Analysis Consumer Credit Scheme Provided by Mercantile Bank
Subject: Finance | Topics:

Main purpose of this report is to analysis customer satisfaction on consumer credit scheme provided by mercantile Bank Limited. Other objectives are to know the different services provided by the Mercantile Bank and to know details about consumer credit scheme of MBL. Finally analysis the customer view whether they are satisfied or dissatisfied towards this scheme and draw SWOT analysis based on Consumer Credit Scheme.

 

Introduction

Commercial banks are the primary contributors to the economy of Bangladesh. People and the Government itself are very much dependent on the effective and efficient service provided by these banks in the financial market.

Credit divisions the heart of the banking system. It is very much related with corporate banking. Credit management is the lifeblood of managing risk in a consumer portfolio. Credit division is responsible for allowing all the credit facilities given to the potential  customers.

This report will give an over all idea about the customer satisfaction on consumer credit scheme of MBL, banana Branch, established in 1999.

 

Objectives

The objective of the first  part of the report is to familiarize with Mercantile Bank Limited, its operations and activities, the organizational structure, management style.

The report also aims at the customer satisfaction on consumer credit scheme provided by mercantile Bank Limited, Banani branch.

However the objective of the report can be categorized in to  main and specific objectives, which are illustrated below:

Main Objective

The main objective of this report is to evaluate the customer satisfaction on consumer credit scheme offered by Mercantile Bank Ltd, Bnani Branch, Dhaka.

Specific Objective

  • The specific objectives of this report are as follows:
  • To know the different services provided by the MBL
  • To know details about consumer credit scheme of MBL
  • To know the customer view whether they are satisfied or dissatisfied towards this scheme.

 

Historical Background:

Mercantile Bank Limited (MBL) was incorporated in Bangladesh as a banking company under the company acts 1913 and commenced operation on 2nd June 1999. During this short span of time, the Bank has been successful to position itself as a progressive and dynamic financial institution of the country. Numerically it is just another commercial bank one of May now operation in Bangladesh, but the founders are committed to make it a little more different and a bit special qualitatively, this bank will have a new vision to fulfill and a new goal to achieve. It will try to reach new heights for realizing its dream.

Mercantile Bank Ltd, a bank for the 21st century, it is not a mere slogan. The Bank has been nanned with talented and brilliant personnel, equipped with modern technology so as to make it most efficient to meet the challengs of 21st century.

Mercantile Bank Ltd is also committed to a performance culture where recognition, promotion and rewares are based o n invividual merti and demonstrated performance, regardless of religion, gender and age. One of its grates assets is the trust of our customers. To keep their trust we are to uphold the highest professional and ethicla standards amidst all odds of competitive environment.

As regard the second slogan of the bak Efficiency is our strength is not a mere pronouncemdnet but a part of their belief, which will inspire and guide them in their long and arduous journey ahead.

 

Operations:

The improtance of the mobilizatin of savings for the economic development of our country can hardly be over emphasized. The considers savings and deposits as lifeblood of the bank. More the deposit greater is the strength of the Bank. So they intends to launch various new savings schemes with prospect  of higher returen duly supported by a well-orchestrated system of custoemr services. Technologies such as computer ATM, Tele-communication etc. All would be harmonized and adapted to the system in order to provide round the clock and any branch services to the clients.

Travelers cheques, credits cards and other ancillary services including payment of different bills from one counter will also be introduced to achieve the ultimate goal of ONE‑STOP service to the valued customers.

The Bank would cater to the credit needs of individuals as well as corporate clients. Initially it will emphasize on trade remittance business would be given top most priority. Consumer credit is a relatively new f ield of micro credit activities. People with relatively new income con avail with this credit facility to buy any household effects including car, computer, and other consumer doorbells. Mercantile Bank Ltd. shall play a vital roll in extending the consumer credits in line with its policy of people oriented banking.

The three main operating divisions of Mercantile Bank Ltd. are as follows:

 

General Banking:

It is the most important side for a bank. Bank is nothing but a middleman between lenders (surplus sector) and borrowers (deficit sector). To provide loan, Bank needs a huge amount of money from the lenders. General banking is the side where bank offers different options to the clients to deposit (save) and remit their money. To invite the clients, bank offers different options in front of their clients. Most of these options are very much similar between the banks, but the customer services and facilities may not be the same.

Divisions of general banking in Mercantile Bank Ltd:

  • Account Opening
  • Clearing
  • Remittance

Account Opening:

There are various types of account in MBL. The assistant officer this department maintains the accounts, supplies account opening from, provides chequebook and takes care of some portion of the remittance. Basically, there are three types of account offered by MBL, these are:

  • Savings Account (5B)
  • Current Account (CA)
  • Short Term Deposit (STD)

 

Clearing:

There are two type of clearing 1) Out‑Ward Clearing 2) In‑Ward clearing. Other banks’ cheques which are submitted to MBL for collection is known as Out‑Ward Clearing Cheque. The bearer of the cheque has to have an account in MBL to clear the cheque. After submission of the cheque, the bearer has to fill up a deposit slip against the cheque, then the in charge of that department entry the information of the cheque in the log book and send the deposit slip to the computer section for computer entry. At the end of the day, the in charge make clearing slip for each cheque through computer using a customize software (NIKASH) supplied by Bangladesh Bank (BB). And f inally these cheques send to the BB clearinghouse then clearing house sends these to the different banks. It takes 48 hours to clear a cheque.

