Organizational Overview of Mercantile Bank Limited


Mercantile Bank Limited was incorporated in Bangladesh as a Public Limited Company with limited liability under the Bank Companies Act 1991on 20 May 1999 and commercial operation on June 1999. The Bank went for public issue of shares on in 2003 and its shares are listed with Dhaka Stock Exchange and Chittagong Stock Exchange.

 During this short span of time the MBL has been successful to position itself as a progressive and dynamic financial institution in the country. The MBL has been widely acclaimed by the business community, from small entrepreneurs to large traders and industrial conglomerates, including the top rated corporate borrowers for forwarding-looking business outlook and innovative financing solutions. Thus within this very short period of time it has been able to create an image for itself and has earned significant reputation in the country’s Banking Sector as a bank with vision. Presently it has 41(fourty one) branches in operation up to31decmber t2007. During the year 2008* the MBL has plan to open more branches in countries.

The emergence of Mercantile Bank Limited at the juncture of liberalization of global economic activities, after the URUGUAY ROUND, has been an important event in the financial sector of Bangladesh. The experience of the prosperous economies of Asian countries and in particular in South Asia, has been the driving force and the strategies behind operational policy option of the MBL. The Company Philosophy-“ A Bank for the 21st Century” precisely the essence of the legend of  the Bank’s success.

Mercantile Bank Limited has been licensed by the Government of Bangladesh as a scheduled Bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the MBL has, within a period of 6 years in operation of its operation, achieved a remarkable success and always met up capital adequacy requirement set by Bangladesh Bank .

 Board Structure

As stated earlier Mercantile Bank Limited Public Limited Company with limited liability under the Bank Companies Act 1991. All the Directors of the Board and Chairman of the Bank are appointed according to act.

The Managing Director is an ex-officio member of the Board of Directors. There are at present 14directors including the Managing Director.

Board supporting Committee

The Board of the Bank has two supporting committees, which are as follows:

Executive Committee

The members of the Executive Committee are chosen from the directors of the Board The members of the Executive Committee decides upon all routine  and day to day operational matters beyond delegated power of the Management, subject to ratification of Board of Directors.

Audit committee

The audit Committee is formed with three members of the Board o Directors. The audit Committee assists the Board of Directors to ensuring that the financial statements reflect true and fair view of the state of affairs of the Company and in ensuring a good working system in the Bank as per frame work. The Audit Committee is responsible to Board of Directors.

Organizational Structure

To achieve its organizational goals, the Bank conducts its operations in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy making body. The day to day operation of the Bank is looked after by the management.

The management is headed by the Managing Director.  At present MD is assisted by the one Additional Managing Director and One Deputy Managing Director and Departmental Heads in the Head Office. Bank is different in respect of hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the Chief Executive is concerned.

The Branch Managers are called Head of Branch report  to the  Deputy Managing Director and, for functional purposes, to the Heads of Departments. Consequently, quick decision making in disposal of cases is ensured.

In addition to the divisions / departments / branches, the following committees, among others are in for smooth function of the Bank:

 Management Committee 

 The Management Committee comprising of seniors members of the management meets weekly to discuss relevant agenda and to take appropriate actions for running the Bank smoothly.

 Asset Liability Management Committee

Asset Liability Management Committee headed by Managing Director and CEO. Asset Liability Management Committee is responsible of balance sheet risk management.

Credit Committee

The Deputy Managing Director of the Bank head the credit committee. The committee evaluates the credit proposal and either recommendations for approval or declines it.

Other Structure:

  • Incentive structure
  • Code f Ethics / Policy of Business conduct
  • Conflicts of interest
  • Lending to employees, directors or controlling shareholders
  • Transparency and Disclosure

Departments of the MBL:

Total division and departments of the MBL can be classified under three main aspects of banking. These are as follows.

