General Banking of Bank Asia Ltd

­­ CHAPTER 1

INTRODUCTION

Bangladesh is a new comer in the world of modernized banking sector. Public sector was the dominant player in the market after liberalization. All financial activities were occupied by the public sector, where insurance was the only privatized sector. As the need for the investment was acute for the rising industry sector, Govt. allowed the private sector to enter the banking industry. The financial sector reform was taken in 1990s, which are very recent development. Like in many other emerging market economies, commercial banks in the Bangladesh economy are to face an increasing competition for their business in the coming days. Their business will no longer remain easy as they had earlier. In the beginning of 1990’s, seven more private commercial banks were permitted, of which of course, two were reconstituted in new names after their collapse. These banks have become known in our economy as the second-generation banks. In a third wave, a dozen more banks are permitted by the Bangladesh Bank and a number of new foreign banks entered into our economy. These banks have become known in our economy as the third-generation banks.  Now, we can say, our commercial banking business, which is an important segment of the financial sector, consists of two dozen private commercial banks, fourteen foreign banks, four NCBs. The other segment of the financial sector is represented by about two dozen insurance companies, six non-banking financial institutions, few leasing companies and twenty newly permitted merchant banks. Bank Asia Limited is one of the few banks permitted by the Bangladesh bank in the late 90s; 11 other banks permitted earlier .These banks are known as the third generation banks and fortunate to remain immune from the bad loan culture. However, the performance of these banks are not the same, the Bank Asia Limited remained as one of the top performers among them.

The banks with modernized banking facilities, termed as ‘third generation bank’ like Bank Asia are providing improved services both to the investors and to the customers.

For preparing my internship report I was assigned to Bank Asia, Corporate Branch. This report has depicted the overview of Bank Asia and especially focusing on how the credit department is being operated.

ORIGIN OF THE STUDY

This internship report has been prepared as part of the requirement for successful completion of the Internship program. The primary objective of this assignment was to have exposure to the business world and acquire practical work experience. I was assigned for doing my internship in Bank Asia Limited for the period of 3 month starting from September 1, 2010 to November 30, 2010. During my intern period in the Bank Asia Limited, Corporate Branch, I worked under all departments of the bank. I worked under the supervision of Mr. Syed Md Jarzis FAVP & Sub Manager, for his assistance and guidance in completing this report. My report was A Study on General Banking of Bank Asia Ltd., which was assigned by my supervisor Dr. Md. Serajul Islam, Professor of Department of Institute of Business Studies of Dhaka University.

STATEMENT OF THE PROJECT ISSUE

A Study on General Banking of Bank Asia Limited

 SIGNIFICANCE OF THE STUDY

Knowledge and learning become perfect when it is associated with theory and practice. Theoretical knowledge gets its perfection with practical application. As our educational system predominantly text based, inclusion of practical orientation program, as an academic component is as exception to the norm. This Internship Report is an important partial requirement of BBA program of University of Dhaka. Recognizing the importance of practical experience, University of Dhaka has introduced a three months practical exposure as a part of the curriculum of BBA program. In such state of affairs the present aiming at analyzing the experience of practical orientation related to an appraisal of Bank Asia Limited.

 OBJECTIVES OF THE STUDY

The basic objective of the report is to see the process of General Banking in Bank Asia Limited and how Bank Asia Limited is handling General Banking.

 The primary objective of the report is-

• To examine the process of General Banking and performance evaluation of Bank Asia Limited.

The specific objectives are-

• To evaluate the General Banking Policies of Bank Asia Limited.
• To explore various sectors and aspects of General Banking of Bank Asia Ltd.

 SCOPE OF THE STUDY

Scope refers to the area of coverage. This report covers the major departments of the Banking system, organizational structure, and background, basic functions of the various divisions and the performance of the bank. For the project part, the study area and observations have been limited to Credit Department, types of credit provided, Credit management and performance evaluation of credit department of Bank  Asia Limited.

LIMITATIONS OF THE STUDY

There were certain limitations regarding the study that is summarized below:

• Deficiencies in data required for the study.
• Field practice varies with the standard practice that also created problem.
• Not able to collect information from the head office.
• For enough information waiting for the annual report of 2009.
• Sometimes the concerned personnel may not provide enough time due to rush banking hours.
  • Lack of knowledge in collection of information.
    • Eliciting required information from busy officials within limited time period hampered the data collection and analysis.
    • It was quite tough for me to concentrate and complete such a complex analysis within a short time span.
    • Dearth of secondary information in the relevant area acted as major constraint to the report preparation.
    • The author’s lack of in-depth knowledge on the credit management was a problem for the report preparation.

CHAPTER 2

METHODOLOGY

SOURCES OF INFORMATION

Information used in this report has been collected from both primary and secondary sources. Primary data were collected mainly through the writer’s observation of the credit approvals and deposit techniques, informal interviews of executives, officers and employees of Bank Asia Limited.

Majority of the information were collected from the secondary sources, which include books, publications, reading materials, internet and reports published by Bank Asia Limited and some other internship report and registers of different departments and CRM manual of Bank Asia Limited and Stelar which is the computer system of the Bank Asia Limited.

 Primary Sources

Primary data are measurements observed and recorded as part of an original study. When the data required for a particular study can be found neither in the internal records of the enterprise, nor in published sources, may it become necessary to collect original data. For the completion of this report, the primary sources of data are –

• Discussion with officials of the Bank Asia Ltd.
• Experts’ opinion and comments,
• Observations of the officials.

Secondary sources

The data which has already been collected by others, such data are called Secondary data. For this internship report, the secondary data are collected from the below sources-

• Procedure manual published by the Bank Asia Limited
• Annual reports of the Bank Asia Limited from year 2003-2009.
• Relevant books, Newspaper, journals etc.
• Published  of different products,
• Office circular and other published papers,
• Website of the Bank Asia Limited; www.bankasia-bd.com

DATA ANALYSIS 

This is a Analytical report mainly aiming to show the loan-deposit system and maintaining techniques and amounts of Bank Asia Limited. The data gathered from both primary and secondary sources were arranged orderly to get a clear picture of the Bank Asia’s credit management policy and depository system. The study includes both qualitative and quantitative analysis of loan-deposit system. Based on the observational information writer also tries evaluate and analyze the problems involved in various phases of the credit process and deposit process.

 DURATION OF OBSERVATION

12 weeks within the period of three months internship program.

CHAPTER 3

BANK ASIA LIMITED AT A GLANCE

HISTORY OF BANK ASIA

“For A Better Tomorrow” Is the mission of Bank Asia Limited through a contemplation of assuring a professional term of Bankers is running the day-to-day operation of the Bank.

The journey of Bank Asia Limited for excellence in Banking as a schedule commercial Bank began in 27^th November 1999 as a public Limited company incorporated in Bangladesh under the companies Act 1994. It was the time when a rapid economic development in the country concurrent with urbanization and life style change created demands for new banking products and services.

