The main objective of this report is to analysis General Banking System of Dutch Bangla Bank Limited. Other focus subjects are to know the role of banks in Loans and Advances and to know how to deal with Foreign Exchange. Here also discuss on to observe banker-customer relationship. Finally examine the profitability and productivity of the Bank and describe SWOT analysis based on problem and solution.
Objective of the Report
The main objectives of the practical orientation are as follows:
- To understand the role of banks in Loans and Advances.
- To familiarize with practical banking.
- To know the General Banking practices.
- To know how to deal with Foreign Exchange.
- To observe banker-customer relationship.
- To relate the theories of banking with the practical banking.
- To examine the profitability and productivity of the Bank.
Methodology of the report
Data have been collected from two sources. These are as follows:
The Primary Sources of Data:
- Face to face conversation with the bank officers and staff.
- Direct conversation with the clients.
- File study of different section.
The Secondary Sources of data:
- Annual Report of Dutch-Bangla Bank Ltd.
- Different publications of Dutch-Bangla Bank Ltd.
- Unpublished data received from the Branch.
- Different text books.
A Brief Idea about Dutch-Bangla Bank
History of DBBL
Dutch-Bangla Bank Limited a Bangladeshi-European joint venture scheduled bank with equity participation from the Netherlands Development Finance Company. It started banking operations in Bangladesh on 3 June 1996. The authorized and paid up capital of the bank is Tk 400 million and Tk 180 million respectively. The paid up capital represents the face value of 1.8 million ordinary shares of Tk 100 each and is fully paid by the sponsors. The equity of the bank was Tk 244.96 million in 1999 and its reserve fund was Tk 22.54 million in 2000.
The bank conducts all types of commercial banking activities including customer services related to local and foreign remittances but its core business is trade financing. It also extends short and medium-term loans to industrial undertakings on a limited scale. Innovative products on credit and deposit scheme introduced by the bank are commission free remittance, the ‘Money Plant’ scheme, monthly term deposits, and small credit facilities for shop owners, small-scale taxi cab loans, small-scale transport loans and consumer credit. Foreign Exchange business dealt by the bank was equivalent to Tk 5,817 million in 1999 and the transactions included export servicing (Tk 1,177 million), import financing (Tk 4,413 million), and remittance services (Tk 227 million). The bank has correspondent relationships with 17 foreign banks
In addition to its banking activities, Dutch-Bangla Bank Limited takes part in different national activities promoting sports, culture, social awareness, etc. Participation in these activities as sponsors is part of its business development policy.
An 8-member board of directors comprising a chairman and four representatives from local sponsors and three representatives from the Netherlands Development Finance Company oversees the management of the bank. The managing director is appointed by the board with the approval of Bangladesh bank. He runs the bank’s day-to-day business with the assistance of its 248 other employees working in various grades. In December 2000, the bank had 9 branches in different towns of Bangladesh.
As on 31 December 2000, total deposits mobilized by the bank amounted to Tk 6,073.3 million and total loans and advances stood at Tk 4,588.1 million was disbursed mainly to small and medium sized enterprises. On that date, its classified loan was Tk 33 million (0.72% of total). In 2000, the bank’s investment was Tk 842.31 million, which comprised Tk 710 million in treasury bills, Tk 1.15 million in shares and securities, Tk 30 million in debentures of Investment Corporation of Bangladesh (ICB) and Tk 100 million in other government securities. On the other hand, the bank borrowed Tk 90 million in 2000 from the inter-bank call market. Total assets of the bank in that year were valued at Tk 7,000 million and its off-balance sheet activities accounted for Tk 3,362 million. During 2000, the gross income of the bank was Tk 766.6 million against gross expenditure of Tk 523.5 million, resulting in an operating profit of Tk 243.1 million and a net profit of Tk 86.6 million. Return on equity of the bank in 1999 was 13.77%.
Dutch-Bangla Bank engineers enterprise and creativity in business and industry with a commitment to social responsibility. “Profits alone” do not hold a central focus in the Bank’s operation; because “man does not live by bread and butter alone”.
Dutch-Bangla Bank dreams of better Bangladesh, where arts and letters, sports and athletics, music and entertainment, science and education, health and hygiene, clean and pollution free environment and above all a society based on morality and ethics make all our lives worth living. DBBL’s essence and ethos rest on a cosmos of creativity and the marvel-magic of a charmed life that abounds with spirit of life and adventures that contributes towards human development.
Dutch-Bangla Bank believes in its uncompromising commitment to fulfill its customer needs and satisfaction and to become their first choice in banking. Taking cue from its pool esteemed clientele, Dutch-Bangla Bank intends to pave the way for a new era in banking that upholds and epitomizes its vaunted marques “Your Trusted Partner”.
Strength of DBBL:
♦ DBBL is the first Bangladeshi-European Joint venture Bank in Bangladesh.
♦ DBBL Directors and/or their family member’s do not maintain any sort of bank account with DBBL, since its inception.
♦ DBBL directors do not avail of any facility or even any fee/remuneration from the Bank for attending Meetings of the Board/Executive Committee/Audit Committee.
♦ DBBL’s sponsoring shareholders did not take any dividend for the initial 5 years in order to increase the capital base of the Bank.
♦ DBBL allows all local remittances such as TT, DD, and PO etc. free of cost.
♦ DBBL’s classified loan as on December 31, 2004 is only 0.16% of total loans and advances.
♦ DBBL’s Regulatory capital as on December 31, 2004 stood at Taka 1.43 billion (i.e. Taka 143 crore).
♦ DBBL’s Capital Adequacy Ratio (CAR) as on December 31, 2004 stood at 10.13% as against Bangladesh Bank’s minimum requirement of 9.00%.
