General Banking Activities of AB Bank Limited

ORIGIN OF THE REPORT:

The internship program is a required course for students who are completing Bachelor of Business Administration (BBA) from the Department of Business Administration of Stamford University Bangladesh. It is a three credit hour program with duration of three months. Students who have completed all the required courses are eligible for this program. In the Internship Program I was attached to the AB Bank of Bangladesh Limited for three months. During this period I have learned about Bank and about die investment facilities that arc providing by the Bank.

BACKGROUND OF THE  STUDY :

 Banker or Bank was defined as a person who carried on business of receiving money, collecting of drafts, honoring cheque drawn upon it. According to modem concept, banking is a business, which deals with borrowings, lending and remittances of fund as well as much ancillary business conducted thereto.

The main functions of a bank borrowing money from the public by accepting deposits and lending to them for the development of trade, industry and agriculture.

Modem bank play an important part in promoting economic development of a country. Banks provide many funds for executing various programs underway in the process of economic development. They collect saving from large masses of people scattered throughout the country, which in the absence of banks would have the remained idle and unproductive. A commercial bank is owned by shareholders that accepts deposits, makes commercial and industrial loans and provides other banking services, In other words, commercial bank is a financial institution that provides business loans, credit cards, saving money in different saving schemes etc. and it is the largest financial intermediary directly involved in the financing of real estate.

 OBJECTIVE 0F THE STUDY:  

There are two main objectives behind this report.

The Primary Objective of the study is to fulfill the partial requirement of the BBA program. In the final semester of our BBA program one Internship report is to be submitted, which is bearing some credit of our BBA program.

The secondary objectives of the study are to provide

1. To demonstrate the experience of the 2 month internship program at ABBL,
2. To get a broader overview of General Banking.

 SCOPE  OF THE  STUDY :

 To obtain practical experience about banking activities especially investment policy by involving such type of program. To build professional carrier in the banking sector.

METHODOLOGY :

To achieve the set of objectives of the study both primary data and secondary data have been used. Primary data have been collected with the help of a questionnaire through field survey. ABBL were interviewed for the purpose. The status of these Bankers are Asst. VP or above. Secondary data have been collected from different publications and annual reports of AB Bank and internet during February 2010‑June 2010.

SOURCES  OF  INFORMATION :

In order to make the study more meaningful and presentable, two sources of data and information will be used widely. The sources of data are as follows-

The Primary Sources :

• Face-to-face conversation with the respective officials.

• Informal conversation as well as a direct interview with officials of DBBL
•  Practical work experience on different desks of the unit.
• Relevant file study as provided by the officers concerned.

The Secondary Sources : 

• Annual report and periodical publications
• Different publications, Newspapers and Journals.
• The internet will also be used as a theoretical source of information

 LIMITATIONS  OF  THE  STUDY :

The following limitations are apparent in the report—

• The main Limitation of this report is that the officials did not disclose all data and information for the reason of confidentiality.
• The bank’s employees were very much busy in banking hour. So it was very

Difficult to have them for equitable long time.

• Many personnel of ABBL were not co-operative to provide useful & relevant information.
• As this report is based on information only, it does not include any research. So, any lack of adequacy or authenticity may hamper the contents of the report. Different sources of data has been using in this report, which may create the harmony of the writing  & presentation bias.

CHAPTER – 2

PROFILE OF AB BANK LIMITED

HISTORICAL  BACKGROUND  OF  AB BANK LIMITED :

AB Bank Limited, the first private sector bank was incorporated in Bangladesh on 31st December 1981 as Arab Bangladesh Bank Limited and started its operation with effect from April 12, 1982

AB Bank is known as one of leading bank of the country since its commencement 27 years ago. It continues to remain updated with the latest products and services, considering consumer and client perspectives. AB Bank has thus been able to keep their consumer’andclient’s trust while upholding their reliability, across time.

During the last 27 years, AB Bank Limited has opened 74 Branches in different Business Centers of the country, one foreign Branch in Mumbai, India and also established a wholly owned Subsidiary Finance Company in Hong Kong in the name of AB International Finance Limited. To facilitate cross border trade and payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of the World.

In spite of adverse market conditions, AB Bank Limited which turned 27 this year, concluded the 2008 financial year with good results. The Bank’s consolidated profit after taxes amounted to Taka 230 cr which is 21% higher than that of 2007. The asset base of AB grew by 32% from 2007 to stand at over Tk 8,400 cr as at the end of 2008.

The Bank showed strong growth in loans and deposits. Deposit of the Bank rose by Tk. 1518 cr ie., 28.45% while the diversified Loan Portfolio grew by over 30% during the year and recorded a Tk 1579 cr increase. Foreign Trade Business handled was Tk 9,898 cr indicating a growth of over 40% in 2008.

The Bank maintained its sound credit rating in 2008 to that of the previous year. The Credit Rating Agency of Bangladesh Limited (CRAB) awarded the Bank an A1 rating in the long term and ST-2 rating in the short Term.

AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its past identity – an identity that the bank carried as Arab Bangladesh Bank Limited for twenty five long years. As a result of this decision, the bank chose to rename itself as AB Bank Limited and the Bangladesh Bank put its affirmative stamp on November 14, 2007.
The Bank decided to change its traditional color and logo to bring about a fresh approach in the financial world; an approach, which like its new logo is based on bonding, and trust. The bank has developed its logo considering the contemporary time. The new logo represents our cultural “Sheetal pati” as it reflects the bonding with its clientele and fulfilling their every need. Thus the new spirit of AB is “Bonding”. The Logo of the bank is primarily “red”, as red represents velocity of speed and purity. Our new logo innovates, bonding of affiliates that generate changes considering its customer demand. AB Bank launched the new Logo on its 25th Anniversary year.

AB Bank commits to nation to take a lead in the Banking sector through not only its strong financial position, but also through innovation of products and services. It also ensures creating higher value for its respected customers and shareholders. The bank has focused to bring services at the doorstep of its customers, and to bring millions into banking channels those who are outside the mainstream banking arena. Innovative products and services were introduced in the field of Small and Medium Enterprise (SME) credit, Women’s Entrepreneur, Consumer Loans, Debit and Credit Cards (Local & International), ATMs, Internet and SMS Banking, Remittance Services, Treasury Products and Services, Structured Finance for Corporate, strengthening and expanding its Islamic Banking activities, Investment Banking, specialized products and services for NRBs, Priority Banking, and Customer Care. The Bank has successfully completed its automation project in mid 2008. It envisages enabling customers to get banking services within the comfort of their homes and offices.

AB Bank has continuously invests into its biggest asset, the human resource to drive forward with its mission “to be the best performing bank in the country.” The bank has introduced Dress Code for its employees. Male employees wear designed ties and females wear Sharee or Salwar Kamiz, all the dresses are consisted with the unique AB Bank logo.

AB is recognized as the people’s choice, catering to the satisfaction of its cliental. Their satisfaction is AB’s success.

CORPORATE  VISION  &  MISSION :

   Vision  :

  “To be the trendsetter for innovative banking with excellence & perfection”

AB Bank dreams of better Bangladesh, where arts and letters, sports and athletics, music and entertainment, science and education, health and hygiene, clean and pollution free environment and above all a society based on morality and ethics make all our lives worth living. ABBL’s essence and ethos rest on a cosmos of creativity and the marvel-magic of a charmed life that abounds with spirit of life and adventures that contributes towards human development.

