber of Commerce (1993) Revision, Publication No. 500 defines Documentary Credit: Types of Letter of Credit: There are many types of letter of credits that are used in different countries of the world. But international chamber of commerce (ICC) vides their UCPDC-500, which donates only two types of letter of credit: (i) Revocable, or (ii) Irrevocable.

Revocable Credit: This type of credit can be revoked or cancel at any time without the consent of the beneficiary. As per Article 8 (a) of UCPDC 500 “ A revocable credit may be amended or cancelled by the Issuing Bank at any moment and without prior notice to the Beneficiary.

Irrevocable Credit: The Irrevocable Credit is a commonly used type of documentary credit. The Credit which can not be revoked, varied or changed/amended without the consent of all parties- buyer (Applicant), seller (Beneficiary), Issuing Bank and Confirming Bank (in case of confirmed L/C). As per Article 9(a) of UCPDC 500, an Irrevocable Credit constitutes definite undertaking of the Issuing Bank provided that the stipulated documents are prescribed to the Nominated Bank OR TO THE Issuing Bank and that the terms and conditions of the Credit are complied with. Irrevocable Credit gives the seller greater assurance of payments, but he remains dependent on an undertaking of a foreign bank.

Steps for Import L/C Operation-6 Steps Operation Step 1-Registration with CCI&E 1. For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export.

2. By paying specified registration fees to the CCI&E. the trader will get IRC/ERC (Import/Export Registration Certificate), to open L/C with bank, this IRC is must.

Step 2-Determination terms of credit 1. The terms of the letter of credit depend upon the contract between the importer and exporter. The terms of the credit specify the amount of credit, name and address of the beneficiary and opener, tenor of the bill of exchange, period and mode of shipment and of destination, nature of credit, expiry date, name and number of sets of shipping documents etc.

Step 3-Application by importer to the banker to open letter of credit 1. For opening L/C, the importer is required to fill up a prescribed application form provided by the banker along with the following documents

a) b) c) d) e) f) g) h)

Pro-forma invoice Demand Promissory Note Authority to debit account Tax Information Certificate Filled up amendment request from IMP form Insurance cover note, etc.

Filled up LCA form

Step 4- Opening of L/C by the bank for the opener 1. Taking filled up application form the importer 2. Collects credit report of exporter from exporter’s country through his foreign correspondence there.

3. Opening bank then issues credit by air mail or cable followed by credit advice as asked for by the opener through his foreign correspondent or branch as the cash may be, at the place of beneficiary. The advising bank advises the credit to the beneficiary on his own form where it is addressed to him or merely hands on the original credit to the beneficiary if it is so addressed.

Step 5-Shipment of goods and submission of documents by exporter 1. Then exporter ships the goods to the destination of the importer country 2. Sends the documents to the L/C opening bank through his negotiating bank.

Generally the following documents are sent to the Opening Banker with L/C: a) Bill of Exchange b) Bill of Lading c) Commercial Invoice d) Certification of Origin e) A certificate stating that each packet contains the description of goods over the packet. f) Packing List g) Advice Details of Shipment h) Pre-shipment Inspection Certificate i) Vessel Particular Step 6-Lodgment of Documents by the opening Bank from the negotiating bank 1. After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy found, it informs the importer. If importer accepts the fault, then opening banker call importer retiring the document. At this time many thing can happen. These are indicated in the following: Discrepancy found but the importer accepts-no problem occurs in lodgment.

Discrepancy found and importer not agreed to accept- in this case, importer protest and send back all the documents to the exporter and request his to make in the specified manner. Here banker is not bound to pay because the documents send by exporter is not in accordance with the terms of L/C. Documents are OK but importer is willing to retire the documents-In this cash bank is obligated to pay the price of exported goods. Since importer did not pay bill of exchang exchange, this payment bank is one kind of credit to the importer and this credit in banking is known as FORCED PAD.

Everything is O.K. but importer fails to clear goods from the port and request bank to clear in this case bank clear the goods and takes delivery of the same by paying customs duty and sales tax etc. So, this expenditure is debited to the importer’s account and in banking it is called LIM. Before opening L/C, the issuing bank must check the following: 1. L/C Application properly stamped, signature verified and margin approved and properly retained.