 

Remittance:

The officer of remittance department takes care of the following things:

  • Fixed Deposit Receipt (FI)R)
  • Bearer Certificate of Deposit (BC[))
  • Deposit Under Scheme (DUS)

 

Deposit Under Scheme:

MBL has already introduced various deposit schemes for the depositors.

They are described as follows;

Masik Sanchaya Prokallpa (MSP)

The behavior of saving in our country is very difficult task. MBL has introduced MSP has introduced MSP to force saving of people and to increase the saving behavior of people. Under this scheme, depositors can deposit a f ixed amount f or a f ixed term. Af ter maturity of this scheme they can get a handsome amount. MBL has designed this scheme under two categories, one for small earning depositors and other for big earning people.

 

For small earning depositors

Table. Masik Sanchaya Prokalpa (MSP)

TermInstallment Per Month And Maturity Value
Tk. 100Tk. 250Tk. 500Tk. 1000
5 yrs8280205004100082000
8 yrs163604000080000160000
10yrs2369059000118000236000

Source: Office Documents.

 

For Big Earning Depositors

Table: Masik Sanchaya Prokalpa (MSP)

TermInstallment Per Month And Maturity Value
Tk. 5000Tk. 10000Tk. 25000
5 yrs4000008000002000000
8yrs78000015600003900000
10yrs110000022000005500000

Source: Office Documents.

Masilk Munafa Prolkallpa:

In our country, people have a certain saving amount, which they utilize to earn a fixed amount so that they can bear their family maintenance. Beside, various institutions want to utilize their fund to earn a fixed amount of profit in a month. To fulfill this type of demand MBL has introduced a scheme named as Masik Munafa Prokalpa. The deposit size is multiple of Tk.

One can get 80% of loan through securing this deposit for his very need.

Example of deposit & profit

Table Masik Munafa Prokalpa

Deposit (Tk.)Profit Per Month
50000500
1000001000
50000005000

Source: Office Documents

Digun Bridhi Amanat Prokalpa:

This scheme offers one can double his amount with 6 years term. The deposit amount will be multiple of Tk. 10000. One can take 80% loan through securing this deposit.

Agrim Sanchaya Prokalpa:

Under this scheme, one can make big amount through deposit a small amount. The Bank advances 4 times of depositors amount of Tk.25, 000 or its multiple. Thereafter, Bank invests this amount under two various methods‑

  • Through creating Term Deposit in the name of depositor.
  •  Through purchasing National Saving Certificate.
  • In any method, the depositor makes a monthly installment for a fixed term.
  • After maturity he can get a big amount at a time.
  • Creating Term Deposit

Credit Department:

It is a very important department and it’s a major income side for a bank. This department mainly deals with loans and advances. There is two major part of this department:

  1. Funded Part (Providing Cash Amount to the Creditor)
  2. Non‑ Funded Part (No Cash Amount Involve)

Funded Part:

Over Draft and loan comes under this section. By taking a collateral (most of the time holding any financial instrument, like FDR, Sacchay Patra etc.) from the borrower, bank allow to take over draft facility is a continuous process (borrower can deposit and withdraw money at same time), borrower has to pay interest on the withdrawn money. Interest of credited amount is 15%.

To provide a loan, bank job is to do‑lending risk analysis. There are two types of loan;

  • Time loan (not more than one year)
  • Term loan (more than one year)

Non‑funded part:

There is no cash amount involved in this kind of loan. BLC (Bill for LIC) and bank guarantee falls in this kind of loan. In case of BLC foreign exchange department mainly deals with it.

Foreign Exchange:

This department deals with foreign currency and the transaction of it. The major job of this department are listed below:

  1. Letter of Credit (for Export and Import).
  2. Dollar / Traveler Cheque (TC) endorsement.
  3. Foreign Remittance.
  4. Foreign Currency Account.

Letter of Credit (L/C):

In case of any f oreign trade there must be a LIC procedure. As we know, there is no guaranteed relationship between importer and exporter. As a result, they use a media to secure their goods and currency. So, exporter and importer use their respective bank as a media and LIC is a legal obligation between exporter and importer. In case of import the importer have to submit necessary documents to his respective bank (the issuing bank). Most of the time MBL wants to take 50% against the LIC amount, but they allow opening LIC less than 50% depends upon relationship with the clients. After paying the amount to the paying bank (exporter bank) the issuing bank charge a percentage on the credited amount from the importer. MBL charges the amount in the following way‑.

a) For first quarter 0.50%

b) For every next quarter 0.30%.

