General Banking at BASIC Bank Limited.

EXECUTIVE SUMMARY

Internship Program of MBA under the faculty of Business studies of Jahangirnagar University an obligatory part for all students. The report includes the practical knowledge and information observed and obtained during the program. My project was determined General Banking at BASIC Bank Limited. This report is mainly divided into two (2) broad parts. Part One has two chapters. These are as follows-Chapter-one covers with background, objectives, methodology and limitations of the study. Chapter-two Is concentrated on overview of the bank as well as the branch and also their performance analysis. Part Two contains practical experiences gathered during the orientation program. It is again divided into three chapters. These are as follows-Chapter-three Contains General Banking operations, observed in the main branch Chapter-Four Contains findings information of the branch & analysis various statistical technique to measure the performance and Chapter-Five Consists of Conclusion and Bibliography.

Background of the Report:

All businesses are concerned with earning profit through selling either a product or rendering service. A bank doesn’t produce any tangible product to sell but does offer a variety of financial services to its customers. General banking is the starting point of all the banking operations. It is the department, which provides day to day services to its customers.

Now a day, general banking, loans and advances and foreign trade plays a vital role in banking. The general banking consists of deposit, pay order, Term Deposit Account,  FDR Accounts, SND Accounts, Clearing house, Clearing activities of branches, Inward and Outward clearing, Endorsements, Outward Bill for Collection  (OBC), Telegraphic Transfer (TT), IBCA, IBDA.

Now we are living in the age of competition at anything in any places. From that tendency recently Education is also in the age of competition. So the procedures and standards of teaching are upgraded by different universities and institutions in our country. In respect to that, internship is mandatory for our MBA program offered by The University of Jahangirnagar. This program is a partial fulfillment of our MBA curriculum. To do so I decided to complete my internship in BASIC Bank Limited. In connecting, HRD of BASIC Bank Limited sent me to the Dhanmondi Branch and assigned to prepare this report. I was sent to BASIC Bank Limited to familiarize with day to day affairs of the bank from 21^th November 2012 to 21^th January 2013. This report has been prepared in the light of practical as well as theoretical knowledge. Also it is prepared under the guidance & supervision of Mr. Nilanjan Kumar Saha, Assistant Professor, Department of Finance & Banking, Jahangirnagar University.

Objectives of the Report:

The prime objectives are –

• To fulfill the course requirement of MBA Program;
• To examine the overall general banking systems of BASIC Bank Ltd;
• To acquaint with day–to–day functioning of service oriented banking business;
• To examine various types of deposit;
• To analysis the general banking activities through various statistical methods;

Methodology of the study:

Methodology includes direct observation, face-to-face discussion with employees of different departments, study of files, circulars, etc. and practical work. In preparing this report, both primary and secondary sources of information have been used.

For collecting primary data, I had to ask the respective officer (s). Others are like –

• Direct communication with the clients of BASIC bank Ltd, Dhanmondi Branch;
• Exposure on different desk of the bank such as customer care, Loan & advances, general banking ;

The secondary sources are –

• Annual Report of BASIC Bank Ltd.;
• Periodicals published by the Bangladesh Bank;
• Different publications regarding banking functions

Analysis method: My research is a Descriptive research. I have selected this topic and at first make an exploratory research. I just collected data and made the report.

Limitations of the study:

Despite all out co-ordination from the bank officials, I have faced some limitations. The notable some of these are:

• Learning all the banking functions within just Three (3) months was really tough.
• Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.
• Sufficient records, publications were not available as per my requirement.
• 3 months are very short time to prepare this.
• Lack of opportunity to work in all the departments for a longer time.
• Up to date data are not available.
• Lack of opportunity to visit more than one branch

Evolution of the Word ‘Bank’:

The word bank originated from Italian word “Banca” which means long bench. In ancient time Italian Jews merchant used to do business of lending money by sitting on the bench. It is assumed that the word “bank” derived from the word Banca. To meet the expense of war of 1171 one type of credit certificate was launched in Italy at an interest rate of 5%. It was called as Monte in Italian language and Banke in German language when German language was widely used in Italy. As a result the word Banke gradually changed to the word Banca from which the word Bank originated.

