Factor Analysis of Credit Scheme of Pubali Bank Limited

The main objective of this report is to analysis Factor analysis of credit scheme of Pubali Bank Limited. General objectives of this reports are to present the overall marketing practices of the Pubali Bank with a structured manner and present different key marketing variables in descriptive manner to show the real practices and to compare the practice of Pubali Bank with the marketing practices of other domestic and international banks. Finally this report make swot analysis Factor analysis of credit scheme of Pubali Bank.

PROBLEM STATEMENT OF THE STUDY

“An Evaluation of Marketing Practices of the Pubali Bank Limited”

• Study: Based on the research conducted on Pubali Bank Limited.
• Study: Based on the information from Internet, and other bank documents.
• Study: Based on the evaluation and analysis of key marketing practices variables that is related with this study.
• Study: Based on the description of other issues and items of banking operations.

OBJECTIVES OF THE STUDY

According to the vital & key information of my honorable advisor, I have conducted this study for the following important objectives:

• To present the overall marketing practices of the Pubali Bank Limited with a structured manner.
• To present different key marketing variables in descriptive manner to show the real practices.
• To compare the practice of Pubali Bank with the marketing practices of other domestic and international banks.
• And above all this study will be very much helpful for facilitating different aspects of banking operation & will be helpful for me to complete this very important internship program.

THE ORGANIZATION PART

Pubali Bank Limited is the largest Commercial Bank in Private Sector in Bangladesh. It provides mass banking services to the customers through its branch network all over the country. This Bank has been playing a vital role in socio-economic, industrial and agricultural development as well as in the overall economic development of the country since its inception through savings mobilization and investment of funds. During the last 5 years the growth rate of bank’s earnings is more than 25% on average. The Bank was initially emerged in the Banking scenario of the then East Pakistan as Eastern Mercantile Bank Limited at the initiative of some Bangalee entrepreneurs in the year 1959 under Bank Companies Act 1913. After independence of Bangladesh in 1972 this Bank was nationalized as per policy of the Government and renamed as Pubali Bank. Subsequently due to changed circumstances this Bank was denationalized in the year 1983 as a private bank and renamed as Pubali Bank Limited. The Government of the People’s Republic of Bangladesh handed over all assets and liabilities of the then Pubali Bank to the Pubali Bank Limited. Since then Pubali Bank Limited has been rendering all sorts of Commercial Banking services as the largest bank in private sector through its branch network all over the country.

OBJECTIVES

The Pubali Bank Limited completely appreciates the significance and implication of the rapidly emerging competition in the banking and finance sector of Bangladesh. It inclines extending loan facilities on easy term to its customers. In this respect The Pubali Bank Limited emphasizes proficiency among its banking professionals to cater to varied customer requirements to the modern time. The core objectives are:

• To carry on transact, undertake and conduct the business of banking in all its branches and to transact and do all matters and things incidental there to in Bangladesh and abroad.
• To receive, borrow or raise money on deposit, loan or otherwise, upon such terms as company may approve and to have guarantees and indemnities in respect of all debts and contracts.
• To establish welfare oriented banking system.
• To play a vital role in human development and employment creation.
• To invest money in such manner as may from time to time be thought proper.
• To carry on the business of buying and selling bullion, gold and other valuable assets.

PERFORMANCE AT A GALANCE

CREDIT DIVISION

The analysis in this chapter focused on the issues of banking services of the Pubali Bank Limited as well as it comprises the best practices that are taken by different domestic and international banks. The recommendations set out there will serve to establish the new policy framework that will encourage the development of more competitive markets. In addition, this chapter discusses the need to transform payment systems, and the impact this will have on the supply of current accounts. This chapter considers whether, taken together, these changes will be sufficient to ensure a brisk transition to competitive markets for personal customers, or whether further intervention may be required in consumers’ interests.

MARKET DEFINITION

Individual banking products sold to personal consumers are comprised of at least one of three economic services: money transmission, holding deposits, and issuing credit. There is clearly no substitution between these economic functions. But consumer products do not map exactly on to these functions: the main purpose of a current account is to provide access to money transmission. The current account also acts as a savings vehicle, and may be used to get credit, through an overdraft. The money transmission services of a current account have no effective substitutes, the other two functions do; both credit cards and personal loans are sources of unsecured credit. The credit card also provides a limited means of money transmission, effectively restricted to retail transactions; mortgages are the most common form of secured lending. The price of unsecured lending means it would be an uneconomic way of buying property, or of making major investment in a Home; there are a number of substitutes for savings accounts, but all of these are investment products, which are outside the scope of the study.

