General Banking and Credit Operations of Mercantile Bank

Major purpose of this report is to analysis on General Banking and Credit Operations of Mercantile Bank Limited. Other objectives are to know about the over all performance of MBL and the services provided by the Bank. Report also focus on about the automation system  and about the documents of credit also the process of loan disbursement. finally identify the problems and weakness of the Bank and suggest the way to overcome the various problems.

Introduction:

General Bnking is the most common department for every bank, which is Designed to provide Financial services to the People. General Banking sector includes Customer Services, Cash, IT and Accounts Department. This department is the center for other department of a bank. Every kinds of activities of a bank initiated by this department.

Credit Operation by the bank means spreading out credit accounts and deposits among a wide variety of customers, including large and small business accounts, different industries, and house holds with a variety of sources of income and collateral. The main objective of Credit Operation is to diversify the risks associated with investments.

Today’s fast growing companies need business banking services that fully meet their expectations for speed, convenience, efficiency and security. To ensure their optimum level of satisfaction, regarding their necessity for this type of affluent banking services different types of local as well as multinational banks are coming up with diverse and dynamic corporate banking services.

As a graduating student of Bachelor of Business Administration, International Islamic University Chittagong, I have to complete my internship submitting an empirical project report of any business related topic. This is an overwhelming opportunity for me to work as a part of a professional business organization. In this regard I feel honored to work with the consumer banking section of Mercantile Bank Limited, Bangladesh, One of the the leading bank in the country. It is a great opportunity for me to establish my internship project paper based on the General Banking and Credit operations of the bank.

Objectives of the Report:

A study without objectives cannot reach the destination. This internship program was also directed to some particular targets. The main objective of this study is to know about the Mercantile Banks Credit operation. For searching the overall loan related job, I had to find out the general Banking procedure at this branch. So the objectives of the study conducted in the Mercantile Bank are mentioned as under:

• To know about the over all performance of MBL.
• To know the services provided by the Bank.
• To be acquainted with the practice of modern banking business.
• To gather knowledge about banking products and services under the competitive environment.
• To know about the automation systam perform by MBL.
• To identify the problems and weakness of the Bank
• To suggest the way to overcome the various problems.
• To know about the documents of credit.
• To know the process of loan disbursement.
• To know the process of loan collection.

Analyzing the Strengths, Weakness, Opportunities & Threats of Mercantile Bank Limited, Khatungonj Branch, Chittagong:

SWOT analysis is very important term in the managerial practice in the each and every organization. Though Mercantile Bank is a Business Organization so SWOT analysis is mandatory for the Bank. It helps the bank to reconstruct different sorts of shortcomings of the Bank. For the SWOT analysis we can figure out ongoing scenario of the Bank. So to have a better vies of the present banking practice of Mercantile Bank Limited, Khatungonj Branch Chittagong, I did the SWOT analysis.

SWOT analysis is an acronym for Strangth, Weakness, Opportunity and Threat.

Strength:

Strength is a companys internal capabilities that give company competitiveness.

Weakness:

Weakness is something a company lacks or does poorly (in comparison to others) or condition that puts it at a disadvantage.

Opportunity:

Opportunity means a company gets the competitive advantages outside the firms operation.

Threat:

Threat means a company loses the competitive advantages due to the external factor.

In the SWOT analysis two factors act as Prime movers:

• Internal Factors, which are prevailing inside the concern, Which include Strength and Weakness.
• On the other hand another factor is External factor, Which act as Opportunity and Threat.

Internal Analysis:

Strength:

1. Efficient and adequate Human resources.
2. Satisfactory performance.
3. Good reputation in locality.
4. Providing better services in comparision to that of other private Banks.
5. Suitable location.
6. Interior Design and Decoration.
7. Suitable environment.
8. Online Banking system.

