Main principle of this report is to analysis Appraisal of Customer Service of IFIC Bank. Other objectives are present an overview of IFIC Bank and highlight the activities and operations. Report also make a comparison of service quality with other commercial banks and scrutinize the performance of the branch as well as IFIC Bank Ltd. as a whole. Finally find out the customer needs and find out the customer problems.
A Summary of IFIC Bank:
IFIC Bank Ltd. is one of those banks that plays important role in the economy of Bangladesh. There is Seventy six Branch of IFIC Bank all over the country. The activities of the branches are more or less same but there are some differences as per the size of the branches. As I was placed to Banani Branch of IFIC Bank as an intern, my focus of the report will be basically on the functions of Banani branch only.
Basically IFIC Bank, Banani Branch always tries to be the right partner for its customers. IFIC Bank is to provide service to their clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for.
Objective of the Report:
The primary objective of this report is to use the theoretical concepts in analyzing real life of Practical Orientation in Banking activities, which is a partial requirement of the BBA program. But the objective behind this study is something broader. The broad objectives of this report are summarized in the following, manner:
- To present an overview of IFIC Bank.
- To make an appraisal of customer service of this Bank.
- To highlight the activities and operations.
- To find out the customer needs
- To find out the customer problems.
- To make a comparison of service quality with other commercial banks.
- To meet the terms with the entire branch banking procedures.
- To scrutinize the performance of the branch as well as IFIC Bank Ltd. as a whole.
- To gain practical experiences and view the application of theoretical knowledge in the real life.
Strategies of the bank:
IFIC Bank Limited mainly follows top down approach to take necessary decisions for the company. Basically they follow the centralize strategy where the Head Office of the Bank control and monitor all the activities of its branches. In case of marketing strategy they basically depend on ‘word of mouth’ as they are already well reputed for its long-term service in the banking industry.
The branches of the Bank cover all tile important trading and commercial centers in Bangladesh. At present it has 76 branches within Bangladesh. All the branches are equipped with computers in addition to modern facilities, logistics and professionally competent manpower.
Mission of the IFIC bank
Our Mission is to provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for.
We are committed to the welfare and economic prosperity of the people and the community, for we drive from them our inspiration and drive for onward progress to prosperity. We want to be the leader among banks in Bangladesh and make our indelible mark as an active partner in regional banking operating beyond the national boundary.
In an intensely competitive and complex financial and business environment, we particularly focus on growth and profitability of all concerned.
Objectives of the Bank:
The objectives of the bank are to promote joint participation of Government and private sponsors to establish joint venture banks, financial companies, branches and affiliates abroad to satisfy their customers.
It conveys its objective via their motto: “Your Satisfaction First.”
- To establish, maintain, carry on, transact, undertake and conduct all types of banking, financial, investment and trust-business in Bangladesh and abroad.
- To form, establish and organize any bank, company, institution or organization, singly and/or in joint-collaboration for partnership with any individual, company, financial institution, bank, organization, or any Government and/or Government agency for- the purpose of carrying on banking, financial, investment and trust business and/or any other business as provided hereafter.
- To carry on any business relating to Wage Earner’s Scheme as may be allowed by Bangladesh Bank from time to time including maintaining of Foreign Currency Accounts and any other matter related thereafter.
- To contract or negotiate all kinds of loan, and or assistance, private or public, from any source, local or foreign, and to take all such steps as may be required to complete such deals.
- To form, promote, organize, assist, participate or aid in forming, promoting or organizing any company, bank, syndicate, consortium, and institute or any holding or subsidiary company in Bangladesh or abroad for the purpose of undertaking any banking, financial, investment or trust business.
Human Resource Development (HRD):
Human Resources Development is focused on recruitment and in-house training for both on the job and off the job Bank staff members through the Bank’s Academy. IFIC Bank Academy – the oldest institution in the private sector – was conceived of as an in-house training center to take care of the training needs of the Bank internally.
Academy is fully equipped with a professional library, modern training aids and professional faculty. Library has about 4941 books on banking, economics, accounting, management, marketing and other related subjects.
