General Banking Activities of Banks in Bangladesh

Executive Summary

The internship report is prepared with respect to the three months internship program in Jamuna Bank Limited. This report is composed of four parts,. In the first two part the introductory portion has been presented along with methodology of the report, limitations of the study and the background of JBL. From chapter three and four, I have highlighted the theoretical framework of the report, which includes definition, fundamentals of Banking Operation and SOWT analysis & findings. Chapter three deal with general banking operation and chapter four deals with SOWT analysis and findings. Recommendations & conclusion have been given in chapter five. While preparing the report I always tried my level best to make it authentic and at the same time easily understandable.

 Origin of the Report:

This report has been prepared as a requirement of the internship program, which is equivalent to a complete course and compulsory for every student of MBA program of Jagannath University. The main objective of the internship program is to initialize the students with the actual working experience, introducing to the corporate culture and an exposure to the world outside the theoretical explanation.

This report is based upon the Jamuna Bank Limited, I am, Md. Arif Anowar, was placed for the internship program for three months under the guidance of my faculty advisor Assistant professor Mazeda Sultana  and under the organization supervisor Md. Golam Sattar Executive Officer of accounts division of the branch

Objective of the Report:

The main objectives of the study are:

  • To find out the reality in the practical life.
  • To fulfill the requirement for the completion of postgraduate (MBA) program.

The secondary objectives of this report are:

  • To apply theoretical knowledge in the practical field.
  • To develop the practical knowledge by the practical orientation of work.
  • Working environment in commercial bank.
  • To build up the pillar of the career for near future.
  • To gain in-depth knowledge of standard banking services of JBL highlighting the islami banking activities.
  • To know the progress & growth of banking operation of JBL.
  • To find out the problems & prospects of banking operation & transactions under Islami Banking system.
  • To identify existing bank-customer relationship.
  • To know the dealings process with the BB.
  • Above all, to know the overall banking process.

Scope of the Report:

For the purpose of my internship program, I was assigned in the Nayavazar Islami Banking Branch at JBL and this paved me the way to get myself familiarized with banking environment for the first time indeed. I have an opportunity to gather experience by working in “Accounts Departments” of the Branch. The scope of the study is only limited to this department of the branch.

The study would focus on the following areas of JBL:

  •  Products of JBL.
  • Files that keep in accounts division.
  • Daily workings.
  • Accounting software and its function.
  • Limitations of the branch.
  • To recommend actions that may be necessary.

Methodology of the Study:

Different data and information are required to meet the goal of this report. Those data and information were collected from various sources, such as, primary and secondary which is showed below:

Primary sources of data:

  • Personal observation.
  • Face to face conversation of the officers.
  • Working at accounts department.

Secondary sources of data:

  • File study.
  • Annual report of Jamuna Bank Limited-2010
  • Statement of affairs.
  • Visit the JBL website “ www.jamunabankbd.com
  • Progress report of the Bank.
  • Audit report BB.

Limitations of the Study:

This internship report is my first assignment outside our course curriculum in the practical life. I am a student of “Accounting and Information Systems” just have completed my formal education stage. After completing the institutional experience, practical performances in the formal stages become difficult. So in performing this report my lack of proper knowledge greatly influenced in this performance. Besides above, have to face some other limitations are:

  • Three months time is not enough for such an extensive study. It is very difficult to collect all the required information in such a short period.
  • Up-to-date information was not available.
  • Load at the work place was a barrier to prepare this report. Although the officers of JBL have been very helpful, they don’t have enough time to provide, as they very busy with their assigned works. So, in some cases, observation was needed.
  • Due to some legal obligation and business secrecy banks are reluctant to provide data..

Background of JBL:

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001.

The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named new generation private commercial  bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers,  a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the field of trade, commerce and industries.

The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking.  The Management of the bank constantly focuses on understanding and anticipating customers’ needs. The scenario of banking business is changing day by day, so the bank’s responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only eight years. The bank has already ranked as one of top quality service providers & is known for its reputation.

At present the Bank has real-time centralized Online banking branches (Urban & Rural) throughout the Country having smart IT-Backbone. Besides these traditional delivery points, the bank has ATM of its own, sharing with other partner banks & Consortium throughout the Country.

Vision of JBL:

To become a leading banking institution and to play a pivotal role in the development of the country.

Mission of the JBL:

The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.