Weakness:

1. High rate of interest loan.
2. Insufficient corporate level clients.
3. Training is not sufficient.
4. Product veriety is not competetive.
5. SME loan disbursement is not satisfactory level.
6. Limited number of officer in General and Personal Banking deparment.
7. On-line charge is high.

External Analysis:

Opprtunities:

1. Increasing the corporate clients.
2. Good Communication Network.
3. If higher liability pricing are provided it is possible to mobalize a good volume of deposit.
4. Technology support improve service standard.
5. Providing new products.

Threats:

1. Unhealthy competition by other Bank.
2. Offering higher deposit rate by other private Banks.
3. On-line system operation is risky.
4. Existance of huge branch of different Bank.
5. Government imposes Tax and VAT on Profit.

General Banking

Introduction:

General Banking is Dsigned to provide Financial services to the People. General Banking sector includes Customer Services, Cash, IT and Accounts Department. Customer Service department provides various services to their Clients. Account Opening and Closing, Travel related services, reply client quarries about different department, Control & documentation of client file requirement is the majore function of this department. Customer service department is the most importent department of Mercantile Bank Ltd. Because of Customers knows various information, queries, product and service of the Bank from this department. Since bank is a financial organization, so as a part of service organization this deprtment should satisfy their client with quality services. Banking goodwill will be effected if customer service department can not satisfy to their client properly. For this reason customer service department should take care of every client. More over customer service department is playing a vital role in Banking services.

Customer Service Department:

Accepting Deposits in MBL:

Accepting deposits is one of the two classic functions of the commercial Banks. Most of the commercial banks view with one another in tapping the savings of the public by means of different kinds of deposts. Almost everyday a new kind of deposit is being introduced. Incase of Mercantile Bank the deposits that are accepted may be classified into:

1. Demand Deposits.
2. Time Deposits.

Demand Deposits:

These deposits are withdrawable without notice, e.g. current deposits. MBL accepts demand deposits through the opening of

1. Current Account (CD)
2. Savings Account (SB)
3. Short Term Deposit (STD)
4. Resident Foreign currency deposit account

Time Deposits:

The amount in this acount is payable only after stipulated time. The following accounts are under time deposit acount.

1. Fixed deposit account.
2. Bearer certificates of deposit (BCD).
3. Non-resident foreign currency deposit.

Procedeure to open an Account:

Before opening of a current or savings account, the following formalities must be completed by the customer.

• Application on the prescribed form.
• Furnishing Photographs.
• Introduction by an account holder.
• Putting specimen signatures in the specimen card.
• Mandate, if necessary.

After fulfilling the above formalities, MBL provides the customer a pay-in-slip book and a cheque book.

In case of Joint account (Two or more persons)-

Operational instruction of the account

• Signature (S)

In case of pertnership firm-

• Partners signature
• Partners name

The following formalities along with the documents are to be completed before opening an account:

1. Two copies of Photograph of the account holder(s) duly attested by the Introducer.
2. Account to be introduced properly.
3. Introducers signature on account opening form to be varified by an officer under full signature.
4. Letter of thanks to account Holder(s) and Introducer to be sent under registered post.
5. In case of Joint Account, operational instruction are to be signed by the Joint Account Holders.

In case of Proprietorship Firm-

• Declaration of Proprietorship.
• Trade License form Municipality.
• Account Agreement form.
• Mandate if Operation by third party is to be allowed.

In case of Limited company-

• Certified true copy of the Memorendum & Articles of Association of the company.
• Certificate of Incorporation of the company for inspection and return with a duly certified photocopy for banks records.

Certificate from the Registrar of the Joint Stock companies that the company is entitled to commence business (In case of Public Limited co. for insfection and return) along with a duly certified Photocopy for banks records:

1. Latest copy of Balance Sheet.
2. Extract of Resoltion of the Board, General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/Managing Director of the company.
3. List of Directors with addresses (a latest Photocopy of the form).
4. Authorized signature.