Dollar and Traveler’s Cheque Endorsement:

MBL is an authorized dealer of American Express TIC. At the same time, they can buy and sell TIC and dollar. Every morning they get a telex from head off ice, which carries the rate of foreign currency of that day. MBL do not fix the rate by them, they use the rate of Janata Bank. At the end of each month, they submit all supportive documents and transaction condition of the whole months and balance to Bangladesh Bank and their head office

Foreign Remittance:

Foreign DO and paying or receiving any bill from foreign country is known as foreign remittance. The amount of foreign remittance is very significant in MBL.

Foreign Currency Account:

A foreigner, a wage earner working in foreign country can open this account. MBL mainly maintain Dollar account, but it is possible to open an account in other recognize foreign currency (British pound, Deutsche Mark, Franc etc.). The account holder gets a cheque book against the account and has to mention the amount in respective currency.

Other Operations:

Locker service:

The locker service of Mercantile Bank Ltd. allows the customer to keep jewelleries and valuable items in a safe and secure place and affords access to the same at convenient time. It offers complete privacy since the bank official is not permitted to know what the customer is putting inside the locker.

 

Consumer Credit

Consumer credit provides medium and short‑term for the purchase of goods and services ‑‑ mostly such expensive, durable goods as automobiles and major appliances. Home mortgages could be considered consumer credit, but as a form of long‑term debt, they are usually excluded.

Consumer Credit Analysis:

The objective of consumer credit analysis is to assess the risks associated with lending to individuals. Not surprisingly, these risks differ substantially from those of commercial loans. Most consumer loans are quite small. Because the fixed costs of servicing consumer loans are high, banks must generate substantial loan volume to reduce unit costs. This means dealing with a large number of distinct borrowers with different personalities and financial characteristics.

When evaluating loans, bankers cite the f ive Cs of credit and these are –

  • haracter,
  • Capital,
  • Capacity,
  • Conditions and
  • Collateral.

 Character:

The most important ‑ yet difficult to assess ‑‑ is character. A loan officer essentially must determine the customer’s desire to repay a loan. The only quantitative information available is the borrower’s application and credit record. If the borrower is a bank customer, the officer can examine internal information regarding the customer’s historical account relationship, if the borrower is not a current customer, the officer must solicit information from local credit bureaus or other businesses that have extended credit to the individual. The ECOA stipulates what information can be required and prohibits discrimination. It also mandates how lenders must report information to the credit reporting agencies. Bankers also rely heavily on subjective appraisals of the borrower’s character. They normally obtain personal references, verify employment, and check the accuracy of the application. This is necessary because fraud is prevalent, and it is relatively easy for an individual to disguise past behavior. If the officer determines that a potential customer is dishonest, the loan is rejected automatically.

Capital & Capacity:

Capital refers to the individual’s wealth position and is closely related to Capacity, an individual’s financial ability to meet loan payments in addition to normal living expenses and other debt obligations. For almost all consumer loans, the individual’s income serves as the primary source of repayment. A loan officer projects what income will be available after other expenses and compares this with periodic principle and interest payments on the new loan.

To assure adequate coverage, the lender often imposes minimum down payment requirements and maximum allowable debt‑service to income ratios. The loan officer verifies that the borrower’s income equals that stated on the application and assesses the stability of the income source.

Conditions:

Conditions refer to the impact of economic events on the borrower’s capacity to pay when some income sources disappear as business activity declines.

Collateral:

The importance of Collateral is in providing a secondary source of repayment. Collateral may be the asset financed by the loan, other assets owned by the individual, or the personal guarantee of a cosigner on the loan. Collateral gives a bank another source of repayment if the borrower’s income is insufficient. Normally, a loan is not approved simply because the collateral appears solid. Often the collateral disappears or deteriorates in value prior to the bank taking possession, as with a damaged or older utomobile. Finally, the bankruptcy code enables individuals to protect a wide range of assets from creditors, and it may be difficult to obtain a judgement. (Koch timothy W. & Macdonald S. Scott “Bank Management”)

Consumer Credit Policy Guidelines:

Consumer loans are extended for a variety of purposes. The most common purposes are for the purchase of automobiles, mobile homes, home improvement, furniture and appliances, and home equity loans. Before approving any loan, a lending officer requests information regarding the borrower’s employment status, periodic income, the value of assets owned, outstanding debts, personal references, and specific terms of the expenditure that generates the loan request. The officer verifies the information and assesses the borrower’s character and financial capacity to repay the loan. Because borrowers’ personal and financial characteristics differ widely, most banks have formalized lending guidelines.

