General Banking Activities of The City Bank Limited

Primary objective of this report is to analysis General Banking Activities of The City Bank Limited. Other objectives are analysis the performance appraisal and Coordinating the functions of various departments of City Bank. Report also focus on apprise the principal activities and evaluate performance of The City Bank Limited. Finally draw SWOT analysis based on General Banking Activities and find out problems and also suggest recommendation to over come problems.

Introduction

Globalization/Free market economy is now world’s major challenge. Banks are key financial institutions that play a vital role in the county’s economy and core of the payment system. The present economy of Bangladesh demands immediate development of financial institutions with this situation.  This report has been prepared in the light of practical as well as theoretical knowledge that is shared by our honorable executives of The City Bank Ltd.

The City Bank Limited pursues decentralized management policies and gives adequate work freedom to the employees. This results in less pressure for the worker and acts as a motivational tool for them, which gives them, increased encouragement and inspiration to move up the leader of success. Overall I have experienced a very friendly and supporting environment at The City Bank Limited which gave me the pleasure and satisfaction to be a part of them for a while.

The Topic of the Report:

To write a report, it is necessary to select a topic. A well-defined topic reflects what is going on to be discussed through out the report. The topic that has been selected by me is “General Banking activities of The City Bank Ltd”

Objective of the Report:

As an integral part of my MBA Program, this summer in the year of 2008, I have enrolled myself in completing the Internship report. It requires me to submit a paper on which I have worked. To fulfill this requirement, I have prepared this paper and have chosen” General Banking activities of The City Bank Ltd” as my paper’s topic. We know theoretical knowledge makes better sense when it’s associate with practical experience. For me, my exposure to banking started not with the theoretical knowledge but rather from direct involvement. This report is based on what I have learned from my practical experiences.

And the objectives of this report are as follows,

• To know the performance appraisal of The City Bank Limited.
• To gain knowledge about the general banking.
• To acquire an in depth understanding of the functions of each department.
• Coordinating the functions of various departments.
• To complete the partial fulfillment of the requirement of BBA Degree
• To know the general banking activities of The City Bank Ltd
• To apprise the principal activities and evaluate performance of The City Bank Ltd

Historical Background of the City Bank Limited:

The City Bank Limited is the first private sector Bank in Bangladesh. The Bank has been operating since 1983 with an authorized capital of Tk. 1.75 Billion under the entrepreneurship of twelve prominent & leading businessman of the country. The noble intention behind starting this Bank was to bring about qualitative changes In the sphere of Banking and Financial management. Today The City Bank serves it’s customers at home & abroad with 82 branches spread over the country & about three hundred oversea correspondences covering all the major cities and business center of the world.

The services encompass wide diversified areas of trade, commerce & industry which tailored to the specific needs of the customers and are distinguished by an exceptional level of prompt and personal attention. Over the years the Bank has expanded the spectrums of Its Services. The extensive and ever growing domestic network provides and carries various products and services to the doorsteps of millions.

The City Bank Limited has already introduced some new Banking products like duel currency Credit Cards, ATM and Online services which has created attraction among the clients. The Bank is going to introduce real time Internet, SMS and Phone Banking systems with all modern delivery channels at an early date.
For significant performance, The Bank has earned national & international recognition. The City Bank Limited was one of the 12 Banks Of Bangladesh among the 500 Banks in Asia for it’s asset, deposit & profit as evaluated by “ASIA WEEK” In The Year 2000. Other than that, The City Bank Limited received the “Top Ten Company” award from the Prime Minister of the People’s Republic Of Bangladesh.

They have a distinguished Board Of Directors which consists of thirteen successful and reputed businessmen. Mr. Deen Mohammad, a top leading businessman, industrialist, pioneer personality & entrepreneur of private sector’s Bank In Bangladesh, is the Chairman of the Bank.

Mr. Abbas Uddin Ahmed a dynamic, nationally & internationally reputed Banker is the Managing Director of the Bank. After taking his charge as chief executive in the year 2000, the Bank’s entire activities have achieved tremendous momentum. Since then, the overall scenario of the Bank has been changed drastically and started making nonstop progress.

Vision Mission of the City Bank Limited:

Vision:

To be the leading bank in the country with best practices and highest social commitment.

