General Banking Department performs the core functions of the bank. It deals day to day transactions. It takes the deposit from the customer and meets the customer demands for cash by honoring their checks. Broadly, it has the following core heads-
1. Accounts Opening Section
2. FDR And Ancillary Services Section
3. Local Remittance Section
4. Collection And Clearing
5. Cash Section
6. Accounts Section.
7. Credit operating Section
8. Foreign Exchange Section
Account opening section
Banker-customer relationship begins with the opening of an account by the customer. Opening of an account binds the same into a contractual relationship. But the selection of customer is very crucial. In fact, fraud and forgery of all kinds start by opening of an account by the customer (s). So, the bank takes extra care in its selection. One of the basic functions of commercial banks is to accept deposits. For accepting deposits both demand and time, Prime Bank Sylhet branch offers the following types of accounts-
A. Demand deposits (Withdrawal on demand)
- Saving Bank Account
- Current Account
B. Time Deposits (Payable at a fixed date or after a period of notice)
Types of Accounts with terms and conditions
Savings Bank Account
This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a week. Heavy withdrawals are permitted only against prior notice. Some Important Points are as follows-
- Minimum opening deposit of Tk.500/= is required;
- Check book issuing balance is also the same (Tk. 500/=);
- Withdrawal amount should not be more than 1/4th of the total balance at a time and limit twice in a week;
- Interest rate is 6% including 10% excise duty on interest rate. Interest paid twice in a year depending on monthly minimum balance. When money is deposited within 5 of the following month, then it is counted as monthly minimum balance. If the interest amount is more than Tk. 200 or more, the bank is paid the amount to the customer. Otherwise it is treated as Bank’s Shadow Profit;
- Can open the A/c individually or jointly. In case of joint a/c, Joint signature is required if not authorized otherwise;
- Minor (For withdrawal purpose), lunatic, insolvent, pardanshin women (Not mandatory) can not open such type of account.
- Recent 2-copy passport size photographs of the A/C. holder duly attested by the Introducer.
- Recent 1-copy passport size photographs of the Nominee duly attested by the A/C. holder(s).
- Passport / Driving License / Voter ID / Chairman Certificate.
Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval. It is most suitable for private individuals, traders, merchants, importers and exporters, mill and factory owners, limited company’s etc. Some Important Points are as follows-
- Minimum opening deposit of TK.1000/- is required;
- There is no withdrawal limit. But in case of large amount say 10 lac or more, bank requires one day before notice;
- No interest is given upon the deposited money;
- The Banker is under an obligation to repay these deposits on demand. So, they are called demand liabilities of a Banker.
- The primary objective of such account is to save big customers like businessmen, join stock companies, public authorities, etc. from the risk of handling a lot of cash.
- The cost of providing current account facilities is considerable to the Bank as they make payments and collect the bills, drafts, and checks for any number of times daily. The Bank is, therefore, do not pay interest on current deposits. At the same time, Prime bank charges Tk. 200 as Incidental fee;
- Minimum Tk. 1000 balance must always maintain all the time;
- Minor can not open such type of account;
- Account holder can enjoy SOD or even TOD facility.
Common formalities required for every account
- Duly filled up Account Opening Form.
- Introducer’s signature on Account Opening Form to be verified by Manager under full signature.
- Two copies of passport size photograph of account opener(s) duly attested by the introducer.
Note: Mandate or authority form filled up by an individual (s) or account openers are to be obtained if the customer wants to authorize another person to operate an account on behalf of him/ them.
Documents required for each account separately
In case of Proprietorship Firm-
- Declaration of proprietorship.
- Trade licence.
- Tax Identification No (TIN) directed by Bangladesh Bank.
In case of Partnership Firm-
- Account must be opened in the name of the firm.
- The firm should describe the names and addresses of all partners.
- Board Resolution signed by all partners to open the A/C.
- Photocopy of partnership deed duly attested by notary public.
- Letter of partnership duly signed by all partners.
- Trade licence from municipality.
- Tax Identification No (TIN) directed by Bangladesh Bank.
In case of Private Limited Join Stock Company-
- Memorandum of Association and Articles of Association duly certified by Chairman or Secretary.
- Board Resolution duly certified by Chairman/ Secretary authorizing to open the A/C with the bank and mentioning the name of the person (s) who will operate the A/C as per provisions of Articles of Association.
- Certificate of incorporation duly certified by Chairman or Secretary.
- List of all Directors with Designation, Address & Specimen Signature duly certified by Chairman or Secretary (Form XII).
- Latest copy of Balance Sheet
- Power of attorney.
- Tax Identification No (TIN) directed by Bangladesh Bank.
