Banking Service of Mutual Trust Bank Limited

Overview of Banking Service of Mutual Trust Bank Limited

Banking System of Bangladesh has gone through three phases of development – Nationalization, Privatization and lastly Financial Sector Reform. Mutual Trust Bank Ltd. (MTBL, the 3rd generation bank) has started its journey as a private commercial bank on 29 September, 1999.

The whole working area of a modern bank can be divided mainly into 4 (four) Sections, such as – 1) General Banking Section, 2) Cash Section, 3) Loans & Advance Section and 4) Foreign Trade Section. Our focus & discussion will be concentrated mainly on General Banking Section.

General Banking is the starting point of all the banking operations. It is the department, which provides day-to-day services to the customer. It opens new accounts, remit funds, issue bank drafts & pay orders etc. Provide customers through quick and sincere service are the goal of the general banking department.

In this study, a fervent appeal has been made to demonstrate and analyze the general banking practice and the subsequent outcome of Mutual Trust Bank Ltd. (MTBL), which is passing its childhood period to establish an iconic threshold in the banking arena.

INTRODUCTION:

Bank is very old institution that is contributing toward the development of any economy and is treated as an important service industry in the modern world. Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is the highest in the initial stage. Modern banks play an important part in promoting economic development of a country.

Bank provides necessary funds for executing various programs in the process of economic development .they collect savings from large masses of people scattered throughout the country, which in the absence of banks would have remained ideal and unproductive, these scattered amounts are collected, pooled together and made available to commerce and industry for meeting the financial requirements.

Bank plays a vital role in the economy by providing means of payment and mobilizing resources. Bank is the most important financial institution in the economic development of a country depends on the development of banking sector. Today’s modern banks are not only providing traditional banking but also expanding the many financial services. In today’s world the life of the people directly are within the arena of banking whether conventional or Islamic banking is not a newer concept in Bangladesh as it has started its operation since 1983, very few people are aware about its operation. But things are changing. Islamic banking is also getting popularity in the country.

PURPOSE:

The purpose of this report is the writing purpose as well as to know about the activities of the companies, and their performances. Report can cover a wide range of topics but usually focus on transmitting information with a clear purpose to a specific audience. Reports are documents that are accurate, objectives and complete information.

OBJECTIVES OF THE REPORT:

• To understand the Banking business in Bangladesh. How Banking transactions Take place.
• To observe the authorities, tasks & responsibilities of the bankers.
• The rules and regulations of private commercial Banks
• To know the background of the MTBL
• To know the General Banking system of MTBL
• To understand the Financial and Accounting techniques of MTBL. In fact this is the prime objective and I have chosen this as the topic of my report.
• To have the idea about the communication between the Branch office and Head office.
• To better understand about the General Banking activities.
• To learn the Banking Laws.
• To appraise the total achievements and success of MTBL
• To focus the growth and development of Mutual Trust Bank Ltd.
• To know the work environment & organizational behavior of the bank.

METHODOLOGY OF THE STUDY:

• For the procedure of different banking operations, I had observed the operations and worked with the officers at the same time. I had interviewed the MTBL officials for getting more information.
• For the analysis part, data have been collected from different statements and the annual report of the bank.

SOURCES OF INFORMATION:

The data collection method of study consists of both of primary and secondary sources. But majority of the information was collected from secondary sources.

Primary Data:

Primary data is mostly derived from the discussion with the employees & conversation with customers of the organization. Primary information is under consideration in the following manner:

• Face to face conversation with the employees
• Practical work experience from different department of the concerned officers.
• Discussion with customers regarding quality of service of the bank.
• Guidelines and suggestions from all the senior employees in charge of mutual trust bank.

Secondary data:

Secondary sources that will be used in the study is include:

Internal Sources

• Bank’s Annual Report
• Published Booklist of Mutual Trust Bank Ltd.
• Magazine of Mutual Trust Bank Ltd.
• Any information regarding the Banking sector

External Sources

• Different books and periodicals related to the banking sector
• Bangladesh Bank Report
• Newspaper
• Bank website

HISTORICAL BACKGROUND:

The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 38,00,000,000 divided into 38,000,000 ordinary shares of Tk.100 each. Board of directors as agents of the shareholders, monitors the functions of the bank whether it is performed efficiently or not and also solves all the problems.