Bank Asia Limited is one of the most successful banks among the third- generation private banks. The bank has successfully entered its seventh year of operations. With professional and dedicated team of management having long experience, commendable knowledge and expertise in conventional and modern banking, the bank has achieved success among its peer group within a short span of time. Since its humble beginning in 1999, it set milestone by acquiring the business operations of the Bank of Nova Scotia of Canada, first in the banking history of Bangladesh. It again repeated the performance by acquiring the Bangladesh operations of Muslim Commercial Bank Ltd. (MCB), a Pakistani bank. This has added to the strength and courage of the bank. With all recourses, the management of the bank family believes that the bank would be able to encounter problems that may arise both at micro and macro economic levels.

Within a short span of time Bank Asia has established itself as one of the fast growing local private banks. It has at present a network of seventeen branches serving many of the leading corporate houses and is gradually moving towards retail banking. Its other significant delivery channel is the shared ATM Network. Bank Asia has 21 ATMs as a member of ETN (E – cash) along with eleven other banks. In 2003 the Bank again came to the limelight with oversubscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in our capital market’s history and its shares commands respectable premium. Bank Asia has been actively participating in the local money market as well as foreign currency market without exposing the Bank to vulnerable positions. The Bank’s investment in Treasury Bills and other securities went up noticeably opening up opportunities for enhancing income in the context of a regime of gradual interest rate decline. Bank Asia is maintaining it’s competitiveness by leveraging on its Online Banking Software and modern IT infrastructure. It is the pioneer amongst the local banks in introducing innovative products like SMS banking, and under the ATM Network the Stellar Online Banking software enables direct linking of a client’s account, without the requirement for a separate account(1). Currently Bank Asia is bank with a network of 21 branches including 4 rural branches.

BANK ASIA’S VISION

The Bank is pledge-bound to serve the customers and the community with utmost dedication.

Vision Statement

• To have a poverty free Bangladesh in course of generation in the new millennium, reflecting the national dream.

• To build a society where human dignity and human rights receive the highest consideration along with reduction of poverty.

 BANK ASIA’S MISSION

 Bank Asia has developed a mission statement which reads as follows-

• To assist in bringing high quality service to the customers and to participate in the growth and expansion of the national economy.
• To set high standards of integrity and bring total satisfaction to the clients, shareholders and employees.
• To become the most sought after bank in the country, rendering technology driven innovative services by the dedicated team of professional.

TRADE MARK OF BANK ASIA LIMITED

The Trade Mark of the Bank Asia is the Identification of the Bank Asia Limited. The Symbol in the Trade Mark Shows BA, B Stands for the Bank And A Stands for the Asia.

SLOGAN OF THE BANK ASIA LIMITED             

“For A Better Tomorrow’’ is the Slogan of the Bank Asia Limited. As the Vision is to make Bangladesh a poverty free country and Mission is to serve the best to satisfy the client, Shareholders and also satisfy the employees the slogan is go through with the vision and mission.

 ORGANIZATION STRUCTURE

Headed by the Chairman, the Bank Asia Limited has 15 (fifteen) members in its board of directors position with one President & Managing Director and one Company Secretary. Their names are given below in Table: Names and Positions of the Members of Board of Directors of the Bank Asia Limited.

CORPORATE INFORMATION

• Letter of Intent received:                                24/02/1999
• First meeting of the Promoters held:               15/04/1999
• Certificate of Incorporation received:             28/09/1999
• Certificate of Commencement of Business:    28/09/1999
• First meeting of the Board of Directors held:   01/10/1999
• banking license received:                               06/10/1999
• First Branch license received:                         31/10/1999
• Inauguration of Bank:                                    27/11/1999
• Date of Publication of Prospectus:                  29/06/2003
• Date of IPO Subscription:                              23/09/2003, 24/09/2003
• Date of First Share Trading in Bourse:            08/01/2004
• Date of Agreement with CDBL:                     20/12/2005
• Date of First Scrip less Trading:                     30/01/2006
• Number of Promoters:                                      22
• Number of Directors:                                       12
• Number of Branches:                                       44
• Number of  SME centers                                  09
• Islamic wings                                                    04
• Brokerage branches                                           02

Board of Directors

Bank Asia has been launched by a group of successful entrepreneurs with recognized standing in the society. The first Board of Directors of the bank was constituted with thirteen Directors. M Syeduzzaman, former Advisor to the government in-charge of the Ministry of Finance and First Chairman and now the Exe Chairman of the Bank Asia Limited.

Management Team

The BAL Management Team comprises of a group talented people and each of them comes with a resourceful working background and is committed in leveraging their experiences to take BAL to greater heights by ensuring top line revenues with dynamic capabilities.

President & Managing Director is the chief of the management team who is now Mr. Erfanuddin Ahmed.

Other then the President, the remaining Management Team members are

DMDs          2

EVP           10

SVP             9

VP               9

FVP           12

AVP          41

FAVP        70

There are a good number of SEOs are also in the Management Team. This mix of people is persistent to provide unparallel service to its customers, come up with timely and innovative products and services and to enhance the capabilities of its people while emphasizing on the latest technology. This team is to drive the business to maximize the operational excellence and efficiency through acquisition of talent, developing systems, processes and people and through blending in of these to let customers revel in with fulfillment and permanence.

 Staff List of Corporate Branch

Table 3.6.5: Staff List of Corporate Branch

 Bank Asia Branches

Bank Asia Limited has got 44 (Forty four) branches in total in Bangladesh to offer its services to the customers. Of them fourteen are rural branches situated in outside metropolitan areas.

CHAPTER   4

GENERAL BANKING OF BANK ASIA LTD.

Generally all sources of activities of a Bank are done in the General Banking. For the better work activities and for better service this General Banking is divided in several desk activities. These desks are treated as some areas like Customer Service, Teller Operation, Clearing, Accounts and Reception.

The Bank Asia Limited has the following departments, which includes the whole operations of the bank. As I have been an intern in the corporate branch of Bank Asia, I am discussing on the departments of that branch.

CUSTOMER SERVICE & REMITTANCE DEPARTMENT

There are several tasks that are performed in the Customer Service & Remittance Desk. We can divide the major tasks of Customer Service & Remittance department as the following:

• Opening New Accounts
• Tasks related with FDR & Sanchaypatra
• Remittance
•   Others

 Opening New Accounts

The most usual way (And the prerequisite in most of the cases) for a client to enter into a deal with the bank is through an account with the bank. To do most of the deals, the client must have an account with the bank. The Customer Service & Remittance desk just that job of opening new accounts. For that, the available accounts are a) Savings, b) Current, c) Short Term Deposit – STD, d) Fixed Deposit – FDR (3)

 Types of Deposit Account

By opening an account, the bank and the account holder establish a banker-customer relationship between them. They also agree to abide by some terms &conditions to enjoy some rights and hold some responsibilities. Generally, deposit accounts maintained by the banking sector are below.

• Current account:

 Current account is a account there a customer can deposit money and withdraws   several times in a working day. In this account there is no interest rate. Customers are just maintaining this kind of account for transaction. This account is open for the industrials or for the business purpose. Individuals are not interested to open this kind of account. Against this account customer can make overdraft on this account. Bank fix the overdraft limit, up to this limit account holder can take the advantage. But against the overdraft amount, customers will have to pay 15%-17% interest. Customer can withdraw money by the cheque. For the current account there is a cheque book which contain  # 50 leaf cheque book.