Main training activities consist of in-depth foundation programmers for entry level Management Trainees. During its 23 years of existence, Academy not only conducted courses, workshops and seminars as required by the Bank, but it also organized training programmes for the Bank of Maldives, Nepal, Bangladesh Bank and Oman International Exchange LLC. In addition, Academy has also the credit of organizing system of Bank of Maldives.
In addition to conducting courses internally, The Academy also selects candidates for nomination to various courses conducted by distinguished training organizations in the country including Bangladesh Bank Training Academy and Bangladesh Institute of Bank Management.
The Academy also re-designs its courses, programmed etc, regularly to make the requirement of new skills arising out of various directives, guidelines of the Central Bank and significant changes in the banking sector from time to time.
Values of the bank:
- Strong customer focus and building relationship based on integrity, superior service and mutual benefit.
- Striving for profit and sound growth.
- Working as a team to serve the best interest of the group.
- Relentless in pursuit of business innovation and improvement.
- Values and respect to people and making decision based on merit.
- Recognition and reward based on performance.
- Valuating open and honest communication.
- Responsible, trustworthy and law-abiding in every respect.
An Appraisal of Customer Service of IFIC Bank:
Customer service is the most vital factor for any organization. When this question comes about a bank than it becomes more important because a bank is directly involves with its customer. To run the business safe and soundly a Bank must have to maintain a good relation with each and every customer.
Basically a bank provides cash deposit service, utility bills payment service, small finances, corporate or business finance services, loan related services etc. IFIC Bank also provides all this kinds of services for its customers.
IFIC Bank has got that much qualified service team who can provide the best service to the customers and can make the customer a satisfied one.
Products & Service :
- Auto Loan
- Consumer Loan
- Easy Loan
- Porua Loan
- Flexi Loan
- Thikana Loan
- Possession Loan
- Retail Loan
Banks Major Functional Departments & Others Activities:
General banking Division:
There are different types of accounts provided by IFIC Bank for considering the highest benefit of the customers. Such as Savings account (SB), current account (CD), Short term deposit (STD), fixed deposit receipt (FDR) etc are offered by this department. General banking is the heart of banking activities. Total banking procedure start with this department. General banking department perform the core function of bank operation and it is known as “Retail Banking”. They take the deposits from the customer and meet their demand for cash honoring their checks. It opens new accounts, remit funds, issues bank draft and pay order. Account opening section, Remittance, Checks clearing, Cash, FDR, Accounts section are part of general banking.
General Credit Division
A wide range of products and services, such as different type of loans are offered by this department. It faces continuous challenge from the local private banks, which mainly specializes in the consumer banking. As a result, it has to develop new products and services to ease the competition on a continuous basis. The approval is mainly based on the risk analysis of the corporate clients done by the Corporate Banking division.
Finance and Accounts Division
This department performs the following activities:
- Sources of finance
- Administration, audit and back office operation.
- Salary & Provident Fund
- Taking care of taxation and financial control of the Bank.
- Decision making related to administrative activities
Recovery of stuck-up loans is a major concern for the bank. This division helps general credit and project finance divisions to recover the loans and take legal action against those creditors. Some time there is some usual recovery. Recovery from written off loans goes to income account of the bank.
Project Finance Division
IFIC Bank’s corporate clients mainly comprise the top local and multinational companies operating in Bangladesh. The main objective of this department is to build and maintain positive relationships with their clients. As a result, each and every company is assigned a Relationship Manager, who maintains regular contacts with clients. Moreover, this department offers the following facilities to its clients:
- Project Finance.
- Syndicated Loans.
- Bonds and Guarantees, etc.
The foreign exchange and money market operation of the IFIC Bank is broad. Exotic currencies happen to be one of its specials areas of strength. A 24 hour-service is provided to customers in Bangladesh through the Bank’s network of dealing centers placed in the principal of the world. The Bank’s treasury specializes in offering solutions to who wish to manage interest rate and currency exposures that result from trade, investment and financing activities of other dynamic economies of the region.
Internal Control & Compliance
Banking involves high risk, the presence of effective internal control system, corporate governance, transparency and accountability is vital to ensure smooth operation of the bank. The internal control is the process affected to provide reasonable assurance for the achievement of the objectives of the bank, the reliability of financial reporting and compliance with applicable laws, regulation and internal policies.
