ORIGIN OF THE REPORT:
The internship program is a required course for students who are completing Bachelor of Business Administration (BBA) from the Department of Business Administration of Stamford University Bangladesh. It is a three credit hour program with duration of three months. Students who have completed all the required courses are eligible for this program. In the Internship Program I was attached to the AB Bank of Bangladesh Limited for three months. During this period I have learned about Bank and about die investment facilities that arc providing by the Bank.
BACKGROUND OF THE STUDY :
Banker or Bank was defined as a person who carried on business of receiving money, collecting of drafts, honoring cheque drawn upon it. According to modem concept, banking is a business, which deals with borrowings, lending and remittances of fund as well as much ancillary business conducted thereto.
The main functions of a bank borrowing money from the public by accepting deposits and lending to them for the development of trade, industry and agriculture.
Modem bank play an important part in promoting economic development of a country. Banks provide many funds for executing various programs underway in the process of economic development. They collect saving from large masses of people scattered throughout the country, which in the absence of banks would have the remained idle and unproductive. A commercial bank is owned by shareholders that accepts deposits, makes commercial and industrial loans and provides other banking services, In other words, commercial bank is a financial institution that provides business loans, credit cards, saving money in different saving schemes etc. and it is the largest financial intermediary directly involved in the financing of real estate.
OBJECTIVE 0F THE STUDY:
There are two main objectives behind this report.
The Primary Objective of the study is to fulfill the partial requirement of the BBA program. In the final semester of our BBA program one Internship report is to be submitted, which is bearing some credit of our BBA program.
The secondary objectives of the study are to provide
- To demonstrate the experience of the 2 month internship program at ABBL,
- To get a broader overview of General Banking.
SCOPE OF THE STUDY :
To obtain practical experience about banking activities especially investment policy by involving such type of program. To build professional carrier in the banking sector.
To achieve the set of objectives of the study both primary data and secondary data have been used. Primary data have been collected with the help of a questionnaire through field survey. ABBL were interviewed for the purpose. The status of these Bankers are Asst. VP or above. Secondary data have been collected from different publications and annual reports of AB Bank and internet during February 2010‑June 2010.
SOURCES OF INFORMATION :
In order to make the study more meaningful and presentable, two sources of data and information will be used widely. The sources of data are as follows-
The Primary Sources :
- Face-to-face conversation with the respective officials.
- Informal conversation as well as a direct interview with officials of DBBL
- Practical work experience on different desks of the unit.
- Relevant file study as provided by the officers concerned.
The Secondary Sources :
- Annual report and periodical publications
- Different publications, Newspapers and Journals.
- The internet will also be used as a theoretical source of information
LIMITATIONS OF THE STUDY :
The following limitations are apparent in the report—
- The main Limitation of this report is that the officials did not disclose all data and information for the reason of confidentiality.
- The bank’s employees were very much busy in banking hour. So it was very
Difficult to have them for equitable long time.
- Many personnel of ABBL were not co-operative to provide useful & relevant information.
- As this report is based on information only, it does not include any research. So, any lack of adequacy or authenticity may hamper the contents of the report. Different sources of data has been using in this report, which may create the harmony of the writing & presentation bias.
CHAPTER – 2
PROFILE OF AB BANK LIMITED
HISTORICAL BACKGROUND OF AB BANK LIMITED :
AB Bank Limited, the first private sector bank was incorporated in Bangladesh on 31st December 1981 as Arab Bangladesh Bank Limited and started its operation with effect from April 12, 1982
AB Bank is known as one of leading bank of the country since its commencement 27 years ago. It continues to remain updated with the latest products and services, considering consumer and client perspectives. AB Bank has thus been able to keep their consumer’andclient’s trust while upholding their reliability, across time.
During the last 27 years, AB Bank Limited has opened 74 Branches in different Business Centers of the country, one foreign Branch in Mumbai, India and also established a wholly owned Subsidiary Finance Company in Hong Kong in the name of AB International Finance Limited. To facilitate cross border trade and payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of the World.
In spite of adverse market conditions, AB Bank Limited which turned 27 this year, concluded the 2008 financial year with good results. The Bank’s consolidated profit after taxes amounted to Taka 230 cr which is 21% higher than that of 2007. The asset base of AB grew by 32% from 2007 to stand at over Tk 8,400 cr as at the end of 2008.
The Bank showed strong growth in loans and deposits. Deposit of the Bank rose by Tk. 1518 cr ie., 28.45% while the diversified Loan Portfolio grew by over 30% during the year and recorded a Tk 1579 cr increase. Foreign Trade Business handled was Tk 9,898 cr indicating a growth of over 40% in 2008.
The Bank maintained its sound credit rating in 2008 to that of the previous year. The Credit Rating Agency of Bangladesh Limited (CRAB) awarded the Bank an A1 rating in the long term and ST-2 rating in the short Term.
AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its past identity – an identity that the bank carried as Arab Bangladesh Bank Limited for twenty five long years. As a result of this decision, the bank chose to rename itself as AB Bank Limited and the Bangladesh Bank put its affirmative stamp on November 14, 2007.
The Bank decided to change its traditional color and logo to bring about a fresh approach in the financial world; an approach, which like its new logo is based on bonding, and trust. The bank has developed its logo considering the contemporary time. The new logo represents our cultural “Sheetal pati” as it reflects the bonding with its clientele and fulfilling their every need. Thus the new spirit of AB is “Bonding”. The Logo of the bank is primarily “red”, as red represents velocity of speed and purity. Our new logo innovates, bonding of affiliates that generate changes considering its customer demand. AB Bank launched the new Logo on its 25th Anniversary year.
AB Bank commits to nation to take a lead in the Banking sector through not only its strong financial position, but also through innovation of products and services. It also ensures creating higher value for its respected customers and shareholders. The bank has focused to bring services at the doorstep of its customers, and to bring millions into banking channels those who are outside the mainstream banking arena. Innovative products and services were introduced in the field of Small and Medium Enterprise (SME) credit, Women’s Entrepreneur, Consumer Loans, Debit and Credit Cards (Local & International), ATMs, Internet and SMS Banking, Remittance Services, Treasury Products and Services, Structured Finance for Corporate, strengthening and expanding its Islamic Banking activities, Investment Banking, specialized products and services for NRBs, Priority Banking, and Customer Care. The Bank has successfully completed its automation project in mid 2008. It envisages enabling customers to get banking services within the comfort of their homes and offices.
AB Bank has continuously invests into its biggest asset, the human resource to drive forward with its mission “to be the best performing bank in the country.” The bank has introduced Dress Code for its employees. Male employees wear designed ties and females wear Sharee or Salwar Kamiz, all the dresses are consisted with the unique AB Bank logo.
AB is recognized as the people’s choice, catering to the satisfaction of its cliental. Their satisfaction is AB’s success.
CORPORATE VISION & MISSION :
“To be the trendsetter for innovative banking with excellence & perfection”
AB Bank dreams of better Bangladesh, where arts and letters, sports and athletics, music and entertainment, science and education, health and hygiene, clean and pollution free environment and above all a society based on morality and ethics make all our lives worth living. ABBL’s essence and ethos rest on a cosmos of creativity and the marvel-magic of a charmed life that abounds with spirit of life and adventures that contributes towards human development.
“ To be the best performing bank in the country”
AB Bank engineers enterprise and creativity in business and industry with a commitment to social responsibility. “Profits alone” do not hold a central focus in the Bank’s operation; because “man does not live by bread and butter alone”.
