Table:1 At a Glance of BASIC Bank Limited
RESOURCES AND CAPABILITIES
BASIC Bank Limited is well prepared to and capable of meeting the demand for a broad range of banking services. It has got adequate resources, both human and physical, to provide the customers with the best possible services.
Physical and technological resources
A great deal of investment for developing the physical resource base of the Bank has been made. The Bank has its presence in all the major industrial and commercial hubs of Bangladesh in order to cater to the needs of industry and trade. At present, there are twenty-seven conveniently located branches throughout Bangladesh. There are ten branches in the capital city of Dhaka, six in Chittagong and one each in Narayanganj, Narsingdi, Rajshahi, Saidpur, Bogra, Khulna, Jessore, Sylhet, Moulvibazar, Comilla, and Barisal.
Major features of these branches are:
• Fully computerized accounts maintenance.
• Well decorated air conditioned facilities.
• A fully operational computer network which is currently being implemented. The work of Local Area Network (LAN) and Wide Area Network (WAN) installation having reliable and secured communication between the branches and the Head Office is in progress to facilitate any Branch Banking and ATM Services.
• Money counting machine for making cash transactions easy and prompt.
• Fifteen out of twenty six branches are authorized dealers of foreign exchange. This facilitates speedy disposal of transaction of export and import trade.
BASIC Bank Limited has a well diversified pool of human resources which is composed of people with high academic background. Also, there is a positive demographic characteristic – most employees are comparatively young in age yet mature in experience. As of December
2003 the total employee strength is 523. The strength is 435 excluding the menial staff. BASIC Bank Limited has been investing its resources with a view to developing an efficient
and professional work force. Two approaches are mainly used in this regard.
A. Industrial Credit
Outstanding at year end
BASIC Bank’s services are directed towards the entrepreneurs in the small industries sector. A small industry, as per Industrial policy 1999 approved by the Cabinet, has been defined as an industrial undertaking whose total fixed investment is less than Tk.100 million.
The industrial loan reflected a significant growth of 23.91 percent over the previous year. Total outstanding industrial loans including term and working capital stood at Taka
17,226.40 million at the end of 2008 compared to Taka 13,901.40 million of 2007. Total outstanding term loan stood at Taka 6,206.75 million as on December 31, 2008 compared to Taka 5,055.58 million in 2007 reflecting a growth of 22.77 percent. The outstanding working capital finance extended to industrial units stood at Taka 11,784.08 million at the end of the reporting period compared to Taka 9,525.98 million in 2007. Growth rate here was 23.70 percent. BASIC Bank’s services are specially directed towards promotion and development of small industries. Its exposure to small and medium industries sector accounted for 56.52 percent of the total loans and advances. During the year total of 87 projects were sanctioned term loan. Out of which 26 were new and the rest were under BMRE of the existing projects. As on 31 December 2008, 801 projects were in the portfolio of the bank. The textile sector including garments being one of the major contributors to
national economy dominated the loan portfolio of the Bank. Other sectors financed include engineering; food and allied industries; chemicals, pharmaceuticals and allied industries; paper, board, printing and packaging; glass; ceramic; and other non-metallic goods and jute products. Recovery rate of project loan was 90.81 percent.
B. Commercial Credit:
The Bank also supports development of trade, business and other commercial activities in the country. It covers the full range of services to the exporters and importers extending various facilities such as cash credit, export cash credit, packing credit, short term loans, local and foreign bills purchase facilities. As on December
31, 2008 total outstanding commercial loans stood at Taka
9,278.26 million Compared to Taka 7,681.74 million in 2007.
C. Micro Credit:
BASIC Bank launched a Micro Credit Scheme in 1994. Micro Credit Scheme provides for the poor for generation of employment and income on a sustainable basis particularly in urban and suburban areas. The Bank follows three systems of credit delivery. These are:
1. Lending to the NGOs who on-lend to their members. At present there are 15 such NGOs.
2. Lending direct to the targets groups or ultimate borrowers under the Bank’s own management.
3. Lending direct to the member-borrowers and NGOs providing nonfinancial services like group formation and monitoring and supervision on exchange for a supervision fee.
At the end of 2008, total amount of Taka 764.46 million remained outstanding as against Taka
680.13 million in 2007. Recovery rate during this period remained at a satisfactory level of 98.00 percent.