Audit & Inspection Division
This division helps the bank accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. It also assists development of the process for smooth operation of various department and branches, detect major deficiencies in the branches, review the activities and organizational structure of the internal audit function.
Foreign Trade Division
All the overseas branches are under the control of this division, the regularly communicate with those branches and solve problem of those branches.
It basically handles all promotional campaign, branding both consumer and corporate products and services for IFIC bank.
In Bangladesh local banking laws regulate and rules set by the Ministry of Finance and Bangladesh Bank is handling by this division. Law division has to take care of are:
- Any kind of legal issues
- Compliance advisory service
Account Opening Section
This section opens Current Deposit (CD), Savings account (SB), Short term deposit (STD), Fixes deposit receipt (FDR). Most vital work starts from here as selection of customer is very important for the bank success and failure. If the account holder do money laundering through this account than the bank will be legally responsible for that and bank has to answer to Bangladesh bank or customer may occur fraud and forgery by this account and thus destroy goodwill of bank’s. In branch account opening officer follow some rules which are guided by IFIC Bank manual and senior opening form signature is must in this case. Manager’s signature is must on every account opening form as permission for opening the account.
Types of Accounts:
Deposit is life-blood of a commercial bank. Since commercial bank deals with other people’s money, without deposit there is no business for the commercial bank. Accepting deposit is one of the main functions of commercial bank. IFIC bank’s deposits can be broadly classified as follows:
(a) Current Account:
Current Account is most suitable for private, individuals, traders, merchants, importers and exporters, mill and factory owner etc. For opening of a current minimum deposit of TK. 2000.00 is required along with introductory reference. No interest is given the current account deposited money. One can enjoy maximum flexibility and convenience when s/he opens a current account with IFIC bank limited. This account offers:
- Any number of transactions a day
- Free check book
- Statement of account at any desired frequency
- Statement by fax on demand
(b) Savings Account:
The saving account is primarily for small-scale savers. The main objective of this account promotion is thrift. Hence, there is restriction on withdrawals are permitted only against prior,
- Minimum amount of TK. 1000.00 is required as initial deposit.
- Frequent withdrawal is not encouraged.
- 7 days is required for withdrawal of large amount
- The rate of interest is 6.00 % against SB account.
(c) Short-Term Deposit (STD) Account:
In short term deposit account, the deposit should be kept for at least six month to get the interest. The STD account is a very important class of account in this bank. The minimum amount of balance has to be maintained with STD account is TK. 25000 Interest is given at a rate of 4.5 percent which is less than savings account. Normally various big companies, organizations, government departments keep money in STD account. For this type of account, frequent withdrawal is discouraged. Deposit should be kept for at least seven days to get interest. Prior notice is required for the withdrawal of money from STD account. The account holder must give seven days before the withdrawal that is why STD is also called ‘Seven days notice’ current account.
(d) Fixed Deposit Receipt (FDR):
Fixed period specified in advance. These deposits are time deposit. Normally the money on a fixed deposit is not repayable before the maturity date of a fixed period. At the time of opening the deposit account, the banker issued a receipt acknowledging the receipt of money on deposit account. It is popularly known as FDR. An interest rate ranging from 10.50 percent to 11.50 percent is offered depending on different amount and tenure of deposit. Fixed deposits are the deposits in which an amount of cash is deposited in bank.
(e) Business account:
To open an account for Sole Proprietorship, Limited company account, Partnership Company the applicants are required to bring all the materials that have mentioned before. Extra required materials for business accounts is Trade license, TIN number and for partnership & ltd. Company partnership deed is required.
Transfer of an account to another Branch:
Sometimes the customer wants to transfer his account to another branch due to various reasons. IFIC Bank, Banani Branch, also gives this kind of facility to the customer. In this case, they will have to submit an application to the branch manager stating the reasons. The officer verifies the signature and finds out the balance of the account holder. The holder also submits the rest check leaves along with the application. Then the officer issues an Inter Branch Credit Advice (IBCA) to that branch and a debit voucher with the balance of deposit in that account. He also sends the account opening form and specimen signature card to that new branch. The new branch officer verifies the customer signature with account opening form supplied to him. The amount mentioned in the (IBCA) considered as the initial deposit of the new branch.