ANALYSIS BY PRODUCT GROUP

THE PRACTICES OF PUBALI BANK LIMITED

CURRENT ACCOUNTS

Most of the money transmission elements of a current account are supplied free at the point of use to retail consumers. Charges are made for a few exceptional money transmission functions, including stopping a cheques and making a same day payments. Charges are also made for overdrafts, except in some cases for small amounts. Interest is charged at a specified rate on the balance of the overdraft. The rate increases considerably if the overdraft is unauthorized rather than previously agreed. Some current accounts pay a small amount of interest on the amount in the account, while others do not. Hence the debt and savings elements of current accounts cross subsidies money transmission services. This cross subsidy makes a total current account price comparison difficult. It is also not meaningful to compare interest paid on deposits in current accounts, as this is not priced in any conventional sense. The price comparison is therefore confined to overdrafts.  The costs of providing overdrafts are unlikely to vary materially between large suppliers and differing bad debt rates alone cannot explain the wide range of prices charged. Hence price dispersion of this order is unlikely to result from underlying cost differences.

CREDIT CARDS

Traditionally, the structure of credit cards reflected their dual role and there used generally to be a fixed annual charge levied on all cardholders. Interest is charged on unpaid balances. The burden of pricing has now moved away from the annual charge and on to interest payments: only a few credit cards now include an annual charge. Cards also increasingly offer a range of benefits in kind, usually associated with high levels of use. These include cash bonuses, air miles, and travel insurance. The choice of card will thus depend on a range of factors, for example how often it will be used and whether the balance will be paid in full each month. Interest charges on different credit cards are calculated in a variety of ways. The majority of cards grant an interest-free period from the date of the transaction until full payment is due. For most issuers, this period is 25 days after the statement containing the transaction, although some give less time. If full payment is received within this period, then usually no interest charge is levied although cash advances may still attract charges.

PERSONAL LOANS

The structure for most personal loans is straightforward. The main price component is the interest rate. In addition, redemption penalties are sometimes charged if the loan is paid off early. It has very wide range of loan prices. The most expensive loan was typically almost double of the cheapest provider. The monthly repayment on the benchmark 3 year Tk. 5, 00000 loan against the size of the supplier. The number of loans outstanding last measures this. The more commonly held loans are by no means those with the most competitive prices, although this could be in part a function of the risk ness of the borrower. The most competitive prices are likely to be available only to those with a high income and low risk of default. The number of products on the market was not found to have an effect on loan rates, and there was a very wide dispersion in rates.

 MORTGAGES

A vast range of different mortgage products is currently available. The pricing structure of all these products falls into one of the following broad Categories: Standard variable rate. The rate of interest over the life of the loan, commonly 25 years, generally reflects movements in the money market rates. These mortgage contracts do not require the lender to vary rates according to any pre set criteria. In this sense the lender has discretion over changing the rate paid by the borrower. Fixed rate mortgages. The interest rate is set at a fixed rate for a specified period – typically five years or less. After this period the rate generally reverts to a variable one. During the fixed rate period, a redemption penalty is commonly payable if the borrower wants to change the mortgage to another type or to another lender. Capped rate mortgage: The interest rate is variable but capped at a maximum level. As with fixed rate mortgages, redemption penalties are often payable.

SAVINGS ACCOUNT

The price of a savings account relates to the rate at which interest is paid. The interest rate often increases as the amount of savings increase. Savings accounts also have a range of other

characteristics, which can affect prices. These include: Terms of access. Savings accounts vary in the degree to which they allow account holders to make withdrawals from their account without financial penalties. Distribution outlets. The study analyzed two types of savings accounts: An instant access account with the following features: Access only through a branch; unlimited withdrawals with no notice period or loss of interest; free withdrawals from own firm ATMs; No passbook; unrestricted additional savings. A telephone only instant access account with the same features as above, excluding branch access. The branch based accounts with very similar terms and conditions for all values of accounts offer a wide range of interest rates.

Consumer Credit

Consumer Credit is a concept, which has conceived in the minds of many a banker and has been thought about to bring the unexplored area of the consumers who belong mainly to the middle class to enjoy the benefits of Bank finance. This group consists of the people who are employed individuals, self-employed persons. Arranging credit facilities for these individuals who have a limited income may think of buying a car or any electronic items, like – TV, fridge, etc. or spend for house renovation or expenses for marriages and enjoy a minimum comfortable living standard. Such credit options have become a desperate need and Arab Bangladesh Bank Limited among the many other banks has successfully introduced the scheme in the year 1997. Arab Bangladesh Bank Limited has attained a remarkable response from this section of people including those of financial / educational institutions, self-employed individuals, government officials, businessmen and employees of this Bank.  Over a span of 5 (Five) years there has been a dramatic rise in the number of Consumer Credit. Nevertheless, it may be mentioned that quite a number of Banks have similar schemes and each day newer products are being introduced. Competition among the private banks is on the rise and clients move to those which have more attractive terms and conditions. Visualizing the present scenario, Arab Bangladesh Bank Limited has re-launched the Consumer Credit Scheme into 6 (Six) product Brands as follows: Personal Loan (secured). Personal Overdraft (secured), Personal Loan (unsecured), Q-Cash Staff Overdraft (unsecured), Q-Cash Customer Overdraft (unsecured).

