General Banking System of Jamuna Bank Limited

The main purpose of this report is to analysis General Banking System of Jamuna Bank Limited on Motijheel Branch, Motijheel, Dhaka. Other objectives are to know deeply about general banking procedure and to know how they minimize general banking risks. Also focus on some other activities of general banking. Finally specify some find out some problems and some recommendations for better performance in general banking.

Introduction

Commercial banks in Bangladesh economy are facing increased competition for their business in coming days, like any other emerging market economies. Their business is no longer remaining easy as they were earlier. The real change in the banking business has started to come with the government’s decision to allow the business in the private sector in the middle of the eighty’s. This report is an effort to reflect a clear idea about the strategies, activities, and performance of Jamuna Bank Ltd. regarding general banking activities.

The General Banking department is the vital part for financial institution. It is linked with all other department. So it is very important to have an effective and sound management System in banking business. Bank is an important and the most appropriate institution for the necessity of the use of money and the protection of the money. As a BBA student, financial institutions are the most appropriate field to gather the experience and among the financial institutions, Bank is the most prominent place.

All over the world the dimension of banking has been altering rapidly due to deregulation, technological modernism and globalization. Now bank must complete the market place both with local institution as well as foreign ones. To survive in this competitive banking world banks entail to develop appropriate financial structure, enlarge professionalism in the sense of developing appropriate manpower structure and expertise and experience.

Objective of the Report

The objectives help in explaining the broad objectives are as follows:

• To give an overview on Jamuna Bank Ltd. and its services,
• Focusing on the brief description of general banking,
• To know deeply about general banking procedure,
• To examine bank’s performance in general banking activities,
• To know how they minimize general banking risks,
• To focus on some other activities of general banking,
• To specify some findings on given topic, and
• To reveal some recommendations for better performance in general banking

Methodology

The methodology of this report is very different from conventional reports. I have emphasized on the practical observation though this report has to need some primary and secondary data. Nevertheless, eventually almost the entire report consists of my practical observation.

Source of Data Collection

While preparing the report, I have taken information from the following sources:

Primary Sources

1. Personal Interview – Face-to-face conversation and in depth interview with the respective officers of the branch.
2. Personal observation – Observing the procedure of banking activities followed by each department.
3. Practical work exposures on different areas of the branch.

4. Informal conversation with the clients or customers.
5. Relevant documents related to the study as provided by the officers. Observation of banking activities.
6. Overflowing Conversation with the in-charge of general banking department of Jamuna Bank Ltd, Dhanmondi Branch.
7. Working with my own experience while internship program.

Secondary Sources

• Annual report (2007) of the bank,
• Periodicals published by Bangladesh Bank,
• Different publications regarding banking functions
• Websites and Newsletters are also used as major sources.
• Daily diary (containing my activities of practical orientation in Jamuna Bank Ltd.) maintained by me,
• Various publications on Bank,
• Website of Bangladesh Bank, and
• Different circulars issued by Head Office and Bangladesh Bank

PROBLEM DEFINITION

BANKING SECTOR IN BANGLADESH                                                      

Definition of Bank

Whoever, being an individual firm, company or corporation generally deals in the business of money and credit are called a bank. Banker means a person transacting the business of accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdrawable by cheques, draft or otherwise. The purpose of banking is to ensure transfer of money from surplus unit to deficit units. Banks in all countries work as the repository of money. The general public deposit money in the bank for safe custody as well as to earn interest on it.

Entrepreneurs try to obtain money from the banks as project loan for long term investment. They also obtain working capital from the bank to run their business smoothly. Banking sector thus owe a great deal to the deposit holders on the one hand and the entrepreneurs on the other. They are expected to play the role of friend, philosopher and guide for the deposit holders and as well entrepreneurs.

The development process of a country largely depends upon its economic activities. Banking is a powerful medium among other spheres of modern socio-economic activities for bringing about socio-economic changes in a developing country like Bangladesh. Three different sectors like Agricultural, Commerce and Industry provide the bulk of a country’s wealth. The nourishment of these three is only possible through an adequate banking facility. The banking service facilitates these three to be integrated in a concerted way. For a rapid economic growth a fully developed economic system can provide the necessary boost. The whole economy of a country linked up with its banking system.

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With the passage of time the functions of a bank, lending is far by the most important. They provide both long–term and short-term credit. The customers come from all walks of life, from a small business of a multi-national corporation having its business activities all around of the world. The banks have to satisfy the requirements of different customers belonging to different social groups.

Since liberation, Bangladesh passed through fragile phases of development in the Banking sector. Some banks were nationalized in the post liberation period to save the institutions and the interest of the depositors. Those handing the banking sector have borne the burden of putting banks on reliable footings. Despite all that was done, some elements of irregularities appeared. With the assertion of the role of the Central Bank, Bangladesh Bank started adopting measures for putting banking institution on right track. Yet the performance of public sector management of banks left some negative effects in the money market in particular and the economy in general. The agility among the borrowers manipulates the banking sector as a whole. In effect, a default culture among other effects appeared on the scene.

The opening of private and foreign participants to the banking sector was intended to obtain desirable results from banking. The authorization of private bank was designed to create competition among the banks and competition in the form of efficiency within and the productivity in enterprises funded by banks. Unfortunately, for the people at large banking sector is yet to obtain the credit for efficiency, credibility and growth.

The clever, among the user of banking services, have influenced the management of banks, for obtaining short term and long term loans. They sometimes showed inflated equity to get money for investment in business and industry. Few diverted their loan money to purposes different from the loan proposal, and invested in non- profitable units have failed to repay their loans to the banks. For this rel1son new entrepreneurs are not getting capital while defaulting entrepreneurs have started obtaining either relief in the form of rescheduling of the repayment program or additional invest able money for diversified units.

Banks are the custodians of the society’s economic resources and if they are socialized, the socialistic government can acquire with them a tremendous power of intervention in every type of business enterprise, both large and small and wide spread power of control and planning over the entire economy. In our country where about 80% of the population lives below the poverty line, this poverty line can be declined by the success of banks. So bank plays an active role in the economic development, as a result different types of banks have come into existence to suit the specific requirements.