Cheque book & ATM Service:
The customer service department helps the customer to collect new cheque book as per customer demands. Most of the time customer came to stop a payment of signed cheque by them. Than the customer service offer stop the cheque payment by analyzing the fact. The cheque only can be stopped in two circumstances, if the customer lost the cheque or if the cheque is being stolen. Unless this two circumstances the service provider can not stop the cheque payment. Except this things service officer takes order for new cheque book for the customers. Usually it takes two working days to collect a new cheque book. This is all about cheque book queries.
There are different services for ATM card users like they can apply for new ATM card. The customer can apply for the lost ATM card. The bank for free of charge provides an ATM if its normally being expired. If the customer somehow damages the card than there is a replacement fee of BDT 300 taka to collect a new ATM card and also customer can collect their captured card after 24 hours from customer service department without any fees. Customer can collect their captured ATM card from their nearest branch. This is all about ATM services.
Closing Procedure of an account:
For two reasons account can be closed –
By Banker: banker has the right to close the account if the customer does not maintain any transaction six years and the balance is become lower than the minimum balance.
By Customer: if the customer wants to close his account he will write an application to the manager and the manager give the proper instruction to the officer then close the account.
Firstly, the concerned customer has to apply for closing his/her account. Then to close the account the Cheque book is to be returned to the bank. After charging the account closing charge the Manager will close the account. Closing charges are as follows:
- For below 6 months 100 tk.
- For over 6 months 200 tk.
The rest amount of money laid in the respective account is paid to the customer by a payment order. In case of payment order certain commissions and vat are cut off from the account.
IFIC bank’s locker service allows a customer to keep their valuable in a safe and secured place and access the same at their convenient time.
Locker service offers the following facilities to its customer:
- Friendly and personalized services from the locker custodian.
- Complete privacy: A locker holder can operate the locker in private environment.
- Convenient location of locker complexes.
- Complete safety and security: Locker complexes have the best available security features such as:
- Alert, round the clock security guard.
- Strong, heat-resistant steel lockers lodged in reinforced concrete steel vaults for maximum protection.
- Sophisticated anti-burglary alarm system.
- Highly advanced smoke-sensor devices placed all over the ceiling backed by the fire fighting equipments.
- Protection against varying weather conditions.
Cash credit is given through cash credit amount. Cash credit amount is basically a current account, however a little different exist between them. The distinction between a current account and cash credit account is that the former is intended to be an account with credit balance and the letter and account for drawing of advances. Operation of cash credit is same as that of overdraft. The purpose of cash credit is to meet working capital need of traders, farmers and industrialists.
Overdraft is that advance which is allowed on current account operated upon by check. The customer may be sanctioned a certain limit within which he can overdraw his current A/C within a certain period The customer can withdrawals or deposits any numbers of within his limit. Bank gives overdraft in following two ways:
- SOD (secured overdraft)
- Cash credit
Secured Overdraft (SOD)
Secured overdraft is a continuous credit facility to the customer of the bank. This kind of credit facility is given on following security:
- Various kind of Sanchay Patras
- Government security
- FDR (fixed deposit receipts)
- ICB unit certificate
- Work order
If any customer wants to get SOD facility from the Bank, he has to submit an application to the Bank manager It must be done in prescribed form of the bank. After getting application form bank made an office note. In this note bank officer write down the following things:
- Nature of limit
- Extent of limit
- Rate of interest rate
SOD limit for FDR, BSB, PSP, ICB unit certificate:
- Two care from branch level
- Above from head office
SOD limit for different kinds share:
- 20 lac from branch label
- If it is more then 2.0 lac, the branch has to take approved from head office
For share bank can sanction 70% credit facility for “A” grade share and 60% for “B” grade share. In case of SOD on share the last six months average value or present value, which one is higher, is considered.
