General Banking Operation of IFIC Bank Limited

The main purpose of this report is to analysis General Banking Operation of IFIC Bank Limited. General purpose of this reports are to know about IFIC Bank Limited and it’s general banking system. Here also focus on about the IFIC Bank Limited’s business process like- analyze Credit Collection Department by using bank’s current online services and overall marketing of the Bank product. Finally identify the customer servicing systems of the Bank and to detect the employees capability to provide quality service.

 

INTRODUCTION

Loans comprise the most important asset as well as the primary source of earning for the banking financial institutions. On the other hand, this (loan) is also the major source of risk for the bank management. A prudent bank management should always try to make an appropriate balance between its return and risk involved with the loan portfolio. An unregulated banking financial institution might be fraught with unmanageable risks for the purpose of maximizing its potential return. In such a situation, the banking financial institutions might find itself in serious financial distress instead of improving its financial health. Consequently, not only the depositors but also the general shareholders will be deprived of their money from the bank. The deterioration of loan quality will also affect the intermediation efficiency of the financial institutions and thus the economic growth process of the country. This establishes the fact that banks should provide increasing emphasis on various analytical tools and techniques for screening proposals and loan decision taking. Credit Worthiness Analysis is one of the most important activities before sanctioning any credit to a new borrower as well as existing borrower to avoid any default risk and for improving the operational efficiency of nationalized and private sector commercial banks.

 

Objective

Objective of a particular report depicts the idea and the reasons behind preparing a report. This objective can be staged into two distinctive way first general objective and second Project objective. My objectives behind preparing this report on general Banking Operation of IFIC Bank Limited by IFIC are discussed below:

General Objectives:

  • The partial fulfillment of the requirement for the award of the degree of Bachelor of Business Administration (BBA)
  • To gain practical job experiences and view the application of theoretical knowledge in the real life situation.

Project Objectives:

  • To know about IFIC Bank Limited and it’s general banking system.
  • To know about the IFIC Bank Limited’s business process.
  • To know about IFIC Bank Limited’s Credit Collection Department by using bank’s current online services
  • To know overall marketing of the Bank product.
  • To identify the customer servicing systems of the Bank.
  • To detect the employees capability to provide quality service.
  • To know existing customers satisfaction.
  • To find out the customer attitudes and response to the service provided by the Bank.
  • To understand and classify the customer’s nature and behavior.
  • Sales strategies of credit collection department.
  • To find out the customers recommendation for improving the Banking service.

 

About IFIC Bank:

Introduction:

IFIC bank is regarded as the pioneer in the private sector banking of Bangladesh. IFIC Bank is stated its journey with the noble vision of diversifying banking activates into different areas of client services.

The bank stated its operation way back from 23rd March, 1983. Since then for 20 years this bank is operating its activities though out the country in order to strengthen the economy of the country. In every sector of banking activities IFIC is become the success bank. Good customer service, investment and t50he industries employees make it possible for IFIC to be one of the leading banking companies of the country.

The board of directors of the bank consists if the finest intellects of the country’s business and extensive experience acquires over the years guided IFIC to a great success and fresher altitude.

The success of IFIC is largely credited to its friendly, cooperative approach, understanding the social banking needs of each and every client and concern for the benefit and welfare. From the beginning, the prime objective of IFIC was to increase capitalization, to maintain disciplined growth and high corporate ethics standard and enhance the health of shareholders.

Now IFIC is operating i0ts activities over the country with 110 branches. This branch is situated in most business points of the country. IFIC is the leading investors in garment sectors of Bangladesh. This helped the people to employ. The country also gets a lot of foreign currency from foreign countries. In 1996 IFIC acquired equity and management of Nepal Arab Bank Ltd. And in 1997 IFIC opened a representative office in Dubai.

With a strong sense of all business area of commercial banking, IFIC could foresee tremendous growth in home bound remittance from Bangladeshi expatriates in USA, UK, and Meddle East and in different countries of the world.