 Mission  :

 “ To be the best performing bank  in the country”

AB Bank engineers enterprise and creativity in business and industry with a commitment to social responsibility. “Profits alone” do not hold a central focus in the Bank’s operation; because “man does not live by bread and butter alone”.

CORPORATE  CULTURE :

ABBL’s focus is to provide one counter service to our clients covering:

1. Commercial Banking (Deposit Accounts)
2. Consumer Banking (Retail Baking)-
   1. Traveler Cheques
   2. Foreign & Inland Remittances
3. Financial Services
4. Corporate Banking
5. Asset & liability management
6. Liquidity & capital Resources Management
7. Information technology
8. Human Resources
9. Foreign Exchange ( Export & Import).
10. Online Banking.

 HIERARCHY  OF  POSITIONS  IN  AB BANK  LIMITED : 

• MANAGING DIRECTOR

• ADDITIONAL MANAGING DIRECTOR

• DEPUTY MANAGING DIRECTOR

• SR. EXECUTIVE VICE PRESIDENT

• SENIOR VICE PRESIDENT

• FIRST VICE PRESIDENT

• VICE PRESIDENT

• SENIOR ASSISTANT VICE PRESIDENT

• FIRST ASSISTANT VICE PRESIDENT

• OFFICER ASSISTANT VICE PRESIDENT

• ASSISTANT VICE PRESIDENT

• SENIOR EXECUTIVE OFFICER

• EXECUTIVE OFFICER

• SENIOR OFFICER

• OFFICER

• ASSISTANT OFFICER

• TRAINEE OFFICER
• RELATIONSHIP OFFICER
• ASSISTANT RELATIONSHIP OFFICER

FINANCIAL  REPORT  OF  AB BANK  LIMITED  FOR  THE  YEAR  ENDED 2009 : 

A BRIEF HIGHLIGHT  ABOUT  AB BANK  LIMITED : 

ABBL at a Glance: Year 2008

The  above  diagram  shows  the  profit  position  of  AB  Bank  from  2004  to  2008. Here  we  see  that  in  the  year  of  2004  they  earned  Tk. 360  million, in  2005  their  profit  was  Tk. 755  million  but  in  the  year  of   2006  their  profit  was  Tk. 711  million. Here  we  see  that  in  2006  their  profit  is  decreased  from  previous  two  years  but  in  2007  &  2008  their  profit  were  Tk. 3,325  million  &  Tk. 4,296  million, here  we  can  see  that  their  profit  increased  more  highly  than  earlier  three  years. Finally, we  can  say  that  without  the  year  of  2006  AB  Bank  were  in  good  position  and  we  think  in  future      

Sector Wise LDOs position as on December 30, 2008

Figure in ‘000’

 From  above  pie  chart  we  see  that  AB  Bank  sectorwise  limite  of  LDOs position  as  a  persentage  baxis. AB Bank  has  invested  their  loan  in  trading  25%, in  agriculture  11%, in  manufacturing  40%, in  services 11%, in  contractual  work s  3%, in  energy & mining  2& and  others  sector is  1%. Here  we  cae  see  that  AB  Bank  their  secured  loan  has  invested  very  easy .

From  above  pie  chart  we  see  that  AB  Bank  sectorwise    of  LDOs position  as  a  persentage  baxis. AB Bank  has  invested  their  loan  in  trading  26%, in  agriculture  13%, in  manufacturing  36%, in  services 8%, in  contractual  work s  3%, in  energy & mining  2& and  others  sector is  1%. Here  we  cae  see  that  AB  Bank  their  secured  loan  has  invested  very  easy .

SOME VALUABLE RELATIVE INFORMATION DEPENDING ON THE PERFORMANCE OF  THE BANK

Introduction:
AB Bank Foundation (ABBF) is a subsidiary company of AB Bank Limited having holding 99.60% shares of the ABBF. The company was first established under the trust deed constituted and registered on the 14th day of May 2002. Subsequently the trust by a resolution of its Board of trustee in its 3rd meeting held on 29.12.2002 resolved to cancel the Trust Deed and utilize the trust fund for the foundation of a company limited by guarantee primarily for charitable purpose. Then the company was incorporated on 3rd day of November 2003 under section 28 of Companies Act 1994, a company limited by guarantee. The certificate of incorporation

is C-558(10)/2003.

The ABBF and its activities:
AB Bank Foundation (ABBF) is one of the country’s leading securities broker houses of Dhaka Stock Exchange (member # 201) and Chittagong Stock Exchange (member # 101). ABBF has started its operation by soft launching on 28th August 2006. Initially, we have started our operation by giving service to client of AB Bank Merchant Banking wing. We have already started our operation in full swing in our corporate head office and Chittagong. In near future, we will start our Mohakhali and Agrabad branch operation.

Services:

 Brokerage Services
AB Bank’s subsidiary, AB Bank Foundation, which has corporate memberships on the Dhaka and Chittagong Stock Exchanges, can act as brokers on behalf of local and foreign individual and institutional client to trade in the local capital market. AB Bank’s Sales & Trading Department will also support brokerage service for offloading shares through direct listing.

CDBL Services as full service Depository Participant (DP)
As a full service depository participant, AB Bank Foundation provides following services,
a) BO (Beneficial Owner) accounts opening and maintenance.
b) Dematerialization & c) Rematerialization
c) Freeze (freeze request and release request) and suspensions
d) Pledging, unpledging and confiscation
e) BO ISIN balances and master maintenance enquiry

Future Product

New Business
In addition, AB Bank will also expand its operations in the investment banking in the following areas:

Card

In the present context of banking business in the world, Card is the future of any bank. Electronic payment system is now ruling the world and some days from now cash transactions system will turn into a history found only in the text book.

AB Bank Limited is one of the leading first generation private sector commercial banks with Branch Network all over the country. The Bank started issuing VISA Credit Cards from the end of year 2004 as a principal member of VISA International.

Brief description of different features:

Card Conversion & Balance Transfer Plan
‘Card Conversion & Balance Transfer Plan’ to AB Bank VISA Credit Card will be extended towards all local Credit Cardholders of the market, provided that their ‘other banks’ credit card is in ‘regular’ state, not in ‘overdue’ state. Cardholders will repay the approved transferred amounts to AB Bank Credit Card Account in monthly installments stated in their monthly statements. Other bank credit cardholders having regular payment history will also be allowed to apply for this facility along with their new AB Bank Credit Card application form. You can convert your other bank card to AB Bank Card and get interest facility @ 19.95% on your outstanding.

EasyBuy
‘EasyBuy‘ Installment Plan to AB Bank VISA Credit Card will be extended towards all AB Bank Visa Credit Cardholders. Cardholders can convert any retail purchase done using AB Bank credit card into an installment scheme where they can pay back the amount at rate of interest of 19.95% per annum over a tenor ranging from 6 months to 48 months.

Easy, convenient and affordable
Under the Easy buy program, cardholder can choose own installment plan, ranging from 6 to 48 months.

1. Simple procedure, no documentation, no down payment
2. Available in comfortable payment options of 6 months to 48 months
3. Process just a call away

No cash advance fee
No cash advance fee for cash withdrawal from AB Bank ATM Booths & Tk.10 only per cash withdrawal will be charged from other Q Cash ATM booths. Market rate is Tk. 125 per cash withdrawal.

Auto bills pay facility
Hassle free monthly payment from AB Bank Account holders.

Higher transaction limit
AB Bank VISA card gives you the facility to withdraw up to Tk. 60,000 or 50% of your credit limit (whichever is lower) of the credit limit from any ATM with Visa logo.