SOD on Work Order:
If any party wants to get SOD facility from the bank after getting work order, he has to submit an application with reliable security mention there In past time bank give SOD facility without any collateral security . But now bank do not give any SOD facility against work order If bank see that all of his papers are eligible for getting SOD facility, bank asks him to give a power of attorney to the bank for receiving all kinds of payment for the work. He can get up to 50%of the amount of the work that he has to done. But he has to submit his collateral security for that. He gets 50% SOD facility against his collateral security. After getting power of attorney bank sends a request letter to the authority by which the work has been issued. Then that authority sends a letter to the bank that they will make all of the payment of the party through the bank. After getting the letter the bank credits the SOD amount to the customer’s current account. When bank gets payment from the authority, they make a ratio and cut off their amount from that payment.
The following charge documents arc taken from the customer:
P (promissory note) note: Three types
1) Single DP note
2) Joint DP note
3) Joint and several DP note
- Letter of arrangement
- Letter of continuity
- Letter of lien for advances against share, stocks and security.
Cash Credit (CC):
Cash credit is the favorite mode of borrowing by traders, industrialist etc. for meeting their working capital. Cash credit is a kind of continuous overdraft. In banking system cash credit is given for two purposes. The purposes are as following:
- Working capital
- Trading purpose
It is a favorite mode of advance for the customer. For cash credit facility bank allow a limit for his customer. The customer can make continuous transaction with in that limit. CC is given for one year. After one year the customer can renew his CC facility.
For CC facility interest is counted daily basis. That means customer has to only that amount of interest which is outstanding in his CC account. Interest is cut off from customer current in tram wise.
Mode of security:
For CC banks take two type of security. These are as following:
In branch level bank cannot give more then 30 lac taka to his customer. But if bank want, they can give more then 30 lacs. The branch has to get approval from head office of the bank.
For giving CC bank takes following charge document:
- DP note
- Letter of arrangement
- Letter of continuity
- Letter of hypothecation of goods
- Stock of goods report
- Personal guarantee of all the director of the company
- Deed on additional charge on the fixed assets of the company
- Form for filling charge with register of joint stock companies
- Resolution of board of directors
- Insurance policy for stock
In CC facility bank only allow 50% credit facility of the stock that the customer has been pledge or -hypothecation. Bank gives CC only for one year. After one year customer has to renewal it.
Bills purchases and discounted:
Banks grant advances to their customers by discounting bill of exchange or pro-note.
Security against Advances:
The different types of securities that offered to a banker are as follows:
- Immovable Property
- Movable Property.
- Pratirakshay Sanchay Patra, Bangladesh Sanchay Patra, ICB unit
- Certificates, wage earner development bond.
- Fixed deposit receipt.
- Shares quoted in the Dhaka Stock Exchange and Chittagong Stock Exchange.
- Pledge of Goods, produce.
- Hypothecation of goods, produce and machinery.
- Fixed assets of manufacturing unit.
- Shipping documents.
Modes of Charging Security:
A lien is right of banker to hold the debtor’s property until the debt is discharged, bank generally retain the assets in his own custody but sometimes this goods is in the hand of third party with lien marked. When it is in the hand of third party, the third party cannot discharge it without the permission of bank. Lien gives banker the right to retain the property not the right to sell. Lien can be made on movable goods only such as raw materials finished goods, shares, debentures etc
Pledge is also like lien but here bank enjoys more right. Bank can sell the property without the intervention of any court, in case of default on loan, but for such selling proper notice must be given to the debtor. To create pledge, physical of goods to the bank is must.
In this charge creation method, physically the goods remained in the hand of debtor. But the documents of title of goods are handed over to the banker. The method is also called equitable charge. Since the goods are in the hand of borrower, bank inspects the goods regularly to judge its quality and quantity for the maximum safety of loan.
Mortgage is transfer of an interest in specific immovable property. Mortgage is created on the immovable property like land, building, plant etc. most common type of mortgage is legal mortgage in which ownership is transferred to the bank by registration of the mortgage deed. Another method called equitable mortgage is also used in bank for creation of charge. Here mere deposit of title to goods is sufficient for creation of charge. Registration is not required. In both the case, the mortgaged property is retained in the bank of borrower.
Advanced Against Fixed Deposit Receipts:
- Fixed Deposit Receipt
Advance against Fixed Deposit Receipt will be subject to credit restrictions imposed from time to time by Head Office/ Bangladesh Bank. Scrutinize the Fixed Deposit Receipts with regard to the following points:
- The fixed Deposit Receipt is not in the name of a minor.
