An Overview of the Trust Bank Limited

Introduction

Financial institutions are investment intermediaries linking the savers and users of fund. These intermediaries are interposed between the ultimate borrowers and lenders permitting them efficient transfer of funds. Individuals having surplus funds can lend them for reasonable return to entrepreneurs who need funds to take the advantage of economically and financially viable investment opportunities. The existence of financial institutions facilitates such exchange of resources. As a result, both the borrowers and lenders are better off than they would have been without financial institutions and market intermediaries. Thus, these financial institutions, such as banks, have a positive role in financing and investment which is a multidimensional process involving the complexity of many interrelated and interdependent factors of diversified nature. It is difficult to assess the contribution of each factor independently.

The key to successful banking lays in the ability of balance many activities simultaneously. The bank must maintain a healthy growth rate, while at the same time it must take action to minimize the risks it faces. The bank must also maintain enough cash on hand to meet obligations. All of these are related to sound performance of a bank. Evaluating Bank Performance, examines the basic risk and return features of commercial banks. The financial performance evaluation demonstrates the strengths and weaknesses of bank performance over time. The Trust Bank Ltd. has a responsibility to ensure efficient and effective banking operation in a sound manner. The study will look at the amount of liquidity that TBL has available to meet any reasonable demands that might have to meet, how it manages asset/liability, Foreign exchange Operation, what is the position in terms of profitability and how the bank manages its capital so that it has sufficient funds to remain solvent. This study is an attempt to the in-depth analysis of the Foreign Exchange performance of The Trust Bank Ltd.

Origin of the report:  

Now a day, education is not just limited to books and classrooms. In today’s world, education is the tool to understand the real world and apply knowledge for the betterment of the society as well as business. From education the theoretical knowledge is obtained from courses of study, which is only the half way of the subject matter. Practical knowledge has no alternative. The perfect coordination between theory and practice is of paramount importance in the context of the modern business world in order to resolve the dichotomy between these two areas. Therefore, an opportunity is offered by Shaikh Burhanuddin Post Graduate College Dhaka, for its potential business graduates to get three months practical experience, which is known is as “Internship Program”.  For the competition of this internship program, the author of the study was placed in a bank namely, “The Trust Bank Limited”. Internship Program brings a student closer to the real life situation and thereby helps to launch a career with some prior experience.

This paper is titled “Foreign Exchange Operations and Performance Evaluation of the Trust Bank Limited” originated from the fulfillment of the BBA program. For the internship program, each student is attached with an organization. My internship was at The Trust Bank Ltd., Dhanmondi Branch, Dhaka. During my internship, I had to prepare a report under the supervision of Nazmun Nahar Shanta, Lecturer, BBA Program, Shaikh Burhanuddin Post Graduate College Dhaka.

Objectives of the Study:

The main objectives of this study is to familiarize with overall activities of the Foreign Exchange division & Transaction procedures maintained by TBL, to analyze the Foreign Exchange Transaction procedures and observe & evaluate Foreign Exchange activities & performance, identify problems & recommend suggestions for the successful Foreign Exchange Operations of the Trust Bank Ltd and lastly to present an over view of The Trust Bank Ltd.

Methodology:

For preparing this paper, I used both Secondary and Primary data.

 Collection of Primary Data:

Many of the data and information were collected from my practical experience and queries from the executives while doing my internship at The Trust Bank Ltd. Information and data regarding Overview of the TBL, interest rates & charges, Foreign Exchange operations, performance measurement in Import & export, SWOT Analysis, Foreign Exchange policies etc. were collected from this sources.

 Collection of Secondary Data:

Data regarding the Foreign exchange operations and Performance Evaluation of The Trust Bank Ltd. were collected from secondary sources like: Annual Reports, Brochures, Manuals and Publication of The Trust Bank Ltd., Bangladesh Bank Library, BIBM Library, DSE Library, News paper etc. were the major sources of secondary date.

 Scope of the Study:

My decision and analysis are done based on the practices applied at Trust Bank Limited. The study was wide spread and has greater scope to focus on different aspect of foreign exchange on banking sector but my study probably will not reflect the practices in the overall banking sector. Moreover, it does not include the foreign exchange practices done by the non-banking financial organizations.

 Limitation of the study:

The main problem faced in preparing the paper was the inadequacy and lack of availability of required data. This report is an overall view of Foreign Exchange Operations of The Trust Bank Ltd. But there is some limitation for preparing this report. These barriers, which hinder my work, are as follows:

  Difficulty in accessing latest data of internal operations.

  Non-availability of some preceding and latest data.

  Some information was withheld to retain the confidentiality of the bank.