Global Economy: an Overview

Global economic growth in the year under review has been seen surpassing projections though there were some factors anticipated to hinder growth. As a matter of fact, world economy forged ahead modestly blessed by favorable financial market and flexible but appropriate macroeconomic policies pursued by most of the economies. Real GDP recorded 6.70 percent growth in FY 2006 compared to 6.00 percent in the preceding year. US GDP growth accelerated at a marginal point in the year under review as compared to that of the preceding year caused by softening of consumer demand and fluctuation of oil price. The Global Economic growth experienced decline in the year 2000 and 2001. In the beginning of the year 2002 the world economy showed the sign of recovery. The world economic growth stood at 2.8% in 2002 compared to 2.5% of 2001 and 4.7% in 2000. In the 3^rd quarter of 2002 the growth of key indicators of world economy became stagnant. Some big corporations of the USA & Europe went for liquidation at the same time. Threat of possible war in Iraq caused a rise in oil price, which collapsed the confidence of consumers and business society. The growth in the industrialized nations further declined in 2002.

Domestic economy

A credible record of sustained growth within a stable macro-economic framework has been established by Bangladesh. Her achievements in macro economic management and social developments have been laudable as compared to those in many Asian countries. Bangladesh is now a role model for socio-economic development including disaster management. The performance of her microfinance sector has been able to surpass many records in financial arena. The outstanding performance of Grameen Microfinance was acclaimed hugely by the world in recognition of which Prof. Dr. Muhammad Yunus and his Grameen Bank earned the most prestigious Nobel Prize in peace in 2006. Foreign direct investment is getting momentum with increased inflows in recent years. Total FDI inflows were US$ 845 million, a record increase in 2005.

In the recent past, Bangladesh has been growing at steady rate with her economy. Despite rise in oil price and the end of quota restriction overall economic activities of the country rebounded during FY 2005-06. GDP growth was estimated to rise by 6.7 percent in FY 2005-06 as against 5.9 percent in FY 2004-05. Per capita income stood at US $456 in FY 2005-06 which was Tk.441 in FY 2004-05. The proportion of domestic resource to the country’s ADP has been estimated to rise by 2.5% in FY 2005-06 over 2004-05. In the revised budget revenue income of the Government was estimated to be Tk. 44,868 crore during FY 2005-06 as against Tk. 39200 crore in the previous year showing an increase of Tk. 5,668 crore (14.46%). The revenue expenditure was estimated at Tk. 34,805 crore in FY 2005-06 being 4.44% higher than that of the previous year.

Finance adviser AB Mirza Azizul Islam has proposed a budget of Tk. 99,962 crore, with Tk. 30,580 crore deficits in the FY 2008-09. And this deficit budget translate into an 86% increase in bank borrowing, which runs the risks of drying out credit for the private sector which the adviser expects to increase to 22.6%. The budget of 2008-09 is 26% bigger than that of 2007-08 FY budget. The Government has pushed up revenue target to Tk 69,382 crore, which is 21 percent higher than the target in the original budget of Fy 2007-08. For ADP in FY 2008-09, the Government has allocated Tk. 25,600 crore against Tk.26, 500 crore in FY 2007-08.

Financial Market Scenario of Bangladesh in GDP

Table: Total Investment in GDP

JAMUNA BANK LIMITED

Basic Information of Jamuna Bank Limited

Jamuna bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban (2^nd, 3^rd & 8^th floor), 3, Dilkusha, C/A, Dhaka-1000, Bangladesh. The Bank started its operation from 3^rd June, 2001.

JBL is a highly capitalized new generation Bank started its operation with an Authorized Capital of Tk. 1600.00 million and Paid-up capital of Tk. 390.00 million, as of December 2006 Paid-up capital of the bank raised to Tk. 1072.50 million. As of June 30, 2007, their paid up capital is Tk. 1,072,500,000.00, share Premium is Tk. 85,800,000.00, Statutory Reserve is Tk. 249,667,430.00 and profit is Tk. 154,504,076.00.

JBL undertakes all the types of banking transactions to support the development of trade and commerce in the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. The bank gives special emphasis on Export, Import, Trade Finance, SME Finance, Retail Credit and Finance to Women Entrepreneurs.

To provide clientele services in respect of international trade it has established wide corresponded Banking relationship with local and foreign banks covering major   trade and financial interest home and abroad.

Nature of Business

• The principal activities of the bank are providing all kinds of commercial Banking Services to its customers.
• The other activities of the bank are providing of all kinds of Islamic banking services to its customers.

Vision

To become a leading banking institution and to play a pivotal role in the development of the country.

Mission statement

The Bank is committed to satisfying diverse needs of its customer through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work force.

Corporate Slogan

Your partner for growth

Sponsors

The sponsors of Jamuna Bank Limited are highly successful leading entrepreneurs of the country having stakes in different segments of the national economy. They are eminent industrialists and businessmen having wide business reputation both at home and abroad.

Management

JBL is managed by highly professional people. The present Managing Director of the bank is a forward looking senior banker having decades of experience and multi discipline knowledge to his credit both at home and abroad. He is supported by an educated and skilled professional team with diversified experience in finance and banking. The management of the bank constantly focuses on the understanding and anticipating customers’ needs and offer solution thereof. Jamuna Bank Limited has already achieved tremendous progress within a short period of its operation. The bank is already ranked as one of the quality service providers and known for its reputation.