D. Foreign Trade:
The bank achieved substantial growth in export in 2008 and the performance of the bank in import business was also satisfactory. The Bank handled total export business of Taka
27,359.77 million and import business of Taka 22,270.87 million in 2008. The export and import business grew by 28.65 percent and 32.60 percent respectively. Major items of exports were garments, jute products, textile, leather etc. Items of import included mainly industrial raw materials, garments accessories, capital machinery, food items and other essential commodities.
E. Other Activities:
The Bank provides services for remittance, underwriting, guarantee, public offering of shares etc. Then also provides funds to investment and leasing companies. Then Bank has recently created a venture capital fund for equity support to innovative but risky projects.
BASIC Bank Limited
Credit Rating Report (Entity Rating)
Credit Rating Information and Services Limited (CRISL) has assigned AA- (pronounced as double A minus) rating in the long term and ST-1 rating in the short term to the Bank for the year 2008
Banks rated AA- in the long term are adjudged to be of high quality, offer higher safety and have high credit quality. This level of rating indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions
Banks rated ST-1 in the short term are considered as the highest certainty of timely payment. Short-term liquidity including internal fund generation is very strong and access to alternative sources of funds is outstanding. Safety is almost like risk free Government short-term obligations
BASIC Bank Limited has launched a Monthly Deposit Scheme (BASIC Fortune) on April 14, 2009. At present, this scheme is available in the following online branches: Bangshal, Dhanmondi, Karwanbazar, Uttara, Gazipur Chowrasta, Rajshahi, Rangpur, Saidpur, Comilla, Jessore, Barisal, Chowmuhana, Sholashahar, CEPZ, Dewanhat, Dilkusha, Narsingdi,Sirajganj, Moulovibazar, Mirpur, Babubazar, Tanbazar, Zindabazar, Bogra, Gulshan, Khatunganj, Asadganj, Khulna, Shantinagar, Jubilee Road and Main branch.
General banking is the starting point of all the banking operations. It is the department, which provides day-to-day services to the customers Main Functions of general banking department are the followings:
1. Accounts Opening Section
2. Accounts Section.
3. Local Remittance Section
4. Collection And Clearing
5. Cash Section
ACCOUNTS OPENING SECTION
Bank is a financial intermediary, which mobilizes fund from surplus unit and allocates it to deficit unit. Surplus unit means the people who have surplus money and willingness to save. Deficit unit means the people who need money for industry, trade, business, or for personal use but don’t have sufficient money of their own for such purposes. Bank mobilizes the fund by accepting deposits from depositors and allocates the fund by providing loan to borrower.
Banker-customer relationship begins with the opening of an account by the customer. Opening of an account binds the same into a contractual relationship. But the selection of customer is very crucial. In fact, fraud and forgery of all kinds start by opening of an account by the customer (s). So, the bank takes extra care in its selection. One of the basic functions of commercial banks is to accept deposits. For accepting deposits both demand and time,
BASIC Bank (Shanti Nagar Branch) offers the following types of accounts-
TYPES OF ACCOUNTS WITH TERMS AND CONDITIONS
This part covers only following types of accounts-
1. Savings Bank Accoun
2. Current Account
3. Short Term Deposit (STD) Account
SAVINGS BANK ACCOUNT
This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a week. Heavy withdrawals are permitted only against prior notice. Some Important Points are as follows-
As per BB instruction 90% of SB deposits are treated as time liability and 10% of it as demand liability
a. Minimum opening deposit of Tk.5000/= is required;
b. Interest is paid on this account. BASIC offers a reasonable rate of interest for SB A/C.
c. Generally, banks require a 7-day prior notice if the total amount of one or more withdrawals on any date exceeds 25% of the balance of the account unless is given.
d. The number of withdrawals over period of time is limited. Only two withdrawals are permitted per week. If there are more than two withdrawals are made in a week, no interest will be paid on rest amount for that month.
e. Generally householders, individuals and other small-scale savers are the clients of this account
Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval. It is most suitable for private individuals, traders, merchants, importers and exporters, mill and factory owners, limited company’s etc. Some Important Characteristics are as follows-
a. A minimum balance of TK.5000 has to be maintained.
b. CD accounts are unproductive in nature as banks loanable fund is concerned.