  1. Administrative departments.
  2. Operational department.
  3. Miscellaneous/other department.

 Administrative Department:

The MBL has the following divisions under the administrative department.

i) Human resource division:

This division is assigned to perform the responsibilities of recruitment, posting, transfer, promotion and development of human resources of the bank. They also maintain personal files and service record of the employee’s takes disciplinary actions when necessary.

ii) Branch Control and Expansion Division:

The duties of this division are to prepare test key arrangement among the branches to maintain inter branch accounts and overall control of the branches. Another duty of this division is to study the feasibility of opening new branches.

ii) Public Relation Division:

Another important division under administration department is public relation division .The main activities of this division are as follows:

 a. Circulation of important notices

 b. Issuance of power of attorney to the officers of the bank

 c. Customer service

d. Legal affairs

e. General correspondence within Bangladesh

f. Cash affairs of the bank

iii) Financial administration division (FAD):

This division can be called as the central accounts division because all the account related are done here. All the branches send their monthly statements to the Head Office and this division prepares a consolidated statement by using those branch statements, which shows monthly position of the bank in cumulative basis.

iv) Audit & inspection Department:

This division works directly under the control of the managing director. This division is responsible to arrange periodical internal audit in each branch to conduct special audit, and to follow – up and monitor the banks overall activities

 Operational Division:

Under the operational department the following divisions of MBL conduct their respective works.

  Credit division

    Investment division

    International Division

    Card Division

   Treasury operation division

    Computer and Engineering Division

 Credit division:

All activities related the loans and advances of the bank are directed and controlled by the Credit Division. This division deals with different kinds of credit products of the bank.

 These are:

   2Commercial Credit.

   2Secured overdraft (SOD).

   2Cash credit (Hypo/pledge).

   2Consumer credit, small and medium enterprise credit

   2Industrial Credit

   2Lease Finance

   2Hire Purchase

   2Real estate credit etc.

 International Division:

 International division of the MBL performs the responsibilities of foreign exchange business on behalf of its branches.

 Treasury division:

This unit performs the works of money market operation they borrow and lend money on call basis.

 Miscellaneous / other department:

There are some other important division performing their respective works for the success of the Premier Bank Limited which are as follows

 Marketing Division:

Marketing division is directly related to the marketing of the bank’s products and services to the customers. It takes all the arrangements in deposit mobilization, customer service related other marketing related activities the main task of this division is to formulate strategies for achieving bank’s corporate goals and objectives.

 Training Division:

The MBL maintain its own training institute to develop its employees as prominent banker In order to render prompt and efficient service bank needs skilled human resources. This can be done only through structured modular program. For this purpose the MB Training Institute (MBTI) conducts training on various courses, workshops and seminars every year.

 Vision, Mission and Objectives of MBL


Would make finest corporate citizen


-Will become most caring, focused for equitable growth based on diversified deployment of resources, and nevertheless would remain healthy and gainfully profitable Bank.


Strategic objectives

To achieve positive Economic Value Added ( EVA) each year.

To be market leader in product innovation.

To be  the top  Financial Institution in Bangladesh in terms of CAMEL rating.

To be one of the top three Financial Institution in Bangladesh in term of market share in all signification market segment we serve.

To share different type of social welfare activities.

Financial objectives

To make more profit and maximize return on asset , return on equity and earning per share.

 Special features of the Bank:

MBL is engaged in conventional commercial banking.

  • it is the pioneer to introducing and launching different customer friendly Deposit Schemes to tap savings of the people for channeling the same to the productive sector of the economy.
  • For updating the standard of living of the limited income group of the population, the Bank has introduced Consumer Credit Scheme by providing financial assistance in the form of loan to the consumer for procuring household durables, which already have encouraging responses.
  • The Bank is committed to continuous research and development so as to keep pase with modern banking.
  • The operations of the Bank are computerized to ensure prompt and efficient service to the customers.
  • The Bank has introduced camera surveillance system to strengthen the security service inside the Bank premises.
  • The Bank introduced customer relation management to asses the needs of the customers and resolves any problem on the spot.

Physical and technological resources

A great deal of investment for developing the physical and technological resources 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 conveniently located branches throughout Bangladesh. There are thirteen branches in the capital city of Dhaka, Six in Chittagong , two in Gazipur  and one each in Sylhet Naogaon, Rajshahi, Bogra, Khulna, Rangpur,  Noakhali .

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 eight branches are authorized dealers of foreign exchange. This facilitates speedy disposal of transaction of export and import trade.