Details of the IVIBL’s ‑ “Consumer Credit Scheme”

Bangladesh is one of the poorest countries of the world. Per capita income of our country is very low. So, the majority of our population is forced to live a sub‑standard life. Most of the people of middle class & fixed income groups of Bangladesh can not afford to buy house hold articles of necessity which can improve their standard of living and bring comfort in their lives by paying the price at a time, out of their own savings. To assist these people and self‑ employed persons, Mercantile Bank Ltd. has introduced the “Consumer Credit Scheme” to financially help these income groups of people to buy their required house hold articles so that they can pay the price in easy installments by availing of the facility under this scheme and also lead a comfortable life to raise their standard of living.

Consumers’ Credit Scheme is very popular in most of the developed and developing countries of the world. This is designed to finance the fixed income group for buying essential commodities to be repaid by installment over a period in accordance with country. A good number of financial institutions in our country are successfully operating similar programs.

Objectives of the Scheme:

a) Major Objectives:

  1. To bring credit services to a wide range of customers.
  2. To provide financial assistance to the limited income group towards buying utility products.
  1. To help the professionals in raising their standard of living.
  2. To participate in the socio‑economic development of the country.

b) Subsidiary Objectives:

  1. To establish a participatory economic system.
  2. To provide investment facility to the depositors of the Bank.
  1. To popularize the Bank’s products among the mass people.
  1. To develop the characteristics regarding monitory transaction of general people.
  1. To protect the defaulter culture of the country through supervising credit program.
  1. To increase the number of beneficiaries through this types of small credit program.
  2. To increase the relationship network of the Bank.

 

Findings

Introduction:

We are living in the age of globalization and information revolution. This new epoch of postmodern post‑industrial era, advancing towards the Christian third millennium, free market economy is the driving force which is reshaping the four corners of the world by bringing the different races, nations, ethnicity, colors and genders together. All kinds of barriers and borders are being shattered ‑ geographic, economic, linguistic, socio‑cultural and ideological breakdowns within the one and only humankind are no longer posing as hindrances to the common good of the most intelligent and ambitious human species. In this post Cold War era of universal freedom, economic and technological development with the objective of sustainable, environment‑friendly and humane human development, the socio‑cultural­technological living standards are reaching a level even beyond the wildest imagination of our predecessors. The most satisfying aspect of this worldwide trend lies in all encompassing nature. Gone are the days when only some nations and classes of people were privileged enough to enjoy the benefits of the latest inventions and innovations of the modernizing civilization.

Breaking the shackles of the exclusive coterie of aristocrats and oligarchs, decent and docile middle and lower middle classes are also entering into the new consumerist information age. People belonging to this hitherto neglected and deprived classes are getting access to modern consumer products like television, refrigerator, washing machine, microwave oven, computer and other home appliances.

Modern consumer credit programs of public and private financial institutions are coming forward to help the emerging professional middle and lower middle classes in joining this new economy of conspicuous consumption.

 

Main Focus of the Project:

Since the lost decade of the previous century, a third world country like Bangladesh has also entered into modern banking practices. Most privates and few public banks are playing a pioneering in this respect.

Mercantile Bank Ltd. is no exception. Its Consumer Credit Program is one of the new programs undertaken by this bank to cope with the emerging consumer oriented new economy.

The focus of this study would be to determine the level of Customer Satisfaction generated by MBL’s “Consumer Credit Scheme”.

Study of customer Satisfaction towards MBL’s Consumer Credit Scheme:

In the literary review part of this report seven basic dimensions of product / service qualities are identified. Based upon the questionnaire is made and after finished the survey I find the following things:

Status of the Customer:

At the beginning it has been tried to identify customer status. After analyzing the data followings are found

Table: Status of the Customers

StatusNumber of Customerpercentage (%)
Service holder2050
Businessman1230
Others820

 

Analysis of the occupation data shows that 50% of the respondents are service holder and it includes both government and private service holders, 30% of the total respondents are business man and rest of the 20% respondents are others and it includes retd. Army person, policeman etc.

 

Sources of Information:

Source of information is very important for a bank’s new scheme like consumer credit scheme. If the source of information is poor then a bank can not do its business strongly. Here in this case the MBL whose marketing strategy is very aggressive and its source of information by which the customer can easily get the information about the bank’s scheme and other things. Regarding the response of customer they have been asked about the media through whom they were informed about this bank. For that purpose the following table and figure are constructed.

Table: Source of information.

Source of InformationFrequencyPercentage (%)
Advertisement2460
Friends615
Employee of this bank615
Others410

Analysis of source of information data show that 60% of the respondents get information  by advertisement, 15% respondents get information from friends, 15 respondents get information from employee of this bank and rest of the 10% respondents get information from other source.

So, the above data analysis it is clears that advertisements play a vital role as source of information. Because in the very beginning when the bank first launched CCS scheme they had made advertisement   team whose work was to inform the customer that MBL has a new scheme name “Consumer Credit Scheme” and which proved very fruitful for the bank later.

