Financial Performance Analysis of Sonali Bank Limited.(part-4)

4.4 International Banking

Sonali Bank Limited expertise in International Banking has a record of in-house growth over more than half a century. Its pioneer role in handling foreign trade and foreign exchange transactions ever before independence of the country still remains unchallenged. With wide network of branches at home and also a large number of correspondent banks world-wide it is singularly handling the largest volume of export-import business including home-bound remittances.

Products & Services:

Export Credit (Pre-shipment & Post shipment)

Facilitating Supplier’s Credit

LCs (Letters of Credit)

Guarantees in Foreign Currency
– Bid Bond
– Performance Guarantee
– Advance Payment Guarantee.

Bill Purchasing/Discounting

Remittance, collection, purchases & sales of Foreign Currency & Traveller’s Cheques.

NRAT (Non-Resident Account in Taka)

NFCD A/c (Non-Resident Foreign Currency Deposit)

RFCD A/c (Resident Foreign Currency Deposit)

Convertible and Non-convertible Taka Account

Forward contracts

Correspondent Banking Relations

Import Finance:

Sonali Bank Limited supports its customers by providing facilities throughout the import process to ensure smooth running of their business. The facilities are.

a. Import Letter of Credit.
b. Post Import Financing (LIM,LTR etc).
c. Import collection services & Shipping Guarantees.

Interest Rate: 12% to 14%

Export Finance:

Sonali Bank Limited offers extra cover to its customers for whole export process to speed up receipt of proceeds. The facilities are:

a. Export Letters of Credit advising.
b. Pre-shipment Export Financing.
c. Export documents negotiation.
d. Letter of Credit confirmation.

Interest Rate: 7% + 1% service charge

The comparative position of foreign exchange business for the year 2007 and 2008.

(Tk. in Crore)

4.5 Industrial Financing

Credit Schemes:

Long term loan for setting up new industrial units and BMRE of existing units including working capital finance are extended by Sonali Bank Limited to cottage industries, small-medium-large scale industries and also to self-employed persons with a view to creating employment opportunities, deployment of resources, increasing GDP and over-all industrial development of the country. Currently the following credit schemes are on offer by the bank:

Some of the main Credit Schemes:

Industrial Financing for Thrust Sectors.

Sonali Bank Industrial Credit Scheme.

Special Investment Scheme for Cottage and Small Industries.

Financing Large Scale Industries through Banks’ Consortium.

Financing Software Development and Data Processing.

Designated Branches:

About 100 branches including all the corporate and district headquarters branches are designated to handle industrial credit.

Thrust Sectors:

Besides the traditional and oft-trodden sectors, Sonali Bank Limited has also come up with very low rate of interest to finance the following thrust sectors of the economy as identified by the Government:

Software development and data processing.

Agro-based industries (excepting cold storage for preservation of potatoes).

Manufacture of artificial flowers.

Frozen foods.

Gift items (preferably export oriented).

100% export oriented finished leather goods.

100% export oriented jute goods.

Jewelry and Diamond cutting and polishing.

Oil and Gas.

Sericulture and silk industries.

Stuffed Toys (preferably export oriented).

100% export oriented textile industry (excepting garments manufacturing industries).

Other Viable Industrial Sectors:

Composite textile (woven & knit fabrics).

Textile / Acrylic Spinning.

Sweater Industry.

Garments Accessories & Washing Plant.

Denim Fabrics (export oriented).

Tourism / Hotel and Resort facilities.

Hospital & Clinics.

Other Export linkage industries.

Power Generating Plant.

LPG, CNG Filling & Conversion plant.

Pharmaceutical Ind.

Plastic Ind.

Tannery/Rubber Foot wear.

Other highly rewarding appropriate technology based projects.

Interest Rates:

Project/Term Loan : 12.00% to 13.00%

Working Capital : 13.00%

Overall Industrial Credit Position of the Bank as on 31 December, 2008:

(Tk. in Crore)

4.6 Merchant Banking

Sonali Bank Limited, the largest State owned commercial bank in Bangladesh. Began to invest in the secondary market from the month of February 2009.

