Deposit Scheme and Performance Analysis

Deposit Schemes

Bank is the largest mobilizer of surplus domestic savings. For poverty alleviation, we need self-employment; for self-employment, we need investment and for investment we need savings. In other words, savings help capital formations and the capital formations help investments in the country. The investment in its turn helps industrialization leading towards creation of wealth of the country. Moreover, the wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the nation.

The savings rate in Bangladesh is one of the lowest in the world, rate of domestic saving being 17.78 %. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive savings schemes so that the marginal propensity to save increases. The savings do not, of course, depend only on the quantum of income but largely depend on the habit of savings of the people.

Prime Bank Limited has formulated the following Savings Schemes:

• Contributory Savings Scheme
• Short Term Deposit Scheme
• Fixed Deposit Scheme
• Double Benefit Deposit Scheme
• Monthly Benefit Deposit Scheme
• Lakhopati Deposit Scheme
• Special Deposit Scheme
• Education Saving Scheme

Contributory Savings Scheme:

This is a Savings Scheme in which a person gets the opportunity to build up savings by contributing monthly installments and receives an attractive fixed amount at the end of a specified term.

The Scheme is designed to help the fixed income group to save money and build up a sizable fund with which they can go for some income generating venture to improve the quality of their life and/or meet any future financial obligations.

The salient features of the Scheme are given below:

1. Minimum size of monthly installment shall be Tk. 500/- and multiplies of Tk. 1000/-.  Maximum installment size shall be Tk. 25,000/-
2. The Deposit shall be for a period of 5 years.
3. Lump sum amount shall be paid after maturity or monthly Pension shall be paid for the next 5 years according to the size of deposit. A brief chart of lump sum amount and monthly pension installments payable are shown below:

4. At present Income Tax on interest will not be applicable but in future for any change in Govt. rule of taxation, the Bank reserve the right to deduct Income Tax.
5. The depositor will have the option to choose any installment size at the time of opening of an Account and will not be allowed to change the size of installment afterwards.
6. Account in the name of minors can be opened too under the Scheme.
7. A person can open more than one account for different size of installments at any branch of the Bank.
8. The specified amount on maturity at any slab shall be paid after one month from the date of deposit of the final installment.
9. Normally no withdrawal shall be allowed before maturity. But, if any depositor intends to withdraw his/her savings due to certain unavoidable reasons before 5 years, he/she will be allowed to do so, in the following manner:

            a. No benefit or interest shall be allowed for pre-mature encashment within one year.

            b. If the account is closed after one year of its opening, interest shall be allowed on the deposit at prevailing Savings Deposit rate.

10. The monthly installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installments is acceptable.
11. When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or maximum Tk. 500/-.
12. When a depositor fails to pay 3 (three) consecutive installments at any point before five years term, the customer will cease to remain within the purview of the scheme and scheme will be treated as a Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB account rate subject to completion of 1 (One) year of its opening.
13. Loan may be allowed up to 80% of the deposited amount against lien on the same after at least 2 (Two) years of regular payment of installments and minimum limit of the loan shall be Tk. 50,000/-.
14. In case of death of a depositor, the account will cease to be operative and the amount deposited so far shall be paid to the nominee, and in absence of nominee, to the legal heirs of the deceased as per rules in force.
15. The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme.
16. The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service.
17. Normally no statement of the account will be served to the depositor, in case of need of any depositor, charges @ Tk. 10/- per year / per statement shall be realized as cost of paper.
18. At the time of opening account under CSS customer shall refer his/her SB account number for transferring his/her pension amount or may open SB A/C at the time of maturity for getting monthly pension amount.

Short Term Deposit:

A short-term deposit (STD) account is a running account with amounts being paid into and drawn out of the account continuously.

The salient features of the Scheme are given below:

1. These accounts are called Demand Deposits or Demand Liabilities since the

           Banker is under obligation to pay the money in such deposits on demand.

2. Business Organization, Public Institution, Corporate bodies, generally opens these accounts.
3. It is an interest bearing deposit. Interest calculates on daily basis as per Banks Prescribed Rate and credit to account on half-yearly basis.
4. Current interest rate on STD account presents in the following table

Fixed Deposit Scheme:

This type of deposit should keep for a fixed term or period. Prime Bank Limited deals with the following terms deposit:

Double Benefit Deposit Scheme:

The main features of this scheme are:

1. Deposit of Tk. 1, 00,000 (Tk. one lac) and multiplies thereof but maximum limit of Tk. 25, 00,000 (Tk. twenty-five lac).
2. At maturity, the deposit amount will be double & paid to the depositor.
3. Photograph of Nominee, duly attested by the depositor, will obtain at the time of opening the account.
4. Normally no withdrawal will allow before maturity. But if any depositor   intends to withdraw his deposit before maturity, the following rules will be applicable:

a)      No benefit including interest/profit will allow for pre-mature   encashment within one year.

b)      If the accounts/deposits close after one year of its opening, benefit will allow on the deposit at normal Savings Deposit rate.

