Rationale for Selecting the Report:
Leasing is comparatively a vast concept in Bangladesh. Over the period of two past decades the barrier situation prevailing in the national economy of Bangladesh has resulted in a traumatic condition in financial sector. Lease Finance has therefore emerged as an alternative source of credit needs of the business and industry, especially for acquiring capital machinery and transport for the small, medium and large enterprise of the country. It is the source of financing whereby the leasing company as lesser finances the acquisition of assets (Equipment/ plant/ transport) which enable the user (company/individual) as the lease to use same on payment of rentals over a specific period.
Through being new concept in Bangladesh the growth of leasing sector is phenomenal. Leasing started in 1984 in Bangladesh through IDLC being the pioneer follow by another company now it is Phoenix Finance and Investment Limited. At present Number of total leasing companies operating in Bangladesh is 35 nos. which reflect the strong acceptability and tremendous popularity of this sector among the business community of the country.
Establish in 1995, Phoenix Finance & Investment Ltd. allocating scare financial resource to the business community has played a significant role in the industrial development of the country through funding in productive plant, capital machinery equipment over the year.
Fund management is one of the most important functions of nonbanking financial institutions and the best of leasing and investment strength depends considerably on the quality of its treasury department. The treasury department collects and invest fund from different sector of banking and nonbanking financial institution.
Background of PFIL
Phoenix Leasing Company Ltd. (plc), one of the leading and reliable multi-product financial institution in Bangladesh wan in corporate on April 19, 1995 as public limited company under the company act 1994 and started its operation may 9, 1995 as a Non Banking Financial Institution under the financial Institution Act 1993, it has changed its name to Phoenix Finance and Investment Limited (PFIL) with a view to reflecting multi-dimensional financial activities the company has been doing other than lease finance which although, has remained as the prime area of the financial activities.
Through being a new concept in Bangladesh the growth of leasing sector is phenomenal. Leasing started in 1984 in Bangladesh through IDLC being the Pioneer followed by another company Phoenix Finance & Investment Ltd. at present the number of total leasing companies operating in Bangladesh 30 companies. That reflects the strong acceptability and tremendous popularity of this sector among the business community of the country.
The company has Authorized capital of tk 1000 million. And it’s paid up capital is TK. 211 million. This has already been subscribed by the sponsor.
The company consists of 11 directors of which two directors represent two renowned corporate bodies.
- To produce multi financial product service
- To provide entrepreneurship skills and enterprise
- To promote employment generation and poverty alleviation
- To accelerate the pace of industrialization for prosperous Bangladesh
- To promote passion of prosperity
- To promote SME sectors.
Vision of PFIL:
To act As the Best Financial Service provider in the country
It conveys its objective via their motto: “prepare to rise.”
1.2.5 Company Milestone
|April 19,1995||Incorporation of the Company|
|April 19,1995||Commencement of leasing business|
|May 09, 1995||Licensed under Bangladesh Bank|
|September21, 1995||Signing of first Lease Agreement|
|April, 1996||Member, Asian Leasing &Finance Association|
|September 25, 1996||Opening branch in Chittagong|
|September 21, 1997||Website Lunched|
|November 05, 2000||Achieved tk 100 crore finance|
|January, 2006||Member, Institute of Bankers, Bangladesh-(IBB)|
|February 01, 2007||Company change names from PLC to PFIL|
|December, 2007||Achieved tk 500 crore finance|
|August 21, 2008||Opening of Imamgonj Branch in Dhaka|
|May 21, 2009||Opening of Uttara Branch in Dhaka|
|August 10, 2010||Opening of Dhanmondi Branch|
i. To gather comprehensive knowledge of the overall function of treasury department.
ii. To gather knowledge of allocate scare financial resources.
iii. To gather knowledge of generation of income through the fund management.
I completed my project work on Phoenix Finance and Investment Ltd (Head office) in Treasury department. This is one of the most important departments of Non-banking financial institution. A wide range of products and services, such as different type of fund are offered by this department. It faces continuous challenge from the local Financial Institution. As a result, it has to develop new products and services to ease the competition on a continuous basis.