 

Gross Annual Income of the Customers:

After finishing the  survey I found:

Table: Gross Annual income

Amount in TkFrequencyPercentage (%)
60,000-80,00037.5
81,000-120,000615
121,000-140,0001640
141,000-160,0001025
161,000-180,00037.5
180,000 Plus25

The data presented here show that most of the respondent’s gross annual income varies within Tk. 121,000-140,000 parameter and it is 40% 7.5% of the respondent’s gross annual income within Tk. 60,00-80,000, 15% of the respondent’s income within Tk. 81,000-120,000 25% of respondent’s annual income within Tk. 141,00-160,000 7.5% of the respondent’s income within Tk. 161,000-180,000 and 5% of the respondent’s gross annual income Tk. 180,000 plus. So from the above discussion it can be said that most of the customers are come from middle class.

 

Amount of Credit Taken:

After finishing may survey I found the followings:

Table 5.4: Amount of Credit Taken.

Amount In TkFrequencyPercentage
1,000-10,00000
11,000-30,00037.5
31,000-50,0001230
51,000-100,0002255
101,000-150,00037.5

The data presented shows 7.5% of the respondent had taken Tk. Within 11,00-30,000, 30% of the respondent say that they had taken from the bank within Tk. 31,000-50,000, the highest number of the respondent had taken credit from the bank with Tk. 512,000-100,000 and it is 55% , 7.5% of the respondent had taken credit within Tk. 101,00-150,00.

 

Reason of Choosing this bank:

Table: Amount of Credit Taken.

ReasonFrequencyPercentage
Low down payment & low monthly installment1435
Low interest rate25
Flexible Payment plan520
Easy terms and conditions1640

 

From the table and figure it has been seen that 35% of the customer have chosen this bank for the low down payment and low monthly installment. 5% of them for low interest rate, 20% of them for flexible payment plan and rest of the 40% customer have chosen this bank for easy terms and conditions.

Performance:

One dimension of product/service quality. The performance of any organization can be measured by whether the organization meets the standards like low down payment, low installment payment, low interest rate etc. It can be define as-the degree to which the consumer credit meets the standards like low down payment, low monthly installment.

Standards like low down payment, low installment payment, low interest rate etc. It can be define as-the degree to which the consumer credit meets the standards like low down payment. Low monthly installment payments, low interest rates, numbers of payments, credit ceiling etc. The degree to which officers and staff have educational credentials/professional training. Experience and award/recognition. About this question after finishing survey I found the followings:

Table : Performance

ValidFrequencyPercentage(%)
Strongly Agree1025
Agree1640
Neither Agree nor Disagree717.5
Disagree410
Strongly Disagree37.5

 

The above table and figure show that 25% of the respondents are  agree with the statement, 40% of the respondents are strongly agree with the statement, 17.5% of the respondents are neither agree nor disagree with the statement, 10% of the respondents are totally disagree and rest of the 7.5% of the respondents are disagree with the statement.

From the above table and figure (table & figure 6.6) we can be said that the performance of MBL’s (banana Branch) performance is satisfactory because most of the customer have agree with he performance question.

 

Employee Interactions:

Another dimension of product/ service quality. It can be measure by whether the management and support staffs of any organization are credible, courteous, friendly etc. It can be define as-the courtesy, friendliness, and empathy shown by the management and staff. The overall credibility of the employees, including consumer’s trust in employees and their perceptions of employee expertise.

Whether the management and support staffs of the scheme are credible, courteous, friendly and empathetic, the following table and figure constructed.

Table: Employee Interaction.

ValidFrequencyPercentage(%)
Strongly Agree615
Agree1947.5
Neither Agree nor Disagree922.5
Disagree410
Strongly Disagree25

The data presented shows 15% of the respondents are strongly agree with the statement, 7.5% of the respondents are agree with the statement, 22.5% of the respondents are neither agree nor disagree, 10% of the respondents are disagree and the rest of the 5% of the respondents are strongly disagree.

So the employee interactions of MBL’s (Banani Branch) is satisfactory because most of the respondents have agreed with the question.

Reliability:

One basic dimension of product/service quality. The consistency with which the bank provides high quality consumer credit services. The degree to which the bank’s credit program coincides with the promises made through advertisements and other promotional campaigns.

Regarding the responses of customer they have been asked about the credit scheme matches the promises made through advertisement and other

Promotional campaigns about the bank. For that purpose the following table and figure are constructed.

Table: Reliability

ValidFrequencyPercentage(%)
Strongly Agree512.5
Agree2357.5
Neither Agree nor Disagree717.5
Disagree37.5
Strongly Disagree25

The data presented (table & figure 6.8) show the highest 57.5% of the respondents are agree with the statement, 12.5% of the respondents are neither agree nor disagree, 7.5% of the respondents are neither agree nor disagree, 7.5% of the respondents are disagree and rest of the 5% are strongly disagree with the statement.

So, form the above discussion it can be say that the MBL’s (banana branch) credit scheme matches the promises made through advertisement and other promotional campaigns, because most of the respondents are agree with this statement. The MBL (banana Branch)

 

Timeliness and Convenience:

It is another dimension of product/service quality. How quickly the service is delivered or rendered. How quickly information and solutions provided Whether prompt and convenient procedures are planned and executed for the processing of the credit application and whether approval and follow-up Takes are done in a relatively convenient time frame are very important indices of customer satisfaction.