General conditions of Governing Current/Savings Account-

• Minimum balance to be maintained in current account Tk. 2,000/- and in Saving account Tk. 1,000/-.
• A suitable instructon by an introducer acceptable to the Bank is required prior to opening an account.
• Recent photographs of the account openers duly attested by the Introducer must be produced.

Issue of Duplicate Cheque Book:

Duplicate cheque Book in lieu of lost one should be issued only when an A/C holder personally approaches the bank with an application in the prescribed pro-forma agreeing to indemnify the bank for the lost cheque book. Fresh cheque book in lieu of lost one should be issued after varification of the signature of the A/C holder form the specimen signature card and on realization of required excise duty only with prior approval of Manager of the branch. Cheque series number of the new cheque should be recorded in ledger card signature card as usual. Series number of the lost cheque book should be recorded in the stop payment register and caution should be exercised to guard against fraudulent payment.

Closing of an Account:

The closing of an account may happen,

• If the customer is desirous to close the account
• If the Bank finds that the account is in-operative for a long duration.
• If Garnishee order is issued by the court on bank.

To close the account, the cheque book is to be returned to the bank. Bank 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.

Remittance:  Functions of remmitance:

• T.(Telegraphic transfer)
• D.(Demand draft)
• O.(Pay order)
• IBC(Inward Bill for collection)
• OBC(Outward Bill for collection)
• Pay slip

Telegraphic transfer (T.T):

Telegraphic transfer T.T. may be done via telegram, telex, telephone, fax as desired by the remitter. But the most commonly practiced is the telephone, telex and Mobile. The drawer and the payee are required to had the account with the bank in oreder for this transaction to take place. T.T is issued against cash, check, and letter of instruction. The client must be paid T.T commission, telex charges, and VAT.

Pay order (P.O):

Pay order is done in inter city in any Bank and any branch. The processing of pay order and D.D is same. The entries involved are:

Clients account……………..Dr

Pay order……………………………….Cr

There are a commission and vat account chraged for the issuing pay order.

Demand draft (D.D):

Demand draft is an instrument issued by a particular branch of a bank to pay certain amount of money by the bank. It is the safest and most acceptable media and bankers note. Commission, vat and postage are charged on issue of DD entries for issuing DD.

Cash/client a/c………………Dr

Income a/c (postage)………………..Cr

Commission on Remittance….………Cr

Charges for TT and DD:

• 1 taka to 25000 taka commission is 25 taka.
• More than 25000 taka 1 taka charge for every thousend.
• 15% vat is payable by the following commision.
• For TT telex charges is 40 taka.

Charges for Pay order:

• 1 to 50000 taka commission is 25 taka.
• 50000 taka to 1 lac commission is 50 taka.
• 1 lac to 10 lac commission is 100 taka.
• 10 lac to unlimited commission is 500 taka.
• 15% vat pay by follow commission.

IBC:

IBC means Inward bill collection. IBC is issueing in the local city of the internal bank.

OBC:

OBC means outward bill collection. OBC is issueing out of the city of the internal bank.

Cash Department:

Cash department is a vital part of General Banking. It deals with cash and cash equivalent. Cash department has the following objectives:

• Ensuring security of deposit.
• Providing prompt customer service.
• Cash maintenance.

Functions:  Cash department deals with the following activities:

• Fund Receipts.
• Fund payment.
• Maintain the fund status and volt.
• Cash Management.
• Wasa Bill, T&T Bill and other utility bill collection.
• Prize Bond purchase and sale.
• Different types of Lottery buy and sale.
• IPO’s Application (Receipt)

IT Department:

IT department deals with the following activities:

• Day start by auto voucher printing.
• Posting of transaction’s (Clearing,Transfer,Cash)
• Day End (Updating all daily transactions)

Accounts Department:

The accounts department is the most delicate and the most confidential department in a bank. The main task of this department is to record all kinds of transaction of the branch, confirming accuracy, preparing statement etc. Under the computerized banking system, today the clean cash statement and the supplementary statement and also party ledger vouchers are printed from computer.

