Assignment on Bangladesh Commerce Bank Limited (Part-1)

1.1 Introduction of the report

The internship program is full credit subject of the BBA program of the StamfordUniversityBangladesh, Which constructs a relation between the real life state of affairs and theoretical concepts.

As a student of Business Administration of BBA program I prefer to prepare a report on banking sector rather than other product and service. This internship report of my BBA program that performed by me as a student of Stamford UniversityBangladesh, Department of Business Administration. In a way I select the banking sector and my supervisor Md. Gulam Sharoar Hossain offered me prepare the report on title as “Investment policies and analysis of competitive advantage by Bangladesh Commerce Bank Ltd”.

1.2 Objectives of the report

Objectives

The objective of the analysis is to evaluate the procedure of “Investment policy and product & Service” of Bank Asia Limited. There are also many objectives. The primary objective of this report is to comply with the requirement of the Bangladesh Commerce Bank Limited. But the objective behind this study is something broader. Objectives of study are summarized in the following manner:

• To evaluate product & Service procedures.
• To evaluate the performance of the bank.
• To apply theoretical knowledge in the practical field.
• To make bridge between the theories and practical procedures of banking day-to-day operations.
• To gain practical knowledge by working in different desks of zigatola branch office of Bangladesh Commerce Bank Ltd.
• To observe the working environment in commercial banks.
• To study existing banker-customer relationship.
• To know the overall functioning of Bangladesh Commerce Bank Limited.
• To have some practical exposures that will be helpful for my future career.

Specific Objectives

• To submit a report, for the fulfillment of my BBA program.
• Is to find out the “Investment policy and analysis of competitive advantage by Bangladesh Commerce Bank Ltd.”

Broad Objectives

• Together comprehensive knowledge on total banking functions.
  • To identify the factors contributing to the attractive & operative performance of the local branch of the bank.
  • To make a study of the facts in order to arrive at certain conclusion about product & Service system.
  • Critically analyze the functions and the operations of each level of the organization of Bangladesh Commerce Bank Limited.

1.3. Scope of the report

Scope of this assignment was very confined concentrate only on the generalization banking system of Bangladesh Commerce Bank Limited development of capital market of Bangladesh. Besides this, for evaluating the performance I kept my thinking on general banking, loan and advances, product & Service.

1.4. Methodology of the report

This report has been prepared on the basis of experience gathered during the period of Internship from May 15, 2009 to August 15, 2009. For preparing this report, I have undergone group discussion, collected data and sent some questionnaires to the selected Officers and interviewed with some of them. I also studied different circulars and files of the bank.

I hope these criteria will be enough to find out different picture of product & Service procedure and financial performance of the selected Bangladesh Commerce Bank Ltd.

Sources of Data

In order to make the report more meaningful and presentable, two sources of data and information have been used widely.

The “Primary Sources” of Data are as follows:

  Face-to-face conversation with the respective officers and staffs of the Branch.

  Informal conversation with the clients.

  Practical work exposures from the different desks of the departments of the Branch covered.

  Relevant file study as provided by the officers concerned.

The “Secondary Source” of Data and Information are:

  Annual Report of Bangladesh Commerce Bank Ltd.

  Various Books, articles, compilations etc. regarding general banking functions, and product & Service.

  Different Procedure Manual published by Bank.

1.5. Limitation of the report

There are some limitations in every analysis. I have also faced some problems at the time analyzing the performance of the bank. The limitations of my analysis are given below:

1. Time is limited (3 month)
2. Insufficiency of information.
3. The bank personnel are very busy.
4. It was very difficult to collect the information from various personnel for their job constraint.
5. As some of the fields of banking are still not covered by our courses, there was difficulty in understanding some activities.
6. Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could very much useful.
7. I carried out such a study for the first time, so inexperience is one of the main constraints or the study.

2.1 Historical Background of BCBL

Bangladesh Commerce Bank Ltd incorporated in Bangladesh on 1 June 1998 as a banking company, it started banking operations on 16 September 1999 with an authorized and paid up capital of Tk 2,000 million and Tk 920 million respectively. The share of the government of Bangladesh in the bank’s paid up capital is Tk 300 million while depositors of the former Bangladesh Commerce and Investment Limited (BCIL) contributed Tk 520 million. The balance of Tk 100 million is to be subscribed by banks and financial institutions under guidance and supervision by Bangladesh bank.