EVALUATION OF PRACTICES

Retailing or business to individual customer seems to be the main operation of the Pubali bank limited. They have extended offerings in this category. Personal loans, credit card, mortgage, fund transferring etc. are the main offerings. On the other hand international pioneer bank like Citibank has a huge range of product in this category also, that have been thoroughly discussed early. For the Pubali bank limited they have to work hard for meeting the international retailing standard.

ELECTRONIC MARKETING

THE PRACTICES OF PUBALI BANK LIMITED

ATMS

Pubali bank limited has adopted ATMS in some of its main operation which, dispenses cash, account information and also may provide other services.

Point of Scale Terminals

Point of scale terminals are also available which, automatically deduct amount of a customer’s purchase from his or her payments account.

Customer Database

Customer databases are also maintained. Those consists the account and balance information for each individual customer, Updating also taken place.

Home and Office Online Banking

Home and office online baking facilities are also available at the Pubali bank limited. Its give customers the access to banking service via- telephone, Internet or other electronic devices.

Transferring

Transferring function also maintained via- telephone in all the branches of the Pubali Bank Limited across the country. Which give the opportunity of fast banking service.

Statements

The regular statements are provided to the client through electronic process and also manual process

OTHER PRACTICES AROUND

Technology

There is no doubt that technology is reshaping the economics of traditional banking across a whole range of activities. It has allowed banks to: Cut the costs of back office processing, Introduce new lower cost access and distribution channels such as ATMs and telephone   banking, Introduce innovative products such as flexible mortgages. The most obvious recent example is the development of Internet banking and the huge swathe of developments announced by high street banks. There have been bullish predictions about the take up of remote banking (by the telephone, internet and mobile phone), along with suggestions that physical cash will be replaced by e-cash, and even that the world’s currencies will be replace by new private electronic currencies.

E-currencies

It has been suggested that the ultimate consequence of new technologies in banking will be to replace conventional state backed currencies by new global electronic currencies. To some extent alternative currencies already exist. For example, air miles and supermarket loyalty scheme points can be exchanged for a range of products and services and attempts are being made to replicate these globally on the internet by companies such as beenz.com at standard chartered.

E-cash

E-cash is a half way house between e-currencies and physical cash. It comes in a variety of different forms: some are like real electronic cash, others more like pre-paid debit cards. Even a particular brand of e-cash can take a range of forms. The most common at present comes either on a smart card for use in the physical world or in an electronic wallet based on a PC or web-server for use in the virtual electronic world. To date the success of e-cash schemes has been mixed. From a competition standpoint, the advantage of e-cash is that it could reduce entry barriers to banking sectors and increase efficiency.

E-payments

In recent years, there has been a significant increase in electronic means of payment such as direct debit and credit and debit cards and a move away from cheques, particularly among personal consumers. The switch to more electronic payment methods can reduce costs if different types of transactions are appropriately priced. The highest expected growth rates are for debit cards and for remote banking via the telephone, Internet and digital TV.

Internet and telephone banking

Up until now, remote access technologies such as the telephone and the mail have played a major role in helping established players enter new geographic markets, for example Direct Line in insurance. Looking to the future, the internet and digital TV are now expected to spark a revolution in banking: cutting costs, allowing consumers to change bank accounts at the click of a mouse or remote control button, and potentially opening the market to a flood of new entrants.

EVALUATION OF PRACTICES

The global and international standard of electronic marketing has reached to unbelievable high standard. International masters of banking like Nat-West, HSBC or Standard Chartered has adopted tremendous facilities sin their e marketing. Pubali bank limited has to improve a lot even to withstand with the competition of domestic banks.

PRICING (SERVICE CHARGES)

THE PRACTICES OF PUBALI BANK LIMITED

Deposit

The deposit schemes include savings bank account, fixed deposit account, and short-term deposit account, current account, and pension account, foreign currency account. The bank pricing these in terms of cost plus profit margin method.

Loans and Lease Services

The Pubali bank limited maintains prime rate to its most credit worthy and trusted customers. Along with this also sets loan rates using a base industry arte plus its mark-up for that particular goal. The loans and lease include micro credit, small and medium enterprise financing, industrial loans, working capital financing, export credit, import credit, bills purchase, letter of credit letter of guarantee, lease financing, transport financing, consumer’s loan scheme, and house building loans.

Remittance Services

Remittance of Fund from abroad by Bangladeshi Nationals includes Foreign Remittance and Internal Remittance. For these services the bank follows cost plus service pricing methods.

Miscellaneous Services

Miscellaneous services include electric bill, gas bill, phone bill, cheques clearing instrument, collection locker services, atm services, and card services. The bank charge service charges only for this case.

OTHER PRACTICES AROUND

Charges

If only partial payment is received, then interest is charged at a daily rate from the date of the transaction until the date at which payment is received. Partial payments of card bills are applied against different elements of the account according to a predetermined order. In a typical account, payments will be applied against the account in the following order: Interest and handling charges; Cash advances; Purchases on previous statements; Purchases on current statement; Cash advances received, but not yet on the statement; Purchases received, but not yet on the statement.