  I was placed to this department for only 3 months of time and working like a regular employee hindered the opportunity to put the better effort for the study.

With all of this limitation I tried my best to make this report as best as possible. So readers are requested to consider these limitations while reading and justifying any part of my study.

An over view of The Trust Bank Limited

The Trust Bank limited (TBL), a private commercial bank sponsored by the Bangladesh Army Welfare Trust, started its operations in November 29, 1999. They gained success from the very beginning of their operation and were capable enough to hold the success year after year. They gained success very early because they have a very strong backup to provide them financial support and they are the Army Welfare Trust. This bank is very much popular within the army community because all the financial activities of the army done by this bank. In a recent days the Trust Bank Ltd also gaining popularity in the general people and also for the business people.

In addition to ensuring quality customer services related to general banking the bank also deals in Foreign Exchange transactions. In the mean time the bank has extended credit facilities to almost all the sector of the country’s economy. The bank has plans to invest extensively in the country’s industrial and agricultural sectors in the coming days.

It has also plans to promote the agro-based industries of the country. The bank has already participated in syndicated loan agreement with other banks to promote textile sectors of the country. Such participation would continue in the future for greater interest of the overall economy. Keeping in mind the client’s financial and banking needs the bank is engaged in constantly improving its services to the clients and launching new and innovative products to provide better services towards fulfillment of growing demands of its customers.

The authorized capital of the bank is Tk. 2004 million. The Army Welfare Trust (AWT) is the major shareholder bearing 51% share. Total shareholders’ equity at the end of December 2011 stood at Tk. 2,154.29 million, where Paid-up capital is Tk. 1,166.67 million, statutory reserve is Tk 330.63 million and Retained Earnings is Tk. 362.25 million. The Paid- up capital is indicative of the face value of 5, 00,000 ordinary shares of Tk. 1,000/-each fully subscribed by the shareholders.

Philosophy of the TBL

At present the bank has as many as 36 branches across the country and it is committed to become equal service providers compatible with the norms of commercial schedule bank. It renders all types of personal, commercial and corporate banking services to its customers within the purview of the Bank Companies Act, 1991 and in line with the directives and policy guidelines lay down by Bangladesh bank.

 Objective of the Bank

The Trust Bank Limited has been established with the objective of providing efficient and innovative banking services to the people of all sections of our society. One of the notable strengths of this bank is that it is backed by the disciplined and strongest Institution of Bangladesh i.e. Bangladesh Army and there is a synergy of welfare and profits in the dynamics of this institution. Bank is service-oriented industry and we on our part are committed to ensure customized Qualitative and hassle free services in our banking operations along with the focus to broaden the clientele base. The bank has extensively in the country’s industrial and agricultural sectors in the coming days. The bank is committed to contribute as such as possible within its limitations for the economic growth and for ensuring value of its available resources.

Corporate Information of TBL

The following Table Shows the Corporate Information of TBL:

Source: Bangladesh Bank Annual Report

 Performance of the TBL

TBL a blend of expertise and technological excellence is in place to meet varied needs of modern customers. The bank aims at mobilizing untapped money of the country and prudent deployment for productive activities in the form of lending at a competitive interest rates/loan pricing. Towards attainment of its goals and objectives, the bank pursues diversified credit policies and strategic planning in credit management. To name a few, the bank has extended micro credit, consumers durable scheme loans, house building loans etc. to cater to the needs of the individuals, which in turn has helped thousands of families. The bank also extends loan in the form of trade finance, industrial finance, and project finance, export & import finance etc. The bank’s credit polices aimed at balanced growth and harmonious development of all the sectors of the country’s economy with top most priority to ensure quality of lending by averting growth of non-performing assets.

 Capital:

The authorized capital of the bank is Taka 2004 million. Total shareholders equity at the end of the December 2011 stood at Tk. 2,154.29 million. Out of Taka 2,154.29 million, paid-up capital is Taka 1,166.67 million, Statutory Reserve is Taka 330.63 million and Retained Earnings is Taka 362.25 million. The paid-up capital is indicative of the face value of 11,666,700 ordinary shares of Taka 100/= each fully subscribed by the shareholders. As at the close of business on December 2011 the capital adequacy ratio was 12.37% against the standard of 8%. The core capital ratio was 12.99% against the standard of 4%.