Regarding the response of customer they have asked about the scheme uses prompt and convenient procedures I n the processing. Approval and follows up tasks of credit sanctioning. For that purpose the following table and figure are constructed.

Category Frequency Percentage (%)
Excellent615
Good2357.5
Fair615
Poor512.5

Table: Timeliness and Convenience.

The above table and figure show that 15% of the respondents rated the timeliness and convenience excellent, 57.5% of the respondents rated as it is good, 15% of the respondents say it is fair and rest of the 12.5% of the respondents say it is poor.

So, the scheme uses prompt and convent procedures in the processing approval and follows up tasks of credit of sanctioning because most of the respondents say this statement is good.

 

Infrastructure and Aesthetics:

One of the basics dimensions of product / service quality. Whether the exterior and interior of the office building have enough space and other facilities, to accommodate for the customers, are to be taken into consideration. Parking lot facility, central are conditioning well decorated waiting lounge, comfortable furniture, refreshments and recreations during waiting period, security system with close-circuit video camera are some of the features that indicate the service provider cares for its customers.

Well-dressed and groomed officers and staff also attract customers.

Regarding the response of customer they have been asked about whether the employee of MBL’s (Banani Branch) is equipped with parking facility, central air conditioning, well decorated waiting lounge with lounge, etc. and for that purpose the following table and figure are constructed.

Category Frequency Percentage (%)
Excellent25
Very Good752.5
Good1015
Fair1615
Poor512.5

Table: Infrastructure and Aesthetics.

 

Overall Satisfaction:

Next question is whether the MBL’s credit scheme offers quality service and thus ensures overall customer satisfaction by attracting customers to repeat purchases and for that purpose the following table and figure are constructed.

CategoryFrequencyPercentage (%)
Strongly Agree37.5
Agree1865
Disagree915
Strongly Disagree412.5

Table: Overall Satisfaction.

 

From the above table and figure, 7.5% of the respondents are strongly agree with the statement, 65% respondents are agree, 15% respondents are disagree and rest of the 12.5% of the respondents are strongly disagree with the statement.

 

Is CCS a good scheme for the bank?

Next question is CCS a good scheme for the bank? For that purpose the following table and figure are constructed.

CategoryFrequencyPercentage (%)
Yes3280
No820

From the above table and figure we can see that 80% of the respondent say CCS is a good scheme for the bank rest of the 20% of the respondents say CCS is not a good scheme for the bank.

 

Ranking the Credit Department Regarding  Customer Relationship: 

When the customers have been asked how they rank this department regarding relationship, following result is found.

RankFrequencyPercentage (%)
Excellent1025
Good2050
Medium615
Poor410

Table : Ranking the credit department regarding customer relationship.

The above table shows that 25% have ranked the department excellent, 50% good, 15% medium and 10% poor. So, it can said that regarding customer

 

SWOT analysis 

Introduction:

SWOT analysis is an important tool for evaluating the company’ Strength, Weaknesses, Opportunities, and Threats. It helps the organization to identify how to evaluate it performance and scan the macro environmental, which in turn would help the organization to navigate in the turbulent ocean of competition. This chapter analysis to identity the strengths, weakness, opportunities and threats of the bank in respect of other leading commercial banks operating in the highly competitive banking sector. Namely Prime bank, Dhaka, Dutch Bangle bank etc.

SWOT Analysis

SWOT analysis of a financial service Firm (FSF) is the analysis of its strength, Weaknesses, Opportunities and Treats with respect to the Technology, Regulation, Interest rate risk, Customers, and capital adequacy. The author analyze SWOT of MBL (Banani Branch) individually due to their immense commonly in various respect with in their own categories.

Following is the SWOT analysis in brief of Mercantile Bank Ltd. But at the beginning it is important to know about the SWOT analysis. SWOT stands for:

S          Strength

W        Weakness

O         Opportunities

T          Threats

The strength, Weakness, Opportunities and Threats were observed during doing internship at MBL (Banani Branch) and from talking to executives, officers, employees and people as well about what other leading commercial banks are doing. These are mentioned below:

Strength:

Sponsors:

MBL has been founded by a group of eminent entrepreneurs of the country having adequate financial strength. The sponsors directors belong large industrial conglomerates of the country. Mr. Abdul Jalil, a former minister of Bangladesh Govt. Other sponsors and directors are very well known businessperson in the country.

Company Reputation:

MBL has already earned reputation in the banking industry of the country particularly among the new comers. Within a period of three years, MBL has already established affirm footing in the banking sector having tremendous growth in the profits and deposits. All these have led to earn a reputation in the banking field.

Leadership:

MBL, eminent banker Mr. Taheruddin is MD of the bank who is very well known banker and experienced banker have enabled him to give the organization sound footing and taking, MBL to new Millennium.