Interests

Interest is calculated daily using the period between the date of the transaction and the date at which payment is received. The range was greater if introductory rates were included. Some banks, especially new entrants, offer low rates to new cardholders for the first six months. These were as low as 5 per cent in August 1999. As with mortgages, prices in this product segment move fast: rates below 5 per cent were available.

Mortgages

Consumer preferences for a particular type of mortgage depend on a number of factors. Most important is the consumer’s attitude towards risk. Fixed rate mortgages became more common in the early 1990s after many property owners with variable rate mortgages had been hit by increasingly high interest rates. A number of people who took out fixed rate mortgages at that time have subsequently seen money market interest rates fall. They have not been able to benefit from lower monthly repayments without paying redemption penalties. Prices were more evenly spread through this range than for variable rate mortgages, where many major suppliers fell within a very narrow pricing band. The rate of interest is only one component of the price of a fixed-rate mortgage. Redemption penalties are also charged during the fixed rate period and, in some cases, beyond. Redemption penalties are expressed in a number of ways and typically not as monetary sums.

Savings

The analysis of price trends was based on two representative 90-day savings accounts derived from the Abstract of Banking Statistics (1998, 1999). The first, a high value account, ranged from £15,981 in 1993 to £23,053 in 1999. The second was taken to be as 10 per cent of the higher figure. For both high and low value savings, the analysis showed that. Interest Rate (%) Paid at £2,501 average spreads (the difference between the interest paid and LIBOR) increased slightly over the period, but fell in the last couple of years.

EVALUATION OF PRACTICES

Pricing of banking services or product mainly consists of service charges and interest rate. Interest rate is very much a secret for most of the bank. That they maintain very strictly. Interest rate in Bangladesh is higher compare to in Europe for international banks. Service charges are also lower. Pubali bank also cut service charge lower than most other domestic banks.

PRODUCT/SERVICES

Nature of banking products

The study also examined whether consumers experience similar information problems in assessing whether a particular banking product is suitable for them. This, too, could point to the need for intervention, such as product regulation. There is no doubt that consumers find it difficult to understand certain financial products.

The banking products, which form the focus of this report, are generally much simpler, however. While some of the terms and conditions are not transparent and certain products have a range of ‘hidden charges’, consumers should be able to tell whether they are getting good value for money if they have access to the right information. The study is not convinced that problems in this area merit these products being subject to regulation through being defined as regulated activities.

THE PRACTICES OF PUBALI BANK LIMITED

Deposit Services

• Savings Bank Account
• Fixed Deposit Account
• Short Term Deposit Account
• Current Account
• Pension Account
• Foreign Currency Account

Loans and Lease Services

• Micro Credit
• Small and Medium Enterprise Financing
• Industrial Loans
• Working Capital Financing
• Export Credit
• Import Credit
• Letter of Credit
• Letter of Guarantee
• Transport Financing
• Consumers Loan Scheme
• House Building Loans

Remittance Services

• Remittance of Fund from abroad by Bangladeshi Nationals
• Foreign Remittance
• Internal Remittance

Miscellaneous Services

• Electric Bill
• Gas Bill
• Phone Bill
• Cheques Clearing
• Instrument Collection
• Locker Services
• ATM Services
• Card Services

OTHER PRACTICES AROUND

Personal Banking

• Personal Finance
• Credit Cards
• Priority Banking
• Investment Advisory Services
• Insurance
• Deposits and Retail Services
• Retail FX Products

Business Banking

• SME Banking
• Cash Management
• Credit Facilities
• Trade Services

Transactions

• Straight2Bank Electronic Channels
• Electronic Channels
• Securities Services

EVALUATION OF PRACTICES

The Pubali bank limited has wide range of product and services in compare to other banks. It lacks a bit in modern and electronic banking operation services. However, as far as traditional banking services are concern it has all the product and services. Credit card and ATM facilities are also limited in compare to the offerings of the HSBC, Citibank N.A, or Standard Chartered. But the Pubali bank limited is doing no less than that of the services of the domestic bank. It is the largest commercial bank of the country and in domestic business it is doing all right.

CUSTOMER MANAGEMENT

THE PRACTICES OF PUBALI BANK LIMITED

The bank has helped clients achieve measurable improvements in service, quality, productivity and costs. Its experienced industry specialists deliver proven results through the optimum blend of people, process and technology.

Innovation

Is CRM another innovation, or the result of innovation? The bank thinks both. CRM is primarily driven by the innovation of technology, but unlike other technological innovations, CRM has power to help bankers quickly and directly improve customer satisfaction. CRM is an added dimension to ensure that what the customer expects is consistent with what the bank is prepared to deliver. One expert in bank CRM initiatives recently said that CRM is an approach that is less focused on providing the right services to the customer than attracting customers who are the right fit for what the bank has to offer. Further, the primary value of CRM is its potential as a customer retention tool. People are starting to measure CRM in terms of increased customer satisfaction rather than ROI.