• Savings account:

Savings accounts are open for the purpose of savings. Generally, Customer can deposit and withdraws money one time in a single working day. Now a days in the savings account deposit and withdraws money more then one time by the permission. Some times without any permission like by the Credit card a customer can withdraw money several times in the whole day. Customers receive the interest against there savings. They get the rate of interest of 6% in a economic year. For the government 10% on the interest amount are deducting as an income tax. For the maintaining of savings account the Bank Asia deduct Tk.300 in six month tenure and vat is 45 so that yearly Tk.690.For open a savings account customer will have to deposit at least Tk.500. for the withdraws of money account holder can use the cheque or there ATM card.

 The Bank provides customer a 10 leaf cheque book and an ATM card for the requisition of the customer.

For receiving checkbook MICR charges 30 tk is deducted from account.

 Other Special Deposit Scheme

• Deposit Pension Scheme

The deposit pension scheme is a kind of savings scheme where customers save certain amount of money in every month and after the maturity they will receive a good amount of money at a total. Deposit monthly installment ranging from Tk. 500/- to Tk.10, 000/- and on maturity the holder receives a handsome amount as per table below:

Table 9: Deposit Pension Scheme (2)

Features of this product are:

• At the maturity the 10% income Tax should be deduct form the maturity amount and then pay to the customer.
• Form start the scheme to the maturity, the customer will get advantage of Tax rebate.
• In case of premature liquidation, the applicable interest rate is savings Bank account rate.
• Installment to be made available in Savings Account in due time.

Short Term Deposit (STD) Accounts:

This type of account is opened and operated for short term and for specific purpose. It is also an interest bearing accounts and rate of interest is 6%. The rates of interest on such types of deposits are lower because the bank holds the fund for a short period only. Normally, interest is paid on daily product basis. Individuals, Firm, Companies, and Associations may open this account.

• Fixed Deposit Receipt (FDR) account:

There are people who have surplus funds which will not be required by them in near future .Such people want to keep funds in a bank for a specific and long period to earn more interest .The duration of these accounts varies. For different duration interest paid

is also different. As the duration increases, rate of interest also increases. Fixed Deposits are kept with the bank for a fixed amount of time and the depositor gets a certain amount of interest from it. After the period is over, the depositor can encash the deposit and take the whole amount or may again open another FDR.

Fixed deposits are important sources of funds to the bank. These add to the stability and growth of the bank’s deposit structure.

Interest rate:

For 1 month           :               8%

For 2 months period:                 8%

For 3 months period:                 9.50%

For 6 months period:                 9.50%

For 1 year period & above:       9.50%

 Tasks Related with FDR

Fixed Deposits are kept with the bank for a fixed amount of time and the depositor gets a certain amount of interest from it. After the period is over, the depositor can encash the deposit and take the whole amount or may again open another FDR. FDR also includes opening an account. FDR is opened from the Customer Service & Remittance desk and also encashed from this very desk.

Remittance

• PO:

 A PO is also used to remit fund like a DD. The main difference is that unlike DD the issuing bank branch itself pays the amount of a Pay Order. At the same time, PO is used to send money within the clearing area only. The basic process of issuing a PO is same like issuing a DD.

• Others:

Except the above mentioned tasks there are some other tasks that this department performs – and also those are equally important. Those are:

Issuing New Cheque book: When all the pages of a cheque book are finished, the customer needs a new book. The Customer Service & Remittance Desk provides new book to the customer. Upon receiving the new book requisition slip duly signed by the customer, a new book is issued. The number of pages of the new book may be different depending on the type of account and the customer request. Before delivery, all the pages of the new book are signed by the authorized signatory of the bank.

Providing Account Statement      

Time to time, Account holders may need to know the status of their accounts as well as the transactions through those accounts. In such case, an account holder asks at the customer service desk to provide him/her an account statement. The personnel at the desk print the account statement from the Stellar with the account number.

Providing Bank Solvency Certificate

A client who is doing transactions satisfactorily with the bank may need Bank Solvency Certificate for various purposes and asks for it at the customer service desk. The certificate is given stating that the person has been doing transaction at a satisfactory level and has a good deposit. At the same time, a statement of the account is also attached with the certificate.

PRODUCT & SERVICES

The Bank is maintaining diversity in developing its product and services. The product list is diversified and healthy and every year it’s getting more developed as Bank Asia is continued to launch 2 products in every year. Those product list include the following items:

• SMS Banking or Mobile Banking
• Tele Banking
• Internet Banking
• Real time online Banking
• Customized loan
• Bonus Savings Schemes
• Poverty Alleviation
• ATM Service
• Credit Card.

 SMS or Mobile Banking

“Bank in your Mobile”, now a days Mobile reached to all hand. So it is a very safe way to satisfy the customer to get information about there account and for the Banks recent all service.

  Table : SMS or Mobile feature

(Bank Asia Brushier)

• PUSH:

For PUSH service, bank Asia will use the respective Mobile Phone Operator’s text mail service (SMS) to send the financial information related to customer’s account. The PUSH service will be offered free-of-charge.

• PULL:

For PULL Service, the Accountholder will be able to obtain range of financial information related to account by typing a pre-defined key-word with a 4-digit pin as message in the mobile phone and then sending this message to a prescribed SMS short code (6969) for this service, regular SMS charges of the respective mobile phone operator will apply.

General Broadcast:

BA will send informative message to all registered customers as and when new product service is being launched. Some messages are sent mandatory to all users which may be non-banking products also.

Available for all Subscribers of

• Grameen phone
• Bangla link
• Aktel
• Citycell
• Tele talk
• Warid

Note: Please keep in mind that BA prefix should be used for 6969 SMS service, until or unless mentioned any other syntax. For account balance query optionally you can type any email address followed by starting and ending transaction date. Your A/C’s statement will send to that email address.

 Online Banking

All branches under online banking system will be able to do banking practices using a common server (which is centralized) from where only the branches will be able to enter using a common password.

 Internet Banking

Any one including any client or any branch from any direction will be able to enter in the system to do banking transactions. Internet Banking Services include the following features:

• Check account balance
• Take print out of account statement for a particular period
• Transfer fund within client’s own account
• Make payment of mobile phone bill
• Enquire foreign exchange rate
• Enquire currency exchange rate
• Acquire information of all the products

 Customized Loan

Bank Asia allows loan against any savings scheme like BSP (Bangladesh Sanchaypatra) etc. The bank allows the client to pay is merely the interest during the entire currency of his/her loan, and repay the principal in one lump sum in the last month of maturity of the loan. The client may get 80%-100% of the face value of the instrument depending on the date of purchase. Repayment of the loan can be completed by 12-48 installments.

Real-time Online Banking

Bank Asia symbolizes modern banking with innovative services in Bangladesh. It has centralized Database with online ATM, SMS and Internet query service. You can use credit/debit card facility with ATM. For SMS service you should have personal cellular phone with at least one account in Bank Asia. You will get special type of withdrawals message time to time free!!! Please contact with your branch for more information.

Through Internet Banking you can access your account to view and print the balance and account statement for last 20 (twenty) transactions.