The Emergence of Modern Banking:

The linguistics and etymology suggests an interesting story about banking origins. Both the old French word “Banque” and the Italian word Banca were used centuries ago to mean a bench or moneychangers table. This describes quite well what historians have observed concerning the first bankers, who lived more than 2000 years ago. They were money changers, sitting usually at table or in a small shop in the commercial district, aiding travelers who came to town by exchanging foreign coins for local money or discounting commercial notes for a fee in order to supply merchants with working capital.

The first bankers probably used their own capital to fund their activities, but it was not long before the idea of attracting deposit and securing temporary loans from wealthy customers became a source of bank funding. Loans were then made to merchant’s shippers and landowners at rates of interests low as 6 percent per annum to as high as 48 percent a month for the riskiest ventures! Most of the early bank was Greek in origin.

The banking industry gradually spread outward from the classical civilizations of Greece and Rome into northern and western Europe. The early bank in Europe were places for safe keeping of valuable items (such as gold and silver bullion) as people were fearing loss of their asset due to war, theft, or expropriation by government. When colonies were established in North and South America, old world banking practices were transferred to the new world.

Banking in Bangladesh

 Since early British rule, the history of banking in Bangladesh territory shows that the traditional trade-networks developed before the banks invaded rural areas. And the banking services have slowly flourished in Bangladesh territory. Even today, in many places, moneylenders provide credit services.  Small shopkeepers and businessman use informal credit at high interest rate, traditional Mahajan,s money lending business gradually declined due to expansion of bank and the micro credit programs of NGOs, Cooperative banks and government agencies.

Public Sector Banks:

During the liberation war in 1971, the economic, political, and social systems including the banking system were severally damaged. At that time, all big and medium financial institutions except two small banks had their head office in the West Pakistan. The non-Bengali owners and managers of the financial establishments that operated in East Pakistan had abandoned them. After independence in 1971, the new government had to take over management and ownership of all such institutions. The bank Nationalization Order 1972 was issued to nationalize banks and financial institutions (except those incorporated abroad) in order to control chaos in the field of ownership, party bureaucracy, the intelligentsia, and pressure group. By several orders six nationalized commercial banks (NCB), one industrial bank (BSB), one agricultural bank (BKB), and one industrial development financial institution (BSRS) were created

The banks and financial institutions, which originated during the Pakistan period and were merged, and renamed and functioning after independence of Bangladesh. In the year 1983, the government allowed private sector to participate in the banking business. The Pubali Bank and the Uttara Bank were denationalized in 1985, due to non-profitability. This action reduced the number of NCB’S to four.   Such restructuring of public sector banks was in order to play their role in industry, agriculture, exporting, self –employment etc.

Private commercial banks:

Taking advantage of the liberalization policy of the government regarding participation of private sector in the banking business, a number of private banks were established in –and –after 1983. With the emergence of private banks in Bangladesh, a competitive situation in the sector has been created. Now there are 52 commercial banks in Bangladesh. The emergence of private banks has added a new dimension to the banking system in Bangladesh. The private commercial banks show a steady growth in terms of number of branches deposits and advances.

Foreign banks:

The state bank of India opened one branch July -September 1975. In 1975, the four foreign banks operating in Bangladesh were: American Express International Banking Corporation, Grind Lays Bank, The Chartered Bank and the State Bank of India. Now there are more than 15 foreign banks.

The historical process shows the influence of the various social groups in the governance of the country and the banking systems. During the British regime banking was concentrated only in the areas of commercial and administrative importance. With the independence of India and Pakistan, the banking sector had to be reshaped. The government of Pakistan had to take major initiatives for the growth and extension of banking services to the different sectors of the economy and also to different regions.

Independence of Bangladesh was yet another major change in the banking sector. Immediately after independence of Bangladesh, banks started their operations under full government ownership. Later, some of the banks were denationalized and the government allowed banks to be established in the private sector. Banking operations have been diversified and a number of specialized banks were established. Development finance institutions also exist to supplement the banking sector in an effort to boost the economy; government has been following a pragmatic policy relating to the banking sector in Bangladesh.

Despite many odds and problems now facing banking sector, it is expected that it would be able to meet up the challenges ahead, particularly of the nest century.

HISTORY OF BASIC BANK LTD.