The growth of institutional investments in capital market of Bangladesh has been far below the expectation. As we know Merchant Bankers can play a vital role in helping to make the stock market transparent and vibrant. Sonali Bank Limited obtained License from the Securities and Exchange Commission in 23 March 2009, to operate in the Capital market as a full-fledged Merchant bank. The terms & conditions imposed by the SEC in operating the Merchant Banking activities are:

1.     There shall be separate unit with separate personnel and designed area for the purpose of Merchant Banking Operation.

2.     The Merchant Banking Unit shall maintain separate books of accounts and financial statements to show clearly the financial position in respect of its Merchant Banking Operation. Financial statements shall be audited by a chartered accountant firm certifying that the relevant rules and guidelines by SEC and other relevant authorities have been strictly adhered to;

3.     The Merchant Banking Unit shall be equipped with necessary modern office equipment for smooth functioning & efficient services to the clients;

4.     All other terms & conditions as laid down in the SEC (Merchant Banker & Portfolio Manager) Regulations 1996, SEO 1969, SEC Rules 1993 and any amendment thereof from time to time shall be adhered to at all times.

As stipulated in the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) regulations 1996, the services of issue management, portfolio management, underwriting of shares and securities and advisory services fall under the purview of Merchant Banking Operation. Sonali Bank Limited has been going with Merchant Banking Operation since 14 September 2009 at 11/A, Sara Tower (11^th Floor), Toyeenbee Circular Road, Motijheel, Dhaka. It has a Merchant Banking Management Committee to manage & take quick decision of merchant banking activities.

SBL provides margin loan to the investors at the ratio- 1:25 (previously 1:1.5) and we always abide by the restrictions, rules & regulations of Securities and Exchange Commission. For example, the recent SEC restriction to provide margin loan to the company, which have more than 50% of P/E ratio. SBL doesn’t provide margin loan for ‘Z’ category shares, Mutual funds & some risky shares. SBL always counsel the clients to follow the fundamental factors of investment. Firstly, SBL suggest taking an overview of the desired company in which the investors want to invest, such as company’s background, authorized capital, Paid up Capital, Assets & Liabilities, last five years Net Profit, Dividends, Earning per Share, Net Asset Value, P/E ratio, highest & the lowest price of the share etc. Thus an investor can know the Company’s Performance & Management Efficiency to take an investment decision. After all these, investors can take his/her decision at his/her risk to invest in any company’s share.

Now SBL has a workstation of ICB named ISTCL for the trading purpose. So far SBL is going to underwrite the Tk.100 crore IPO of Janata Bank Limited. SBL have been offered to take private placement of Beximco Pharmaceuticals to purchase preference shares. We are participating in the upcoming IPO of JBL as Banker’s to the issue.

As per BPRD Circular no-12 of Bangladesh Bank on 12^th October 2009 every merchant Banking Unit of Commercial bank should be converted into a subsidiary company. We are already got the permission of Bangladesh Bank. In this regard a Memorandum and Articles of association have been approved by the Board of Directors of Sonali Bank Limited. Sonali Bank Limited has submitted the name of the subsidiary company as “Sonali Investment Limited” to the registrar of joint stock companies and also got the Name clearance letter. There will be 6(six) Directors for Sonali Investment Limited including 4(four) Directors represented from Sonali Bank Limited & 2 independent Directors from other than Sonali Bank Limited. Human resources will be employed from Sonali Bank Limited on deputation. We hope Sonali Investment Limited will also become the Leading Merchant Bank like the Sonali Bank Limited, a Leading Commercial bank in Bangladesh.