Poverty Alleviation

Introduction:

Bangladesh is a highly populated developing nation, where 80% of the people living in the rural areas engaged in agriculture sector directly or indirectly for their livelihood. But these people can’t engage themselves with development and production activities due to unavailability of capital. To help these people by engaging themselves in production oriented sector some NGO and Govt. organizations are working together. Beside them Bank Asia as a private commercial bank is highly dedicated to establish rural branches to empower the poor people.

Objectives of the Scheme

Our objective is to help people by providing loan facilities to establish fisheries plant, Poultry firm, small and cottage industry, village transport and small engineering workshop as well as to establish computer training center where electricity supply is available. It will help to create employment opportunities for the unemployed young people.

Project Area

These lending facilities will be provided through our rural branches in different branch location.

System for providing loan the program will run in the following way:

• Loans for personal who are promoter or investors.
• Loan distribution by making groups of worthless poor people.

Loans for personal who are promoter or investors
under this system anyone having educational or past experience without any obligation or liability with other organization will be given maximum Tk. 1, 00,000 loans. For these purpose he/she need to provide security against the loan facilities.

 Loan distribution by making of worthless poor people
In primary situation these loan facilities will be provided through established NGO and later on Bank Asia will go for using its own manpower when this program will be expanded.

Tenure for the Loan
Tenure will be, minimum 1 year to maximum 3 years depending on the nature of the loan provided.

Repayment procedure
Loan will be repaid depending on the inflows from investment as well as from other source of income as weekly, monthly or quarterly basis.

ATM Service

Bank Asia has a network of 63 ATMs out of which 30 are its owned and 33 are under common ownership as a member of cash link Bangladesh. Under the ATM network the Stelar online banking software enables direct linking of a client’s account, without the requirement of a separate account. The bank is in the process of setting up it’s own ATM network at every important point in Dhaka, Chittagong and other area of the country with a view to providing retail banking services.

Bank Asia Credit Card

Bank Asia Credit Card is accepted more than 3,500 merchant outlets around the country. Bank Asia Credit Card offers free credit facility up-to 45 days & minimum 15 days without any interest,. You can also pay 8.33% of your billing amount or current dues every month and thus have the flexibility to plan your payments

Western Union

Western Union gives you the service at a reasonable price

Now Bank Asia serves the people to transfer money all over the World and also inside the Country at a reasonable price with the help of Western Union and The BURO Bangladesh for the International service level. I found some fee or charges for several countries.

Table 4.3.4: Fees for Western Union(Bank Asia Brushier)

• More then 200 country and more then 3, 55,000 areas are located for the service.
• There is no fee for the receiver.

 LOAN SYNDICATION

Syndication loans represent a substantial portion of the commercial and industrial loan portfolios of large banks. A syndicated loan involves two or more banks contracting with a borrower, typically a large or middle market corporation, to provide funds at specified terms under the same credit facility. The average commercial syndicated credit is in excess of TK100 million. Syndicated credits differ from participation loans in that lenders in syndication participate jointly in the origination process, as opposed to one originator selling undivided participation interests to third parties. In a syndicated deal, each financial institution receives a pro rata share of the income based on the level of participation in the credit.

There are four phases in loan syndication:

• Pre-Launch,
• Launch,
• Post-Launch, and
• Post-Closing.

The syndicated market formed to meet basic needs of lenders and borrowers, specifically to raise large amounts of money; to enable geographic diversification; satisfying relationship banking; to obtain working capital quickly and efficiently; spreading risk for large credits amongst banks, and Gain attractive pricing advantages.

Corporate Banking

Corporate Banking department manages relationship of our multinationals and large corporate clients. In addition corporate banking is focused on providing creative financial solutions to our eligible corporate clients in manufacturing bottling and conglomerates. Our total banking package covers all the needs of our corporate customers. Our efficient quality services are our trademark.

From its inception of operation, Bank Asia is dedicatedly providing corporate banking operations with eligible corporate clients.

Types of loan facilities under corporate banking facilities are as follows

• Working capital financing requirements
• Term Loan
• Equity Financing
• Structured Finance
• Trade Services
• Corporate & Institutional Services

SCHEMES

Bank Asia offering the following schemes towards their customer:

• Bonus Saving Scheme
• Double Benefit scheme
• Monthly Benefit Plus
• Deposit Pension Scheme

Bonus Saving Scheme

    A savings account held by subscribers with a minimum balance of Tk. 50,000.00 will attract not only the usual savings interest but a further 10% bonus on interest.

 Double Benefit Plus

The criteria of Double Benefit Plus is –

• Only individuals can open this account.
• Money deposited in this account will be doubled in 6 (six) years.
• Deposit amounts will be Tk. 100,000/-or it’s multiple, and maximum will be Tk. 2,500,000/-under single name and Tk. 4,000,000/-under joint name.
• In case of premature encashment, the applicable rate will be the simple savings rate of the Bank; however, there will be no interest payment for premature encashment within six months life of the account.
• Loan facility will be available up to 90% of the deposited amount.

Value at maturity:

 Table 4.5.2: Value at maturity (2)

Triple Benefit Plus

• Only individuals can open this account.
• Money deposited in this account will be Tripled in 9 (nine) years 6 (six) months.
• Deposit amounts will be Tk. 100,000/-or it’s multiple, and maximum will be Tk. 2,500,000/-under single name and Tk. 4,000,000/-under joint name.
• In case of premature encashment, the applicable rate will be the simple savings rate of the Bank; however, there will be no interest payment for premature encashment within six months life of the account.
• Loan facility will be available up to 90% of the deposited amount

 ^{Table  4.5.3:                 Value at maturity (3)}

Monthly Benefit Plus

MB+ is a 5 year scheme that lets the customer earn monthly benefit of Tk. 850/= or its multiple by minimum initial deposit of Tk. 100,000 or its multiple. Features of this product are:

One can start with the MB+ deposit scheme by depositing Tk. 100,000 initially or it’s multiple for 5 years and after maturity the deposited principal amount is refundable

The asset and liability growth has been remarkable. By Dec 2007 the total asset of the Bank grew to Tk 38,436,069,093, increase of 26.11% comparing to 2006. Bank Asia has been actively participating in the local money market as well as foreign currency market without exposing the bank to vulnerable positions. The Bank’s investment in Treasury Bills and other securities went up noticeably opening up opportunities for enhancing income in the context of a regime of gradual interest rate decline.

LAST FIVE YEARS PERFORMANCE

 Graph 4.6.1: Deposit increasing

Total Asset increasing

 Loan & advance

Operating profit

FUNCTIONAL DEPARTMENTS OF BANK ASIA

 Cash Department:  

Any service providing organization has two parts: front-end and back-end. Front-end part deals directly with the customers and the back-end part creates the base on which the front-end tasks are performed, For the effective operation of the organization, both the front-end and back-end parts have to be operated effectively. Therefore, both the part s are important. The cash or teller section is a front-end part which deals with the customers of the bank directly. Since, the quality of service is very important for a service providing organization, cash section of the bank should provide high quality service to the customers.

Different types of tasks are conducted in the cash section, such as:

• Cash withdrawal
• Cash deposit
• Cheque deposit
• Transfer of funds from one account  to another
•  Receiving GrameenPhone, Banglalink, Rankstel bills
• Receiving cash deposits for PO.