Proposals

The new proposals set out three ‘pillars’ for regulation: Minimum capital requirements Supervisory review of a firm’s capital adequacy and internal assessment process Market discipline as a lever to strengthen disclosure and encourage prudent and sound banking practices

Actions

The Commission identified a number of areas for action including: Information and transparency; Redress procedures; a balanced application of consumer protection rules; laying the foundations for e-commerce based retail financial services.

Lender of last resort

Greater transparency might also be helpful in relation to the role of lender of last resort when a bank suffers liquidity or solvency problems. The Memorandum of Understanding between the Bank and its customers. In exceptional circumstances there may be a need for an operation, which goes beyond the Bank’s routine activity in the money market to implement its interest rate objectives. Such a support operation is expected to happen very rarely and would normally only be undertaken in the case of a genuine threat to the stability the financial system to avoid a serious disturbance in the economy In all cases the Bank and the customers would need to work together very closely

OTHER PRACTICES AROUND

Customer value management tools

Another development, which could have a significant impact on the value for money for consumers, is Customer Value Management (CVM) and Customer Relationship Management (CRM) tools. These help banks store and mine their customer data to determine which customers are generating profits and which are not. The so called 80/20 rule is often said to apply in banking, by which 80 per cent of profits come from 20 per cent of customers. Not all reputed banks appear to be developing these tools and even among those who are, some are apparently doing so without much conviction. CVM techniques could affect consumers directly. For example, banks in other countries have used CVM techniques to decide which customers they want to retain (and sell further financial products to) and which customers should either be persuaded to leave the bank or made profitable through reprising strategies on, for example, current account charges. From a competition perspective, it could be argued that this an inevitable result of ending cross subsidies.

Risk management and credit scoring

The introduction of better risk management tools by banks is welcome. For small business customers they produce better lending decisions and prices more accurately attuned to risk and therefore cost. For retail customers, more sophisticated credit scoring techniques may bring credit within reach of some customers previously refused loans or subjected to penal rates of interest. Taking a wider perspective, better risk management should allow banks to allocate their capital according to real economic risk rather than to meet regulatory standards, which are often a poor proxy for actual risk. This better allocation of capital should give banks a clearer view of the costs associated with different activities.

Regulation and technological improvements

Regulation and technological improvements are responsible for the vast majority of innovations in banking over the past quarter century. The introduction of personal computers and the proliferation of ATMs in the 1970s captured bank management’s attention. The regulatory changes in the 1980s fueled much of the industry’s growth, then downsizing as bankers focused on amassing market presence, which resulted in significant merger activity. Recent technological improvements are at the root of bankers’ focus as well as a target for their significant investment dollars today. In fact, according to recent projections, bankers and their financial service company brethren will spend almost $7 billion this year on CRM and increase that by 14 percent each year for the next several years.

Innovations

For example, ATMs. What drove many bankers to invest in ATMs was the promise of reduced branch cost, since customers would use them instead of a branch to transact business. But what was discovered is that the financial impact of ATMs is a marginal increase in fee income substantially offset by the cost of significant increases in the number of customer transactions. The value proposition, however, was a significant increase in that intangible called customer satisfaction. The increase in customer satisfaction has translated to loyalty that resulted in higher customer retention and growing franchise value.

Internet banking

Internet banking, a product of the 1990s shows similar characteristics. Again, bankers invested believing that the Internet was a lower-cost delivery channel and a way to increase sales. Studies have now shown, however, that the primary value of offering Internet banking services lies in the increased retention of highly valued customer segments. Again, the intangible called customer satisfaction drives the value proposition. Now we explore CRM. CRM is not another ATM or Internet bank. It is not a checking account, a stock or a mortgage. In fact, CRM is not anything a customer should even know about! You will never sell your customer your CRM, will you? So, one can conclude that CRM is not tangible. If it’s intangible, can it be expected to produce a tangible return? Probably not, or at least not with any direct financial value exclusively linked back to the investment in CRM.

EVALUATION OF PRACTICES

The Pubali bank limited is very much conventional in their customer management practice. It lacks innovation but they are trying to innovate new things to withstand with the competition. The international banks have different customer management department and strategic papers. According to that they are not just operating as bank but as a customer’s Service Company or marketing company. So, the Pubali bank requires bringing some changes in their customer management program.

SERVICES TO BUSINESS FIRMS

Introduction

The markets for business banking services are much more problematic. The market dynamic seen in personal banking services is absent. There is little prospect of effective competition. The main services considered here were current accounts and external finance. Many of these information problems apply also to business. However, the levels of market concentration in the supply of banking services to business are much higher than in the corresponding markets to supply personal customers.  For businesses, the situation is very different. Getting effective competition

in the relevant markets is materially more difficult: entry costs are much higher and small businesses much less disposed to change their supplier. Better information and redress can be expected to have some beneficial effect in that small businesses may realize they do not have to put up with high prices and poor service. But they will still have few options to move away from the current small group of banks, all of which offer pretty much the same deal. More extensive remedies, including structural measures, are required.