Lot more features are in the pipeline to add more value to satisfy AB Bank customers.

Safe Deposit Locker

Looking for a safe storage place for your valuables?
A Safe Deposit Locker with AB Bank is the solution to your concern. Located at select branches in cities all over the country, our lockers ensure the safe keeping of your valuables.

Advantages / Key Benefits :

• Wide Availability.
• Lockers available in various sizes. i.e. Small, Medium and Large with varying rents.
• Lockers are rented out for a minimum period of one year. Rent is payable in advance.
• The rent may be conveniently paid from your deposit account with us.
• Direct debits for locker rentals from your account rid you of the hassles in writing out cheques.

Eligibility :

An individual (not minor), firms, limited company, associations, clubs, trusts, societies, etc may hire a locker.

Nomination for Safe Deposit Locker :

• The Lockers and their contents can be nominated to people near and dear to you.
• Nomination facility is available to individual hirer of Safe Deposit Locker.
• In the case of a sole hirer of a safe deposit locker, nomination can be made in favour of only one individual.
• Where the safe deposit locker is hired in the name of a minor, the nomination shall be made by a person lawfully entitled to act on behalf of the minor.

Terms & Conditions :

• For obtaining a Locker at AB Bank you must be an account holder with our Bank.
• Lockers can be allotted individually as well as jointly.
• The Locker holder is permitted to add or delete names from the list of persons who can operate the Locker and can have access to it.
• Loss of Key is to be immediately informed to the concerned Branch.
•  For Schedule of Rentals, please contact the branch nearest to you.

 CHAPTER-3

  General Banking 

 INTRODUCTION :

Financial institution intermediary that mediates or stands between ultimate borrowers and ultimate lenders is knows as banking financial institution. Banks perform this function in two ways- taking deposits from SURPLUS UNIT i.e. from various areas in different forms and lending that accumulated amount of money to the DEFICIT UNIT i.e. to potential investors in other different forms. General banking department aids in taking deposits and simultaneously provides some ancillaries services.

General banking is the starting point of all the banking operations. General banking is the front-side banking service department. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, there is no relation between banker and customers who will take only one service from bank. Everyday it receives deposits from the customers and meet s their demand for cash by honoring cheques. It opens new accounts, remit funds, issues bank drafts and pay orders etc. Since bank is confined to provide the services everyday, general banking is also known as ‘retail banking’. On the other hand, there are some customers with who bank are doing its business frequently.

 FUNCTION  OF  THE  DEPARTMENT :

G E N E R A L

B A N K I N G

 1Account opening  Section2Local Remittance Section 3Bills and clearing Section4Cash  Section5Other  Activities

ACCOUNT  OPENING  SECTION :

The relationship between banker and customer begins with the opening an account by the customer. Opening an account binds the banker and customer into contractual relationship. Infect all kinds of fraud & forgery start by opening an account. So, the bank should take extreme caution in selection customers.

Bank is a financial intermediary, which mobilizes fund from surplus unit and allocates it to deficit unit. Surplus unit means the people who have surplus money and willingness to save. Deficit unit means the people who need money for industry, trade, business, or for personal use but don’t have sufficient money of their own for such purposes. Bank mobilizes the fund by accepting deposits from depositors and allocates the fund by providing loan to borrower.

 So accepting deposits is one of the two classic functions of commercial banks. In ABBL account opening section deal with

• Current deposit (CD)
• Savings deposit (SB)
• Short notice deposit (SND)
• Fixed deposit (FDR)
• Bearer certificate deposit.

CURRENT  DEPOSIT  ACCOUNT :

General Characteristics:

• CD accounts are unproductive in nature as banks loan able fund is concerned. Sufficient fund has to be kept in liquid form, as current deposits are demand liability.
• Businessmen and companies are the main customers of this product.
• Thus huge portion of this fund become non-performing. For this reason banks do not pay any interest to CD Account holders.
• There is no restriction on the number and the amount of withdrawals from a current account.
• Service charge and incidental charges are recovered from the depositors since the bank make payments and collect the bills, drafts, cheques, for any number of times daily.
• The Banks through current accounts grant the loans and advances
• In practice of ABBL, a minimum balance of TK.5000 has to be maintained.

SAVINGS  DEPOSIT  ACCOUNT :

General Characteristics:

As per Bangladesh Bank instruction 90% of SB deposits are treated as time liability and 10% of it as demand liability

• Interest is paid on this account. ABBL offers a reasonable rate of interest (5%) for SB A/C on day basis.
• Generally, banks require a 7-day prior notice if the total amount of one or more withdrawals on any date exceeds 25% of the balance of the account unless is given. But in ABBL there is no restriction about drawing money from savings account. Any time holders may draw money of any amount without prior notice.
• Generally householders, individuals and other small-scale savers are the clients of this account
• Minimum Balance of Tk.500 is to be maintained. But initial deposit is Tk 2000.
• Very limited service charge (Tk.200 per year) as it is an interest bearing account.
• Govt. charge 10% only on interest income of the customer.

 ACCOUNT  OPENING  PROCESS :

Under this section, ABBL Bank Assistant Officer opens different types of accounts on the request of clients. The procedure of opening account is given is given below.

# Two copies of passport size photographs from individual are taken, in case of firms photographs of all partners are taken.(attested by the introducer)

#Applicants must submit citizenship certificates: Photocopy of valid passport or ward commissioner certificate or National ID Card

# Application must sign in A/c opening form and KYC (Know Your Customer) form

# Introducer’s signature and accounts number – verified by legal officer.

# Nominee name, signature and photograph one copy.Step 3Authorized Officer accepts the applicationStep 4Minimum balance is deposited – only cash is acceptedStep 5Account is opened and a pay-in-slip book is given

 Bank activity: After fill up account opening form and KYC by customer the assistant officer done following job:

• Verify all information by assistant officer then
• Entry all  customer information into  ABBL’s online server
• After completion of entry assistant officer it sends to Second officer/Manager for authorization.
• If Second officer/Manager satisfies with customer information he/she gives authorization.
• Assistant officer gets new account number for certain customer after authorization.

After fulfilling the above formalities, ABBL Bank provides the customer pay-in-slip book that customer deposit their initial deposit.

 Checkbook: In online banking it is difficult to issue cheque book immediately that is why it takes two or three days.

 ATM Card: An account holder gets a  Debit card after opening account. It takes two or three weeks and sends him by mail.

Special Caution must be taken for the following customers:

 In addition, the customer has to submit the valid Trade License and Tax Paying Identification Number (TIN) along with the application.Partnership Firm

1. A copy of notarized partnership deed certified by all the partners or Registered partnership deed.
2. Resolution of the partners regarding account opening.
3. Photographs attested of those who will operate.
4. Trade license.
5. Mandate as to operation of the account.

Public Limited Company

1. Certificate of Incorporation
2. Copy of Memorandum and Articles of Association duly certified by the Register of Joint Stock Companies.
3. Certificate of Commencement
4. Form-xii and schedule X – duly certified by the Register of Joint Stock Companies.
5. Copy of Resolution of the Board of Directors

Private Limited Company

1. Certificate of Commencement is not necessary
2. Certificate of Incorporation
3. Copy of Memorandum and Articles of Association
4. Copy of Resolution of the Board of Directors

Non-trading Concerns (Societies, Clubs, Associations

1. Registration Certificate under the Societies Registration Act, 1962
2. Certified copy of Bylaws & Regulations/ Constitution.
3. Certified copy of Resolution for opening and operation of account.
4. Power of attorney to borrow

Joint account in the name of minor

 A minor cannot open an account in his own name due to the incapacity to enter into a contract. He can open an account in ABBL in joint name of another person who will be guardian of him.