These tasks are described below:

 Cash withdrawal:

The cash section receives cheques from the clients for cash withdrawal.

After receiving the cheques, the teller has to carefully verify the validity of the cheque. In order to do that four corners of the cheque are checked:

1. Bank & branch name
2. Date
3. Signature of the account holder
4. Amount of money written in words and in figure

Beside these four corners, the teller should also notice that whether the payment is made to the right person mentioned in the cheque. If the person presenting the cheque is not the account holder, the teller may verify the person if felt necessary (In such a case, any authorized person of the bank may verify the person presenting the cheque).

The person presenting the cheque has to make two signatures on the back of the cheque. One for placing the cheque and the other for receiving the money.

 Cash deposit:

A customer can come to the bank to deposit cash. In order to deposit cash, he or she has to fill a deposit slip with the amount he or she wants to deposit He also has to write the date, the denomination of the amount and put a signature. The teller puts the “Cash Received” seal on the slip after receiving the money. Then he and an authorized officer sign on the slip and carbon copy of the slip is given to the depositor. Then the teller credits the depositors account by the amount deposited in the ‘Stelar’ software.

 Cheque deposit:

A customer can come with cheque of other banks .Then the bank collects the proceeds for its customer. If the cheque is issued by or drawn on any bank within Dhaka city then a clearing seal is given. On the other hand, if the cheque is issued by or drawn on any bank outside Dhaka city then a collection seal is given. These cheques must be account payee only otherwise the teller should not accept them. First the cheque is crossed with the bank seal. The issuing bank name, branch name, cheque no. & date is written on the deposit slip. It is then sent for clearing or collection depending on the issuing bank branch.

 Reasons for cheque dishonor:

1. Refer to drawer
2. Not arranged for
3. Effects not cleared. May be presented again.
4. Exceeds arrangements
5. Full cover not received.
6. Payment stopped by drawer.
7. Payee’s endorsement irregular/ required.
8. Payee’s endorsement irregular, require Bank’s confirmation.
9. Drawer’s signature differs/required.
10. Alterations in date/ figures/ words require drawer’s full signature.
11. Cheques are post dated/ out of date/ mutilated.
12. Amount in words and figures differs.
13. Crossed Cheques must be presented through a bank.
14. Clearing stamp required/ requires cancellation.
15. Addition to Bank’s discharge should be authenticated.
16. Cheques crossed” Account Payee Only”
17. Collecting Bank’s discharge irregular/ required.

Transfer of funds:

A client, who has more than one account in the same branch or different branches, can transfer funds between these accounts. In order to do that the client has to fill and palace a cheque with a deposit slip. Then the teller checks whether the client has sufficient fund to transfer by ‘Stelar’ and if there is sufficient fund, the amount is transferred. A client can transfer maximum Tk.50000 in this way.

Receiving cash for pay order:

Bank gets a commission for issuing pay order, etc. This commission plus the amount transferred through PO are received in the cash section.

 Determining Daily Cash Position:

It is a regular task of this department. The daily cash position covers the day’s opening balance, total transactions (received & paid) in local and foreign currency as well as the closing balance.

Maintaining Late Register:

When a client deposits or withdraws money after closing the cash, this transaction cannot be posted on that very day. But the cash department may sometimes have to handle such transactions. In a case like that, the transaction is recorded in the late register. Later, they are recorded as transactions made in the next working day.

 Receiving GrameenPhone /Banglalink /Rankstel bills:

Bills of GrameenPhone/ Banglalink/ Rankstel bills can be deposited in the cash section. Different deposit slips are used for different companies.

At the end of each day the whole day’s transactions are cross checked with the report generated by ‘Stelar’ with the records of all the transaction.

Accounts Department

The importance of accounts department is very significant since the task of this department is to ensure the correctness of all the transactions .It controls and monitors all the transactions in the form of check and balance.

Day Beginning & Ending:

Day Beginning and Ending are software operations that are used to differentiate among transactions of different days and record them accordingly. At the very beginning of a day, the accounts department begins the day. At this stage, all the transactions that are entered into the system in the previous day are processed. If all the accounts are found correct, then the previous day is ended and the new day is begun. Similarly that day is closed in the next day morning and a new day is begun.

Statement Preparation:

Accounts department prepares statement on daily, weekly, monthly, quarterly, semi-annually and annually. These statements are prepared comprising all the accounts existed in the banking operation. All types of assets, liabilities, incomes & expenses are the components of the statements. Asset & Liability are the items of Balance Sheet and Income & Expenditure are the items of Profit & Loss Account. From the accounts balance statement, position of the bank in terms of the above account can be found.

The accounts department also prepares statement for the Bangladesh Bank Statistical purpose. Those are SBS 1, 2 & 3. SBS 1 is a monthly statement while SBS2 & 3 is sent quarterly.

Inward & Outward Bill for Collection (IBC & OBC):

Cheques of different branches of Bank Asia are presented to the cash counter. These cheques are sent to the respective banks for collection with OBC slip attached with them for. Accounts department performs these tasks and makes necessary entries.

General Accounts Reconciliation:

Everyday, a lot of inter branch transactions take place in the form of Demand Drafts, Telegraphic Transfers, Pay Orders etc. Such Inter-branch transactions by any particular bank involve the general account maintained with that particular branch. To reconcile the accounts, IBCA & IBDA are sent. Responding bank responds to those instruments and final transaction is settled.

Check & Balance of Every Account:

This is one of the prime tasks of the accounts department to check every transaction posted in a day. This can be performed by checking the Stelar output with the respective voucher. Error may take different forms like error of omission, commission, cross error etc. accounts department checks carefully those transactions and finally rectifies them. The output of every transaction found in the Stelar in General Ledger mode. Trial Balance summary & details are selected to get those data.

Accounts Department Related Voucher Preparation:

Generally establishment related expenditures are controlled by the accounts department. Different types of bill payments are made through this department. The payments may be for the house rent, plantation or office security. These payments are made in pay orders.

Provisioning:

The accounts department keeps provisions for some expenditure & income. Interest payable, bills payable, etc are some examples of provisioning. These provisions can be categorized as Expense Provision & Income Provision.

Clearing Department:

Clearing house is an arrangement for the banks to mutually settle their claims over each other arising out of deposit transfer from one bank to another by their respective customers. in the clearing house ,all scheduled banks have  their accounts .They mutually settle their claims by simply ‘debit and credit’ without physically transferring those funds .This is a convenient system in the sense that it does not involve traveling and cash handling by customers. Branches of other banks where cheques and drafts are not to be visited by the customers. Simply by depositing those into the accounts, the customers get those collected by their banks.

Procedure:

1) An account holder of Bank Asia Ltd. Come with a cheque of another bank. He fills a deposit slip with the cheque’s amount and places them to the teller section.

2) The cash officer verifies the cheque and deposit slip and put clearing seal of them and send them to the clearing section.

3) The clearing officer enters the name and figures of the cheque into “Nikash” software provided by the Bangladesh Bank) and copy it into a floppy disk. A printout of list of the cheques is made .Then the list along with the cheques is placed to the sub manager for signing. Then the floppy is entered into another computer and the data are loaded into the “Software” and a list of these cheques is created. Then the cheques are sent to the clearing house.