JBL Corporate Culture

Employees of JBL share certain common values which help create a JBL culture

• The client comes first
• Search for Professional excellence
• Openness to new ideas and new methods to encourage creativity
• Quick decision making
• Flexibility and prompt response
• A sense of professional ethics

Objective

• To earn and maintain CAMEL Rating `Strong’
• To establish relationship banking and improve service quality through development of strategies marketing plans.
• To remain one of the best banks in Bangladesh in terms of Profitability and assets quality.
• To introduce fully automated system through integration of Information Technology.
• To ensure an adequate rate of return on investment
• To keep risk position at an acceptable range (including any of balance sheet risk)
• To maintain adequate liquidity to meet maturing obligation and commitments
• To maintain a healthy growth of business with desired image
• To maintain adequate control systems and transparency in procedure
• To develop and retain a quality work force through an effective Human Resources Management System
• To ensure optimum utilization of all available resources
• To pursue an effective system of management by ensuring compliance to clinical norms, transparency and accountability

Strategies

• To manage and operate the Bank in the most efficient manner to enhance financial performance and to control cost of fund.
• To strive for customer satisfaction through quality control and delivery of timely services.
• To identify customers credit and other banking needs and monitor their perception towards our performance in meeting those requirement.
• To review and update policies, procedures and practices to enhance the ability to extend better services to customers.
• To train and develop all employees and provide adequate resources so that customer needs can be responsibly addressed.
• To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to all employees in a timely fashion
• To cultivate a working environment that fosters positive motivation for improved performance
• To diversify portfolio both in the retail and wholesale market
• To increase direct contract with customers in order to cultivate a closer relationship between the bank and its customers.

Strategic Business Plan

• Though Jamuna Bank is engaged in conventional commercial banking it also considers the inherent desire of the religious Muslims, and has launched Islami Banking system and established one Islami Banking Branch in the year 2003. the Islami Banking Branch is performing its activities under the guidance and supervision of a body called “SHARIAH COUNCIL”.
• The bank is committed to continuous research and development so as to keep pace with modern banking.
• The operations of the Bank are computerized to ensure prompt and efficient services to the customers.
• The bank has introduced camera surveillance system (CCTV) to strengthen the security services inside the bank premises.
• The bank has introduced customer relations management system to asses the needs of various customers and resolves any problem on the spot.
• The bank has also introduced full online Banking facility to the customer.

Present status of JBL

Table: Highlights for the year 2007 and 2006

Business Performance

JBL has registered a steady growth in all spheres of its operations and expects to attain better results in the days ahead.

Target Market for Loans and Advances

• Agro processing industry
• Textile spinning, Dyeing/printing
• Export oriented Garments, Sweater
• Foods & Allied
• Paper & products
• Engineering steel mills
• Chemical, Pharmaceuticals etc
• Telecommunication
• Computer Software and information technology
• Manufacturing of artificial flowers
• Electronics
• Infrastructures
• Oil & gas
• Jewelry and diamond cutting and polishing
• Liquefied Petroleum Gas (LPG)
• Compressed Natural Gas (CNG)
• Tiles
• Ceramics
• Small and Medium Enterprises (SME)

Product or service offer by bank

• Retail Banking
• Deposit taking including special schemes viz. MSS, MBS, DBDS, TBDS etc.
• Remittance and collection
• Import and Export handling and financing
• Corporate Banking
• Loan syndication
• Project Finance
• Investment Banking
• Consumer Credit
• Lease Finance
• Hire Purchase
• 24 Hours Banking Q-cash ATM
• Personal loan for women

Three Themes for Growth

• Introducing Card Network and electronic banking.
• Expanding personalized services
• Building strong presence in the market with reputation.

R&D: Investing into the Future

Excellence in banking operation depends largely on a well equipped and efficient Research and Development Division. Such activities require the investment of substantial resources and a set of qualified personnel with multidisciplinary background. Although it is not possible at this stage to undertake R&D activities similar to those of the banks in the developed countries, Jamuna Bank’ has established a core Research and Planning Division comprising skilled persons from the very inception of the Bank.

Human Recourses:

They sincerely believe investment in human recourses ultimately pays high divided and also recognize the intellectual capital is the most important asset for the Bank. The Bank offers competitive comprehensive package to the employees. They  recognize  the importance of the developing  a well trained professional staff whose skill and dynamic X-ray vision and deep commitment will steer the Bank through the turbulence of globalize  business scenario to growth and prosperity.

The bank also recognizes the importance of employee participation in standardization and general well-being of the company. They believe that their success depends on our employees who are working together in the interest of our customers. They follow the under-mentioned policies for the development of our human resource.

• The Bank committed to nurturing the employee relationship by continuous development of innovative reward and incentive programs that focus on long and short term operational and strategic goals.
• Emphasis is given to teamwork, training and philosophy of internal promotion to enhance the empowerment of employees
• For free exchange of positive ideas within the workplace a policy is adopted for open, honest and two –way communication.
• For maintaining their human resources they reward them with performance bonus, overseas trip, promotions, and increments reasonably.

Besides developing the human resources professionally, with the view of this Jamuna Bank has established a library where all sorts of books including professional books are available so that the officers and executives can sharpen and update their knowledge.

Information technology

Use of technology for providing prompt services to customers is inevitable for a service industry like bank. They have a strong conviction of applying information technology in their operation for ensuring prompt but accurate service to their customer. All of their branches are connected with on-line. They have established 45 ATMs. They have already introduced direct debit card, credit card in limited range, tele banking. All these, they believe “would take your bank to a newer height in auto-banking services.”

Training Division

The Bank has set up Training Institute for providing training facilities to its executives/officers and this training institute was established in September, 2006. The Training Institute has already conducted a number of foundations and specialized training courses. A number of officers were sent to Bangladesh Institute of Bank Management (BIBM) and other training institutes at home and abroad for specialized training on various aspects of banking.

Social responsibility

In the backdrop of profound financial success the benign Board of Directors and prudent management considered the formation of Jamuna Bank Foundation through which some social welfare activities can be rendered to the society. For the last few years, they are consistently expanding their social welfare activities. They have distributed relief to the various disaster-affected areas of the country. They have contributed Tk.1.00 million to Muktijoddha Jadughar, Tk.1.00 million to Atish Dipanker University etc. The bank also distributed 27,000 new blankets among the distressed peoples. They have started scholarship programme to the meritorious but financially weak students in various parts of the country.

Correspondent Relationship

Jamuna Bank Limited has established correspondent    relationship with leading International Banks in 117 countries through 152 correspondents to cover all important financial    centers of the Globe. It endeavors to increase its network of Correspondent  Relationship  with prime International Banks and Financial Institutions in order to help satisfy  the expanded needs of its customer  globally Efforts are being made of established drawing arrangements with the overseas exchange house to bring home-bound remittance into the country through the Banking channel.