Sufficient fund has to be kept in liquid form, as current deposits are demand liability.
c. Thus huge portion of this fund become non-performing. For this reason banks do not pay any interest to CD Accountholders.
d. There is no restriction on the number and the amount of withdrawals from a current account.
STD (SHORT TERM DEPOSIT) ACCOUNT
Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice. In BASIC, customers usually give an instruction that their current account will be debited whenever its deposited amount crosses a certain limit and this amount will be transferred to the STD account
COMMON FORMALITIES REQUIRED FOR EVERY ACCOUNT
> Duly filled up Account Opening Form.
> Introducer’s signature on Account Opening Form to be verified by Manager under full signature.
> Two copies of passport size photograph of account opener(s) duly attested by the introducer.
Accounts department maintains all records of transactions and all types of statement. At the end of transaction hour all concerned section sends vouchers of transactions to this department. Accounts department compares all figures/ amount, contents of transactions with supplementary statement prepared by computer. If any discrepancy arises regarding any transaction then this department reports to the concerned department. Following are the activities of accounts department:
To record all transaction in the cash book.
To record all transaction in the cash book.
To prepare daily, weekly, monthly, half-yearly and yearly fund position.
To prepare all kinds of statements related to Bangladesh Bank, Head office and
National Board of Revenue (NBR).
To prepare monthly salary statement, provident fund statement and administrative expenditure statement.
To make charges for different types of duty.
# COLLECTION AND CLEARING SECTION
Customers do pay and receives bill from their counter party as a result of transaction. BASIC Bank Limited collects the bills on behalf of their customers. Collection mechanisms in BASIC Bank are clearing, Outward Bill For Collection, Inward Bills for Collection.
When the bill is within the range of the clearinghouse it is sent for collection through clearing section. As far as safety is concerned customers get crossed cheque for the transaction Crossed check can’t be encashed from the counter; rather it has to be collected through banking channel i.e., clearing. If a client of BASIC Bank received a check of another bank which is located within the clearing range and deposit the instrument in his account at BASIC Bank. Then BASIC Bank will collect the money through clearing house. After received the check BASIC Bank will credit client account. However, the amount is credited in the customer a/c but he will not get the money until the check is honored.
Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the branch. This section deals with all types of negotiable instruments and it includes vault, used as the store of cash, instruments. The vault is insured up to Tk.20 lac. Insured amount yet to be enhanced to Tk. 40 lac. Operation of this section begins when the banking hour starts. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a more secured place. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remains in the cash counter is put back in the vault and known as the closing balance. If the cash s t o c k g o e s b e yo n d t h i s l i m i t , t h e e x c e s s c a s h i s t h e n t r a n s f e r r e d t o B A S I C b a n k m a i n b r a n c h . The main functions of this section are-
1. Cash Receipt
2. Cash Payment
Cash receipt procedure is given below-
i. The depositor first fills up the Deposit-in-Slip.
ii. Depositor deposits the money.
iii. Officer receives the money, counts and then enters in the Cash Receipt Register, and finally signs with seal and dates the deposit-in-slip.
Some important check points for making the payment are as follows-
1 . E n d o r s e m e n t
Endorsement is done by putting signature of the drawer on the back of the negotiable instrument for the purpose of negotiation. By ‘blank endorsement’, an order instrument is made as ‘bearer’
Generally two types of crossing are practiced, namely- General Crossing and Special Crossing. Basically it gives a direction to the paying bank not to pay the check amount over the counter. General crossing includes ‘A/C payee’ crossing only. Drawing two parallel and transverse lines do it. On the other hand, special crossing is like general crossing but in addition bank name is also mentioned. This gives the direction to the same to pay the check only to the banker, whose name appears in the crossing or to his agent.
Foreign Exchange- its meaning and definition:
Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign trade gives rise to foreign exchange. Modern banks facilitate trade and commerce by rendering valuable services to the business community. Apart from providing appropriate mechanism for making payments arising out of trade transactions, the banks gear the machinery of commerce, especially in case of international commerce, by acting as a useful link between the buyer and the seller, who are often too far away from and too unfamiliar with each other. According to foreign exchange regulation act 1947, “Anything that conveys the right to wealth in another country is foreign exchange”. Foreign exchange department plays significant roles through providing different services for the customers. Opening or issuing letters of credit is one or the important services provided by the banks.