 SPECIAL  NOTICE  DEPOSIT ACCOUNT (SND) :

General Characteristics:

• Customers deposit money for a shorter period of time.
• SND account can be treated as semi-term deposit
• SND should be kept for at least thirty days to get interest.
• The interest offered for SND is less than that of savings deposit.
• In practice, ABBL offers 5.00% rate of interest (half yearly compounding) for SND account. It may increase depending on the fund.
• Volume of SND A/C is generally high. In ABBL, various big companies, organizations, Government Departments keep money in SND accounts.
• Frequent withdrawal is discouraged and requires prior notice.

 TERM  DEPOSITS :

The fixed deposit account is repayable after the expiry of a predetermined period fixed by the customer himself. The period varies from three months to three years. The customer may open his /her account for different time periods, which may be for one month, three months, six months, one year, two years. The interest rates of FDR accounts are as below:

 Interest rate for Deposit

 Savings  Acount        6.00%

 1 Month  (Tk.5 00 00 000 & above)

         6.00%3 Month

          (1)  Upto  Tk. 1 00 00 000

          (2)  Above Tk  1 00 00 000 

         8.25%

         8.50%6  Month

          (1)  Upto  Tk. 1 00 00 000

          (2)  Above Tk  1 00 00 000 

         8.25%

         8.50%1 Year

          (1)  Upto  Tk. 1 00 00 000

          (2)  Above Tk  1 00 00 000 

         8.25%

         8.50%2 (Two) Years         7.25%SND ( For  Tk. 5 lac and above)         4.00%SND ( Spcefic)         7.50%Seurity  Deposit  Receipts (SDR) Call  Dep         3.00%

 General Characteristics:

1. Popularly, it is known as Fixed Deposit Receipt (FDR). Term deposits are made with the bank for a fixed period of time.
2. The bank needs not to maintain cash reserves against these deposits and therefore, the bank offers high rate of interest on such deposits.
3. In ABBL, fixed deposit account is opened in customer choice time.

 OPENING  OF  FIXED  DEPOSIT  ACCOUNT :

Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed by him. The period varies form 3 months to 1 year. These deposits are not repayable on demand but they are withdrawal subject to a period of notice. Hence, it is a popularly known as ‘Time Deposit’ or ‘Time Liabilities”. Normally the money on a fixed deposit is not repayable before the expiry of a fixed period.

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

1. In case of a deposit in joint name, ABBL also takes the instructions regarding payment of money on maturity of the deposit.
2. The banker also takes the specimen signatures of the depositor(s).
3. Necessary entries are given on the FDR register and on line.
4. An FDR is then issued to the depositor acknowledging receipt of the sum of money mentioned therein. It also contains the rate of interest & the date on which the deposit will mature.

Payment of Interest :

1. It is usually paid on maturity of the fixed deposit. ABBL calculates interest at each maturity date and provision is made on that “Miscellaneous creditor expenditure payable accounts” is debited for the accrued interest.
2. But the Bank may pay interest to depositor every 6 months or credit the amount of interest to his savings or current account, at his request.

Premature Encashment of FDR :

A depositor has the right to claim for refund of his deposit before expiry of the fixed term thereof. Bank may in special consideration allow premature encashment on application of the depositors subject to the under noted conditions:

1. For FDR which are 3 months maturity no interest will be payable at the premature encashment, only the principle amount will be refunded.
2. When premature encashment is allowed of FDR with tenure of over 3 months, interest will be paid if encashment before expiry of 6 months at the rate of 3 months prescribed interest rate.
3. Premature encashment is allowed of FDR with tenure of over 6 months, interest will be paid if encashment before expiry of 12 months at the rate of 6 months prescribed interest rate and the same theory will also be applicable for premature FDR encashment of 2 years and 3 years.

Lost of FDR:

If the instrument is lost from the possession of the holder, the holder is asked to fulfill the following requirements:

1. Party should inform it to the bank immediately;
2. Furnish an Indemnity Bond;
3. On fulfilling the above requirements a duplicate FDR is then issued to the customer by the bank.

Renewal of FDR:

1. FDR is automatically renewed within seven days after the date of its maturity if the holder does not come to en-cash the instrument.
2. Renewal will be for the previously agreed maturity period.

 GENERAL  PRACTICE  FOR  ALL  TYPES  OF  ACCOUNTS :

Cheque book:

1.        a.            To facilitate withdrawals and payment to third parties by the customer, ABBL provides cheque book to the customer.

2. CD account cheque book contains 20 and 50 leafs, while SB account cheque book has 20 leafs. Per cheque Charge is Tk.69. Bank maintains a separate register and also record in online in this regard.
3. Requisition slip is provided to the customer in cheque book to issue new cheque book.
4. A new cheque book should be delivered only to the account holder. Otherwise authorization letter is needed from client for delivery to other person.
5. Issuing cheque book after verification of signature & photo and signature keep record in register.

 When cheque book is lost : 

A guarantee form is taken from the account holder when his book is lost, where he indemnifies the bank in this regard. A new requisition sleep is given to him for a new cheque book. Only verification of senior officer will approve in this case.

Incidental charges :

1. TK. 115/- each for twice a year is debited from customer’s CD account for rendering service to him.
2. Again TK. 115/- each is debited from customers account for providing him the solvency certificate/ Bank Statement/ Bank Certificate.
3. Service charge for Savings A/C is TK.400.00 per year. If the balance is below the minimum amount (Tk.500) then Tk.200.00 is charge additionally.
4. TK. 50/- is charged from customer as penalty if his cheque is dishonored.

Fee and Charges for Debit Card :

(From 2^nd Year)Cash Withdrawal feeReplacement feeRegenerated PIN

Mailer FeeAt ABBL

BoothAt Other

BoothClassic

(Blue, Silver)Nill200NillNot Applicable200200Maestro

(Golden)400400NillTk. 150 or

2.5% Which one is Higher400200Visa Electron400400NillTk. 150 or

2.5% Which one is Higher400200

 Compounding of interest :

1. In ABBL, interest-compounding period varies with products.
2. Interest on term deposit i.e. FDR is compounded at its maturity period. Such as 3 monthly, 6 monthly, yearly etc.
3. Interest on savings bank (SB) deposit is compounded on day basis.
4. Interest on SND accounts is compounded yearly.

Crediting interest :

Crediting interest implies that so for interest accrued is attached with the principal amount. In practice of ABBL

1. FDR interest is credited at the maturity date.
2. For SB account the crediting season is six-month period.
3. Interest of SND is credited after each year.

Tax:

Whatever the amount of interest is accrued 10% tax is debited from the account at the time of crediting interest.

 CLOSING  OF  AN  ACCOUNT :

The closing of an account may happen:

1. If the customer is desirous to close the account
2. If ABBL finds that the account is inoperative for a long duration.
3. If Garnishee Order is issued by the court on ABBL.

To close the account, the cheque book is to be returned to the bank. ABBL takes all the charges by debiting the account and the remaining balance is then paid to the customer. Necessary entries are given to the account closing register and computer.

 TRANSFER  OF  AN  ACCOUNT :

Account holder may transfer his account from one branch to another branch. For this he/she must apply to the manager of the branch where he is maintaining account. Then manager of the old branch sends a request letter to the new branch manager where the account holder wants to transfer his account. With his request he sends original copy of account opening application and specimen Signature Card and photocopy of application for transferring the account with the balance remained account. But now-a-days customer need not transfer their account from one branch to another branch. They can make transaction any ABBL branch with truly on-line facility.