- The depositor on revenue stamp of adequate value discharges in hand his signature is verified.
- Creation of liability on Fixed Deposit issued in joint names by any one of the depositors is irregular.
- It the deposit receipt is offered as a security for allowing advances, a letter of line shall be obtained from the depositors, on the appropriate form.
- If the deposit receipt has been issued by the branch-allowing advance, line against that specific deposit receipt to be marked in the fixed deposit register of the branch.
- The discharged receipt, the letter of lien duly verified by the issuing branch and the letter confirming registration of the lien on the deposit receipts shall be kept along with other documents under safe custody of the bank.
- Lien on the partial amount of deposit shall not be accepted.
SWOT Analysis: IFIC Bank Limited
The strengths, weaknesses, opportunities and threats of IFIC Bank Limited are noted below as I have found in my analysis.
- Strong capital position of the bank
- Capability to mobilize substantial deposits through various deposit schemes despite low offering.
- Low non-performing assets or classified loans of the bank signify strengths in credit customer selection.
- Ability to maintain positive non-interest margin that signifies efficiency in earning fee incomes.
- Lack of adequate liquidity of the bank
- Management’s inability to converts assets into earnings efficiently which results in decrease in return of assets, return on equity and earnings per share.
- Inability to cope with economic conditions resulted in slower growth of interest earning assets than of interest bearing liabilities. The net effect was decline in operating profit in the recent year.
- Technology integration for automation of business process can gain competitive edge over the others.
- Increasing awareness of Islamic banking can bring more success for Islamic Banking Branches
- The revolution of Information Technology (IT) in the country may lead to success for the bank, as IT sector is a major target area for lending.
- Increased competition in the market for public deposits
- Market pressure for lowering the profit or interest rate
- Volatile global and local economic scenarios
- High concentration in loans as percentage of total deposit may cause severe liquidity problem if significant percentage of loan holder become default.
- The declining return on equity, earnings per share and dividend can give danger signal to the investors.
In order to get competitive advantage and to deliver quality service, top management should to modify the services.
Rectify the Existing Problems:
- As there is no classified loan, branch should monitor the loans & advances closely to avoid classification in future.
- Banani Branch should extend with their all out effort to increase the credit portfolio and to procure more low cash deposit, increase non funded business so as to minimize dependency on interest earning from IFIC Bank general account and to improve overall business performance of the branch to maintain earning.
- When a joint stock company comes to open an account if it’s an existing one, the account opening officer should ask the copies of the Balance Sheet and Income Statement. These will reflect the financial growth of the company and its soundness but in practice bank do not do this. If they have all these that will help them to examine money laundering risk.
- There are numbers of new private banks and some have already activated with their extended customer service pattern in a completely competitive market. Where as IFIC Banani branch is far behind. They are not competitive in customer service because the officers do not behave in professional manner in fort of customer.
- To deliver quality service top management of this breach should try to mitigate the gap between customer’s expectation and employee’s perception and customer’s convenience should give priority.
- IFIC Bank should always monitor the performance of its competitors in the field of Foreign Trade.
- IFIC Bank Ltd. must develop electronic banking system to moderate the service. Technological advantage of a bank ensuring its competitive edge in the market place which can only be achieved by improved technology, efficient manpower and better services.
Customer service is a big factor for a bank to keep the customer happy and satisfied with the services that bank can provide with highest effort. A bank is an intermediary institution, which deposited customer’s money and again invests it to other customers to reach the goal as well as specific objective. A bank can not be able to reach the goal until it makes the customer satisfied by providing services as much as the customer needs.
In this report the importance of customer service has been highlighted. It indicates that the customers are the most valuable assets for a bank. Without having a good number of customers and a good relation with the customer a bank can’t run well in this era because there is huge competition. So I tried to make a relationship scenario of customer with this bank to measure the service quality.
To be the number one bank, there should be a strategy for a bank, that customers are the source of fund and customer should get all the benefits, whish can provide a lot for the customer and as well as can bring a lot for the bank. So each and every strategy should build on the basis of mutual benefit.
After preparing this report it is become easy to say that there should be a goal to make the customer always happy and satisfied with the service, only then a bank can run its business safe and soundly in this competitive era.