2. Indent Proforma Invoice signed by the Importer and Indentor/Supplier.

3. Ensure that the relevant particulars of L/C application correspond with those stipulated in Indent Proforma Invoice.

4. Validity of LCA entitlement of goods, amount etc. conform with the L/C application.

5. Conversion and rate of exchange correctly applied.

6. Charges like commission, F.C.C., postage, telex charge, if any, recovered.

7. Insurance Cover Note- In the name of Issuing Bank- A/C Importer covering required risks and voyage route.

8. Incorporation of instruction for Negotiating Bank as per bank’s existing arrangement.

9. Reimbursement instruction for Reimbursing Bank.

10. If foreign bank’s confirmation is required, necessary permission should be obtained and accordingly advising bank is advised as per bank’s existing arrangement.

11. If add confirmation is required on account of the applicant- charges should be recovered from the applicant.

12. In case of usance L/C , mention rate of interest clearly in the Letter of Credit.

Parties to a letter of credit: i.

Importer – Seller Who applies for opening the L/C. ii.

Issuing Bank – It is the bank which opens/issues a L/C on behalf of the importer. iii.

Confirming Bank – It is the bank, which adds its confirmation to the credit and it is done at the request of issuing bank. Confirming bank may or may not be advising bank. iv.

Advising / Notifying Bank – is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporters country. It may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit. v.

Negotiating Bank – is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same.

Sometimes it can also be confirming bank. vi.

Paying / Accepting Bank – is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank. vii.

Reimbursing bank – is the bank, which would reimburse the negotiating bank after getting payment – instructions from issuing bank.

The following types of letter of credit are used in the Prime Bank, Banani Branch, i) Cash Letter of credit ii) Differed Letter of Credit iii) Back to Back Letter of Credit Import Procedures: An importer is required to have the following to import through PBL--i.

Applicant has to apply for opening L/C by a prescribed form.

ii.

iii.

iv. v. vi. vii. viii.

Applicant has to submit the Letter of Indent or Letter of Proforma Invoice.

Letter of Indent: Many sellers have their agent in seller’s country. If the contract of buying is made between the buyers and the agent of the sellers then Letter of Indent is required.

Letter of Proforma Invoice: If the contract is made directly between the buyers and the sellers then Letter of Proforma Invoice is needed.

Applicant has to submit IRC (Indentors Registration Certificate). It is a certificate being renewed every year. This certificate is necessary if the contract is made between the buyers and the agents of the sellers. IRC is of two types – COM and IND. COM is given for commerce purpose and IND is given for industrial purpose.

Applicant has to submit LCAF (Letter of Credit Authorization Form).

Applicant has to submit insurance document.

Applicant has to prepare FORM-IMP. Recently, there has been made a provision to give a certificate named TIN (Tax Payers Identification Number). Taxation department issues this certificate.

Then after proper scrutiny bank will open an L/C.

While opening L/C, importer must keep certain percentage of the document value in the bank as margin.

Financing Related with Import Loan Against Trust Reciept (LTR): • Advance against a Trust Receipt obtained from the Customers are allowed to only first class tested parties when the documents covering an import shipment or other goods pledged to the Bank as security are given without payment. However, for such advances prior permission/sanction from Head Office must be obtained.

• The customer holds the goods or their sale-proceeds in trust for the Bank, till such time, the loan allowed against the Trust Receipts is fully paid off.

• The Trust Receipt is a document that creates the Banker’s lien on the goods and practically amounts to hypothecation of the proceeds of sale in discharge of the lien.

Loan Against Imported Merchandise (LIM): Advance (Loan) against the security of merchandise imported through the Bank may be allowed either on pledge or hypothecation of goods, retaining margin prescribed on their Landed Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank. Bank shall also obtain a letter of undertaking and indemnity from the parties, before getting the goods cleared through LIM Account.