Strategies:

 
  • To manage and operate the Bank in the most efficient manner to enhance financial performance and to control cost of fund
 
  • To strive for customer satisfaction through quality control and delivery of timely services
 
  • To identify customers’ credit and other banking needs and monitor their perception towards our performance in meeting those requirements.
 
  • To review and update policies, procedures and practices to enhance the ability to extend better service to customers.
 
  • To train and develop all employees and provide them adequate resources so that customers’ need’s can be reasonably addressed.
 
  • To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to employees in a timely fashion
 
  • To cultivate a working environment that fosters positive motivation for improved performance
 
  • To diversify portfolio both in the retail and wholesale market
 
  • To increase direct contact with customers in order to cultivate a closer relationship between the bank and its customers.
  • To earn and maintain CAMEL Rating ‘Strong’
  • To establish relationship banking and improve service quality through development of   Strategic Marketing Plans.
  • To remain one of the best banks in Bangladesh in terms of profitability and assets quality.
  • To introduce fully automated systems through integration of information technology.
  • To ensure an adequate rate of return on investment.
  • To keep risk position at an acceptable range (including any off balance sheet risk).
  • To maintain adequate liquidity to meet maturing obligations and commitments.
  • To maintain a healthy growth of business with desired image.
  • To maintain adequate control systems and transparency in procedures.
  • To develop and retain a quality work-force through an effective human Resources Management System.
  • To ensure optimum utilization of all available resources.
  • To pursue an effective system of management by ensuring compliance to ethical norms, transparency and accountability at all levels.

Goals and Objectives

Key Features: 

  • Centralized Database.
  • Platform Independent.
  • Real time any branch banking.
  • Internet Banking Interface.
  • ATM Interface.

Corporate MIS Facility:

  • Branch Network.
  • ATM Network.
  • POS (Point of Sales) Network.
  • Internet Banking Network.

 Deposit Products

(a)   All Types of Deposit Accounts:

The client can maintain different types of deposit accounts i.e. Current, Savings, STD, FDR and Foreign Currency Account accounting to his necessity and convenience.

(b)   Special Deposit Schemes: 
  • Ananta Account
  • FD Chamak
  • Abashon Deposit Scheme
  • Student’s Savings Scheme
  • Pension Deposit Scheme
  • Car Deposit Scheme
  • Taravel Deposit Scheme
  • Money Multiplier
  • Quarterly Benefit Scheme
  • Daily Profit Savings Account
  • Sangshar Deposit Scheme
  • Easy Account
  • Hi-Fi-FDR
  • Overseas Earner’s Deposit Scheme
  • Household Durable Deposit Scheme
  • Jamuna Bank Paribar
    • Small Savings Scheme
    • Senior Citizen Benefit Scheme
    • Rural Deposit Scheme
    • NRB  Gift Cheque
    • Tuition Savings Deposit Scheme
    • Special Service Savings Account for Housewives
    • Mudaraba Hajj Savings Scheme
    • Crorepati Deposit Scheme
    • Education Savings Scheme
    • Millionaire Deposit Scheme
    • Lacpati Deposit Scheme
    • Marriage Deposit Scheme
    • Double Growth Deposit Scheme
    • Tripple Growth Deposit Scheme
    • Monthly Benefit Scheme
    • Monthly/Travel/Abashon/ Household Durable/ Tuition Savings Scheme

Loan Products

(a)   General Loan Facility

  • Letter of Credit
  • Bank Guarantee
  • Cash Credit, SOD
  • Loan (General)
  • Hire Purchase
  • Lease Finance
  • Work-Order Finance
  • Export Finance
  • House Building Loan
  • LDBP
  • FDBP
(b) SME Credit Scheme 
  • Double Loan (Double Amount of Loan of FDR value)
  • Loan for purchase of possession right for shop/business
  • Shop/Business office renovation loan
  • Loan for purchasing capital machinery & vehicle
  • Working capital/ Trade Finance
  • Flexible Working Capital Loan
  • Loan for Herbal Industry
  • Loan for Women Entrepreneurs

 (c) Retail Credit Products

  • Any purpose lifestyle loan
  •  Loan against salary
  • CNG Conversion loan
  • Car Loan
  • Travel Loan
  • Consumer Loan
  • Household durable loan
  • Study Loan
  • JBL Debit & Credit Card
  • Doctors Loan
  • Marriage Loan

 Electronic Products

  • On-Line banking
  •  24-hours  ATM
  • Debit Card
  • Credit Card
  • Telephone Banking
  • SMS Banking
  • Internet Banking

 General Banking is the starting point of all banking operation. It is a combination of

General Banking: General banking is the starting point of the banking operation. It is the department which provides day-to-day services to the customers. Main functions of general banking department are the following:

   Accounts Opening Section.