Automation and Customer Service

Banking is an industry has to cope with rapid change. Innovative and Application to technology to meet the needs to our customers are becoming more vital than ever before. From day one, Jamuna Bank Limited has been offering automated banking services to its customers through use of cutting edge technology. It is so being done to extended quick services with accuracy. They shall constantly try adapted their selves to every change and competition.

Jamuna Bank Limited got membership of the society for worldwide inter bank Financial Telecommunication (SWIFT) and going to provide the valued customers’ prompt & accurate trade related activities.

The Bank has signed an agreement with ITCL with view to introduced Q-cash ATM 24 hours banking services with provision for Debit/ Credit Card, Utility bill payment at Merchant location etc. From the month of July 2008, they have already started their VISA card for the customer. The Bank is contemplating to introduce online Banking facilities to its valued customers to facilities Branch to Branch transaction, withdrawals and remittances of fund through the Branch network.

Financial Performance of JBL

Authorized Capital & Paid up capital

Authorized Capital of the bank remains unchanged at Taka 1600 Million in the year 2007 and the paid up capital of the Bank is Tk 1, 07, 25,000 ordinary shares of Tk. 100 each.

Table: Authorized & Paid up Capital of JBL

Reserve fund and other reserve

In the year 2005 the total reserve was taka 487.46 Milloin, but in the year 2006, it was increased on taka 629.33 Million by the difference is taka 141.87 Million. At the year of 2007 it is reached at taka 703.67 Million.

 Table: Reserve Fund of JBL

Deposit

Deposit is termed as the life –blood of a commercial Bank. In the year 2005 Jamuna Bank was able to mobilize a total deposit of Tk. 14454.13 million. In the year 2006 Jamuna Bank was able to mobilize a total deposit of Tk. 17284.81 million. And in the year 2006 Jamuna Bank was able to mobilize a total deposit of Tk. 17491.34 million. Efforts are on to have a balanced deposit mix to solidify the deposit base further.

Table: Deposit Position of JBL

Investment:

On December 31, 2005 the total amount of investment is Tk. 2037.84 Million. On December 31, 2006 the total amount of investment is Tk. 2552.67 Million. And on December 31, 2007 the total amount of investment is Tk. 2550.59 Million. The investment portfolio comprising Government Treasury Bills etc. contributed mainly towards fulfillment’s of Statutory Liquidity Requirement.

Table: Investment Position of Jamuna Bank

SWOT Analysis

SWOT analysis is the detailed study of an organization’s exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the organization.

Strengths:

• Experienced top management
• Satisfactory capital base
• Low infection in loan exposure
• Prospective IT infrastructure

Weakness:

• Limited market share

• Exposure to large loan

• Excessive dependency on term deposits

• Weak fund management

• High cost of fund

• Islamic Branch funds are not ring fenced

Opportunity:

• Regulatory environment favoring private sector
• Credit card
• Small and medium enterprises

Threats:

• Daily basis interest on deposit offered by HSBC.
• Increased competition in the market for quality assets
• Supply gap of foreign currency
• Overall liquidity crisis in money market

Balanced Sheet (Un-Audited) as on 30^th June 2007

 Balanced Sheet (un-Audited) as on 30^th June 2007

MARKETING

Marketing concept

Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user.

Marketing is the process by which companies create value for customers and build strong customer’s relationships in order to capture value from customers in return.

Marketing management wants to design strategies that will build profitable relationships with target consumers. But what Philosophy should guide these marketing strategies? What weight should be given to the interests of customers, the organization, and society? very often this interest conflict.

There are five alternative concepts under which organizations design and carry out their marketing strategic:

1. The production concept:

The idea that consumers will favor products those are available and highly affordable.

2. The product concept:

The idea that consumers will favor products that offer the most in quality,   performance, and features and the organization should therefore devote its energy to making continuous product improvements.

3. The selling concept:

The idea that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort.

4. Marketing concept:

The marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do.

5. The societal marketing concept:

A principle of enlightened marketing that holds that a company should make good marketing decisions by considering consumers wants, the company’s requirements, consumer’s long runs interests.

Understand the marketplace and customer needs and wants

Customer Needs, Wants and Demands:

Needs: States of felt Deprivation.

Wants: The form human needs take as shaped by culture and individual personality.

Demands: Human wants that are backed by buying power.

Marketing Offers- product, services, and experiences:

Consumers’ needs and wants are fulfilled though a marketing offer- some combination of product, services, information, or experiences offered to a market to satisfy a need or want. Marketing offer are not limited to physical products. They also include services, activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything.

Customer value and satisfaction:

Consumer usually faces a broad array of products and services that might satisfy a given need. How do they choose among these many marketing offers? Customer form expectations about the value and satisfaction that various marketing offers will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to other.

Exchange and Relationships:

Marketing occurs when people decide to satisfy needs and wants through exchange e relationships. Exchange is the act of obtaining a desired object from someone by offering something in return. In the broadest sense the market tries to bring about a response to some marketing offer. The response may be more than simply buying or trading product or services.

Product:

Product means the goods and services combination the company offers to the target market.

It includes quality, design, features, branding, packaging, warranties, guaranties, product life cycle etc of the product offered by a firm.

Price:

Price is the amount of money customers have to pay to obtain the products.

Promotion:

Promotion includes all the activities the firm undertakes to communicate and promote its products to the target market to buy.

Place:

Place includes company activities that make the product available to target consumers.

It includes the decision of:

• What shipping method,
• How and where to store the product until it is sold,
• What intermediaries to use,
• What sales outlets to be used in specific locations throughout the country.

 Marketing segmentation

Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Geographic segmentation:

Calls for dividing the market into different geographical units such as:

• Country Neighborhood.
• City or Metro Size.

Demographic segmentation:

It divides the market into groups based on variables such as:

• Family size.
• Family life cycle.

Psycho graphic segmentation:

Psycho graphic segmentation divides buyers into different groups based on

• Lifestyle (Activities, Interests & Opinions)
• Social class, and
• Personality characteristics.