CORPORATE CULTURE :
ABBL’s focus is to provide one counter service to our clients covering:
- Commercial Banking (Deposit Accounts)
- Consumer Banking (Retail Baking)-
- Traveler Cheques
- Foreign & Inland Remittances
- Financial Services
- Corporate Banking
- Asset & liability management
- Liquidity & capital Resources Management
- Information technology
- Human Resources
- Foreign Exchange ( Export & Import).
- Online Banking.
HIERARCHY OF POSITIONS IN AB BANK LIMITED :
- MANAGING DIRECTOR
- ADDITIONAL MANAGING DIRECTOR
- DEPUTY MANAGING DIRECTOR
- SR. EXECUTIVE VICE PRESIDENT
- SENIOR VICE PRESIDENT
- FIRST VICE PRESIDENT
- VICE PRESIDENT
- SENIOR ASSISTANT VICE PRESIDENT
- FIRST ASSISTANT VICE PRESIDENT
- OFFICER ASSISTANT VICE PRESIDENT
- ASSISTANT VICE PRESIDENT
- SENIOR EXECUTIVE OFFICER
- EXECUTIVE OFFICER
- SENIOR OFFICER
- ASSISTANT OFFICER
- TRAINEE OFFICER
- RELATIONSHIP OFFICER
- ASSISTANT RELATIONSHIP OFFICER
FINANCIAL REPORT OF AB BANK LIMITED FOR THE YEAR ENDED 2009 :
|AB Bank Limited|
|As at 31 December 2009 |
|PROPERTY AND ASSETS|
|3.1||489,993,012||679,556,149||In hand (including foreign currencies)|
|3.2||4,864,888,564||3,416,488,006||Balance with Bangladesh Bank and its agent bank(s)|
|(including foreign currencies)|
|4||3,494,118,146||2,300,084,385||Balance with other banks and financial institutions|
|5||600,000,000||1,190,607,400||Money at call and on short notice|
|70,879,933,446||56,708,771,906||Loans and advances|
|7||69,732,552,194||54,412,358,249||Loans, cash credits, overdrafts, etc|
|8||1,147,381,251||2,296,413,657||Bills purchased and discounted|
|9||2,440,962,657||2,444,650,234||Fixed assets including premises, furniture and fixtures|
|LIABILITIES AND CAPITAL|
|11||6,125,161,339||3,193,343,038||Borrowings from other banks, financial institutions and agents|
|12||83,087,129,113||68,560,474,323||Deposits and other accounts|
|11,900,897,489||9,726,178,008||Savings bank deposits|
|130,325,000||130,325,000||Bearer certificates of deposit|
|Total Shareholders’ Equity||10,086,522,932||6,722,505,347|
|106,912,312,383||84,053,612,585||Total Liabilities and Shareholders’ Equity|
A BRIEF HIGHLIGHT ABOUT AB BANK LIMITED :
ABBL at a Glance: Year 2008
|December 31||2008||2007||% Change|
|Gross Interest Income||7,366.85||5,269.90||39.79|
|Net Interest Income||2,030.69||1,439.28||41.09|
|Operating Profit (PBP & T)||4,298.39||3,325.29||29.26|
|Net Operating Profit (PBT)||3,600.62||2,817.99||27.77|
|Profit after Tax (PAT)||2,300.62||1,903.49||20.86|
|Loans & Advances||56,708.77||40,915.35||38.60|
|Non Interest Income to Operating Income (%)||66.98||69.09|
|Cost Income Ratio||62.57||28.59|
|Return on Equity – ROE (%)||40.96||42.19|
|Return on Assets – ROA (%)||3.12||3.41|
|Advance Deposit Ratio (%)||82.71||76.66|
|Capital Adequacy Ratio||12.84||10.75|
|NPL as % of Advances||2.99||4.31|
|Earnings per Share (Tk.)||103.18||85.37|
The above diagram shows the profit position of AB Bank from 2004 to 2008. Here we see that in the year of 2004 they earned Tk. 360 million, in 2005 their profit was Tk. 755 million but in the year of 2006 their profit was Tk. 711 million. Here we see that in 2006 their profit is decreased from previous two years but in 2007 & 2008 their profit were Tk. 3,325 million & Tk. 4,296 million, here we can see that their profit increased more highly than earlier three years. Finally, we can say that without the year of 2006 AB Bank were in good position and we think in future
Sector Wise LDOs position as on December 30, 2008
Figure in ‘000’
|Industrial sector||SIC Code||Limit||%||Outstanding||%||A/C|
|Energy & Mining||6000||1,016,647||2%||945,776||2%||51|
|100% Secured Loan||8000||2,633,006||4%||2,098,487||4%||1118|
|Special Scheme Loans||9000||2,095,618||4%||2,730,863||6%||174|
From above pie chart we see that AB Bank sectorwise limite of LDOs position as a persentage baxis. AB Bank has invested their loan in trading 25%, in agriculture 11%, in manufacturing 40%, in services 11%, in contractual work s 3%, in energy & mining 2& and others sector is 1%. Here we cae see that AB Bank their secured loan has invested very easy .
From above pie chart we see that AB Bank sectorwise of LDOs position as a persentage baxis. AB Bank has invested their loan in trading 26%, in agriculture 13%, in manufacturing 36%, in services 8%, in contractual work s 3%, in energy & mining 2& and others sector is 1%. Here we cae see that AB Bank their secured loan has invested very easy .
SOME VALUABLE RELATIVE INFORMATION DEPENDING ON THE PERFORMANCE OF THE BANK
AB Bank Foundation (ABBF) is a subsidiary company of AB Bank Limited having holding 99.60% shares of the ABBF. The company was first established under the trust deed constituted and registered on the 14th day of May 2002. Subsequently the trust by a resolution of its Board of trustee in its 3rd meeting held on 29.12.2002 resolved to cancel the Trust Deed and utilize the trust fund for the foundation of a company limited by guarantee primarily for charitable purpose. Then the company was incorporated on 3rd day of November 2003 under section 28 of Companies Act 1994, a company limited by guarantee. The certificate of incorporation
The ABBF and its activities:
AB Bank Foundation (ABBF) is one of the country’s leading securities broker houses of Dhaka Stock Exchange (member # 201) and Chittagong Stock Exchange (member # 101). ABBF has started its operation by soft launching on 28th August 2006. Initially, we have started our operation by giving service to client of AB Bank Merchant Banking wing. We have already started our operation in full swing in our corporate head office and Chittagong. In near future, we will start our Mohakhali and Agrabad branch operation.
AB Bank’s subsidiary, AB Bank Foundation, which has corporate memberships on the Dhaka and Chittagong Stock Exchanges, can act as brokers on behalf of local and foreign individual and institutional client to trade in the local capital market. AB Bank’s Sales & Trading Department will also support brokerage service for offloading shares through direct listing.
CDBL Services as full service Depository Participant (DP)
As a full service depository participant, AB Bank Foundation provides following services,
a) BO (Beneficial Owner) accounts opening and maintenance.
b) Dematerialization & c) Rematerialization
c) Freeze (freeze request and release request) and suspensions
d) Pledging, unpledging and confiscation
e) BO ISIN balances and master maintenance enquiry
To extend our Merchant Banking services across the country, MBW has already launched its operation in Agrabad (Chittagong). We are going to open 3 new service networks in Mohakhali (Dhaka), Uttara (Dhaka) and Sylhet soon.