Source: Bangladesh Bank Annual Report

Reserve:

The bank raised Statutory from Taka 10.98 million in the year 2005 to Taka 330.63 million in the year 2011. The following table shows year-wise reserve:

 Source: Bangladesh Bank Annual Report

Profit and operating results

The Profit and operating result are shown in the following table: (Figures are in million of taka)

 Source: Bangladesh Bank Annual Report

 Source: Bangladesh Bank Annual Report

Deposits

In FY 2011, the deposits of TBL shot up to Tk. 27,101.58 million from Tk. 18,958.95 million as recorded in FY 2010. During this period, the deposit base was increased by 42% compared to the preceding year. The combination of competitive interest rates, depositors’ trust in the bank and mobilization efforts of the bank resulted in this growth of deposits. Efforts are a foot being made to further increase deposit base of the bank through promotion of business and exploring of potential scope.

Loans & Advances

Total loans & advances of the bank as on December 31, 2005 was Tk. 1,603.95 million as against Tk. 18,682.16 million in FY2011, showing an increase by 1064.75% over the last 7 years. In FY 2010, the Total loans & advances of the bank as on December 31 was 13188.09 million and it increased to 18,682.16 million in FY2011 that is about 41.65% increase from previous year. The credit portfolio of the bank is a mix of scheme loans, namely Micro credit, Consumers durable scheme loan (CDS), Marriage Loan, Car Loan, HBF Loan and Commercial Loans. Commercial Loans comprise Trade financing in the form of working Capital and industrial loans (both large and medium scale industries) in the form of Term loans and other funded & non-funded credit facilities.

 Source: Bangladesh Bank Annual Report

Term financing indicates the Bank’s participation in the industrial development of our country while by extending small loans the TBL has fulfilled the borrowing needs of the low and medium income groups of our society. The bank as a matter of priority in its policy wants to ensure quality of its Loan Portfolio by strengthening post disbursement recovery measures as well as by prioritizing on Early Warning System (EWS) to check the growth of non-performing assets.

Human Resources Development:

The bank’s work force is composed of personnel having rich academic background with vast experience in banking. The human resources development means to create an environment by dynamic, enthusiastic and vigorous participation of all individuals. We would like to be consistent and transparent in their decisions and actions. The total number of executives and officers of the bank stood at 1200 and others number of employees are 110 as on December 2008. To make their personnel knowledgeable and truly professional they arrange training for them at Head office of the bank, BIBM and other institutions. The management of the bank sits with the branch managers and departmental heads in regular meetings. The meetings provide scope for open discussion, which help in formulating new strategies for achieving “targets” of the bank.

Social Commitment and Future Prospect:

It has been all most nine years since the stepped in to the banking arena. They are not yet past of their formative stage. It would be only a matter of time for them to testify that they are equally committed to the social up liftmen of the country. They would stand by the people through philanthropic activities whenever any crisis and disaster confront them. They will not keep their social welfare activities restricted to one area only. It will be diversified in the days ahead of us as they are planning to award students of exceptional academic performance with scholarship in different educational institutions. They expect to launch soon school banking by extending their services, which would encourage parsimony in the students. It would also help in the creation of savings, which could be utilized for pursuing higher studies in future. Keeping in mind their social commitment would soon launch “Educational” and “Hajj” loans. Agriculture, being the only means of subsistence for innumerable people in rural areas of the country, needs more attention. They have plans to manufacturing agricultural equipments in the Bangladesh Machine Tools Factory Ltd., which would be distributed among their farmers at an affordable price.

SWIFT:

The bank is a member of SWIFT Alliance Access, a sophisticated, fraud proof secured financial messaging system provided by the Society for Worldwide Inter-bank Financial Telecommunication (SWIFT), Belgium. With the installation of the SWIFT system the bank would ensure and reliable transmission of L/C, funds transfers, outgoing and incoming massages and other financial services.

 Web Page:

The introduction of Internet has change the traditional concept of world trade and commerce. As the time is progressing its necessity is being felt more in the prevailing competitive since no organization can afford to remain in isolation with the rest of the world for its survival. In order to provide up-to-date information on the bank at fingertips to the trade and business communities of the world, their own IT team has developed a web page for the bank. It can be accessed to under the domain:

http://www.trustbank.com.bd/

 Branch Expansion

The TBL has taken up a program to expand its branches. The bank has already 36 branches in many different places in Bangladesh; most of them are inside the different cantonments. The management is filling that they need more branches all over the Bangladesh. As per Bangladesh Bank circular that if any bank opens a branch in Dhaka then they have to be open a branch in out side Dhaka.