Behavioral segmentation:

Behavioral segmentation  divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. The variables are:

• Occasions
• Benefits sought
• User Status
• Usage Rates
• Loyalty Status
• Readiness Stage
• Attitude Toward the Product/Service

Requirements for Effective Segmentation:

• Measurable: The Size, purchasing power, and profiles of the segments can be measured.
• Accessible: The market segments can be effectively reached and served.
• Substantial: The market segments should be large and profitable enough to serve.
• Differentiable: The segments should be conceptually distinguishable and respond differently to different marketing mix elements and programs.
• Actionable: Effective programs can be designed for attracting and serving the segments.

Definition of service

Service can be defined as any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.  Its production may or may not be tied to a physical product. A company’s offerings often include some services. (Lovelock Christopher, 2004).

In other words, services are deeds, processes, and performances”. (Zeithaml and Bitner, 2003).

Categories of Service Mix

A company’s offerings often include some services. The service component can be a minor or major part of the total offering. Categories of offerings are:

• Pure tangible good:

The offering consists primarily of a tangible good such as soap, toothpaste etc,

• Tangible good with accompanying services:

The offering consists of a tangible good accompanied by one or more services, such as car, computer etc,

• Hybrid:

The offering consists of equal parts of goods and services, such as restaurants.

• Major service with accompanying minor goods and services:

The offering consists of a major service along with additional services or supporting goods, such as airline services.

• Pure service:

The offering consists primarily of a service such as psychotherapy, baby- sitting etc.

Characteristics of service

There are some basic differences exist between services and goods. Services posses the following Characteristics that make services difference from those of goods:

1. Intangibility: Services cannot be seen, tasted, felt, heard or smelled before they are bought. Consumers look for service quality signals. Example: Airline services.

2. Inseparability: Services can’t be separated from their providers whether the providers are people or machine. If a service employee provides the service, then the employee is a part of the service, such as doctor services.
3. Variability: The quality of services depends on who provides them as well as when, where and how they are provided. Employees and other factors result in variability. Example: Hotel services.

4. Perishability: Services can’t be stored for later sales or use. Several strategies can produce a better match between demand and supply in a service business. Example: Seats of a theater hall for a particular movie.

Building Customer Relationships

The first three steps in the marketing process- understanding the marketplace and customer needs, designing a customer driven marketing strategy, and constructing marketing programs- all lead up to the fourth and most important step: Building profitable customer relationships.

Customer relationships management (CRM)

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction is the customer relationships management.

Customer value and satisfaction:

Customer value:

Attracting and retaining customers can be a difficult task. Customer often faces a confusing array of products and services from which to choose. A customer buys from the firm that offers the highest customer perceived value- the customer evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

Customer satisfaction:

Customer satisfaction depends on the products/services perceived performance relative to buyer’s expectations. If the products/services performance falls short of expectations, the customer is dissatisfied. If the performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted.

Customer Relationship Levels and Tools:

• Basic Relationships.
• Full partnerships.
• Frequency marketing program.
• Club marketing Programs.
• Structural ties.
• Financial bonds.
• Social bonds.

The Changing nature of customer relationships:

• Relating with more carefully selected customers.
  • Selective relationship Management.
  • “Fire” Unprofitable customer.
• Relating for the long term.
• Attracting new customer is costlier than retaining.
• Relating directly.

Service-quality Model

The instrument used in this study was adapted from SERVQUAL (Parasuraman, Zeithaml and Berry, 1988). This model highlights the main requirements for delivering high service quality. The SERVQUAL instrument has many advantages (Buttle, 1994):

• It is accepted as a standard for assessing different dimensions of service quality.
• It has been shown to be valid for a number of service situations.
• It has been demonstrated to be reliable, meaning that difference readers interpret the questions similarly.
• The instrument is parsimonious in that it has a limited number of items. This means that customers and employees can fill it out quickly.
• It has a standardized analysis procedure to interpret the results.

Few studies have used SERVQUAL to measure IT service quality (KIM 1990: Pitt, Watson and Kavan 1995; Shaw, Delone and Niedman 2002). These studies have confirmed that SERVQUAL can be used with confidence in IT environment.

The SERVQUAL is based on the concept of a “service quality gap” that exits between the customers expected level of services (from the previous experience and word-of-mouth communication) and their perception of actual level of service delivery.

Definition of customer satisfaction

• The provision of goods or services which fulfill the customer‘s expectations in terms of quality and service, in relation to price
• The degree to which there is match between the customer‘s expectations of the product and the actual performance of the product.

Department wise activities of Jamuna Bank

The department does the most important and basic work of the banks. All other departments are linked with this department. It also played a vital role in deposit mobilization of the branch. Jamuna Bank provides different types of accounts and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows:

• General Banking
• Cash Section
• Bills and clearing Section
• Remittance & FDR section
• Accounts Sections
• Loan and Advances
• Foreign exchange

Section

is the starting point and ‘Heart’ of all the banking operations. It is the department, which provides day-to-day services to the customers. It is performs the core functions of Bank. It is the storage point for all kinds of transaction of foreign exchange department, loans and advance department & itself.

Deposit Section

It is a major part of Section. The function of the deposit section is very important. It is fully computerized. The officer of the deposit section maintains account number of all the customers of the bank. They are used different code number for different account. By this section a depositor/drawer can know what is the present position lf his / her account. The officer makes posting three types of transactions such as cash, clearing and Transfer. This section performs the following tasks:

• Post all kind of transactions.
• Provide on demand report.
• Check maintenance.
• Preparation of day transaction position.
• Preparation of closing monthly transaction.

Savings deposit (SB)

General Characteristics:

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

• Interest is paid on this account. JBL offers a reasonable rate of interest for SB A/C.
• Generally, banks require a 7-day prior notice if the total amount of one or more withdrawals on any date exceeds 25% of the balance of the account unless is given. But in JBL there is no restriction about drawing money from savings account. Any time holders may draw money of any amount without prior notice. Generally householders, individuals and other small-scale savers are the clients of this account
• Minimum Balance of Tk.500 is to be maintained.
• Interest will be counted on the daily basis. Savings interest rate is 6.00%.
• Very limited service charge as it is an interest bearing account.