In addition, AB Bank will also expand its operations in the investment banking in the following areas:
|Islamic Capital Market Products||Processing|
|Derivatives Products||Supporting infrastructure going to be prepared|
|Asset Management / Mutual Fund||We are planning to launch and manage Mutual Fund in future.|
In the present context of banking business in the world, Card is the future of any bank. Electronic payment system is now ruling the world and some days from now cash transactions system will turn into a history found only in the text book.
AB Bank Limited is one of the leading first generation private sector commercial banks with Branch Network all over the country. The Bank started issuing VISA Credit Cards from the end of year 2004 as a principal member of VISA International.
Brief description of different features:
Card Conversion & Balance Transfer Plan
‘Card Conversion & Balance Transfer Plan’ to AB Bank VISA Credit Card will be extended towards all local Credit Cardholders of the market, provided that their ‘other banks’ credit card is in ‘regular’ state, not in ‘overdue’ state. Cardholders will repay the approved transferred amounts to AB Bank Credit Card Account in monthly installments stated in their monthly statements. Other bank credit cardholders having regular payment history will also be allowed to apply for this facility along with their new AB Bank Credit Card application form. You can convert your other bank card to AB Bank Card and get interest facility @ 19.95% on your outstanding.
‘EasyBuy‘ Installment Plan to AB Bank VISA Credit Card will be extended towards all AB Bank Visa Credit Cardholders. Cardholders can convert any retail purchase done using AB Bank credit card into an installment scheme where they can pay back the amount at rate of interest of 19.95% per annum over a tenor ranging from 6 months to 48 months.
Easy, convenient and affordable
Under the Easy buy program, cardholder can choose own installment plan, ranging from 6 to 48 months.
- Simple procedure, no documentation, no down payment
- Available in comfortable payment options of 6 months to 48 months
- Process just a call away
No cash advance fee
No cash advance fee for cash withdrawal from AB Bank ATM Booths & Tk.10 only per cash withdrawal will be charged from other Q Cash ATM booths. Market rate is Tk. 125 per cash withdrawal.
Auto bills pay facility
Hassle free monthly payment from AB Bank Account holders.
Higher transaction limit
AB Bank VISA card gives you the facility to withdraw up to Tk. 60,000 or 50% of your credit limit (whichever is lower) of the credit limit from any ATM with Visa logo.
Lot more features are in the pipeline to add more value to satisfy AB Bank customers.
Safe Deposit Locker
Looking for a safe storage place for your valuables?
A Safe Deposit Locker with AB Bank is the solution to your concern. Located at select branches in cities all over the country, our lockers ensure the safe keeping of your valuables.
Advantages / Key Benefits :
- Wide Availability.
- Lockers available in various sizes. i.e. Small, Medium and Large with varying rents.
- Lockers are rented out for a minimum period of one year. Rent is payable in advance.
- The rent may be conveniently paid from your deposit account with us.
- Direct debits for locker rentals from your account rid you of the hassles in writing out cheques.
An individual (not minor), firms, limited company, associations, clubs, trusts, societies, etc may hire a locker.
Nomination for Safe Deposit Locker :
- The Lockers and their contents can be nominated to people near and dear to you.
- Nomination facility is available to individual hirer of Safe Deposit Locker.
- In the case of a sole hirer of a safe deposit locker, nomination can be made in favour of only one individual.
- Where the safe deposit locker is hired in the name of a minor, the nomination shall be made by a person lawfully entitled to act on behalf of the minor.
Terms & Conditions :
- For obtaining a Locker at AB Bank you must be an account holder with our Bank.
- Lockers can be allotted individually as well as jointly.
- The Locker holder is permitted to add or delete names from the list of persons who can operate the Locker and can have access to it.
- Loss of Key is to be immediately informed to the concerned Branch.
- For Schedule of Rentals, please contact the branch nearest to you.
Financial institution intermediary that mediates or stands between ultimate borrowers and ultimate lenders is knows as banking financial institution. Banks perform this function in two ways- taking deposits from SURPLUS UNIT i.e. from various areas in different forms and lending that accumulated amount of money to the DEFICIT UNIT i.e. to potential investors in other different forms. General banking department aids in taking deposits and simultaneously provides some ancillaries services.
General banking is the starting point of all the banking operations. General banking is the front-side banking service department. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, there is no relation between banker and customers who will take only one service from bank. Everyday it receives deposits from the customers and meet s their demand for cash by honoring cheques. It opens new accounts, remit funds, issues bank drafts and pay orders etc. Since bank is confined to provide the services everyday, general banking is also known as ‘retail banking’. On the other hand, there are some customers with who bank are doing its business frequently.
FUNCTION OF THE DEPARTMENT :
G E N E R A L
B A N K I N G
1Account opening Section2Local Remittance Section 3Bills and clearing Section4Cash Section5Other Activities
ACCOUNT OPENING SECTION :
The relationship between banker and customer begins with the opening an account by the customer. Opening an account binds the banker and customer into contractual relationship. Infect all kinds of fraud & forgery start by opening an account. So, the bank should take extreme caution in selection customers.
Bank is a financial intermediary, which mobilizes fund from surplus unit and allocates it to deficit unit. Surplus unit means the people who have surplus money and willingness to save. Deficit unit means the people who need money for industry, trade, business, or for personal use but don’t have sufficient money of their own for such purposes. Bank mobilizes the fund by accepting deposits from depositors and allocates the fund by providing loan to borrower.
So accepting deposits is one of the two classic functions of commercial banks. In ABBL account opening section deal with
- Current deposit (CD)
- Savings deposit (SB)
- Short notice deposit (SND)
- Fixed deposit (FDR)
- Bearer certificate deposit.
CURRENT DEPOSIT ACCOUNT :
- CD accounts are unproductive in nature as banks loan able fund is concerned. Sufficient fund has to be kept in liquid form, as current deposits are demand liability.
- Businessmen and companies are the main customers of this product.
- Thus huge portion of this fund become non-performing. For this reason banks do not pay any interest to CD Account holders.
- There is no restriction on the number and the amount of withdrawals from a current account.
- Service charge and incidental charges are recovered from the depositors since the bank make payments and collect the bills, drafts, cheques, for any number of times daily.
- The Banks through current accounts grant the loans and advances
- In practice of ABBL, a minimum balance of TK.5000 has to be maintained.
SAVINGS DEPOSIT ACCOUNT :
As per Bangladesh Bank instruction 90% of SB deposits are treated as time liability and 10% of it as demand liability
- Interest is paid on this account. ABBL offers a reasonable rate of interest (5%) for SB A/C on day basis.
- Generally, banks require a 7-day prior notice if the total amount of one or more withdrawals on any date exceeds 25% of the balance of the account unless is given. But in ABBL there is no restriction about drawing money from savings account. Any time holders may draw money of any amount without prior notice.
- Generally householders, individuals and other small-scale savers are the clients of this account
- Minimum Balance of Tk.500 is to be maintained. But initial deposit is Tk 2000.
- Very limited service charge (Tk.200 per year) as it is an interest bearing account.
- Govt. charge 10% only on interest income of the customer.