Banking is not only a profit-oriented commercial institution but it has a public base and social commitment. Admitting this true IFIC is going on with its diversified banking activities. IFIC introduced monthly saving Scheme, Special Deposit Scheme, Consumer’s credit scheme and savings Insurance Scheme etc. to combine the people of lower and middle-income group.

A term of highly qualified and experienced professionals headed by the managing director of the bank who has vast banking experience operates bank and at the top there is an efficient board of directors for making policies.

Function of IFIC:

  • The main task of the IFIC is to accept deposited from various customers though various accounts.
  • Provide loans on east term and condition.
  • It creates loan deposit.
  • The bank invest it fund into profitable sector.
  • It transfer money by Demand Draft (DD), pay order (PO), and telegraphic transfer. Etc.
  • The bank is doing the transaction of bill of exchange, cheque etc. On behalf of the client.
  • Assists in the foreign exchange by issuing letter of credit.
  • The bank insures the securities of valuable documents of the client
  • It brings the increasing power of dimension of transaction.
  • Above all IFIC helps the business man financially by giving discount facility for bill of exchange and by providing the facility of letter of guarantee.

 

Operation of IFIC:

The importance of the mobilization of savings for the economic development of our country can hardly be over emphasized. The bank considers savings and deposits as lifeblood of the bank. More the deposit greater is the strength of the bank. So they intend to launch various new savings schemes with prospect of higher return duly supported by a well-orchestrated system of customer services. Technologies such as computer, ATM, telecommunication etc. all would be harmonized and adapted to the system in order to provide found the clock and any branch services to the clients.

The Three main operating divisions of IFIC Bank Ltd. are as follows:

General banking Division

A wide range of products and services different type of deposits such as SB, CD, FDR etc are offered by this department. Local private banks is biggest threat a they offer higher interest rate and better services.

General banking is the heart of banking activities. Total banking procedure start with this department. General banking department perform the core function of bank operation and it is known as “Retail Banking”. They take the deposits from the customer and meet their demand for cash honoring their checks. It opens new accounts, remit funds, issues bank draft and pay order. Account opening section, Remittance, Checks clearing, Cash, FDR, Accounts section are part of general banking.

General Banking is designed to serve the general people is saving money, smoothing transactions for commercial people and ensure security of the precious wealth of the clients lot of important activities.

 

Account Opening Section

This section opens Current Deposit (CD), Savings account (SB), STD, FDR. Most vital work starts from here as selection of customer is very important for the bank success and failure. If the account holder do money laundering through this account than the bank will be legally responsible for that and bank has to answer to Bangladesh bank or customer may occur fraud and forgery by this account and thus destroy goodwill of bank’s. In branch account opening officer follow some rules which are guided by IFIC Bank manual and senior opening form signature is must in this case. Manager’s signature is must on every account opening form as permission for opening the account. All these help to stop adverse situation.

Target Customer of IFIC Bank:  

Individual person Public limited company
Sole proprietorship firm Government Organization
 Partnership firmSemi Government Organization
Private limited company Bank employee

 

Types of Accounts

Deposit is life-blood of a commercial bank. Since commercial bank deals with other people’s money, without deposit there is no business for the commercial bank. Accepting deposit is one of the main functions of commercial bank. IFIC bank’s deposits can be broadly classified as follows:

Current Account

Current Account is most suitable for private, individuals, traders, merchants, importers and exporters, mill and factory owner etc. For opening of a current minimum deposit of TK. 2000.00 is required along with introductory reference. No interest is given the current account deposited money. One can enjoy maximum flexibility and convenience when s/he opens a current account with IFIC bank limited. This account offers:

  • Any number of transactions a day
  • Free check book
  • Statement of account at any desired frequency
  • Statement by fax on demand

 

 

Savings Account

The saving account is primarily for small-scale savers. The main objective of this account promotion is thrift. Hence, there is restriction on withdrawals are permitted only against prior,

  • Minimum amount of TK. 1000.00 is required as initial deposit.
  • Frequent withdrawal is not encouraged.
  • 7 days is required for withdrawal of large amount
  • The rate of interest is 6.00 % against SB account.