The data regarding the Merchant Banking operations in the Merchant Banking Unit of Sonali Bank Ltd is given below:

Obtained License from SEC                              :   23   March   2009

Started Merchant Banking Operation            :  14 September 2009

Number of Accounts opened up to date       :   About 200

Size of the Investors Portfolio                         :  Tk. 150.50 million

Income of SBL from Merchant Banking

(Tk. In millions)

  Loan Ratio                                                     :    1: 1.5 (at present 1:1)

 Rate of Interest                                          :     13%

 Management Fee                                       :     1%

To operate the Merchant Banking activities Sonali Bank Ltd have purchased the unique soft ware namely ‘’m bank” developed by the renowned software Vendor M/S Leads Corporation.

The Merchant Banking Unit will start its operation as a subsidiary company under the name of “Sonali Investment Limited” very soon. And we believe that it will be able to hold the position of the leading Merchant Bank as it has been doing since it started its journey in the banking arena.

4.7 SME Banking

To reduce poverty within 2015 Sonali Bank Ltd. Has start a service which is SME loan. By offering this product Sonali Bank Ltd. Helps government to increase job opportunity as well as increase GDP.

Objectives of SME Loan-

Help government to remove poverty.

Earn much currency by Export Import business to government.

Helps woman entrepreneur to be self-independent by providing loan.

Industrialization with employment opportunity.

Requirements for getting Loan-

Minimum 2 years business experience.

Entrepreneur must be educated & healthy and age must be within 18-60.

Women entrepreneur will get first preference.

Entrepreneur must be Bangladeshi citizen.

Types of product for getting SME loan-

Export products-

1. Fringing Plant for fish.
2. Tanaree business.
3. Export furniture.

Import products-

1. Xining Mill.
2. Garments accessories.
3. Washing plant, Packaging.

Loan Limit-

Depends on business type loan can be 50000-100000000

Duration and Interest rate-

Duration depends on business type. But in case of current assets 1 year and in case of term loan 3-7 years. Interest rate is 13%.

4.8 Online Banking

1. Branch Computerization: 267 branches are on live operation. Out of 1182 branches at home, 1169 branches have already been entered in the automation network.

2. Foreign Remittance : Bank’s own in-house software “Remittance Management System” (RMS+), having, among others, the feature of paying foreign remittance instantly over the counter is being implemented at all branches. This web based software provides digital services to the expatriates through its unique advantage of sending confirmation message to the mobile phone of the remitter/beneficiary.

3. ATM: Sonali Bank Limited is a member of Q-Cash ATM network. At present the bank has 12 ATM booths. Establishment of 43 more ATM is on. Sonali Bank’s ATM cardholders enjoy the access to the ATMs and POS of Dutch Bangla Bank Ltd. and Brac Bank Ltd. besides those of Q-Cash consortium. Sonali Bank recently launched Credit Card.

Features:

Sonali Bank Ready Cash Card is a Debit Card.

Cardholder can easily pay utility bills like – Water, Telephone, Gas etc.

It is easy to remit funds among the participating branches of the Bank.

Transaction beyond working hours.

It is a riskless Cash Carrying facility.

Cashless purchase can be made form specific merchandise points.

Only computerized Branches of Dhaka City will deal Ready Cash Card.

Branches of other Cities and Towns will introduce Sonali Bank Ready Cash Card in due course.

4. Online and SMS Banking: At present    34   branches of Sonali Banks are included in the Online Any Branch Banking (ABB) network. The bank is seriously working on connecting all branches in the Real-time Online Banking network gradually. Branches having ABB facility are also rendering SMS banking services.

5. SWIFT: SWIFT facilities are available in Bank’s Head Office and in 21 designated branches.

4.9 Ancillary Services

Sonali Bank Limited offers multiple special services with its network of branches throughout the country in addition to its normal banking operations.

Collection:

Gas bills.

Electricity bills.

Telephone bills.

Water/Sewerage bills.

Municipal holding Tax.

Passport fees, visa fees and Travel tax.

Customs & Excise duties.

Source tax and VAT.

Jakat fund.

Hajj deposit.

Land development tax.

Payment:

Pension of employees of Government and other Corporate Bodies.

Bangladesh Bank employees’ pension.

Army pension.

British pension.

Students’ stipend/scholarship.

Govt. & Non-Govt. Teachers’ salary.