# Foreign Exchange :
Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.
Bangladesh Bank issues Authorized Dealer (AD) license by observing the bank’s performance and also the customers associated with the bank for conducting foreign dealings.
# Export Section :
Foreign Exchange Regulation Act, 1947 nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside Bangladesh, unless a declaration is furnished by the exporter to the collector of customs or to such other person as the Bangladesh Bank (BB) may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by BB.
Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export BASIC Bank are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.
SCRUTINY AND NEGOTIATION OF EXPORT BILL
Bank deals with documents not with goods. The bankers are to ascertain that the documents are strictly as per terms of L/C. Before negotiation of the export Bill the bankers are to scrutinize and examine each and every document’s with care. Negligence on that part of the bankers may result in non repatriation or delay in realization of export proceeds are incorrect documents may put the importers abroad into unnecessary troubles.
Import Section :
Imports are foreign goods and services purchased by consumers, firms & Governments in Bangladesh. To import, a person should be competent to be a ‘importer’. According to Import and Export Control Act, 1950, the Office Of Chief Controller Of Import and Export provides the registration (IRC) to the importer.
BASIC Bank checks the documents. The usual documents are,-
ii. Bill of lading
iii. Certificate of origin iv. Packing list
v. Weight list
vi. Shipping advice
vii. Non-negotiable copy of bill of lading viii. Bill of exchange
ix. Pre-shipment inspection report
x. Shipment certificate
1. Registration with CCI&E
a. For engaging in international trade, every trader must be first registered with the
Chief Controller of Import and Export.
b. By paying specified registration fees and submitting necessary papers to the CCI&E. the trader will get IRC (Import Registration Certificate).After obtaining IRC, the person is eligible to import.
2. Purchase Contract between importers and exporter:
a. Now the importer has to contact with the seller outside the country to obtain the proforma invoice / indent which describes goods.
b. Indent is got through indenters a local agent of the sellers.
c. After the importer accept the preformed invoice, he makes a purchase contract with the exporter declaring the terms and conditions of the import.
d. Import procedure differs with different means of payment. In most cases import payment is made by the documentary letter of credit (L/C) in our country.
3. Collection of LCA form:
Then the importer collects a Letter of Credit Authorization (LCA) form BASIC Bank, Shanti
4. Opening a Letter of Credit (L/C)
In international environment, buyers and sellers are often unknown to each other. So seller always seek guarantee for the payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its ‘Letter of Credit’.
a. Parties to Letter of Credit
1. Importer ( Buyer)/ Applicant
2. The issuing Bank (Opening Bank)
3. The Advising Bank ( Notifying Bank)
4. Exporter /Seller ( Beneficiary)
5. Confirming Bank
6. Negotiating Bank
7. The paying/Reimbursing? Accepting/Remitting Bank
The person/Body who requests the bank (opening bank) to issue the letter of credit. As per instruction and on behalf of applicant, the bank opens L/C in line with the terms and condition of the seller contract between the buyer and the seller.
Opening /Issuing Bank:
The Bank which open /issue letter of credit on behalf of the applicant/importer. Issuing bank obligation is to make payment against presentation of documents drawn strictly as per terms of the L/C.
Advising /Notifying Bank:
The Bank through which the L/C is advised / forward to the beneficiary (exporter). The responsibility of advising bank is to communicate the L/C to the beneficiary after checking the authority of the credit. It acts as an agent of the issuing bank without having any engagement on their part.
Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are the seller or exporter.
The Bank which under instruction the letter of credit adds confirmation of making payment in addition to the issuing Bank. It is done at the request of the issuing having arrangement with them. This confirmation constitutes a definite undertaking on the part of confirming bank in addition to that of issuing bank.
Negotiating Bank is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same.