4) In the next morning, the list generated by “Stelar” with deposit slips and debit voucher is verified by the sub manager. Debit voucher is created on the Principal branch General A/C. In the afternoon, the representatives of the bank come from the clearing house with honored and dishonored cheques. Then the accounts are actually credited by “Stelar”.

Reception

There are some tuff jobs activities in the reception are like

• All phone calls are received and transfer by the receptionist.
• All kinds of inward / outward Documents are registered by the receptionist in the different Register book, Inward, Outward, Local, and Foreign Register.
• The incoming Documents received in reception then the document is going for the marking to the Manager or to the Sub Manager.
• So the responsibilities for all kinds of documents are to the receptionist for receive and discharge the Documents by her Signature.

 Credit Department:

A Department of credit in any Bank are for the maintaining all activities for the Loan System. Bank Asia has this type of system to provide lone for the applicant. Bank Asia has a verity of loans like home loan, Auto loan, Consumer Durable Loan, Loans for Professionals, Unsecured personal Loan, Secured over draft etc. all the loan variation has different range of interest rates but in a systematic range.

Foreign Trade Department:

 Functions of foreign trade:

1. 1.      Import
2. 2.      Export
3. 3.      Remittance

To facilitate Export and Import, L/C (Letter of Credit) is a very commonly used financial Instrument. First, let’s know what an L/C is:

 L/C (Letter of Credit): L/C is a promise/undertaking of a bank (Issuing Bank) on behalf of the importer in a trade in favor of the exporter to pay a certain sum of money under some specific terms and conditions.

So, an L/C is a negotiable instrument (A form of documentary credit) that carries a promise of payment with the fulfillment of certain conditions. An L/C can be used in foreign trade as well as for local payments. We can divide L/Cs into two broad categories. Those are:

a)      Revocable L/C: It is a promise of payment that can be revoked by the issuing bank. In Bangladesh, revocable L/Cs are not used.

b)      Irrevocable L/C: As the name implies, once such an L/C is issued, the issuer cannot revoke the promise of payment of the value of an irrevocable L/C. In the following discussion, we shall talk about only irrevocable L/Cs.

On the basis of types of payment, we can divide L/Cs into two major types. Those are:

a)      Sight Payment: The payment is made as soon as the L/C is presented

b)      Deferred Payment: The L/C has a maturity date after which is over, the payment is made (Usually, the duration is 30, 60, 90, 120 or 180 days). Such an L/C is also called USANCE L/C.

Another special type of L/C is issued in Bangladesh that is called Back-to-Back (B to B) L/C where the applicant opens an L/C against another export L/C. These B to B L/Cs are USANCE L/Cs.

        1. Import:

The following are the criteria that have to be fulfilled by an importer when opening an L/C for importing:

1. First of all, the Importer has to be a client of the bank
2. Have to submit a formal request (Usually an application) for opening an L/C
3. Duly filled up L/C and signed L/C application form and Letter of Credit Authorization form (LCAF) by the importer
4. Have a  Import Registration Certificate (IRC) that is renewed to the current period as well as VAT and TIN certificate
5. Copy of Proforma Invoice/ Indent that has been accepted by the importer
6. CIB report from Bangladesh Bank that is clear.
7. Supplier’s credit report from credit rating agency or from supplier’s bank –  usually the bank itself performs this task while the importer is required to bear the costs of obtaining such reports
8. IMP form properly signed by the importer
9. Insurance cover note along with the money receipt
10. Charge documents as per the bank’s requirement

Now the bank calculates the required balance that the applicant will have to maintain with the bank. The bank asks the applicant to maintain an L/C margin (A certain percentage of the total L/C value) as a security – in other words, the risk coverage. The margin depends on the relationship of the client with the bank, govt. policies and also on the marketability of the goods being imported. The bank asks the applicant to maintain that certain percentage of balance at its account with other charges like commission of .5%, VAT (15% on commission), SWIFT charge, LCA fee & Cost for stamps (2).

When all of the above requirements/documents are submitted properly, the bank officially issues an L/C on a bank that it has BKE with. A SWIFT message is sent to the advising bank that includes the terms & conditions of the L/C. the other documents are sent by courier service. An L/C contains various information from which few important fields are given below:

1. a.      L/C number
2. b.      The Importer & his Bank name (Issuing bank)
3. c.       The Exporter & his Bank name
4. d.      Value of the L/C
5. e.       L/C Issuing date
6. f.        Date of Maturity
7. g.      Description of Goods
8. h.      Revocable/Irrevocable
9. i.        Transshipment & Partial Shipment permitted/not permitted

When the advising bank advises the exporter about the L/C, the exporter collects the L/C from the advising bank paying only the advising commission. After that, the exporter prepares documents asked in the L/C (The list of these documents is given in the lodgment part). As the exporter gets the guarantee of payment, he/she makes arrangement to export the goods. After the goods have been shipped, the exporter submits the complete set of documents to the negotiating bank. The negotiating bank may be the advising bank or another bank. The negotiating bank sends the set of documents to the issuing bank for the L/C claim.

Documents Required for Lodgment:

1. a.      Commercial Invoice
2. b.      Original Bill of Lading (B/L)
3. c.       Packing List
4. d.      Country of Origin Certificate
5. e.       Pre-shipment Inspection (PSI) Certificate
6. f.        Compliance Certificate
7. g.      Certificate by the Beneficiary that the goods are brand new

The L/C issuing bank carefully scrutinizes the documents that are sent by the exporter through his/her negotiating bank. If there is no discrepancy, within 7 days of receipt of documents, the issuing bank sends acceptance of the L/C & asks the reimbursement bank to make necessary payment to the negotiating bank’s account. This is called PAD (Payment against Documents). If any discrepancy is found in the documents, the negotiating bank and the importer is informed about the discrepancies. At the same time the importer is also asked if he accepts the discrepant documents. If there is no discrepancy in the documents or the importer agrees to accept those discrepant documents, the bank delivers the documents to the importer upon payment in cash or against LTR/LIM. If the Importer does not respond, then the document is retired by creating forced LTR.

The final closing of an Import L/C is done as soon as the Bill of Entry is collected.

2. Export:

In the export desk, L/C is issued upon the bank for advising. When such an L/C is sent to the bank by any issuing bank, the bank scrutinizes the documents and advises the exporter/beneficiary.

The exporter collects the documents from the advising bank, arranges exports and then prepares documents as per requirement in the L/C. The exporter negotiates the documents by submitting the documents to a bank. The negotiating bank claims the export proceeds to the issuing bank and sends the documents for acceptance. As the documents are accepted, the issuing bank asks its reimbursement bank to make the payment to the negotiating bank as per the terms of payment in the L/C (Instant payment for L/C at sight or deferred payment for USANCE L/C – if there is no discrepancy). If there is a late in payment from the L/C issuing bank, the negotiating bank reminds it of the payment in favor of the exporter.