The Treasury Division of PFIL is engaged with Cash Management, Liquidity Planning and Liquidity Protection. It is also conscious to protect all the company’s Assets and Profits against loss due to domestic as well as global financial realities, particularly Interest and Exchange Rate fluctuations. The Treasury Department is also regarded as a ProfitCenter, which generates income by trading instruments in the Financial Market.
To manage treasury unit as profit centre, along with guidance from regulatory authorities, the bank equipped itself with clear policies, fit organization structure, deployment of trained staff, modern infrastructural facilities and technological initiatives.
Major Function of Treasury department in PFIL
- Fund Management
- Corporate Investment
- Assets Liability Management
There are four ways to funding:-
Long Term Loan:
Phoenix finance & Investment limited Funding money through the long term loan. The company collect loan from various bank, and non banking financial institution. These long term loan collect for mainly 3 to 5 years and payment of loan basically monthly, quarterly or half yearly basis. This is the main source of funding money
Secured Over Draft:
Loan agreement under bank extends credit up to maximum amount against which a current account can write a check or make withdrawals. The most common form f business borrowing an overdraft is type of revolving loan where deposit are available for re-borrowing and interest is charged only on the daily overdraft balance. SOD type of loan one year renewable. Secured Over draft in Bangladesh maintains against FDR or TDR.
Term Deposit Receipt:
Term Deposit Scheme is a scheme which pays a started interest over a specific period. The TDR of PFIL is approved by the Bangladesh Bank. For Depositors company maintains CRR (Cash Reserve Ratio) with Bangladesh Bank. So client deposit is risk free.
The depositors can also alive lease /loan facilities from TDR scheme. The TDR is open for all; Individuals, firms, Companies, Corporate bodies etc.
PFIL have the following types of TDR facilities:
I. Advance Income Option: Through advanced income option depositors can earn advance &profit for their deposit amount for deposit 3 years.
II. Monthly Income Option: Through Monthly Income option depositors can earn income on monthly basis.
III. Quarterly income Option: Through quarterly income option depositors can earn quarterly income after every 3 months.
IV. Half yearly income option: Through half yearly income option depositors can earn half yearly income after every 6 months.
V. Double Income Option: Through double income option depositors can double their depositors in five and half years.
VI. Triple Income Option: Through triple income option depositors can triple their depositors in nine years.
Term Deposit Procedure:
For your deposit we maintain CRR (Cash Reserve Ratio) with Bangladesh Bank. So your deposit is risk free
There are two types of procedure:
- Single account
- Joint account
|Step 1||Receiving filled up application and signed by TDR holdersprescribed form mentioning what type of account is desired to be opened|
|Step 2||# The form is filled up by the applicant himself / herself.# Two copies of passport size photographs from individual are taken, in caseOf joint account photographs of all parties are taken.#Applicants must submit citizenship certificates: Photocopy of valid|
passport or Ward Commissioner certificate
# Application must sign in A/c opening form and KYC (Know Your
# Nominee name, signature and photograph one copy.
|Step 3||Authorized Officer accepts the application|
|Step 4||Balance is deposited – only cash is accepted|
|Step 5||Account is opened and a give the TDR receipt|
To verify the application form that are fill up by the depositor according to the terms & condition of PFIL and approved by the authority.
After completing all the procedure provide a check book to the depositor by the name of PFIL and the depositor may withdrawal the interest from the Nominated Bank in various scheme.
Process of collecting cheque
The branches of PFIL are deposited their crossed cheque in the various bank. Treasury department collect their cheque and make a branches a/c credit. As far as safety All branches get cheque for the transaction Crossed cheque can’t be encashment from the counter; rather it has to be collected through banking channel i.e., clearing. If a client of PFIL deposited a cheque of another bank that located within the clearing range and deposit the account after clearing.
Procedures for collection:
“Received” the cheque
Proper endorsement is given
“Clearing” seal with date is given
After that check sent to the concerned bank directly in to the clearing house
Product and Service of PFIL:
PFIL is one of the leading and reliable multi-procedure financial institutions in Bangladesh. The company divided its total Product & service into four categories. Namely,
Stock brokerage service
Assets are leased to clients on predetermined rental basis for a fixed term with a purchase option at the end.