Mission:

• To contribute to the socioeconomic development
• To attain highest level of customer satisfaction through extension of services by dedicated an motivated team of professionals.
• To maintain continuous growth of market share ensuring Quality
• To maximize bank’s profits by ensuring its steady growth
• To ensure participative management system and empowerment of Human Resources.
• To nurture an enabling environment where innovativeness and performance is rewarded.

General Banking System

What is Banking?

The word “banking” has been defined to mean the accepting, for the purpose of lending or investment, of deposit of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise.

• The term baking has also been defined as:
• U S A: Act of congress defines banking, “as the business of dealing in credit”.
• Japan: Act of 1927 in Japan defines bank as “institutions, which carry on operations of giving as well as receiving credit”.

Banking Functions

Banking or Main Functions:

• Taking Deposit
• Extending Loans and Advances
• Foreign Exchange Business

Customer Focus:

• Know your Customer
• Know Your Product

The general banking system of “THE CITY BANK LIMITED” have described following on the basis of departmental functions.

The general Banking section is what keeps the overall banking going. All sorts of day-to-day transactions are performed in here as I play a vital role in banking. The general banking department that consists mainly of the following and they are given below:

• Account opening section/Department
• Bills & Clearing
• Remittance
• Cash section/Department

Account Opening Department

Account is the systematic record of transaction. Bank Account is a contract between he Bank and the client, allowing he customer to use Bank Service against a cost of fees. This is the best way a Client can build relationship with the Bank. The main purpose of opening account is to deposit money. Deposit account can take on a various forms.

They consist of two forms-

• Current deposit.
• Savings deposit

The basic things that any accounts require are:

• A valued client’s Introduction.
• Two photographs of the concerned party.
• Taka 500 cash deposit for Savings deposit and Taka 1000 cash deposit for current deposit

Who can open account?

Any one can open an account with the banker, if he is not incapable of entering into a valid contract and the bank is satisfied of his bonafide and is willing to enter into the necessary business relations with them. A minor is not capable to open an Account under the prevalent rules and regulations.

SAVINGS DEPOSIT:

Savings account is an individual A/C, joint A/c or minor A/C. It is an account where client can deposit his or her money having an interest from the bank on minimum rate of interest of per month transaction Like-6 to 8.5%. That’s why who wants to deposit rather than withdrawal choose such type of A/C. There are 10 leaves in a cheque book.

Rules and Regulations:

• The manager’s permission is mandatory to open any account.
• Savings account can either be opened individual or jointly.
• Interest rate in Savings Deposit in City Bank is 6 to8.5% and is counted on monthly basis.
• But no SD holder can draw more than 25% of his balance in a week neither s/he can encash more twice in a week. If he does so, he will be deprived of interest in that given week.
• The initial minimum deposit for this account in this bank is TK.500 in urban areas and for the rural areas it is TK.100.
• IC (Incidental Charge) of TK.50 will be deducted from the account if the minimum balance of the account goes bellow TK.1000.

INDIVIDUAL ACCOUNT: Account opening steps

(Applicant’s Part)

• The applicant must find out an introducer who has a SD or CD account in the specific branch of the bank. The introducer must have satisfactory transaction as well as healthy account balance.
• The applicant must fill up the Account Opening Application Form properly. The introducer must introduce him by signing his name and mentioning his account number.
• He must also put his name and signature in the Specimen Signature Card (SS card) and must fill up the cheque book requisition form.
• The applicant must submit two passport size photographs, which will have to be attested by he introducer in backside. And also submit one copy photograph of nominee.
• The applicant must submit Citizenship Certificate/attested copy of passport/ driving license/voter ID/utility Bill.
• He must deposit money over the cash counter and hen he will be provided with an account number and cheque book.

(Bank’s Part)

• The Bank will match the applicant’s signature in the application form with that on the SS Card.
• It will match Introducer’s signature.
• The banker will fill up the KYC (know your Customer) form In front of customer.
• The Bank will attach one copy of photograph with the application form whereas the other copy will be with the SS card.
• It will issue an account number by registering the applicant’s name against the number.
• Manager’s permission is mandatory in this regard.
• The bank will send Thanks Letter to both the account Holder and the Introducer for safety reasons.