Structure

Getting the right structure for businesses balance sheets at crucial points in their development is essential for growth. The study found no evidence that businesses are unable to get access to debt products, except for high-risk propositions. Such activity is almost always better funded by equity.  The current account provides the essential gateway to money transmission for both personal and business customers. Not all consumers need to borrow and not all have money to save. But it is impossible to participate in a modern economy without cash, and increasingly inconvenient and expensive to participate without access to forms of electronic payment. The networks of payment systems that support these everyday transactions matter to everyone. They affect not just prices to consumers but the ways in which economic exchanges can develop in the future. In particular, e-commerce cannot by definition flourish without efficient means of electronic payment.

THE PRACTICES OF PUBALI BANK LIMITED

Working Capital

The Pubali bank limited provides working capital loans to its business customers to purchase inventories meet payrolls and cover other short-term operating costs.

Asset-based Financing

Here, salable business assets, such as, inventory or account receivables, usually secure the credits.

Contractual Financing

Contractual financing consists a temporary financing agreement to cover the costs of erecting a building, home or other structure, usually paid off by subsequent securing a long term mortgage loan.

Long-term Project Loans

Project loans are also been provided that give extended credit to support a specific commercial venture, for example, such as drilling oil or gas. These are expected to be repaid by revenues following from the venture.

Transferring

Transferring of balance and funds taken place via- Internet, telephone or mail. The bank maintains secret code for each and every branch for this purpose.

Statement Proving

The bank provides different statements of transactions to its customers in requirement of their business operation

OTHER PRACTICES AROUND

A wide range of solutions for financial needs and a comprehensive range of services and products to fulfill all financial needs provide by the banks.

Premium Currency Deposit

Premium Currency Deposit gives substantially higher interest rates than a regular time deposit. Treasury specialists can assist u with customized strategies to enhance returns.

Principal Protected Currency Deposit

Principal Protected Currency Deposit, one can earn potentially higher interest based on strategies customized to views of the currencies, with r principal protected.

Bonds

You can select from our range of bonds issued by well-established and reputable organizations worldwide to enhance your returns. Tenures typically run from 1 to 10 years.

Unit Trusts

Standard Chartered is a recognized leader and the largest third party distributor of funds. Tapping on the expertise of reputable fund houses, a wide range of investment options.

Others include

Saving Accounts, Current Accounts, Foreign Currency Deposits, Cheque & Save Accounts, Time Deposits, Insurance, and Investment linked products, Rate linked Deposits, Currency Investments, Principal Guaranteed Investments, Tax & Estate Planning, Personal Loans, Personal Credit, Standard Chartered Platinum Credit Card, Mortgage One, Business Property Financing, and Trade Services.

Trade Services

The complexities of international trade can thwart even the most capable business. So, having an experienced bank can help business sail its way expertly and safely through unfamiliar waters. The long history of the banks means that they have the experience and knowledge of local business practices – enabling them to handle transactions efficiently and confidently.  Some of the trade services offered include Letter of Credit, Documentary Collections and Guarantees.

One-Stop Financial Solution for Growing Business

With years of banking experience, these banks are undoubtedly in a strong position to help growing businesses sail through the complexities they may face. SME Banking offer one of the widest ranges of banking products and services in the market today. Managing a growing  business demands most of time and energy. That is why working with the right bank can help business sail more smoothly.

Credit Facilities

Whether one is expanding his business, buying premises for office use or looking for short-term loans to fund working capital, banks are happy to discuss the requirement and put together the loans and other credit facilities in need. They offer tailored loan packages to meet your specific needs and to assist in working capital and cash flow management.

Cash Management

Having accurate, up-to-date financial information at the right time and place is crucial to business decision-making. These banks offer financial tools to manage business cash flow more efficiently and effectively. Cash management offers include Internet Banking, FAX Banking, Phone Banking, ATM Services and Courier Service.

EVALUATION OF PRACTICES

The service that are provided by the Pubali bank and other banks are very much the same except some innovation in the offerings of the international pioneer banks like the HSB, Standard Chartered or Citibank.

ADVERTISING

THE PRACTICES OF PUBALI BANK LIMITED

The Pubali Bank Limited found to be very defensive and restricting as far as its advertising campaign is concern. Unlike most banks it’s never found to be sponsoring in news channel in recent past. It normally seems to follow traditional make and produce value delivery system. However the bank management is considering the expansion of advertisement budget and campaign in near future. In present situation the bank never found to be engaging in any sorts of advertising campaign. The commercial banks in the country in recent stage have extended their advertising campaign, but the Pubali Bank Limited found to be out of it.

OTHER PRACTICES AROUND

Place Advertising

Standard chartered Citibank N.A, NatWest, Barclays or other international banks are all the time makes huge expenses in place advertisements. They normally invested in billboard, placards, leaflets, public space ads, print advertisements etc.

