Performance and Prospect of Basic Bank
Subject: Banking | Topics:

Main principle of this report is to analysis overall Performance and Prospect of Basic Bank Limited. In this report focus on General Banking activities, partially discussion are about Loan and Advance and Foreign Exchange related activities. Here briefly explain customer service and satisfaction level of customer and account account opening process. Finally find out some problems and suggest recommendation for improvement.

 

GENERAL BANKING

General Banking is designed to provide financial service to the general people is saving their money, smoothing transactions for businessman and ensure security of the precious wealth of the clientele. Under general banking the BASIC Bank provides offers varies kind of accounts.

ACCOUNT:

The BASIC BANK provides different types of account facilities. These accounts can be classified into three major categories as shown below:

  1. Savings Accounts
  2. Current Accounts
  3. Fixed Deposit Accounts
  4. Short Term Deposit A/C

These functions have been discussed in the latter part in a descriptive way for their better understanding.

ACCOUNT OPENING

Deposit accounts are one of the important sources of a bank’s funds. These are the liability-based products for a bank. Keeping an eye on the needs of customers and ensuring their full satisfaction, BASIC Bank is offering a full range of deposit products. These are as follows:

  1. Current Deposit Account (CD)
  2. Savings Deposit Account (SB)
  3. Short Notice Term Deposit (STD)
  4. Fixed Term Deposit (FTD)

A concise discussion is given below for better understanding of these deposit schemes:

Current Deposit Account (CD)

It is generally non-interest bearing account in which frequent transactions are allowed. Minimum balance is required to open this account. An initial deposit of Tk. 25000.00 is required to open the account and maintain as minimum balance. This amount may be reduced at the discretion of the bank. There is no limit on transactions or withdrawals of amount.

Who Can Open Current Account?

  1. Any adult individual in single or in joint names.
  2. Proprietorship or Partnership Firms.
  3. Private and Public Limited Companies.
  4. Government, Semi-Government, Autonomous Bodies and Sector Corporations.
  5. Club, Societies, Associations and NGOs.

 

Requirements for Opening Current Account:

For Individuals-

  1. Appropriate account opening form
  2. Two photographs each attested by the introducer.
  3. Disclosure of nominee
  4. Nationally Certificate
  5. National Identity Card
  6. TIN Certificate (if any).

For Proprietorship and Partnership-

  • Appropriate account opening form
  • Two photographs of proprietor/partner each attested by the introducer
  • Disclosure of nominee
  • Nationally Certificate
  • TIN Certificate
  • Valid Trade License and Partnership deed (for partnership firm).

For Private and Public Limited Companies-

  • Certified copy of Memorandum and Articles of Association
  • Certificate of Incorporation
  • Certificate of Commencement of business (in case of public limited company)
  • A resolution of the Board of Directors of the company to open and operate the account.
  • Two photographs of each directors who are authorized to operate the account.

For Club, Societies, Associations and NGOs

  1. Two photographs of each of the authorized account operators
  2. Decision/ Resolution of the competent authority to open and operate the account
  3. Registration from the respective departments of the government
  4. Up to date copy of Laws, By-Laws.

 

Savings Deposit Account (SB)

This is another form of account, which is of interest bearing and in which account transactions is limited as per guidelines of the bank. Other requirements are the same as the current deposit account. A depositor may deposit money as often as he wishes. A minimum balance is to be maintained at all time, which is of Tk.1, 000.00 and an initial deposit of Tk.2, 000.00 is required to open the account. BASIC Bank may close the account without notice if minimum balance is not maintained. At present 7.00% interest per annum on monthly balance is paid. An account holder is not entitled to withdraw more than twice a week.

For opening of this type of account, formalities are of the same as they are for the current deposit account.

 

Short Notice Term Deposit (STD)

Those publics stated earlier in the Current Deposit Account section are eligible to open and requirements for opening the account are those stated in case of Current and Savings Accounts. Initial deposit is Tk. 10,000.00 and so is the minimum balance. Both may be relaxed at the discretion of the Bank. At present 4.50% interest p.a. is paid on daily product basis and is credited in June and December each year. The holder of STD must make the bank know 7 days before withdrawal.