♦ DBBL maintains general provision on unclassified Loans and Advances @ 3% instead of minimum requirement of 1% as set forth by Bangladesh Bank’s regulatory provision.
♦ DBBL extends free medical facilities under its “Rural Health Service Program” to the members of the general public around the rural branches.
♦ DBBL supports humanitarian and charitable activities and causes and spends a substantial amount from its income for these purposes.
♦ DBBL promotes different socio-cultural and sports activities.
♦ DBBL awarded 500 scholarships to meritorious and needy students of the country till this year. From the year 2007, the number of scholarships will be 1250 for which the Bank will need to provide Taka 3.75 Crore each year.
♦ DBBL provides 27% of its total advances as Term Loan and a substantial amount as working capital loan to support industrial development and boost up export earnings of the country.
♦ DBBL has set up the Dutch-Bangla Bank Foundation for carrying out social and charitable activities. From the last year, 5% of the Bank’s annual operating profit is earmarked for the Foundation which was 2.50% earlier.
♦ DBBL distributes up to 2.50% of its annual profit among its employees as profit sharing.
♦ DBBL, in addition to its Statutory Auditor, M/s. Rahman Huq has engaged M/s. Hoda Vasi Chowdhury & Co. as Special Auditor to conduct detail audit Committee of the Board and thus help the Committee to discharge its duties more professionally and accurately. This exceptional step has been taken by the Boards of Directors of DBBL with a view to bringing absolute transparency ands accountability in the overall performance of the Bank.
♦ DBBL’s objective is not only to make profit, but also simultaneously contribute towards social and human development through various generous activities.
Foreign Remittance through Exchange House:
At the beginning of the year 2005, our Bank has been exerting much emphasis on INWARD REMITTANCE. By this time the Bank established extensive drawing arrangement network with Banks and Exchange Companies located in the important countries of the world namely in the United Arab Emirates, State of Kuwait, State of Qatar, State of Bahrain, Italy, Canada and United States of America.
In the meantime, Dutch-Bangla Bank Limited gained the faith of the Bangladeshi Wage Earners in sending their hard-earned money to their respective beneficiaries in Bangladesh in shortest possible time. Expatriates Bangladeshi Wage Earners residing in those countries can now easily remit their hard-earned money to Bangladesh with confidence, safety and speed.
Western Union Financial Services Inc. U.S.A. is the number one and reliable money transfer company in the world. This modern Electronic Technology based money transfer company has earned world wide reputation in transferring money from one country to another country within the shortest possible time.
Dutch-Bangla Bank Limited has set up a Representation Agreement with Western Union Financial Services Inc. U.S.A. as on 14th February 2006. Millions of people have confidence on Western Union for sending money to their friends and family. Through Western Union Money Transfer Service, Bangladeshi Wage Earners can send and receive money quickly from over 225,000 Western Union Agent Locations in over 197 countries and territories world wide- the world’s largest network of its kind, only by visiting any branches of Dutch-Bangla Bank Limited in Bangladesh.
Name of the Exchange Companies and Banks:
|Serial No.||Country||Name of the Exchange Co./Bank|
Last Five years’ Comparative Performance of the DBBL (Figures in million taka)
|Paid up Capital||180.00||202.14||202.14||202.14||202.14|
|Share Money Deposit/Share Premium||18.20||11.07||11.07||11.07||11.07|
|Loans & advances||4588.09||8,044.43||9,391.64||11,431.32||14,976.06|
|Total earning assets||6511.95||12,387.63||16,457.32||18,342.87||22,161.76|
|Total non-earning assets||454.39||1,075.60||1,408.35||1,622.73||2,398.79|
|Total contingent liabilities||3363.50||3,640.22||3,583.34||6,786.52||11,588.25|
|Total operating income||766.57||1,299.27||1,897.40||2,115.49||2,366.91|
|Total operating expense||527.79||902.01||1,473.84||1,661.70||1,734.50|
|Total income from investment||43.60||58.17||102.33||224.32||126.62|
|Profit before provisions||238.78||397.26||423.56||453.79||632.41|
|Profit before tax||206.77||274.54||296.00||382.10||499.02|
|Provision for tax||82.71||111.74||118.40||171.95||262.67|
|Net profit (after tax)||124.06||162.80||177.60||210.16||236.35|
|Ratios & Statistics:|
|Return on equity (%)||41.09||37.85||31.50||29.63||26.70|
|Capital adequacy ratio (%)||8.05||8.20||10.09||10.23||10.13|
|Loan deposit ratio (%)||75.00||70.00||59.00||66.72||71.09|
|Amount of classified Advances (Tk)||32.97||41.19||56.41||41.58||23.24|
|Provision kept against classified Advances (Tk)||5.44||6.94||19.04||19.04||19.04|
|Provision surplus/(deficit) (Tk)||0.36||–||1.75||10.38||13.70|
|Classified loans to total loans (%)||0.72||0.51||0.60||0.36||0.16|
|Return on assets (%)||2.27||1.59||1.13||1.11||1.06|
|Return on Investment (ROI) (%)||57.61||54.76||33.31||22.98||26.12|
|Cost of Fund (%)||7.97||7.86||8.65||8.53||6.90|
|Earning per share (Tk)||68.92||80.54||87.86||103.97||116.93|
|Dividend per share (Tk)||15.00||17.50||20.00||20.00||22.50|