Sponsoring

Nat-West is the regular sponsor of cricket tournament in England. Barclay’s sponsors’ football competition. In Bangladesh commercial banks sponsored news telecast and other TV Programs.

Advertising Budget

Most of the dominating and well performing banks in the world and in Bangladesh expire substantial budget for the purpose of their advertising campaign. HSBC gives ad more than 30 channels of the world.

Message Generation

The prime objective of this advertising campaign is definitely generate message in the mind of clients and to influence them for taking service as, banking now a days also like the application of FMCG’s marketing practices.

Creative Development and Execution

Most of the ads contain creative thinking and new idea generation. Home loan ads of HSBC or mortgage ads of Nat-West all have creative ways to deliver the main message.

EVALUATION OF PRACTICES

Unlike most commercial banks of the country Pubali Bank rarely found in the television channel. That signifies its advertising campaign. It is very much restrictive as far as its advertising are concern. Global banks engage themselves in place and media ads in far greater extent.

SALES PROMOTION

THE PRACTICES OF PUBALI BANK LIMITED

The Pubali Bank Limited found to be very defensive and restricting as far as its sales promotion campaign is concern. It takes few steps like service week declaration, special rebates or discounts in some cases. But that is never to be in detail or expand operation for sales promotion.

OTHER PRACTICES AROUND

Objectives

International reputed banking firms as well as domestic banking organization varies in perspective of their sales promotion objectives. A free sample stimulates consumer trial, whereas a free management advisory service aims at cementing a long-term relationship with customers.

Sales Promotion Tools

Sales promotion tools that re commonly used are samples, coupons, cash refunds, price packs, premiums, prizes, awards, free traits, promotions, and point of purchase.

Decisions

Major sales promotion decisions involved the choosing of event opportunities, deigning sponsorship programs and measuring and managing sponsorship activities. Most of the banks use to choose the electronic media and games as well as news program seems to be their preference.

Effectiveness

Effectiveness of each and every sales promotion tools a s well as campaign has been periodically judged by the banks. Verification, up gradation as well as required changes are taken place periodically.

EVALUATION OF PRACTICES

The Pubali bank limited has almost no sales promotion. Service week or some rebates are some exceptions in this case. Whereas international reputed banks are taking several sales promotion campaigns like cash refund, awards, quizzes, rebates, coupons etc.

MARKET RESEARCH

THE PRACTICES OF PUBALI BANK LIMITED

The Pubali Bank Limited rarely conducts market research for colleting information. This is not an exception in our country. However, after the commercialization the bank has initiated few changes in their campaign. That also includes collecting information from the market and the environment. They don’t conduct thorough market research, but what they do is they collect information from the field and other lending and filed level super visor. That information actually works as market research output for the bank. In near future the bank is considering to conduct research or to give this task to professional research firm.

MANAGEMENT, PLANNING & STRATEGY

THE PRACTICES OF PUBALI BANK LIMITED

The Pubali Bank Limited follows following marketing strategies and planning in its marketing practices:

PRINCIPLES

In developing the new framework, the first task is to establish the key principles against which specific policy proposals are to be assessed. Principles are competitive neutrality, proportionality and cost effectiveness, transparency, flexibility and accountability.

COMPETITIVE NEUTRALITY

Competitive neutrality means that the policy framework must operate on a non discriminatory basis. This demands not just that similar customer are treated similarly, but also that dissimilar customers are not treated the same. In other words, regulations should be imposed only on those customers who are at risk from – or contribute to – the problem that regulation is designed to address.

PROPORTIONALITY

Proportionality means that policy must be proportionate to the problems they are designed to address. They should be imposed only where there is clear benefit from doing so and should take account of all costs, including the direct and indirect costs associated with any distortion to competition. Proportionality implies also that regulations should be calibrated according to the degree of risk.

FLEXIBILITY

Strategies need to have a high degree of flexibility. In today’s fast moving market detailed prescriptive rules may quickly create inefficiencies or perverse incentives for individuals.

TRANSPARENCY

Conversely, high levels of transparency can help reduce information imbalances and minimize the effects of moral hazard.

ACCOUNTABILITY

Accountability is also necessary to ensure that regulators are mindful of the effects of their decisions and that they operate independently of sectional interest with appropriately skilled staff. These principles lie at the heart of the study’s recommendations.

They have also been applied to the assessment of remedies needed to correct the defects of the old strategies. These remedies include: reducing information imbalances by improving transparency, getting the right institutional incentives and accountability, ensuring rigorous competition scrutiny of the customer services in the banking sector.

RISK DISCLOSURE

Publishing more information on firms should improve the effect of market discipline. Other market participants would be able to use the information to improve their risk assessment of a particular firm before making their investment decisions. This mechanism would itself reduce excessive risk taking. The study believes there is a greater role for market discipline in banking regulation than at present. It therefore welcomes the inclusion of market discipline. These proposals are still at the formative stage and it will be some time before any new requirements are implemented.