Principal Activities:

A Banks main activity is to collect deposit, because this deposit will use as loan money. So deposit is very much important for the bank. Generally a bank’s principal activity is to serve the customer or give service. There are different types of deposit and they are:

   Current Deposits Account (CDA)

  Savings Deposit Account (SBA)

  Fixed Deposit Account (FDR)

  Special Notice Time Deposit Account (STD)

  Trust Maxima Savings Account

  Lockers Service

  Trust Tele-Banking

Here each account has different restriction and requirement. They are:

1. Current Deposit Account & STD Account:

The characteristics of the current account are different from the savings account but same as STD account. In current account there is no interest on the current deposit account, but in STD account there is interest on deposit amount and there is no restriction on withdrawal. The depositor can withdraw the money from any time when he needs money, but withdrawal must be in transaction hour. The minimum limit of opening a current account & STD account in The Trust Bank is Tk.5000. There are different types of current & STD account. They are and their requirements are:

 Individual Current Account/STD A/C:

A/C Opening Form

Signature Card

Photograph of Account Holder

 Proprietorship Current A/C /STD A/C:

A/C Opening Form

Signature Card

Agreement Form/Proprietorship

Trade License

Mandate Agreement Form

Photograph of Account Holder

 Partnership Current A/C /STD A/C:

A/C Opening Form

Signature Card

Partnership Agreement Form

Partnership Deed

Photograph of Account Holder

ÞPrivate LTD Co. / Current A/C/STD/A/C:

A/C Opening Form

Signature Card

Corporate Agreement Form

Memorandum & Articles of ASSON

Certificate of Incorporation

Resolution

Photograph of Account Holder

ÞPublic LTD Co. / A/C STD/ A/C:

A/C Opening Form

Signature Card

Corporate Agreement Form

Memorandum & Articles of ASSON

Certificate of Incorporation

Certificate of Commencement

Resolution

Photograph of Account Holder

ÞClub/Societies Current A/C/STD A/C:

A/C Opening Form

Signature Card

Account Agreement Form

Copies of Constitution/Bye Law

Photograph of Account Holder

2. Savings Deposit Account:

Savings account is specially designed for the middle and low-income groups who are generating limited income and have the tendency to save. A minimum initial deposit of Tk. 500 shall be required for opening savings account. There are different types of savings account and their opening requirements are also change. They are:

 Individual Savings Account:

A/C Opening Form

Signature Card

Photograph of Account Holder

 Club/ Societies/Asso. Savings A/C:

A/C Opening Form

Signature Card

Resolution

Account Agreement Form

Copies of Constitution/Bye Law

Photograph of Account Holder

3. Fixed Deposit Account (FDR):

There are various fixed deposit schemes in The Trust Bank. The interest rate of the deposited amount depends on duration and volume of the amount. If duration is long the interest rate is high, and at the same time if the volume of amount is large the interest rate is also high and vice-versa. Depositors have to withdraw the interest after the maturity date. If the depositors intend to withdraw the interest earning before expiring the maturity date then the bank is not bound to pay the interest. But some times it depends on the party like if the party is big then the bank will consider to that party for getting the interest amount. The requirements for the FDR are:

¨Signature Card

¨Application for Fixed Deposit

4. Trust Maxima Savings Account:

Trust Maxima Savings Account that gives an extra facility to normal savings account. Under this new option of savings account one can get higher rate of interest than the prevailing normal rate. Present rate in Savings A/C is 7.50%, but in Trust Maxima Savings Account the additional interest rate are:

Source: Bangladesh Bank Annual Report

General Banking:

  Cash Department

  Remittance Department

Cash Department:

All sorts of transaction considering the cash are taken into the care in the cash department. Cash is deposit in the name of concern bank and disbursed to the client by his/her department.

Remittance Department:

Remittance is another significant part of the general banking. The bank provides services and various types of bills through the remittance within the country. Obviously, the bank charges commission on the basics of bills account. Types of remittance are as follow:

• Pay Order:

A Pay-Order is issued only with in the members of Bangladesh Bank clearing house. It can be issued in favor of a customer holding account by debiting his/her account and crediting bills payable account. In case of non-customer, cash equivalent of payment plus pay order charges is received in cash and held in daily expanses account until the payment is made through clearing.

• Pay Slip:

Pay Slip is issued when bank created expanses for his own purpose.

• Demand Draft (DD)

Demand Draft is as same as Pay Order, but it can be drawn on other branches of The Trust Bank and Bangladesh Bank. A DD is drawn on the bank’s other branches when payment has to b made outside of Dhaka. The bank has to have a branch over there and prayer should have an account with the bank.

• Telegraph Transfer (TT):

TT is one of the quickest methods for remittance. All incoming telexes are kept in the telex room and test agreed. One copy of telex is kept in the file and other is worked on. 0Payments of incoming TT’s are made either issuing DD or Po depending upon the requirement of the customer.