Export Section: Export is the flow of goods and services selled by economic staying in the country to economic agent staying abroad. Creation of wealth in any country depends on the expansion of production and increasing participation in international trade. By increasing production in the export sector we can improve the employment level of such a highly populated country like Bangladesh. Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters export to

foreign countries. Garments sector is the largest sector that exports the lion share of the country's export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through PBL are readymade garments exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.

Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.

Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.

A. As an advising Bank It receives documents from the foreign importer and hands it over to the exporter. Sometimes it adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it assumes the responsibility to make payment to the exporter.

B. As Negotiating Bank It negotiates the bills and other shipping documents in favor of the exporter. That is it collects the proceeds of the export-bill from the drawer and credits the exporter’s account for the same. Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the importer’s country. Sometimes the bank purchases the bills at discount and waits till maturity of the bill. When the bill matures, natures, bank presents it to the drawee to encash it.

Export Financing: Financing exports constitutes an important part of a bank’s activities. Exporters require financial services at four different stages of their export operation. During each of these phases exporters need different types of financial assistance depending on the nature of the export contract.

• •

Pre-shipment credit Post-shipment credit

• Pre-shipment credit: Pre-shipment credit, as the name suggests, is given to finance the activities of an exporter prior to the actual shipment of the goods for export. The purpose of such credit is to meet working capital needs starting from the point of purchasing of raw materials to final shipment of goods for export to foreign country. Before allowing such credit to the exporters the bank takes into consideration about the credit worthiness, export performance of the exporters, together with all other necessary information required for sanctioning the credit in accordance with the existing rules and regulations. Pre-shipment credit is given for the following purposes: • • • • •

Cash for local procurement and meeting related expenses.

Procuring and processing of goods for export.

Packing and transporting of goods for export.

Payment of insurance premium.

Inspection fees.

•

Freight charges etc.

An exporter can obtain credit facilities against lien on the irrevocable, confirmed and unrestricted export letter of credit in form of the followings: i. ii. iii. iv. v. vi.

Export cash credit (Hypothecation) Export cash credit (Pledge) Export cash credit against trust receipt.

Packing credit.

Back to back letter of credit.

Credit against Red-clause letter of credit.

• Post Shipment Credit: This type of credit refers to the credit facilities extended to the exporters by the banks after shipment of the goods against export documents. Necessity for such credit arises as the exporter cannot afford to wait for a long time for without paying manufacturers/suppliers.

Before extending such credit, it is necessary on the part of banks to look into carefully the financial soundness of exporters and buyers as well as other relevant documents connected with the export in accordance with the rules and regulations in force. Banks in our country extend post shipment credit to the exporters through: 1. Negotiation of documents under L/C; 2. Foreign Documentary Bill Purchase (FDBP): 3. Advances against Export Bills surrendered for collection.

Documents Used in Foreign Trade: The documents used in foreign trade may be classified into following two categories:Group- A: The documents shown under this category are known as export documents from the exporter’s side and import documents from the importer’s side. These are• • • • • • • • • • • • •

Bill of Exchange Bill of Lading Air consignment Note or Airway Bill/Post Parcel Receipt/Railway Receipt/Truck Receipt Invoice/Commercial Invoice Consular Invoice Marine Insurance Policy Certificate of Origin Packing list or Mills Specifications Inspection Certificate/Survey Report Bill of Entry Quality Control Certificate Phyto-sanitary certificate GSP certificate

Group- B:

The documents shown under this category are of miscellaneous types and required depending on the nature of transactions and terms of credit. These are• Indent • Proforma Invoice • Dock Warrant • Ware house • Ware house keeper’s Certificate • Delivery Order Trust Receipt etc.

5.6 Remittance Section The remittance process involves the following four modes: Cash Remittance Dollar/Pound • Sell Bank Sell Dollar/Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of ‘Convertibility of Taka for Currency Transactions in Bangladesh”.

• Purchase Bank can purchase dollar from resident and non resident Bangladeshi and Foreigner. Most dollars purchases come from realization of Export Bill of Exchange.

Traveler’s Cheque (TC) • Issue of TC TC is useful to traveler abroad. Customers can encash the TC in abroad from the drawee bank. TC is alternative to holding cash and it provides better security than holding cash in hand.