Short-term deposit (STD)

General Characteristics:

• Customers deposit money for a shorter period of time.
• STD account can be treated as semi-term deposit.
• STD should be kept for at least thirty days to get interest.
• The interest offered for STD is less than that of savings deposit.
• Volume of STD A/C is generally high. In MBL, various big companies, organizations, Government Departments keep money in STD accounts.
• Frequent withdrawal is discouraged and requires prior notice.

General conditions for opening Savings, Current, Short term deposit, Individual and Joint account:

1. The law rules and regulations of Bangladesh, usual customs and procedures common to Banks in Bangladesh will apply to and govern the conduct of accounts opened with the bank.
2. Any person opening an account will be deemed to have read, understood and accepted the rules governing the account. Minimum balance to be maintained in the A/C Tk. 1000/-
3. A suitable introduction by an introducer acceptable to the bank is required prior to opening of any account. Recent photographs of the account openers duly attested by the introducer must be produced including up to date Trade License where needed.
4. Separate account number shall be allocated for each account.
5. The account holder shall have to use the specimen signature put in the bank while withdraw money and in case of other correspondence with the Bank. In order to change specimen signature put earlier the operator shall have to apply in writing before well time.
6. The Bank reserves the right to amend the present rules at any time in any manner with or without giving prior notice to the account holder’s separately.
7. The Bank preserves the right to close the account without showing any cause.
8. Account holder should authorize the persons called nominee who receive or draw the amount of deposits held by the bank in the event of account holder’s death.
9. Any change of the address or telephone number of the Account Holder must be informed in writhing to the Bank.

Interest Rate of SB, CD and STD Account

Table: Interest rate of SB, CD & SRD A/C

Deposit taking including special schemes: viz. (MSS, MBS, DBDS, TBDS etc)

MSS (Monthly Savings Scheme)

• A depositor can open a MSS account for depositing 500/, 1000/-, 1500/-, 2000/-, 3000/-, 5000/- and Tk 10000.
• This deposit shall be for the period of 3, 5 & 10 years.
• To open this account the depositor will have to fill up the respective application form of the bank and submit a photograph of the depositor and also the nominees.
• Installment amount shall be deposited within 10^th day of each month. Customer may also deposit installments on next working day if 10^th is holiday.
• If the depositor fails to deposit of installment within the specific date he/she has to be charged fine at the rate of 5% of the installment amount of Tk. 25/- whichever is higher for such late payment.
• If the customer fail to deposit consecutive 3(Three) installments, then his/her account will be close under this scheme. Than profit given at normal savings rate. But no profit will be given before encashment of 6(Six) months.
• Credit facilities up to 80% may be availed against the deposit.

Interest rate of MSS

 Table:  Interest of MSS

MBS (Monthly Benefit Scheme)

• To open the account the depositor has to fill in an application form where in he/her mentions the amount of deposit, the period for which deposit is to be made and the names in which the Monthly Benefit Scheme receipt is to be issued.
• In case of deposit in joint name the banker also takes the instruction regarding payment of money on maturing of deposit.
• In this account the minimum amount for deposit is Tk. 1, 00,000/- or any multiple of this amount.
• The rate of interest is 6%. The depositor can get the interest in every month.
• Based on the deposit profit will be given as follows:

If the depositor wants to withdraw his/her principal deposit before 6 month, no profit will be given to him/her. If it is drawn on six months or after 6 months, profit will be given at normal savings rate. Credit facilities up to 80% may be availed against the deposit.

Double Growth Deposit Scheme (DGDS)

• JBL Double Growth Deposit Scheme are high yielding deposit schemes in which depositors money will be double at the end of 6 years.
• In this account the minimum amount for deposit is Tk. 1, 00,000/- or any multiple of this amount.
• The deposit shall be accepted only for the period of 6 (Six) years. The depositor must maintain a savings or current account with any of the branches of JBL.
• Credit facilities up to 80% may be availed against the deposit.
• If the depositor wants to encash this “Deposit Receipt” prior to maturity, profit will be paid at normal savings rate. But no profit will be given if such encashment is made before completion of 6 months.
• Account may be opened in the name of Limited Company/Society/Clubs/Trusts under scheme. All existing rules for opening account in the name of Company/Society/Clubs/Trusts shall be applicable.

Triple Growth Deposit Scheme (TGDS)

• JBL Triple Growth Deposit Scheme is high yielding deposit schemes in which depositor’s money will be double at the end of 9.5 years.
• In this account the minimum amount for deposit is Tk. 1, 00,000/- or any multiple of this amount.
• The deposit shall be accepted only for the period of 9 (nine and a half) years. The depositor must maintain a savings or current account with any of the branches of JBL.
• If the depositor wants to encash this “Deposit Receipt” prior to maturity, profit will be paid at normal savings rate. But no profit will be given if such encashment is made before completion of 6 months.
• Credit facilities up to 80% may be availed against the deposit.

Salient Features of the Schemes

Depositors will be given money as per the following table on maturity.

Fixed Deposit:

These are time deposit A/C with maturation period 1 month, 3 months, 6 months, 1 year, 2 year and 3 year. Fixed deposits are repayable along with profit on or after maturation period. At the request of the depositor a matured FDR may be renewed for any of the periods mentioned above. If the depositor does not issue any instruction to branch within on month of the date of maturity of the FDR, the same will be automatically treated as renewed from the date of expiry for a period of three months at the rate of profit applicable on the renewal. In case of premature encashment of FDR, no profit is paid to depositor.

Interest rate of FDR

Table:  Interest of FDR

General practice for all type of account:

The following procedures are maintained for issuing of a check book:

• For the first cheque book, the customer has to apply in a specified form and then for new cheque book the customer shall have to apply through the requisition slip supplied with the previous cheque book.
• The leaves of the check book under issue shall be counted to ensure that all the leaves and the bank requisition slip are intact and the name and account number shall be written on the cover page of check book. The account number of the customers shall be entered on all the leaves of the check book and its requisition slip
• The name and account number of the customers shall be entered in the check book register against the particular check book series.
• Then the register check book and the requisition slip are signed by the officer in charge of the deposit department.
• Then the check book is handed over to the customer after taking acknowledgement on the requisition slip and the register book.
• A cover file containing the requisition slip shall be effectively preserved as vouchers. If the ledger keeper notices any defect, he will make a remark to that effect on the requisition slip and forward it to the cancellation officer to decide whether a new check book should be issued or not.