LOCAL  REMMITANCE  SECTION :

In banking language money transmitted domestically are known as local remittance. For local remittance purpose DBBL purchases and sells some instruments for its customers. The instruments are Pay Order (PO), Demand Draft (DD), Telegraphic Transfer (TT), and Mail Transfer (MT).

PAY  ORDER (PO) :

Pay order is an instrument, which is used to remit money within a city through banking channel. The instruments are generally safe as most of them are crossed. It is current liability on the part of bank, which implies that, money received in this purpose has to be paid to the payees collecting bank on placement of the instrument.

 ISSUING  OF  A  PAY  ORDER (PO) :

A customer can purchase pay order in different ways:

 From the above accounting treatments it is clear that the money, which is received by the bank from selling the instrument, is kept under bills payable account. It is current liability on the part of bank, which implies that, money received in this purpose has to be paid to the payees collecting bank on placement of the instrument.

But in the local banking arena ABBL offers free of cost for issuing of Payment Order for it’s account holders.

PRACTICE  AND  OPERATION  OF  PAY  ORDER :

Types of P.O

Account payee only                 : only can en-cash it by depositing it in his account.

Blank Crossed                         : Any one can en-cash it by depositing in their account.

Cash payment                          : P.O. can be paid in cash if buyer gives a letter of

                                                      Identification regarding payee.

 THE  PROCEDURE  FOR  SELLING  P.O.  IS  AS  FOLLOW :

1. Purchaser must be an A/c holder of ABBL.
2. Deposit money with P.O. application form.
3. Give necessary entry in the Bills Payable (P.O.) on line register;
4. Payee’s name, date, P.O. No. Etc.
5. Prepare the instrument.
6. After it has been scrutinized & approved by higher authority, the instrument is delivered to customer. Signature of customer is taken in the counterpart.

 SETTLEMENT  OF  A  P.O :

When P.O. submitted by collecting bank through clearinghouse, the issuing bank gives payment.

Bills payable A\C …………………………………… Dr.

Balance with Bangladesh Bank ………………… Cr.

Thus bank’s liability is settled by debiting bills payable. But before giving payment it should be examined whether endorsement was given by the collecting bank or not. If not then the instrument is dishonored marking “Endorsement required”.

 UNUTILIZED P.O. / CANCELLATION  OF  A  P.O : 

If buyer wants to cancel the P.O. he has to give a letter of instruction in this regard. He will also have to return the instrument. Adjusting entry will be:

Bills Payable (P.0.) A\C ……………………………………………… Dr.

Client’s A\C ………………………………………………………………. Cr.

 WHEN  P.O  IS  LOST :

Incase the instrument is lost, the holder whether payee or buyer will inform it to the issuing bank immediately. Bank will mark stop payment on the Bills Payable (P.O.) register. Buyer will then ask for a new instrument by submitting a G.D. Copy and indemnity bond of Tk.50.00 (issued by court). A new Instrument will be delivered marked “In lieu of”.

COLLECTION  OF  P.O  :

A customer of ABBL who is the payee of a P.O. will deposit it for collection. The instrument is given to the clearing that will place it to the issuing bank in the clearinghouse. Before placement, ABBL as a collecting bank gives necessary endorsement.

 DEMAND  DRAFT (DD)  :

Demand Draft is a very much popular instrument for remitting money from one corner of a country to another. The instrument is basically used for transfer and payment. Difference between pay order and demand draft is in terms of place only. P.O. is used for remitting money within the city whereas DD is used for within the country. DD too, constitutes current liability on the part of a bank. At ABBL DD is not sold to people other than its customer. But with the introduction of ONLINE banking the importance is DD has reduced. Now the customers can draw the money from any of its branch. Fund transfer is free of cost for all accounts holder.

 PROCEDURES  FOR  ISSUING  A  DD :

1. DD application from filled in and money deposited by the customer.
2. Necessary entries are given to a register name DD OUT – concern (drawn on) branch. A number, which is taken from this register, is known as “Controlling number.”
3. An “Account payee only” crossed instrument given.

 Accounting treatment :

Sale of instrument:

Cash/Party A/C ………………………….. Dr.

HO/A/C Drawn on Branch …………… Cr.

Income A/C Commission ……………… Cr.

 PREPARE  AN I.B.C.A. (Inter Branch Credit Advice)  :

The I.B.C.A. (Inter branch Credit Advice) is dispatched to drawn on branch. Issuing an I.B.C.A. implies that the branch is being credited to whom it is issued I.B.C.A. contain s the controlling number.

ROLE  OF  A  DRAWN  ON  BANK :

Lodgment is given after receiving an I.B.C.A. (Inter branch Credit Advice) Necessary entry is given in a register called “DD-In-Issuing branch,” Controlling number of the I.B.C.A should match the serial number of this DD-in register.

Accounting treatment :

Issuing Branch ……………………………..Dr.

Bills Payable (D.D.) A.C……….………..Cr.

(After receiving I.B.C.A.)

Bills payable (D.D.) A/C ………….….….Dr.

Customer A/C ………………………………..Cr.

When finally the instrument arrives through clearing, the cancellation mark is given on the register. In case where I.B.C.A. has not yet received from the issuing bank but where instrument has been placed, bank cannot hang a party for the I.B.C.A. In this case payment is given to the party from the suspense account.

Accounting treatment:

            Suspense A/C ………………….. Dr.

            Customer A/C …………………..Cr.

Later on it is adjusted after receiving the fund from the issuing bank.

            Issuing bank A/C …………………Dr.

            Suspense A/C ………………….…Cr.

CHARGES  TAKEN  FOR  THE  DRAFT :

Tk. 50.00 as postage charge is taken and no commission is charge for this purpose. The postage charge credited to the concern stamp account.

 CANCELLATION  OF  A DD :

If the holder of the instrument wants to cancel it, he should submit a request letter in this regard. Issuing branch then sends an I.B.D.A. to the drawn on branch against the I.B.C.A., which was sent previously.

Accounting treatment:

            H.O. A/C Drawn on Branch ………………..…… Dr.

            Customer Account …………………………………. Cr.

 DUPLICATE DD :

When DD is lost a duplicate instrument is given subject to fulfillment of the following requirements:

1. Tk. 50.00 indemnity bond issued from the court.
2. After losing the instrument, holder should immediately inform it to the bank that puts “stop payment” mark on the register.

 BILL  COLLECTION  AND  CLEARING  SECTION :

Customers do pay and receives bill from their counter party as a result of transaction. ABBL collects the bills on behalf of their customers.  Collection mechanisms in ABBL are clearing, Outward Bill for Collection (OBC), Inward Bills for Collection.

CLEARING : 

When the bill is within the range of the clearinghouse it is sent for collection through clearing section. As far as safety is concerned customers get crossed cheque for the transaction Crossed check can’t be encashment from the counter; rather it has to be collected through banking channel i.e., clearing. If a client of ABBL received a check of another bank that is located within the clearing range and deposit the instrument in his account at ABBL, then ABBL will collect the money through clearing house. After received the check ABBL will credit client account. However, the amount is credited in the customer a/c but he will not get the money until the check is honored.