In case of Public Limited Join Stock Company-
- Photocopy of Registration certificate certified by Chairman or Secretary.
- Memorandum of Association and Articles of Association duly certified by
Chairman or Secretary.
- Board Resolution duly certified by Chairman/ Secretary authorizing to
pen the A/C with the bank and mentioning the name of the person (s) who
will operate the A/C as per provisions of Articles of Association.
- Certificate of commencement duly certified by Chairman or Secretary.
- List of members of Managing/ Executive duly certified by Chairman or
- Tax Identification No (TIN) directed by Bangladesh Bank.
In case of Societies/Clubs-
- Certified copy of Registration certificate under the societies Registration Act, 1962.
- Certified copy of Resolution for opening and operation of account.
- Certified copy of Bye-laws & Regulations/ Constitution.
- Power of Attorney.
In case of Cooperative Society–
- Copy of Bye-law duly certified by the Co-operative officer.
- Up to date list of office bearers.
- Resolution of executive Committee as regards of the account.
- Certified copy of Certificate of Registration issued by Registrar, Co-operative Societies.
In case of Non-Government College/ School/ Madrasha, –
- Up to date list of the Governing Body/ Managing Committee.
- Copy of Resolution of the Governing Body/Managing Committee authorizing opening and operation of the account duly certified by Gazetted Officer.
- Putting the word “ MINOR” after the title of the account.
- Recording special instruction of operation of the account.
- The account opening form is to be filled in and signed by either of the parents or the legal guardian appointed by the Court of Law & not by the Minor.
In case of Minor’s account-
Chart 1: Account Opening Procedure
Issuing cheque book
For New and Old Account
Fresh checkbook is issued to the account holder only against requisition on the prescribed application form. In case of old account, requisition made on the prescribed requisition slip attached with the checkbook issued earlier. Generate a security no randomly for every check leaf by Manager or authorized person. Prepare the instrument with respective security no on the back of each leaf and signed by the authorized person. Make necessary entries in Check Issue Register. Finally issue the checkbook for client (s).
For Duplicate Check Book
Duplicate checkbook in lieu of lost one is issued only when an A/C holder personally approaches to the bank with an application agreeing to indemnify the Bank for the lost check book. Verify signature of the A/C holder with the specimen signature card. Series number of lost checkbook is recorded in the stop payment register and caution should be exercised to guard against fraudulent payment.
A customer can obtain the statement of his A/C by submission of an application in prescribed balance enquiry receipt. Normally it is supplied two times in a year. In addition, customer can know his current deposit position informally.
Transfer of an Account
Account holder may transfer his account from one branch to another. For this, he/she must apply with proper reason to the manager of the branch where he is maintaining account. Manager then requests to the manager of that branch where the A/C holder wants to transfer his account. Besides, he also sends original copy of account opening form and SSC (Specimen Signature Card) and photocopy of application for transferring the account with the balance remained in the account.
Closing of an account
An account may close-
- When the customer desirous to close the account.
- When the account is inoperative for a long time.
- In case of customer’s death, insanity or insolvency.
- When the court on that particular A/C issues Garnishee Order.
To close an account, the checkbook is to be returned to the bank. Prime bank charges Tk. 200/= for the same by debiting the amount from his account and rest amount is then paid to the customer. Necessary entries are given to the account closing register and computer. Finally make sure that A/C holder is completely free from all dues.
|Sl. No.||Deposit Amount Limit||Charge|
|1.||Up to 10,000||Zero|
|2.||10,001 to 1,00,000||Tk. 120|
|Sl. No.||Deposit Amount Limit||Charge|
|3.||1,00,001 to 10,00,000||Tk. 250|
|4.||10,00,001 to 1,00,00,000||Tk. 500|
|5.||1,00,00,001 to 5,00,00,000||Tk. 2500|
|6.||5,00,00,001 and above||Tk. 5000|
Table 6 : Excise Duties Applicable For All Kinds of Deposits
Bank is the largest mobilizer of 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.
The savings rate in Bangladesh is one of the lowest in the world. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive Savings Schemes so that the marginal propensity to save increases. The savings do not, of course, depend only on the quantum of income but largely depend on the habit of savings of the people.
Types of Deposit Scheme with terms and conditions
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 funds 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:
The Deposit shall be for a period of 5 years.
Lump sum amount shall be paid after maturity or monthly Pension shall be paid for the next 5 years according to the size of deposit. A brief chart of lump sum amount and monthly pension installments payable are shown below:
Size of monthly deposit (Taka)
Terminal value after 5 years (Taka)
Pension for next 5 years (Taka)
At present Income Tax on interest will not be applicable but in future for any change in Govt. rule of taxation, the Bank reserve the right to deduct Income Tax.