Credit Services:

  Credit:

“Credit” it is a very similar word for the bank. It contents a huge meaning. A bank’s main earning source is credit. If bank’s credit management is not good then the bank will never ever achieve its proper goals. Question may arise what are the proper goals for the bank? The proper goals for the banks are profit maximization and shareholder’s wealth maximization. The fundamental nature of credit is that an element of trust exists between buyer and seller whether of good or money. The main use of bank fund is to collect money from surplus unit and lend it to deficit economic unit.

   Types of Credit:

Modern banking operation touches almost every sphere of economic activity. The extension of bank credit is necessary for expansion of business operations. Bank credit is a catalyst bringing about economic about economic development. Without adequate finance there can be no growth or maintenance of a stable output. Bank lending is important to the economy, for it makes possible the financing of commercial and industrial activities of a nation. The credit facilities are generally allowed by the bank may be in two broad categories. They are as follows:

A. Funded Facilities:

Funded facilities can also be divided into the following categories

• § Term Loans:

The term of loan is determined on the basis of gestation period of a project generation of income by the use of the loan. Such loans are provided for Farm Machinery, Dairy, Poultry, etc. It is categorized in three segments:

 § Over Draft (OD):

OD is some kind of advance. In this case, the customer can over draw from his/her current account. There is a limit of overdraw, which is set by the bank. A customer can with draw that much amount of money from their account. For this there is a interest charge on the over draw amount. This facility does not provide for every one, the bank will provide only those who will fulfill the requirement. It means that only real customer can get this kind of facility.

§ Cash Credit (Hypo):

It allows to individuals or firm for trading as well as whole-sale purpose or to industries to meet up the working capital requirements against hypothecation of goods as primary security fall under this type of lending. It is a continuous credit. It allowed under two categories:

Commercial Lending

Working Capital

§ Cash Credit (Pledge):

Financial accommodation to individual/firm for trading as well as whole sale purpose or to industries as working capital against pledge of goods primary security falls under this head of advance. It also a continuous credit and like the above allowed under the categories:

Commercial Lending

Working Capital

§ SOD (General):

Advance allowed to individual/firm against financial obligation (i.e. lien of FDR/PS/BSP etc.) and against assignment of work order for execution of contract works fall under this head. This advance is generally allowed for allowed for definite period and specific purpose. It is not a continuous credit.

§ SOD (Imports):

Advances allowed for purchasing foreign currency for opening L/C for imports of goods fall under this type of leading. This is also an advance for a temporary period, which is known as preemptor finance and falls under the category ‘Commercial Lending’.

 § PAD:

Payment made by the bank against lodgment of shipping documents of goods imported through L/C falls under this type head. It is an interim type of advance connected with import and is generally liquidated shortly against payments usually made by the party for retirements of documents for release of import goods from the customer authority. It falls under the category ‘Commercial Lending’.

§ LTR:

Advances allowed for retirement of shipping documents and release of goods imported through L/C without effective control over the goods delivered to the customer fall under this head. The goods are handed over the importer under trust with arrangement that sales proceed should be deposited to liquidate the advances within a given period. This is also temporary advance connected with import that is known post-import finance under category ‘Commercial lending’.

 § IBP:

Payment made through purchase of inlands bill to meet urgent requirements of customer fall under this type of credit facility. This temporary advance is adjusted from the proceeds of bills purchased for collection. It falls under the category ‘Commercial Lending’.

 § FDBP:

Payment made to a party through purchase of foreign documentary bills fall under this head. This temporary advance is adjustable from the proceeds of negotiable shipping/export documents. It falls under category ‘Export Credit’.

 § LDBP:

Payment made to a party through purchase of local documentary bills fall under this head. This temporary liability is adjustable from proceeds of the bill.

§ Bank Guarantee:

The exporters pay of the imported goods on behalf of the importer through bank guarantee. If the exporter fails to make the fulfill payment at the moment the bank will take the liability and pay to the exporter. This type of guarantee is also needed to attend in any tender.

B. Non Funded Facilities:

Non funded facilities are divided into the following categories:

§ Guarantee:

Credit facilities in contingent liabilities from extended by the banks to their clients for participation in development work, like supplies goods and services.

§ Letter of Credit:

A credit facility in contingent liabilities from provided to the clients by the banks for import/procurement of goods and services.

 Rate of Interest of the Trust Bank’s for Lending

For all types of loans there is a fixed rate, which is given by Bangladesh Bank, base on that rate bank set their own interest rate. Most of the time bank’s interest rate varies from party to party.