Bangladesh Small Industries and Commerce (BASIC) Bank limited is a banking company registered under the Companies Act 1913. It was incorporated under the Act on the 2^nd of August 1988. The bank started its operations from the 21^st of January 1989. It is governed by the Banking Companies Act 1991. The bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing Small-Scale Industries (SSIs). At the outset, the bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being nonfunctional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of BASIC bank on 4^th June 1992. Thus, the bank is state-owned. However, the bank is not nationalized; it operates a private bank as before.

BASIC bank is unique in its objectives. It is a blend of development and commercial banks. The Memorandum and Articles of Association of the bank stipulate that 50 percent of loan able funds shall be invested in small and cottage industries sector.

MAIN FUNCTIONS OF BASIC Bank Ltd

The Bank offers:

   Term loans to industries especially to small-scale enterprises.

   Full-fledged commercial banking service including collection of deposit, short term trade finance, working capital finance in processing and manufacturing units and financing facilitating international trade.

   Technical support to Small Scale Industries (SSIs) in order to enable them to run their enterprises successfully.

   Micro credit to the urban poor through linkage with Non –Government Organizations (NGOs) with a view to facilitating their access to the formal financial market for the mobilization of funds.

In order to perform the above tasks, BASIC works closely with its clients, the regulatory authorities, the shareholders (GOB), banks and other financial institutions.

CORPORATE STRATEGY OF BASIC Bank Ltd

   Financing establishment of small units of industries and businesses and facilitate their growth

   Small Balance Sheet size composed of quality assets

   Steady and sustainable growth

   Investment in a cautious way

   Adoption of new banking technology

ORGANIZATIONAL GOALS OF BASIC Bank Ltd

   To employ funds for profitable purposes in various fields with special emphasis on small-scale industries

  To undertake project promotion to identify profitable areas of investment

  To search for newer avenues for investment and develop new products to suit such needs

   To establish linkage with other institutions which are engaged in financing micro enterprises

   To cooperate and collaborate with institutions entrusted with the responsibility of promoting and aiding SSI sector.

ORGANIZATIONAL STRUCTURE OF BASIC Bank Ltd

To achieve its organizational goals, the bank conduct its operation in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy making body. The management looks after the day to day operation of the Bank.

 RESOURCES AND CAPABILITIES OF BASIC Bank Ltd

BASIC bank is well prepared to and capable of meeting the demand for a broad range of banking services. It has got adequate resources, both human and physical, to provide the customers with the best possible services.

Physical and Technological Resources

A great deal of investment for developing the physical resource base of the Bank has been made. BASIC has its presence in all the major industrial and commercial hubs of Bangladesh in order to cater to the needs of industry and trade. At present, there are fifty three conveniently located branches throughout Bangladesh. There are four branches in underway.

Major features of these branches are:

• Fully computerized accounts maintenance
• Well decorated and air conditioned facilities
• A fully operational computer network which is currently being implemented. The work of Local Area Network (LAN) and Wide Area Network (WAN) installation having reliable and secured communication between the branches and the Head Office is in progress to facilitate any Branch Banking and ATM services.
• Money counting machine for making cash transactions easy and prompt.
• Forty out of 55 branches are authorized dealers of foreign exchange. This facilitates speedy disposal of transaction of exports and import trade.
• A group of professional bankers to render personalized services.

MONETARY / FINANCIAL RESOURCES

Like any other financial intermediaries, BASIC is no exception in performing its core functions viz. mobilization of fund and utilizing such fund for profitable purposes.

A.   Mobilization of fund

The main sources of fund for BASIC are:

i.          Deposit

ii.         Borrowing

i.          Deposit

Deposit is the mainstay of BASIC Bank’s sources of funds. The following includes the usual types of deposits of the bank:

a) Current Deposit

b) Savings Deposit

c) Term Deposit

ii.         Borrowing

Apart from deposit, BASIC received funds from:

a) Bangladesh Bank

b) Asian Development Bank (ADB)

c) KfW (Kreditanstalt fur Wieder-aufbau, Credit Institution for Reconstruction), a German Development Bank

All of these funding sources are for relatively longer period. Receiving the credit lines from ADB and KfW has been recognition of BASIC’s highly satisfactory performance.

B. Utilization of Fund

BASIC utilizes its funds in accordance with its organizational goals and corporate strategy. Main use is for lending to industrial and trade sectors. Maintenance of cash and statutory liquidity reserve with the Bangladesh Bank covers 20 percent of demand and time liabilities. Placement of funds in NOSTRO ACCOUNTS to handle foreign trade and investment in money market is also done as usual.