Top Management:

Like the MD and DME), the top management of the bank is also a major strength for the MBL and contributed heavily towards the growth and development of the bank. The top management officials all have had reputed of banking experience, skill and expertise.

Facilities and equipment:

MBL has adequate physical facilities and equipment’s to provide better service to the customers. The bank has computerized banking operations under the software called PC bank. Counting machine in the teller counter has been installed for speedy service at the cash counters. Computerized statements for the customers as well as for the internal use of the banks are also available. All the branches of MBL are equipped with telex or fax facilities.

Impressive Branches:

MBL has earned a reputation in the banking sector for establishing impressive branches. This has created a positive image in the minds of the potential customers and many people get attracted customers. The Banani branch is also impressive and is comparable to foreign banks. It is located at a unique central area, where business organizations are expected to come up rapidly.

Team works at the mid level and lower level:

At MBL’s (Banani branch) mid level and lower level management, there are often team works. Many jobs are performed in‑groups of two in order to reduce the workload and enhance the process of completion of the job. One is eager to help the other and all are devoted.

Moreover MBL has the following strengths:

  • Fastest customer service
  • Return on Assets and capital is on satisfactory level
  • On ‑ Line banking facility
  • Recruitment policy
  • Customer reliability

 

Weakness:

The study reveals that compared to other leading commercial banks in Bangladesh, MBL appears to have the following Weakness:

Advertising and Promotion:

This is a major set back for MBL and one of its weakest points. MBL is not in the limelight like other banks. Expecting the neon sign more places like business places, MBL does not seem to have display boards.

Poor Recruitment:

During its inception, recruit of staff in the lower management, as usual, was not up to the mark. As a result, services are sometimes confused. But I think they will come out from this problem in near future.

Disguised Employment:

Currently there are “Two many heads but few heads”. And this is related to the problem of reference appointment. There are people who are only drawing salaries at the end of the month but marking a minimum contribution towards the organization. On the other hand there are officers who work hard but are not appreciated accordingly.

Limitation of PC Bank:

PC bank is not comprehensive banking software. It is desirable that a more comprehensive banking system should replace PC Bank system.

More over MBL has the following weakness too:

  • Some jobs in MBL have no growth on career advancement opportunity. Therefore, lack of motivation exists in many label of the organizational structure.
  • Employees are not well trained in some cases to utilize the computerizes banking system at its maximum utility.

 

Opportunities:

Intense competition in the banking arena will obviously create some opportunities for MBL for which it has already taken some steps towards taking these opportunities out of intense competition. Those are as follows:

Diversification:

Mercantile Bank Ltd can pursue a diversification strategy in expanding its current line of business. The management can consider options of starting merchant banking or diversify in to leasing and insurance. By expanding business portfolio, MBL can reduce business risk.

ATM:

This is the fastest growing modern banking concept. MRL should lunch ATM. It can form an alliance with other contemporary banks in lunching the ATM.

Credit Card and Tele banking:

These are the new retail banking services provided by the foreign banks. MBL can evaluate the option of launching credit cards and Tele banking.

Mercantile Bank Ltd has some other opportunities and those are as follows:

  • With its proper and useful operational network, there is an opportunity for MBL to further expand its branches in many remote and now locations of the country which will deliver services to customer and earn a healthy profit for the Bank
  • As many new foreign and local commercial banks are entering into the market, there will be an opportunity for MBL to evaluate its operational performance with the quality foreign banks which will open the quality foreign banks which will ope the door for improved customer service

 

Threats:

Multinational Bank:

The rapid expansion of multinational bank poses a potential threat to the new PCB’s. due to the booming energy sector, more foreign banks are expected to operate in Bangladesh. Moreover, the already existing foreign banks such as ANZ and Standard Chartered are new pursing an aggressive branch expansion strategy. Since the foreign banks have tremendous financial strength, it will pose a threat to local banks to a certain extent in terms of grabbing the lucrative clients.

Upcoming Banks:

The upcoming private local banks can also pose a threat to the existing PCB’s. It is the expected that in the next few years more local private banks may emerge. If that happen the intensity of competition will rise further and banks will have to develop strategies to compete against a on slaughter of for foreign banks.

Contemporary Banks:

The contemporary banks of MBL like Dhaka Bank, Prime Bank, Dutch Bangla are its major rivals. They are carrying out aggressive campaign to attract lucrative corporate clients as well as big time depositors. MBL should remain vigilant about the steps taken by these banks, as these will in turn affect MBL strategies.

Some other Threats:

  • With the higher inflation rate (Over 7%), peoples buying could decrease than it was previously. So, people will stop depositing their money at the previous amount which could cause damage to MBL’ profit.
  • New banks will come up with different diversified schemes with lower interest rates to capture the market. With the help of huge capital, new banks will hire talented, young and experienced officials with higher wage for which M8L could lose its manpower.
  • Increase Govt. regulations in taxation.