ACCOUNT OPENING PROCESS :
Under this section, ABBL Bank Assistant Officer opens different types of accounts on the request of clients. The procedure of opening account is given is given below.
|Step 1||Receiving filled up application and signed by account holder in bank’s prescribed form mentioning what type of account is desired to be opened|
|Step 2||# The form is filled up by the applicant himself / herself.|
# Two copies of passport size photographs from individual are taken, in case of firms photographs of all partners are taken.(attested by the introducer)
#Applicants must submit citizenship certificates: Photocopy of valid passport or ward commissioner certificate or National ID Card
# Application must sign in A/c opening form and KYC (Know Your Customer) form
# Introducer’s signature and accounts number – verified by legal officer.
# Nominee name, signature and photograph one copy.Step 3Authorized Officer accepts the applicationStep 4Minimum balance is deposited – only cash is acceptedStep 5Account is opened and a pay-in-slip book is given
Bank activity: After fill up account opening form and KYC by customer the assistant officer done following job:
- Verify all information by assistant officer then
- Entry all customer information into ABBL’s online server
- After completion of entry assistant officer it sends to Second officer/Manager for authorization.
- If Second officer/Manager satisfies with customer information he/she gives authorization.
- Assistant officer gets new account number for certain customer after authorization.
After fulfilling the above formalities, ABBL Bank provides the customer pay-in-slip book that customer deposit their initial deposit.
Checkbook: In online banking it is difficult to issue cheque book immediately that is why it takes two or three days.
ATM Card: An account holder gets a Debit card after opening account. It takes two or three weeks and sends him by mail.
Special Caution must be taken for the following customers:
|In the name of individual/||The client has to fill up an account opening form. Terms and conditions are printed on the back of the form. The form contains the declaration clause, special instructions etc.|
|In joint name||In this type, the formality is same as individual account, but in the special instruction clause, either or survivor’ or ‘former or survivor’ clause is marked|
In addition, the customer has to submit the valid Trade License and Tax Paying Identification Number (TIN) along with the application.Partnership Firm
- A copy of notarized partnership deed certified by all the partners or Registered partnership deed.
- Resolution of the partners regarding account opening.
- Photographs attested of those who will operate.
- Trade license.
- Mandate as to operation of the account.
Public Limited Company
- Certificate of Incorporation
- Copy of Memorandum and Articles of Association duly certified by the Register of Joint Stock Companies.
- Certificate of Commencement
- Form-xii and schedule X – duly certified by the Register of Joint Stock Companies.
- Copy of Resolution of the Board of Directors
Private Limited Company
- Certificate of Commencement is not necessary
- Certificate of Incorporation
- Copy of Memorandum and Articles of Association
- Copy of Resolution of the Board of Directors
Non-trading Concerns (Societies, Clubs, Associations
- Registration Certificate under the Societies Registration Act, 1962
- Certified copy of Bylaws & Regulations/ Constitution.
- Certified copy of Resolution for opening and operation of account.
- Power of attorney to borrow
Joint account in the name of minor
A minor cannot open an account in his own name due to the incapacity to enter into a contract. He can open an account in ABBL in joint name of another person who will be guardian of him.
SPECIAL NOTICE DEPOSIT ACCOUNT (SND) :
- Customers deposit money for a shorter period of time.
- SND account can be treated as semi-term deposit
- SND should be kept for at least thirty days to get interest.
- The interest offered for SND is less than that of savings deposit.
- In practice, ABBL offers 5.00% rate of interest (half yearly compounding) for SND account. It may increase depending on the fund.
- Volume of SND A/C is generally high. In ABBL, various big companies, organizations, Government Departments keep money in SND accounts.
- Frequent withdrawal is discouraged and requires prior notice.
TERM DEPOSITS :
The fixed deposit account is repayable after the expiry of a predetermined period fixed by the customer himself. The period varies from three months to three years. The customer may open his /her account for different time periods, which may be for one month, three months, six months, one year, two years. The interest rates of FDR accounts are as below:
Interest rate for Deposit
|Name of Deposit||Interest Rate|
Savings Acount 6.00%
1 Month (Tk.5 00 00 000 & above)
(1) Upto Tk. 1 00 00 000
(2) Above Tk 1 00 00 000
(1) Upto Tk. 1 00 00 000
(2) Above Tk 1 00 00 000
(1) Upto Tk. 1 00 00 000
(2) Above Tk 1 00 00 000
8.50%2 (Two) Years 7.25%SND ( For Tk. 5 lac and above) 4.00%SND ( Spcefic) 7.50%Seurity Deposit Receipts (SDR) Call Dep 3.00%
- Popularly, it is known as Fixed Deposit Receipt (FDR). Term deposits are made with the bank for a fixed period of time.
- The bank needs not to maintain cash reserves against these deposits and therefore, the bank offers high rate of interest on such deposits.
- In ABBL, fixed deposit account is opened in customer choice time.
OPENING OF FIXED DEPOSIT ACCOUNT :
Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed by him. The period varies form 3 months to 1 year. These deposits are not repayable on demand but they are withdrawal subject to a period of notice. Hence, it is a popularly known as ‘Time Deposit’ or ‘Time Liabilities”. Normally the money on a fixed deposit is not repayable before the expiry of a fixed period.
Before opening a Fixed Deposit Account a customer has to fill up an application form, which contains the followings:
- In case of a deposit in joint name, ABBL also takes the instructions regarding payment of money on maturity of the deposit.
- The banker also takes the specimen signatures of the depositor(s).
- Necessary entries are given on the FDR register and on line.
- An FDR is then issued to the depositor acknowledging receipt of the sum of money mentioned therein. It also contains the rate of interest & the date on which the deposit will mature.
Payment of Interest :
- It is usually paid on maturity of the fixed deposit. ABBL calculates interest at each maturity date and provision is made on that “Miscellaneous creditor expenditure payable accounts” is debited for the accrued interest.
- But the Bank may pay interest to depositor every 6 months or credit the amount of interest to his savings or current account, at his request.
Premature Encashment of FDR :
A depositor has the right to claim for refund of his deposit before expiry of the fixed term thereof. Bank may in special consideration allow premature encashment on application of the depositors subject to the under noted conditions:
- For FDR which are 3 months maturity no interest will be payable at the premature encashment, only the principle amount will be refunded.
- When premature encashment is allowed of FDR with tenure of over 3 months, interest will be paid if encashment before expiry of 6 months at the rate of 3 months prescribed interest rate.
- Premature encashment is allowed of FDR with tenure of over 6 months, interest will be paid if encashment before expiry of 12 months at the rate of 6 months prescribed interest rate and the same theory will also be applicable for premature FDR encashment of 2 years and 3 years.
Lost of FDR:
If the instrument is lost from the possession of the holder, the holder is asked to fulfill the following requirements:
- Party should inform it to the bank immediately;
- Furnish an Indemnity Bond;
- On fulfilling the above requirements a duplicate FDR is then issued to the customer by the bank.
Renewal of FDR:
- FDR is automatically renewed within seven days after the date of its maturity if the holder does not come to en-cash the instrument.
- Renewal will be for the previously agreed maturity period.
GENERAL PRACTICE FOR ALL TYPES OF ACCOUNTS :
- a. To facilitate withdrawals and payment to third parties by the customer, ABBL provides cheque book to the customer.
- CD account cheque book contains 20 and 50 leafs, while SB account cheque book has 20 leafs. Per cheque Charge is Tk.69. Bank maintains a separate register and also record in online in this regard.
- Requisition slip is provided to the customer in cheque book to issue new cheque book.
- A new cheque book should be delivered only to the account holder. Otherwise authorization letter is needed from client for delivery to other person.
- Issuing cheque book after verification of signature & photo and signature keep record in register.
When cheque book is lost :
A guarantee form is taken from the account holder when his book is lost, where he indemnifies the bank in this regard. A new requisition sleep is given to him for a new cheque book. Only verification of senior officer will approve in this case.
Incidental charges :
- TK. 115/- each for twice a year is debited from customer’s CD account for rendering service to him.