Technology (IT) & Automation Information

All the branches of the TBL are fully computerized. New software is now in use to provide faster, accurate and efficient service to the clients. The bank is continuously striving for better services through extensive automation of its branches. Trust bank has launched “One Branch Banking” through on-line connectivity. The bank has set up a full-fledged IT division to keep abreast of the latest development of IT for better service in the days to come.

Foreign Correspondents

Foreign correspondent relationship facilities, foreign trade operation of the bank, mainly in respect of export, import and foreign remittance. The number of foreign correspondents and agents of the bank in the year 2009 stood at which covers important business and trade centers of the world. The bank maintains excellent relationship with the leading international banks, for handling all foreign correspondent and maintaining all foreign business there is an International Division, which is called ID.

Organizational Hierarchy of the Trust Bank Ltd.

The Organizational hierarchy of the Trust Bank Ltd. can be shown by the following diagram:

Findings of the study:

In the middle of twenty first century here we are facing a heavy competition with each other. Here everyone is competing with each and every single point. So today’s business institution are moving forward to remember this concept. If any one has a week point than the rival party will take the opportunity and make a problem for the week intuition.

After complete my internship in The Trust Bank I realized that there are many problems and this may be a cause of huge loss or create a barrier for the future prospect. So the bank should taken care it very seriously.

 Problems:

The Problems for the Trust Bank’s are:

Advertisement Problem: Today’s world is very much depend on the media, so if the intuitions are not think about the advertisement or any kind of activities which is related some kind of advertisement then it will not earn so much popularity. A media can rise or fall an institution within very short time. So if we see to other developed country then we can find that every business intuition has a huge budget for the advertisement purpose. They do not take this expanse as an expanse; they always take it as a huge investment, because if the people do not know about my organization then how they will do business with us (it dose not matter which type of organization is this), it may be big manufacturing company or a bank. Here I realized for The Trust Bank that they do not have any kind of vast advertisement or any kind of social activities, so most of the people do not have any idea about The Trust Bank. In this case when any one asks that “where are you working?” Then if any one says that in The Trust Bank then people reply at first that “is this Mutual Trust”. So for his or her kind information they have to say no there is a bank called The Trust Bank and it is a bank for the army. This bank is also serving the general people but it is not so much popular, because of advertisement. People thought that this bank’s purpose is to serve only army people. That’s why the bank is not go for a vast banking.

Hierarchy Problem: This is another big problem for The Trust Bank, because in the beginning level there are so many ranks to become a principal officer that it may be the cause of brain drain from this bank to other bank.

If any one join as a J.O than it will take 6-8 years to become a P.O, because promotion is after every 2 years or more than 2 years. So for this reason the young employees who are join here as a J.O they will leave this bank after getting an experience. They will take this bank as a tanning center, because after provision period they will look for another bank, which they can get higher position than this bank.

Limited Number Of Branches: The Trust Bank has only 12 branches allover the Bangladesh. So if they want to do a vast business then they have to increase the number of branches.

Limited Power to the Managers: The managers and other high officials have no power for decision-making. The branch managers have no power to sanction loans. In every bank there is a certain amount that a branch manager can sanction, but in this bank if anyone wants to take a single Taka for loan then the manager has to for the head office approval. Some times it may be the cause of losing customer, because it will take time to sanction a loan.

Other Findings:

In a developing country like Bangladesh the need for domestic resource mobilization is of special importance. Deposit held by the financial intermediaries constitutes the major part of domestic financial resources of the country. The other activities of the bank are chiefly dependent upon the deposits. The higher the amount of deposits, the better is the position banks in financing investment projects, especially large-scale projects. The size of deposit shows that TBL’s growth in deposit is notable over the years indicating a growth rate of 67.47%.

(i)     Loan and advance are vital to finance the projects. An appropriate credit distribution system and monitoring will ultimately lead to the profit maximization of banks. It is evident from that the size of TBL’s loans and advances are increasing over the years. It indicates more earning for the bank. It shows a positive growth rate.

(ii)   Profit is the simplest and most convenient measuring rod for appraising the performance of the banks as they deal with finance. The survival and sustained growth are possible when there is a regular flow of profit. Above all, the service value being intangible profit may be the justification of the banks from the financial aspect. Net profit figures show the absolute amount of profits. Trust Bank Ltd. has a positive growth rate in Net Profit. It also indicates a positive trend.

(iii) Return on Asset (ROA) shows that the bank has maintained a positive ROA through 2008 to 2011. The profitability of the bank gradually increased and attained highest ROA of 1.79% in 2008. The ROA of 2011 is lower than 2010, this is because of lower growth in net income compare to asset growth. The trend of ROA is positive and the compound growth rate shows that every 100 taka utilized results a positive growth of ROA of Tk. 0.4612.