 

Fixed Deposit (FD)

The bank accepts Fixed Deposit at attractive rates of interest depending on its term for a minimum period of three months and minimum amount of Tk. 10000.00 and there is no maximum limit. Interest is paid on maturity of FD. Those publics stated earlier in the Current Deposit Account section are eligible to open FD.

 

Interest Rates on FD

At present rate of interest on FD is as under

 Period/ TermRate of Interest
A3 months or above7.25% p.a.
B6 months or above7.50% p.a.
C12 months or above8.00% p.a.
D24 months or above8.25% p.a.


CASH AND CHEQUE

Cash Function

Cash is an important section in General Banking. The function of cash is to receive deposits from the clients and to make payment by cheque and other instruments. In Cash section of the BASIC Bank, there are two limits in case of amount keeping. They are-

  • Counter Limit
  • Vault Limit

The maximum amount of Counter Limit is Tk. 20 lac, that is, in the counter the maximum amount of money to be kept is Tk. 20 lac, not exceed of that amount, whereas the maximum amount of Vault Limit is Tk. 30 lac. Any amount exceed of the counter limit must be shifted to the vault. If the amount exceeds Tk. 30 lac (which is excess of the vault limit), the excess amount is shifted in the feeding branch (Agrabad Branch) and the feeding branch shifts the amount to Bangladesh Bank at the time of closing cash.

 

Cheque Function

  1. It is an instrument that must be presented in writing not orally.
  2. A cheque is an unconditional order to pay and is not a request. A cheque is payable only on demand.
  3. A cheque is always drawn on a particular banker where the name and address of the banker is clearly printed on the cheque leaf itself.
  4. It must be made payable to the order of a certain specified person or to his agent or the bearer thereof.
  5. A cheque is usually drawn for a definite sum of money.
  6. A cheque must be signed by the drawer in whose name the account is kept or his authorized agent.

 

Facts to Be Considered Before Honoring a Cheque

Before honoring a Cheque, a bank must pay attention to the following things:

  1. Whether the cheque is duly filled or not, i.e. having valid date, account number, conformity in amount written in words and numeric values, signature etc.
  2. If the cheque is torn into pieces or cancelled or mutilated or distorted anyhow, then, the paying banker may dishonor the cheque or return it for drawer’s confirmation for payment.
  3. Whether the cheque is an open or crossed cheque. If it is an open one, the payment may be made at the counter. If it is crossed, the payment must be specifically made to the banker, in whose favor it has been crossed.
  4. Whether the cheque is drawn on the branch where the account is kept.
  5. The paying banker should also note whether the cheque is presented during the banking hours on a business day.

If all these things are okay, then the banker verifies the account holder’s account to see whether s/he is having sufficient balance, consistency in signature etc. Upon fulfillment of the above conditions, the banker then goes for other formalities to make payment to the bearer.

 

Return of a Cheque

Despite proper presentation of a cheque, a bank may return it if-

  1. “Garnishee Order”-an order from the court is imposed over specific account transactions.
  2. Death of the account older before due date of the account holder.

Other Reasons to Dishonor a Cheque

  1. Outdated or expired cheques
  2. Post-dated cheques
  3. Insufficient balance
  4. Difference in Signatures
  5. Cross cheques presented for cash
  6. Not duly authenticated
  7. Difference in amount and figure
  8. Not arrange for
  9. Effect not cleared, may be presented.
  10. Clearing stamp required
  11. Cheque crossed ‘Account, Pay only’
  12. Payment in due course

 

Issuance of Cheque Books to Account Holders

While opening account, a cheque book is issued to a customer. For issuance of cheque book, the cheque requisition slip is to be duly filled in and signature of the customer is to be obtained on it. All subsequent cheque books shall be issued against the requisition slip extracted from a previous cheque book issued to him. Before issuing a cheque book to a customer the requisition slip is to sent to the ledger keeper to ascertain –

  • The account number,
  • The average balance.
  • The manner in which the account is operated on,
  • Whether cheque book issued previously have been properly consumed,
  • The cheques are not frequently returned due to inadequate balance,
  • It is not dormant account,
  • The payment of cheque is not frequently stopped.

