General Banking Activities of Mutual Trust Bank

Primary objective of this report is to find out the general banking Activities of Mutual Trust Bank and also about their services and rates which is different in different situation. Other objectives are to know the banking environment the Mutual Trust bank at Pallabi Branch and get a clear scenario about the various Scheme of MTBL. Report also focus on to find out the different types rates. Finally find the problems regarding the general banking and provide possible solution.

Objectives

Broad Objectives:

A broad objective is to find out the general banking Activities of Mutual Trust Bank ltd and also about their services and rates which is different in different situation.

Specific Objectives:

1. To know the banking environment the Mutual Trust bank at Pallabi Branch
2. To get a clear scenario about the various Scheme of MTBL.
3. To find out the different types rates.
4. To find out the different types condition

5. To find the problems regarding the general banking and provide possible solution

Methods and Sources

Primary Sources:

1. Discussion with the banking officer in-charge of Mutual Trust Bank
2. Direct conversation with the customers

Secondary sources:

Secondary sources for data collection are given below:

1. Web site.
2. Office record
3. Annual report.

Company overview & its Activities:

The Bank

Mutual Trust Bank Limited is the leading private sector bank in Bangladesh offering full range of Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market Services. Mutual Trust Bank Limited is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments, assuring Excellence in Banking Services. Credit Rating Agency of Bangladesh Limited (CRAB) has adjudged A1 (Pronounced A One) rating in the Long Term and ST3 rating in the Short Term for Mutual Trust Bank Limited (MTBL).

• Date of Rating: 29 May 2008
• Validity: 1 (One) Year

Historical Background

The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a Public Company Limited by Shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 1,000,000,000 divided into 10,000,000 ordinary shares of Tk. 100 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999.

As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business:

(i) All types of Commercial Banking Activities including Money Market operations.

(ii) Investment in Merchant Banking Activities.

(iii) Investment in Company Activities.

(iv) Financiers, Promoters, Capitalists etc.

(v) Financial Intermediary Services.

(vii) Any related Financial Services.

The Company (bank) operates through its Head Office at Dhaka and 37 branches. The Company/Bank carries out international business through a global network of foreign correspondent banks.

Mutual Trust Bank Ltd. started its commercial operation from October 1999 as a scheduled bank obtaining license from Bangladesh Bank under Bank Company Act 1991. It’s a 3^rd generation private commercial bank in Bangladesh. Mercantile Bank Ltd., EXIM Bank Ltd., Bank Asia Ltd., One Bank Ltd., First Security Bank Ltd., Premier Bank Ltd., Standard Bank Ltd. got license in the year 1999. Mutual Trust Bank Ltd. alongwith these banks are un-officially known as 3^rd generation private commercial bank. On the other hand National Bank Ltd., IFIC Bank Ltd., The City Bank Ltd., AB Bank Ltd., United Commercial Bank Ltd., Islami Bank B’desh Ltd. etc. are known as 1^st generation private commercial bank and Dhaka Bank Ltd., Prime Bank Ltd., South East Bank Ltd., Dutch-Bangla Bank Ltd., Social Investment Bank Ltd., Al-Arafah Islami Bank Ltd. etc. are 2^nd generation bank in terms of their launching year.

Promoters

Mutual Trust Bank Ltd. is organized by number of reputed business & industrial groups of the country say, Apex Group, Square Group, Bashundhara Group, ACI Ltd., ABC Ltd., Sahco Ltd. etc. Mr. Manzur Elahi is the founder Chairman of the bank. He is one of the experienced industrialist in the country and distinguished ex-cabinet members of earlier caretaker government. He is representing Apex Group. Mr. Samson H. Chowdhury is the Vice-Chairman of the bank. Mr. Chowdhury is the Chairman of Square Group. Square Group is known in the country due to its leading role in pharmaceuticals sector since long. Other directors of the bank are also well known in the business community for their business means.

Network

Despite the bank started with its principal branch in the inaugural day presently it has opened 3 new more branches within Dhaka and Chittagong. Out of 4 branches 3 branches are in Dhaka and rest one is in Chittagong. In near future Mutual Trust Bank Ltd. is going to open new more branches in potential business areas including its rural branch/s. May be mentioned private commercial banks are to open at least one rural branch against five of its branches in conformity with Bangladesh Bank norms.

Performance

In the previous year the said bank earned profit of Tk 2.00 crore. May be mentioned in the same year some of the 3^rd generation banks earned much more profit than that of the said bank. Merchantile Bank Ltd. and EXIM Bank Ltd. profit figure is reported to Tk 20.00 crore and Tk 10.00 crore respectively. Other banks say, Bank Asia Ltd., First Security Bank Ltd., One Bank Ltd., Premier Bank Ltd., Standard Bank Ltd. earned profit aroung Tk 1.00 crore to Tk 2.00 crore.

General Banking

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 various areas in different forms and lending that accumulated amount of money to the potential investors in other different forms.

General Banking is the starting point of all the banking operating. General Banking department aids in taking deposits and simultaneously provides some ancillaries services. 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 form Bank. On the other hand, there are some customers with who bank are doing its business frequently. It is the department, which provides day-to-day services to the customers. Everyday it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, demit funds, issue bank drafts and pay orders etc. since bank in confined to provide the service everyday general banking is also known as retail banking.

Scope of General Banking

1. Customer Service.
2. Account Opening.
3. Remittance.
4. Payment Order.
5. Demand Draft.
6. T.T.
7. IBC/ OBC Collection.
8. Deposit Department.
9. Account’s Department.
10. Clearing Transfer.
11. Cash.
12. Loan and Advance.