1. In case of death of a depositor, the amount of instrument will pay to the nominee, to the legal heirs of the depositor on production of succession certificate.

Monthly Benefit Deposit Scheme:

This is a deposit scheme where the depositor gets a fixed amount of profit every month. The scheme is designed for the benefit of the persons who intend to meet the monthly budget of their families from the income out of their deposit.

The salient features of the Scheme are given below:

1. Deposit of Tk. 25,000.00 (Taka twenty five thousand) and multiples thereof, but maximum Tk. 25, 00,000/- (Taka twenty-five lac) shall be acceptable under the Scheme.
2. The Deposit shall be for a period of 5 (Five) years. The Principal amount is refundable on maturity.
3. Profit shall be paid on monthly basis @ Tk. 1,000.00 per Tk. 1,00,000.00.
4. Payment of monthly profit shall start from the subsequent month after a clear minimum gap of 30 days from date of deposit.
5. In case of death of a depositor, the account shall cease to be operative and the amount deposited so far shall be paid to the nominee, and in the absence of nominee, to the legal heirs of deceased as per rules in force.
6. Normally, the deposit will not be encashable before 5 (Five) years. But if any depositor intends to withdraw his deposit before maturity due to certain unavoidable reasons, he would be allowed to do so in the following manner:

a. No benefit including interest shall be allowed for pre-mature encashment within one year.

b. If the accounts / deposits are closed/ encashed after one year of its opening, benefit shall be allowed on the deposit at existing normal Savings Deposit rate.

c. If the amount of monthly profit already paid exceeds the amount payable at normal Savings rate, the difference shall be realized from the principal deposit amount, if and when necessary.

7. Separate Application Form specially designed for the purpose shall be obtained duly filled in and signed by the depositor. In addition to this, the depositor must have a separate Savings Bank Account with the branch wherein the benefit on the amount so deposited shall be credited every month.
8. A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR.
9. The Receipt will not be transferable.
10. Advance against lien on such Receipt can be allowed up to 80% of the deposit bearing normal rate of interest prevalent at the time on Overdraft/ Loan.
11. During the period of such Overdraft/ Loan, the monthly benefit shall be credited to the concerned Overdraft/Loan.
12. Payment will be made after deduction of taxes as fixed by the Govt. from time to time.
13. In case the instrument is lost, the procedure for issuance of a duplicate will be the same as applicable in case of loss of FDR.

N.B. Senior Citizens will get 0.50% higher rate of interest as permissible for all other deposits of our Bank. Monthly benefit shall be Tk. 1042/- per Tk. 1,00,000/- per month for Senior Citizens.

Lakhopati Deposit Scheme:

Rules & Regulations:

  Monthly Installment size, tenure and terminal value of the scheme are:

1. The installment shall be payable by the 8th day (in case of holiday the next   working day) of every month. Advance payment of any number of installments is acceptable.

3. Normally no withdrawal shall be allowed before maturity, if any depositor intends    to withdraw his/her savings due to certain unavoidable reasons before 5 years, 10 years and 15 years, he/she will not be allowed any benefit if the premature encashment takes place before completion of 1 year.
4. In case of death of a depositor, the account will cease to be operative and the     amount deposited so far will paid to the nominee, and in absence of nominee, to the legal heirs of deceased as per rules in force.

Education Saving Scheme:

The education expenses particularly the expenses for higher education are sharply increasing day by day in our country. Sometimes, the children are deprived of getting the desired level of education because of the inability of the parents to meet their educational expenses. However, the parents would not feel any difficulty to defray such expenses if a proper financial planning makes much ahead of time. Moreover, the Bank is receiving demands from the Islamic minded people of our country for an attractive Savings Scheme based on Islamic Sariah to encourage them to save in Islamic way for education of their children.

Prime Bank Limited has introduced a Saving Scheme entitled “Education Savings Scheme” based on profit and loss sharing. The scheme provides a unique opportunity to the parents to make a future provision for the educational expenses of their children when they enter into Schools, Colleges and Universities out of the benefit of a small amount of savings with the Bank at an opportune moment.

The salient features of the Scheme are given below:

1. The Scheme shall be implemented through all our branches, though it is specially designed for Islamic Banking branches.
2. Deposit of Tk. 50,000/- and multiples thereof but maximum limit of Tk. 5,00,000/- at a time will be acceptable under the Scheme.
3. A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR.  Branches shall use the ESS receipts that used for existing scheme.
4. The instrument shall be issued for a period of 5 years term.
5. On maturity a lump sum amount of Tk. 85,382/- shall be payable or education allowance @ Tk. 1,854/- per month per Tk. 50,000/- shall be payable on the basis of deposit amount for next 5 years starting from the completion of the term as per following table.  Income Tax @10% on interest may be deducted at source at the time of payment of lump sum amount.