 

CLEARING HOUSE AND ITS FUNCTION

The BASIC function of a commercial bank is to collect cheques, drafts etc on behalf of its customer. Clearing Department performs this function. Clearing House is an institution for mutual settlement of various instruments in presence of various representatives of various banks at the appointed time and place to meet the claims made in among member banks. The net amount payable or receivable as the case may be, is settled through an account kept with the Controlling Bank (Bangladesh Bank/Sonali Bank). BASIC Bank Agrabad Branch is the representative of BASIC Bank in Bangladesh Bank for Chittagong zone.

Types of Clearing

Outward Clearing

When a particular branch receives instruments drawn on the other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch. This branch is known as Collecting Branch.

Inward Clearing

When a particular branch receives instruments, which are on themselves and sent by other member bank for collection is treated as Inward Clearing of that branch. This branch is known as Paying Branch.[5]

 

Types of Return

Outward Return

Clearing Outward Returns include those cheques that were presented to this bank by other banks but this bank has to return them unpaid to the collecting banks due to various reasons.

Inward Return

Clearing Inward Return consists of those instruments which were presented by this bank to other banks for payment but have been returned and unpaid by them due to specified reason through the clearing house.

 

Bank-To-Bank Clearing Through Bangladesh Bank

In the clearing house, the representatives of the respective banks receives those cheques that are drawn on them by other banks and places those cheques to the representatives of other banks that are provided by their clients for collections. As the BASIC Agrabad branch is the member of the clearing house, they receive and place the clearing cheques on behalf of the other branches in the Chittagong zone. The cheques that are drawn on them are verified according to rules by the respective branches and passed subject to having sufficient balance, proper submission of cheques (duly and neatly filled, conformity in the amount and figures, signatures, properly endorsed, special crossing, authentication etc.). If the cheques are passed, then payment is made through the member branch, which in turn makes payments through Bangladesh Bank. If the cheques are not passed, then they are sent to the member branch for retuning them to the representatives of those respective banks.

 

Inter Branch Transaction

It means transactions within the branches of a particular bank, i.e. the branches of the BASIC Bank. In this case, IBDA (Inter Branch Debit Advice) and IBCA (Inter Branch Credit Advice) are issued. For instance, if BASIC Bank CEPZ Branch gets money from any branch of the same bank, to get the money it will issue IBDA. If the reverse thing occurs, that is, other branches of BASIC Bank get money from the CEPZ branch, and then IBCA is issued by CEPZ branch. In this case, the branch that issues IBDA/IBCA upon other branches, that is the originating branch and the branch that responds to that instrument is the responding branch.

Outward Branch Transaction

Outward Branch Transaction means transactions with other bank’s branches. These transactions are made through DD, TT, PO or other instruments. All the transactions made in this process are to be kept in a register named OBCR (Outward Bill Collection Register). The procedure of transactions is the same but subject to collection charges. If the transactions held within the city area then no collection charge is imposed whereas outside city area transaction is subject to collection charges.

 

REMITTANCE

Another important part of General Banking is Remittance. The function of Remittance is to issue and remit the D.D., T.T., P.O. etc. according to their nature. Remittance is of two types according to its nature.

  • Inward Remittance
  • Outward Remittance

These are discussed in a nutshell below:

Inward Remittance

If a client of a bank purchases any instrument such as DD, TT, PO etc. from it, these types of purchasing is called Inward Remittance from the Bank’s perspective.

Outward Remittance

If these instruments mentioned above are collected through branches then they are called Outward Remittance. The instruments that have been transacted here are discussed one-by-one below:

Demand Draft (D.D)

A Demand Draft is an order to pay money drawn by one office of the Bank upon other to the same Bank for a sum of money payable to order on demand. The DD is applicable for making payment outside city area. The banker even on receiving instructions from the purchaser cannot stop the payment of the DD. Once the DD is purchased and delivered to the payee, it acquires a right in the instrument, which cannot set aside by the stop payment order by the purchaser.