Functions:

To preared and maintain the daily input journal, proof sheet and validation report.

1. To prepare flash report daily liquidity position.
2. Other miscellaneous work of the department.
3. Daily statement of affairs.
4. Test agreed is another arrangement maintained for control purpose.
5. Test control agreed is most important for the banks internal control.
6. To prepare in chime and expenses statement.
7. To maintain trial balance and financial accounts system.
8. To maintain and prepare maturity balance sheet.
9. Daily posting of voucher issued by all departments.
10. TO prepare clearing diiference balance.

Statements prepared by Accounts section:

1. Sector wise balance position.
2. Maturity balance sheet.
3. Foreign currency statement.
4. Branch trial balance.
5. Liquidity position.
6. Income expenses statement.

Clearing Department:

It is a department which is completely involve with the Bangladesh Bank. By collection of a cheque in any other bank through Bangladeh Bank is called clearing. Every bank gets the cheque from different bank which is send to the zonal branch of the bank (Agrabad Branch). Zoanl branch make a sheet of this cheque and put the total amount on the cheque. The entire related officer is meeting in the clearing house in Bangladesh Bank. And every bank have to submit their cheque list by the floppy disk to the Bangladesh Bank. The officer distributed the cheque to the related bank officer. Here on Bank is getting the cheque which is classifying (Cheque, Pay order, DD) by branch and total amount of the cheque are putted in the back side of the cheque. This is the end of the morning session.

At the evening session the officer have to distributed the disowner cheque which is being distributed to the branch representative.

Causes of disowner a Cheque:

• Insufficient fund,
• Payment stopped,
• Refer to drawer,
• Not arranged for,
• Show the wrong date,
• Signature of related officer,
• Cheque submitted by wrong way,
• One cheque is going to another bank,
• To submit wrong account number,
• Effects not cleared may be presented again,
• Amount in word and figures differs,
• Drawers signature differs,etc.

Receiving Cheque for collection:

In Mercantile Bank, cheques of its customers are received for collection from other banks. In case of receiving cheque, following points should be checked very carefully-

1. The cheque should not carry a date older then the receiving date for more than 6 months. In that case it will be a ‘stale cheque’ and it will not be allowed for collection. Again the date of cheque should not be more than 1 day forwards than receiving date.
2. The amount in figures and words in both sides of the pay-in-slip should be same and it should also be same with the amount mentioned in figures and words in the cheque.
3. The name mentioned in the cheque should be same in both sides of the pay-in-slip and it should the same with the name mentioned in the cheque.
4. The cheque must be crossed.

Register maintained by General Banking:

• Inward and outward dispatch registers.
• Pay order,DD and TT issuing and payment register.
• Cheque clearing register.
• IBDA register.
• Account opening register.
• Cheque issuing register like as CD, SB, and STD.
• IBCA issuing and receiving register.
• Cheque return register.
• IBC and OBC register.
• Voucher register.

Credit Operations

Credit division is one of the important part of the Bank. This division deals with asset selling of the bank. Generally financial institutions like commercial banks pool fund from society in terms of deposit and channel this fund in terms of credit to different firms in business community as well as to individuals with deficit fund in the society. And this facility is generally known as Loan. So in a broader sense bank infer that bank is providing solutions to the business as well as to the individuals for their financial problems.

Continuous Loan:

Here the customer avail the loan facility continuously for a specific time period. And the customer can enjoy the facility at any time within the period. And also noted here thaw within stipulated limit customer can enjoys the facility as much as he desires. Thats why this loan arrangement is also termed as revolving loan. This very much popular form of loan facility in the business community.