HUMAN RESOURCES

BASIC bank has a well-diversified pool of human resources, which is composed of people with high academic background. As of 31^st December 2000, the total employee strength is 453. The strength is 345 excluding the menial staff. Most employees are comparatively young in age yet mature in experience. And also their level of education comprises 55.07 % post-graduate, 42.90 % graduate and rest under graduate. BASIC has been investing its resources with a view to developing an efficient and professional work force. Two approaches are mainly in this regard: Training and Fresh Recruitment.

Training: Intensive training program, on a regular basis, is being imparted to employees of both management and non-management levels to meet the challenges in the banking industry and to help employees to adapt the changes and new working conditions. Human resource is the main driving force and quality human resources are the key sources for the success of today’s banking business. Keeping this view in mind and recognizing the importance of training for professional excellence BASIC Bank Ltd. has established its own training institute in 2005 with modern facilities. In 2008 the institute arranged 27 training courses and provided training to as many as 517 employees of the bank. To cater to the needs of the employees and to keep pace with demand of the time it will continue to arrange regular training courses in the days ahead. During the year 2008, a total of 602 employees of the Bank were provided with training in various fields. Out of them 11 employees participated in training courses held abroad. In 2007 total 122 employees of various stages were given promotion which is almost 17.00 percent of total.

Fresh Recruitment: The bank follows a strict recruitment policy in order to ensure that only the best people are recruited. The bank, so far, has recruited four batches of entry-level management staff, all of whom have excellent academic background.

Progress at a Glance (2006-2011)

(Source: BASIC Bank Main Branch)

2.10 SWOT Analysis

SWOT ANALYSIS OF BASIC BANK’S CREDIT POLICY

Strength:

• The main advantage of BASIC Bank’s credit policy is its conservative approach. The entire policy is designed in a way that, it could always avoid default risk. In the credit policy all kinds of documentation process, appraisal techniques are designed so that the bank officials can take no excess risk.
• In the credit policy top management are assigned adequate power to monitor the credit operation at the branch level.
• In most of the government bank we have seen that, the head office is not contributing more for the supervision of the loans and advances. But in BASIC a handful number of top officers are engaged in monitoring day to day operation, which is reducing the number of errors.
• In the credit policy it has been clearly specified that, 50% of the total fund should be invested in the in small and cottage industries for short time. And we all know short-term loans are more secured than the long term. And also small investors are much more honest than the large investors. So for this policy BASIC Bank is getting competitive advantage.
• All the investors know that, it is very difficult to get loan from BASIC Bank. They have to satisfy the concerned body and should be very optimistic about the future of their project. If any kind of loopholes exist in their procedure it will be very tough for them to get any loan from the bank. This policy gives the bank small but strong borrower portfolio that is important to keep the classification rate low.
• Not only that, BASIC Bank is the one of those banks, which never takes any kind of, uncovered risk in dealing with foreign trade. They provide the foreign trade facilities only to their prime clients.

Weaknesses:

• The technique that is being used in credit analysis is not adequate. Now-a-days it is not possible to justify a client by analyzing only their projects production capacity. It is important to analyze their financial statement and market share and make sure that the project will last for long. BASIC’s credit policy does not clearly specify these techniques.
• In the credit policy no emphasis is given for mobilizing deposit from private sources. But private sources are the least costly sources and using it is possible to earn more profit from investment.
• Consumer credit is the most profitable business now from where bank can derive a lot of service charge. BASIC does not provide such credit.

Opportunities:

• Bangladesh is a country where it is very difficult to establish hi-tech industries because of high capital asset cost. So the government of Bangladesh and other international bodies are convincing to establish small and cottage industries first which will make the ground for huge investment. As a result the numbers of small industries are increasing day by day. And BASIC  has a huge chance to progress if it can hunt this sector.

• Not only that, international organizations and donor countries are continuously convincing the government of Bangladesh to attenuate the high classified loan rate. Now they are including the clause of reducing the classified rate before sanctioning donation or loan to the country. As BASIC bank is successfully keeping the classification rate low it is possible that, it will get international assistance from ADB and from other organizations. And obviously these funds will have lower interest rate by which the bank will be able to earn handful profit.