The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business.

The Company (Bank) operates through its Principal office at Dhaka and 68 branches and 12 SME/Agri Branches Service Centers. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.

1. Investment in Merchant Banking Activities
2. Investment in Company Activities Financial, Promoters, Capitalists.
3. Financial Intermediary Services.
4. Any related Financial Service

CORPARATE STRATEGY:

The corporate strategy of any organization is a vital role on the performance of the company’s performance and lead them to the way of being in growth prospect of the company. So the corporate strategy of the Mutual Trust Bank is describe below-

• Financing establishment of small units of industries and business and facilitate their growth
• Small Balance Sheet size composed of quality assets.
• Steady and sustainable growth.
• Investment in a cautious way.
• Adoption of new banking technology

BANKING SERVICES AND PRODUCTS:

Mutual Trust Bank provides the following services and financial products:

(I). Retails Banking:

We aim to satisfy all clients, regardless of how big or small they may be. Individuals are counseled on the best type of accounts suitable to them. At MTB we have designed different type of retail product to meet different need. The following are our range of retail banking product.

(1) Deposit Product

(2) Loan Product

(3) MTB Card.

Deposit Product:

1. Savings Account
2. Current Account
3. Brick By Brick
4. Children’s Education Plan
5. Fixed Deposit
6. Monthly Benefit Plan
7. MTB Senior
8. MTB Inspire
9. MTB Double Saver Plan.
10. MTB Millionaire Plan.
11. MTB Ruby.

Loan Product:

1. MTB Personal Loan
2. MTB Auto Loan
3. MTB Home Loan.
4. MTB Home Equity Loan

MTB Card:

(I. Debit Card

(II. Credit Card

Corporate Banking:

The promise of world class corporate banking has created a new panorama opportunity to leverage on our excellent image created over the years. MTB offer flexible of options to afford the right financial products and services, designed particularly to meet immediate needs, individually concerned and professionally realized. Now we focused our corporate Banking.

1) Term Finance.

2) Working Capital Finance.

3) Trade Finance

4) Offshore Finance.

5) Syndication & Structured Finance.

SME Banking:

SME’s has different types of credit needs and have designed a number of loan products to meet the needs.

MTB Green Energy Loan.

1. MTB Bhagyoboti
2. MTB Krishi
3. MTB Mousumi
4. MTB Revolving Loan
5. MTB Small Business Loan
6. Micro Digoon

Treasury Service:

1) Money Market.

2) DIBOR.

3) Foreign Exchange.

4) Primary Dealers.

MTB Services:

1. Corporate Banking.
2. Institutional Banking.
3. Off-Shore Banking.
4. Investment Banking.
5. Merchant Banking.
6. Securities Trading and Brokerage Service.
7. SME Banking.
8. Consumer Banking.
9. Card Services.
10. Leasing.
11. Services Non Resident Bangladesh (NRBs).

GENERAL BANKING:

Financial institution/ intermediary that mediates or stands between ultimate borrowers and ultimate lenders is knows as banking financial institution. Banks perform this function in two ways- taking deposits from various areas in different forms and lending that accumulated amount of money to the potential investors

General Banking is the starting point of all the banking operating. General Banking department aids in taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, there is no relation between banker and customers who will take only one service form Bank. On the other hand, there are some customers with who bank are doing its business frequently. It is the department, which provides day-to-day services to the customers. Every day it receives deposits from the customers and meets their demand for cash by honoring cheques.

It opens new accounts, demit funds, issue bank drafts and pay orders etc. since bank in confined to provide the service everyday general banking is also known as retail banking.

SCOPE OF GENERAL BANKING:

1. Customer Service.
2. Account Opening
3. Deposit Department.
4. Payment Order.
5. Demand Draft.
6. T.T.
7. IBC/ OBC Collection.
8. Remittance.
9. Account’s Department.
10. Clearing Transfer.
11. Cash.
12. Loan and Advance.