Joint Account:

Rules and regulations & Account Opening Steps:

The same above mention rules and regulations & steps are applicable in case of a joint MSD account. In addition, following are the prerequisites of opening a joint account:

• All applicants’ name must be mentioned as account title.
• All applicants name, occupation, present & permanent address must be written in the form.
• Name of the person who will operate he account must be mentioned as special instruction in the application form & SS card.
• Nomination is mandatory.
• Permission and signature of all applicants’ must be done in front of the account opening officer.
• All major decisions (nomination, closure etc) must be taken by all account holders.

CURRENT ACCOUNT (CD)

Introduction

It is non-interest bearing A/C. Any legal Businessman or Company can open this A/C. client can demand and withdrawal all of the money without giving any notice to the bank.That’s why who wants to cycle their money every now and then choose such type of A/C. the Cheque book leaves are 25,50 or 100 in number.

Types of CD Account:

1. Individual Account
2. Proprietorship A/C
3. Partnership A/C
4. limited company A/C
5. Cooperative A/C
6. Special A/C

Rules & Regulations:

• Current account can be opened individually, proprietorship, jointly, partnership, autonomous, govt., club etc.
• No interest rate is offered in this case neither here is any bar regarding minimum balance or weekly cash withdrawals.
• The initial minimum deposit for this account in this bank is TK. 1000.
• No IC (incidental Charge) is deducted in this regard.

Individual Account

Account opening Steps:

Applicant’s part

• The applicant finds out an introducer who must have a CD A SD account holder can not introduce a current account holder in the specific branch of the bank. The introducer must have satisfactory transitions as well as healthy account balance.
• The applicant must fill up the account Opening Application Form Property. The introducer must him by signing his name and mentioning his account number.
• He must also put name and signature in the Spaceman Signature Card (SS Card) and must fill up the cheque book requisition form.
• The applicant must submit two passport size photographs, which will have to be attested by the introducer in backside.
• The applicant must submit National Certificate/ Copy of passport/copy of Utility bill(WASHA/DESA)
• He must deposit money over the cash counter and then he will be provided with an account number and cheque book.

Bank’s part

• The bank will match the applicant’s signature in the application form with that on the SS Cad.
• It will match introducer’s signature.
• It will issue an account number by registering the applicant’s name against the number.
• Manager’s per mission is mandatory in this regard.

Joint Account

Rules and regulations & account Opening steps:

The same above mentioned rules and regulation & steps are applicable in case of a joint CD account. But SD account holders can not open a Joint account.

Organization

Proprietorship Account

When a proprietor open an account on behalf of his/her firm. She/he may mandate some other employees to operate that A/C without his/her presence.

Account Opening Steps:

The applicant must submit the following documents other then the mentioned procedures:

• Copy of Trade License (up-to-date). He must bring the main copy to the bank so that concerned authority can compare them and attest accordingly.
• Declaration of ownership containing his signature and seal in it.
• TIN Certificate.
• In case of authorization, manager’ signature must be attested by the account holder (proprietor) in he application form as well as in the SS Card and must be mentioned as special instruction.

Partnership Account

Accordion to Section 4 of the Partnership Act 1932, Partnership is defined as-“The relational between Persons who have agreed to share the profit of the business carried on by all or by any of acting for all.”

Account Opening Steps:

• Copy of Trade License (up-to-date). He must bring the main copy to the bank so that concerned authority can compare them and attest accordingly.
• Certified true of the memorandum and Articles of Association Company
• Certificate of Incorporation of the company for inspection and return (along with a duly certified photocopy for Bank’ records.)
• Partnership farm may be registered or unregistered. If it’s registered, then registration Certificate form the joint Stock Company must be submitted. In case of unregistered partnership farm, the bank can file law suit against, but it can not sue the bank.
• Extract of the resolution of the Board/ General Meeting of Company for opening the account and authorization for its operation duly certified by the Chairman of the company.
• Certificate of Commencement of Business. (In case of Public Ltd. co.)
• Photocopy of passport of the Chairman/Managing Director.
• Photographs of signatures.
• Certified true copy of the list of directors of the company along with their Signature.
• Partnership deed/Agreement must be submitted in Tk.150 Judicial Stamp Paper.
• Retirement/ death of any partner must be informed to the bank.

Bank reserves some specific rights in case of partnership account. One is the right to set off which gives it the authority to transfer fund from another individual CD/ SD of any partner to meet liabilities of the partnership account. The other is the right to close the partnership account if one partner is found bankrupt.