Threats:

• From 1990 the core concept of banking in Bangladesh is changing. Now banks are going to the customer with services and try to convince them by it. Most of the banks have increased its service range significantly to attract its clients and to satisfy them properly.
• Along with that, now the banks are trying to accumulate more funds from the middle class group. Alike insurance company most of the banks also have employed marketing agents to convince the mass. All of said situation is happening because of the increase in number of banks in the country and competition among them.
• BASIC bank is not very keen in marketing its product. And in credit policy, it also not specified significantly. Not only that, it does not have any marketing plan to grab the market after 5 or 10 year. So if the bank does not change this attitude its profit will be reduced for the abnormal competition in the market.
• And also if the government sells its entire share to the private sector the bank will face huge pressure from its competitors.

Matching of Strength and Opportunities with Weaknesses and Threats

• In the credit policy we have found everything all right except the techniques used for screening the client. BASIC bank has some very efficient and highly educated professionals who can easily solve the problem if they concentrate on the issue. So the weakness can be eliminated easily through its strength.
• The credit policy of BASIC has been perfectly designed depending on the government funds and assistance. But as it is sure that, government will sell its share in near future, BASIC has to revise its credit policy by considering alternative source of fund. International funds can be alternatives for government source if BASIC can continuously reduce its classification rate.
• Alike other bank BASIC can enforce its marketing operation to grab the small savings of the middle class. And a small change is enough to do so as the strength of the present credit policy is capable to take any pressure.

So from the SWOT analysis of the credit policy of the bank we have found that, the credit policy of BASIC Bank is sound with some exception. And by small revise of the policy is can be the best policy that can lead the bank to the peak of success.

eneral Banking Department performs the core functions of the bank. It deals day to day transactions. It takes the deposit from the customer and meets the customer demands for cash by honoring their checks. Broadly, it has the following core heads-

1. Accounts Opening Section
2. FDR And Ancillary Services Section
3. Local Remittance Section
4. Collection And Clearing
5. Cash Section
6. Accounts Section.

ACCOUNTS OPENING SECTION

Banker-customer relationship begins with the opening of an account by the customer. Opening of an account binds the same into a contractual relationship. But the selection of customer is very crucial. In fact, fraud and forgery of all kinds start by opening of an account by the customer (s). So, the bank takes extra care in its selection. One of the basic functions of commercial banks is to accept deposits. For accepting deposits both demand and time, BASIC Bank Mirpur branch offers the following types of accounts-

A.        Demand deposits (Withdrawable on demand)

1. Saving Bank Account
2. Current Account

B.        Time deposits (Payable at a fixed date or after a period of notice)

1. Fixed Deposit Receipt (FDR)
2. Short Term Deposit (STD)

 Types of Accounts with Terms and Conditions

This part covers only following types of accounts-

1. Savings Bank Account
2. Current Account
3. Short Term Deposit (STD) Account

Savings Bank Account

This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a week. Heavy withdrawals are permitted only against prior notice. Some Important Points are as follows-

• Minimum opening deposit of Tk.1000/= is required;
• Check book issuing balance is also the same (Tk. 1000/=);
• Withdrawal amount should not be more than 1/4^th of the total balance at a time and limit twice in a week;
• Interest rate is 7.5% including 10% excise duty on interest rate. Interest paid twice in a year depending on monthly minimum balance. When money is deposited within 5 of the following month, then it is counted as monthly minimum balance. If the interest amount is more than Tk. 200 or more, the bank is paid the amount to the customer. Otherwise it is treated as Bank’s Shadow Profit;
• Can open the A/c individually or jointly. In case of joint a/c, Joint signature is required if not authorized otherwise;
• Minor (For withdrawal purpose), lunatic, insolvent, pardanshin women (Not mandatory) cannot open such type of account.

Current Account

Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval. It is most suitable for private individuals, traders, merchants, importers and exporters, mill and factory owners, limited company’s etc. Some Important Points are as follows-

• Minimum opening deposit of TK.5000/- is required;
• There is no withdrawal limit. But in case of large amount say 2 lac or more, bank requires one day before notice;
• No interest is given upon the deposited money;
• The Banker is under an obligation to repay these deposits on demand. So, they are called demand liabilities of a Banker.
• The primary objective of such account is to save big customers like businessmen, join stock companies, public authorities, etc. from the risk of handling a lot of cash.
• The cost of providing current account facilities is considerable to the Bank as they make payments and collect the bills, drafts, and checks for any number of times daily. The Bank is therefore, do not pay interest on current deposits. At the same time, BASIC bank charges Tk. 200 as Incidental fee;

  Minimum Tk. 1000 balance must always maintain all the time;

  Minor can not open such type of account;

  Account holder can enjoy SOD or even TOD facility.