BASIC Features of DD

  1. It must be payable on demand.
  2. It must be drawn by one office/branch of a bank upon another office/branch of the same bank.
  3. Payment is to be made to the person whose name is mentioned therein or according to his order and
  4. Satisfy the conditions of a negotiable instrument.

Issuance of Demand Draft requires –

  1. Application in prescribed form
  2. Cash deposit or Cheque received from the customer for the purpose of DD with commission and telegram charges
  3. Preparing DD with clear hand writing in the proper DD-Block, making entry into DD Issuing Register (branch-wise) and inserting the serial number beside printed number
  4. Writing printed and serial number of DD on the application,
  5. Writing the amount on DD with Protectograph
  6. Applying test key
  7. Checking and signature by two authorized officials
  8. Hand over to customer after due acknowledgement
  9. Issuing Cost Memo (if customer desires)
  10. Preparing and sending Credit Advice for Paying Branch (drawee) and checking and signature by two authorized officials.

Payment of Demand Draft

  1. Check the DD and verify signatures and ensure that the DD is not reported lost by the purchaser,
  2. Verification of Test, if agreed ok, otherwise ask for repetition,
  3. Posting in B/P: DD payable or DD paid W/A,
  4. Ensure proper identification of payee, if payment make over the counter and advice not reached,
  5. Cancellation of DD
  6. If it is presented through a bank, proper endorsement should be ensured.

 

 

 

Cancellation of DD

  1. Application with the instrument,
  2. Signature verification
  3. Ensure DD not delivered to the Payee, if so, consent or discharge to be required,
  4. Confirmation about duplicate issue,
  5. Obtain cancellation charge,
  6. Notes in the DD issue register and application form,
  7. Cancellation of Instrument and attached to the debit voucher (if any).

 

Foreign Exchange:

Foreign Exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country.

In accordance with banks, Foreign exchange refers to the general mechanism by which a bank converts currency of one country into that of another. Foreign trade gives rise to foreign exchange. Foreign trade is transacted either in the currency of the exporter’s country or that of the importer’s country or that of a third country acceptable to both the exporter and the importer.

Foreign Exchange department is divided into two parts. The first part is the export department and the second is the import department.

Fundamentals of Foreign Exchange

There are 3 fundamental aspects of the general mechanism of Foreign Exchange:

  1. Every country has its own currency-legal tender/distinctive unit of account.
  2. Banks by bookkeeping entry carried out in the two centers concerned effect the conversion of one currency into another.
  3. These exchanges are affected by means of credit instruments viz. Draft, Mail Transfer, Telegraphic Transfer etc.

Exchange Control

Whenever a country faces a mounting pressure on its balance of payments position, it may impose various forms of restrictions or controls on payments and receipts in foreign exchange and also on the imports and exports of goods and services.

The objectives of exchange control are-

  1. To ensure that the receipts from exports of goods and services from Bangladesh are: surrendered to a central pool.
  2. To oversee use of foreign exchange resources in accordance with priorities determined by the government.

 

EXPORT

When any organization wants to export any product to other country than that particular organization usually opens an export L/C from this department.

Foreign exchange Operation: (Export financing)

Export means any person lawfully exporting goods from Bangladesh to any other country after shipment the exporter has to tender the documents to the Bank within the stipulated period for the negotiation of the documents are drawn under a letter of Credit. If require, finance the duty drawback and cash compensatory support claims of the exporter.

Packing credit means any loan or advance grated or any other credit provided by an institution to the exporter for financing the purchase, processing or packaging or goods on the basis of L/C.

Duty Draw Back:

An export of manufactured products is entitled to draw back the value customer’s duties, sales tax etc. already paid on the importation of raw material in the production or manufacture of the products.

  1. Export Credit Guarantee Scheme
  2. Confessional Rate of Import Duty
  3. Income Tax Rebate
  4. Retention Quota
  5. Traveling Facilities.

Export Formalities

There is certain formalities involved exporting such as maintaining the books register, L/C checking etc.

1) Procedure of Registration of Exporter.

2) Books and Register/ Ledger required for export

3) B.B.Bill checking/ Lodgments.