Food procurement bill on behalf of the Govt.

Social Services:

Old age allowances.

Widows, divorcees and destitute women allowances.

Freedom Fighters’ allowances.

Rehabilitation allowances for acid survival women.

Maternal allowances for poor women.

Disability allowances.

Sale & Encashment/Purchase:

Savings Certificates.

ICB Unit Certificates.

Prize Bonds.

Wage Earner’s Development Bonds.

US Dollar Premium & Investment Bond.

Lottery tickets of different Semi-Govt. and Autonomous Bodies.

Sanchaypatra.

Public Service Commission’s application form.

Judicial Service Commission’s application form.

Exchange of soiled / torn notes.

4.10 Miscellaneous Services

•       Bank A/C information of tax payee client according to demand of NBR.
•       Local Governance Support Project.
•       Enlist of Non Government Insurance Company.
•       Locker Service is provided in some branches of Sonali Bank Limited. Customers may avail this service and secure their valuables.

5.1 Rural Deposit Scheme (RDS):

A deposit scheme for the rural or people live under middle-class. Monthly deposits: 100,200,300,400,500 and 1000Tk.

Duration of the deposit- 7 years & rate of interest- 9%

Loan against account:  When any particular account duration reaches to 1 year and on that account if there are 5000 Tk. Balance money then the account-holder can get maximum 80% overdraft opportunity. RDS can be opened in those branches of Sonali Bank which are located in the rural.

5.2 Marriage Savings Scheme (MSS):

Duration of the deposit: 10 years & interest- 8.5%

Loan opportunity against  account:  When any particular account duration reaches to 1 year and on that account if there are 10000Tk. balance money then the account-holder can get maximum 80% overdraft opportunity. MSS can be opened in all branches of Sonali Bank Limited.

Bonus only is given after the continuous operation by the account holder.

5.3 Monthly Earning Scheme (MES):

Duration of the deposit:  3 and 5 years.

Amount of deposits: 50000 or 100000.

Rate of interest: For 3 years 9% and for 5 years 10%.

Loan opportunity against account: When 80% overdraft opportunity on a particular account. MES can be opened in all branches of Sonali Bank. Bonus amount can be taken monthly wise.

5.4 Double Benefit Scheme (DBS):

Duration of the deposit:  8 years.

Amount of deposits: 5000 minimum.

Rate of interest given yearly basis as following:

All types of vat according to government rule will be deducted from the account.

Rule for Double Benefit Scheme-

This account can be open in all the branches of Sonali Bank Limited. But account holder must be age of 18 or above.

An account holder can get up to 80% loan against his deposit in the account.

In case of closing account customer can any time apply to the Manager (Where account was opened), but a charge of 250 Tk. will be applicable.

5.5 Medicare Deposit Scheme (MDS):

Duration: 10 years.

Amount of monthly saving: 500-10000 Tk. & rate of interest is yearly 8%.

Date of payment: 10 -20 of every month.

5.6 Sonali Deposit Scheme (SDS):

Duration: 5 years.

Amount of monthly savings-500-10000 Tk. & rate of interest is yearly 8.5%.

Date of payment: 16-25 of every month.

5.7 Education Deposit Scheme (EDS):

Duration: 10 years.

Amount of monthly savings: 500-10000 Tk. & rate of interest is yearly 8%.

Date of payment: 10-15 of every month.

Requirement for the special scheme:

Photocopy of national ID of both nominee and client. 2copy of passport size photograph which is attached by introducer and one copy of photograph of nominee which is attached by the client.

Valid introducer of particular branch.

Clients must be 18.

For more parts of this post, click the following links-

Financial Performance Analysis of Sonali Bank Limited.(part-1)

Financial Performance Analysis of Sonali Bank Limited.(part-2)

Financial Performance Analysis of Sonali Bank Limited.(part-3)

Financial Performance Analysis of Sonali Bank Limited.(part-4)

Financial Performance Analysis of Sonali Bank Limited.(part-5)

Financial Performance Analysis of Sonali Bank Limited.(part-6)