STD (Short Term Deposit) Account

Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice. In BASIC, customers usually give an instruction that their current account will be debited whenever its deposited amount crosses a certain limit and this amount will be transferred to the STD account. The deposit should be kept for at least seven days to get interest. The interest offered for STD is less than that of savings deposit. Interest is calculated based on daily minimum product and paid two times in a year. Interest rate is 6.00% including 10% excise duty on interest rate.

COMMON FORMALITIES REQUIRED FOR EVERY ACCOUNT

• Duly filled up Account Opening Form.
• Introducer’s signature on Account Opening Form to be verified by Manager under full signature.
• Two copies of passport size photograph of account opener(s) duly attested by the introducer.

Note: Mandate or authority form filled up by an individual (s) or account openers are to be obtained if the customer wants to authorize another person to operate an account on behalf of him/ them.

Documents Required For Each Account Separately

In case of Proprietorship Firm-

• Declaration of proprietorship.
• Trade licence.
• Tax Identification No (TIN) directed by Bangladesh Bank.

In case of Partnership Firm-

• Account must be opened in the name of the firm.
• The firm should describe the names and addresses of all partners.
• Board Resolution signed by all partners to open the A/C.
• Photocopy of partnership deed duly attested by notary public.
• Letter of partnership duly signed by all partners.
• Trade licence from municipality.
• Tax Identification No (TIN) directed by Bangladesh Bank.

In case of  Private Limited Join Stock Company-

• Memorandum of Association and Articles of Association duly certified by Chairman or Secretary.
• Board Resolution duly certified by Chairman/ Secretary authorizing to open the A/C with the bank and mentioning the name of the person (s) who will operate the A/C as per provisions of Articles of Association.
• Certificate of incorporation duly certified by Chairman or Secretary.
• List of all Directors with Designation, Address & Specimen Signature duly certified by Chairman or Secretary (Form XII).
• Latest copy of Balance Sheet
• Power of attorney.
• Tax Identification No (TIN) directed by Bangladesh Bank.

In case of  Public Limited Join Stock Company–

• Photocopy of Registration certificate certified by Chairman or Secretary.
• Memorandum of Association and Articles of Association duly certified by Chairman or Secretary.
• Board Resolution duly certified by Chairman/ Secretary authorizing to open the A/C with the bank and mentioning the name of the person (s) who will operate the A/C as per provisions of Articles of Association.
• Certificate of commencement duly certified by Chairman or Secretary.
• List of members of Managing/ Executive duly certified by Chairman or Secretary.
• Tax Identification No (TIN) directed by Bangladesh Bank.

In case of  Societies/Clubs-

• Certified copy of Registration certificate under the societies Registration Act, 1962.
• Certified copy of Resolution for opening and operation of account.
• Certified copy of Bye-laws & Regulations/ Constitution.
• Power of Attorney.

In case of Cooperative Society–

• Copy of Bye-law duly certified by the Co-operative officer.
• Up to date list of office bearers.
• Resolution of executive Committee as regards of the account.
• Certified copy of Certificate of Registration issued by Registrar, Co-operative Societies.

In case of Non-Government College/ School/ Madrasha, –

• Up to date list of the Governing Body/ Managing Committee.
• Copy of Resolution of the Governing Body/Managing Committee authorizing opening and operation of the account duly certified by Gazetted Officer.

In case of Minor’s account-

• Putting the word “ MINOR” after the title of the account.
• Recording special instruction of operation of the account.
• The account opening form is to be filled in and signed by either of the parents or the legal guardian appointed by the Court of Law & not by the Minor.

Issuing Cheque Book

For New and Old Account

Fresh checkbook is issued to the account holder only against requisition on the prescribed application form. In case of old account, requisition made on the prescribed requisition slip attached with the checkbook issued earlier. Generate a security no randomly for every check leaf by Manager or authorized person. Prepare the instrument with respective security no on the back of each leaf and signed by the authorized person. Make necessary entries in Check Issue Register. Finally issue the checkbook for client (s).