Two most popular continuous loan are as follows:

Over Draft (OD):

This is a loan arrangement between bank and customers by which the customer can draw money over and above his credit amount in his account up to certain limit as approved by the bank. This loan is for one year time and renewable upon maturty. Generally on maturity the customer clear all debit balance of this account and request the bank to renew the facility and then bank proceed on to renew the facility. Usually collaterals secure this facility and also guarantee as the bank ask for. This loan is termed as Secured over Draft (SOD) when the facility is secured by cash equavalent i.e. FDR certificate, DPS certificate or any other savings instrument. This type of loan i.e. Overdraft crafts the majore portion of total loan portfolio of the bank. At present overdraft facility is around 20% of total loan facility of principle office branch. And present interest rate charged on this loan ranges between 12-14% in MBL. This loan is disbursed in clients present current account as maintained with the bank. And interest on this loan is calculated on daily basis but charged in customer account quarterly.

Cash Credit (CD):

This is an arrangement to meet the firms working capital needs. Usually this loan is provided to procure raw materials and to complete it in finished goods. Therefore usually the security of this loan is the subject matter for which the loan is arranged for  i.e. the finished goods stock. Some other securities are also kept for this facility like savings instruments. This facility generally extends to the business firms rather than individual. Cash credit depending on its natur classified in the following types:

• CC Hypothecation: In this arrangement the possession of goods (Subject matter of the loan) goes with the client or borrower but the ownership is in banks hand. And client repays loan from the sales proceeds by turn. Here primary security is the goods purchased by the sanctioned loan and secondary security may be cash equavalent instrument or any mortgage property.
• CC Pledge: Here both ownership and procession of the goods subject matter of the loan lies wih the bank. And upon prior payment the client release goods from banks custody and sales accordingly.

Demand loan:

This loan is repayable by the borrower on demand. That means for this loan the borrower i bound to pay back on demand of bank. And hence this loan become due after one day of its drawing. Bank providence a wide range of loan under this head as follows:

• Bill Purchase: May be local (LDBP) or Foreign Bill (FDBP). In this arrangement bank facilitates the client to channel cash flow to the business houses by purchasing or discounting its bill on its export proceeds. And usually this amount is given for a specific period depending on the maturity of the export At present in principle office branch MBL this loan covers 5% of the total advances.
• Force Loan: Some time the bank is forced to create some loan for some specific purpose for instance to wash out PAD (describe later on here) within 21 days of its creation if there is no LTR or LIM arrangement and the customer fails to pay in cash. Another one may be claim on Bank guarantee. In this situation the bank is forced to create a loan and make payment to the beneficiary.
• PAD (Payments Against Documents): This the another type of demand loan. This is a special arrangement of bank to settle the L/C payment for all sight L/C upon arrival of non-discrepant L/C documents. Then the bank open PAD and make a payment to the nagotiating bank and then with the next 21 days the bank washed out PAD by receiving cash for the customer in case of cash L/C or by crediting LTR or LIM when prior arrangement is made accordingly. At prasent PAD covers less than 1% of total advances in principle office branch. This volume is low as it washed out away within 21 days of its creation.

Term Loan:

This loan is given for a specific term and usually repaid in equal monthly Installment (EMI) or interest paid quarterly and principal at the end of the loan tenor. Depending of the loan tenor this is classified as:

• Short-term loan: The tenor of this loan is less then one year.
• Mid Term loan: The tenor of this loan is between one to five years. This type of loan is most preferred by both bank and the borrower. This loan is comprises with consumer credit, Agro credit, Micro credit etc. and present this loan is less then 1% of total advance in principle office branch.
• Long Term Loan: The tenor of this loan is more that fivr years. This is not viable for the banker as here the fund is locked up for a long period and hence risk exposure is higher that other term loans. At present total term loan in POB is arround 41% of total advances.