4) Export document checking and negotiation/ collection basis

5) Pre- shipment financing

6) Disposal of EXP forms

7) Export Incentives

8) Disputes and settlement of Export claim.

 

Procedure for obtaining Export Registration Certificate (ERC)

For obtaining export registration certificate form CCI & E, the following documents are required.

1) Application form

2) Nationality Certificate

3) Partnership deed (registered)

4) Memorandum & Article of Association and Incorporation Certificate

5) Bank Certificate

6) Valid Trade License

7) Copy of rent of the business firm.

 

Preparation of Export Documents

1) Bill of Exchange or Draft

2) Commercial Invoice

3) Bill of Lading

4) Inspection Certificate

5) Packing list

6) Export License

7) Shipment Advice

8) Certificate of Origin

9) Weight Certificate

10) EXP form

11) DHL Courier Receipt

 

Export Documents Checking:

General Verification:

a) L/C registers or not

b) Exporters submitted documents before expiry date of the credit

c) Shortage of documents etc.

 

Sanction of Pre- Shipment:

The part is to apply the Bank. On receipt of the application Pre- shipment, section will start security of the application.

  1. Type of pre-shipment: whether clean/pledge/ hypothecation of goods.
  1. Whether the investment is within Bangladesh Bank credit restriction.
  2. What is the purpose of the investment?
  3. Whether the goods specified for finance is eligible for export under control rule.
  4. How the PSI A/C will be adjusted.
  5. Disbursement
  6. Execution of documents
  7. Lien mark on Master L/C

 

IMPORT:

When any organization wants to import any product other country than the particular organization usually opens an import L/C from this department.

Import of goods by letter of Credit:

A letter of credit is a conditional Bank Undertaking of Payment. Credit is a letter form the importer Banker to the exporter that the bills if drawn as per terms and conditions are complied with will be honored on presentation.

Following papers are to be submitted by the importer before opening of the L/C

a) Trade license

b) Import Registration Certificate.

c) Income Tax Declaration with TIN

d) Membership Certificate

e) Memorandum of Article

f) Registered Deed

g) Resolution

h) Photographs

i) VAT Registration.

Bank will supply the following papers/documents before opening of the L/C:

a) L/C application

b) LCAF

c) IMP

d) TM Form

e) Charge Documents

f) Guarantee Form

The above papers /documents must be completed dully filled and signed by the party and to be verified the signature.

 

Checking of Documents:

Before lodgment, documents must be checked with L/C file. Check-up as under.

a) Invoice

b) Bill of lading

c) Draft

d) Bank forwarding date

 

Lodgment of the Document:

Documents must be lodged within 7 days and examine the same whether document in order or not.

The exporters of Bangladesh follow the whole procedure. Necessary papers that the exporter sends with the shipment are:

a) Commercial Invoice

b) Packing list

c) Bill of Leading

d) Certificate of original goods

e) Weight and measurement list

f) Other paper that the importer asked

 

Letter of Credit (L/C):

L/C is the most important thing for doing any sort of foreign business. There is no guaranteed relation between importer and exporter. As a result they use a media to secure their goods and currency. So, exporter and importers use their respective banks as a media and L/C is a legal obligation between the exporter and importer. It is necessary to fill up following forms.

a) LCF form

b) Application and agreement for confirmed irrevocable without resource to drawer’s letter of credit

c) Letter of credit authorization form

d) Form of IMP (importer) and EXP (exporter)

 

Classification of L/C

  1. Revocable L/C
  2. Irrevocable L/C
  3. Transferable L/C
  4. Confirmed and Unconfirmed L/C
  5. Non-revolving L/C
  6. Revolving L/C

 

Explain below:

Revocable L/C

This type of credit can be revoked or cancel at any time without the consent of, or notice of the beneficiary. A revocable credit may be amended or cancelled by the issuing bank at any moment and without prior notice to the Beneficiary.

Irrevocable L/C:

The Irrevocable credit is a commonly used type of documentary credit. The credits which can not be revoked varied or change/amended without the consent of all parties- buyer (applicant), seller (Beneficiary) Issuing Bank and confirming Bank (in case of confirmed LC).