Customer Services of MUTUAL TRUST BANK LIMITED

Professional merit and Competency, Flexibility, Determination and Dedication are the core resources that MTBL consider to be of paramount importance for building a client oriented modern banking. Customer satisfaction is MTBL foremost professional undertaking. Therefore, a satisfied client is MTBL precious product and they consider them MTBL ambassador in the market.

Account Opening of MTBL

Under this department, MTBL officer opens different types of account on the request of clients. The procedure of opening account is given bellow:

Types of Accounts:

General Products are

(i)  Current Deposit (InterestRate0.00%)

1. Individual Account
2. Joint Account
3. Proprietorship Account
4. Limited Company Account

(ii)  Savings Deposits (Interest Rate 6.25%)

1. Individual Account
2. Joint Account
3. Proprietor Ship Account
4. Limited Company Account

(iii)  Short Term Deposits (Interest Rate 6.00%)

• Individual Account
• Joint Account
• Proprietor Ship Account
• Limited Company Account

(iv)  Fixed Deposits

Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed by him. The period varies form 1 month to 12 months. These deposits are not repayable on demand but they are withdrawable 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. Amounting figures
2. Beneficiary’s name and address
3. Period
4. Rate of interest
5. Date of issue
6. Date of maturity

Instructions:

• To be renewed automatically with interest for the next period.
• Not to be renewed for next period.
• Pay interest to account no. (——-) on maturity

7. Special instruction

8. How the account will be operated (singly or jointly)

9. Signature (s)

10. FDR no.

Then a FDR account is opened and it is recorded in the FDR Register which contains the following information,-

1. FDRA /C no.
2. FDR (Fixed Deposit Receipt) no.
3. Name of the FDR Holder with address
4. Maturity period
5. Maturity date
6. Interest rate

In case of Fixed Deposit Account the Bank needs to maintain a cash reserve. So MTBL offers a high interest rate in Fixed Deposit accounts. The interest rates followed by MTBL in Fixed Deposit accounts are:

Interest Rate:

• 1 months and above but less than 3 months: 8.50%
• 3 months and above but less than 6 months: 11.00%
• 6 months and above but less than 12 months: 11.25%
• 12 months and above: 11.75%

The FDR becomes renewed automatically in MTBL if the customer does not enclose it within 7 days of maturity. In case of encashment of FDR in maturity, following accounting treatments are given:

Excise Duty on FDR——————–Dr.

Income Tax on interest ————–Dr.

FDR A/C———————————Dr.

Cash A/C—————————————-Cr.

Interest on FDR A/C—————————Cr.

If the customer wants to draw the interest only, then following entries are given:

Interest on FDR A/C—————–Dr.

Cash A/C—————————————Cr.

In case of ‘before maturity enactment’ interest is calculated for the days from the date of opening the FDR account.

Festival Sanchay Prokalpa are:

• Eid-Ul-Azha Sanchaya Prokalpa (Interest Rate 10.00%)
• Eid-Ul-Fitre Sanchaya Prokalpa (Interest Rate 10.00%)
• Durga-Puja Sanchaya Prokalpa (Interest Rate 10.00%)
• Buddha-Purnima Sanchaya Prokalpa (Interest Rate 10.00%)
• Boro-Din Sanchaya Prokalpa (Interest Rate 10.00%)

 MTBL Consumer Banking Products are

1. Brick by Brick Savings Scheme
2. Monthly Benefit Plan
3. Save Everyday Plan
4. Children’s Education Plan
5. Consumer Credit Scheme
6. Best Invest Plan
7. Unique Savings Plan

Some of MTBL Consumer Products

We will have to open an account in the bank from which a standing instruction will be given to transfer the monthly deposit in the scheme’s account and you must ensure that your account has sufficient balance within the 20th of each month.

This plan is so flexible that at maturity you can earn a handsome amount depending on the size of installment amount of savings and tenure.

Rate of interest-10%

 (ii) Monthly Benefit Plan

This plan offers you to generate monthly income out of your deposit. It has been designed to help and assist conscious savers from all strata of the society. The minimum deposit is Tk. 50,000/= or in multiples thereof. There is no upper limit and this plan is for a 3 (three) & 5 (five) years term that cannot be changed subsequently.

You will require opening a savings/current account. Monthly income will be credited to your account.

A few examples of deposit and income are given below:

(iii)  Save Everyday Plan

Mutual Trust Bank offers you “Save Everyday” Plan. The primary advantage of this plan is that you are absolutely free to choose your own time for depositing money into this account. You can deposit daily, weekly or monthly. The choice is yours, but the transactions will have to be within the Bank’s transaction hour.

This is a 5 year plan and you will be required to open the account with an initial deposit of Tk. 2500/= only. We offer you very attractive interest rate which is accrued in this account on a daily basis.

(iv) Children Education Plan

To admit a child in a good institution parents require adequate amount of savings for the cost of admission into a school. This plan allows new parents to save for 4/7/9/12 years.

The parent can deposit any amount of money at any day of the month. The interest rate is very lucrative and we offer substantially more than the prevailing savings rate.

 (v) Consumer credit Scheme

With a view to materialize the dreams of those who are unable to make one time investment from their own savings, one can now afford to buy necessary household equipments and thus improve the standard of living.