Sometimes it can also be confirming bank
The Bank nominated in the letter of credit by the issuing bank to make payment stipulated in the document, complying with reimbursing bank.
b. Application For L/C limit:
Before opening L/C, importer applies for L/C limit. To have an import L/C limit, an importer submits an application to the Department of BASIC Bank Limited furnishing the following information, –
i. Full particulars of bank account maintained with BASIC Bank Shanti Nagar branch.
ii. Nature of business
iii. Required amount of limit
iv. Payment terms and conditions
v. Goods to be imported
vi. Offered security
vii. Repayment schedule
A credit Officer scrutinizes this application and accordingly prepares a proposal (CLP) and forwards it to the Head Office Credit Committee (HOCC). The Committee, if satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled for the limit.
c. The L/C Application:
After getting the importer applies to the bank to open a letter of credit on behalf of him with required papers.
i. Documentary Credit Application Form:
BASIC Bank provides a printed form for opening of L/C to the importer. This form is known as Credit Application form. A special adhesive stamp is affixed on the form. While opening, the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin in percentage.
ii. Proforma Invoice: It states description of the goods including quantity, unit price etc.
iii. The insurance cover note: The name of issuing company and the insurance number are to be mentioned on it.
iv. The Letter of credit authorization (LCA) form: LCA form should be duly attested.
Identification of Documents Used in
Foreign Exchange Banking:
The following Documents are used in Export:
Bill of Exchange or Draft; Bill of Lading
Certificate of origin
Quality Control Certificate
The following Documents are used in Import:
Bill of lading
Certificate of origin
Non-negotiable copy of bill of lading
Bill of lading
Certificate of origin
The following documents are used in Foreign Remittance:
Certificate of origin
v. The Form-IMP.
vi. Tax Information Certificate
vii. Forwarding for Pre-Shipment Inspection (PSI):
Importer sends forwarding letter to exporter for Pre-Shipment Inspection. But all types of goods do not require PSI.
5. Securitization of L/C Application:
The BASIC Bank Official scrutinizes the application in the following manner, –
a. The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation.
b. Eligibility of the goods to be imported.
c. The L/C must not be opened in favor of the importer.
d. Radioactivity report in case of food item.
e. Survey report or certificate in case of old machinery
f. Carrying vessel is not of Israel or of Serbia- Montenegro
g. Certificate declaring that the item is in operation not more than 5 years in case of car.
Foreign Remittance Section:
The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place at an agreed rate of exchange, in where the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender.
Workings of this department:
0 Overall supervision of Foreign Remit. Dept.
0 Foreign TT payment & Purchase of F. Drafts, preparations of F.B.P. (Foreign Bill Purchased).
0 Issuance of outward TT & FDR
0 Issuance of proceed responding certificate (PRC).
0 Foreign Collection, Bangladesh Bank Clearing Check Collection, which comes from all branch of BASIC Bank Limited.
0 Withdrawal from F.C. A/C.
0 Encashment of T.C. & Cash Dollar and Sterling Pound.
0 Deduction of Tax and VAT. On behalf of Bangladesh Bank.
0 Preparation of related statements including convertible Taka Accounts.
0 Preparation of IBCA & IBDA and Balancing of Collection and other special assignment as desired by Department in charge.
0 Balancing of Account Statements.
0 Compliance of audit & inspection.
0 Statement of all related works submitted to Bangladesh Bank.
Inward Foreign Remittance:
Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, T.C. and bills etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.
Outward Foreign Remittance:
Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired. Sale of foreign exchange is reported to Exchange control Department of Bangladesh Bank on form T/M.
Foreign exchange means foreign currency and includes all deposits, credits and balances payable in foreign currency as well as foreign currency instruments such as Drafts, T.C.s, bill of exchange, and Letters of Credit Payable in any Foreign Currency. All foreign exchange transactions in Bangladesh are subject to exchange control regulation of Bangladesh Bank.
Performance of Foreign Exchange Business of
BASIC Bank Limited
The following table shows year-wise performance of foreign exchange operations consisting item-wised income generating avenues. All the figures show positive growth which generally signals foreign exchange business as a profitable business in Bangladesh. Within all the income avenues, income from exchange gain shows highest figure in taka value. Growth rate here was 48.92%. Income from Letter of Credit and Letter of Guarantee were the second and the third largest among the income avenues respectively.
Income from foreign exchange business of BASIC Bank limited
|Foreign bill Purchased||460,581||360,461||654,329||628,965|
|Local bill Purchased||3,833,860||4,485,557||8,646,784||9,041,451|
|Letter of Guarantee||14,160,897||21,397,445||23,360,370||39,869,621|
|Letter of Credit||66,555,289||75,284,688||96,433,989||106,869,561|
|Bills for Collection||2,846,448||4,078,047||8,747,327||10,792,897|
|Miscellaneous(includescommission on sale of|
|(B) Exchange gain (Profit on exchange trading)||129,977,023||114,610,826||149,640,436||222,845,221|
The performance of BASIC Bank Limited has been satisfactory since its inception in respect of all the measurement parameters.