Transferable L/C:

The Original beneficiary when request the banker in writing to effect transfer the L/C to the secondary beneficiary, the signature of the original beneficiary on the letter of request must be verified by his banker. The L/C can be transferred only the terms and conditions specified in the original credit.

Confirmed and Unconfirmed L/C:

A confirmed credit is one that has been confirmed by the advising bank. The bank issuing the credit sends the credit through his branch or correspondent bank located in the beneficiary’s country with a request to add its confirmation to the credit. If the advising bank adds its confirmation to the credit, it becomes a confirming bank and the credit is a confirmed credit. Confirmation constitutes a definite and legal undertaking on the part of the confirming bank that it will duly honor the payment or acceptance, as the case may be, on presentation of the stipulated documents provided the terms and conditions of the credit are satisfied.

Non-revolving L/C:

A Non-revolving Credit is one in which the limit is reduced permanently to the extent of bills drawn under the credit. In this case, both the amount and the period of availability are fixed, and when either the time is expired or the amount is exhausted the facility comes to an end.

Revolving L/C:

Banks to fulfill the special requirements of the importers who require regular and continuous payments to their suppliers issue Revolving Credits.

 

Back-to-Back Letter of Credit:

Under this arrangement the bank finances export business by opening a letter of credit on behalf of the exporter who has received a letter of credit form the overseas buyer but is not the actual manufacturer of producer of the exportable goods. The letter of credit opened in favor of the actual producer or supplier within or outside the country. Since the second letter of credit is opened on the strength of and backed by another letter of credit it is called “Back to Back” credit. The back-to-back letter of credit must conform to the terms and conditions of the original letter of credit with the following exceptions:

  1. Name of the original beneficiary shall be substituted by that of the actual supplier.
  2. The credit amount shall normally be lower than that of the original letter of credit.
  3. The back to back letter of credit shall be made valid for shipment and negotiation prior to expiry of the corresponding date.

 

Processing and opening of BTB L/C

An exporter desired to have an import L/C limit under Back to Back arrangement. In that case the following papers & documents are required:

a) Full particulars of bank account.

b) Balance Sheet

c) Statement of Assets & liability.

d) Trade License.

e) Valid Bonded Warehouse License

f) Membership Certificate

g) Income Tax Declaration

h) Memorandum of Article

i) Partnership Deed.

j) Resolution

k) Photographs of all Directors.

On receipt of above documents and papers the Bank to Back L/C opening section will prepare a credit report. Branch must obtain sanction from Head office for opening Back-to-Back L/C.

 

General loan & Advances of the Bank is furnished as under:

Short term advances

  • Loan against foreign bills (clean)
  • Loan against Foreign bills (Documentary)
  • Loan against packing credit
  • Payment against documents
  • Loan against trust receipts
  • Loan against imported merchandise
  • Cash credit against goods

Other Advances

  • Temporary overdrafts
  • Overdraft clean (Under Limit)
  • Overdraft secured (Bonds & Shares)
  • Overdraft secured mortgages
  • Overdraft secured (Other securities)

Loan general

  • Term loan (Small Industries)
  • Loan secured (Bonds & Shares)
  • Loan secured (Other securities)
  • Other advance

 

Short Term Advances:

  1. Loan against foreign bills (Clean)

This type of loan provides against foreign Drafts/Mail Transfer/Payment order for a short period.

  1. Loan against foreign bills (Documentary)

This type of loans provides against foreign bills under L/Cs.

  1. Loan against packing credit (PC)

This type of loans provides to the exporters to process, pack and ship the goods.

  1. Payment against document (PAD)

The Bank which establishes the L/C is bound to honor it is commitment to pay for import bills when these are presented for payment, if drawn strictly in terms of letter of credit. The foreign correspondent who negotiates the documents, debits the account of the opening bank. The opening Bank lodge the shipping documents in their books and response to the debit advice originated by foreign correspondent to the debit of payment against documents (PAD) A/c.

  1. Loan against trust receipt

A form of advance where the bank delivers the import documents with out receiving payment against a receipt giving by the importer to pay the bank’s dues within a stipulated time limit. Generally this type of loan provides to most valuable clients whose are financially sound and solvent and socially renowned.