The following are the documents that are required in an export:

1. Letter to the bank for submission of documents for negotiation
2. EXP Form
3. Commercial Invoice
4. Packing List
5. PSI Certificate
6. Bill of Lading (B/L)
7. Letter for acceptance of documents negotiated
8. Bill of Exchange
9. Scrutiny sheet for Export Documents (For internal use)

In case of an USANCE L/C, if the exporter wishes to get some financing from the upcoming L/C payment, the bank may buy the documents as IFDBC (Inward Foreign Document Bill for Collection).

1. 3.     Remittance:

The Foreign Trade department is also involved in foreign outward remittances. This Department issues Traveler’s Cheque in favor of people who want to go abroad. There are limits for remitting money out of the country for difference purposes. The following are some limits:

 Maximum $ 3000 is allowed to remit outward without declaration in one year if a person travels by road in a country other than SAARC countries.

But at best 50% of the amount may be carried in cash.For the same purpose, if a person is traveling in any SAARC Country will be allowed to remit $ 1000 without declaration within year.

 For treatment purpose, the maximum limit to remit fund with the permission of medical board’s permission is $ 10000 through foreign DD or TT.

 Bank has recently prohibited Secured Overdraft against Bonds, and Sanchaypatra. Interest charged on the Secured Overdraft is calculated on the basis of the security limit can be a corporate credit or a consumer credit, even an employee house building loan or a car loan. Whichever the credit is there are several common steps to follow for granting & recovery of a credit when a borrower makes the first approach for a credit (Or the bank itself may go to the borrower with the offer of a credit if the borrower seems attractive to the bank

Now is the period of innovations. There are 52 commercial banks operating in the country excluding other non banking financial institutions. In this competitive banking arena a bank must come up with new and easily accessible customer focused loan and Deposit products. Bank Asia Limited offers a limited number of loan and Varity of Deposit products to its customers. Bank Asia has been operating in the market for the last ten years starting from mid 1999 and yet to develop new and innovative loan and Deposit products. The loan mix of the bank is very conventional and Deposit Schemes are regular. It has been observed that the existing loan products are insufficient to meet up the existing borrower’s need. The bank has no loan products for the religious Muslim borrowers. It has caused the bank losing a large segment of the potential borrowers. The bank has yet to establish credit card facility which could pull a large number of borrowers because due to safety need, increasing number of people is being interested in having this facility. And Also the regular and Attractive Deposit schemes for general people as customer. Bank Asia Limited is now going in a heavy speed with other private commercial banks in terms of product diversity in all sectors. The bank has established WAN (Wide Area Network) to bring all the branches under online banking system. The bank can use its online system for easy access of the customer to the loan as well as

Abstracts:

The objective is to find out the best performing commercial banks of Bangladesh. For find out the best performing commercials banks primarily banks with higher credit rating, at least AA3, are selected. Through out the paper these banks are analyzed based on some key financial ratios, like – Credit Deposit Ratio (CDR), Ratio of Classified Loan against Total Loan, Cost of Fund (COF), Return on Investment (ROI), Return on Asset (ROA), Return on Equity (ROE), Earnings per Share (EPS), Net Income (NI) Ratio and Credit Rating (CR). Based on the performance on the each ratios banks are scored. Finally the raking of the banks is done by adding all the score on each ratio.

CHAPTER 5

FINDINGS

ANALYSIS OF FINANCIAL PERFORMANCE:

The analyses of the financial performance of the four selected Bangladeshi commercial banks of last 6 years and 5 years are presented below with their average performance.

Ratio of classified loan against total loan:

Ratio of classified loan against total loan dictates the percentage of bad loans to total loans. This ratio is very much useful to measure the efficiency in collecting money. Under this ratio higher the percentage, lower the efficiency of bank.

This figure shows that bad loan of AB bank was very high with 11.36%, 8.21%, and 4.02% in 2004, 2005 and 2006 respectively. In 2008 and 2009 it came under the average. BRAC Bank has the highest bad loan in last three years with 4.45%, 4.69% and 6.04% respectively. And the Bank Asia and DBBL performed better and were under average. For this ratio higher score will be given to bank with lower percentage as lower percentage dictates higher efficiency.

Cost of Fund (COF):

Another ratio to judge the efficiency is the cost of fund. The percentage of this ratio indicate amount of cost required to incur by the bank to collect a certain amount of money, higher the cost of fund, lower the efficiency of the organization.

The above chart shows that the cost of fund of AB Bank was always higher with 8.53%, 8.60%, 10.04%, 11.09% and 10.34% from 2004 to 2009 respectively. The cost of BRAC Bank almost always with the average and cost of DBBL are always below the average where the cost of Bank Asia was sometime higher and sometime lower than the average.

 Bank Asia and BRAC Bank are in the joint position in 2005. That why the score of 2nd and 3rd position are equally divided among them by adding the two score.

Return on Investment (ROI):

Return on Investment (ROI) is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. By this ratio we can measure the efficiency of the firms in investment decision making to earn the highest return. For this ratio, higher the return on investment, higher the efficiency of the organization on investment decision making.

From the above mentioned chart it is found that AB Bank had the higher investment efficiency with 18.81%, 22.87%, 23.89% and 21.06% in the last four years respectively. And the other three banks were under the average for the maximum times, though Bank Asia performs above average in 2005 and 2009. For this ratio higher score will be provided to the organization with higher performance as higher percentage means higher efficiency of the organization on investment decision making. The score sheet of the banks are provided below –

 Return on Assets (ROA):

The return on assets (ROA) percentage shows how profitable a company’s assets are in generating revenue. Higher the percentage of return, higher the efficiency of assets is observed.

Form the above chart it can be said that Bank Asia lost its efficiency in the recent year and the AB Bank gained efficiency in using assets in recent years. In 2004, 2005, 2006 and 2007 Bank Asia was in the highest position with 2.58%, 2.58%, 3.17% and 3.55% respectively where in 2008 and 2009 AB bank hold the highest position with 3.17% and 3.52% respectively. The efficiency of BRAC bank remained constant below average in these years and DBBL also in the same position of BRAC in recent years. For this ratio higher score will be provided to the organization with higher performance as higher percentage means higher efficiency of the organization in using assets. The score sheet of the banks are provided below –

 Earnings per Share (EPS):

Earning per Share (EPS), one of the major concern for investor, indicate the earnings of the firm against its’ each share or stock. This ratio usually used to find out the operating efficiency of the firm against its’ total number of share.

The chart shows that AB Bank lead this ratio among four banks in 2007, 2008 and 2009 with tk. 256.10, tk. 89.72 and tk.131.13 respectively where in 2005 and 2006 it was leaded by DBBL with tk. 181.97 and tk. 179.18 respectively. And the EPS of BRAC Bank and Bank Asia were below average. For this ratio higher score will be provided to the organization with higher percentage as higher percentage means higher efficiency of the organization. The score sheet of the banks are provided below –

Net Income (NI) Ratio:

Net Income Ratio measure the efficiency of the operating cost to generate profit or net income. The higher the percentage of net income higher the efficiency of the operating expenses. In this paper this ratio is calculated by dividing income after tax by total income.

Form the information it is found that BRAC Bank got the highest ratio in the last 5 years with 49.46%, 50.56%, 54.51%, 52.58% and 51.18% respectively and the AB Bank gain some better efficiency in the last 3 years where the ratio is quiet lower in case of Bank Asia and DBBL. Also For this ratio higher score will be provided to the organization with higher percentage as higher percentage means higher efficiency of the organization.