When cheque book is lost:

A guarantee form is taken from the account holder when his book is lost, where he indemnifies the bank in this regard. A new requisition sleep is given to him for a new cheque book. Fresh cheque book in lieu of the lost one should be issued after verifying the signature of the account holder from the specimen signature card only prior approval of the manager/sub-manager of the branch.

Closing of an A/C:

A customer may close out his A/C at any time by submitting an application to the branch. The customer should be asked to draw the final cheque for the amount standing to the credit of his A/C less the amount of closing and or other incidental charges and surrender the unused cheque. The A/C should be debited for the account closing charges etc. and an authorized officer of the branch should destroy unused cheque leaves.

Transfer of an A/C:

Account holder may transfer his account from one branch to another branch. For this he/she must apply to the manager of the branch where he is maintaining account. Then manager of Local Office sends a request letter to the manager of the branch where the account holder wants to transfer his account. With his request he sends original copy of account opening application and specimen Signature Card and photocopy of application for transferring the account with the balance remained account.

Account inquiry:

A customer can obtain the statement of his account by the submission of an application in prescribed balance inquiry receipt. JBL not charges any amount for this statement.

Cash section

Banks, as a financial institution, accept surplus money from the people as deposit and give them opportunity to withdraw the same by cheque, etc. But among the banking activities, cash department plays an important role. It does the main function of a commercial bank i.e. receiving the deposit and paying the cash on demand. As this department deals directly with the customers, the reputation of the bank depends much on it. The functions of a cash department are described bellow:

Cash Department

Cash section of any bank plays a vital role in procedure. Because it deals with the most liquid assets. There is several counters work simultaneously in cash section of Jamuna Bank, Motijheel Branch. There is also some electronic counting machines by which a huge amount of cash money can be counted within a few minutes. This section deals with all type of negotiable instruments and it includes vault, used as the store of cash, instruments.

Functions of Cash Department

Cash packing

After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial.

Allocation of currency:

Before starting the banking hour all tellers give requisition of money through “Teller cash proof sheet”. The head teller writes the number of the packet denomination wise in “Reserve sheet” at the end of the day; all the notes remained are recorded in the sheet.

Remittance and Collection

Carrying cash money is troublesome and risky. That’s why money can be transferred from one place to another through banking channel. This is called remittance. Remittances of funds are one of the most important aspects of the Commercial Banks in rendering services to its customers

Sending money from one place to another place for the customer is another important service of banks and this service is an important part of countries payment system. For this service people especially businessman can transfer funds from one place to another very quickly. There are 4 types of remitting money such as:

Pay order (PO): Pay order gives the payee the right to claim payment from the issuing bank. It can be en-cashed from issuing bank only. Unlike cheque, there is no possibility of dishonoring pay order because before issuing pay order bank takes out the money of the pay order in advance pay order cannot be endorsed or crossed and so it is not negotiable instrument.

The procedure for selling P.O. is as follows

• Purchaser must be an A/c holder of JBL.
• Deposit money with P.O. application form.
• Give necessary entry in the Bills Payable (P.O.) register;
• Payees’ name, date, P.O. No. Etc.
• Prepare the instrument.
• After it has been scrutinized & approved by higher authority, the instrument is delivered to customer. Signature of customer is taken in the counterpart.

Demand Draft (DD): Demand draft is an order of issuing bank on another branch of the same bank to pay specified some of money to the payee on demand. It is generally issued when customer wants to remit money in any place, which is outside of the clearinghouse area of issuing branch. Payee can be purchaser himself or another mentioned in the DD. It is a safe technique of transferring money from one place to another. Bearing money may be risky. It is a negotiable instrument and it can be crossed or not.

For payment of DD, Paying branch first has to be confirmed that the DD is not forged one. First bank cheque the “Test Code” mentioned on the draft. If “Test Code” agrees then believe that DD is not forged and make payments. For further confirmation the issuing bank sends an advice about the DD to the paying branch. Without advice the paying branch generally does not pay.

Procedures for issuing a DD:

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

Role of a drawn on bank:

The I.B.C.A. is dispatched to drawn on branch. Issuing an I.B.C.A. implies that the branch is being credited to whom it is issued I.B.C.A. contain s the controlling number. Lodgment is given after receiving an I.B.C.A. Necessary entry is given in a register called “DD-In-Issuing branch,” Controlling number of the I.B.C.A should match the serial number of this DD-in register.

Clearing

According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks which are a member of the clearing house are called ad Scheduled Banks. The Scheduled Banks clear the cheques drawn upon one another through the clearing house. This is an arrangement by the central bank where everyday the representative of the member banks sits to clear the cheques. For clearing there is a department in every bank. This department receives cheques, drafts and like instruments from its customers for the purpose of collection with a deposit slip over the counter crediting their accounts. Clearing of cheque is done through the clearing house in Bangladesh Bank. Everyday the first hour starts at 10:30 a.m. and returns house at 5:00 pm.

Function in the Clearing House

• The clearinghouse is an assembly of the locally operating scheduled banks for exchange of checks, drafts, and other demand instruments drawn on each other and received from their respective customers for collection.
• The house meets at the appointed hour on all working days under the chairmanship of the central bank. The clearinghouse sits twice in a working day.
• The members submit the claimable checks in the respective desks of the banks and vice-versa.
• Consequently, the debit and credit entries are given.
• At the end, the debit summation and the credit summation are calculated. Then the banks clear the balances through the check of Bangladesh Bank.
• The dishonored checks are sorted and returned with return memo.

Dishonor of Cheque

If the cheque is dishonored, MBL sends (with cheque return memo) to the customer stating the reason. If the cheque is dishonored due to insufficiency of funds, MBL charges some money as penalty

Accounts Section

This is a very much crucial department for each branch of a commercial bank. Records of all the transactions of every department are kept here as well with other respective branches. Accounting department verifies all financial amounts and contents of transactions. If any discrepancy arises regarding any transaction this depart report to the concerned department.