The total assets of the Bank increased to Taka 46,651.53 million at the end 2008 from Taka
38,773.91 million in the previous year. The growth rate was 20.31 percent. Deposit rose from
Taka 31,947.98 million in 2007 to Taka 38,368.23 million in 2008 showing a growth rate of
20.09 percent. Loans and advances stood at Taka 27,269.13 million as on December 31, 2008 against Taka 22,263.35 million at the end of 2007, recording a growth rate of 22.48 percent compared to 23.86 percent in the previous year. All out efforts were made to improve the recovery rate and control non-performing loans and advances. Although the recovery rate of project loans remained stable in the neighborhood of 96 percent the proportion of non- performing loans to total loans increased to 3.25 percent in 2008 from 3.70 percent in 2007. Emphasis on the maintenance of quality of assets remained the centerpiece of the Bank’s business strategy.
Year 2008 was a period of high growth in loans and advances with 22.48 percent increase compared to 23.86 percent increase in 2007. Growth of industrial finance was moderate and loans to small and medium industries were 23.91 percent of total loans and advances. The industrial loan of Tk. 17226.40 million was distributed among 13 sectors. Textile sector registered the highest concentration being 36.24 percent of industrial loans and 23.59 percent of total loans. Textile sector is followed by: food & allied industries – 13.73 percent of industrial loans and 8.94 percent of total loans, chemical & allied industries – 12.97 percent
of industrial loans and 8.44 percent of total loans and engineering – 11.44 percent of industrial loans and 7.45 percent of total loans.
SWOT Analysis :
The SWOT analysis comprises of the organization’s internal strengths and weaknesses and external opportunities and threats. SWOT analysis helps to identify the current position of the organization. A
SWOT analysis of BASIC Bank Ltd. has been done below:
• First-class management
• Initially being a specialized bank, it caters to the needs of an entire target market
• Low customer base ensures dedicated attention to each customer
• Low service charges with no hidden cost
• Strong internal co-ordination
• Friendly environment
• Heavily dependent on head office for decision making
• No foreign branches
• Most of the branches are situated in urban areas
• Low rate of interest on deposits
• Very few ATM Booths
• Small range of offerings
• Not enough promotional activities
• Enlarging business by opening new branches in rural areas
• Innovation of new services
• Increasing demand for import, export and L/C through proper promotional activities
• Fully utilizing incentives provided to government banks
SWOT Analysis of BASIC Bank Ltd
• Increased competition by foreign and local banks
• Political involvement in decision making
• Forecast of low growth in national economy due to adverse world economic situation and recession
I had the practical exposure in BASIC Bank Ltd. for just twelve weeks, with my little experience in the bank in comparison with vast and complex banking system, it is very difficult for me to recommend. We have observed some shortcomings regarding operational and other aspects of their banking. On the basis of my observation we would like to recommend the following recommendations-
1 . D o c u m e n t d i s c r e p a n c y c h a r g e v a r i e s f r o m c u s t o m e r t o c u s t o m e r . T h e y d o n ’ t c h a r g e t o p r i m e c u s t o m e r . W e t h i n k t h a t t h e b a n k s h o u l d r e v i e w t h e c u s t o m e r s ‘ b e h a v i o r f o r a p e r i o d o f t i m e a n d s h o u l d d e v e l o p a c e r t a i n p o l i c y i n t h i s r e g a r d .
2 . W h e n t h e y c a l c u l a t e l o a n a g a i n s t d o c u m e n t a r y b i l l , t h e y p r o v i d e d o l l a r r a t e $ 6 5 . W h i c h is l o w e r t h a n o t h e r b a n k . W e t h i n k t h e y s h o u l d i n c r e a s e t h e d o l l a r r a t e .