Short-Term Deposit (STD) Account

In short term deposit account, the deposit should be kept for at least six month to get the interest. The STD account is a very important class of account in this bank. The minimum amount of balance has to be maintained with STD account is TK. 25000 Interest is given at a rate of 4.5 percent which is less than savings account. Normally various big companies, organizations, government departments keep money in STD account. For this type of account, frequent withdrawal is discouraged. Deposit should be kept for at least seven days to get interest. Prior notice is required for the withdrawal of money from STD account. The account holder must give seven days before the withdrawal that is why STD is also called ‘Seven days notice’ current account.

Fixed Deposit Receipt (FDR)

Fixed period specified in advance. These deposits are time deposit. Normally the money on a fixed deposit is not repayable before the maturity date of a fixed period. At the time of opening the deposit account, the banker issued a receipt acknowledging the receipt of money on deposit account. It is popularly known as FDR. An interest rate ranging from 10.50 percent to 11.50 percent is offered depending on different amount and tenure of deposit. Fixed deposits are the deposits in which an amount of cash is deposited in bank for a

 

Transfer of an account to another Branch

Sometimes the customer wants to transfer his account to another branch due to various reasons. IFIC Bank, Dhanmondi Branch, also gives this kind of facility to the customer. In this case, they will have to submit an application to the branch manager stating the reasons. The officer verifies the signature and finds out the balance of the account holder. The holder also submits the rest check leaves along with the application. Then the officer issues an Inter Branch Credit Advice (IBCA) to that branch and a debit voucher with the balance of deposit in that account. He also sends the account opening form and specimen signature card to that new branch. The new branch officer verifies the customer signature with account opening form supplied to him. The amount mentioned in the (IBCA) considered as the initial deposit of the new branch.

 

Closing Procedure of an account

For two reasons account can be closed –

By Banker: banker has the right to close the account if the customer does not maintain any transaction six years and the balance is become lower than the minimum balance.

By Customer: if the customer wants to close his account he will write an application to the manager and the manager then close the account.

Firstly, the concerned customer has to apply for closing his/her account. Then to close the account the cheque book is to be returned to the bank. After charging the account closing charge the Manager will close the account. Closing charges are as follows:

  • For below 6 months 100 tk.
  • For over 6 months 200 tk.

The rest amount of money laid in the respective account is paid to the customer by a payment order. In case of payment order certain commissions and vat are cut off from the account.

 

Deposit Product

IFIC Bank offers a wide variety of deposit products to meet your financial needs. From current and savings accounts to Fixed Deposits and Pension Schemes each account is designed to give you the best value for your money.

Savings Account

IFIC Bank offering the most attractive interest rate of 5% on your Savings Account:

  • Initial Deposit: Tk. 500.00 at rural branches & Tk. 1000/- for urban branches which should be considered as minimum balance.
  • Competitive Interest Rate.
  • No extra hidden charge.
  • Debit Card facility.
  • SMS Banking Facility.
  • ATM facility.
  • Online banking facility.
  • Utility payment service.
  • Transfer of fund from one branch to another.
  • Opportunity for availing locker facility.

 

Income Tax Rebate

Monthly installments of our PSS will qualify as allowable investment in Yearly Income Tax Return. The account under this scheme will also be exempted from deduction of tax on interest payable at source. However, If any tax or other Govt. Levy is payable under this Scheme in future the same shall be deducted from the account.

Credit facilities

The A/c holder can avail loan / Secured Overdraft (maximum 80% of the deposited principal amount but not less than Tk.20, 000/-) against lien of the PSS account to meet the personal need, educational expenses of his/her children or for medical treatment.

Current Account

a) Minimum required balance Tk. 2000.

b) Debit Card facility.

c) ATM facility.

d) Online Banking facility.

e) SMS Banking Facility.

f) Utility payment service.

g) Transfer of fund from one branch to another.

h) Opportunity for availing locker facility.

i) No extra hidden charge.