The former BCIL was set up on 27 January 1986 as a non-bank financial institution. It continued its business till April 1992. Consequent upon its liquidity crisis, Bangladesh Bank suspended its operations in April 1992. As a result, the investors of the company suffered a lot and its employees became jobless. Both the depositors and the jobless employees launched a movement for reopening the company in some form or other and demanded return of their money and dues. With a view to safeguarding the interest of the depositors, employees and the general public, and to protecting the banking system itself from contagious effects of bank failures, the government of Bangladesh established the Bangladesh Commerce Bank on the ashes of the collapsed BCIL.

Subsequently, the government on 8 February 1998 constituted a 10-member board of directors to organize and transform BCIL into BCBL and to administer the affairs of the bank. The 24 branches of BCIL were reopened as full-fledged branches of BCBL. The broad objective of the bank is to carry out all kinds of commercial banking activities and to respond quickly to the changing demands for modern banking products.

In its three months of operations in 1999 starting on 16 September and ending on 31 December, BCBL had mobilized deposits of Tk 83 million. To augment its deposit collection further, BCBL introduced a number of deposit schemes suited to the needs of all classes of people in society. These schemes include a) Monthly Profit Based Deposit Scheme, b) Pension Saving Scheme, c) Interest Free Deposit and Loan Scheme, d) Consumers’ Credit Scheme, and e) Money Plantation Against Saving Certificates. It has also offered competitive rates of interest on its deposit holdings, which varied between 7.75% and 12% since the inception of its operations through May 2000. Total deposits stood at Tk 1,294.2 million on 31 December 2000, when its gross loans and advances amounted to Tk 1,311 million.

The first priority of the bank in 1999 and 2000 was the recovery of the past loans of the BCIL. It has managed to recover Tk 523.3 million in cash and Tk 1,788 million by adjustment against past liabilities. The bank is overburdened with the liabilities and the non-performing classified loans of BCIL. The bank also suffered losses in the years 1999 and 2000 and was not able to maintain necessary provisions for classified loans. Investment of the bank has increased from Tk 20 million in 1999 to Tk 95 million in 2000, mainly in government treasury bills. Because of the huge stuck up loans inherited from the BCIL, the bank’s credit-deposit ratio stood at 101.30%.

Total assets of BCBL, including the Tk 1,423.99 million of former BCIL stood at Tk 3,763.7 million on 31 December 2000. The bank’s off-balance-sheet reserve was only Tk 95.8 million, a figure which has contributed little to the increase of its asset-mix. In 2000, BCBL maintained liquid assets of Tk 1,052.6, a sum hardly sufficient to meet its accumulated short-term/current obligations. On the other hand, statutory liquid assets of the bank were 15.08% in 2000, which is below the 20% SLR requirement envisaged by Bangladesh Bank. Because BCBL had absorbed huge amount of liabilities and non-performing assets of BCIL, it was not possible for the bank to make net profits during the short period of its existence in the new set-up.

The bank is managed by a 9-member board of directors appointed by the government. A total of 590 officers and other staff work in the head office and the 24 branches of the bank. It has inherited a training institute from BCIL. This institute is being reorganized to provide training to its employees in modern banking services.

2.2 Objectives and Targets

1. Offering maximum services to the clients and shareholders as per rules.
2. Providing services by diversification to the door step of people in the economic sector.
3. Ensuring maximum utilization of professional manpower by developing skill & creativeness.
4. Creating savings attitude among various classes of people.
5. Increasing investment for keeping the market economy operative.
6. Earning confidence of all concerned by easing foreign trade and international transaction.
7. Assessment of consumer need and provide short term and long term finance on the basis of real need.
8. Proper maintenance of Bank’s resources through appropriate investment and active participation of various welfare programs of the country.
9. Activate capital market by more participation in the capital market.
10. Involves customers with modern banking through proper usage of modern information technology.
11. Providing best services to the customers to establishing firm discipline in Bank management and building long term relation.
12. Achievement of economic growth through various socio-economic activities.
13. Building image of the Bank home and abroad. Upgrading socio-economic aspects of Bangladesh financing Agro-based Prakalpa.