All shot of household durables e.g. Television, Refrigerators, Computers, Air Conditioners, Video Cameras, Washing/ Drying Machines and Furniture’s are allowed under this scheme. One can buy Motorcycle too under this programme.

(vi) Best Invest

BestInvest offers you efficient high return investment plan. This plan helps you to build up a sizeable income in easy and affordable installments. This plan allows you to own 5 times the initial invested amount. Best Invest offers two separate and convenient term deposit periods for 4 years and 6 years respectively. Best Invest is available in units worth Tk.50,000/- each. You will invest Tk.10,000/- as down payment for purchasing 1 (one) unit and the Bank will provide loan for Tk.40,000/-. The customer also has the option to buy units in multiples of Tk. 50,000/- but maximum upto Tk. 1,00,00,000/- (one crore).

Customized Products are:

• MTB Double Saver Plan

MTB Double Saver Plan offers you an one time savings scheme, which will provide you double the amount of your deposit after 6.5 years. You will receive a handsome amount at maturity.

If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for 6.5 years with no limit for maximum amount. At maturity you will get double of your deposited amount along with a gift item.

You can even avail loan up to 90% of the deposited amount.

 (ii) MTB Triple Saver Plan

If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for ten (10) years with no limit for maximum amount. At maturity you will get three times of your deposited amount along with a gift item.

Account holders can even avail loan up to 90% of the deposited amount.

Millionaire Plan

Millionaire Plan is a monthly savings plan, which is designed to make you a millionaire in a few years. An individual may invest your savings in this scheme for 6/8/10/12/15/20 years with different installment sizes. At maturity you will get Tk. 10, 00,000/-.

You can even avail loan up to 90% of the deposited amount after 1(one year).

Unique Savings Plan

Unique Savings Plan is an any day, any amount savings plan. The beauty of this plan is that a customer can deposit any day, any time and any amount. Unique Savings Plan offers you to deposit any amount of your choice but not less than Tk. 500/- for 3/4/5 years. This is a high income plan with withdrawal facilities. The withdrawal facility will help at the time of any emergency. Account holder can withdraw 50% of the deposited balance for once a month. At maturity you will get a handsome amount.

(v) Small business

With the objective of extending financial support to small businessmen, this loan scheme has been introduced. It has been designed to get business loans on easy terms and without any hassle. Only the genuine businessmen having entrepreneurship quality and honesty to run and expand their business smoothly.

• Maximum loan under the scheme will be up to Tk. 50 lac.
• No collateral security is required up to Tk. 5 lac.
• Collateral security is required for loan above 5 lac.

(vi) Home Loan Scheme                               

Home Loan Scheme has been introduced to facilitate people to fulfill their dream of a home of their own. It has been designed o help people to get home loans on easy terms and without any hassle.

• Loan amount under this scheme is maximum Tk. 50 lac. Salaried executives, professionals, businessmen and govt. officials are eligible to avail this loan scheme.
• The loan is to be repaid by monthly equal installments including interest within the period ranging from 5 years to 15 years depending on the size of loan.

Home Repair/ Renovation Loan Scheme

Home Repair/ Renovation Loan Scheme has been designed with a view to help the owners of house/ building/ flat to mitigate their financial need for repair/ renovation of their house/ building/ flat.

Only the genuine residential house owners will be eligible to avail the loan facilities to repair or renovate their own house/ building/ flats according to their needs.

• Maximum loan under the scheme will be up to Tk. 5.00 lac.
• The loan is to be repaid by monthly equal installments including interest within maximum 60 months.

(viii) Auto Scheme

Purchase of new/ reconditioned cars is allowed under this scheme. Salaried executives, professionals, businessmen, govt. officials or self employed persons are eligible to avail this loan. Loan amount under this scheme is 70% of car value but maximum of Tk. 20 lac.

Other Service

SWIFT Services

Mutual Trust Bank has already become the member of SWIFT community and has started its operation from March 2004. With introduction of SWIFT, MTB ensures its customers the quickest and most secured financial transaction around the world.
The SWIFT address or BIC of Mutual Trust Bank is: MTBL BD DH

MTB Tele Banking

This value added service is offered absolutely free.  Registration is mandatory for Tele Banking. For registration you have to visit your bank branch. You can download the registration form here. Account holders of Mutual Trust Bank Ltd can registration for this service. To access the service dial 9553671 or 9560727.

Facilities available at present

• Access your account from anywhere in the world through a telephone.
• Ability to make balance inquiries without visiting the bank.
• Ability to listen to last 5 transaction detail over the phone.
• Provides a language selection being available in English and Bangla.

Online Banking

Mutual Trust Bank is playing a pioneering role among its competitors in providing real time online banking facilities to its customers. Mutual Trust Bank online banking offers a customer to deposit or withdraw any sum of money from any branch anywhere. Any account holder having a checking account with the bank can avail this service.

Correspondent Banking

The objective of our correspondent banking operations is to strengthen our existing relationships with foreign banks and financial institutions around the globe as well as exploring new relationships. In addition to that, we provide assistance in marketing the products of the correspondent banks. At present MTB is maintaining relationships with 30 (thirty) foreign correspondents and the number is growing everyday. Currently the bank has 18 (eighteen) NOSTRO A/Cs with large foreign banks abroad. The bank is a “SWIFT” member and its Bank Identification Number or BIC is ‘MTBL BDDH’.

Procedure of Account Opening

Account Opening (Normal Account)

1. Collect an Account opening form from the Bank.
2. Fill all the requirements of the form.
3. Nominee is must be specified.
4. Photograph is most important for any account.
5. The account holder sign of his/her own self in front or the specific bank principle Officer in the account opening form.