|Price Earnings (P/E) Ratio (Times)||–||5.30||4.64||4.15||15.84|
|Net asset Value (NAV) per share (Tk)||199.38||248.01||309.88||391.85||484.03|
|Number of shareholders||7||588||471||451||403|
|Number of employees||248||309||401||436||401|
|Number of branches||9||11||17||17||19|
Cash Flow Statement:
|Cash flow statement for the year ended 31st December|
|A) Cash flows from operating activities|
|Interest received in cash||1,784,417,975||1,770,168,918|
|Interest paid by cash||(1,267,353,908)||(1,108,168,519)|
|Fees & Commission received in cash||177,031,917||112,521,045|
|Cash paid to employees||(219,518,106)||(157,625,542)|
|Cash paid to suppliers||(62,200,952)||(27,910,631)|
|Income taxes paid||(167,550,422)||(187,923,301)|
|Received from other operating activities (item-wise)||267,863,506||170,680,233|
|Paid for other operating activities (item-wise)||(175,830,317)||(154,020,563)|
|Operating profit before changes in operating assets & liabilities||337,143,489||417,979,920|
|Increase/(decrease) in operating asset & liabilities|
|Purchase-sale of trading securities||550,000,000||(440,000,000)|
|Loans and advances to customers (other than banks)||(3,544,737,639)||(2,039,675,687)|
|Other assets (item-wise)||734,756,049||(558,257,144)|
|Deposits from other banks||1,090,787,721||728,358,611|
|Deposits from customers (other than banks)||2,569,071,311||679,019,108|
|Other liabilities account of customers||20,641,910||108,166,314|
|Other liabilities (item-wise)||(352,730)||(15,616,782)|
|Net cash received from operating activities||2,060,465,111||(1,550,253,660)|
|B) Cash flows from investing activities|
|Payments for purchase of securities||–||(5,655,000)|
|Purchase of property, plant & equipment including leased assets||(1,162,067,905)||(66,658,834)|
|Sale proceeds of fixed assets||–||438,664|
|Net cash used in investing activities||(1,162,067,905)||(71,875,170)|
|C) Cash flows from financing activities|
|Received from issue of loan capital and debt securities||500,000,000|
|Net cash received from financing activities||(40,310,980)||459,775,270|
|D) Net increase/(decrease) in cash (A+B+C)||858,086,225||(1,162,353,560)|
|E) Opening cash and cash-equivalents||4,597,595,434||5,759,948,994|
|F) Closing cash and cash-equivalents (D+E)||5,455,681,659||4,597,595,434|
DBBL Financial Highlights:
Year ended December 31, 2003 and 2004 Taka in million
|Profit before tax||382.11||499.02||116.91||30.6|
|Profit after tax||210.16||236.35||26.19||12.46|
|Net Asset Value (NAV) (Taka per share)||391.85||484.03||92.18||23.52|
|Earnings per share (Taka)||103.97||116.93||12.96||12.47|
|Return on Assets (ROA %)||1.11%||1.06%||(0.05)||(4.5)|
|Return on Equity (ROE %)||29.63%||26.70%||(2.93)||(9.89)|
Highlights on overall activities of the bank for the year 2011 and 2012
|Particulars||2003 (Taka)||2004 (Taka)|
|Surplus/ (shortage) of capital||159,256,006||136,234,296|
|Total loans and advances||14,976,056,619||11,431,318,979|
|Total contingent liabilities and commitments||11,588,252,297||6,786,518,913|
|Ratio on loans and deposits||71.09||66.72|
|Ratio on classified loans to total loans & adv.||0.16||0.36|
|Profit before tax & provisions||632,412,185||453,785,211|
|Classified loans for the year|
|Provision held against classified Loans||19,043,356||19,043,356|
|Surplus/ (shortage) of provision||13,698,707||10,381,825|
|Cost of fund||6.90%||8.53%|
|Interest earning assets||22,161,756,773||18,342,854,479|
|Non-interest earning assets||2,398,789,290||1,622,741,702|
|Return on investment (ROI)||26.12%||22.98%|
|Return on assets (ROA)||1.06%||1.11%|
|Income on investment||126,620,851||224,317,597|
|Earning per share (Taka)||116.93||103.97|
|Net income per share (Taka)||116.93||103.97|
|Price earning ratio (Times)||15.84||4.15|
Profit & loss account for the year ended 2011 and 2012.
|Particulars||2012 (Taka)||2011 (Taka)|
|Less: Interest paid on deposits & borrowings||1,264,334,948||1,291,708,740|
|Net interest income||537,218,851||316,030,176|
|Income from investment||126,620,851||224,317,597|
|Commission, exchange and brokerage||346,681,280||244,737,126|
|Other operating income||92,062,436||35,937,181|
|Total operating income||1,102,583,418||821,022,081|
|Salary ands allowances||222,526,033||179,303,371|
|Managing Director’s Salary ands allowances||5,150,600||4,205,754|
|Rent, taxes, insurance, electricity etc||53,644,991||41,801,511|
|Postage, stamp, telecommunication etc.||13,447,616||10,923,146|
|Printing, stationary ands advertisement||37,119,831||34,454,423|
|Repairs, maintenance and depreciation||60,477,017||48,230,561|
|Total operating expense||470,171,233||367,236,869|
|Profit before provisions||632,412,185||453,785,211|
|Provision for diminution in value of investment||33,180||.|
|Provision for DBBL foundation||26,945,450||10,055,000|
|Profit before tax||499,023,878||382,104,711|
|Provision for tax||262,673,526||171,947,120|
|Profit after tax||236,350,352||210,157,591|
|Dividend equalization account||5,053,375|
|Proposed dividend @ Tk,22.50 per ordinary share of Tk. 100 each||45,480,375||40,427,000|
|Dividend distribution tax @ 10% on proposed dividend||4,548,038||4,042,700|
|Retained earnings carried forward||81,463,789||89,266,949|
|Earning per share||117||103.97|
Balance sheet of December 31, 2004 and 2003.