Beside these there are some other funded facilities as follows:

• LTR (Loan against Trust Receipt): This facility is extended to the importers who import goods by opening L/C from our bank. Usually the importer, under the arrangement obtains the documents of tattle of goods and clear the goods from customs and arrange to sell out the goods and form the sales proceed the client retire the documentary credit LTR. LTR is executed by a trust receipt means that the customer will held the subject matter i.e. the goods or its sales proceed in trust of the bank until the full payment of this loan. This trust receipt creates the banker lien on the goods and sales proceeds. Usually this loan is arranged for a maximum time of 180 days. And the sales proceed of the goods held in the trust must be deposit in the Bank to repay the LTR outstanding irrespective of the period of the trust receipt. In principle office branch LTR covers around 26% of total advances. And this loan is reported in classified loan listing under the head of continuous loan.
• LIM (Loan against imported Merchandise): It is like as LTR and used to make a payment of import bills. But here the goods are held in banks go down under its possession and ownership and bank allow the customer to discharge goods a certain portion and make payment from the sales proceeds so on.
• Packing Credit: Some times by the lien of master L/C bank may extend loan amounting 10-15% on master L/C value to the exporter to complete packing formalities and ship the goods to the importer. And upon receipt of Master L/C proceeds this loan is adjusted. This branch at present covers 0.5% 0f its total loan on this.

Besides these funded facilities, means those loans for which bank already channeled this fund, there are some no funded arrangement for which bank dont lock its fund immediately but will make it in future time. For instance:

• Letter of Credit (L/C): Its an undertaking of issuing Bank on be half of the importer favouring the exporter to pay certain some of money under certain terms and conditions.
• Bank Guarantee: The guarantee of the bank on behalf of this customer to make payment to the beneficiary if the client fails to make payment.
• Acceptance: Undertaking by the bank to pay a bill drawn on the bank on behalf of its client on maturity.

Loan Processing procedures for a loan application:

Now the question, how bank will go ahead with a loan proposal received from any of our customer. The choronological illustration is given here below:

Preliminary Steps (Relation building):

Bank have to know the customer. If the applicant is new to us then we let him o open bank acount and continue transaction for certain time and upon good refletion of transaction the bank will proceed with the loan propasal. Having an account or opening an account is must be proceed for any loan request from any customer. Whatever the bank want to facilitate the cusomer depends on our knowlege on the client. And an account helps up to enrich our knowledge on our client. And if the transaction in the customer account reflects healthy and sound views then bank procceds with the loan application to the next step as follows:

Appraisal of credit request:

Bank go through in-depth study of the credit request. The prime motive of this study is to identify the purpose of the loan and ability of the borrower to implement the purpose and payback the loan amount along interest to the bank. And for the study bank collect various information on the applicant vide the following forms:

• Loan Application form duly filled up.
• Sponsor Director information.
• Personal Net Worth statement of all directors.
• Project feasibility study by the client.
• Annual audited financial statement of the client.
• Copy of land valuation report in case of property mortgage.
• Papers on land and building or any other property.

Drafting of Proposal:

Then Bnak draft the proposal for the loan facility to the customer and send this proposal to the Head Office through Zonal Head. Usually a loan proposal covers infomation on the following areas:

• Name and address of the applicant.
• The level of facilities and its limit. It may be for composite limit that comprises a compact range of loan facility to the business or may be for a single facility.
• Backgrounf of the business house that soght for loan.
• Nature of industry and nature of business, capacity of the business and background and particulars of owners or directors.
• Description of Management.
• Sister concerns or group information.
• Bank relation.
• Account turnover and business performance with us.
• Banks past earnings and proposed earnings from this relation.
• Business performance with other banks.
• Liability with us and other banks.
• Financial highlights for last three years.
• Brief analysis of financial strength.
• Eastimation of working capital requirements.
• Brief description of the project.
• Specific perticulars of the proposed facilities.
• Branches visit report.
• Security arrangement and documentation status.
• Finally comments and recommendation.

And above proposal is send to head office along with Risk Grade Score sheet, Copy of land valuation report, FSS, Copy of audited accounts of the applicant & copy of feasibility report of the project.