- Again TK. 115/- each is debited from customers account for providing him the solvency certificate/ Bank Statement/ Bank Certificate.
- Service charge for Savings A/C is TK.400.00 per year. If the balance is below the minimum amount (Tk.500) then Tk.200.00 is charge additionally.
- TK. 50/- is charged from customer as penalty if his cheque is dishonored.
Fee and Charges for Debit Card :
|Card Type||Issuance Fee||YearlyCharge|
(From 2nd Year)Cash Withdrawal feeReplacement feeRegenerated PIN
Mailer FeeAt ABBL
(Blue, Silver)Nill200NillNot Applicable200200Maestro
(Golden)400400NillTk. 150 or
2.5% Which one is Higher400200Visa Electron400400NillTk. 150 or
2.5% Which one is Higher400200
Compounding of interest :
- In ABBL, interest-compounding period varies with products.
- Interest on term deposit i.e. FDR is compounded at its maturity period. Such as 3 monthly, 6 monthly, yearly etc.
- Interest on savings bank (SB) deposit is compounded on day basis.
- Interest on SND accounts is compounded yearly.
Crediting interest :
Crediting interest implies that so for interest accrued is attached with the principal amount. In practice of ABBL
- FDR interest is credited at the maturity date.
- For SB account the crediting season is six-month period.
- Interest of SND is credited after each year.
Whatever the amount of interest is accrued 10% tax is debited from the account at the time of crediting interest.
CLOSING OF AN ACCOUNT :
The closing of an account may happen:
- If the customer is desirous to close the account
- If ABBL finds that the account is inoperative for a long duration.
- If Garnishee Order is issued by the court on ABBL.
To close the account, the cheque book is to be returned to the bank. ABBL takes all the charges by debiting the account and the remaining balance is then paid to the customer. Necessary entries are given to the account closing register and computer.
TRANSFER OF AN ACCOUNT :
Account holder may transfer his account from one branch to another branch. For this he/she must apply to the manager of the branch where he is maintaining account. Then manager of the old branch sends a request letter to the new branch manager where the account holder wants to transfer his account. With his request he sends original copy of account opening application and specimen Signature Card and photocopy of application for transferring the account with the balance remained account. But now-a-days customer need not transfer their account from one branch to another branch. They can make transaction any ABBL branch with truly on-line facility.
LOCAL REMMITANCE SECTION :
In banking language money transmitted domestically are known as local remittance. For local remittance purpose DBBL purchases and sells some instruments for its customers. The instruments are Pay Order (PO), Demand Draft (DD), Telegraphic Transfer (TT), and Mail Transfer (MT).
PAY ORDER (PO) :
Pay order is an instrument, which is used to remit money within a city through banking channel. The instruments are generally safe as most of them are crossed. It is current liability on the part of bank, which implies that, money received in this purpose has to be paid to the payees collecting bank on placement of the instrument.
ISSUING OF A PAY ORDER (PO) :
A customer can purchase pay order in different ways:
|By cash||Cash A/C……….……………………………….Dr.|
|Bills Payable (P.O) A/C ……………………….Cr.|
|Income A/C Commission on Remittance…Cr.|
|By account||Client’s A/C ……………………………….…….. Dr.|
|Bills Payable (P.O) A/C ……………..………..Cr.|
|Income A/C Commission on Remittance ..……..Cr.|
|By transfer||Head office \ other department’s client A\C ..…..Dr.|
|Bills Payable (P.O) A/C …………………….………..Dr.|
|Income A/C Commission on Remittance ……….Cr.|
From the above accounting treatments it is clear that the money, which is received by the bank from selling the instrument, is kept under bills payable account. It is current liability on the part of bank, which implies that, money received in this purpose has to be paid to the payees collecting bank on placement of the instrument.
But in the local banking arena ABBL offers free of cost for issuing of Payment Order for it’s account holders.
PRACTICE AND OPERATION OF PAY ORDER :
Types of P.O
Account payee only : only can en-cash it by depositing it in his account.
Blank Crossed : Any one can en-cash it by depositing in their account.
Cash payment : P.O. can be paid in cash if buyer gives a letter of
Identification regarding payee.
THE PROCEDURE FOR SELLING P.O. IS AS FOLLOW :
- Purchaser must be an A/c holder of ABBL.
- Deposit money with P.O. application form.
- Give necessary entry in the Bills Payable (P.O.) on line register;
- Payee’s name, date, P.O. No. Etc.
- Prepare the instrument.
- After it has been scrutinized & approved by higher authority, the instrument is delivered to customer. Signature of customer is taken in the counterpart.
SETTLEMENT OF A P.O :
When P.O. submitted by collecting bank through clearinghouse, the issuing bank gives payment.
Bills payable A\C …………………………………… Dr.
Balance with Bangladesh Bank ………………… Cr.
Thus bank’s liability is settled by debiting bills payable. But before giving payment it should be examined whether endorsement was given by the collecting bank or not. If not then the instrument is dishonored marking “Endorsement required”.
UNUTILIZED P.O. / CANCELLATION OF A P.O :
If buyer wants to cancel the P.O. he has to give a letter of instruction in this regard. He will also have to return the instrument. Adjusting entry will be:
Bills Payable (P.0.) A\C ……………………………………………… Dr.
Client’s A\C ………………………………………………………………. Cr.
WHEN P.O IS LOST :
Incase the instrument is lost, the holder whether payee or buyer will inform it to the issuing bank immediately. Bank will mark stop payment on the Bills Payable (P.O.) register. Buyer will then ask for a new instrument by submitting a G.D. Copy and indemnity bond of Tk.50.00 (issued by court). A new Instrument will be delivered marked “In lieu of”.
COLLECTION OF P.O :
A customer of ABBL who is the payee of a P.O. will deposit it for collection. The instrument is given to the clearing that will place it to the issuing bank in the clearinghouse. Before placement, ABBL as a collecting bank gives necessary endorsement.
DEMAND DRAFT (DD) :
Demand Draft is a very much popular instrument for remitting money from one corner of a country to another. The instrument is basically used for transfer and payment. Difference between pay order and demand draft is in terms of place only. P.O. is used for remitting money within the city whereas DD is used for within the country. DD too, constitutes current liability on the part of a bank. At ABBL DD is not sold to people other than its customer. But with the introduction of ONLINE banking the importance is DD has reduced. Now the customers can draw the money from any of its branch. Fund transfer is free of cost for all accounts holder.
PROCEDURES FOR ISSUING A DD :
- DD application from filled in and money deposited by the customer.
- Necessary entries are given to a register name DD OUT – concern (drawn on) branch. A number, which is taken from this register, is known as “Controlling number.”
- An “Account payee only” crossed instrument given.
Accounting treatment :
Sale of instrument:
Cash/Party A/C ………………………….. Dr.
HO/A/C Drawn on Branch …………… Cr.
Income A/C Commission ……………… Cr.
PREPARE AN I.B.C.A. (Inter Branch Credit Advice) :
The I.B.C.A. (Inter branch Credit Advice) is dispatched to drawn on branch. Issuing an I.B.C.A. implies that the branch is being credited to whom it is issued I.B.C.A. contain s the controlling number.
ROLE OF A DRAWN ON BANK :
Lodgment is given after receiving an I.B.C.A. (Inter branch Credit Advice) Necessary entry is given in a register called “DD-In-Issuing branch,” Controlling number of the I.B.C.A should match the serial number of this DD-in register.
Accounting treatment :
Issuing Branch ……………………………..Dr.