(iv) Return on Equity (ROE) measures the efficiency with which common shareholder’s equity is being employed within the firm. The higher the ROE, the better for the company, as they are getting higher amount of net income over the equity. Trust Bank Ltd. has maintained significantly high ROE throughout the years of its operations, which indicates a positive trend. Although it is seen that in 2011 ROE dropped to 14.45% from 24.51% in 2010. This is because of no. of shares increased in 2011.

(v)   Productivity has been measured in terms of the ratio of operating revenue to operating expenditure. If income substantially outweighs expenditure, the productivity of the bank is good. The bank shows a positive trend in terms of productivity. Although the ratio in 2008 is slightly declined because of more operating expenditure compare to operating revenue, it portrays a positive compound growth rate of 23.81%.

(vi) Deposit per employee measures the amount of long-term fund per employee. Deposit per employee consistently increased over the years with a positive trend indicating overall efficiency of the bank.

(vii)           Advance per Branch measures the loans and advances per employee of the bank. Advance per employee consistently increased over the years showing a positive trend. we can see that no. of employees increased over the years as well as volume of advance.

(viii)         Net profit per employee shows that profit per employee is Tk. 485250.74, Tk. 693819.89, Tk. 834809.44 and Tk. 829504.08 for the year 2008, 2009, 2010 and 2011 respectively. It consistently increased over the years. Although a slight decrease in 2008 because of increase in no. of employees at the end of the year. If manpower increases, manpower expenses will also increase and the profitability will decrease by the manpower expenses.

(ix) AD ratio measures the distributive efficiency for the bank. It indicates the liquidity position of the bank. As the bank started its operation in the last quarter of 1999 so the AD ratio in first year and the next two years is very low. During these periods the bank maintained conservative approach in lending. In 2007 the AD ratio moved to more than 80% and maintained an increasing trend up to 2011. The bank is operating efficiently in lending against its deposits, which indicates an increasing trend. The bank is maintaining its AD ratio within a tolerance limit, which indicates an ideal scenario for the bank. It can be inferred that the bank is managing its funds maintaining sound liquidity. It can be said that their funds is used in profitable ends. But the risk will also increase with the increased AD ratio. The trend of AD ratio is positive.

(x)   Bangladesh Bank, the central bank, has instructed all banks to keep 1% as provision against of outstanding of total loans. This provision has been made to meet any kind of future losses. Although Trust Bank Ltd. does not have any classified loans it is maintaining 1% provision for future. The bank is prepared to meet any unwanted situation in future.

(xi) The loan ratio indicates the extent to which assets are devoted to loans. The higher net loan ratio shows the higher earning assets, which is one of the most important policies for the bank. As the net loan ratio increases, the interest earning of the bank increases. Over the last five years the net loan ratio of the bank increased in a significant manner. It shows a positive increase in loan portfolio of the bank.

(xii)           From the analysis the most important factor revealed is that the bank does not have any classified loans. That is all the loans disbursed by the bank are performing well. In a country like Bangladesh, NIL classified loans is a major indicator for the superior performance for a bank and Mutual Trust Bank Ltd. falls into this category.

RECOMMENDATION:

For improve their performance and remove the problem The Trust Bank has to do some thing and these are:

Vast Advertising: Firstly the bank has to increase their advertisement and also increase their social activities. They have to go with the people’s needs and demands. They have to explore their name to the people that every one can know about The Trust Bank.

Hierarchy Problem: Hierarchy Problem is the second one; it means the bank has to make the duration small from J.O to P.O. Every one has a desire to achieve a good position, so if it takes a long time then the employee may lose their efficiency and they will not provide 100% effort for doing job. So for the bank’s good future they can cut off some level which makes the long hierarchy.

Increase Number of Branches: In this time there is so much competition between each other that a single step can change the all direction. Today’s people are very much willing to do banking, which one is near to them. So if the number of branches will not increases than it can lose the customer.

Give Some Power To the Manager: If the authority gives some power to the managers like: for the purpose of loan sanction then it will be good for the bank. Because when a penitential customer will want to taka a loan in emergency basics then the manger can sanction to a certain limit. It can earn of that customer’s satisfaction and in future he or she may be do vast business with the bank.

Trade disputes and settlements: Export trade as it takes place in between the seller and buyers who live apart in different countries under different situation, Rules, regulations and culture is thus highly technical. The exporters require knowing the global market environment acquainted with regulations and customs.