 Return on Equity (ROE):

Return on equity (ROE) measures the rate of return on the ownership interest (shareholders’ equity) of the common stock owners. It measures a firm’s efficiency at generating profits from every unit of shareholders’ equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. Higher percentage of ROE refers higher efficiency in using equity fund.

The information shows that AB Banks ROE was much higher in the last three years with 42.19%, 34.21% and 33.43% respectively though it was the lowest in 2004, 2005 and 2006. In 2005 DBBL was in top with 31.01% and in 2006 Bank Asia was in top with 24.04%. And the other three banks ROE was much constant in the last 5 years. For this ratio higher score will be provided to the organization with higher percentage as higher percentage means higher efficiency of the organization.

 Credit Rating (CR):

The credit rating (CR) also needs to judge, because CR indicates the total financial health, capability and future prospects of the organization. The credit rating of the banks are presented in the following table-

 Here, Bank Asia and BRAC Bank hold highest position with AA2 rating, so the score of 1st and 2nd position divided among them and so is done for AB Bank and DBBL.

Total Scoring and Ranking:

According to the analysis the total score of the each bank and ranking of the bank according to the score are provided in the following chart –

 According to the analysis it is found that Bank Asia Limited achieve the highest score and the best ranking followed by AB Bank Limited, BRAC Bank Limited and Dutch Bangla Bank Limited respectively.

POSITIVE ASPECTS

Bank Asia follows well constructed Relationship starting with KYC or Know Your Customer and ending with Spread. KYC is getting increasing emphasis in the banking arena because loan default rate, Money laundering is high in our country.

• Proper compliance with KYC can help the banks avoiding bad loans.

• FDR interest is high than other bank.

• Bank Asia is a fast growing bank. There are huge opportunities to keep pace with the market trend.
• Attracts new customer by enhancing its coverage  over country

• The Bank Asia still maintains adequate safety in its loan portfolio which is reflected in its low default rate.

• The bank could able to establish confidence in the minds’ of the customers regarding maintaining adequate liquidity to meet up the borrowers’ requirement.

• At the same time the bank was able to remain profitable in terms of interest income maintaining a higher spread.

• So far Bank Asia could be able to perform well in its banking activities but the scenario will better in future.

• Lending rate is being decreased under the policy guidelines of the Bangladesh Bank so as the deposit rate is begin decreased and the bank has to adopt necessary strategy to maintain its profitability from the loan portfolio.

• Bank Asia is in constant search of profitable business sector for extending credit line. Bank has also taken safe guard against predicted alteration in the world trade policy.

• Better customer service, flexible loan, and business strategies over competitors enable to achieve customer reliability. All the branches are operating on line banking.

NEGATIVE ASPECTS:                      

• Accounting opening amount is high.
• Delivery of checkbooks is delayed.
• In the afternoon software was slow that’s time customer has to wait most of the time.
• Maintaining account in Bank Asia service charge is high.
• For savings account charge is 690(Yearly). Current account charge is 1090.
• The major problem that the credit officers face in selecting borrower is the unavailability of information about particular borrower.
• Number of potential borrowers is sufficient as compared to the number of banks operating.
• Technology used in Bank Asia is not advanced like other bank.
• Lack of ATM booth.
• Complicacy of maintaining manually accounts and papers.
• Day to day new upcoming banks is coming with many new services that are a threat for a bank. So increased number of  new banks creates sever  competition   in Foreign Exchange banking
• Competition will be tough to survive in market with lacking of new software.
• Better customer service, flexible loan, and business strategies  over competitors
• Able to achieve customer reliability. All the branches are operating on line banking.

CHAPTER 6

CONCLUSION & RECOMMENDATIONS

 CONCLUSION

As a ubiquitous financial institution in todays globalize economy banking sector deals with the most insightful part of the economy.

As a third generation bank, Bank Asia has been operating successfully in the banking arena for nine years. The assets position of Bank Asia Limited is quite satisfactory & it has requisite strength & opportunity to sustain. It is committed to provide high quality financial services/products to contribute to the growth of G.D.P. of the country through stimulating trade & commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited income group and over all sustainable socio-economic development of the country.

In the upcoming days, for maintaining the accelerated pace of business growth and operating performance, the bank will have to invest for the development of HR quality and research, IT infrastructure etc.

Credit management of the bank is very important to achieve the desired objective of the bank because the major part of total revenue of the bank is generated from it and a huge risk is related with it. Most importantly, the existence of the bank is depending on the prudent management of its credit portfolio. The failure of a Commercial Bank is usually associated with the problem in credit portfolio and is less often the result of shrinkage in the value of other assets. As such credit portfolio not only features in the assets structure of the Bank, it is critically important to the success of the Bank also.

Bank Asia, started its journey in 1999 for “ A Better Tomorrow” Its friendly and congenial environment, dedication to service and ability to proved equality, at low cost, with high efficiency has been able to develop a reputation in market. If all the efforts those were put forward in past can be employed again with renovation and increased integrity then we can hope that it will not only be able to build a “better Tomorrow for itself “but also for the whole nation that will lead us to build a developed and civilized nation.

Severe competition only way to be the front line in the race is to go with learning process and adoption of latest technology. This will help us to read the environment properly and adjust in the changed environment.

As the duration of my internship in corporate branch of Bank Asia was three months, it is very tough to cover and understand all the functions of the bank in depth. In spite of the time constraint, I have tried my best to focus and analyze on the “General baking”, its operations and performance evaluation. Again, I want to thank all members of Bank Asia for giving me ample support to prepare this report and I beg pardon to all if there is any unintentional mistake in the report.

 RECOMMENDATIONS

Bank Asia Ltd has to take up some innovative as well as cost effective measures to overcome its existing problems. I would like to present some recommendations regarding the overall condition especially the General Banking policy as it is related to my report topic. I think the following short listed measures can boost its performance in General Banking Department and the Bank as well:

• Customer service is related to do work accurately and speedy and energetic way.
• Providing service at once when customer need.
• Customer service is the core concern of general banking .A bank must satisfy its customer by providing best facilities and advantages.
• It sector is not well structured, it must be developed.
• Take efficient and effective initiatives to raise deposit. Like Introduce new accounts to acquire more deposit. They also offer diversified investment scheme, which leads to increase deposits

• Entrepreneurship lending should be given due emphasis.
• Increase skill manpower by train up program and also create professionalism about the bank personnel.
• Take initiative to introduce scholarship program in private University level.
• Bank Asia can make a structure of pay daily interest on savings account if possible.
• Increase promotional activities for growth and expansion.

• Restructure remuneration or salary package for the motivation of existing employees and for the qualified peoples who wants to make banking professional life.
• KYC profile is most important in successful banking. Bank Asia maintains KYC profile.

• Most of the customer faces difficulty to fill the account opening form.
• When a customer comes to close an account they get their money after few days. Now a days it is not for a commercial bank.
• The space is not enough for the banking activity, it should be increased.
• Canteen facility is lower than employees. It  should take necessary steps to increase canteen facility.