OTHER PRACTICES AROUND

The above reputed domestic and international Banks follow following marketing strategies and planning in its marketing practices:

TRANSPARENCY

It is paradoxical that while one of the main reasons for prudential regulation is to deal with the information imbalance between firms and consumers, very little regulation itself requires greater information disclosure. Two different sorts of information could usefully be published: Firm’s own assessment of its risk exposures; the customer’s assessment of a firm’s risk exposures. If information asymmetries represent one of the key problems surrounding risk management and prudential regulation, then customer’s are under an obligation to do all they can to reduce any imbalance.

THE NEW POLICY FRAMEWORK

These banking firms make risk disclosures at least annually on their: Capital structure and components of capital, The terms and conditions of the main features of capital instruments, Accounting policies for the valuation of assets and liabilities, provisioning and income recognition

PRINCIPLES

Market confidence – maintaining confidence in the financial system, Public awareness – promoting public understanding of the financial system, Consumer protection – securing the appropriate degree of protection for Consumers, Financial crime reduction – reducing the extent to which a business carried on by a  regulated person can to be used in connection with financial crime.

ENSURANCE

Efficiency; Market power, Managerial; Government and social consequences.

 WAY FORWARD

Recent experience has highlighted some very real problems the in banking markets are currently considered. For example, the Government of UK cleared bids by both the Bank of Scotland and the Royal Bank of Scotland for Nat-West without obtaining any undertakings in relation to banking services to small businesses.

MERGERS

There are relatively few mergers among the top 10 banks in the world could be presently argued to be in the public interest, given the current structure of banking markets. It is essential that the market structure maximize the potential for competition in the long term. As markets are likely to remain concentrated for some time, changes are needed to the way government considers mergers between firms operating in these markets. Currently, there are no special legislative rules concerning mergers in the financial services sector. This differs from practice in many other countries where special rules apply because of the special nature of banks

BARRIERS TO EFFICIENCY AND INNOVATION

The bank has also led to a number of barriers to efficiency and innovation. In some cases, such as money laundering, it is partly because banks have been allowed to write the rules. At other times, it is because the contract encourages regulators to be risk averse.

BARRIERS TO SWITCHING SUPPLIERS

Barriers to switching recur throughout the banks strategies. The issue is important because however many new entrants there are in a market, they will not provide a spur to more effective competition unless significant numbers of customers are prepared, and able, to switch supplier when offered better value for money elsewhere.

 ELIMINATE INFORMATION PROBLEMS

One of the characteristics of the banking sector is the information imbalance, which exists between all market participants. This stems partly from the current regulatory contract which discourages transparency and openness both on the part of the regulator and by others, but information problems impede the competitive process in a number of other ways: consumers often do not have the information they need to decide whether they are getting a good deal from their current financial provider, so banks are looking to eliminate that problem.

CONCENTRATED ON MARKET STRUCTURE

Most of the markets examined are found not to be concentrated according to standard benchmarks. But the exception was the important current account market. It is very important to operate in various markets according to the structure of that.  That is why banks are looking to concentrate on market structure more that aver before. This concentration is likely to give them an extra edge over other operators, as they will be able to operate from more appropriate information resources.

EVALUATION OF PRACTICES

Management of the Pubali Bank Limited seems to follow conservative and traditional approach compare to other pioneer domestic and international banks. However, it is the largest commercial bank of the country after the privatization and liberalization. Since that bank bring some major changes in its operation. Management also has decided to cut a huge number of jobs and also bring innovation alike the facilities of evening banking. In spite of that further innovation and aggressive marketing practice and strategy required for more progress.

CONCLUDING STATEMENT

After conducting internship program, collecting and evaluating data on the Pubali Bank Limited I have made my report as informative as possible. After evaluating all the things I have found that the performance and condition of marketing practices of the Pubali Bank Limited is not expacticular nor very poor. I have also evaluated few related aspects of marketing practices like CSR and market Research in order to make the report more structured and informative.

RECOMMENDATIONS

Improving service quality: The bank should concentrate on improving their service quality and efficiency. Bank should train its employee for better service providing.

Increase and bring more variety:  The Pubali bank Limited should increase and bring more variety as well as innovation in its product and service offering. For that they can follow the operation of global banks.

Environment: The environment of the branch office needs to improve also to equal the things with other competitors.

Quick service providing: The bank also needs to give more emphasize on quick service providing. So that the customer don’t required to stay a lot before getting services. More energetic talent need to be recruited to face the new challenge.

Adoption of new technological equipment: Adoption of new technological equipment also needed to be done sooner than later. So that the bank don’t fall behind its customers. Modern banking services like credit cards, ATM’s, debit cards, internet banking, online statement etc. also require vast improvement and up gradation.

Need to change its culture:  The Pubali Bank Limited need to change its culture which it has got form its age of government bank.

CSR campaign Expansion: CSR campaign also needed to be expanding a lot in order to change the image. The bank for this purpose can follow the example of The Dutch Bangla Bank Limited.