6. To avail the monthly allowances the depositor is required to surrender the savings instrument to the Bank duly discharged with a written instruction to the Bank to pay the installments to his ward on monthly installment basis as stipulated in the scheme.
7. Separate Application form specially designed for the purpose shall be obtained duly filled in and signed by the depositor.
8. Photograph of the Nominee and Ultimate Beneficiary, if any, duly attested by the depositor, shall be obtained at the time of opening the account.
9. Normally no withdrawal will be allowed before maturity. But if any depositor intends to withdraw his/her deposit before maturity, the following rules will be applicable:

a. No benefit including interest shall be allowed for pre-mature encashment within one year.

b. If the accounts/deposits are closed/ encashed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate.

10. The instrument will be acceptable as collateral security against any investment subject to registering lien with the issuing Branch.
11. In case of death of the depositor, the amount of instrument will be paid to the nominee or, in the absence of a nominee, to the legal heirs of the depositor on production of succession certificate.
12. But if the nominee after the demise of the depositor intends to continue the deposit to enjoy the monthly educational allowance for five years, as admissible under the rules of the scheme, the receipt should be surrendered to the Bank on maturity duly discharged by the nominee and duly authenticated by the legal guardian.
13. In case of instrument is lost the procedure for issuance of the duplicate will be the same as applicable in case of loss of FDR.

House Building Deposit Scheme:

The salient features of the Scheme are given below:

1. The tenor of the House Building Deposit Scheme will be 5/7/10 years.
2. Minimum Equity building amount shall be Tk. 10.00 lac.

* Age upper limit will be applicable for HBL facilities only

** Insurance Coverage will be restricted to terminal amount of Tk. 1,000,000/-(Taka Ten Lac) only; here the age limit will be from 18 years to 60 years.

3. Income Tax on interest amount shall be as per Government rule on taxation and the Bank reserves the right to deduct Income Tax.
4. The depositor will have the option to choose any installment size at the time of opening of the A/C. and will not be allowed to change the size of installment afterwards.
5. Account in the name of minors can be opened too under the Scheme but without insurance coverage.
6. A person can open more than one account but House Building Loan facility shall be on one account only.
7. The installment shall be payable by the 8th day (in case of holiday the next working day) of every month. Advance payment of any number of installments is acceptable.
8. Normally no withdrawal shall be allowed before maturity, if any depositor intends to withdraw his/her equity due to certain unavoidable reasons before maturity, following should be applicable for accounts covering insurance:

            a. On or before completion of one year, No interest (Saving) shall be paid and Advance Insurance Premium paid to the Insurance Company shall be deducted from the final settlement.

            b. On or before completion of two years, No interest (Saving) shall be allowed and No deduction will be made.

            c. On completion of three (03) years, Saving Interest rate on the deposited amount may be allowed.

For accounts not covering any insurance:

a. On or before completion of one year, No interest (Saving) shall be paid.

b. After completion of one year Saving Interest rate on the deposited amount may be allowed.

9. When a depositor fails to deposit any installment, he/she will have to pay a fine @5% of the overdue amount payable at the time of depositing the next installment or maximum Tk. 500/-
10. When a depositor fails to pay 3 (Three) consecutive installment at any point of time before 2 years term, the customer will cease to remain within the purview of the scheme and scheme will be treated as a Savings Bank deposit and interest will be paid on the deposited amount at prevailing SB A/C rate subject to completion of 1 (One) year of its opening.
11. HBL facility shall be considered on maturity upon application up to three times the equity but not exceeding Tk. 50.00 lac on compliance of loan formalities.
12. In case of death of a depositor, the A/C. will cease to be operative and the amount deposited so far shall be paid to the nominee, and in the absence of nominee, to the legal heirs of deceased as per rules in force.
13. The Bank at its discretion may allow inter branch transfer of the A/C under the Scheme.
14. The clients are encouraged to give standing instructions to the Bank to deposit the monthly installments, debiting their CD/SB accounts maintained with the concerned Branch. In that case, no charge will be realized for such service.
15. Normally no statement of the account will be served to the depositor. Incase of need of any depositor, charge @Tk.10/- per year / per statement shall be realized as cost of paper.

Deposit Performance

Prime Bank Limited is well able to mobilize substantial deposits through various deposit schemes. The deposit balance of Prime Bank reached the level of Tk. 70,512 million during 2007 from Tk. 54,724 million of previous year. The growth rate is 28.85 percent. This was possible due to superior customer service delivery at the branch level, expansion of branch network to rural areas where foreign remittance flow is significant.

The deposits performance is shown below:

Deposit mix as on December 31, 2007 was as follows:

Conclusion:

Customer service constitutes the core functions of the bank, operated the day-to-day transactions, all the functions of other department is linked with customer service. This is very difficult to satisfy a customer in banking sector because the customers usually make judgement about the quality of services depending on how much satisfaction they are getting from the customer services and the way of judgement varies from customer to customer. Therefore, the customer service providers should be concerned in giving their best efforts to satisfy the need of each individual customer.