  1. Loan against imported merchandise

Loan against imported merchandise (LIM) is also connected with import facility. As per pre-arrangement or under forced situation when the client is unable to realize the L/C documents, Bank may clear the imported goods from customs and store it in Bank’s godown. LIM is given for maximum 120 days within which client has to adjust the liabilities and take delivery of the imported goods from Bank’s custody.The LIM amount consists of the outstanding import liabilities (Demand loan, BLc) and at time also is inclusive of duty sales tax etc.

  1. Cash credit against goods

Cash credit is the main method of lending by Banks. Under the system, the banker specifies a limit, called the cash credit limit, for each customer, up to which the customer is permitted to borrow against the security of tangible assets or guarantees. The customer with draws from his cash credit account as and when he needs the funds and deposits any amount of money, which he finds surplus with him on any day. The cash credit is thus an active and running account to which deposits and with drawls may be affected frequently.

 

Cash credit systems classified in to 2(Two) are as under:

  1. Cash credit (Hypothecation); and
  2. Cash credit (Pledge).

Cash credit (Hypothecation):

Advances allowed against hypothecation of goods kept under borrower’s control. Such advance is, generally collaterally secured by mortgage of properties.

Cash credit (Pledge)

Cash credits secured by pledge of goods kept under Bank’s Control stored in Bank’s/Party’s godown.

CC(hypo)CC(Pledge)
The stocks of goods are under the control of borrower.1The stocks of goods are under the control of lending Bank.
For this ‘letter of hypothecation’ is obtained from the borrower.2For this ‘letter of pledge’ is obtained form the borrower.
Borrowers have to submit stock report on monthly basis to the lending Bank.3Bank maintains pledge register, stock reports not requires to submit.
Incase of CC (hypo) Bank obtained sufficient collateral security for covering loan risk.4Incase of CC (Pledge) Bank takes other collateral security if available in the hand of borrower.

 

CONCLUSION

The Bangladesh Small Industries and Commerce Bank Limited (BASIC) is a Promising Commercial bank in Bangladesh. There are lots of local branch in Bangladesh. In this competitive market Bangladesh Small Industries and Commerce Bank Ltd has to compete not only with the other commercial bank but also with the public bank. According to the CAMEL rating the BASIC Bank Ltd holds the Leading Position in Bangladesh (2004) .I think this report may show a guideline for BASIC for its future Planning and for its successful operation to achieve its goal in the environment of the competitive environment prevailing in the country now.

Bangladesh Small Industries and Commerce Bank Ltd (BASIC) are more capable of contributing towards economic development as compared with foreign bank.

Bangladesh Small Industries and Commerce Bank Ltd (BASIC) registered under the Companies Act 1913 on the 2nd of August 1988, started its operation from the 21st of January 1989.It is government by the banking companies Act 1991. At the onset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percentage shares and the government of Bangladesh (GOB) with the remaining 30-percentage share.

 

 

RECOMMENDATION

BASIC Bank Limited always contributes a sustainable growth in the economic development throughout the country for its special attention towards financing small and medium scale Industry of the country. However Bank should have appropriate marketing strategies to penetrate into different targets group of market. Here the following recommendation is embedded with:-

  • Bank should undertake a policy for small deposits which ultimately enable small depositors to enhance their savings habits.
  • The rate(s) of Deposit of different nature should immediately increase to secure private Deposits and also to sustain existing deposit position
  • Bank should have a specific guideline to launch new innovative and IT based products such Auto Loan, Consumer Credit, Personal Loan, ATM & Debit & credit card facilities On Line facilities etc
  • A policy for establishing Regional based Research and Marketing unit must be calked-out.
  • Societal marketing program must be undertaken for direct contribution towards Education, Health and other infra-structural development of the country.
  • Net-work of this bank should be very extensive in sub-urban and rural areas for direct contribution towards producer of Agro-products, cultivators and other entrepreneur etc.
  • From above all information and analysis, we can comment that the BASIC BANK CEPZ branch thoroughly an effective and efficient branch for it glorious performance. So it is a potential and prospective branch in BASIC BANK LTD.

 

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