Dispute in the export trade may arise due to the following reasons:

• Ø  Misunderstanding of the contractual obligation of the either party on the stipulated terms for interpreting differently.
• Ø  Violation of contractual terms by the either party.
• Ø  Buyer’s inability to pay.
• Ø  Sudden change in the government import and tariff policy.
• Ø  Buyer’s refusal for any discrepancy in the export documents.
• Ø  Unwillingness of the buyer to pay the export bill on the flimsy ground.
• Ø  Imposition of quota, tarif etc.

Settlement of Disputes:

In matter of dispute on export trade the exporter may solicit assistance of the following agencies:

• Ø  Commercial Wing of Bangladesh Embassy at that country.
• Ø  Export Promotion Bureau (EPB).
• Ø  Federation of Chambers of Commerce and Industry.
• Ø  International Arbitrary Agency.

Possible way-out where settlement is not at all possible:

• Ø  Sale of goods to new buyer at the port of destination.
• Ø  For finding out a new buyer the exporter may personally visit the port of destination or take help from Bangladesh Embassy.
• Ø  Lodge notice of refusal of payment by the drawee to the Exchange control Department of
• Ø  Bangladesh Bank.
• Ø  Submit copy of new buyer-seller agreement to Bangladesh Bank and obtain permission of sale.
• Ø  Convey Bangladesh Bank’s approval to negotiating/collecting bank for handling over documents to the title of the goods after realizing   the value thereof.

For Export trade possibility of dispute cannot be illuminated. To get rid of the possible dispute best way is to keep excellent personal relationship with the buyer based on trust. Conclude contract on the terms and conditions, which can be complied with as per schedule.

CONCLUSION:

Banks and financial institutions play an important role in the process of economic growth of a country. Given their considerable economic potential, these institutions have a far – reaching impact on the development and welfare process of the surrounding societies. These financial institutions depend, in accumulating their financial resources, basically

on the inflow of deposits. In order to survive and achieve success, these banks endeavor to attract clients in search of loans to finance their different activities according to the banks established terms and conditions. These banks, which are called commercial banks, depend in their transactions on the interest rate, as the driving factor, which stimulates all their dealings.

In a developing country like Bangladesh, banking business is very much competitive. Almost fifty banks are operating at this moment and competing to hold maximum market share. For a smoothen operation every bank must have the capability of managing asset/liability, liquidity and credit.

Liquidity is one of the essential requirements for the effective functioning of the banking system. Without adequate liquidity, banks are not able to perform some of their core functions, including the settlement of their inter-bank obligations. From the analysis we can also observe that TBL is managing liquidity very well and in a sound liquidity position.

The financial performance evaluation demonstrates that the profitability of the bank has a positive trend. Profitability is an indicator of a bank’s capacity to carry risk and / or to increase its capital. The income statement, a key source of information on a bank’s profitability, as well as the analysis reveals that Trust Bank Ltd. has – attained significant amount of profitability over the years. With a limited number of branch network it has recorded positive growth in net profit because of proper management and right selection of investment criteria.The bank has strong core deposit signifying sound liquidity position and mainataining an ideal scenario in advance-deposit ratio. Overall financial picture of Trust Bank Ltd. for the five-year period shows that it has positively set its root in the financial arena of Bangladesh. The figures do not tell the story of failure. The trend is in favor of Trust Bank Ltd. and the management should take initiative to keep the bank’s way to the success. Globalization of national economies has given a boost to international trade. The seller and the buyer in an international trading transaction must agree for a product or its quality, price etc. enter into a sales contract, spelling out precisely shipping and delivery details, terms of payment, required documentation and other related issues including dispute settlement procedure and legal framework available. The impact on trade transactions currency policies of the importing and exporting countries and risks associated with them, fraud possibilities in the transaction or in documents are also necessary.

A country cannot long continue to have a deficit on foreign current account but a favorable balance of payments on current account may conceal a heavy adverse balance of payments with one individual country or group of countries.

As developing country, Bangladesh is striving to reduce its trade gap. Government is taking necessary steps to enhance its Export sector through the help of market mechanism as well as different financial and institutional incentives to the exporters. At the same time it is taking necessary steps to attract foreign investments and creating efficient human resource to fight the edge of competition. In the line of liberalization of our economic sector, our current account has already been made convertible along with floating exchange rate. With the help of continuous increase in wage earners remittance and inclusion of non-traditional items in export list Bangladesh emerging towards a more stable economy.

REFERENCE

1. An Introduction to Research Method by Mr. Md. Kamal Hossain Sarker, First Edition: Fed, 2010
2. Articles of Modern Banking System of TBL.
3. Annual Report of TBL (2011)
4. www. trust bank ltd.com
5. www.google.com