Private & Public Limited Company Account:

Account Opening Steps:

The following documents along with the above mentioned procedures in Joint Account must be submitted:

• Certified of Incorporation of the Company for inspection and return (along with duly certified photocopy for Bank’s records).
• Extract of the resolution of the Board/General Meeting of the Company for Opening the account and authorization for its operation duly certified by the Chairman of the Company.
• Certificate of Commencement of Business. ( In cases of Public Ltd. Co.)
• Photocopy of passport of the Chairman/Managing Director.
• Photographs of Signatories.
• Certified rue copy of the list of directors of the company along with their Signature.
• Copy of trade License.(up-to-date)
• An introducer is preferred by the bank, but not mandatory.

Club/Society/Association/School/College/Charity at only if the court declares someone to be guardian of the minor thereafter, then the account may be operation again by the new guardian as designated by the court

1. If the court doesn’t find anyone suitable to be the minor’s guardian to operate the account, then the minor may withdraw the amount in the account, when s/he becomes adult.
2. When the minor becomes adult, then this account has to be closed and a new account is to be opened. This is necessary as in the SS (specimen signature) card no signature of the minor is taken. Thus after the minor turns out to be adult, the account has to be opened newly.
3. In case of death of the minor, the account is closed automatically and the court decides who will get the money.

Account of the illiterate person

Bank does not encourage opening such type of account. Rather the bank takes some careful steps for type of special account.

Rules & Regulations:

Besides fulfilling the other general criteria, the following are to be added:

1. As the person is illiterate, thus s/he gives fingerprint in lieu of signature. In case of male it is LTI (Left Thumb Impression) and in case of female it is RTI (Right Thumb Impression). At the bottom of the SS card, it should be written whether it is LTI or RTI. And the authorized officer should sign below it.
2. Though the person is illiterate, yet s/he should be given pass-book of the account so that s/he may verify the balance from a third party.

Death Account:

When we receive the news of anyone’s death, then at first we write on the account opening form “Reported Dead”. And the dead person’s nominee is to receive that money. At the time of claiming the money, the nominee has to bring-

1. Death Certificate,
2. Certificate of relationship from the ward commissioner
3. In case of ‘no nominee’, the proper heir/heiress should bring the succession certificate from the court.
4. And Certificate of the graveyard.

We pay the money keeping two of our clients as witness. Nominee should give an indemnity bind (on Tk.50non-judiciary stamp).in case if ‘no-nominee’, the proper heir/heiress should bring the succession certificate from the court. And we send all the papers to the Head Office. And then the successor has to give an indemnity bond.

Short Notice Deposit (SND):

This special types of account is just in between CD and SD which gives profit at the rate of 6%(simple rate of profit calculated annually on daily balance) but requires 7 days-30 days prior notice of cash withdrawal. It is notice, the amount of money is withdrawn without notice, and then profit won’t be given on the said money. If any financial organization or autonomous bodies open this A/C hen no excise duty will be deducted but source tax will be deducted.

Remittance

Remittance means transmission of money from one place to another. There are different modules of remittance. They are as follow:

• TT-Telegraphic Transfer
• DD-Demand Draft
• PO-Pay Order

TT-Telegraphic Transfer:

TT is the quickest method of transferring funds from one place to another. The remitting branch sends a telegraphic/ telephonic/ Fax message to the branch at the other end, to pay a certain sum of money to a named payee.

DD-Demand Draft:

It is an instrument containing an unconditional order of one bank office to pay  certain amount of money to the named person or order the amount therein on demand. DD is very much popular instrument for remitting money from one corner of money to another. Commission for DD is 15% of the principle amount.

PO-Pay Order

It is process of money transfer from payer to payee within a certain clearing area through banking channel. A person can purchase payment order in different models such as Pay Order by cash, Pay Order by cheque.

Bills & Clearing Department

Clearing stand for mutual settlement of claims made in among member banks at an agreed time place in respect of instruments drawn of each other: Clearing House is an arrangement under which member banks agree to meet, through their representatives, an appointed time and place to deliver instruments drawn on the other and in exchange to receive instruments drawn of them. The nit amount payable or receivable as the case may be, is settled through an account kept with the controlling bank (Bangladesh Bank/Sonali Bank).