• Buying of TC If any unused leaf of TC is surrendered bank buys it from the customer. All payments are made in local currency. Banks generally buy only those TC. • TC for collection This bank for collection receiver’s unused levels of traveler’s cheque issued by another banks. Generally it takes 21 days for collection and customer can draw cash draw cash after one month.

Telex Transfer • Outward TT It remits find by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.

• Income TT It a; so makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account.

Foreign Demand Draft Bank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. The payee can collect it for the drawee bank in which the Issuing bank of Demand Draft holds in NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account.

In these processes of remittance, bank must have to make profit a business institution. Profit is made in two ways1. Commission charged 2. Difference in the guying and selling rate.

Miscellaneous Services by This Department:

Student File: Students who are desirous to study abroad can open file in the bank. By opening this file, bank assures the remittance of funds in abroad for study.

NRIT Account: ‘Non-resident Investors’ Taka Account is account where Non-resident Bangladeshi can deposit foreign currency for investment in security of stock exchanges.

F.C. Account: Foreign Currency opened in the names of Bangladeshi nationals or persons of Bangladeshi origin working or self-employed abroad can now are maintained as long as the account holder’s desire.

NFCD: Stands for Resident Foreign Currency Accounts. Persons ordinarily resident in Bangladesh may maintain foreign currency accounts with foreign exchange brought in at time of their return to Bangladesh from visit abroad. Balance of such accounts is freely remittable abroad.

Import and Export Taka in Million 70617

70000 60000

52639 41801

50000

40303 36747

40000 30000

51316

28882

25411 19502

16490

20000 10000 0

2003

2004

2005 Import

2006

2007

Export

Import increased by 34.15% and Export increased by 22.76% Other services provide by PBL are: - Locker Service.

- Master Card Credit card.

Prime Bank Limited obtained principal Membership of master-card International in the month of May 1999, within a period of 6 months, the bank successfully launched master card credit card which created a new dimensioning its customer service and consumer financing.

The card can be used for –

• •

Making payments to merchants against purchase of all goods and services by the card holder from Merchant (s) Availing cash advances.

SWOT ANALYSIS, CONCLUSION AND RECOMMENDATION 6.1 SWOT Analysis: SWOT is an acronym for the internal Strengths and Weaknesses of a firm and environmental Opportunities and Threats of that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. It is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes weaknesses and threats.

Strengths: A strength is a resource advantage relative to competitors and the needs of the markets a firm serves or expects to serve. Strengths arise from the resource and competencies available to the firm.

Weaknesses: A weakness is limitation or deficiency in one or more resources or competencies relative to competitors that impedes a firm’s effective performance.

Opportunities: An opportunity is a major favorable situation in a firm’s environment. Key trends are one source of opportunities. Identification of a previously overlooked market segment, changes in competitive or regulatory circumstances, technological changes, and improved buyer or supplier relationship could represent opportunities for the firm.

Threats: A threat is a major unfavorable situation in a firm’s environment. The entrance of new competitors, slow market growth, increased bargaining power of key buyers or suppliers, technological changes and new or revised regulations could represent threats to a firm’s success.

Strength: • Adequate capitalization.

• Good profitability.

• This bank is introduced on-line banking.

• It provides quick and prompt services to its customer.

• It is not engaged in unfair business.

• It maintains the rules & regulation as per the rules and regulations Bangladesh Bank.

• Officers are highly educated and qualified.

• Officers maintain co-operative relationship with customers.

• It has many attractive deposit schemes. . Bank quickly expanding its business all over the country • T 24 has been implemented at the branch.

. • It is located at a convenient place of the city.

Weakness: • Long term investment is not sufficient.

• Lack of experienced employees in junior level management.

• Shortage of lower level manpower.

• Capital resources are short for its investment.

• Has not yet expanded its network in rural areas.

• Insufficient workforce.

Opportunity: • Launching own master card- Credit card services.

• It can expand its network in rural areas.

• Potential to expand franchise bases on consumer.