Account Opening (Saving Account)

1. Collect an Account opening form from the Bank.
2.  Fill all the requirements of the form.
3. Nominee is must be specified.
4. Photograph is most important for any account.
5. The account holder sign of his/her own self in front or the specific bank principle Officer in the account opening form.
6. To open this account the most important things is that Passport Photocopy or the Word Commissioner Certificate must have to add with the account opening form.

Account Opening (Current Deposit Account)

1. Collect an Account opening form from the Bank.
2. Fill all the requirements of the form.
3. Nominee is must be specified.
4. Photograph is most important for any account.
5. To open this account the most important things is that Passport Photocopy or the Word Commissioner Certificate must have to add with the account opening form and also enclose the form 12 with the account opening form.

Checklist of Documents to be obtained for various types of ACCOUNTS

(I) Sole Proprietorship

• Signature Card.
• Photograph of signatories attested by introducer.
• Copy of valid Trade License.
• TIN Certificate.
• 18-A  permission from Bangladesh Bank (for GSA & Agents only).

(II) Partnership

• Signature Card.
• Photography of signatories attested by introducer.
• Partnership Deed.
• Partners letter of authority to open account and authorization for operation.
• Copy of valid Trade License.
• 18-A permission from Bangladesh Bank (for GSA & Agents only).

(III)Limited Liability Company

Signature Card.

• Photograph of signatories attested by introducer.
• Copy of Memorandum and Articles of Association (Certified by RJSC).
• Copy of Certificate of Incorporation and commencement of business (In case of public Ltd. Co.).
• Copy of Board Resolution to open the account and authorization for operation.
• List of Directors and signatories along with addresses.
• Latest copy of From XII.

(IV) Association/Trust/Society

• Signature Card.
• Photograph of signatories attested by introducer.
• Copy of Resolution of governing body to open the account and authorization for operation.
• Copy of consolation / bylaws/ rules.
• Certificate of registration.
• List of authorized signatories and members of the governing bodies along with address.
• Trust Deed (for Trust account only).

Interest Posting to Client’s account

1. Bangladesh Government has circulated that, 10% deduction from the Bank’s Internal Account’s. This 10% tax deduction from the client’s interest.

2. Other wise another circulation is that, from the OBC collection every bank cut off there OBC commission as income account, here Bangladesh Bank said that 15% money cut off from the OBC collection as Vat on Others.

Cheque Book Issues

• Types of Cheque Book’s
• Savings Account – 10 Leaves
•  Current Deposit Account – 10 Leaves
• Current Deposit Account – 25 Leaves (CDTF)
• Current Deposit Account – 50 Leaves (CDF): CDTF: Current Deposit Twenty Five ande CDF: Current Deposit Fifty

Cheque Issued by using two types of slips

1. Direct requisition slips
2. Cheque Book’s requisition slip

Customers Service Officer receives these types of slip from the client’s and gives the cheque books under processing. Processing means Cheque Book’s collect from the VOLT and the put account number in the cheque book, write down the serial number of the cheque book in the requisition slip and cheque book register, then Verified client signature. After all this things the Principal officer sign in the cheque leaves and sent the cheque book to another Principal officer for sign, after his sign the client receive the cheque book. These things the Principal Officer for sign, after his sign the client receive the cheque book. Then Principal Officer posting that cheque books leaves number in the computer data processing system.

Account Closing

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 case of different types of A/C to close

1. Fixed deposit A/C is closed after the termination of the period.
2. Brick by Brick A/C is very easily closing if one of the clients didn’t pay his/her monthly installment at the bank three months one after one, in this way three months.
3. Another account’s will be closed on the parties advice, if they want to close any one of the account clients must have to submit an A/C closing letter through des pass. Then the Sr. Principal Officer checks it out and closes the A/C.

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.

Remittance

Remittance of funds is ancillary services of MTBL. It aids to remit fund from one place to another place on behalf of its customers as well as non- customers of Bank. MTBL has its branches in the major cities of the country and therefore, it serves as one of the best mediums for remittance of funds from one place to another. The main instruments used by MTBL, Dilkusha Branch for remittance of funds.

1. Payment Order Issue/Collection
2. Demand Draft Issue/Collection
3.  T.T. Issue/Collection
4. Endorsements
5. Travelers Cheque Issuance
6. IBC/OBC Collection.

Payment Order Issue/Collection

The pay order is an instrument issued by bank, instructing itself a certain amount of money mentioned in the instrument taking amount of money and commission when it is presented in bank. Only the branch of the bank that has issued it will make the payment of pay order.

Issuing of Pay Order

The procedures for issuing a Pay Order are as follows:

• Deposit money by the customer along with application form.
• Give necessary entry in the bills payable (Pay Order) register where payee’s name, date, PO no, etc is mentioned.
• Prepared the instrument.
• After scrutinizing and approval of the instrument by the authority, it is delivered to customer. Signature of customer is taken on the counterpart.

Different modes of PO when a customer can purchase

By cash:
            Cash A/C Debit
Bills payable (PO)A/C Credit.
Income on commission A/C Credit.
By account:
            Customer’s A/C Debit
Bills payable (PO)A/C Credit.
Income on commission A/C Credit.

By transfer:
MTBL General/ other Dept Clients A/C Debit
Bills payable (PO)A/C Credit.
Income on commission A/C Credit.