|2012 Taka||2011 Taka|
|PROPERTY AND ASSETS|
|In hand (including foreign currencies)||268,284,999||142,110,467|
|Balances with Bangladesh Bank and its agent bank (including foreign currencies)||1,032,911,157||728,805,489|
|Balances with other banks and financial institutions|
|Money at call and short notice||1,450,000,000||1,944,980,341|
|Loans and advances|
|Loans, cash credits, overdrafts, etc.||13,387,699,162||10,536,967,138|
|Bills purchase and discounted||1,588,357,457||894,351,841|
|Fixed assets including land, building, furniture, and fixtures||323,944,948||173,376,080|
|LIABILITIES AND CAPITAL|
|Long-term liability-DBBL industrial Bond||500,000,000||500,000,000|
|Borrowings from financial institutions including other banks and agents||432,432,625||370,773,938|
|Deposits ands other accounts:|
|Current deposits and other accounts, etc||2,300,794,380||1,726,812,625|
|Savings bank deposits||2,988,366,140||1,801,638,302|
|Bearer certificates of deposits||–||5,500,000|
|Paid up capital||202,135,000||202,135,000|
|Dividends equalization account||5,053,375||–|
|Profit ands loss account-Retained earnings||407,241,626||325,777,837|
|TOTAL SHAREHOLDSERS EQUITY||978,393,394||792,071,455|
|TOTAL LIABILITIES AND SHAREHOLDSERS EQUITY||24,560,546,063||19,965,596,181|
General Banking Department
The General Banking Department does the most important and basic works of the banks .All other department are linked with this department. It also plays a vital role in deposit mobilization of the branch. For proper functioning and excellent customer service this department is divided into various sections namely as follows:
- Accounts opening section
- Cash section
- Deposit section
- Remittance section
- Clearing & collection section
- Accounts section
- Dispatch section
- Personal and establishment section
Accounts Opening Section
This section deals with opening of different types of accounts. It is also deals with issuing of check book and different deposits book to the different accounts opener. A customer can open different types of accounts through this department such as:
- Current account
- Saving bank deposit account
- Fixed deposits account
- Monthly saving scheme
- Special deposits scheme
Requirements of opening an accounts
There are some requirements have to be completed for opening an account such as:
Current account is an account where numerous transactions can be made by the accounts holders within a working day. There is no restriction on the number and the amount of withdrawals from the current account within availability of funds.
As the banker is under this obligation to re pay this deposit on demand. NO interest is paid in this A/C. Generally, current account is opened for businessmen and traders for easy transaction. But a person can open CD A/C for special purpose. Requirements for the different types of accounts holder are discussed below:
There is a different account opening form for proprietorship firm provided by the Dutch Bangla Bank Ltd., Banani Branch; Requirements of opening CD A/C for proprietorship are mentioned below:
- Trade license
- Seal of the firm
- Attested photograph (2 copies)
There is a different account opening form for partnership firm. Instruction for running an account is given in this form documents required to open these types of account as follows:
- Attested (2COPIES) of those who will operate the account.
- Partnership deed.
- Resolution of the firm regarding account opening should be given.
- Trade license.
For opening every types of account a signature card and different register for different types of account is maintained in the bank. An account number is given in each account and the description of the account is entered in the computer.
A separate account opening form is used for limited company. The banks always take precautions for opening account these types of customer. Several documents are submitted by them which should be checked carefully by the bank to be legally in a safe position. Requirements to open an account as follows:
- Memorandum of association
- Article of association.
- Attested photographs (two copies each) of those who will operate the account.
- Letter of commencement (for public ltd co.)
- Letter of incorporation.
- List of the directors and their number of share and status.
- Registration: the company must be registered and certificate related to this issue is obtained from the registered office of Joint Stock Company.
- Resolution: specimen of resolution to be passed by a limited company for opening an account with the bank.
Saving Bank Deposits Account
SB account is meant for the people of the lower and middle classes who wish to save part of their incomes to meet their future needs and intended to earn to an income form their savings. Therefore, the banks impose certain restriction on the savings bank account also offer reasonable rate of interest. The cash reserve maintained by the bank against these deposits is comparatively smaller than current account.
Restrictions on SB account
The saving bank deposits are subject to the following restrictions regarding withdrawals:
- The number of withdrawals over a period of time of time is limited. Three withdrawals per week are permitted .but more then that no interest will be paid on rest amount for that month.
- The total amount of one or more withdrawals of any date should not exceed 25% of the balance in the account unless 7days advance notice is given.
Opening of FDR
There is prescribed form for opening FDR. No introducer is required for opening this A/C. A minimum amounts as determined by the H.O. is required to open such A/C.
Accounts in which no operation either deposit or withdrawal takes place for period of one year should be treated as Dormant Account. Such account should be transferred to a separate Auxiliary ledger called “Dormant Account Ledger”. As a measure of precautions against a fraud the specimen signature cards of all the dormant accounts should be also be removed from the box of active account signature cards and kept in a separate signature card box. The first withdrawal from such account should be allowed with closing and other incidental charges and surrender the unused check leaves. The account should be debited for the account closing charges etc. and unused check leaves should destroyed by the authorized officer of the bank. In case of Joint A/C the application for closing the account should be signed by the entire Joint A/C holder.
Procedures of Closing Account
A customer may close out his account any time by submitting an application to the branch. The customer should be asked to draw the final check for the amount standing to the credit of his account less the amount of closing another incidental charge and surrender the unused cheque leaves. The account should be debited for the account closing charge etc. and unused cheque leaves should be destroyed by the authorized officer of the bank. In case of joint account the application for closing the account should be signed by the joint account holder.
There several counters work simultaneously in cash section of DBBL, Banani Branch. There is also some electronic counting machines by which a huge amount of cash money can be counted within a few minutes. This branch also allows evening hour transaction only in case of deposit of money.