• Internet and SMS Banking.

• Opportunity to take market share from rivals by offering new innovative products or services.

• Client’s reliability on MTBL is growing day by day on the bank Threats:.

• . Very competitive market • Central Bank’s policies sometimes are not in favor of the private bank’s policies.

• Entry of new commercial banks, leasing companies and merchant bank etc. they all are competitors.

• Competitors are offering innovative new products and services.

• Competitors are using several new marketing policies to attract the customer.

Findings: Prime Bank Ltd. is one of the most potential Banks in the banking sector. It has a large portfolio with huge assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and managers in all level of management. So it is not an easy job to find out the drawbacks of this branch.

For the improvement of the service the following measures should be taken: • Providing more industrial loans.

• Necessity of ensuring Proper Division of Labor in the Desk.

• Ensuring Sufficient Manpower.

• Development of Human Resources.

• Ensuring Proper Maintenance of Files.

• Ensuring Proper Maintenance of Office Premises.

• Ensuring Proper Communication System and Maintenance of Machineries.

• Ensuring Sufficient Forms and Brochures.

• More Gifts and Discounts for the Premium Customers.

• Offer some investment and Deposit Scheme exclusively for the Premium Customers.

• More Strict Security should be maintained.

• The period of disbursement of loan should be made shorten to meet the urgent need of customers.

• • • •

To be more competitive its should lower the interest rate of different products under retail loan scheme.

Employees should be rotated in different desk at least after three year.

It should undertake more promotional activities to attract new clients.

It should undertake various training program to increase the efficiency of the officials of Prime Bank.

Recommendations: To ensure effective banking, the following recommendations are advised for more efficiency: • It seemed to me that the bank having a large amount of deposit is not encouraging the large scale producers that much of long term industrial loans to accelerate the economy as well as to help the economy to solve unemployment problem.

• Human resource is another sector for the branch to be developed urgently. Human resources, in the branch, need to be equipped with adequate banking knowledge. Majority of the human resources must be having basic knowledge regarding money, banking, finance and accounting. Without proper knowledge in these subjects, efficiency cannot be optimized.

Bank can arrange training program in these subjects.

• Prime Bank Ltd. gives personalized services. All the officers have to give concentration to the customers, while doing this they cannot properly maintain the customer files. In many cases, application forms are not properly filled up and documents are not properly filed.

Every staff should try to reduce these irregularities.

• Branch is supposed to be very neat and clean and well decorated. But sometimes it loses its glamour. The cleaners are not regular in their duties and files and papers are kept here and there by the officers during the busy hour. This habit must be changed. Moreover, the sitting arrangement is very sufficient comparing with the number of customers. So, Principal branch of PBL must pay attention to this issue.

• Most of the time the branch’s computers remain out of order and it is also true for the photocopiers. Attention should be given on proper maintenance of phone, computer, fax machine and photocopier.

• There are always shortages of application forms, brochures, etc. in the branch. These Forms and Brochures must be maintained in sufficient quantity. Otherwise, customer service will be hampered.

• Premium Customers should be offered occasional gifts and discounts, which can make the Premium Service more attractive and keep consumer delight. The profit rates on several investment and deposit schemes should be differentiated for the Premium customers.

• To sustain in the competition of private banking race, the branch should looks offering lucrative schemes and other customer service oriented facilities • . Lending policy should be liberalized and loan recovery must be ensured.

• Proper marketing policy is essential for establishing the idea of MTBL and tries to develop a project which ensures the increase of public relation.

• Banani Branch is such a branch, where millions of Taka transactions are handled regularly.

Sometimes, it has been observed that miscreants try to enter into the premises and Managers have to face these odds. Therefore, more strict security should be maintained.

Bibliography: • • • • • • •

Annual Reports of Prime Bank Limited, 2006 and 2007.

The Financial Express, July 7, 2008.

Credit Manual of Prime Bank Limited.

Credit Risk Management Policy of Prime Bank Limited, Publication- November 19, 2005.

Foreign Exchange Regulations Act- 1947.

WWW.prime_bank.com www.bangladeshbank.org.