Bills Payable (D.D.) A.C……….………..Cr.
(After receiving I.B.C.A.)
Bills payable (D.D.) A/C ………….….….Dr.
Customer A/C ………………………………..Cr.
When finally the instrument arrives through clearing, the cancellation mark is given on the register. In case where I.B.C.A. has not yet received from the issuing bank but where instrument has been placed, bank cannot hang a party for the I.B.C.A. In this case payment is given to the party from the suspense account.
Suspense A/C ………………….. Dr.
Customer A/C …………………..Cr.
Later on it is adjusted after receiving the fund from the issuing bank.
Issuing bank A/C …………………Dr.
Suspense A/C ………………….…Cr.
CHARGES TAKEN FOR THE DRAFT :
Tk. 50.00 as postage charge is taken and no commission is charge for this purpose. The postage charge credited to the concern stamp account.
CANCELLATION OF A DD :
If the holder of the instrument wants to cancel it, he should submit a request letter in this regard. Issuing branch then sends an I.B.D.A. to the drawn on branch against the I.B.C.A., which was sent previously.
H.O. A/C Drawn on Branch ………………..…… Dr.
Customer Account …………………………………. Cr.
DUPLICATE DD :
When DD is lost a duplicate instrument is given subject to fulfillment of the following requirements:
- Tk. 50.00 indemnity bond issued from the court.
- After losing the instrument, holder should immediately inform it to the bank that puts “stop payment” mark on the register.
BILL COLLECTION AND CLEARING SECTION :
Customers do pay and receives bill from their counter party as a result of transaction. ABBL collects the bills on behalf of their customers. Collection mechanisms in ABBL are clearing, Outward Bill for Collection (OBC), Inward Bills for Collection.
When the bill is within the range of the clearinghouse it is sent for collection through clearing section. As far as safety is concerned customers get crossed cheque for the transaction Crossed check can’t be encashment from the counter; rather it has to be collected through banking channel i.e., clearing. If a client of ABBL received a check of another bank that is located within the clearing range and deposit the instrument in his account at ABBL, then ABBL will collect the money through clearing house. After received the check ABBL will credit client account. However, the amount is credited in the customer a/c but he will not get the money until the check is honored.
PROCEDURES FOR COLLECTION :
- “Received” seal is stamped on the cheque
- Crossing of the cheques are done
- Proper endorsement is given
- “Clearing” seal with date is given
- Cheques are sorted bank wise and entries are given to the software-NIKASH2 (Provided by Bangladesh Bank)
FUNCTION IN THE CLEARING HOUSE :
- The clearinghouse is an assembly of the locally operating scheduled banks for exchange of checks, drafts, and other demand instruments drawn on each other and received from their respective customers for collection.
- The house meets at the appointed hour on all working days under the chairmanship of the central bank. The clearinghouse sits twice in a working day.
- The members submit the claimable checks in the respective desks of the banks and vice-versa.
- Consequently, the debit and credit entries are given.
- At the end, the debit summation and the credit summation are calculated. Then the banks clear the balances through the check of Bangladesh Bank.
- The dishonored checks are sorted and returned with return memo.
- If the instruments are dishonored then they are sorted again and sent back to the returning house along with their return memo.
- Later on all the instruments of ABBL which were claimed by other banks are sorted and delivered to respective branches.
INSTRUMENTS OF OTHER BRANCHES :
However, the Gulshan branch clears its checks as well as the checks of other branches. Because, no other branch is allowed to represent directly. The other branches send the instruments Gulshan branch along with IBDA.
acts as an agent in this case.
Accounting treatment for concerned branch:
HO A/C- Gulshan branch ——————————————–Dr.
Customer A/C ———————————————————–Cr.
if the instrument is honored, Gulshan branch gives the following treatment Balance with B.B. ————————————Dr.
HO A/C-concerned branch ——————————————-Cr.
If the instrument is dishonored, the instrument is returned to the concerned branch through IBDA. The treatment is:
HO A/C concerned branch ————————————Dr.
Balance with B.B. ——————————————————-Cr.
DISHONOR OF CHEQUE :
If the cheque is dishonored, ABBL sends (with cheque return memo) to the customer stating the reason. If the cheque is dishonored due to insufficiency of funds, ABBL charges TK.50/= as penalty.
OUTWARD BILLS FOR COLLECTION (OBC) :
If the bill is beyond the clearing range then it is collected by OBC mechanism. Customer deposit cheque, drafts etc. for collection, attaching with their deposit sleep, Instrument within the range of clearing are collected through local clearing house, but the other which are outside the clearing range are collected through OBC mechanism. A customer of ABBL Gulshan branch. Dhaka is depositing a cheque, of Sonali Bank Cox’s Bazar. Now as a collecting bank ABBL Gulshan branch will perform the following task;
PROCEDURE FOR OBC :
- Depositing the cheque along with deposit-slip
- Crossing of the cheques are done indicating Kawran Bazar as collecting bank.
- Endorsement “Payee’s A/C will be Credited on realization” is given
- Entries are given in the Outward Clearing Register (OBC)
Collecting bank can collect it either by its branch or by the drawer’s bank. They will forward the bill then to that particular branch. OBC number will give on the forwarding letter. Now following procedures will take place in case of the following two cases.
BILLS COLLECTED THROUGH BRANGH :
If the bill is forwarded to branch they will collect it through IBC procedure. Collecting branch will receive an I.B.C.A. from that particular agent branch. In this case commission will be charged by the collecting branch, not the agent branch and the drawers bank will send a DD to the collecting branch. Here both the banks will charge for collection from the customer. It should be scrutinized that D.D. is containing the OBC number. (0.15% commission of the instrument value, 15% VAT and Tk. 20/- as postage charge in deducted. The minimum amount is Tk.43.00 and maximum amount is Tk.3000.00).
BALANCE SHEET EFFECT :
OBC create asset and liabilities simultaneously for bank. When send for collection, it is bank’s liability and as well as customers liability i.e. banks asset.
- Liability head Bills for collection being bills receivable as per contra
- Asset head Bills receivable being bills for collection as per contra.
Customer’s liability A/C ………………. Dr.
Banker’s liability A/C …………………….. Cr.
After realization (even if dishonored)
Banker’s liability A/C ………………. Dr.
Customer liabilities A/C ………… Cr.
After realization the contra is settled. This item is a stock variable of balance sheet at a particular date.
Balancing is done on the bankers liability account. The day-end balance is shown on balance sheet.
DOMESTIC BILL PURCHASED (DBP) :
Bank has to serve its customer by any means. But some customers are valued as far as deposit is concerned. So banks give them some benefits depending on the situation. Clients get bill that is as per agreement collected by the bank. This collection procedure takes usually 2-3 days. But in many cases valued clients need money urgently. In this situation bank purchase the bill of the client paying him money then the then. Later on bank collects the bill and adjust accordingly. This is kind of credit which is offered to the valued clients only. However no credit line facility is needed for them. Commission is charged from them at a higher rate, which is equivalent to lending rate of 14-15% for the collection period only.
CASH SECTION :
Cash section demonstrates liquidity strength of a bank. It is also sensitive as it deals with liquid money. Maximum concentration is given while working on this section. As far as safety is concerned special precaution is also taken. Tense situation prevails if there is any imbalance in the cash account.
All cash, instruments (PO, DD, cheque) and other valuables are kept in the vault. Principal branch’s vault is incurred up to Tk. 2 crore with a local insurance company. If cash stock goes beyond its limit of Tk. 2 crore, the excess money is transferred to Bangladesh Bank. If there is shortage of cash during transaction period money is drawn from the central bank. There are three keys of the vault, which are given to three seniors most officer. Daily, an estimated amount of cash is brought out from the vault, for transaction purpose.