Different Credits Offered by the MBL:

  • Cash credit (Hypothecation)
  • Hire purchase
  • Loan (general)
  • House building (commercial)
  • Lease finance
  • Staff loan (car)
  • Staff loan (building)
  • Secured Overdraft (special scheme)
  • Secured Overdraft (financial obligation)
  • Secured Overdraft (against FDR)
  • Secured Overdraft (against work order)
  • Secured Overdraft (general)
  • Loan against Bills
  • Loan against share
  • Loan against consumer credit scheme (CCS)
  • Loan for Export/Import.

 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 eight branches are authorized dealers of foreign exchange. This facilitates speedy disposal of transaction of export and import trade
Performance of the MBL

The MBL’s overall objectives is to have a higher profitability than the average of other banks. The MBL has been operating since June 02,1999.

 Operating Result

The operating revenue of the Bank stood at BDT 962.23 million in 2005 as against BDT 821.76 million in 2004. After necessary provision net profit after tax stood at BDT 386.83 million as of December 31, 2005 as against BDT 312.58 million in 2004. An amount of BDT 316.50 million has been set aside for income tax contribution to National Exchequer as compared to BDT 241.68 million in 2004.

At a Glance the improvement of MBL

                                                                                                            Tk.( in Million )

Paid-up Capital245.00245.00276.85319.765639.5379904125999.271199.121498.9
Total Assets4764.989364.5013078.9316383.9318324.7324705.0528,890.4837159.6539348
Loans & Advances871.463912.976707.428896.1910775.9517669.2921,857.0526842.1431877.86
No.of Branch41014152025283041

 SWOT Analysis

In order to manage strategically SWOT analysis is very vital. In the the process ofanalyzing  SWOT managers identify the Strengths and Weaknesses of the company and also the Opportunities and Threats to the company . There are some strengths , weaknesses , opportunities and threats of MBL that I found when I worked with my study. They are pointed out below:

Strength :

  • MBL is a well-capitalized bank with potential to increase  capital base .
  • MBL believes in Teamwork basis work & feel that a loyal and motivated team can produce extra ordinary results.
  • MBL Board of Directors is homogenous.
  • Computerized customer services (online banking).
  • MBL has the reputation of being the provider of good quality services to its potential customers.
  • Lending financial service provider identity countrywide. With its strong corporate image and identity it has better position in the minds of customers.
  • MBL has a bulk of qualified, experienced and dedicated human resources.
  • Interest of loan is lower in MBL than other bank.
  • Availability of strong marketing activities through mass media e.g. Television.


  • Lack of feasible industrial venture
  • Lack of socio economic stability
  • Lack of proper industrial counseling and guidance
  • Shortage of trained manpower and logistic support.
  • Lack of incentives and publicity
  • Shortage of working capital
  • Technological limitations
  • Political unrest situation
  • Heavy competition with other private commercial Banks
  • Sales and marketing department are not including in this bank.
  • Lack of opportunities for profitable investment.
  • Unfavorable business environment.
  • Increasing cost burden.
  • No practice of productivity measurement.
  • Lack of accountability.
  • Limited number of branches.


  • Public confidence.
  • Minimization of risk.
  • Bangladesh has a huge customer base for maintaining several accounts .so; MBL has the opportunity to keep these customers by reducing its current fees and charges.
  • Our country’s growing population is gradually and increasingly learning to adaptation of consumer finance. As the bulk of our population is middle class, different types of products have very large and easily pregnable market.


  • The upcoming private local & multinational banks posses a serious threat to the existing banking network of MBL.
  • Competitive pressure from rivals.
  • Industrial downward trend due to recession, inflation & unemployment.
  • Now -a –day’s different foreign and private banks are also offering similar type of product with an almost similar profit margin for declining profit.


Mercantile Bank Limited, a specialized state owned scheduled bank having 42 branches in the country, is financing small-scale industries. Mercantile Bank Limited is unique in its objectives. It is a blend of development and commercial banking services.

The main objective of the study was to find out the productivity of the Mercantile bank from 2001 to 2005. It is vary difficult to comment on such a critical subject. In the present study the Bank performance were analyzed from four different but related angles, i.e. coverage, inputs, outputs and sect oral productivity.

Loan and Advances is an important asset in the banks portfolio because it is the main income-generating avenue. The bank did very well in financing industries. The commercial loan scheme also better but micro credit sector could not do significant during the study period.

Remittance and foreign exchange services also showed a better performance in the last two years of the study period than the rest three years.

Mercantile Bank Limited