PO A/C is the current liabilities of bank, which is acquired to be discharged by beneficiaries against cash or through an account.

Settlement of a PO

When PO submitted by collecting bank through clearing house, the issuing bank gives payment.

Bills  payable (PO) A/C Debit
MTBL General A/C Credit.

But before giving payment it is duty for issuing to observe whether endorsement was given by the collecting bank or not, then the instrument is dishonored and marking ‘Endorsement required’.

3.4.4 Cancellation of a Pay Order

If a buyer wants to cancel it, he should submit a letter of instrument in this regard and also return the instrument.

Accounting treatment: Adjustment entry wills be-

Bills payable (PO) ————–Dr.
Customer A/C——————Cr.

When PO is lost

If the instrument is lost, the holder will inform to the issuing bank immediately. Bank will mark ‘stop payment’ on the Bills payable (PO) Register. Buyer will then ask for a new instrument by submitting a GD copy, and indemnity bond. A new instrument will be delivered.

Demand Draft Issue/Collection

The person intending to remit the money through a Demand Draft (DD) has to deposit the money to be remitted with the commission which the banker charges for its services. The amount of commission depends on the amount to be remitted. On issue of the DD, the remitter does not remain a party to the instrument: i) Drawer branch ii) Drawee branch iii) Payee. This is treated as the current liability of the bank as the banker on the presentation of the instrument should pay the money. The banker event on receiving instructions from the remitter cannot stop the payment of the instrument. Stop payment can be done in the following cases:

1. Loss of draft before endorsement: In this case, “Draft reported to be lost, payee’s endorsement requires verification” is marked.
2. Loss of draft after endorsement: In this case, the branch first satisfies itself about the claimant and the endorsement in his favor.

Accounting behavior
In case of issuing of the instrument:

Cash/ customer’s A/C———————Dr.

MTBL Genera A/C (Drawn on branch)———-Cr.

Income A/C commission—————————Cr.

After giving these entries an Inter Bank Credit Advice is prepared which contains the controlling number, depicting that the branch is credited to whom it is issued.
An IBCA implies the following entries,

MTBL General A/C Issuing Branch——-Dr.
Drawn on branch————————————Cr.

Role of the Drawn Branch

After receiving the IBCA lodgment is done by the branch. The following entries are given “DD In-Issuing branch” register:

Issuing branch A/C————————-Dr.
Bills Payable—————————————Cr.
(After receiving an IBCA)
Bills Payable (DD)A/C——————–Dr.
Client’s A/C——————————–Dr.

Entries are given in “DD In-Issuing branch” register:

Issuing branch A/C———————–Dr.
Bills Payable—————————————Cr.
(After receiving an IBCA)
Bills Payable(DD)A/C——————Dr.
Client’s A/C——————————Dr.

Charges

A commission of 0.15% is taken on the draft value & Tk.50/= is taken as postal charge.

Cancellation

To cancel an issued DD, the client has to submit an application. Issuing branch then sends an Inter Branch Debit Advice (IBDA) to the drawn branch against previously issued IBCA.

After that the following entries are given:

General A/C drawn on branch———Dr.
Client’s A/C —————————————Cr.

Issuing of Duplicate DD

If the customer wants to issue a duplicate DD, than customer is asked to do the following formalities:

1. Making a general diary (GD) in the nearest Police Station.
2. Furnishing an Indemnity Bond in Tk.50/= stamp

The banker immediately marks “stop payment” in the register after receiving the application from the customer and a duplicate DD is issued.

T.T. Issue/ Collection

Telex transfer (TT) is another widely used mode for remittances of funds. In case of telex transfer the message for transfer of funds is communicated through tested telex. MTBL generally recovers from the telex charges in addition to the usual service charges.

Issuing of TT

MTBL follows the following procedures:

1. The customer deposits money with MTBL to be sent.
2. The customer obtains a cash memo containing TT serial number.
3. TT serial number, notifying part name is mentioned in the telex message.
4. The Telex Department confirms transmission of the telex.

Accounting entries for TT

Cash A/C Client’s A/C———————-Dr.
MTBL General A/C (Dilkusha branch)—————Cr.

Procedures for the incoming TT

After receiving the telex, it is authenticated by test. TT Serial number is verified by the “TT in-Concern branch” register. The following entries are given in the vouchers:

MTBL General A/C (Dilkusha branch)——-Dr.

Client’s A/C——————————————-Cr.

Tk. 50/- is taken as postal charge. The minimum commission is Tk. 50/- or o.15% of the amount whichever is higher.

Endorsements

MTBL endorses US$ in passports. To endorse US Dollar, the client has to apply in the prescribed from (TM Form).

The following entries are given in this regard:

Cash or Customers’ A/C—————–Dr.

Foreign Currency on Hand< Dollar Special> ———Cr.

IBC/OBC

By OBC, we mean that those cheques drawn on other banks which are not within the same clearing house. Officer gives OBC seal on this type of cheques and later sends a letter to the manager of the branch of the some Bank located in the branch on which cheque has been drawn. After collection of that bill branch advises the concerned branch in which cheques has been presented to credit the customer account through Inter Branch Credit Advice (IBCA).

In absence of the branch of the same bank, officer sends letter to manager of the bank on which the cheques is drawn. That bank will send pay order in the name of the branch. This is the procedure of OBC mechanism.