 

Recommendation:

Today’s world is that of consumerism. This means that if MBL wants to survive the immensely competitive market it has top consider the needs and demands of customers, and keep on improving the existing scheme. Analysis and interpretation of the survey data, insights gained from the conducted interviews and other primary and secondary information enable us to offer some humble recommendations for consideration.

  • Most respondents rate MBL positively in all dimensions and attributes of customer satisfaction, identified and streamlined in the questionnaires, however, MBL should take more carefully thought out steps to improve their service quality. For example it may introduce 24‑Hour ATM Banking, Creclit/Debit Cards, Networking etc.
  • MBL can compare its scheme with that of its competitors and try to modify the scheme.
  • Logistic and aesthetic attributes need to be improved on a preferential basis so as to transform the bank’s present out look into a modern and state‑of ‑the ‑art dimension.
  • Dress code and hygienic standards should be improved to uphold the appearance quality of the staff.
  • To achieve the global target of CCS MBL should have to take very aggressive initiative from the beginning.
  • It will be beneficial for the bank, if much emphasis can be given regarding advertisement.
  • Employees dealing with the advances are to be more trained and efficient managing the customers.
  • Regarding internal environment, sitting arrangement may be extended for customer satisfaction.
  • Comment the bank to have the customers’ ideas and views regarding different issues may provide box.
  • MBL must pursue a shortage and effective recruitment system so that the right people are recruited at the right job.
  • MBL do not have its own training institute. The authority takes the help of BIBM to train their employees that is quite insufficient for the bank. The establishment of own training will enable the employees of the bank to provide better services to the clientele.
  • Generally consumer credit scheme is an unsecured supervisory credit scheme. If MBL wants to succeed in this scheme, they should to select potential customer.
  • MBL should properly utilize existing Management Information System.
  • Measurement of customer satisfaction can be done in four different methods. In this case only one process is employed, leaving the other three, because of limitations mentioned earlier. Obviously the scope and depth of this study become small in size correspondingly. Therefore, strong suggestion is made here that future study of customer satisfaction should include all four methods in order to be more accurate and comprehensive.

There are many defaulters in MBL and to make the recovery rate higher the Bank should concentration some particular areas. Those are describing follows:

  • Regular checking the balance of client’s 5B / CD A / Cs.
  • Regular communication with the defaulter customers and _quarantors‑ Physically / over telephone.
  • After dishonors of cheque officer should issue a letter to the customer.
  • After three overdue installments officer should contact with the employers of the defaulter customers.
  • Officer should issue legal notice to the defaulter customers and guarantors prior to classification of the loan.
  • Officer may periodically visit with the customer to maintain relationship and supervise of supplied articles.
  • Officers should have taken legal action after failing all possible to recover the Bank’s dues.

 

Conclusion:

In the banking sector of Bangladesh there was a time when people used to talk down to the Bank to meet their purpose. Due to insufficient number of bank and their branch banks used to play the monopoly behavior in the banking industry to the market. However in order to support the growing demand of more bank activities, the screniono has been changed a lot. Customers are getting better banking service. New local and multinational banks are entering into the banking sector. Therefore increased awareness and practice of marketing theory by financial institution have become a pre­condition to their survival and growth in Bangladesh.

The Mercantile Bank Ltd. has been trying to operate its business successfully in Bangladesh since 1995. MBL has already developed goodwill among its clientele by offering its excellent services through General Banking, Credit division and foreign Exchange divisions. This success has resulted from the dedication, commitment and dynamic leadership of its management over the periods.

Base upon the conducted survey, exclusive interview other primary and secondary information regarding the Study of Customer Satisfaction towards the Scheme, the following conclusion are drown.

Customer satisfaction ratings are sometimes difficult to interpret. When customers rank their satisfaction with the elements of service performance, these may vary to a large extent in how they define service/ performance delivery. Keeping this in mind, in the present study it has been tried to judge the satisfaction,& dissatisfaction through survey the customers.

At the very beginning of the study, it has been observed that, most of the customers are new and they were informed of this bank for the first tie f rom the advertisement. So it has become clear that the number of new customers are lot & the advertisement about the bank is also satisfactory.

On an overall basis this program is very popular among the middle and lower and lower‑middle classes.

People of middle‑income groups find this program very attractive because it offers them certain otherwise unavailable latitude and flexibility in down payment and monthly installment payments.

Most of the respondents show interest to purchase consumer goods like TV, freeze and computer.

Most customers choose MBL because of its relative low down payment and easy terms and conditions.

The survey shows that majority of customers are satisfied with the attributes of performance and employee interactions in MBL.

MBL’s operations and procedures are found to be timely and convenient to the majority of customers.

Its customers also judge the logistical and aesthetic attributes of MBL very positively.

A very competitive market exists for this scheme. MBL was able to get wide acceptance but if this trend goes on they might lose their market to the other emerging local Banks offering similar scheme. In order to survive in such a competitive market. MBL needs to decrease interest rate and also provide extensive promotional activities for consumer credit scheme.

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