Cash Receiving Procedures
The work of cash receiving counter is examining deposit slips. Depositor will use the prescribed deposit slip supplied by the bank to deposit cash, cheque, draft, pay order, etc. In all types of deposit the teller must check the following things:
- The slip has been properly filled-up.
- The title of the account and its number.
- The amount in figure and in words is same.
- Instrument signed by the depositor.
- Date of the instrument.
After checking all these things the teller will accept cash, cheque, draft, pay order, etc. against deposit slip. The Teller will place the cash in the cash drawer according to denominations. The teller will place sign and affix “cash receipt, rubber stamp” and return the customer’s copy to the customer.
Cash payment Procedures
In order to safe guard his position; the paying banker has to observe the following precaution before honouring a cheque:
- A cheque must be looked whether it is an open or crossed cheque.
- The paying officer should see whether the cheque is drawn on his/her branch.
- He must see the cheque is post dated or pre dated. A teller must not pay any post dated cheque.
- The officer must carefully see the apparent tenor of the cheque. If it is mutilated or materially altered then the officer must not honour it.
- The officer must compare the signature of the cheque with the signature on the specimen signature card.
- The officer must verify the regularity of the endorsement.
- The officer may allow overdue against a cheque if prior arrangement is done with the bank.
Passing the Cheque
If the cheque has no defect and it is payable, the in charge will sign in the cheque affixing signature verification seal along with his/her initial and will cancel the cheque by striking it with pen. The officers will handover the payment to the appropriate payee.
Dishonour of Cheque
A banker can dishonour a cheque in following situation:
- Insufficient fund
- Payment stopped by drawer
- Alteration required drawer signature
- Effect not clear in cheque
- Exceed arrangement in cheque
- Full cover not received
- Payee’s endorsement irregular/illegible/required
- Drawer signature differed and required
- Cheque is post dated/mutilated/out of date
- Crossed cheque must be presented through a bank
- Clearing stamp required cancellation
- Cheque crossed “Accounts payee only”
- Collecting bank’s discharge irregular/required
The function of the Deposit section is very important. It is fully computerized. The officer of the deposit section maintains account number of the all customers of the bank. They are used different code number for different account. By this section a depositor/drawer can know what the present position of his account is. The officer make posting three types of transaction, such as: Cash, Transfer and Clearing. This section performs following tasks:
- Open a new account
- Post all kind of transactions
- Provide on demand report
- Cheque maintenance
- Preparation of day transaction position
- Preparation of closing monthly transaction position
Banks have a wide network of branches all over the country and offer various kinds of remittance facilities to the public. The remittance of the funds by banks is made through different methods. They are:
- Demand Drafts
- Pay Order
- Pay Slip
- Mail Transfer
- Telegraphic Transfer
Above all this service is performed by the Remittance department efficiently.
Demand Drafts (DD)
Demand draft is an order to pay money, drawn by one branch of a bank upon another branch of the same bank for a sum of money payable to order on demand. A draft cannot be drawn payable to named payee. Draft may be purchased by customer or non-customer of the banks. The purchaser of the draft must fill in the relative application form with his name, amount, name of the payee, the branch on which draft is desired, sign it. He has to tender the amount in cash for the draft and bank charge, if any .If the purchaser has an account to the bank can debit D.D amount. The draft is prepared with care regarding the name of the payee, the amount and the office on which it is drawn. In order to ensure safety, the purchaser is advised to cross the draft and the bank given test number. The issuing officer send to the drawee branch an advice containing the particulars of the draft.
Pay Order (PO)
Banks payment order is an instrument which contains an order for payment to the paid to effect local payment whether on behalf of the bank or its constituents. In the beginning stage, PO was issued only to effect local payment of banks own obligations .But at present it is also issued to the customers which they can purchase to deposit as secondary money of carnets money. The banks payment offers are in the form of receipts and issued by the joint signature of two officials. It ensures payment to the payee as the money deposited by the purchaser of PO is kit in the banks own A\C named. Payment of the instrument to be made from the branch it has been issued. It is not transferred and therefore it can only be paid to:
- The payee in identification
- The payees’ banker, who would certify that the amount will be credited to payees account.
- A person, holding the latter of authority from the payee whose signature must be authenticated by the payee.
- The purchaser, by cancellation provides the original PO is surrendered by him to the bank.
Pay Slip (PS)
Pay slip is one kind of instrument provided by the remittance section to the applicants for making payments certain sum of money to the name mentioned in the pay slip.
Mail Transfer (MT)
Mail transfer is an advice regarding remittance of funds sent by one branch to another branch of the same bank, at the written request of applicants. The mail transfer contains:
- The name of the beneficiary
- Address of the beneficiary
- Particulars of the account of beneficiary
- Name of the remitter
It is a non-negotiable instrument and generally it is not handed over to the customer rather than send through post office to the concerned branch for credit to the respective account.
Telegraphic Transfer (TT)
Telegraphic transfer is the quickest methods of transferring funds from one place to another place. The remitter branch sends a telegraphic message to the others branch, to pay a certain sum of money to a named payee. Such a message is usually sent in coded language. There are two procedures should be followed for TT:
Procedures for Opening TT by Issuing Branch
At first, customer should fill up TT application form and deposit money at the same amount mentioned in application form to the cash department.
Procedures for Receiving TT by Receiving Branch
In case of receiving telex from outside the Dhaka city the concerned official maintains the following sequence:
- The officer at first, verifies the own test number with the test number sent by the branch outside the Dhaka On the telex message there also appears the number of the sender, the name of the receiver, the account number from which the money will be sent, the account number where the money will be deposited. The names of the branch, date of the sending TT etc. are also written which should be checked carefully by the concerned officer.