Customer Services of Mutual Trust Bank :

Professional merit and Competency, Flexibility, Determination and Dedication are the core resources that MTBL consider to be of paramount importance for building a client oriented modern banking. Customer satisfaction is MTBL foremost professional undertaking.

Therefore, a satisfied client is MTBL precious product and they consider them MTBL ambassador in the market.

Account Opening of MTBL:

Under this department, MTBL officer opens different types of account on the request of clients. The procedure of opening account is given bellow:

(a) Types of Accounts:

(i) Current Deposit:

1. Individual Account
2. Joint Account
3. Proprietorship Account
4. Limited Company Account

(ii) Savings Deposits:

1. Individual Account
2. Joint Account
3. Proprietor Ship Account
4. Limited Company Account

(iii) Short Term Deposits:

1. Individual Account
2. Joint Account
3. Proprietor Ship Account
4. Limited Company Account

(b) Procedure of Account:

Account Opening (Normal Account):

1. Collect an Account opening outline from the Bank.
2. Fill all the requirements of the form.
3. Nominee is must be specified and also signed this form.
4. Photograph of account holder & nominee for any account.
5. National ID reference of both account holder & nominee
6. The Account holder sign on his own self in front of specific bank principal officer in front of account opening form.

Account Opening (Saving Account):

1. Collect an Account opening outline from the Bank.
2. Fill all the requirements of the form.
3. Nominee is must be specified and also signed this form.
4. Photograph of account holder & nominee for any account.
5. National ID reference of both account holder & nominee
6. The Account holder sign on his own self in front of specific bank principal officer in front of account opening form.

Account Opening (Current Deposit Account):

1. Collect an Account opening form from the Bank.
2. Fill all the requirements of the form.
3. Nominee is must be specified and signed in the account opening form.
4. Photograph is most important for any account.

To open this account the most important things is that Passport or National ID photocopy must have to add with the account opening form and also enclose the trade license with tin number.

Account Opening( Fixed Deposit):

Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed by him. The period varies form 3 month. These deposits are not repayable on demand but they are withdrawn able subject to a period of notice but bank paid only principal amount not interest. Hence, it is a popularly known as term. Deposit. Normally the money on a fixed deposit is not repayable before the expiry of a fixed period.

Before opening a Fixed Deposit Account a customer has to fill up an application form which contains the followings:

1. Amounting figures
2. Beneficiary’s name and address
3. Period
4. Rate of interest
5. Date of issue
6. Date of maturity
7. Instructions:
8. Special instruction
9. How the account will be operated (singly or jointly)
10. 10 Signatures
11. FDR no.
12. Nominee’s name and signature.

(c) Interest Posting to Client’s Account:

Bangladesh Government has circulated that, 10% deduction from the Bank’s Internal Account’s. This 10% tax deduction from the client’s interest.

Other wise another circulation is that, from the OBC collection every bank cut off their OBC commission as income account, here Bangladesh Bank said that 15% money cut off from the OBC collection as Vat on Others.

(d) Cheque Book Issues:

Types of Cheque Book’s:

1. Savings Account
2. Current Deposit Account

(e) Cheque Issued By Using Two Types of Slips:

1. Direct requisition slips
2. Cheque Book’s requisition slip

Customers Service Officer receives these types of slip from the client’s and gives the cheque books under processing. Processing means sent this account number to MTBL head office and they verified this and under processing they are issue a cheque for the client. Customer Service Officer receive cheque . These things the Principal Officer for sign, after his sign the client receive the cheque book. Then Principal Officer posting that cheque books leaves number in the computer data processing system.

(f) Account Closing:

For two reasons, one can be closed. One is by banker and other is by the customer. By banker: If any customer doesn’t maintain any transaction within six years and the A/C balance becomes lower than the minimum balance, banker has the right to close an A/C.

By customer: If the customer wants to close his A/C, he writes an application to the manager urging him to close his A/C.

(g) Different Type of Procedure are Followed in Case of Different Type of Account to Close:

1. Fixed deposit A/C is closed after the termination of the period.
2. Brick by Brick A/C is very easily closing if one of the clients didn’t pay his/her monthly
3. installment at the bank three months one after one, in this way three months.
4. Another account’s will be closed on the parties advice, if they want to close any one of the account clients must have to submit an A/C closing letter through des pass. Then the Sr. Principal Officer checks it out and closes the A/C.