 PROCEDURES  FOR  COLLECTION :

1. “Received” seal is stamped on the cheque
2. Crossing of the cheques are done
3. Proper endorsement is given
4. “Clearing” seal with date is given
5. Cheques are sorted bank wise and entries are given to the software-NIKASH2  (Provided by Bangladesh Bank)

 FUNCTION  IN  THE  CLEARING  HOUSE :

1. The clearinghouse is an assembly of the locally operating scheduled banks for exchange of checks, drafts, and other demand instruments drawn on each other and received from their respective customers for collection.
2. The house meets at the appointed hour on all working days under the chairmanship of the central bank. The clearinghouse sits twice in a working day.
3. The members submit the claimable checks in the respective desks of the banks and vice-versa.
4. Consequently, the debit and credit entries are given.
5. At the end, the debit summation and the credit summation are calculated. Then the banks clear the balances through the check of Bangladesh Bank.
6. The dishonored checks are sorted and returned with return memo.
7. If the instruments are dishonored then they are sorted again and sent back to the returning house along with their return memo.
8. Later on all the instruments of ABBL which were claimed by other banks are sorted and delivered to respective branches.

INSTRUMENTS  OF  OTHER  BRANCHES :

However, the Gulshan branch clears its checks as well as the checks of other branches. Because, no other branch is allowed to represent directly. The other branches send the instruments Gulshan branch along with IBDA.

acts as an agent in this case.

Accounting treatment for concerned branch:

HO A/C- Gulshan branch ——————————————–Dr.

Customer A/C ———————————————————–Cr.

if the instrument is honored,  Gulshan branch gives the following treatment Balance with B.B. ————————————Dr.

HO A/C-concerned branch ——————————————-Cr.

If the instrument is dishonored, the instrument is returned to the concerned branch through IBDA. The treatment is:

HO A/C concerned branch ————————————Dr.

Balance with B.B. ——————————————————-Cr.

DISHONOR  OF  CHEQUE :

If the cheque is dishonored, ABBL sends (with cheque return memo) to the customer stating the reason. If the cheque is dishonored due to insufficiency of funds, ABBL charges TK.50/= as penalty.

OUTWARD  BILLS  FOR  COLLECTION (OBC) : 

If the bill is beyond the clearing range then it is collected by OBC mechanism. Customer deposit cheque, drafts etc. for collection, attaching with their deposit sleep, Instrument within the range of clearing are collected through local clearing house, but the other which are outside the clearing range are collected through OBC mechanism. A customer of ABBL Gulshan branch. Dhaka is depositing a cheque, of Sonali Bank Cox’s Bazar. Now as a collecting bank ABBL Gulshan branch will perform the following task;

 PROCEDURE  FOR  OBC :

1. Depositing the cheque along with deposit-slip
2. Crossing of the cheques are done indicating Kawran Bazar as collecting bank.
3. Endorsement “Payee’s A/C will be Credited on realization” is given
4. Entries are given in the Outward Clearing Register (OBC)

Collecting bank can collect it either by its branch or by the drawer’s bank. They will forward the bill then to that particular branch. OBC number will give on the forwarding letter. Now following procedures will take place in case of the following two cases.

BILLS  COLLECTED  THROUGH  BRANGH :

If the bill is forwarded to branch they will collect it through IBC procedure. Collecting branch will receive an I.B.C.A. from that particular agent branch. In this case commission will be charged by the collecting branch, not the agent branch and the drawers bank will send a DD to the collecting branch. Here both the banks will charge for collection from the customer. It should be scrutinized that D.D. is containing the OBC number.  (0.15% commission of the instrument value, 15% VAT and Tk. 20/- as postage charge in deducted. The minimum amount is Tk.43.00 and maximum amount is Tk.3000.00).

BALANCE  SHEET  EFFECT :

OBC create asset and liabilities simultaneously for bank. When send for collection, it is bank’s liability and as well as customers liability i.e. banks asset.

• Liability head Bills for collection being bills receivable as per contra
• Asset head Bills receivable being bills for collection as per contra.

Customer’s liability A/C ………………. Dr.

Banker’s liability A/C …………………….. Cr.

After realization (even if dishonored)

Banker’s liability A/C ………………. Dr.

Customer liabilities A/C ………… Cr.

After realization the contra is settled. This item is a stock variable of balance sheet at a particular date.

Balancing

Balancing is done on the bankers liability account. The day-end balance is shown on balance sheet.

DOMESTIC  BILL  PURCHASED (DBP) :

Bank has to serve its customer by any means. But some customers are valued as far as deposit is concerned. So banks give them some benefits depending on the situation. Clients get bill that is as per agreement collected by the bank. This collection procedure takes usually 2-3 days. But in many cases valued clients need money urgently. In this situation bank purchase the bill of the client paying him money then the then. Later on bank collects the bill and adjust accordingly. This is kind of credit which is offered to the valued clients only. However no credit line facility is needed for them. Commission is charged from them at a higher rate, which is equivalent to lending rate of 14-15% for the collection period only.

CASH  SECTION :

Cash section demonstrates liquidity strength of a bank. It is also sensitive as it deals with liquid money. Maximum concentration is given while working on this section. As far as safety is concerned special precaution is also taken. Tense situation prevails if there is any imbalance in the cash account.

 VAULT :

All cash, instruments (PO, DD, cheque) and other valuables are kept in the vault. Principal branch’s vault is incurred up to Tk. 2 crore with a local insurance company. If cash stock goes beyond its limit of Tk. 2 crore, the excess money is transferred to Bangladesh Bank. If there is shortage of cash during transaction period money is drawn from the central bank. There are three keys of the vault, which are given to three seniors most officer. Daily, an estimated amount of cash is brought out from the vault, for transaction purpose.

FUNCTIONS  OF  CASH  DEPARTMENT :

# This is the unique function of the banking system which is known as “payment on demand”

# It makes payment only against its printed valid ChequeCash Receipt# It receives deposits from the depositors in form of cash

# So it is the “mobilization unit” of the banking system

# It collects money only its receipts forms

 CASH  PAYMENT  OR  CHEQUE  CANCELLATION  PROCESS :

1. Date of the Cheque (it is presented within 6 month from issue date)
2. Issued from this branch
3. Amounts in figure and sentence written does not differ
4. Signature of the drawer does not differ

v.        Cheque is not torn or mutilatedStep 3Gives pay cash seal and sends to the payment counter (verified by an officer)Step 4Payment officer makes payment

Books maintained by this section:

Though most of transactions are through On-line and signature, photo and account balance are check in computer that network with server. But following registers keep for this section.

 In book 1 and book 5, notes and currency are recorded by mentioning their denominations and number of each denomination. Some set of these books is maintained separately for both local and foreign currency.

 CHEQUE  AND  CROSSING  CHEQUE :

A “Cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. [According into section-6, negotiable instrument Act, and 1881.]

A cheque may be classified into:

a)      An open cheque, which can be presented for payment by the holder at the counter of the drawer’s bank.

b)      A crossed cheque, which can be paid only through a collecting banker.

Crossing cheque: A cheque is said to be crossed when two transverse parallel lines with or without any words are drawn across the face. Crossing may be general, special or restrictive.

 NEW  MAGNATIC  INK. CHEQUR  RECOGNITION (MICR)   CHEQUE  BOOK :

AB Bank has started Issuance of new cheque book from June 01, 2009 as per Bangladesh Bank guideline. You can conveniently collect new cheque book from your Account Opening Officer of your AB Bank branch. As per Bangladesh Bank instruction we have implemented MICR coded cheque book from June 6, 2009, which will be customized by the Bank. MICR is a process of printing cheques using magnetic ink and special fonts to create machine-readable information. It is the first step towards electronic cheque clearing process.