3.1 Product & Services: Deposit Product

A savings account at BCBL will provide you with healthy returns on your savings at the same time as you help support projects bringing lasting benefits to communities and the environment. Our range of personal savings accounts has been designed to offer something for everyone. So whether you want to invest a lump sum, put by a little every month or you simply want to move your savings to a bank with a uniquely ethical approach, there is a BCBL savings account to suit your needs.

3.2 The rates of interest are given below

3.3 Special Savings Scheme 

Under the special savings scheme against regular deposit of particular amount per month a substantial amount after 5/8/10/12/15 & 20 years will be given. This scheme is popularly known as Deposit Pension Scheme

3.4 The Attractive Savings Schemes of BCBL are

3.4.1 Lakhopati Scheme (LDS)

3.4.2 Millionaire Scheme (MIDS)

3.4.3 Kotipati Scheme (KDS)

3.4.4 Marriage Scheme (MDS)

3.4.5 Sikha Sanchaya Scheme (ESS)

3.4.6 Double Benefit (DGDS)

3.4.7 Triple Benefit (TGDS)

3.4.1 Lakhopati Scheme (LDS)

1. Under this Scheme the amount of Deposit is Tk. 1,260/- & Tk. 460/- gradually for period 5 (Five) & 10 (Ten) years.
2. Depending on maturity the return will be as follows-

1. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
2. Under this Scheme client could open any of above account. But after opening account the amount & maturity period could be changed.
3. The depositor must maintain a saving account with any of the brunches of BCBL. By paying a certain fee bank will automatically deposit the monthly deposit amount from the general saving account upon a special instruction of client.
4. Any Bangladeshi above 18 years of age can open this Account. A minor can also open this account by his/her own name. In this case his/her legal guardian will operate the account.
5. Client would receive the return after one month of depositing the last monthly payment.
6. Monthly payment have to deposited within 10 (Ten) of every calendar month (incase of holyday, next working day will be effective). Any number of advance “Deposit” will be accepted.
7. If the depositor wants to encash this ‘Deposit Receipt” prior to maturity, profit will be paid at normal saving rate. But profit will be given if such encashment is made before completion of 6 (Six) month.
8. If client fail to deposit within the prescribed time, he/she have to pay 5% of deposit amount or Tk. 25/- whichever is greater with the next deposit.
9. Bank contains the right to close the account upon a failure to deposit three (3) consecutive “Deposit”. If a client fail to deposit three (3) consecutive “Monthly Deposit”, the account will be treated as ESS account and upon completion of 6 (Six) month, profit will be paid at normal saving rate.
10. After completion of 2 (Two) years, credit facility upto 80% may be availed against the deposit. In that case the client will be required to pay interest on the loan amount as determined by the Bank. This requires minimum Tk. 10,000/- deposit on the account.
11. In the event of death of the depositor prior to maturity of principal with profit will be disbursed his/her nominee(s).  in absence of nominee(s), lawful heir(s) may receive the above on submission of succession certificate.
12. No monthly transaction report will be provided on this account. But if needed a charge of Tk. 10/- would be charged for the monthly transaction report.
13. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
14. Money laundering prevention act, shall be exercise as per rules of BB.
15. BCBL reserves the right to change/enhance the above terms & condition including revision of rate of interest.
16. Photograph of Nominee duly attested by the applicant is to be enclosed herewith.

3.4.2 Millionaire Scheme (MIDS)

1. Under this Scheme the amount of Deposit is Tk. 4600/- & Tk. 2170/- gradually for period 10 (Ten) years & 15 (Fifteen) Years.
2. Depending on maturity the return will be as follows-

1. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
2. Under this Scheme client could open any of above account. But after opening account the amount & maturity period could be changed.
3. The depositor must maintain a saving account with any of the brunches of BCBL. By paying a certain fee bank will automatically deposit the monthly deposit amount from the general saving account upon a special instruction of client.
4. Any Bangladeshi above 18 years of age can open this Account. A minor can also open this account by his/her own name. In this case his/her legal guardian will operate the account.
5. Client would receive the return after one month of depositing the last monthly payment.
6. Monthly payment have to deposited within 10 (Ten) of every calendar month (incase of holyday, next working day will be effective). Any number of advance “Deposit” will be accepted.
7. If the depositor wants to encash this ‘Deposit Receipt” prior to maturity, profit will be paid at normal saving rate. But profit will be given if such encashment is made before completion of 6 (Six) month.
8. If client fail to deposit within the prescribed time, he/she have to pay 5% of deposit amount or Tk. 25/- whichever is greater with the next deposit.
9. Bank contains the right to close the account upon a failure to deposit three (3) consecutive “Deposit”. If a client fail to deposit three (3) consecutive “Monthly Deposit”, the account will be treated as ESS account and upon completion of 6 (Six) month, profit will be paid at normal saving rate.
10. After completion of 2 (Two) years, credit facility upto 80% may be availed against the deposit. In that case the client will be required to pay interest on the loan amount as determined by the Bank. This requires minimum Tk. 50,000/- deposit on the account.
11. In the event of death of the depositor prior to maturity of principal with profit will be disbursed his/her nominee(s).  in absence of nominee(s), lawful heir(s) may receive the above on submission of succession certificate.
12. No monthly transaction report will be provided on this account. But if needed a charge of Tk. 10/- would be charged for the monthly transaction report.
13. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
14. Money laundering prevention act, shall be exercise as per rules of BB.
15. BCBL reserves the right to change/enhance the above terms & condition including revision of rate of interest.
16. Photograph of Nominee duly attested by the applicant is to be enclosed herewith.

3.4.3 Kotipati Scheme (KDS)

1. Under this Scheme the amount of Deposit is Tk. 21,950/- & Tk. 11,100/- gradually for period 15 (Fifteen) Years & 20 (Twenty) Years.
2. Depending on maturity the return will be as follows-
3. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
4. Under this Scheme client could open any of above account. But after opening account the amount & maturity period could be changed.
5. The depositor must maintain a saving account with any of the brunches of BCBL. By paying a certain fee bank will automatically deposit the monthly deposit amount from the general saving account upon a special instruction of client.
6. Any Bangladeshi above 18 years of age can open this Account. A minor can also open this account by his/her own name. In this case his/her legal guardian will operate the account.
7. Client would receive the return after one month of depositing the last monthly payment.
8. Monthly payment have to deposited within 10 (Ten) of every calendar month (incase of holyday, next working day will be effective). Any number of advance “Deposit” will be accepted.
9. If the depositor wants to encash this ‘Deposit Receipt” prior to maturity, profit will be paid at normal saving rate. But profit will be given if such encashment is made before completion of 6 (Six) month.
10. If client fail to deposit within the prescribed time, he/she have to pay 5% of deposit amount or Tk. 25/- whichever is greater with the next deposit.
11. Bank contains the right to close the account upon a failure to deposit three (3) consecutive “Deposit”. If a client fail to deposit three (3) consecutive “Monthly Deposit”, the account will be treated as ESS account and upon completion of 6 (Six) month, profit will be paid at normal saving rate.
12. After completion of 2 (Two) years, credit facility upto 80% may be availed against the deposit. In that case the client will be required to pay interest on the loan amount as determined by the Bank. This requires minimum Tk. 2,50,000/- deposit on the account.
13. In the event of death of the depositor prior to maturity of principal with profit will be disbursed his/her nominee(s).  in absence of nominee(s), lawful heir(s) may receive the above on submission of succession certificate.
14. No monthly transaction report will be provided on this account. But if needed a charge of Tk. 10/- would be charged for the monthly transaction report.
15. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
16. Money laundering prevention act, shall be exercise as per rules of BB.
17. BCBL reserves the right to change/enhance the above terms & condition including revision of rate of interest.
18. Photograph of Nominee duly attested by the applicant is to be enclosed herewith.