Closing Process For Current & Savings A/C:

1. After receiving customer’s application the officer verifies the balance of the A/C.
2. He then calculates interest and other charges accumulated on the A/C.
3. If it bears a credit balance, the officer writes advice voucher. He gives necessary Accounting entries post to accounts section.
4. The balance is returned to the customer. And lastly the A/C is closed.

Deposit Department:

(a) Brick by Brick

Drops of water make an ocean. Your habit of regular savings will provide you comfort in the future. Brick by Brick is a unique monthly savings plan which builds up over the years and provides a lump sum amount at maturity. Monthly deposit in the scheme’s account and you must ensure that your account has sufficient balance within the 20th of each month.

(b) Monthly Benefit Plan:

This plan offers you to generate monthly income out of your deposit. It has been designed to help and assist conscious savers from all strata of the society. The minimum deposit is

Tk. 50,000/= or in multiples thereof. There is no upper limit and this plan is offer for1(one)to 3 (three) years term that cannot be changed subsequently.

You will require opening a savings/current account. Monthly income will be credited to your account.

(c) Saving’s Account:

Saving money for the future is a common practice in any society.

Savings help you to build a better tomorrow. Regular saving makes a man become disciplined, self confident successful.

An-easy-to operate savings account that allow you to operate issue cheques, Draw demand drafts and withdraw cash. Check up on your balances from the comfort of your home or office through Internet Banking and SMS banking. This scheme’s interest rate is 5.25% and wage earner 5.50% for half yearly basis. accrued in this account on a daily basis.

 (d) Children Education Plan:

Education is the backbone of any nation and one of the primary factors of prosperity. An educated nation stands tall in the committee of nations and deserves respect. A child’s education is of prime importance and every parent should ensure and make every effort to get their child educated.

To admit a child in a good institution parents require adequate amount of savings for the cost of admission into a school. This plan allows new parents to save for 4/7/9/12 years.

The parent can deposit any amount of money at any day of the month. The interest rate is very lucrative and we offer substantially more than the prevailing savings rate. Monthly installment are Tk.1000 or multiples are 1000 but not exceeding Tk.20000.

(e) Current Account:

A Current account is ideal for carrying out day-to-day business transactions. With the MTB Regular Current Account, you can access your account anytime, anywhere, pay using payable at par cheques or deposit cheque at any MTB bank branch .Access to the largest fleet of the country.

In order to make a significant contribution in the living standards of the people of medium and low income category, Mutual Trust Bank has introduced a scheme called “Consumer Loan Scheme”. With ina view to materialize the dream of those who are unable to make one time investment from their own savings.

All shot of household durables e.g. Television, Refrigerators, Computers, Air Conditioners, Video Cameras, Washing/ Drying Machines and Furniture’s are allowed under this scheme. One can buy Motorcycle too under this programme.

(f.) MTB Double Saver Plan:

MTB Double Saver Plan offers you an one time savings scheme, which will provide you double the amount of your deposit after 8 years. You will receive a handsome amount at maturity.

If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for 8 years with no limit for maximum amount. At maturity you will get double of your deposited amount.

(g) Fixed Deposit.

A specific amount of fund is placed on deposit under the name of account holder. The moist unusual characteristics of fixed deposit is that the fund cannot be withdrawn for a specified period of time. Duration that time the money remains in the account and cannot be withdrawn for any reason. Individuals, corporate entities an even organization that with to set aside fund and limit their excess to the funds for a period of a time often fund fixed deposit is a simple way to accomplish their goal but for any reason account holder can receive their money befor maturity period so bank pay only principle amount.

(h) Millionaire Plan:

Millionaire Plan is a monthly savings plan, which is designed to make you a millionaire in a few years. An individual may invest your savings in this scheme for 6/8/10/12/15/20 years with different installment sizes. At maturity you will get Tk. 10, 00,000/-.