 

Fixed Deposit Receipt (FDR)

Fixed deposit gives you higher interest than other forms of deposits. IFIC Bank is offering competitive interest rate in FDR:

Fixed Deposit Rate:

FDR (Tenure 3 months)8.25%
FDR (Tenure 6 months)8.00%
FDR (Tenure 1 year)8.00%

Short Term Deposit (STD)

Short Term Deposit account is opened for any individual/firm/company/Financial institutions /societies/clubs/Trust/NGOs/Banks/Corporations/Autonomous bodies   /government organizations. Initial Deposit for opening account Tk. 25,000/- which should be considered as minimum balance.

STD Interest Rate

Short Term Deposit(STD)2.00%
Short Term Deposit(STD)-Bank to bank/Non-Banking Financial Institutions (NBFI)0.20%

 

Local Remittance

Sending money from one place to another place for the customer is another important service of banks. And this service is an important part of country’s payment system. For this service, people, especially businessmen can transfer funds from one place to another place very quickly. There are five kinds of techniques for remitting money from one place to another place. These are:

  • Demand Draft
  • Pay Order
  • Telegraphic Transfer
  • Telephone Transfer
  • Mail Transfer – Time consuming and not frequently used

 

Money Transfer

IFIC Bank Ltd. earns a huge amount of money by selling several customer services. The IFIC Bank Ltd. offers the following services to its customer:

 

 

Demand Draft (DD)

DD is the most popular instrument of remitting fund. It is an order to pay money drawn by one branch of a bank upon another branch of the same bank for a particular sum of money which is payable to order and demand.

Commission of DD as under:

Postal charge                      10/=

Amount of DD      Commission (TK)

Minimum charge             25

Payment Order (PO)

A payment order is an instrument from one branch to another of the same bank to pay specified sum of money to the person named therein of his order. Unlike cheque, there is no possibility of dishonoring pay order because before issuing bank takes our money of the pay order in advance.

Amount of DD                              Commission (TK)

TK 0 to TK. 1000                                       10

1000 to TK. 100000                                  25

TK 100000 to TK 500000                       50

Above TK. 500000                                    100

 

 

Telegraphic Transfer (TT)

TT is the fastest means of money transfer between two branches of the same bank. The formalities of TT is as same as MT, there are taken some extra charge for telephone.

Telegraphic and Telephone transfer are almost the same, both are them are known as TT in short. IFIC bank helps people transfer their money from one district to another in the quickest possible time at the lowest service charge.

 

CREDIT PROFILE OF IFIC BANK

Introduction:

The basic functions of bank are deposit extraction and credit extension. Credit is the hub of banking business. It helps this kind of organizations to earn more than 50% of the total revenue. Managing credit operation, thus, is the crying need for any bank. In case of failure in credit management, a bank may face extinction. It is, therefore, necessary that a bank has a proper credit profile that guides the credit operation of the bank in an effective manner. For proper management of credit each and every bank follows the profile for smooth approval, direction, monitoring and review of lending operation.

Credit Policy of IFIC Bank Limited:

A credit policy includes all rules relating to loans and advances made by the bank to the borrowers. It includes types of credit extended by banks, method of judging the credit worthiness of borrowers, the collateral or securities that are accepted by the banks and so on. This policy guidelines refer to all credit facilities extended to customers including placement of funds on the inter bank market or other transactions with financial institutions. IFIC Bank Limited Credit policy contains the views of total macro-economic development of the country as a whole by way of providing financial support to the Trade, Commerce and Industry. Throughout its credit operation IFICBL goes to every possible corner corners of  the society. They are financing large and medium scale business house and industry. At the same time, they also takes care entrepreneur through its operation of Lease Finance and some Micro Credit, Small Loan Scheme etc. As a part of its Credit Policy IFICBL through its credit operation maintains commitment  for social welfare. The bank is coming up with a scheme where the under privileged children will be given financial support for education and self-employment.

From operational aspects it is observed that as a matter of policy—

  1. Charging of interest is flexible depending on  the proposal and the customer.
  2. It takes care in maintaining proper mix of short medium and long  term finance for a period  not exceeding  5  years.
  3. IFICBL puts emphasis on the customers, ie, the man and business not on the security in selecting borrowers.
  4. It takes care of diversity in credit portfolio.