The depositor will have the option to choose any installment size at the time of opening of an Account and will not be allowed to change the size of installment afterwards.
Account in the name of minors can be opened too under the Scheme.
A person can open more than one account for different size of installments at any branch of the Bank.
The specified amount on maturity at any slab shall be paid after one month from the date of deposit of the final installment.
Normally no withdrawal shall be allowed before maturity. But, if any depositor intends to withdraw his/her savings due to certain unavoidable reasons before 5 years, he/she will be allowed to do so, in the following manner:
|No benefit or interest shall be allowed for pre-mature encashment within one year.|
|If the account is closed after one year of its opening, interest shall be allowed on the deposit at prevailing Savings Deposit rate.|
|10.||The monthly installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installments is acceptable.|
|11.||When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or maximum Tk. 500/-.|
|12.||When a depositor fails to pay 3 (three) consecutive installments at any point before five years term, the customer will cease to remain within the purview of the scheme and scheme will be treated as a Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB account rate subject to completion of 1 (One) year of its opening.|
|13.||Loan may be allowed up to 80% of the deposited amount against lien on the same after at least 2 (Two) years of regular payment of installments and minimum limit of the loan shall be Tk. 50,000/-.|
|14.||In case of death of a depositor, the account will cease to be operative and the amount deposited so far shall be paid to the nominee, and in absence of nominee, to the legal heirs of the deceased as per rules in force.|
|15.||The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme.|
|16.||The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service.|
|17.||Normally no statement of the account will be served to the depositor, in case of need of any depositor, charge @ Tk. 10/- per year / per statement shall be realized as cost of paper.|
|18.||At the time of opening account under CSS customer shall refer his/her SB account number for transferring his/her pension amount or may open SB A/C at the time of maturity for getting monthly pension amount.|
Education Savings Scheme
|The educational expenses particularly the expenses 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.|
Moreover, we are receiving demands from the Islamic minded people of our country for an attractive Savings Scheme on the basis of Islamic Sariah so as to encourage them to save in Islamic way for education of their children.
With this end in view, Prime Bank Limited has introduced a Savings Scheme entitled “Education Savings Scheme” in accordance with the principles of Islamic Sariah i.e., on the basis of profit and loss sharing. The scheme provides a unique opportunity to the parents to make a future provision for the educational expenses of their children when they enter into Schools, Colleges and Universities out of the benefit of a small amount of savings with the Bank at an opportune moment.
The salient features of the Scheme are given below:
|01.||The Scheme shall be implemented through all our branches, though it is specially designed for Islamic Banking branches.|
|02.||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.|
|03.||A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR. Branches shall use the ESS receipts that used for existing scheme.|
|04.||The instrument shall be issued for a period of 5 years term.|
|05.||On maturity a lump sum amount of Tk. 85,382/- shall be payable or education allowance @ Tk. 1,854/- per month per Tk. 50,000/- shall be payable on the basis of deposit amount for next 5 years starting from the completion of the term as per following table. Income Tax @10% on interest may be deducted at source at the time of payment of lump sum amount.|
06.To avail the monthly allowances the depositor is required to surrender the savings instrument to the Bank duly discharged with a written instruction to the Bank to pay the installments to his ward on monthly installment basis as stipulated in the scheme. 07.Separate Application form specially designed for the purpose shall be obtained duly filled in and signed by the depositor. 08.Photograph of the Nominee and Ultimate Beneficiary, if any, duly attested by the depositor, shall be obtained at the time of opening the account. 09.Normally no withdrawal will be allowed before maturity. But if any depositor intends to withdraw his/her deposit before maturity, the following rules will be applicable:
|a.||No benefit including interest shall be allowed for pre-mature encashment within one year.|
|b.||If the accounts/deposits are closed/encashed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate.|
10.The instrument will be acceptable as collateral security against any investment subject to registering lien with the issuing Branch. 11.In case of death of the depositor, the amount of instrument will be paid to the nominee or, in the absence of a nominee, to the legal heirs of the depositor on production of succession certificate. 12.But if the nominee after the demise of the depositor intends to continue the deposit to enjoy the monthly educational allowance for five years, as admissible under the rules of the scheme, the receipt should be surrendered to the Bank on maturity duly discharged by the nominee and duly authenticated by the legal guardian. 13.In case of instrument is lost the procedure for issuance of the duplicate will be the same as applicable in case of loss of FDR.