- After verification there happens the register entry on the register book.
- Debit voucher should be issued by the officer against the issuing bank.
- The In-charge again verifies the authorized signature of the authorized official of the issuing branch.
- Creating the clients account by that particular amount of TT in deposit department.
- Lastly, it will go to the accounts department.
The above procedure happens after getting the telex from another branch.
NOTE: Within the local area (say, within Dhaka city) there is no provision for sending TT or DD. In case of transferring money within local area pay order is used.
Clearing & Collection Section
For safety and security in financial transaction, people use financial instruments like DD, PO, Cheque, PS, etc. It is the duty of Commercial bank’s to collect this financial instrument on behalf of their customer. This process that the banks use is known as clearing and collection.
If a cheque, PO, DD, PS of a bank comes from another bank within the range of the local clearing house it is sent for collection through clearing house to the respective branch. The DBBL, Banani Branch deals with clearing house on like of all branches within the range of the local clearing house. It collects all kinds of instruments on behalf of customers and sends it to the local office of DBBL. The local office then sent it to the respective branch for collection. It also deposits all kinds of instruments to the clearing house for collection on behalf of all branches.
Essential things for clearing the instruments
There are four essential things required for clearing the instruments:
- Crossing seal
- Endorsement seal
- Clearing seal
- Signature of Authorized Officer
The clearing and collection transactions are handled in various ways:
- Outward clearing cheque
- Inward clearing cheque
- OBC (Outward Bill Collection)
- LBC ( Local Bill Collection )
- IBC ( Inward Bill Collection)
Clearing and Collection Process
Various types of clearing and collection processes are briefly discussed below:
Outward Clearing Instruments Handling Procedures
If any cheque is deposited by any account holder which is not drawn on Dilkusha Branch (DB) in remittance department (Note: the cheque which is not drawn on DB and expected to be in process of collection of money from another bank can never be placed for “over the counter” (OTC) payment. This cheque must be placed by the account of DB at first, in Remittance Department with the deposit slip. In that deposit, the account number in which the collected money will be kept, the cheque number against which the collection of money from the paying banker will be happened, the name of the account-holder, the signature of the depositor etc should be stated clearly. The process of Outward Clearing Cheques starts from here. The sequence is as follows:
- Reception of cheque by the officer and special crossing to be given on the cheque. Special crossing means the crossing in which the name of Dutch Bangla Bank, Ring Road Branch, is stamped.
- Register Entry to be given on the Outward Clearing Register.
- Clearing seal to be given (LBC for cheque, the money of which will be collected from the bank exists in Dhaka city or local area and OBC for the cheques, the money of which will be collected from outside the Dhaka city of local area).
- Endorsement to be given at the back of the cheque. The language of the endorsement is like this-
- Cheque Schedule (it is the computer posting for each outward clearing cheque) should be attached with each outward clearing cheque along with the Forwarding (it is the computer posting of the sum total of all cheques drawn on a particular bank) and be sent to the clearing house with a view to be cleared.
Inward Clearing Instruments Handling Procedures
Like the outward clearing cheques, there are some cheques, which are drawn by the account holders of DB and given to other parties who are maintaining accounts with other banks. They placed the cheques on their respective bank’s branch and thereby come to the DB for collection of money. The treatments for these cheques are as follows:
- Verification of the position of the account of the account- holder to know whether the cheque can be honoured or not.
- Register entry in the Inward Register Book.
- If there any returns then it should be marked separately.
- Sorting of various types of inward clearing vouchers is happened next; demand draft, foreign demand draft, pay slip and pay order are kept with the remittance department and some of the rest are sent to the deposit department and some to Loan and Advance department.
Here there happens an effect on IBTA (Inter Bank Transaction Account) in accounts department where the particular client account is debited and the collecting bank is credited by the amount of the cheque.
Outward Bill for Collection (OBC)
When Banani Branch send any cheque drawn on another branch outside Dhaka city (say Sylhet Branch) of DBBL for collection on part of its account holder, then this collection procedure will be treated as OBC. OBC happens when the cheque would be drawn ob another branch of DBBL which is outside the Dhaka city.
The sequence of OBC procedures is as follows:
- Reception of the cheque from account holder.
- Seal of the Banani Branch to be given on the cheque, special crossing, and seal of OBC to be given in front of cheque and the endorsement to be on back of the cheque.
- Entry is taken on the OBC register.
- IBCA (Inter Bank Credit Advise) is prepared and sent to Sylhet Branch along with respective instruments.
Various types of vouchers come to this section from several departments (such as Deposit Department, Remittance Department, Loans and Advances Department). At first, there happens register entry then these goes for computer posting.
One of the most important tasks that are performed by this section is to inform the daily deposit position, bills payable and total loans & advances to the Head Office. At the opening of the working day’s transaction this information (previous working day’s) must be sent to the particular department of Head Office.
In the opening of the working day concerned officer of the general section prints out various types of statement and affairs about various transactions of the previous day, such as:
- Daily Statement of Affairs
- Cash-cum Day Book
- General Ledger
- Transaction Listing
3.11.2 Daily Statement of Affairs
This statement shows the overall position of a branch on a particular day. It holds the information on each and every particular account. This statement, first part, holds asset accounts and liability accounts.