FUNCTIONS OF CASH DEPARTMENT :
|Cash Payment||# Cash payment is made only against cheque|
# This is the unique function of the banking system which is known as “payment on demand”
# It makes payment only against its printed valid ChequeCash Receipt# It receives deposits from the depositors in form of cash
# So it is the “mobilization unit” of the banking system
# It collects money only its receipts forms
CASH PAYMENT OR CHEQUE CANCELLATION PROCESS :
|Step 1||Receiving Cheque by the employee in the cash counter|
|Step 2||Verification of the followings by the cash Officer in online.|
- Date of the Cheque (it is presented within 6 month from issue date)
- Issued from this branch
- Amounts in figure and sentence written does not differ
- Signature of the drawer does not differ
v. Cheque is not torn or mutilatedStep 3Gives pay cash seal and sends to the payment counter (verified by an officer)Step 4Payment officer makes payment
Books maintained by this section:
Though most of transactions are through On-line and signature, photo and account balance are check in computer that network with server. But following registers keep for this section.
|Vault Register||It keeps account of cash balance in vault in the bank.|
|Cash Receipt Register||Cash receipt in whole of the day is recorded here.|
|Cash Payment Register||Cash payments are made in a day are entered here.|
|Rough Vault –Register||Cash calculation for final entry in vault register is done here, as any error and correction here is not acceptable.|
|Cash Balance Book||Balance here is compared with vault register. If no difference is found, indicates no error.|
In book 1 and book 5, notes and currency are recorded by mentioning their denominations and number of each denomination. Some set of these books is maintained separately for both local and foreign currency.
CHEQUE AND CROSSING CHEQUE :
A “Cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. [According into section-6, negotiable instrument Act, and 1881.]
A cheque may be classified into:
a) An open cheque, which can be presented for payment by the holder at the counter of the drawer’s bank.
b) A crossed cheque, which can be paid only through a collecting banker.
Crossing cheque: A cheque is said to be crossed when two transverse parallel lines with or without any words are drawn across the face. Crossing may be general, special or restrictive.
NEW MAGNATIC INK. CHEQUR RECOGNITION (MICR) CHEQUE BOOK :
AB Bank has started Issuance of new cheque book from June 01, 2009 as per Bangladesh Bank guideline. You can conveniently collect new cheque book from your Account Opening Officer of your AB Bank branch. As per Bangladesh Bank instruction we have implemented MICR coded cheque book from June 6, 2009, which will be customized by the Bank. MICR is a process of printing cheques using magnetic ink and special fonts to create machine-readable information. It is the first step towards electronic cheque clearing process.
The new MICR coded cheque book will facilitate:
- Quick processing and faster cheque clearing time
- Prevent cheque related fraudulent activities
In this regard, we would request you to collect the new cheque book on or before July 31, 2009.
Bangladesh Bank Clearing House will not honor existing chequebook leaves after July 31, 2009. However, you may continue to use your existing chequebooks to withdraw cash over the counter or to transfer funds to another customer of AB Bank Limited at any of our branches.
OTHER ACTIVITIES OF AB BANK LIMITED :
- 1. Pin mailer of ATM card delivery
- After opening account an inactive ATM card send to customer within two or three weeks.
- Then account holder come to the branch with card and fill up the form for requesting activation of ATM card.
- A secret PIN number delivered the account holder.
- Concern officer verify signature and photo of account holder.
- ATM Card will be activated with in one week and user can use it.
- 2. Account related activities
- Scanning photo and signature of new account holder
- And linked with server
- Proper preservation of respective files
- Change of account holder address ( application from customer)
- Change of Board resolution of several limited company account
- Issuing of thanks letter to A/C holders & introducers
- Provide all information to the customer and also provide in phone
- Receiving Chaque, instrument, refund warrant etc.
- Checking of daily outward clearing activity report with vouchers & their proper preservation and also Inward clearing, communication with client regarding inward cheque confirmation. Posting or entry of salaries of different corporate client and transactions related to GB
Closing of an Account :
For two reasons, one can be closed. One is by banker and other is by the customer.
By banker: If any customer doesn’t maintain any transaction within six years and the A/C balance becomes lower than the minimum balance, banker has the right to close an A/C.
By customer: If the customer wants to close his A/C, he writes an application to the manager urging him to close his A/C.
Different procedures are followed in cash of different types of A/C to close. Fixed deposit A/C is closed after the termination of the period. BCD A/C is closed when the certificate is surrendered.
Closing process for current & savings A/C:
1. After receiving customer’s application the officer verifies the balance of the A/C.
2. He then calculates interest and other charges accumulated on the A/C.
3. If it bears a credit balance, the officer writes advice voucher. He gives necessary accounting entries post to accounts section.
4. The balance is returned to the customer. And lastly the A/C is closed.
But in practice, normally the customers don’t close A/C willingly. At times, customers don’t maintain any transaction for long time. Is this situation at first, the A/C becomes dormant and ultimately it is closed by the bank.
Minimum Balance :
The account holder has to keep minimum balance in his/her accounr that is the security for the bank and bank will get confirm that the accont holder is running his/her accont smoothly. The minimum balamce will be
- Savings A/C minimum balance………………………… Tk. 500
- Current A/C minimum balance…………………………. Tk. 500
- CD personal A/C minimum balance……………………. Tk. 500
- CD proprietor A/C minimum balance…………………… Tk. 1000
- Company A/C minimum balance……………………….. Tk. 5000
Statement Charge :
If any client wants to take bank statement then they have to pay some charge to the bank.In this case bank keeps Tk. 50 for every single page of the bank statement.
If any client wants to take bank solvency certificate then bank keep Tk. 150 as a charge of bank solvency certificate and it is deducted from the client’s account.
Clearing Cheque Return :
There are some reasons for the cheque returns. The reasons are given below :
01) Insufficient fund.
02) Not arrange for.
03) Full cover not received.
04) Exceeds arrangement.
05) Payment stopped by the drawer.
06) Payee’s endorsement irregular / illegible / required.
07) Drawer’s signature differ / required.
08) Alteration in date / figures / words require drawer’s full signature.
09) Cheque is post dated / out of date / mutilated.
10) Amount in word and in figure differs.
11) Crossed cheque must be presented through a bank.
12) Clearing stamp required/requires cancellation.
13) Collecting bank’s discharge irregular / required.
14) Cheque not drawn on us.
15) Payee’s signature require on revenue stamp.
16) Please present again on ………
Account Closing Charge :
If any client wants to close his/her account in that case he/she has to pay some charge to the bank for closing the account. The charge is given below :
1. Service Charge ………………… Tk. 120
2. Commission…………………….. Tk. 300
3. Bank Charge…………………… Tk. 500
CHAPTER – 5
DEPOSIT ANALYSES OF THE ORGANIZATION :
Accounts Opening Section :
AB Bank is one of the most profitable organization in Bangladesh. In case of banking business deposit section is the most vital part of a bank. Everyday many people come to bank and they open a account that’s why AB Bank’s deposit increases day by day. If see the last five years deposits of AB Bank then we can easily clarify the AB Bank’s deposit position then other banking organization.