STD (Short Term Deposit) Account
Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice. In Prime customers usually give an instruction that their current account will be debited whenever its deposited amount crosses a certain limit and this amount will be transferred to the STD account. The deposit should be kept for at least seven days to get interest. The interest offered for STD is less than that of savings deposit. Interest is calculated based on daily minimum product and paid two times in a year. Interest rate is 5% including 10% excise duty on interest rate. Senior Citizen will get 0.50% higher rate than usual.
Short Term Deposit Conditions:
|Current interest rate on STD account is presented in the following table:|
|N.B. Senior Citizen will get 0.50% higher rate than usual.|
Double Benefit Deposit Scheme
|Deposit Term and Conditions:|
|01.||The Scheme shall be implemented through all the branches of Prime Bank Limited.|
|02.||Deposit of Tk. 25,000/- (Taka twenty five thousand) and multiplies thereof but maximum limit of Tk. 25,00,000/- (Taka twenty five lac) at a time will be acceptable under the scheme.|
|03.||A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR. Branches shall use the existing SDS receipts for issue of instruments under this scheme till separate receipts are supplied.|
|04.||The instrument shall be issued for 06 (six) years term.|
|05.||At maturity after 06 (six) years double the amount of deposit will be paid to the depositor.|
|06.||Photograph of Nominee, duly attested by the depositor, shall be obtained at the time of opening the account.|
|07.||Normally no withdrawal will be allowed before maturity. But if any depositor intends to withdraw his deposit before maturity, the following rules will apply:|
|a)||No benefit including interest/profit shall be allowed for pre-mature encashment within one year.|
|b)||If the accounts / deposits are closed / encashed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate.|
|08.||The instrument will be acceptable as collateral security against any investment subject to registering lien with the issuing branch.|
|09.||In case of death of a depositor, the amount of instrument will be paid to the nominee, to the legal heirs of the depositor on production of succession certificate.|
|10.||In case of instrument is lost the procedure for the issuance of a duplicate receipt will be the same as applicable in case of loss of FDR.|
Resident Foreign Currency Deposit Account
Non Resident Taka Account
Monthly Benefit Deposit Scheme
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.|
N.B. For Senior Citizenship Scheme 0.50% higher rate may be offered.
Lakhopati Deposit Scheme
Foreign Currency Account
- Bangladesh nationals residing abroad, foreign nationals residing abroad or in Bangladesh, foreign firms registered abroad and operating in Bangladesh or abroad, and foreign missions and their expatriate employees in Bangladesh can open Foreign Currency (FC) accounts.
- Foreign exchange earned through business done or services rendered in Bangladesh can not put into this account.
- Local as well as foreign payments may be made freely from foreign currency accounts.
- No payment in foreign exchange can be made to or on behalf of any resident in Bangladesh. Payments from these accounts received by residents, unless generally or specifically authorized by Bangladesh, must be converted into Taka.
- Banks may pay interest on such accounts at rates determined from time to time.
- Credits to a foreign currency account may be made against inward remittances of foreign exchange in any form or by transfer from another FC account.
FC Accounts of Overseas Bangladesh Nationals
- Bangladesh nationals working abroad or proceeding abroad to take up employment may open foreign currency accounts.
- No initial deposit is required to open this account.
- Account holder may operate the account himself or nominate other persons in Bangladesh for this purpose.
- The account may be opened in pound sterling, US dollar, Euro or Japanese yen.
- The account may be maintained as long as the account holder desires.
- These accounts should ordinarily be fed by remittances by account holder himself but funds sent by other wage earners may also be placed to the credit of such accounts.
- Sale proceeds of currency notes, traveller’s cheques, drafts etc. brought into Bangladesh by the account holder while on temporary visit to Bangladesh provided foreign exchange in excess of US$ 5000 (or its equivalent) is duly declared to the Customs on Form FMJ at the time of their arrival.
- Funds lying to the credit of FC accounts of Bangladesh nationals can be utilized for import of goods and commodities as per Import Policy announced by the Government from time to time.
FC Accounts of Duty Free ShopsForeign Currency Account in the names of the Diplomatic Bonded Warehouse (duty free shops) licensed by the custom authorities may be opened on the following conditions:
- Foreign exchange received only on account of sale of merchandise may be credited to this Account.
- Foreign exchange may be sent abroad only for the purpose of import of merchandise by the bonded warehouse.
- For the same purpose foreign exchange may also be transferred from these account to foreign currency account maintained with other banks.
- Foreign exchange from these accounts may be freely converted into Taka at current exchange rates.
FC Accounts of Joint Venture Contracting Firms
- Local and joint venture contracting firms employed by foreign donors/international donor agencies to execute projects in Bangladesh may open foreign currency accounts as per terms of the approved contracts.