Sound Principles of lending:

Sound principle of lending is obvious to avoid loan default tendency and risk elements to safeguard of public money as well as business of a bank. So, there must be a principle of advance and efforts should be made to make it a sound one for which in depth study must be made on the following points by this bank.

  1. When the loan is to be given
  2. Why the loan is to be given
  3. How the loan is to be given
  4. What may happen after disbursement of the loan
  5. Generally what happen (from past experience) after disbursement of the loan
  6. Is it hopeful that the borrower will repay the loan?
  7. Whether loan should be given only in private sector or also in government sector as well.
  8. Whether only secured loan will be extended or provision should be kept for clean loan also
  9. Whether only short term and mid term loan will be considered or long term will also be considered?
  10. Whom to be financed?
  11. Whether loan will be extended to trading sector only or industrial sector will also be considered.

Besides the above mentioned decision, the managers must ensure materialization of following safe guards for proper use and timely realization of loans, commission. Interest etc and minimize the risk and hazards:

  1. Safety of Fund: Safety means the assurance of repayment of distributed loans. This depends mainly on integrity, business behavior, reputation, past experience in the particular line of business, financial solvency, quantum of own equity in business, capability to run business efficiently, capacity and willingness to repay the loan etc. of the loan.
  2. Security: It must be ensured that repayment of the loan is secured and for this purpose manager must retain security against loan to fall back upon incase of borrower’s default. The securities must possess required basic qualities such as possession, title deed, parches etc.
  3. Liquidity: The borrower should have liquid assets so that he can adjust liability on demand and as much as possible loan itself should be quasi liquid so that it can be realized on demand in case of need.
  4. Purpose: Purpose of a loan should be production, development and economic benefit oriented.
  5. Profitability: This is applicable both for bank and the borrower.
  6. Diversification: Diversification means to distribute the loan to a large number of borrowers rather to a small number of borrowers. This will increase the services of the bank and it will reduce the risk of loan recovery.
  7. National Interest: Nothing can be done legally if it jeopardizes national interest in any way.
  8. Credit restriction imposed by Central Bank: At the time of sanctioning loan, the commercial banks must have to follow the restrictions that are imposed by Bangladesh Bank from time to time.

Financial Data Analysis:  The credit manager has to compare financial statements of at least three years. For this s/he takes help of different ratios such as liquidity ratio, solvency ratio, profitability ratio and activity ratio. S/he also needs to examine bank account statement of the applicant very keenly. In addition to analysis, the manager should visit the business concern to get a true picture of it.

Industry Analysis: In this part, the manager is required to study the business behavior, which includes market demand, competitors and government barriers.

Lending Risk Analysis: It is a systematic and structural way to assess lending risk, which covers all the factors described above. Here a form has to be completed by the lending officer. If lending risk is found to be low, financing can be done and vice versa.

Finally based on the above information provided by the loan applicant and after analyzing all the information and information provided by Credit Information Bureau. (CIB) a credit committee of a bank takes the lending decision.

Credit Facilities Extended by IFIC

Lending of money to different kinds of borrowers is one of the most important functions of IFIC Bank Limited. Major amount of income of this   Bank comes from its lending. IFIC makes advances to different sectors for different purposes, such as financing in trade and commerce, imports and exports, industries, transport, house building, agriculture etc.

General Loan:

When an advance is made in a lump sum repayable either in fixed monthly installment or in lump sum and no subsequent debit is ordinarily allowed except by way of interest, incidental charges, etc it is called a loan. The whole amount of loan is debited to the customers name on a loan account to be opened in the ledger and is paid to the borrower either in cash on by way of credit to his current/ savings account. It is given against Personal guarantee, hypothecation of goods and land & building.

Eligibility: Loans are normally allowed to those parties who have either fixed source of income or who desire to pay it in lump-sum.