The company extends Lease Finance in the following areas:
- Capital Machinery
- Construction and Medical Equipment
- Energy generating equipment
- Heavy Construction Equipments
- Generator & Boiler
- Air condition/Ice Plant
- Vehicle like bus, luxury bus, Minibus, Trucks, Cars and others vehicles.
The customers are offered loan facilities for a determined term at a negotiated rate.
- Short term loan
- Mid term loan
- Long term loan
Under this scheme, PFIL finances receivables of supply of goods or delivery of services on credit to help the clients realize the maximum portion of their payment soon after they have made the delivery to the buyer. The payment is collected from the customers and the balanced amount is re-reimbursed to the clients
This refers to short-term finance (maturity of not more than 12 months) in anticipation of immediate long term financing such as public issue, private placement, syndication, loan, lease, debenture, etc.
PFIL offers loans to purchase apartment to individuals for their personal use
REAL ESTATE FINANCE
PFIL finances clients to construct house, renovate and extend house, for office chamber/space for professionals etc. under two different schemes:
- Developer’s Finance Scheme
- Corporate Finance Scheme
PFIL sell financial instruments of organizations in local financial market backed by their asset/cash flows such as loan, lease etc.
PFIL helps to raise fund for clients with huge financial requirement through syndication and also help them with the documentation, execution and administration of the syndicated finance.
FINANCIAL ADVISORY SERVICE
PFIL help the existing venture or a new venture by providing various advisory services such as corporate counseling, project counseling, capital restructuring, financial engineering etc.
Department of PFIL:
Phoenix Finance and investment Limited organ gram consist of Chairman, Vice-chairman, Managing Director, Deputy Managing Director, Executive Vice President, Senior Vice President, Vice President Assistant Vice President and so on. In the organ gram the position of the Chairman, Vice chairman and the board are horizontal. Other positions are vertical forms that represent upward and downward delegation of power.
PFIL are two departments, namely:
a) Operation and Marketing department
b) Finance and Accounting department
Operation and Marketing department:
Operation and Marketing Department is very much concerned with Marketing activities, exposition of leasing business, and all other function relating to operation of lease finance of the company. It headed by an Executive Vice President, Senior Vice President, and supervised by the Vice president of the company; there are Principle Officer, Senior Officer, Officer, and Assistant Officer.
Under the Operation and Marketing department there are some other departments. These are-
- Human Resource Management
Finance and Accounting Department:
The department is headed by a manager and supervised by the Vice president of this department. Mangers responsible for all work of the department and supervisor directly the daily works of the officer of the company.
This department has to prepare a series of statement in daily, weekly, monthly, and yearly basis. Some of the statement name is listed below:
- Overdue statement
- Profit and loss statement, Balance sheet,
- Lease support report
- Other financial report for Bangladesh Bank.
Under the Accounting and Finance Department there are some other divisions, these ares-
- Credit Administration
- Treasury & Liability
Description of the Leasing Process:
Equipment of Selection:
Lessee has all the liability to decide and selecting equipment, Specification, Price, Supplier, Purchase terms & condition.
The lessee will formally apply in PFIL’s formal application from along with service charge & others required Information /documents /papers etc.
A lease agreement has two parties. The lease rental lease deposit stipulated loss etc are calculated based on the estimated acquisition cost of the equipment adjusted on the basis of actual cost and charges at the time of executions.
In leasing process need some document. In document there is some paper about product, quantity, quality, shipment etc.
After Documentation company order purchase to supplier.
Installation / delivery:
Upon delivery of the equipment the lessee will install the equipment in his location with the technical assistance of the manufacture/supplier.
After delivery company payment to the supplier or manufacturer.
The lessee becomes formally entitled to use it from the date of lease executions. On the lease execution the lessee will issue the certificate of the equipment acceptance and pay first lease rentals as well as any others charge to the lesser.
After executions of the lease proper monitoring talking following thing into consideration;
a) Monitoring must be done regularly in order to get rentals.
b) A rental schedule is prepared and copy of it is kept in the concern lease file give order to the lessee
Other Relevant Activities
During my internship program I had done some other relevant official activities. These are:
I did printout statement for client.
I have collected TDR.
I did manage the various file.
I did printing.