Actually OBC comes from the out side bank’s branch, or inter branches. Suppose AGRANI Bank, Jatrabari Branch sent a Cheque, which no: 012536, Tk. 5,00,000/- to Mutual Trust Bank Limited against AGRANI Bank Motijheel Corp. Branch. So this cheque could be an OBC. Now what Mutual Trust Bank Limited has to do? MTBL tries to collect this cheque through Bangladesh Bank Clearing House, and credited clients account.

OBC Collection Process

Create a Voucher against OBC: S/D A/C  OBC Tk. 5,00,000/-

10% Cut off as Commission on OBC Tk. 500

15% Cut off as Vat on Others               Tk.  75

Tk. 20/- Cut off as Postage Recovery   Tk.  20

Total                                                     Tk. 595/-

In this condition MTBL got the cheque amount of Tk. 5, 00,000/-, but after cut off the commission, vat and postage recovery MTBL will be credited the amount Tk. (5, 00,000 – 595) = Tk. 4, 99,405/- in party account.

Accounts Department

Accounts Department is play most vital role in Banking. Accounts Department is a department with which each and every department is related. It records the profit & loss A/C and statement of assets and liabilities by applying “Golden Rules” of book-keeping. The functions of it are theoretical & computerized based. MTBL Pallabi Branch records its accounts daily, weekly, and monthly every record.

Basically Accounts Department is not alone. Accounts department is a mix of as follows:

1. Cash
2. Transfer
3. Clearing

Cash

The cash section of any branch plays very significant role in Accounts Department. Because, it deals with most liquid assets the MTBL Pallabi Branch has an equipped cash section. This section receives cash from depositors and pay cash against cheque, draft, PO, and pay in slip over the counter. Every Bank must have a cash counter where customer withdrawn and deposit there money. When the valued client’s deposit their money at the cash counter they must have to full fill the deposit slip his/her own, then they sing as the depositor option’s then they deposit their money through cash officer at the cash counter.

Several Types of deposit slip

There are several types of deposit slip as follows:
1. Current Deposit—————————————-A/C Slip,
2. Saving’s Deposit—————————————A/C Slip,
3. Festival Deposit—————————————-A/C Slip,
4. Brick By Brick Deposit———————————A/C Slip,
5. Pay order Slip,
6. Demand Draft Slip,
7.  T.T. Slip.

After paying this kind’s of slip, the valued client waits for the deposit slip book out side of the cash counter. The cash officer deposit the money in there account through computer software, while the depositors account credited, then the cash officer put a seal in the deposit slip and return it to the client.

Receiving Cash

Any people who want to deposit money will fill up the deposit slip and give the form along with the money to the cash officer over the counter. The cash officer counts the cash and compares with the figure written in the deposit slip. Then he put his signature on the slip along with the ‘cash received’ seal and records in the cash receive register book against A/C number. At the end of the procedure, the cash officer passes the deposit slip to the counter section for posting purpose and delivers duplicate slip to the clients.

Account-treatment:

Cash A/C———————Dr.

Customer’s A/C————- Cr.

Disbursing Cash

The drawn who wants to receive money against cheque comes to the payment counter and presents his cheque to the officer. He verifies the following information:

1. Date of the cheque
2. Signature of the A/C holder
3.  Material alteration
4. Whether the cheque is crossed or not
5. Whether the cheque is endorsed or not
6. Whether the amount in figure and in word correspondent or not

Then he checks the cheque from computer for further verification. Here the following information is checked:

1. Whether there is sufficient balance or not
2. Whether there is stop payment instruction or not
3. Whether there is any legal obstruction (Garnishee Order) or not

After checking everything, if all are in order the cash officer gives amount to the holder and records in the paid register.

Account behavior:

Customer’s A/C Dr.
Cash A/C Cr.

The cash section of MTBL deals with all types of negotiable instruments, cash and other instruments and treated as a sensitive section of the bank. It includes the vault which is used as the store of cash instruments. The vault is insured up to Tk. 1 corer. If the cash stock goes beyond this limit, the excess cash is then transferred to Principle Branch Office. When the excess cash is transferred to MTBL Principle Branch Office the cash officer issues IBDA.

Account treatment:
MTBL General A/C Dr.
Cash A/C Cr.

When cash is brought from MTBL Principle Branch Office.

Accounting treatment:
Cash A/C Dr.
MTBL General A/C Cr.

Transfer

Transfer is not a critical sector in banking but it is very important. Transfers play a vital role in banking sector. So now we have to know what transfer is: basically transfer is a type of register maintaining matter. In this register officer write down every day transactions in Debit and Credit side then the officer calculate both the side of the register if both side shown same amount, it means that the total day’s transaction is completely okay.

Clearing

Clearing is one of the magical parts of banking. I really enjoyed this part of the accounts department and banking sector.

Clearinghouse
In Bangladesh Bank, there is a very large room, which contains fifty (50) or more tables for each bank that is called the clearing house.

Nature of clearinghouse

• 1stClearingHouse
• Return Clearing House

Clearing House Process

Every bank has an officer of clearinghouse who is work with Bangladesh Bank clearing house. Actually most of major client deposit their account in different kinds of bank cheques. Clearing officer check all the cheques and deposit slip very carefully and then he received the cheque. After that the clearing officer posting all the cheques in computer software which is recognized through Bangladesh bank computer department. Then clearing officer seal all the cheques in advance date after that the officer endorsement all the cheques and sign all the cheques. All the cheques are posted in the computer by branch wise, then officer print the entire document and staple all the cheques by branch wise this is called schedule of clearing house. It is a very difficult job to staple all the cheques, because some time’s the cheques are huge in quantity, it may be 250 to 400, this is very vital job because every cheque must have to staple very carefully, it means cheque amount and the print sheet amount and cheque branch must have to be same. If the cheques staple in wrong direction, the cheque may be return from another bank, that’s why MTBL not to be able to credited party account. Then the clearinghouse officer copying all the document in two floppy dist as per Bangladesh Bank requirement. When the clearing officers enter the clearinghouse, his first job is that the floppy delivered to the Bangladesh Bank computer department.