In asset side, the information regarding the following accounts for DBBL, Banani Branch is shown as follows:
- CASH AND BANK BALANCE
- Foreign currency in hand
- Cash in hand
- Stamps in hand
- Bangladesh Bank
- Other Banks
- Other Banks FC
CALL LOANS TO BANKS
Call Loans to Banks
- Loans (ADB)
- Loans (General)
- Staff House Building
- All other Loans (Staff)
- Loans Ag. Import Merchandise
- Loans Ag. Trust Receipts
- Loans Ag. Packing Credit
- Loans Ag. House Building (General)
- Temporary Overdraft (TOD)
- Overdraft Secured
- Cash Credit
- Inland Bills Purchased
- PAD (Cash)
- PAD (AID/LOAN/GRANT/BARTER)
- Foreign Bills Purchased (FDBP)
- Local DOC Bills Purchased (LDBP)
- PAD (Inland)
- Building and Property
- Furniture and Fixtures
- Stock of Stationary
- Suspense Account
- Advance Deposits
- Sundry Assets
- Clearing House
- Inter Branch Transaction
INTER BRANCH TRANSACTION CONTRA ACCOUNTS
- Bills Lodged (Local)
- Foreign Bills Lodged
- Foreign Document bills Lodged
- Local Document Bills Purchased (LDBP)
- Customers Liability L.G.
- Customers Liability L.G. (Cash)
- Customers Liability L.G. (Foreign)
- Customers Liability L.G. (AID/GRANT/BARTER)
- Customers Liability L.C. Bill Accept EDF
- Customers Liability L.C. (Inland)
- Customers Liability L.C. (Bills Accepted)
- Customers Liability L/C. (EDF)
The information which is shown on the liability side of the Daily Statement of Affairs for DBBL, Banani Branch is as follows:
- Current Account
- Over-use Fixed Deposit
- Sundry Deposits
- Saving Bank Deposits
- Short Term Deposits
- Fixed Deposits
- Bearer’s Certificate of Deposits
- Foreign Currency Deposits
- Deposit from Bank
- Savings Insurance Scheme (SIS)
- Monthly Savings Scheme (MSS)
- Payment Order Issued
- Pay Slip Issued
- DD Issued Foreign
INTERST SUSPENSE ACCOUNT
- Interest Suspense Account
- ADJUSTING ACCOUNT CREDIT
- Adjusting Account Credit
- BORROWING FROM BANKS
- Bangladesh Bank
- Other Banks (All loans)
INTER BRANCH TRANSACTION
- Inter Branch Transaction
- CONTRA ACCOUNT
- Inland Bills for Collection
Foreign Bills for Collection
- Foreign Document Bills for Collection
- Banker’s Liability LG
- Banker’s Liability CC (Cash)
- Banker’s Liability for LG (Foreign)
- Banker’s Liability LG (Foreign)
- Banker’s Liability CC (AID/GRANT/BARTER)
- Banker’s Liability LC Bill Accept EDF
- Banker’s Liability LC (Inland)
- Banker’s Liability LC (Back to Back)
- Banker’s Liability LC (Bill Accepted)
- Banker’s Liability LC (EDF)
At the end of the first part there are some other information as well; such as:
- Total Deposit
- Bills Payable
- Total Advances
- Number of Current Accounts
- Number of Saving Accounts
- Number of FDR
- Number of Loans and Advances Accounts
- Number of SIS (Saving Insurance Scheme) Accounts
- Number of MSS (Monthly Savings Scheme) Accounts
- Number of Other Accounts
In the second portion of the Daily Statement of Affairs there are some other information. In Debit side the following information are included:
- Assets or Liability with other banks
- Amount of Overdraft Secured Loans (particular)
- Head-wise Amount of Various Cash Credit
- Head-wise Amount of Various Fixed Assets
- Head-wise Amount of Suspense Accounts
- Head-wise Amount of Sundry Assets
In credit side the information which are stated are as follows:
- Head-wise Sundry Deposit Amount
- Sundry Creditors Account
- FCBPR (1&2)
- Margin on LG
- Margin on LC AID
- Margin on Export Bill (LDBP)
- Export Bill (LA) and Others
Cash-cum Day Book
This statement shows the position of Cash receipts & disbursement, payment & receipt by clearing and transfer payment & receipt by transfer. It holds debit and credit side. It also shows the total number of vouchers (by which how many transactions are happened against specific account on particular date). This is a consolidated statement of all the accounts where the total amount is shown against the particular account head. The accounts which are shown in “Particular” column are as follows:
- Current Deposit Account
- Sundry Deposit Account
- Savings Bank Deposits
- Short Term Deposits
- Fixed Deposits
- Payment Order Issued
- Pay Slip Issued
- Loans against Packing Credit
- Overdraft Secured
- Cash Credit
- Inland Bills Purchased
- PAD (Cash)
- Foreign Bills Purchased
- Local Document Bills Purchased (LDBP)
- Sundry Assets
- Inter Branch Transaction
- Expense Account
- Income Account
Besides the above information there are also others in the statement; such as:
- Debit and Credit transaction-amount of Cash
- Debit and Credit transaction-amount of Clearing
- Debit and Credit transaction-amount of Transfer
- Number of Debit and Credit Voucher
General Ledger is the statement that shows the net difference between the previous day’s balance and present day’s balance of each account of assets and liabilities for the branch. It contains account number; head-wise account name, previous day’s balance amount, present day’s debit and credit balance and net difference amount between previous day’s balance and present day’s balance.
It is the document of every day’s head wise transaction with particular account suppose , M r. X is a cash credit (general) account holder , Mr.Y is also an account holder, if the same types of credit – they both made transaction . In this case, the transaction listing would show both the transactions with the transaction number, account number, account heading, the amount of the transaction etc. each and every bit of activity of the branch is reflected here. This statement shows the following information.
- Voucher number.
- Types of transaction (whether it is depositing transaction or withdrawal transaction)
- Code number of the transaction.
- Whether the transaction is Debit or credit balance and the amount.
- ID number.
- Transaction number.
- Account number.
- Heading of the account.
- Particulars of the account.