The following table shows the deposit situation from 2005 to 2009 of AB Bank Ltd.
|Year||Deposit figure in million|
The above shows the deposit volume of AB Bank. In the year of 2005 deposit was Tk. 28,439 million. In the of 2006 the deposit value raised to Tk. 41,554 million, in 2007 deposit was Tk. 48,731 million, in 2008 deposit was Tk. 56,986 million, in 2009 deposit was Tk. 60,918 million. Now if we plot this amount in a diagram then we can see the original deposit situation of AB Bank.
The above diagram shows the deposit situation of AB Bank. Here we can see that the deposit value continuously increases from 2005 to 2009. For increasing the deposit volume of AB Bank, they always set a plan that they will provide better services to their client. So we hope that in future will collect more deposit and they will keep hold their good position.
SWOT ANALRSES OF THE ORGANIZATION :
- Better customer relation specially with the Small and Medium Entrepreneurs
- Better customer relation specially with the Small and Medium Entrepreneurs
- Short time requirements of in loan application processing and approval.
- Authority granted to the branch manager to avail excess limit to a client in sudden need.
- A very well organized Credit Unit.
- Correspondence with most of the countries of the world.
- Quick understanding of customer needs
- Efficient and effective means of determining value of the client’s properties
- Capability of doing online banking, internet banking and SMS banking
- Strong procedure in selection of new borrow
- Clearly defined measure in dealing with foreign exchange transaction.
- High cost of fund
- Lack of sufficient field officer to sell different products of the bank
- High interest charged
- Security and collateral requirement while disbursing the loans
- Fishery, poultry, dairy and agricultural sector which are largest business sectors of the country are left out of the target market for loans and advances
- Lack of strong recovery team.
- More dependency rests on government sources for deposit mobilization.
- The techniques specified for credit appraisal is not sufficient.
- Rising of new business venture and prospective entrepreneurs
- Bank’s attractiveness and goodwill in the current market.
- Collection of huge foreign remittance from expatriate Bangladeshis.
- Bank’s business expansion to prospective remote areas.
- Government positive attitude towards low classification.
- Increased competition imparted new market participants in the banking industry
- Newer banks with diversity and flexibility to charge variable interest rates to different loan applicants
- Banks with source of low cost fund are getting much better position in SME financing
- Govt. regulations over banking industry.
Recommendation & Conclusion
Comparison among three local private banks EBL, ABBL, and PBL examines followed an assessment based on the CAMEL method of international bank ratings, a reputed US supervisory rating system supervised by Bangladesh Bank under the regulation and guideline. The ‘A-Class’ CAMELS rating has been awarded to Commercial Bank Bangladesh after assessing the six strategic factors covered by the abbreviation, Capital Adequacy, Asset Quality, Management Quality, Earnings, Liquidity and Sensitivity to market risks. In all, 48 banks in Bangladesh were assessed till September 2008 for this latest rating. In the CAMELS ratings, each bank is assigned a score of one (A) to five (E) for each factor. “If a bank has an average score less than two, it is considered to be high-quality institution, while banks with scores greater than three are considered to be less-than-satisfactory establishments. This year, six other banks operating in Bangladesh were rated Strong or A-Class. The rating is based on financial statements of the bank and on-site examinations by The Bangladesh Bank, the Central Bank of Bangladesh. “The CAMELS rating system helps the supervisory authorities identify banks that are in need of attention”. Last year, the Commercial Bank’s operations in Bangladesh was awarded a rating of AA+ (Double A plus) for long term credit, an upgrade from the previous rating of AA, by Credit Rating Information and Services Ltd.
It is very difficult to recommend about this topic because of research restrictions and unavailability of data. Despite these problems there are some things that the credit management systems/policy of AB Bank Limited, Gulshan office should look at :
- ABBL used to focus its attention on commercial sector for large and medium scale industrialization but the recent concentration on small and medium enterprise (SME) got the new momentum as lending spheres. Though the SME is the focusing attention, AB Bank’s contributions on agriculture sector are insignificant.
- In industrial sector, (Wholesaler Restaurant, Retailers} AB Bank prefers giving loans to large and medium scale industries, which has a high turnover. To these customers, they give short-term working capital machinery, generator, lift, boiler, commercial vehicle, office equipment. Export, import, financing, syndication services also remarkable. They avoid sectors like small & cottage industry and agriculture. Majority portion of their loans goes to consumer loans. They give loans to industrial consumers to buy all types of durable.
- The ABBL loans and advances are dominated by financing on short term credit programs, mainly to the trade commerce and processing units rather in any manufacturing unit.
- ABBL has also increased its lending export finance and working capital support.
- Classified loan and advances has down ward trend, which represents excellent performance of credit administration and monitoring review.
- ABBL properly follow the credit guideline provided by Bangladesh Bank.
- Specially for controlling the branch activities ABBL delegates disbursement to the credit administration division.
- In the changing scenario, each bank should have their own credit vision and accordingly restructure their credit management policies relating to screening monitoring and recovery.
- Lending is one of the main function of a banker. But lending is a risky AB Bank have different variations such as credit grading and risk grading system. While gathering information during the face to face interaction between the clients and researcher, this involves a number of questions. Among them, most of the customers have positive point of view towards the credit management of AB Bank.
- The employee must take time to hear the problems of the customers. It will help them to deliver the right service and quick solution of respective problems.
- AB Bank can allow the clients to repay their installment at any branches he / she finds convenient.
- Brochures always show he features, benefits, costs and characteristics of the products. There are many customers who do not have any lending facility but want to get it. Many of them do not want to spend time on discussing products with the lending officer. If there were available brochures of all types of customers advances, customer could pick up any according to their choice and evaluate the products offering by reading and analyzing the products. Some of them might have been turned into customers from their standing of prospective.
Banking industry in Bangladesh is now on the right track. The banks are contributing much than the previous years for the growth and development of the country. Banking industry is much organized because of strong vigilance and supervision of Bangladesh Bank. In the industry, AB Bank is one of the pioneers in many criteria. AB Bank is committed towards the excellence in the service with efficiency, accuracy and proficiency. Like of most of the commercial banks, general banking & foreign exchange department is one of the most important departments of AB Bank. Despite problems and weaknesses, it is driving the bank from the front. With an easy to understand operating guidelines, transparent operating procedure and a tem of highly knowledgeable and proficient personnel, this department is expending and excelling itself day by day.
To the gateway to professional life an experience at AB Bank as an intern was a privilege for me. AB Bank does offer a real practical orientation to the new comers with typical corporate culture . Rather, it offers people like us an environment where the appetite for learning just gets intense. This three months internship orientation with AB Bank undoubtedly will help me a lot to understand and cope with any typical corporate culture.
Overall, AB Bank’s image stands superb in the eyes of the clients. This means that the AB Bank Limited is well-placed to further increase their presence in the credit marker and increase their profits in the future. As AB Bank is performing well in traditional banking .I wish and hope that in future AB Bank will be number one Bank in Bangladesh.
M.A Bari Md. Mohiuddin Siddique (2000), “ Reading Materials of the Induction for the Probationary Officer of AB Bank “ BIBM, Bangladesh
AB Bank Website research for the report.
Foreign Exchange and Credit Policy & Risk Management guide of AB Bank (2003)
www.findartcles.com “ Principles of Foreign Exchange Management “ and What is Foreign
Exchange “ www.abbank.bd.com
Stigum Marcia (1983) “ Management Bank Asset & Liabilities : Strategies for risk control & Profit”
L.Irwin Homewood, New York.
Helping by other reports and conversation with other respectable persons.
Annual Report 2009 Of AB Bank Limited
“ Banking Law & Practices “ written by Syed Ashraf Ali
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