All of the procedure the clearing in charge goes to the Bangladesh Bank clearing house before 10 am in the morning. The clearing officer check all the bank’s cheque and he put all the cheques in bank wise, like as this another bank’s delivered there cheques in MTBL desk. Then the officers of MTBL have to calculate all the cheques by using calculator machine, Staple pin remover, and then he divided all the cheques as MTBL Branch wise.

Types of Clearing Cheque

MTBL Pallabi Branch performs the bill clearing function through Bangladesh Bank. MTBL Pallabi Branch acts as the agent of all MTBL branches for the clearing house of the Bangladesh Bank. There are two types of cheque which are-

• Inward clearing cheque
• Outward clearing cheque.

Inward Cheques

Inward cheques are those ones drawn the respective branch which have been presented on other banks and will be cleared / honored through the clearing house of Bangladesh Bank. Then the cheque is called inward cheque of MTBL Pallabi Branch.

Accounting behavior

• Customer’s A/C Debit.
• MTBL General A/c credit.

Outward cheques

Outward cheques are those ones drawn on other bank branches which are presented on the concerned branch for collection through clearing house of Bangladesh Bank. These cheques are called outward clearing cheques.

Reason for the Return Cheques:

Memorandum

MUTUAL TRUST Bank LIMITED

__________ Branch  Date:_____________

Cheque(s) No:_________________  for Taka ________________

Is/are returned un-paid for reason(s) no_____________________

1. Not arrange for
2.   Effects not cleared, may be present again.
3. Exceeds arrangement.
4. Full neither covers nor received.
5. Payments stopped by drawer.
6. ________ Payee’s endorsement irregular requires bank’s confirmation.
7. ________ Payee’s endorsement irregular, illegible / required.
8. Drawer signature differs / required.
9. Alteration in Date / figures / words required drawer’s full signature.
10. Cheque is post dated / out of date / mutilated.
11. Amount in word and figure differs.
12. Crossed cheque must be presented through a Bank.
13. Clearing stamps required.
14. Addition to Bank discharge should b authenticated.
15. Cheque crossed “Account’s Payees Only”.
16. Collecting Bank discharge irregular.

Extract

Extract is a statement of all originating and responding transactions among inter–branches through inter branches debit and credit advice. At the end of the day, all the debit and credit advices of different department come to accounts department. It makes extract in light of all advices.

Actually extract shows the balance of MTBL Pallabi Branch general A/C. The objective of preparing it is to know how many transactions have been originated and responded by the respective branch per day. Branch has to send it its Head Office keeping one photocopy.

Debit Voucher

For making cash payment like entertainment, conveyance, Account Department writes a debit voucher. Amount is withdrawn through cash section by presenting debit voucher.

Statement of affairs

Accounts section prepares the statement of affairs for finding the profit /loss as well as amount of assets and liabilities of concerned branch per day. Theoretically; it is called financial statement and has two parts:

1. Income and Expenditure A/C.
2. Statement of assets & liabilities.

Amortization and Depreciation

Amortization is the allocation of the cost of an intangible asset to expense. For example: prepaid expenditure, prepaid insurance and goodwill etc. Amortization schedule is determined by the decision of management.

Depreciation is a process of cost allocation of assets not a process assets valuation.

1. Fixed Assets have been show at written down value.
2. Depreciation is charged at the following rates on reducing balance method on all fixed assets other than motor vehicles, which are deprecated on straight-line basis:

Assets purchased during the year are depreciated from the date of acquisition.

Functions providing by Account department

Like all other Banks, in MTBL Accounts Department is regarded as the nerve Center of the bank. In banking business, transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors’ money. Any deviation in proper recording may hamper public confidence and the bank has to suffer a lot otherwise. Improper recording of transactions will lead to the mismatch in the debit side and in the credit side. To avoid these mishaps, the bank provides a separate department whose function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery. This department is called as Accounts Department.

The tasks of the Accounts Department of MTBL Pallabi Branch may be seen in two different angles:

1. Daily Tasks.
2. Periodical Tasks

Daily Tasks

The routine daily tasks of the Accounts Departments are as follows——–

1. Recording the daily transactions in the cashbook.
2. Recording the daily transactions in general and subsidiary ledgers.
3. Preparing the daily position of the branch comprising of deposit and cash.
4. Preparing the daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately.
5. Making payment of all the expenses of the Branch.
6. Recording inters branch fund transfer and providing accounting treatment in this regard.
7. Recording of the vouchers in the Voucher Register.

Periodical Tasks

The routine periodical tasks performed by the department are as follows:

1. Preparing the monthly salary statements for the employees.
2. Publishing the basic data of the branch.
3. Preparing the weekly position for the branch which is sent to the Head Office to maintain Cash Reserve Requirement (C.R.R).
4. Preparing the monthly position for the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (C.R.R).
5. Preparing the weekly position for the branch comprising of the break up of sector-wise deposit, credit etc.
6. Preparing the weekly position for the branch comprising of the denomination wise statement of cash in tills.