Types of Clearing

1. Outward Clearing
2. Inward  Clearing

Out ward Clearing

When a particular branch receives instruments drawn on other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considerate as Outward Clearing for that particular branch. This branch knows as collecting branch.

Inward Clearing

Clearing returns (inward) consists of those instruments which were presented by us to other banks for payment but have been returned and unpaid by them due to specified reason through the clearing house.

Cash Department

Cash Department is the most important part of General Banking. Cash department should be placed in a branch from where manager can watch everything from his table either clients or the vault. It is the most important department of the bank since from desk cash department has direct interaction with customers. Usually cash department receives and pays cash directly which work as a media to communicate with the clients. In the Islami Banking Branch I have got acquainted with cash receiving and cash payment procedures. Some register books uses in the cash department are mentioned bellow:

• Receiving Cashier’s Book
• Payment Cashier’s Book
• Cash Balance Book
• Vault Register or safe–in and safe-out Register
• Key Register
• Remittance Registers.

In addition, I have also learnt the procedure of cash-in and cash-out from the vault. We have also got acquainted with systematic procedure of cash receiving through different vouchers as well as payment procedure by different cheque and vouchers. Science the branch is fully computerized, it does not maintain token, scroll etc.

Cash Receive:

Cash is the blood of a branch. It is the life of a bank. Cash may be received by-

• Cash Receiving by Pay Slip
• Cash Receiving of Bills
• Cash Receiving by TT, DD, Pay-Order, MTDR.

Cash Receiving by Paying-Slip:

By paying slip we receive cash of CD or MSD account. When we receive cash by paying slip, officers check the paying slip if there is any discrepancy, if everything is found to be in order, then they make entry of the amount in the scroll register and put receiving seal on paying slip.

Cash Receiving of Bills:

Two kinds of bills (DESA & Grameen Phone) are received in drench. When officers receive cash bill, h/she check the bill’s copy to see whether is any discrepancy. If everything is found alright, then h/she makes entry of the amount in the scroll register. And h/she put receiving seal on bills paper.

Cash Receiving by TT, DD, Pay-Order, MTDR:

At first the form filled up by the party should be checked to verify whether is any discrepancy, if everything is found to be in order, then officers make entry of the amount in the scroll register and put receiving seal on the respective form.

Cash Payment:

Usually cash is paid against cheque, pay-slip, pay-order, DD and debit voucher. While paying cash against any instrument, officers first verity whether there is any material alteration on the instrument. He also check the instrument if it is in holder in due course and holder in due time. Then he verifies the signature of payee. If everything is in order, he pays the amount to the respective payee.

Position of the Cash Department

The position of the cash department is very important. The cash department should be at a safe place. If should be at the middle position of the branch. The cash counter and vault should be a close to cash department. The cash position of the Islami Banking Branch is in the front side of the branch and its safe and vault is at the back side of cash department.

Duties and Responsibilities of Cash in Charge

• Holds the key of cash safe.
• Receive cash from other bank/Branch and acknowledge, where necessary. Opens the cash safe before commencement of business along with other personal holding the key.
• Supervise receipt and payment of cash.
• Supervise the carrying of the cash to the cash Department.
• Delivers cash to the paying cashier against receipt on a memo.
• Countersigns the credit vouchers if he is an attorney.
• Arranges sending cash to other Branch.
• Check the receiving cashier’s and paying cashier’s receipt/payment sheet and collect cash from them.
• Writes the cash balance book and cash position memo and signs them
• Maintains record of stamped forms.
• Investigate and inform the manager about excess or shortage of cash.
• Gets books and cash checked by manager or authorized officer.
• Supervise the custody o f cash in the safe and books in the strong room. Checks the drawers of the cashiers before leaving the office.

Financial performance

Financial performance is the best measurement tools of measuring any companies’ strenghs.For showing the actual financial performance of The City Bank Limited I have analyzed Balance Sheet, Income statement and previous five years financial records. The financial performance of The City Bank Limited is appraisable during recent year.

Financial Performance – Balance Sheet

Balance Sheet As At 31st December, 2006

Five year’s performance (Business)

Five years performance of The City Bank Limited is increasing day by day. The most important area of the bank such as deposits, advance import and export investment are given below.

(Tk. In Crore)

Performance at a glance with discussion:

The Financial performances of The City Bank Limited described follows by showing the graphical representation and department wise discussion.