For Duplicate Check Book

Duplicate checkbook in lieu of lost one is issued only when an A/C holder personally approaches to the bank with an application agreeing to indemnify the bank for the lost check book. Verify signature of the A/C holder with the specimen signature card. Series number of lost checkbook is recorded in the stop payment register and caution should be exercised to guard against fraudulent payment.

 Account Enquiry

A customer can obtain the statement of his A/C by submission of an application in prescribed balance enquiry receipt. Normally it is supplied two times in a year. In addition, customer can know his current deposit position informally.

Transfer of an Account

Account holder may transfer his account from one branch to another. For this, he/she must apply with proper reason to the manager of the branch where he is maintaining account. Manager then requests to the manager of that branch where the A/C holder wants to transfer his account. Besides, he also sends original copy of account opening form and SSC (Specimen Signature Card) and photocopy of application for transferring the account with the balance remained in the account.

Closing of an Account

 An account may close-

• When the customer desirous to close the account.
• When the account is inoperative for a long time.
• In case of customer’s death, insanity or insolvency.
• When the court on that particular A/C issues Garnishee Order.

To close an account, the checkbook is to be returned to the bank. BASIC bank charges Tk. 200/= for the same by debiting the amount from his account and rest amount is then paid to the customer. Necessary entries are given to the account closing register and computer. Finally make sure that A/C holder is completely free from all dues.

FIXED DEPOSIT RECEIPT (FDR)

FDR Account

Fixed deposits are time deposits or time liabilities. These are the deposits in which an amount of cash is deposited in Bank for a fixed period specified in advance. Before opening a Fixed Deposit Account a customer has to fill up an application form which contains the followings-

• Amount in figures
• Beneficiary’s name and address
• Time period
• Rate of Interest
• Date of Issue
• Date of maturity
• How the account will be operated ( singly or jointly)
• Signature (s)
• F.D.R. no.
• Special instructions (if any)

After fulfilling the above information and depositing the amount, FDR account is opened and a FDR receipt is issued and it is recorded in the FDR Register which contains the following information-

• FDR account no.
• FDR (Fixed Deposit Receipt ) no.
• Name of the FDR holder with address
• Maturity period
• Maturity date
• Interest Rate

CASH SECTION

Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the branch. This section deals with all types of negotiable instruments and it includes vault, used as the store of cash, instruments. The vault is insured up to Tk.20 lac. Insured amount yet to be enhanced to Tk. 40 lac. Operation of this section begins when the banking hour starts. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a more secured place. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remains in the cash counter is put back in the vault and known as the closing balance. If the cash stock goes beyond this limit, the excess cash is then transferred to BASIC bank main branch. The main functions of this section are-

1. Cash Receipt
2. Cash Payment

Cash Receipt

Cash receipt procedure is given below-

• The depositor first fills up the Deposit-in-Slip.
• Depositor deposits the money.
• Officer receives the money, counts and then enters in the Cash Receipt Register, and finally signs with seal and dates the deposit-in-slip.
• Slip is then passed to another officer, who enters the receipt details like serial no, amount, etc. in his register, signs the slip and keeps the banks’ part of the slip. Other part is given to the depositor.
• At the end of the day, entries are cross checked with the register kept at the cash counter to see whether the transactions are correct or not.

Accounting treatment–

When cash received, the following entries are made-

          Cash A/C……………………….Debit

          Party’s A/C………………………….Credit

Cash Payment

Some important check points for making the payment are as follows-

Endorsement

Endorsement is done by putting signature of the drawer on the back of the negotiable instrument for the purpose of negotiation. By ‘blank endorsement’, an order instrument is made as ‘bearer’. BASIC bank limited endorses the instrument in the following ways-

1.  Crossing

Generally two types of crossing are practiced, namely- General Crossing and Special Crossing. Basically it gives a direction to the paying bank not to pay the check amount over the counter. General crossing includes ‘A/C payee’ crossing only. Drawing two parallel and transverse lines do it. On the other hand, special crossing is like general crossing but in addition bank name is also mentioned. This gives the direction to the same to pay the check only to the banker, whose name appears in the crossing or to his agent.