I did use of fax machine.
I did data entry for TDR account.
I did photocopy for both client and official necessary purpose.
FINDINgS and PROPOSED COURSE OF ACTION FOR IMPROVEMENT
Findings observed in the Organization
Constraints and Proposed:
During my project working in PFIL I realized that there are many challenges and this may be in barrier for future prospect. So the company should take care of his problem very seriously. It is very difficult to find out the hidden problem of an organization within very short time. I tried to my best to find out the challenges and proposed for improvement
Software problem: The main problem faces F&A department is software problem. At a time they maintain two accounting software one is FINTELLIGENT and another is ORACLE. Each work they do doubly. And the software ORACLE is under installation.
Multiple Tasks: Finance and accounting related activities are doing jointly in this department. Though separate service holder maintain the financial and accounting activities sometimes both types of activities done by the same employees.
Shortage of Man power: PFIL is one of the leading nonbanking financial institutions in the country. So it needs huge service holders. Now they have only eighty two service holders to maintain organizational activities properly.
High Interest Rate: Client’s main complaint against the company is high interest rate. They said that Non banking financial institution interest rate is very high compared than bank.
Service charge: Regarding Service charge lessee’s argument is that it is their business and why they should bear the service charge.
Lack of training: Training is essential to update service holder’s knowledge. In PFIL they have no internal training institution. Lack of training is the mainly effect the employees productivity.
Recovery Problem: Recovery is the main problem of O&M department. The lessees are unable to pay the rentals due to political instability, fire, damage, industrial hazard and lack of expert technician.
Limited Rental Period: Rental period is minimum 3 years and maximum 5 years for small investor which creates extra burden to pay the rentals.
Lack of intra department co- ordination: To achieve the goals or targets intra department co-ordination is important. I saw that intra- department co ordination is very poor among the various department of PFIL.
Extra job Presser: Management also fixes the target to collect TDR clients and lessee on employee of all departments. To collect TDR from clients is burden for every employee.
Lengthy Processing time: In PFIL formal procedure is maintained it takes more time to disburse to amount. Sometimes it takes two or more months to get loan or lessee. They want prompt.
Working only 6 weeks or 45 days with this kind of project is really insufficient. But the main thing is that in my M.B.A course I learned theoretical idea but in my project work I learned practical things.
My project work at PFIL which ended on November 02, 2012. During these 6 weeks I worked in Head Office. I had a lot of challenges/constraints, but finally I understood the activities of the non-banking financial institution by actually being there. This practical orientation is necessary for the development and preparation of a person in business world to build up ones career. Those things I have learned at PFIL.
Meaning of responsibility.
Necessity of commitment.
Sincerity and punctuality.
Ability to interact with different sorts of people.
Understand the Corporate activities.
Implications to Organization
Work as team
Implications to University’s project working program
Having some limitations the lessons/knowledge /skills/behavior/practices I learned from my project work help me to convert my theoretical knowledge to real life operation. Besides help me to signify my future education as well as my future career.
Suggestions For Future Strategic Actions for PFIL
In the last stage of report I want to recommend the following thing for the management of the PFIL.
They should strictly follow their internal rules, regulation and policy for sanctioning lease and loan.
It is necessary to appoint sufficient and efficient human resource as well as to retain the existing qualified personnel.
They should be update their software
They should practice democratic decision making to establish an effective management system.
They can arrange corporate picnic or tour to interpersonal and inter department co ordination
They should ask for some legal reforms in leasing sector to handle the default leases with prompt legal option.
They should arrange some internal and external training program.
For any M.B.A student who would like to build up his/her career in the banking or nonbanking financial sectors, he/she must need to complete this type of project report. As a successful completion, I am really a lucky person that I could perform my project work in PFIL (Head office). I hope this report prepared by me on the basis of my project work will be beneficial for the personnel who are already involved in job in any reputed organization and will also be helpful for the future internees those who will carry out their internship training in PFIL or in other NBIF. PFIL has been able to continue its overall progress for year to year, especially through the treasury department. In the NBIF’s profit largely depends on its collection of fund. PFIL was able to achieve 2nd highest profit in year 2009. This success has been making possible due to dynamic leadership of the NBIF.