- Only foreign exchange received from the donors/donor agencies to meet expenses of the project can be credited to these accounts.
- All expenses in foreign exchange as per relevant contract may be met from these accounts.
FC Accounts of Bangladeshis Working in Foreign organisations
- Foreign currency accounts may be opened in the names of resident Bangladesh nationals working in foreign/ international organizations operating in Bangladesh provided their salary is paid in foreign currency.
- Such accounts may be credited only with the foreign currency portion of the salary and debited for all approved current transactions like cost of travel, education for children, medical treatment etc.
- Foreign currency accounts may also be credited with consultancy fees/honoraria received in foreign currency by the above mentioned category of residents, debits to such accounts being subject to same conditions as mentioned above.
Non Resident Foreign Currency Deposit Account
Non-resident Investor’s Taka Account
The Mercantile Bank Limited has achieved success in all sectors and ended up with the highest ever-operating profit, which is much higher than that of preceding year. The profound achievement has been possible because of the able leadership, dedicated and committed service provided by all levels of management and stuff and above all the trust and confidence that our valued client had reposed in us. For Prime Bank, the days ahead will see this institution to achieve greater highest of glory.
- In evaluating the performance of the clients, there must be some set standards to be used as a scale for better comparison. There should be a range of standard to cover a wide range.
- Necessary precaution should be taken to have the collateral ease of getting favorable judgment and estimation of original value of assets is to be ensured.
- Expertise should be involved in the process of forecasting future prospect of the projects.
- Opportunities of financing in the new sectors like Agriculture, Real Estate, and IT etc. should be explored out.
- Loans should not be provided only on the basis of inter-personal relationship with the clients.
- Necessary training should be provided to upgrade the efficiency of the officers in measuring risk and in selecting the profitable projects.
- More attention should be given on the better utilization of working funds.
- For the selection of the industrial projects proper study should be conducted.
- The bank should be more cautious on operating expenses and establishment expenses.
- Bank executives should try to mobilize more deposit schemes through better marketing and incentive measures.
- The bank should develop their communication process between branches.
- The bank should be equipped with LAN (Local Area Network) and WAN (Wide Area Network) facilities.
- The decision making process should be more fast.
- Loan advances section should reduce its complex and rigid rules and regulations
- Internal control system should be improved so as to increase the brunch productivity.
- Physical and technological facilities should increase in evaluating credit proposals and also in monitoring the recovery of advances.
- Experienced and expert personnel should be kept within the banks by considering the goal congruence, which will lead to a quality selection of clients in lending money.
- Decision making authority should be decentralized to some extent to expedite the lending procedure.
- The Mercantile Bank Limited has provision for internship program, but it is not well organized. Although the officials are very careful and co-operative with the interns, the authority should be more structured. The bank really uses the Internship program to their advantage by rearranging the whole procedure.
- Now a day’s world is going very fast. Now most of the banks provide online customer service system. So, in order to compete in the world market they should adopt online banking system.
- One of the business strategies is promotion. Successful business depends how they can promote their products or services to the customer. To improve the business status, the bank should introduce more promotional programs.
- So that, the system is based on buying and selling, it is needed to have more skill manpower to assess market situation.
- It should arrange the International seminar & meeting for global access of commercial banking.
- The products of deposit and investment should be more diversified and modern.
- In loans & Advance department, we have seen that, when client fails to repay the loan with interest it becomes accrued and bank cannot take this amount into income. That is why; sometimes bank’s income figure shows insignificant. So, it should modify the system; so that bank does not have to show the negative figure.
- In Foreign Exchange Department, we have seen the problem of Claim Memo (CM) that the bank faces. It should have the universal system that all banks follow internationally. So, Claim Memo system should be changed.
- In Foreign Exchange Department, we also configured out the Export problem. Now days, it is very tough to sustain in competitive market because of higher cost that the bank has to maintain. So, when the all banks are charging overdue interest, Mercantile Bank also should charge the overdue profit.
Mercantile Bank Limited, a specialized state owned scheduled bank having 42 branches in the country, is financing small-scale industries. Mercantile Bank Limited is unique in its objectives. It is a blend of development and commercial banking services.
The main objective of the study was to find out the productivity of the Mercantile bank from 2001 to 2005. It is vary difficult to comment on such a critical subject. In the present study the Bank performance were analyzed from four different but related angles, i.e. coverage, inputs, outputs and sect oral productivity.
Loan and Advances is an important asset in the banks portfolio because it is the main income-generating avenue. The bank did very well in financing industries. The commercial loan scheme also better but micro credit sector could not do significant during the study period.
Remittance and foreign exchange services also showed a better performance in the last two years of the study period than the rest three years.