Cash payment procedure is given below-

• Customer first deposits the check (s) to the cash section. Authorized individual checks whether it is materially altered, proper endorsed, crossed or not. Being satisfied the total requirements; he passes it to the computer for checking the balance. Operator verifies the check leaf security no. If matched, then operator signs. Otherwise noticed to the individual for stop payment;
• Authorized officer is then verified the signature with the Specimen Signature Card (SSC);
• Send the instrument to the computer section once again for posting;
• Cash officer is then asked the bearer to sign on the back of the instrument. At the same he just enters the payment details in his register and pays the money to the bearer;
• At the end of the day, these information must be tallied with computer postings to ensure the correctness of payment.

ACCOUNTS SECTION

Accounts department maintains all records of transactions and all types of statement. At the end of transaction hour all concerned section sends vouchers of transactions to this department. Accounts department compares all figures/ amount, contents of transactions with supplementary statement prepared by computer. If any discrepancy arises regarding any transaction then this department reports to the concerned department. Following are the activities of accounts department:

• To record all transaction in the cash book.
• To prepare daily, weekly, monthly, half-yearly and yearly fund position.
• To prepare all kinds of statements related to Bangladesh Bank, Head office and National Board of Revenue (NBR).
• To prepare monthly salary statement, provident fund statement and administrative expenditure statement.
• To make charges for different types of duty.

FINDINGS, RECOMMENDATIONS AND CONCLUSION

Dhanmondi Branch, BASIC Bank Ltd. is very in the point of customer satisfaction. A good no. of Govt. a/c is maintained satisfactorily that increases deposit position of the branch. Besides, I have observed some irregularities. Based on my observation some recommendations have made to improve the prevailing situation of the branch. The observations and pertinent suggestions are as follows –

1. In case of account opening, terms and conditions are not printed on the back of the A/C opening form. But if it is so, applicants open their A/C being fully aware of the same. At the same time, bankers can easily follow the terms and conditions strictly.

1. There is a provision of depositing a minimum amount of money at the time of opening an account and also maintain a minimum balance all the time. But it is not strictly followed, particularly for prospective customers. I think the amount should be fixed at a level that is not altered from customer to customer.

1. Every account opening must have some documentary requirement (s). Without proper documentation, sometimes accounts are opened. Bankers should take special care in this arena to safe guard his position.

1. Trade license must be renewed by the a/c holder every year and that copy should be deposited in the branch. But getting certified copy is very tough after opening the a/c. I think bank can impose some sort of monetary penalty to the a/c holder if he/ she fails so intentionally that ultimately motivates his/ her to update the documentary requirement.

1. Letter of thanks is to be sent to the introducer as well as to the a/c holder to confirm the authenticity of a/c holder and to get feedback from the introducer if finds any dissimilarity by him. But it is not practiced. It should be implemented soon for the aforesaid reason. In addition, it also builds up banker-customer relationship.

1. No customer is allowed to issue any PO or TT until he has no a/c with BASIC Bank Limited. This policy is being followed according to the Bangladesh Bank Order to restrain ‘Hoondi’ business.

1. Demand liabilities particularly cash payment is made within maximum 5 minutes that helps the branch to attract more customer (s), doing banking business with the bank. This is handled with personal care.
2. Flexible banking hour attracts more clients doing banking transactions with the branch. In some cases, customers, coming outside the banking hour can honour the cheque without delay. As per Bangladesh Bank Order, transaction hour is now-

9am to 2 pm (During Romadan) and

10 am to 4 pm  (Normal)

On the other hand, personnel dissatisfaction is also observed. To resolve this problem, bank can introduce some monetary awards/ incentives to the cash related people.

Conclusion

Banking sector is the chief financial Intermediary in a country. It is a very challenging institution and in age of globalization and free trade, the process and the system of running a bank is changing. BASIC Bank Limited already managed itself with this changing environment. The company strategies are clear and concise. Their return is pretty good. If the company goes this way, one can expect that in near future BASIC Bank Limited may become one of the top performers.

From the discussion it can be concluded that BASIC Bank Limited playing an important role in the economic development of the country and it has a prospect future to have a very good position in the banking sector. To do this it should increase promotional activities to reach to the people easily. From the learning and experience point of view I can say that I really enjoyed my internship at BASIC Bank Limited. from the very first day.