Interest Rate: 16%

 

CREDIT RATING ON IFIC BANK LIMITED

Long TermShort Term
Surveillance Rating 2008AST – 2
Entity Rating – 2007AST – 3
OutlookStable
Date of RatingJune 29, 2009

Credit Rating Information and Services Limited (CRISL) has assigned A (pronounced as single A) rating in the long term and ST – 2 in the short term to International Finance Investment and Commerce (IFIC) Bank Limited for the year 2008. The above rating has been given in consideration of the Bank’s good fundamentals such as good capital adequacy, good financial performance, sound liquidity position, increasing trend in market share and decreasing trend in NPL. However, the above has been constrained, to some extent, by high loan deposit ratio, decline in internal capital generation ratio and dependence on term deposits. Bank/ Financial Institutions rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. The short term rating indicates high certainty of timely payment. Liquidity factors are strong supported by good fundamentals and the risk factors are very small.

Credit Rating Information and Services Limited (CRISL) also viewed the bank with “stable outlook” on the basis of its consistent increase in operational efficiency.

Mentionable that the above ratings were based on the position of the bank as of December 31, 2008 and the date of rating by CRISL was June 29, 2009.

 

Technology

Since the beginning of its journey as a commercial bank in 1983, IFIC Bank has been giving great emphasis on the adoption of modern technology. It became the pioneer in the field of automation by introducing computerized branch banking right in the same year. Subsequently, all the branches were brought under similar automated platforms with upgraded software applications to offer all the critical banking features. At present all 65 domestic branches are fully computerized under networked environment.

The Bank has taken up a new project with Misys International Banking System Inc. (UK) to further upgrade its banking operation to state-of-art world class on-line banking solutions to provide faster and even more convenient centralized services to the clients.

Besides, the Bank is also operating fully on-line Automated Teller Machine (ATM) services under the banner Q-Cash at a number of locations in Dhaka and Chittagong. The ATM facilities are available to the customers at Q-Cash booth.

Since the importance of Web presence in the Internet is absolutely critical, IFIC Web Site www.ificbankbd.com has long been launched for the convenience of the customers, where all the activities and information are constantly being posted and updated. A Central Mailing System is operational at the Head Office to let the customers have direct electronic access to the selected staff.

 

Nature of the Loan

Bank advances loans for short, medium and long terms. The term of the loan is determined on the basis of gestation period of a project and generation of income by use of the loan.

Nature of Loan  at a glance

 Loan    TypeShort Term ( up to 1 year)Medium Term (over 1year to 5 years)Long Term (over 5 years )
Name of LoanCash Credit Hypothecation,

LTR,PAD,SOD,L/C

SOD work Order,PLS,CCS,Car Loan,Doctors Credit Scheme,Small LoanGeneral Loan, House Building Loan, Staff Loan , Lease Finance.

Here

LTR=Loan against Trust Receipt                             L/C=Letter of Credit

PLS=Personal Loan Scheme                                    PAD=Payment against Documents

CCS=Consumer Credit Scheme                              SOD=Secured Overdraft

 

Types of Borrowers                                                                   

A borrower should be legally competent to enter into a contract, as borrowing is a contract between the lender and the borrower. Minors, lunatics, drunkards and insolvents cannot enter into a valid contract and cannot, therefore, be entertained as borrowers. Before entertaining an application for loans and advances, banker should verily borrowers’ capacity to contract and, his power to borrow, so as to effectively charge the security offered as a cover for the advances.

There are certain conditions to be fulfilled by the consumer to apply for the loan. Consumer should be eligible to apply for a loan. Service person get loan only when the retirement date must be after the date of expiry of loan. The target customer of the Bank is all people. Business, service, doctors, suppliers, contractors are he customers. Now it can be classified into four types:

Types of Borrower at a glance

SI No.BorrowersName of the Loan%
1.BusinessGeneral Loan, Cash Credit (CC) Hypothecation, Packing Credit, LTR (Loan against Trust receipt), PAD (Payment against document). Lease Finance, Small Loan, Letter of Credit50
2.ServicePersonal Loan5
3.BothHouse Building Loan, Consumer Credit Scheme, Car Loan20
4.Others (Doctors, Suppliers, Contractors, Deposit holders. Staff and Executive)Doctors Credit Loan, Secured Overdraft, Staff Loan25