Then head office will evaluate the proposal and upon due approval send the proposal to the branch.

Documentation:

Upon receipt of the approval from the head office bank will send the approval to the customer and request this to inform us in written his due acceptance of the approval and bank will proceed to the documentation. It is a very important part of credit activities. Failure of proper documantation may lead to a loss of bank in case of clients failure to repay it. If all the charge documents are not maintained properly then bank may fail to take any legal action against the defaulter.

Necessary charge documents for different types of loan are as follows:

• Demand Promissory Note (DP Note).
• General loan and Collateral Agreement.
• Personal guarantee, in form of continuing guarantee.
• Letter of hypothecation.
• Letter of pledge.
• Letter of continuity.
• Letter of Lien.
• Letter of counter indemnity(For non funded loan).
• Personal guarantee of all director of a limited company.
• Resolution of meeting of board of directors for a limited company.
• Trust receipt (For LTR).

And bank also perform required arrangement for collaterals. Usually collaterls are in following forms for a loan security:

• Hypothecation of stock of raw materials and finished goods.
• Duly executed trust receipt.
• Lien on export L/C contract.
• Lien on the documents against cash incentive receivables from Bangladesh Bank.
• Lien on important documents.
• Registered mortgage on industrial plots or land property as security. First charged on fixed and floating assets.
• Pledge of FDR or other saving instruments.

Disbursement of the loan:

Having completely and acurately, prepare the necessary loan documents, The loan officer ready to disburse the loan to the borro Bankers loan account. After disbursement, the loan needs to be monitored to ensure wheather the terms and conditions of the loan fulfilled by both bank and client or not.

Monitoring and Recovery:

After disbursement the most vital task of bank is to ensure timely collection of the loan repayment. And for this proper monitoring is required. And bank also prepare report on classified loan each month and send it to Bangladesh Bank through corporate office. The classified listing and provision are as follows:

Classifid loans are non-performing assets of bank and are a matter of great concern. Monetary authority also is cautious about these loans. So the rule is to keep certain percentage of these loans as provision. This provision requirement varies on the basis of phases of classified loan as stated above.

Reporting:

This department prepares various report on daily, Bankekly, Monthky, Quarterly, and Yearly basis and provide those report for internal uses, head office and to the Bangladesh Bank through Head Office.

Credit the most crucial sensitive division of a bank. So it must be competent enough to choose the right place to lend others money and ensure sustainable growth of the bank as Bank as the society at a whole. Otherwise it will cut long term loss of the bank that may lead to threat to the existance of the bank. So utmost care and sincerity must be placed in choosing the business house to extend loan facilitate.

Findings Analysis

During the period of my internship program I have observed and collected data regarding General Banking Procedure and Credit Operations of Mercantile Bank Ltd, Khatungonj Branch. After completion of my internship I have to understood that the function and customer perception, openion, satisfactory and dissatisfactory regarding on General Banking service and Credit Operations of MBL.

Economic Position of Mercantile Bank Ltd:

Income & Expenditure:

Now below the table showing the Income and Expenditure of Mercantile Bank Ltd: [Figure in Million]

From the above graph, we have to understood that the Income and Expenditure volume of Mercantile Bank is continuously increasing. The income amount was Tk.1,588.67 million in 2003, Income amount was increasing  Tk.2,120.82 million at 2004 and it has increased to Tk.4,450.90 million at 2007. While the expenditure amount was Tk.1,115.82 million in 2003, the expenditure amount was increasing  Tk.1,509 million at 2004  and it has increased to Tk. 3,159.30 million at 2007.