3 . I n c a s e o f E x p o r t L / C s , t h e G o v e r n m e n t e n c o u r a g e s t h e e x p o r t e r s b y g i v i n g d i f f e r e n t f a c i l i t i e s l i k e t a x – c u t s . W e t h i n k t h e b a n k s h o u l d a l s o t h i n k a b o u t s u c h t yp e o f f a c i l i t i e s t o b e g i v e n t o t h e E x p o r t e r s b e c a u s e B a n g l a d e s h i E x p o r t e r s l i k e R e a d ym a d e g a r m e n t s E x p o r t e r s a r e g o i n g t o f a c e a t u f f s i t u a t i o n i n c o m i n g ye a r s f r o m t h e e x p o r t e r s o f o t h e r c o u n t r i e s .
4 . I n c a s e o f E x p o r t L / C s , s o m e t i m e s c u s t o m e r s i n s i s t t o g i v e t h e i r p a ym e n t s t h o u g h t h e i r d o c u m e n t s a r e f o u n d d i s c r e p a n t . I n s o m e c a s e s , B a n k h a s t o g i v e p a y m e n t t o t h e s e c u s t o m e r s f o r d i f f e r e n t r e a s o n s . B u t i t l e s s e n s t h e c r e d i b i l i t y o f t h e B a n k . W e t h i n k t h e B a n k s h o u l d b e a s s t r i c t e r a s p o s s i b l e a b o u t g i v i n g p a ym e n t s a g a i n s t d i s c r e p a n t
d o c u m e n t s w i t h o u t h u r t i n g t h e c u s t o m e r s .
5 . O v e r b u r d e n o f w o r k a n d i l l d e f i n e d a s s i g n m e n t u n a b l e t h e e m p l o ye e t o d i s c h a r g e t h e i r d u t i e s i n c o o l m a n n e r . I t i s a l s o c r e a t e s a h a z a r d o u s s i t u a t i o n i n t h e w o r k p r o c e s s . S o a l l t h e e m p l o ye e s h o u l d b e a s s i g n e d w i t h p r o p e r a n d s p e c i f i c a s s i g n m e n t .
6 . T h e y s h o u l d e x p a n d t h e i r b u s i n e s s m o r e b a l a n c i n g w a y w h i c h m e a n s t h e y s h o u l d n o t f o c u s o n a p a r t i c u l a r i n d u s t r y l i k e r e a d ym a d e g a r m e n t s i n d u s t r i e s
7 . T o c o m m u n i c a t e w i t h t h e N e g o t i a t i n g B a n k , A d v i s i n g B a n k .
R e i m b u r s i n g B a n k t h e b r a n c h u s e s S W I F T . A s w e l l a s t h e s e m e d i a t h e B a n k c o u l d u s e t h e E – m a i l , w h i c h i s c h e a p e r a n d f a s t e r t h a n t h o s e m e d i a .
8 . B A S I C B a n k L t d . n o w u s i n g s o f t w a r e a n d t h a t i s K a s t l e . I t i s v e r y d e d i c a t e d s o f t w a r e . I t h a s r e a l t i m e o n l i n e b a n k i n g , A T M f a c i l i t i e s a n d E – b a n k i n g a n d l o t o f m o r e . S o w e t h i n k i t w i l l b e a g r e a t p r o g r e s s f o r t h e b a n k .
I think the Management should employ at least few more employee in foreign trade department as I have seen from my practical experience that many customers wait for a long time for any service as they see that only one concerned official is doing their best to meet the requirements of the customers but as the foreign trade procedure is designed with man small tasks.
This is a well-established statement that practical situations always differ from theoretical explanation. During my internship period with BASIC Bank Limited almost all the desks have been observed. And I have found theory deviates from the practice more or less though three months are not enough time to find out all the discrepancy between theory and practice.
Among all experiences some noticeable observations are described below:
The officers were mostly courteous, friendly in nature and eager to help despite the tremendous workload.
As a 100% Government owned bank, BASIC Bank is trying it’s best to extend their service to the public.
A very working environment was remaining in the BASIC Bank Ltd., (Shanti Nagar Branch). During my long relationship with (Shanti Nagar Branch), it is found that the (Shanti Nagar Branch) provides all kinds of commercial banking services to its customers. Foreign Exchange department rendering all the services related to international trade and remittance.
It is well established that theory without practice is blind. During the practical orientation I have observed the function of General Banking, Foreign Exchange, and Credit department of BASIC Bank which will help me a lot to understand the overall banking.
Out of the above discussion a conclusion can be drawn after saying that, the present customer dealing procedure is quite well at this moment. The computerized transaction makes the system efficient and effective.