Disbursement Situation of Different Types of Loan:

Particulars20052006200720082009
General Loan Disbursement39..5841.5743.8945.4848.83
Loan against Trust Receipt290.46304.32326.73348.27533.70
Payments against Documents39.4547.5463.9868.0756.53
Cash Credit (HYPO)29.931.732.5826.742.7
Consumers Credit43.5747.2335.4715.26000
House Building Loan6.3822.0134.2952.9194.027
Staff Loan9.1315.8518.4716.4419.09
Other Credit Scheme11.9813.0711.0717.0760.71

 

Classification of Loans and Advances:

The management of the institution as well as their supervising authority i.e. the Central Bank evaluates the assets of the institution keeping in view the aforesaid aspects. This evaluation at stipulated intervals is called “Classification of Advances”. It is in fact, placing all loans and advances under pre-determined different heads/ classes based on the depth of risk each and every loan has been exposed to and to bring discipline in financial sector so far risk elements concerned in credit portfolio of banks.

At present loans and advances are classified under three heads according to degree of risk element involved these are-

  1. Sub-standard
  2. Doubtful
  3. Bad

1.Substandard: A loan value of which is impaired by evidence that the borrower is unable to repay but where there is a reasonable prospect that the loan’s condition can be improved is considered as substandard.

  1. Doubtful: A loan is doubtful when its value is impaired by evidence that it is unlikely to be repaid in full but that special collection efforts might eventually result in partial recovery.
  2. Bad: A loan is considered as bad when it is very unlikely that the loan can be recovered.

Good loans are classified as un-classified loans. Naturally depth of risk is more in doubtful or bad loans than unclassified ones.

 

Recommendation

In order to get competitive advantage and to deliver quality service, top management should to modify the services.

Rectify the Existing Problems

  • As there is no classified loan, branch should monitor the loans & advances closely to avoid classification in future.
  • Dhanmondi Branch should extend with their all out effort to increase the credit portfolio and to procure more low cash deposit, increase non funded business so as to minimize dependency on interest earning from IFIC Bank general account and to improve overall business performance of the branch to maintain earning.
  • Dhanmondi Branch should set up more CC camera in the branch to hold more control of manager in the branch. It can install CC camera in accounts department and clearing department as it is an important past of the branch and it is not always possible for the manager to visit all departments which has become important.
  • Dhanmondi Branch can contact with the existing customers to make the dormant accounts operative.
  • When a joint stock company comes to open an account if it’s an existing one, the account opening officer should ask the copies of the Balance Sheet and Income Statement. These will reflect the financial growth of the company and its soundness but in practice bank do not do this. If they have all these that will help them to examine money laundering risk.
  • There are numbers of new private banks and some have already activated with their extended customer service pattern in a completely competitive market. Where as IFIC Dhanmondi branch is far behind. They are not competitive in customer service because the officers do not behave in professional manner in fort of customer. Some time they are late in there service, which ultimately disturbs the respective customer.
  • Dhanmondi branch personnel should train up about all sort of information regarding SWIFT and its service. Due to lack of proper knowledge about the operation procedures and services provided to the customers by SWIFT, certain customers are facing problem, as they have to wait for certain time to get service as there was one officer know about the procedure of SWIFT. He is not fully independent of handling SWIFT. Official training is the solution to this problem. For customer’s convenience in Foreign Exchange Department of IFIC Bank Ltd. should provide more personnel to deliver faster services to their honorable customer.
  • Now a day conventional banking concept is outmoded. Now banks are offering more ancillary services like credit card, online services and many others. IFIC Bank Ltd. should differentiate its services through adopting the modern facilities and implementing in the branch level.
  • To deliver quality service top management of this breach should try to mitigate the gap between customer’s expectation and employee’s perception and customer’s convenience should give priority.
  • Administrative cost of this branch is on the high side, which has a major impact on profitability. Te manager should bring down the administrative cost and take all effective steps, strategy and action plan to reduce the cost at the desired level.
  • IFIC Bank should always monitor the performance of its competitors in the field of Foreign Trade.
  • Without proper knowledge in different laws, rules which set by Bangladesh Bank efficiency of employees cannot be optimize. Bank can arrange training program on these subjects and can test its employees which will improve their qualities.
  • IFIC Bank Ltd. should focus on their promotional activities. They should also focus on the marketing aspects to let customers know about their products and offerings and more promotion is should be given to attract new customer.
  • IFIC Bank Ltd. must develop electronic banking system to moderate the service. Technological advantage of a bank ensuring its competitive edge in the market place which can only be achieved by improved technology, efficient manpower and better services. If bank get more market share through all these than it will reduce operating cost and generate new revenue. The bank can offer to its customer better service if all of its departments are computerized and incorporated under local area network (LAN).
  • Without using modern technology no bank can even think of remaining in the business in near future. So the bank must decide right now how it can equip its branches with modern technology. Use of modern technology in one sense can increase cost but another sense it increase higher productivity and it attract big clients. It can introduce ATM service again in all branches which will bring speed in banking services.