(i) MTB Senior:

A saving account for senior citizen age 60years or above. For MTB age requirement is 55 years or above. Interest is add on daily basis and will be credited monthly instead of traditionally half yearly. Minimum account opening balance is 10000 on half yearly.

Minimum daily qualifying balance to earn interest is 15000. Rate of interest is 5.60%P.A. Lifetime free debit card and internet banking. First three cheque is free and 20% discount on locker charge.

(j) MTB Inspire:

Actually inspire account means provide a lot of facility to inspire people. Interest is add of daily basis. Minimum account opening balance is 10000 on half yearly. Minimum daily qualifying balance to earn interest is 15000. Rate of interest is 5%. And free debit card for one year and free internet banking.

(k) MTB Ruby:

MTB Ruby enables today’s independent women to enjoy hassle-free banking services. Besides the core MTB banking advantage, MTB Ruby, an exclusive savings account for women, is packed with special benefits for our women customers. Enjoy your present and plan for the future, with this rewarding savings account Interest will add on higher interest on daily basis. Minimum account opening balance is 10000 and minimum daily qualifying balance to earn interest is 10000. Free debit card only one year and free interest banking.

MTB Tele Banking:

Your bank is just a call away the centralized Tele Banking service introduced in the Bank brings a world of banking convenience to the customers. Through the Tele Banking System, customers can access their Bank Accounts over the telephone on a 24X7 basis.

The facility is secure as the customer is given a unique identification number to access his bank account through the telephone. The voice response system prompts the customer to dial the digits that will help him/ her meet his requirement of placing instructions or retrieving account information. This value added service is offered absolutely free.

Registration is mandatory for Tele Banking. For registration you have to visit your bank branch. You can download the registration form.

An account holder of Mutual Trust Bank Ltd. Facilities available at present.

– Access your account from anywhere in the world through a telephone.

– Ability to make balance inquiries without visiting the bank.

– Ability to listen to last 5 transaction detail over the phone.

– Provides a language selection being available in English and Bangla.

Internet Banking

A substantial expansion in the customer base was experienced through the enhancements to our internet banking services, now re-branded as ‘MTB Internet Banking’. The state-ofthe-art software, built in-house, enabled us to overcome the hurdles to the single customer identification number and improved access security. ‘MTB Internet Banking’ is one of the best internet banking suits within the local banking industry.

SMS Banking

‘SMS Alerts’, one of the most valued fraud detection services offered to our customers, was enhanced this year, by offering customers the alerts to all transactions in addition to ATM and POS transactions.

SWOT ANALSIS OF MTB:

SWOT analysis is a important tool for evaluation the company’s strengths weakness and opportunities treats, it helps the organization to identify evaluate its performance and can scan the macro environment ,which in turn is would help the organization to navigate in the turbulence ocean of competition. Following is given the SWOT analysis of MTB.

STRENGTHS:

Top Management:

The top management of the bank, the key strengths for MTB has contributed heavily towards the growth and development of the bank. The Top management officials are enough capable to manage their work so they have a good idea about the current situation.

Company Reputation:

MTB has created a good reputation in the banking industry of the country. Their main customers are many respective organization and respective person also. The popularity of this bank is increase day b day.

Modern Facility and computer:

From the very beginning MTB tries to furnish their work surrounding with modern equipment and facilities. For speed service to the customer .MTB had installed money country machine in the teller counter. The bank has computerized banking operation under software called PC banking. More over computer printer statement are available to internal use and occasionally for the customer.MTB is equipped with telex and fax facilities.

Stirring Branches:

The company operates through its Head Office at Dhaka and 104 branches .The company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.

Interactive Corporate Culture:

The corporate culture of MTB is very much interactive compare to other local organization. This interactive environment encourages the employees to work alternatively. Since the banking job is very much routine work oriented and lovely environment boots up the work capability of the employees.

WEAKNESS:

Limitation Of Information System:

Engaged in account opening and closing task, FLORA Bank software is used to operate the account information. Following is the job description and some important discussion regarding this software. Sometime net too much slow that hampers the work.

Hierarchy problem:

The hierarchy problem treated as a weakness for MTB ,because the employee will not stay for a long . So there will be a chance of brain from this bank to other bank.