Statements that are sent by Account Department to the Head Office
The account Department has to send various types of statements to the head Office such as:
- Daily statement
- Weekly Statement
- Monthly Statement
Brief description about these statements is as follows:
In this statement every branch has to send its every day’s last resources position to its Head Office.
In weekly statement every branch sends all the particulars of two types of deposit.
- Time Deposit
- Demand Deposit
Every branch has to send monthly statement to the Head Office in earlier part of the month. In this statement there are all particulars of every accounts, how income the branch is generating, how much expenditure they are making, how much loans and advance they are providing to the parties, how much recovery has been achieved, how much loans has been stucked-up, how much deposit has been collected, what is the performance of the branch in foreign exchange business, etc. are included in the monthly statement.
The literal meaning of the term “Dispatch” is to send away hostily/quickly or to receive an official message. There are two types of dispatch maintained by the dispatch section.
- Dispatch of Letter
- Dispatch of Telegram
For convenient of the work dispatch of letter has been classified into two groups mainly:
- Inward Mail
- Outward Mail
Outward mail is again classified into:
- Ordinary Letter
- Registered Letter/Registered Parcel
Each branch will maintain a deposit account with the local telegram office to which the amount of initial deposit will be paid by debiting to the Charge Account under advice to accounts division. Where a record of all such deposit paid by branches are maintained. The receipt for the deposit will be recorded in the branch document register and retained with other documents.
Personal and Establishment section
This section is under general banking department. The function of the Personal and Establishment section is as follows:
- Supply of office stationary and furniture & fixture
- Maintenance of all fixed assets
- Placement, transfer, promotion letter issuing to the employees
- Correspondence with different department and executives
- Maintenance of stores
- Preparation of expense bill for all kind of expenses
- Maintenance of all expenditure register
General Banking Department
- The location of the DBBL is very much suitable for deposit mobilization, and the external and internal appearance is also attractive.
- The space of the branch is much extended, so different function can be done very easily.
- Accounts opening department is required to be well furnished with modern desk.
- The officers, who work with computer, are not so well trained. If sometimes any problem arises they take time to overcome it.
- There is no computer in remittance section. So, at least one computer is required in the remittance section for quick and prompt service.
- Payments against instruments are faster.
- All decoration of the entire branch is necessarily to be reconstructed for attracting actual and potential customers in competitive market.
- Accounts department needs another permanent officer to perform the job quickly.
- The bank use software named Flex-cube Retail which is good but it needs lots of improvement to perform better and provide faster service to the customer.
Foreign Exchange Department
- In foreign exchange department, sufficient number of employee needed to perform better service and to sustain in the competitive market.
- Some times, return documents against L/C are not found according to the terms and conditions of L/C.
- Pre-shipment inspection certificate should obtain from the exporter of back to back L/C.
Recommendation of the Study
Now some recommendations based on the findings of the study are given below:
- In cash department to ensure more prompt service and to reduce risk an electronic scanning machine should be installed to verify signature on the cheques.
- The officer of front desk should well mannered and of pleasing personality. They should be more professional in their work.
- The officers of the different department should be well trained. The organisation could arrange training program for them in their training institute.
- Transfer of internal instruments should be done quickly on the same day.
- Clearing cheques should be presented and collected on the following day receipt of such cheques.
- Out-station cheques and other instruments should be sent for collection on the same day by registered post.
- In case of instruments received for collection from outstation branches, payment should be effected by the following working day. Intermission/advice thereof should be communicated promptly.
- Balance confirmation on quarterly basis must be sent to CD/SB Account holders. Statement of accounts and passbook, if requested for, must be provided to clients.
- Bank personnel should come to office, at 15 minutes before commencement of business hour. This will enable them to plan their work for the day and to attend the clients at 9 A.M.
- At the peak-banking hour, Manager should move around CD/SB Departments and counters for overall supervision and smooth functioning of the branch.
- Counter should be neat and clean and counter personnel should be smart, tidy and well groomed.
- When customer approaches bank personnel with a problem, which is not actually related to him, the customer should not be avoided. Rather he should be guided to the relevant person.
- Special emphasis must be given for collecting credit report and status report of the borrower when loan exceeds more than fifty thousand.
- Strict supervision must be adopted in case of high-risk borrowers. Time to time visit to the project should be done by the bank official.
- As the office deals with a huge number of clients in a day. Therefore, most efficient employees of this bank should send to this branch for greater work force productivity.
This report has attempted to explain the banking services and policy allowed by the DBBL and also attempted to harmonize and link the theoretical knowledge acquired in the previous term with the experience gathered during the period of practical orientation.
Comparing practical knowledge with theoretical involves identification of weakness in the branch activities and making recommendation for solving the weakness identified.
Since all departments and sections are covered in internship program, it is not possible to go to the depth of each activities of branch because of time limitation.
So, the objective of internship program has not been fulfilled with complete satisfaction. However, highest effort has been given to achieve the objectives of the internship program.
DBBL is playing an important role in the banking system and in the payment system of Bangladesh. The bank has taken suitable policy, strategies and modern technologies to deal with different situations.
Finally, I think that Authority needs to think more about customer services and customer awareness – how to improve the service strategies, how to bring more speed in banking process, how to achieve more efficiency, and above all how to obtain more deposit with lower cost. Otherwise it will be very difficult for the bank to compete with the other commercial banks that already have achieved such level of efficiency. Also every Bank has to be very careful about the credit/advance banking. Overall awareness of both borrowers and the leaders has to be developed. At present DBBL is successful in effectively and efficiently managing these vital issues. In spite of that, in order to keep its success continue and reach at the pinnacle of success it, its managers, board of directors and employees must have the comprehensive and clear idea about the reserve, fund, loan, capital, deposit and liquidity regarding the smooth control of bank and continue its vital operation toward country’s economic development.