SWOT Analysis

Not surprisingly, in the competitive arena of marketing era SWOT analysis is a must based on product, price, place and promotion of a financial institute like private bank. From the SWOT analysis we can figure out ongoing scenario of the bank. So to have a better view of the present

SWOT Analysis

Internal factor

• Strength
• Weakness

External factor

• Opportunity
• Threats

Strength

1. Usage of faster Flora Banking software.
2. Good banker-customer relationship.
3. Online banking system.
4. Bangladesh Bank based Banking system.
5. Competitive profit provider comparing with other bank.
6. Strong Financial Position.

Weakness

1. Reluctance to ad campaign.
2. Existing manual vouchers.
3. Marketing policy is not well setup.
4. The bank has no own ATM booth.

Opportunity

1. Huge business area.
2. Introducing consumer credit scheme.
3. Growth of sales volume.
4. Introducing branch banking through online.
5. Develop relations and correspondence with foreign banks.

Threats

1. Competition have more attractive deposit schemes.
2. Different classic service of other banks.
3. Govt. imposes high rate of taxes and VAT.

Findings

After this part, I think this is the most vital part for every bank in Bangladesh or any other country. Mutual Trust Bank Limited is a private commercial bank. This is most probably consumer base bank. After analyzing my work and observation I found following points:

1. Normally any person can purchase pay order, demand draft and telex transfer by depositing money and commission. But the person who wants to purchase these should have account in the bank branch. These will discourage customers to transact with bank.
2. In opening A/C some additional documents are needed as compared with theoretical record. Like trade license, member of Dhaka chamber of commerce and industry (DCCL) in Dhaka city. Again some documents are not essential practically as referred in theory. For example, the photo of the person who will open A/C, and sometime introducer.
3. There is a rule to deposit at least an amount of money in case of opening an account. But it is not strictly followed. Sometimes more money is asked from a new customer who discourages him to open an account in the bank. I think the amount should be fixed at a level that is not altered from customer to customer.
4. In case of crossing cheque I did not observe any crossing with “Not negotiable” as much as I stayed in bank orientation. Though theory have been given emphasis on the effect of “A/C pay only” and “not negotiable”. The role of “Not negotiable” is not so much. There is no provision in law regarding “A/C payee crossing”. But it has been developed in practice. If the words, “A/C payee” are added to a crossing, it becomes an A/C pay crossing.
5. The degree of relationship between banker and customer determines how much theory is deviated from practical work.
6. When a client try to open an A/C he must have to need an introducer, sometime it may create a problems for the clients.
7. Under this department, practice strictly supports theories. There is not too much discrepancy between them. All the functions of Account Department provided by MTBL Dilkusha Branch are based on accounting theories and procedures.
8. In case of amortization there is no pre-determined rate on which it will be charged. It fully depends on the decisions of the executives of Accounts Department or the instruction of H/O.
9. In case of depreciation only the straight-line is to be followed, but there are other methods of charging depreciation, such as-double decline, sum year-digit methods etc are used as method of depreciation. These are not followed by MTBL except the straight line method.
10. This department plays a vital role in the management information system. Management collects different types of information from this department

Conclusion

I had the opportunity to work for this banking giant during my three months internship program. I was placed at the customer service department of MUTUAL TRUST BANK, Pallabi Branch. During this time I got a vast opportunity to observe the overall service process of MUTUAL TRUST BANK personal banking division. I also got the scope to interact with customers directly and reveal their expectations and perceptions about the bank’s services. During my interaction with customers I felt that somewhere there are gaps between customer expectations and banks services.

So, finally I will say that this internship at MUTUAL TRUST BANK has increased my practical knowledge of Business Administration and made my BBA education more complete and applied. I give MUTUAL TRUST BANK all my wished and regards so that it could become the leader of financial services in Bangladesh in the near Future.

Recommendation

MUTUAL TRUST BANK is one of the most flourishing Banks of Bangladesh with wide growth opportunities in the industry. The survey on the customers of MUTUAL TRUST BANK was conducted with an aim of improving the overall customer satisfaction at MUTUAL TRUST BANK. The research gave valuable insights as to where improvements were necessary to improve the quality of service.

Based on the above results, it can be said that MUTUAL TRUST should reconsider it’s service strategies in Bangladesh and design products and services that better satisfy customer needs and requirements. Bank should be more tactful in dealing with the customers and launch new products that fully meet customer expectations.

The following point can be recommended on the findings of survey: 

1. Regular research should also be conducted to find out customer expectations about various service aspects.
2. Appropriate research and surveys should be designed to find out the requirements the dissatisfied segments.
3. The bank should focus more on existing customers in order to build strong and loyal relationship with them as the survey showed that satisfied customers more aptly or certainly recommends the bank to friends and relatives. Thus the power of relationship will foster positive Word of Mouth Communication and will attract new customers at a lower cost.
4. Employees training should be conducted so that they will be more professional and efficient to deal with problem customers and problematic situations.
5. Individual attention should be given to customers in order to better understand their needs and better satisfy them.
6. Customers showed a huge dissatisfaction with current locations as MUTUAL TRUST BANK provides services from only 20 branches throughout Bangladesh. New branches should be constructed in Dhaka city satisfying more geographic segments.
7. In another dimension where the customers showed higher dissatisfactory was the time dimension that they have to wait to get their work done. So, this problem should be eliminated to have a higher range of satisfied customers.