Advertisement problem:

There is another weakness for MTB is advertisement .Their media coverage is so much low that people do not know the bank thoroughly.

OPPORTUNITIES:

Diversification:

MTB pursue diversification strategy in expanding its current line of business. They do serve not only the organization but also individual person.

Business Banking:

The investment Potential of Bangladesh is foreign investment. So MTB has opportunity to expand in business banking.

Credit Card:

There is an opportunity to launch Credit Card in Bangladesh by MTB. Beside this , MTB can acquire service for cards like VISA, MASTER CARD, etc. so that they can enhance market based card service.

THREATS:

Contemporary Bank:

The contemporary Bank of MTB like : Dhaka Bank Ltd, Brace Bank Ltd is major rivals. They are carrying out aggressive campaign o attract lucrative clients as well as big time depositors.MTB should remain vigilant about the steps taken by these banks, as these will in turn affect MTB strategies.

Multinational Bank:

The rapid expansion of multinational bank posses a potential treat to new FLORA bank. Due to the booming energy sector ,more foreign banks are expected to operate in Bangladesh. Moreover, the existing foreign Banks such as HSBC,AMEX.CITI N.A and STANDARD CHATTERED are now pursuing an aggressive branch expansion strategy. Since the foreign banks have tremendous financial strength, it will pose a treat bank to a certain extent in terms of robbing the lucrative clients.

RECOMMENDATIONS:

MUTUAL TRUST BANK is one of the most flourishing Banks of Bangladesh with wide growth opportunities in the industry. The survey on the customers of MUTUAL TRUST BANK was conducted with an aim of improving the overall customer satisfaction at MUTUAL TRUST BANK. The research gave valuable insights as to where improvements were necessary to improve the quality of service.

Based on the above results, it can be said that MUTUAL TRUST should reconsider its service strategies in Bangladesh and design products and services that better satisfy customer needs and requirements. Bank should be more tactful in dealing with the customers and launch new products that fully meet customer expectations.

The following point can be recommended on the findings of survey:

• The bank should introduce more products based on the market demand.
• The remuneration of employees need to be increased, as a result experienced people from other bank will be attract to join Mutual Trust Bank Limited.
• Mutual Trust Limited should offer international credit card, because in modern world the use of increasing paper currencies is decreasing.
• The bank can open more branches to reach to more customers.
• The bank can open branches or foreign booth because many people send money from abroad every year to Bangladesh.
• The bank should finance to the consumer goods, because many people in the country wants to buy consumer goods from bank loan.
• The marketing department of the bank should more efficient to reach at the heart of the customer.
• The bank should be more profit concern as well as took part to the economics development of the country.
• The departments of the bank should more efficient to make profit by satisfying customers.
• The bank should use printed instruments like cheque, pay orders etc.
• Being a clear transparent the bank can provide the best support to the customer as earn profit.
• The bank should solve the problems regarding ATM card because it causes an embarrassing situation for the employee in front of customers.
• MTBL should arrange a lot of training schedules, seminars and workshops for its existing employees to make them more effective and efficient.

CONCLUSIONS:

As an organization the Mutual Trust Bank Limited has earned the reputation of top banking operation in Bangladesh. The organization is much more structured compared to any other bank operating local or foreign in Bangladesh. It is relentless in pursuit of business innovation and improvement. It has a reputation as a partner of consumer growth.

With a bulk of qualified and experienced human resource, Mutual Trust Bank Limited can exploit any opportunity in the banking sector. It is pioneer in introducing many new products and services in the banking sector of the country. Moreover, in the overall-banking sector, it is unmatched with any other banks because of its wide spread branch networking thought the country.

This report tries to figure out most of the indicators of problems and strengths of Mutual Trust Bank Limited as a valid pretender in the competitive banking sector of Bangladesh. A severe cut throat competition is going on currently in this sector and that’s why Mutual Trust Bank Limited has to work out with different dimensions like – product diversification, market forecasting, proactive activities undertaken by Mutual Trust Bank Limited and some suggestion to get rid of the predicaments that exist.