3.4.4 Sikha Sanchaya Scheme (ESS)

1. Under this Scheme the amount of Deposit is Tk. 500/- for period 8 (Eight) & 12 (Twelve) years.
2. Depending on maturity the return will be as follows-

1. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
2. Under this Scheme client could open any of above account. But after opening account the amount & maturity period could be changed.
3. The depositor must maintain a saving account with any of the brunches of BCBL. By paying a certain fee bank will automatically deposit the monthly deposit amount from the general saving account upon a special instruction of client.
4. Any Bangladeshi above 18 years of age can open this Account. A minor can also open this account by his/her own name. In this case his/her legal guardian will operate the account.
5. Client would receive the return after one month of depositing the last monthly payment.
6. Monthly payment have to deposited within 10 (Ten) of every calendar month (incase of holyday, next working day will be effective). Any number of advance “Deposit” will be accepted.
7. If the depositor wants to encash this ‘Deposit Receipt” prior to maturity, profit will be paid at normal saving rate. But profit will be given if such encashment is made before completion of 6 (Six) month.
8. If client fail to deposit within the prescribed time, he/she have to pay 5% of deposit amount or Tk. 25/- whichever is greater with the next deposit.
9. Bank contains the right to close the account upon a failure to deposit three (3) consecutive “Deposit”. If a client fail to deposit three (3) consecutive “Monthly Deposit”, the account will be treated as ESS account and upon completion of 6 (Six) month, profit will be paid at normal saving rate.
10. After completion of 2 (Two) years, credit facility upto 80% may be availed against the deposit. In that case the client will be required to pay interest on the loan amount as determined by the Bank. This requires minimum Tk. 10,000/- deposit on the account.
11. In the event of death of the depositor prior to maturity of principal with profit will be disbursed his/her nominee(s).  in absence of nominee(s), lawful heir(s) may receive the above on submission of succession certificate.
12. No monthly transaction report will be provided on this account. But if needed a charge of Tk. 10/- would be charged for the monthly transaction report.
13. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
14. Money laundering prevention act, shall be exercise as per rules of BB.
15. BCBL reserves the right to change/enhance the above terms & condition including revision of rate of interest.
16. Photograph of Nominee duly attested by the applicant is to be enclosed herewith.

3.4.5 Marriage Scheme (MDS)

Under this Scheme the amount of Deposit is Tk. 1,000/- for period 12 (Twelve) years & 18 (Eighteen) years.

Depending on maturity the return will be as follows-

1. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
2. Under this Scheme client could open any of above account. But after opening account the amount & maturity period could be changed.
3. The depositor must maintain a saving account with any of the brunches of BCBL. By paying a certain fee bank will automatically deposit the monthly deposit amount from the general saving account upon a special instruction of client.
4. Any Bangladeshi above 18 years of age can open this Account. A minor can also open this account by his/her own name. In this case his/her legal guardian will operate the account.
5. Client would receive the return after one month of depositing the last monthly payment.
6. Monthly payment have to deposited within 10 (Ten) of every calendar month (incase of holyday, next working day will be effective). Any number of advance “Deposit” will be accepted.
7. If the depositor wants to encash this ‘Deposit Receipt” prior to maturity, profit will be paid at normal saving rate. But profit will be given if such encashment is made before completion of 6 (Six) month.
8. If client fail to deposit within the prescribed time, he/she have to pay 5% of deposit amount or Tk. 25/- whichever is greater with the next deposit.
9. Bank contains the right to close the account upon a failure to deposit three (3) consecutive “Deposit”. If a client fail to deposit three (3) consecutive “Monthly Deposit”, the account will be treated as ESS account and upon completion of 6 (Six) month, profit will be paid at normal saving rate.
10. After completion of 4 (Four) years, credit facility upto 80% may be availed against the deposit. In that case the client will be required to pay interest on the loan amount as determined by the Bank. This requires minimum Tk. 50,000/- deposit on the account.
11. In the event of death of the depositor prior to maturity of principal with profit will be disbursed his/her nominee(s).  in absence of nominee(s), lawful heir(s) may receive the above on submission of succession certificate.
12. No monthly transaction report will be provided on this account. But if needed a charge of Tk. 10/- would be charged for the monthly transaction report.
13. If Government Tax is imposed on earned income, depositors account will be debited to pay such Taxes.
14. Money laundering prevention act, shall be exercise as per rules of BB.
15. BCBL reserves the right to change/enhance the above terms & condition including revision of rate of interest.
16. Photograph of Nominee duly attested by the applicant is to be enclosed herewith.

Some more parts-

Assignment On Bangladesh Commerce Bank Limited (Part-1)

Assignment On Bangladesh Commerce Bank Limited (Part-2)

Assignment On Bangladesh Commerce Bank Limited (Part-3)