  Cash Section.

  Clearing Section.

  Remittance Section.

  Accounts Section.

Account Opening Section:

The relationship between banker and customers begins with the opening of an account by the customer. Opening accounts binds the banker and customers into contractual relationship.

Islami Banking system of Jmuna Bank Limited Gives special importance on savings. The objectives and principles of the savings policy are:

  To encourage people to save for self and for the country as a whole.

  To develop a sustained savings habit among the people.

  To mobilize deposits through the operation of the following accounts :

  1. Al-Wadeeah Current Account
  2. Mudaraba Savings Account
  3. Mudaraba Term Deposit
  4. Mudaraba Special Notice Account
  5. Mudaraba Hajj Saving Scheme
  6. Mudaraba Savings Bond Scheme
  7. Mudaraba Foreign Currency Deposit (Savings) Scheme
  8. Mudaraba Monthly Profit Deposit Scheme

To operate Current Account on Al-Wadeeah principle and all other deposit accounts on Mudaraba principle of Islamic Shariah.

Cash Section:

Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the branch. This section deals with all types of negotiable instruments and it includes vault, used as the store of cash, instruments. Operation of this section begins when the banking hour starts. Cash officer begins his transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a more secured place. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remains in the cash counter is put back in the vault and known as the closing balance. main branch. The main functions of this section are –

Cash Receipt

Cash Payment

 Clearing:

According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks which are a member of the clearing house are called as Scheduled Banks. The scheduled banks clear the cheques drawn upon one another through the clearing house. This is an arrangement by the central bank where every day the representative of the member banks sits to clear the cheques. For clearing there is a department in every Bank. This department receives cheques, drafts and like instruments from its customers for the purpose of collection with a deposit slip over the counter crediting their accounts. Clearing of cheque is done through the clearing house in Bangladesh Bank.

Remittence Section:

Cash remitting from one place to another is risky. So, Banks remit funds on behalf of the customer(s) to save them from any awkward happening through network of their branches. There are three modes of remitting funds. These are –

  Pay Order (PO)

  Demand Draft (DD)

  Telegraphic Transfer (TT)

 Accounts Section:

This is obviously an independent and unique department, which works as the composition of all the departments of the branch, but it is under the in charge of the general banking in this branch.

Accounts department maintains all records of transactions and all types of statement. At the end of transaction hour all concerned section sends vouchers of transactions to this department. Accounts department compares all figures/ amount, contents of transactions with supplementary statement prepared by computer. If any discrepancy arises regarding any transaction then this department reports to the concerned department. Following are the activities of accounts department:

  To record all transaction in the cash book.

  To prepare daily, weekly, monthly, half-yearly and yearly fund position.

  To prepare all kinds of statements related to Bangladesh Bank, Head office and National Board of Revenue (NBR).

  To prepare monthly salary statement, provident fund statement and administrative expenditure statement.

  To make charges for different types of duty.

 Statements Prepared by JBL:

  1. Weekly fund position (CRR-4% and SLR-16%)
  2. Monthly sector corporation
  3. Monthly Schedule Bank Statements-1 (SBS-1)
  4. Quarterly Schedule Bank Statements-2 (SBS-2)
  5. Quarterly statement of exchange of torn/ dirty notes
  6. Half-yearly Schedule Bank Statements-3 (SBS-3)
  7. Half-yearly deposit insurance pension scheme

Name of Files Keeps in Accounts Section:

SL. No.

Name

File No.

1

Annual closing circular

41

2

Asset-Liabilities

22

3

Bank premises

48

4

Bonus

5

5

Budget and action plan

39

6

Business performance

24

7

Capital adequacy

15

8

Closing affairs

59

9

Computer / ICT division

26

10

Computer expenses

27

11

Confirmation

12

12

Courier service bill

53

13

Dep.  of furniture and fixture

43

14

Deposit insurance premium

8

15

Deposit mobilization

25

16

Drinking water bill

34

17

Electric bill

33

18

Elite security bill

35

19

FAD

63

20

Furniture and fixture executive

42

21

Higher rate / MTDR

61

22

IBIA Interest

19

23

Incentive bonus

9

24

Income tax

6

25

Increment

8

26

Information circular

46

27

Instruction circular

47

28

Interest, VAT, Lease rental

64

29

Islamic bond fund

52

30

Job allocation

49

31

Leave assistance

10

32

LPC

62

33

Management report “Howlader youns”