The new MICR coded cheque book will facilitate:

• Quick processing and faster cheque clearing time
• Prevent cheque related fraudulent activities

In this regard, we would request you to collect the new cheque book on or before July 31, 2009.

Bangladesh Bank Clearing House will not honor existing chequebook leaves after July 31, 2009. However, you may continue to use your existing chequebooks to withdraw cash over the counter or to transfer funds to another customer of AB Bank Limited at any of our branches.

 OTHER  ACTIVITIES  OF  AB  BANK  LIMITED :

1. 1.                    Pin mailer of ATM card delivery

• After opening account an inactive ATM card send to customer within two or three weeks.
• Then account holder come to the branch with card and fill up the form for requesting activation of ATM card.
• A secret PIN number delivered the account holder.
• Concern officer verify signature and photo of account holder.
• ATM Card will be activated with in one week and user can use it.

1. 2.                    Account related activities

• Scanning photo and signature of new account holder
• And linked with server
• Proper preservation of respective files
• Change of account holder address ( application from customer)
• Change of Board resolution of several limited company account
• Issuing of thanks letter  to A/C holders & introducers
• Provide all information to the customer and also provide in phone
• Receiving Chaque, instrument, refund warrant etc.
• Checking of daily outward clearing activity report with vouchers & their proper preservation and also Inward clearing, communication with client regarding inward cheque confirmation. Posting or entry of salaries of different corporate client and transactions related to GB

 Closing of an Account :

For two reasons, one can be closed. One is by banker and other is by the customer.

By banker: If any customer doesn’t maintain any transaction within six years and the A/C balance becomes lower than the minimum balance, banker has the right to close an A/C.

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

Different procedures are followed in cash of different types of A/C to close. Fixed deposit A/C is closed after the termination of the period. BCD A/C is closed when the certificate is surrendered.

Closing process for current & savings A/C:

1. After receiving customer’s application the officer verifies the balance of the A/C.

2. He then calculates interest and other charges accumulated on the A/C.

3. If it bears a credit balance, the officer writes advice voucher. He gives necessary accounting     entries post to accounts section.

4. The balance is returned to the customer. And lastly the A/C is closed.

But in practice, normally the customers don’t close A/C willingly. At times, customers don’t maintain any transaction for long time. Is this situation at first, the A/C becomes dormant and ultimately it is closed by the bank.

 Minimum Balance  :

The account holder has to  keep minimum balance in his/her accounr that is the security for the bank  and bank will get confirm that  the accont holder is running his/her accont smoothly. The  minimum  balamce   will be

1. Savings A/C  minimum balance………………………… Tk. 500
2. Current A/C  minimum balance………………………….  Tk. 500
3. CD personal A/C  minimum balance……………………. Tk. 500
4. CD proprietor A/C  minimum balance…………………… Tk. 1000
5. Company  A/C  minimum balance……………………….. Tk. 5000

Statement Charge :

If any client wants to take bank statement then they have to pay some charge to the bank.In this case bank keeps Tk. 50 for every single page of the bank statement.

If any client wants to take bank solvency certificate then bank keep Tk. 150 as a charge of bank solvency certificate and it is deducted from the client’s account.

 Clearing Cheque Return :  

There are some reasons for the cheque returns. The reasons are given below :

01)    Insufficient fund.

02)    Not arrange for.

03)    Full cover not received.

04)    Exceeds arrangement.

05)    Payment stopped by the drawer.

06)    Payee’s endorsement irregular / illegible / required.

07)    Drawer’s signature differ / required.

08)    Alteration in date / figures / words require drawer’s full signature.

09)    Cheque is post dated / out of date / mutilated.

10)    Amount in word and in figure differs.

11)    Crossed cheque must be presented through a bank.

12)    Clearing stamp required/requires cancellation.

13)    Collecting bank’s discharge irregular / required.

14)    Cheque not drawn on us.

15)    Payee’s signature require on revenue stamp.

16)    Please present again on ………

Account Closing Charge :

If any client wants to close his/her account in that case he/she has to pay some charge to the bank  for closing the account. The charge is given below :

1. Service Charge …………………  Tk. 120

2. Commission……………………..   Tk. 300

3.  Bank  Charge……………………   Tk. 500

CHAPTER – 5

 ANALYSIS     SECTION      

    DEPOSIT  SECTION

    SWOT  ANALYSES

DEPOSIT  ANALYSES  OF  THE  ORGANIZATION :

  Accounts  Opening  Section  : 

AB  Bank  is  one  of  the  most  profitable  organization  in  Bangladesh. In  case  of  banking  business  deposit  section  is  the  most  vital  part  of  a  bank. Everyday  many  people  come  to  bank  and  they  open  a  account  that’s  why  AB Bank’s  deposit  increases  day  by  day. If  see  the  last  five  years  deposits  of  AB  Bank  then  we  can  easily  clarify  the  AB  Bank’s  deposit  position  then  other  banking  organization.

The  following  table  shows  the  deposit  situation  from  2005  to  2009  of  AB  Bank  Ltd.    

 The  above  shows   the  deposit  volume  of  AB  Bank. In  the  year  of  2005  deposit  was  Tk. 28,439  million. In  the  of 2006  the  deposit  value  raised  to  Tk. 41,554  million, in  2007  deposit  was  Tk. 48,731  million, in  2008  deposit  was  Tk. 56,986  million, in  2009  deposit  was  Tk. 60,918  million. Now  if  we  plot  this  amount  in  a  diagram  then  we  can  see  the  original  deposit  situation  of  AB  Bank.

The  above  diagram  shows  the  deposit  situation  of  AB  Bank. Here  we  can  see  that  the  deposit  value  continuously  increases  from  2005  to  2009. For  increasing  the  deposit  volume  of  AB  Bank, they  always  set  a  plan  that  they  will  provide  better  services  to  their  client. So  we  hope  that  in  future  will  collect  more  deposit  and  they  will  keep  hold  their  good  position.

 SWOT  ANALRSES  OF  THE  ORGANIZATION  :

STRENGTH

• Better customer relation specially with the Small and Medium Entrepreneurs
• Better customer relation specially with the Small and Medium Entrepreneurs
• Short time requirements of in loan application processing and approval.
• Authority granted to the branch manager to avail excess limit to a client in sudden need.
• A very well organized Credit Unit.
• Correspondence with most of the countries of the world.
• Quick understanding of customer needs
• Efficient and effective means of determining value of the client’s properties
• Capability of doing online banking, internet banking and SMS banking
• Strong procedure in selection of new borrow
• Clearly defined measure in dealing with foreign exchange transaction.

WEAKNESSES

• High cost of fund
• Lack of sufficient field officer to sell different  products of the bank
• High interest charged
• Security and collateral requirement while disbursing the  loans
• Fishery, poultry, dairy and agricultural sector which are largest business sectors of the country are left out of the target market for loans and advances
• Lack of strong recovery team.
• More dependency rests on government sources for deposit mobilization.
• The techniques specified for credit appraisal is not sufficient.

OPPORTUNITIES

• Rising of new business venture and prospective entrepreneurs
• Bank’s attractiveness and goodwill in the current market.
• Collection of huge foreign remittance from expatriate Bangladeshis.
• Bank’s business expansion to prospective remote areas.
• Government positive attitude towards low classification.