Bank is providing both internal and external training for the officers but bank should be scrupulous about the training facilities so that officials can implicate this in their job. People are very choosy about environment now a day, so bank premises should be well decorated and IFIC Bank Ltd. should look into the matter very seriously as well. Side by side it will give customers better felling about the bank.

 

 Implementation

Some other important factors that should be focused on the development process:

  • Time consumed at service level should be minimized at optimum level.
  • Evaluate customer’s needs from their perspective and explain logically the shortcomings.
  • Customer’s convenience should receive priority over other.
  • Improve office atmosphere to give customers better feeling.
  • Use of effective management information systems.
  • Use appropriate techniques in evaluating customer need professionally.
  • To deliver quality service top management should try to mitigate the gap between customer’s expectation and employee’s perception.

 

Comments:

  • The bank can offer to its customer better service if all of its departments are computerized and incorporated under local area network (LAN).
  • At the entry position the bank should enroll more expertise people to augment quality services.
  • Now a days-conventional banking concept is outmoded. Now banks are offering more ancillary services like credit card, on line services and many others. IFIC Bank Ltd. should differentiate its services adopting the modern facilities.
  • Bank is providing both internal and external training for the officers but bank should be scrupulous about the training facilities so that official can implicate this in their job.
  • People are very choosy about environment now a day, so bank premises should be well decorated and IFIC Bank Ltd. should look into the matter very seriously.
  • Bank should provide advances towards the true entrepreneur with reconsidering conventional system of security and collateral, moreover, the whole process should be completed within an acceptable time.

 

Conclusion

The Banking sector in any country plays an important role in economic activities. Bangladesh is no exception of that. As because it’s financial development and economic development are closely related. That is why the private commercial banks are playing significant role in this regard. This report focused on and analyzed Operational Performance of IFIC Bank Limited, Dhanmondi Branch. IFIC Bank Limited is a new bank in Bangladesh but its contribution in socio-economic prospect of Bangladesh has the greater significance. Total deposit of IFIC Branch was Tk.50017.96 million as on 31st December 2009, whereas total Loans and Advances were Tk 37793.89 million. Here we observe its deposit figure is not so strong, so the bank should take necessary action for increasing deposit promptly. IFIC attaining offer special deposit scheme with higher benefits, which is a crying need for long-term position in financial market. Because of the entrance of more banks in the financial market, deposits will be spreaded over. So it is high time to hold some permanent customers by offering special deposit scheme otherwise in future amount of deposit may come down. To strengthen the future prospect of branch, it is emergency to collect more deposit. Comparably the IFIC’s local remittance is less than the other banks because of less number of branches. IFIC should extend its branches to become a sustainable financial institution in this country. Yet last year IFIC has obtained second position in CAMEL rating. As a new branch Dhanmondi Branch of IFIC has been able to maintain its recovery position in sector-wise credit financing is up to the satisfactory level. At last it should give more emphasis in this sector to acquire more profit.