45

34

Mangers conference

60

35

Miscellaneous file

58

36

Mobile bill

57

37

Monthly income and expenditure

44

38

Monthly statement from crop. Biusiness house

65

39

Monthly statement deposit

16

40

Other banks correspondence

30

41

Post facto approval

40

42

Printing stationary

37

43

Promotion

11

44

Provident fund

4

45

Providing shoes and socks

58

46

Reconciliation

17

47

Salary

1

48

Salary of casual employee

3

49

SBS-01

20

50

SBS-02

21

51

Security stationary

36

52

Share of Mudaraba depositors

28

53

Share related

54

54

Shohag nursery

32

55

Solvency / Income tax certificate

38

56

Status of different equipment & services

55

57

Superannuation fund

7

58

Suspense account adjustment

23

59

TA / DA

51

60

Tax/ Token / Fitness / Reg of executives

56

61

Techno associates

31

62

Utility allowance

2

63

VAT on banking service

29

64

Weekly statement

14

65

Yearly statement of salary

13

Accounting Software use by JBL

For recording purpose: For transaction recording procedure JBL use accounting software named FLORA BANK. For all Br. of JBL use same accounting software but for islami banking, Nayabazar islami banking br. use a different type of FLORA BANK software designed base on islami banking. In this software islami banking terms are included for better banking.

For report purpose: For preparing reports JBL use FLORA BANK REPORT software. This software has six parts, which are:

  CRM

  Deposit

  Loan

  Remittance

  General ledger

  Daily activities

 Steps of Arranging Vouchers

  Collect last day’s vouchers from all other department.

  Divide vouchers into Dr. & Cr.

  Divide vouchers into different accounts head.

  Arrange voucher into their serial number.

  Attach arrange vouchers with instructed supplement.

  Check all vouchers amounts with supplement.

 Arrange all supplements for audit purpose

For audit purpose bank store its all documents by Maintain a serial. First all cash transaction supplement then All clearing Supplement and at last all transfer supplements. This all type of supplements is serial as follows:

  Cash position memo

  Sundry deposit

  P. O. Issued

 Profit payable

  Accrued profit on investment

  Bankers liabilities

  Jamuna bank general A/C (Islami)

  Jamuna bank general A/C

  Income

  Customers liabilities

  Suspense accounts

  Expenditure

  SME loan

  Al-Wadiah current account

  Savings deposit

  Margin on L/C

  Short notice deposit

  MTDR

  MSS

  LDBP

  FDBP

  Stamps in hand

  Profit receivable

  Bai-Muajjal

  Quard against MTDR

  MPITR

  Murabaha import bill

  Cheque book issue

  Daily audit report for management

Today is not like yesterday and tomorrow will be differ from today. Given the first changing, dynamic global economic and the increasing pressure of globalization, liberalization, consolidation and disintermediation, it is essential that Jamuna Bank should adopt some of the industry best practices that are not practiced currently. These are given in short below:

  • This br. should use upgrade accounting software because some time employees facing problem to posting transaction.
  • Employees don’t use their skill properly to posting a transaction.
  •  They made some wrong posting regularly.
  • They have to take some steps to improve the service quality.
  • More branches should be opened in Dhaka city and in other cities of the country.
  • They will have to start consumer credit scheme and other schemes that will help the consumer.
  • It is badly needed to provide modern banking services such as Credit Card, ATM Card, Visa Card etc.
  • Large loan risk must be minimized and should be emphasis to its SME and consumer credit scheme so that recovery rate may increase and risk may decrease.
  • JBL should adopt a credit grading system that will cover risk grade. Borrower risk grade should be clearly defined and stated on application.
  • The lending guideline line should include Industry and Business Segment Focus, Types of loan facilities, Single borrower and group limit, lending caps, Discouraged Business types, and Loans Facilities Parameters and Cross boarder risk..
  • Lending functions should be segregated in following ways:
  1. Relationship management / Marketing.
  2. Risk management / Credit approval.
  3. Credit administration / Recovery.

The Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis of JBL is described in the following table:

Table: SWOT Analysis of JBL

                   

      

 

S

4Sound profitability and growth with good internal capital generation.

4Larger corporate client base.

4Experienced and efficient management team and human resource.

4Quaity products and services.

4Better infrastructural facilities.