THREASTS

• Increased competition imparted new market participants in the banking industry
• Newer banks with diversity and flexibility to charge variable interest rates to different loan applicants
• Banks with source of low cost fund are getting much better position in SME financing
• Govt. regulations over banking industry.

CHAPTER-6

Findings,

Recommendation & Conclusion

FINDINGS:

Comparison among three local private banks EBL, ABBL, and PBL examines followed an assessment based on the CAMEL method of international bank ratings, a reputed US supervisory rating system supervised by Bangladesh Bank under the regulation and guideline. The ‘A-Class’ CAMELS rating has been awarded to Commercial Bank Bangladesh after assessing the six strategic factors covered by the abbreviation, Capital Adequacy, Asset Quality, Management Quality, Earnings, Liquidity and Sensitivity to market risks. In all, 48 banks in Bangladesh were assessed till September 2008 for this latest   rating. In the CAMELS ratings, each bank is assigned a score of one (A) to five (E) for each factor. “If a bank has an average score less than two, it is considered to be high-quality institution, while banks with scores greater than three are considered to be less-than-satisfactory establishments. This year, six other banks operating in Bangladesh were rated Strong or A-Class. The rating is based on financial statements of the bank and on-site examinations by The Bangladesh Bank, the Central Bank of Bangladesh. “The CAMELS rating system helps the supervisory authorities identify banks that are in need of           attention”. Last year, the Commercial Bank’s operations in Bangladesh was awarded a rating of AA+ (Double A plus) for long term credit, an upgrade from the previous rating of AA, by Credit Rating Information and Services Ltd.

Recommendations :

It  is  very  difficult  to  recommend  about  this  topic  because  of  research  restrictions  and  unavailability  of  data. Despite  these  problems  there  are  some  things  that  the  credit  management  systems/policy  of  AB  Bank  Limited, Gulshan  office  should  look  at  :

• ABBL  used  to  focus  its  attention  on  commercial  sector  for  large  and  medium  scale  industrialization  but  the  recent  concentration  on  small  and  medium  enterprise   (SME)   got  the  new  momentum  as  lending  spheres. Though  the  SME  is  the  focusing  attention, AB Bank’s contributions  on  agriculture  sector  are  insignificant.

• In  industrial  sector, (Wholesaler  Restaurant, Retailers} AB  Bank  prefers  giving  loans  to  large  and  medium  scale  industries, which  has  a  high  turnover. To  these  customers, they  give  short-term  working  capital  machinery, generator, lift, boiler, commercial  vehicle, office  equipment. Export, import, financing, syndication  services  also  remarkable. They  avoid  sectors  like  small & cottage  industry  and  agriculture. Majority  portion  of  their  loans  goes  to  consumer  loans. They  give  loans  to  industrial  consumers  to  buy  all  types  of  durable.

• The  ABBL  loans  and  advances  are  dominated  by  financing  on  short  term  credit  programs, mainly  to  the  trade  commerce  and  processing  units  rather  in  any  manufacturing  unit.

• ABBL  has  also  increased  its  lending  export  finance  and  working  capital  support.

• Classified  loan  and  advances  has  down  ward  trend, which  represents  excellent  performance  of  credit  administration  and  monitoring  review.

• ABBL  properly  follow  the  credit  guideline  provided  by  Bangladesh  Bank.

• Specially  for  controlling  the  branch  activities  ABBL  delegates  disbursement  to  the  credit  administration  division.

• In  the  changing  scenario, each  bank  should  have  their  own  credit  vision  and  accordingly  restructure  their  credit  management  policies  relating  to  screening  monitoring  and  recovery.

• Lending  is  one  of  the  main  function  of  a  banker. But  lending  is  a  risky  AB Bank  have  different  variations  such  as  credit  grading  and  risk  grading  system. While  gathering  information  during  the  face  to  face  interaction  between  the  clients  and  researcher, this  involves  a  number  of  questions. Among  them, most  of  the  customers  have  positive  point  of  view  towards  the  credit  management  of  AB  Bank.

• The  employee  must  take  time  to  hear  the  problems  of  the  customers. It  will  help  them  to  deliver  the  right  service  and  quick  solution  of  respective  problems.

• AB  Bank  can  allow  the  clients  to  repay  their  installment  at  any  branches  he / she   finds  convenient.

• Brochures  always  show  he  features, benefits, costs  and  characteristics  of  the  products. There  are  many  customers  who  do  not  have  any  lending  facility  but  want  to  get  it. Many  of  them  do  not  want  to  spend  time  on  discussing  products  with  the  lending  officer. If   there  were  available  brochures  of  all  types  of  customers  advances, customer  could  pick  up  any  according  to  their  choice  and  evaluate  the  products  offering  by  reading  and  analyzing  the  products. Some  of  them  might  have  been  turned  into  customers  from  their  standing  of  prospective.

Conclusion   

Banking  industry  in  Bangladesh  is  now  on  the  right  track. The  banks  are  contributing  much  than  the  previous  years  for  the  growth  and  development  of  the  country. Banking  industry  is  much  organized  because  of  strong  vigilance  and  supervision  of  Bangladesh  Bank. In  the  industry, AB Bank  is  one  of  the  pioneers  in  many  criteria. AB  Bank  is  committed  towards  the  excellence  in  the  service  with  efficiency, accuracy  and  proficiency. Like  of  most  of  the  commercial  banks, general  banking  &  foreign  exchange  department  is  one  of  the  most  important  departments  of  AB  Bank. Despite  problems  and  weaknesses, it  is  driving  the  bank  from  the  front. With  an  easy  to  understand  operating  guidelines, transparent  operating  procedure  and  a  tem  of  highly  knowledgeable  and  proficient  personnel, this  department  is  expending  and  excelling  itself  day  by  day.

To  the  gateway  to  professional  life  an  experience  at  AB  Bank  as  an  intern  was  a  privilege  for  me.  AB  Bank  does  offer  a  real  practical  orientation  to  the  new  comers  with  typical  corporate  culture .  Rather, it  offers  people  like  us  an  environment  where  the  appetite  for  learning  just  gets  intense. This  three  months  internship  orientation  with  AB  Bank  undoubtedly  will  help  me  a  lot  to  understand  and  cope  with  any  typical  corporate  culture.

Overall, AB  Bank’s  image  stands  superb  in  the  eyes  of  the  clients. This  means  that  the  AB  Bank  Limited  is  well-placed  to  further  increase  their  presence  in  the  credit  marker  and  increase  their  profits  in  the  future. As  AB  Bank  is  performing  well  in  traditional  banking .I  wish  and  hope  that  in  future  AB  Bank  will  be  number  one  Bank  in  Bangladesh.

APPENDIX 

Bibliography

  M.A  Bari  Md.  Mohiuddin  Siddique  (2000), “ Reading  Materials  of  the  Induction  for  the  Probationary  Officer  of  AB  Bank “  BIBM, Bangladesh

AB  Bank  Website  research  for  the  report.

Foreign  Exchange  and  Credit  Policy  &  Risk  Management  guide  of  AB  Bank  (2003)

www.findartcles.com  “ Principles  of  Foreign  Exchange  Management “  and  What  is  Foreign

Exchange “ www.abbank.bd.com

  Stigum  Marcia (1983) “ Management  Bank  Asset & Liabilities : Strategies  for  risk  control  &  Profit”

 L.Irwin  Homewood, New  York.

Helping  by  other  reports  and  conversation  with  other  respectable  persons.

Annual  Report  2009  Of  AB  Bank  Limited

 “ Banking  Law  &  Practices “  written  by  Syed  Ashraf  Ali