Total Loans & Advances And Deposit:

Table: Showing the Loans & Advances And Deposit amount of MBL: [Figure in Million]

Now from the above graph, we have to understood that the Loan & Advances and Deposits of Mercantile Bank is continuously increasing. The Loan & Advances was Tk.10,775.95 million in 2003, the Loan & Advances amount was increasing  Tk.17,669.29 million at 2004 and it has increased to Tk.31,877.86 million at 2007. While the Deposit amount was Tk.16,285.19 million in 2003, the Deposit amount was increasing  Tk.22,385.19 million at 2004  and it has increased to Tk.39,348 million at 2007. So, form the above analysis we have to understood that MBL Loan & Advances and Deposit is increasing day by day.

Interest Income on Loans & Advances and Interest paid on Deposit & Borrowings: [Figure in Million]

Above graph shows that the Interest income on Loan & Advances and Interest paid on Deposits & Borrowings of Mercantile Bank is continuously increasing. The Interest income on Loan & Advances was Tk.996.90 million in 2003, the Interest income on Loan & Advances amount was increasing  Tk.1,596.12 million at 2004 and it has increased to Tk.4,450.90 million at 2007. While the Interest paid on Deposits & Borrowings amount was Tk.558.45 million in 2003, the Interest paid on Deposits & Borrowing amount was increasing  Tk.991.50 million at 2004  and it has increased to Tk.3,159.30 million at 2007. So, form the above analysis we have to understood that MBL Interest income on Loan & Advances and Interest paid on Deposits & Borrowings  is increasing day by day.

Other Findings:

• The customer servicing system and process is satisfactory in MBL. The customers are satisfied with their providing services.
• The function that is performing by this branch is systematic.
• Process of Loan disbursement is also well and systematic.

Problem Identification:

• For opening an account different forms have to be filled out with the same information like name, address, nationality, date of birth etc. This account opening procedure takes a lot of time, Which is bouring for clients. Also this procedure is harmful for the employee. Because it takes a long time to supervision.
• Bank personals sometimes delay to detect and to report about problem loans to proper authority.
• Computer facility for every employee is not avilable in cash department and other. So it takes a long time for online transaction customers.
• MBL is not performing fully automated banking service. So, MBL can not provide the customer quick service than other bank like as DBBL,SCB,HSBC bank etc.
• There is a very few number of ATM booth in Chittagong as well as in whole country.
• The formalities of getting ATM card are very lengthy process.
• MBL takes longer time to analyze credit risk grading.

 Recommendations:

With a view to ensure exciting services and opening up the new window of progression as well as uplift, we should like to present the MBL, Khatungonj Branch, Chittagong with several recommendations like:

• Bank may follow the fully automation system for more efficient customer service.
• Bank may update their online system for better service.
• They may open new ATM booth at different commercial and social center as like as DBBL.
• Bank may make league with some other banks to us ATM booth of those bank with the ATM cards of Mercantile Bank.
• They may motivating employee with special bonus for increasing efficiency.
• The less important steps may be removed from documentation process.
• Bank may minimize some steps from credit risk grading (CRG) process.
• MBL may increase the number of branches. So that it can reach the remote areas and provide them banking facilities.
• At last, In our country most of the people are islamic minded. So the bank has need to initiate the Islamic banking system.

Concluding Remarks:

At present banking industry is being governed by tight rules and regulations set by Bangladesh Bank, the central bank of the country. Mercantile bank is successfully operating their operations and expanding it gradually. Now a days many private bank are emerging with a lot of attractive features. To capture and maintain this lucrative position Mercantile Bank needs to compete in very competitive environment.

Therefore, Mercantile Bank should move ahead of its rivals by applying the recommendations provided above. Certainly, it will help reducing the gap (or dissatisfaction) & retaining existing customers. And ones this dissatisfied customers become satisfied, it will not only help to retain existing customers, but it will also help to drag new customers through positive word of mouth communicatons. Also, it will help to attract new segments with different needs. Thus MBL should focus on increasing its market share by providing quality service as promised & and at the same time, providing new product /services that would satisfy customer need even more; creating a competitive advantages over its competetors.