4Company reputation and goodwill.

 

 

W

4Small market share.

4Limited branch network.

4High concentration on fixed deposits and largescale loans.

4Lack of full scale automation.

 

 

 

    

O

4Scope of market penetration through diversified products.

4Automation of transaction processes and online branch banking.

4Government’s policy of encouraging heavy inflow of foreign  investment.

4Regulatory environment favoring private sector development.

4Value addition in products and services.

4Increasing purchasing power of people.

4Increasing trend in international business.

 

 

T

4Increased competition for market share in the industry.

4Frequent changes of banking rules by the Central Bank.

4Market pressure for lowering of lending rate.

4National and global political unrest.

4Default culture of credit.

NIBB has many problems but the problems are not uncomfortable, where there is problem there must be a solution. Some solution, which I recommend to improve the performance of NIBB are as follows: –

  Bank has been facing space problem. So they need another floor for solve the problem finally they manage another floor, I think this is the right decision in right moment.

  Bank need to improve interpersonal relationship of the employees.

  Bank need to train up their employees like computer operation, Communication skills & others needs.

  The employees of the bank need to be very fast; customers come to the private Bank for fast service; because Time is Money.

  To establish Islamic legal framework for conducting foreign exchange Business.

  To establish Islamic capital market for conducting foreign exchange business.

   Bank needs to recruit expert manpower with computer literacy & business communication skills.

 To handle foreign exchange business, business communication skill should be developed.

  To establish institution to make expert for international trade and foreign exchange business.

  To conduct research for Islamic capital market.

  A better coordination between IBTRA and Shariah council of IBBL should be ensured in order to evolve new avenues of activities under Islamic Shariah and innovate new Islamic financial instruments. The AC of IBTRA and Shariah council may hold joint meetings from time to time.

  Islamic guidelines are required for foreign exchange investment.

  A study team may visit Malaysia, Pakistan and other countries to study the operations of Islamic capital market in those countries.

  To build up interest free economy system recognized by the state so as to cope with the conventional banks.

  To create syndicate banking system for foreign exchange business.

  To establish partnership relation with exporter and importer on a profit loss-sharing basis so as to avoid the undesirable effects of interest based transaction and necessary steps to establish justice in the economic system.

  Shariah cell should be in dealing foreign exchange business with Islamic Banks.

  To conduct foreign exchange smoothly govt. support is required to get IRC and ERC.

  The bank should ultra- modernize its foreign trade and remittance.

  Literature on Islamic capital market may be preserved at IBTRA library and important copies of those may be supplied to the researchers, internee and thinkers on the subject from time to time.

  Bank should introduce update technology to render competitive banking service, Increase ATM booth, and Launching credit card.

 Bank should take hand various advertisement programs.

  To gather the Social image NIBB needs to participate in the Social welfare.

  Bank need to change the tea boy, behavior of the tea boy is unacceptable

Interest free banking system is no more a concept. It is now a Reality, a dynamic system, embodying a set of superior banking mechanism. More than 300 Islamic bank and financial institutions are operating in different Countries throughout the world with a marked success from this inception in our country in 2001 but Jamuna Bank Limited has been operating with real and confidence in corporation with other conventional banks. Bringing a new concept in such business sector, which is growing too rapidly in the world, is rally bold step. As a large Islamic commercial bank, Jamuna bank took various steps to create employment and socio-economic development for the poor through Islamic shariah. After taking effective and time defeating measures regarding efficient employees and instruments will help the local office of Jamuna Bank Limited to reach the pinnacle of success with high profit and productivity. A new bank they should be stronger in financial side because there is too much competition and new banks are growing up. Now the time for Jamuna Bank Limited to fabricate in success they have achieved and go on with its operation. The Jamuna Bank Limited have an illusion to their customers, this statement is

“Your Partner for Growth”

So, the Economic Development is not only facilitated but its swiftness is quickened by the appropriate development of the Investment Management system of financial mediators in the country.

Bibliography:

  Brochures of Jamuna Bank Limited.

  JBL General Banking Policy Book

   Credit Risk Grading Policies of JBL

  Published booklist and hand bills of JBL

  CRG Chart provided by Bangladesh Bank

 JBL Foreign-Exchange Banking policy guideline

  Statement affairs of JBL NIBB year 2009, 2010, 2011 .

  JBL prospectus.

Website:

  www.jamunabankbd.com

  www.bangladeshbank-bd.org

  www.wikipedia.com

General Banking