Tasks of accounts department

Accounts department plays a vital role in commercial banking. In private banking sector accounts department of Jamuna Bank Ltd. Performs its tasks properly. The activities of accounts section are as follows:

• Record al transaction in the cash book.
• Record all transaction in the general and subsidiary ledger.
• Prepare daily fund function, Weekly position, Periodic statement of affairs etc.
• Prepare necessary statement for reporting purpose.
• Pay all expenditure on behalf of the branch.
• Make salary statement and pay salary.
• Branch to branch fund remittance and support for accounting treatment.
• Budgeting for branch.
• Make charges for different types of duties.

Statements Prepared by the Branch

• Weekly fund position
• Monthly sector corporation
• Monthly Schedule Bank Statement-1(SBS-1)
• Quarterly schedule bank statement-2 (SBS-2)
• Quarterly statement of exchange of torn/dirty notes
• Half-yearly schedule bank statements-3 (SBS-3)
• Half yearly deposit insurance pension scheme
• Branch position daily, monthly, yearly
• Prepare all kind of voucher

Loans & Advances of JBL

Bank credit is very important for bringing economic development in a country. Without adequate finance there can be no growth or maintenance of a stable economy. Bank lending is important for the economy for it makes possible the financing of the agriculture, commercial and industrial activities of a nation. At the same tine, a bank will, therefore, distribute its funds among various sectors in a manner as to derive sufficient incomes. The bank has formulated its policy to give priority to small and medium businessmen while financing large-scale enterprises through me formulation of a consortium of banks. The banks total outstanding as of December 31, 2003 stood at TK. 10,775.95 million as compared to TK. 8,896.19 million in 2002. The bank provided credit for trade and business, import, export. Garments, fisheries real estate and micro credit programs.

Credit

Credit is one of the functions of commercial banks. The word credit derives the Latin word ‘credo’ which means “I Believe”. The fundamental nature of credit is that an element of trust exists between buyer and seller whether of goods or money. The main use of bank fund is to collect money from surplus unit and lend it to deficit economic unit. In the ordinary course of business, bank advances a loan; it does not pay the amount in cash. But it opens an account in his name and allows him to withdraw the required money by check. Bank provides credit facilities to the businessmen by way of loans, advances, overdraft and cash credit. When a loan is granted or overdraft is sanctioned, the amount of loan or overdraft is entered in the account of the customer and he is allowed to draw check up to the amount agreed upon. Thus the bank creates a deposit in the name of borrower. Basically credit is the function by which people can perform their job by depositing and lending money from the bank with an implied interest rate and bank performs here as a middleman.

Importance of Bank Credit

Financial Intermediary is an important activity in the economy because it allows fund to be channeled from those who might otherwise not put them to productive use o those who will. In this way financial intermediaries can help promote a more efficient and dynamic economy. Some other importance of bank credits is as follows:

Credit is an important determinant of money creation and hence of production,
consumption and national income. Credit influences and is influenced by quantity of money, level of economic activity, impost and net foreign assets.

• Credit influences imports and capital movement and hence the outcome of the
  balance of payments.
• Credit influence behavior of economic sectors and behavior of economic agents.
• Credit provides vital linkage among Govt. sector, private sector, financial sector and foreign sector.
• Credit is the most important activity of bank, because interest of loans constitutes the major part of the bank income. Hence vital importance of the making good loans.

Types of Credit

Direct of Funded Facility

Here Withdrawal power is directly given to the customer. Funded facilities can also be
divided into the following categories:

• Secured Overdraft.
• Consumer Credit Scheme.
• Small Lon scheme.
• Lease Finance.
• Doctors Scheme.
• Hire Purchase.
• Staff Loan.
• Cash Credit against Hypothecation.
• Packing credit.
• Loan against Letter of Trust receipt.
• Paid against Document.
• House Building.
• SME

Indirect or Non-funded

Indirect facility withdrawal power is not directly given to the customer. Indirect facilities
are giving below:

• Letter of Credit.
• Bank guarantee.

Credit Management

To have crystal clear idea about the credit management of JBL Critical analysis of the following are essential:

1. Credit policy of the Bank.
2. Credit sanctioning Authority of MBL and
3. Processing and sanctioning of Credit Proposal.

Credit Policy of JBL

JBL credit policy contains the views of total macro-economic development of the country as a whole by way of providing financial support to the Trade, Commerce and Industry. Throughout its credit operation Jamuna Bank Limited goes to very possible comers of the society. They are financing large and medium scale business house and industry. At the, same time they also takes care entrepreneurs through its operation of lease financing and some micro credit, Small Loan scheme etc. As a part of its Credit Policy JBL through its credit operation maintains commitment for social welfare. The bank is coming up with a scheme where the under privileged children will be given financial support for education and self-employment. From operational aspects it is
observed that as a mailer of policy.

• Jamuna Bank Limited put emphasis on the customer i.e. the ‘Man’ and the Business not on the Security in selecting borrowers.
• It takes of diversity in credit portfolio.
• It takes care maintaining proper Mix of short, medium and ling term finance in its credit portfolio usually they do not go for long term Finance for a period not exceeding 5 years.
• Charging of interest is flexible depending on insisting of the proposal and the customer.

Credit Sanctioning Authority of Jamuna Bank Limited

Jamuna Bank Limited believes in decentralization of power and authority. Because of the evil duel subordination may crop in the chain of command its authority is not well defined and properly implements with a view to ensuring prompt efficient services to its multitude of plans spread far and wide, the bank envisages delegation of optimum power to its executives and officials at different levels of operation.

In order to implement the system of delegation of power effectively and desired for the bank as well as the executives concerned, bank has developed a system to ensure that delegated authority by the executive can be evaluated realistically and qualitatively. The basic guideline they follow to achieve the objective of delegation of authority is

• The Managing Director can exercise all the powers vested in other executives of the bank.
• Other than Managing Director, the delegation power is ‘exercised by the executives through specific or general order.
• The Managing Director may suspend exercise of delegated power of any executive through specific or general order.

Delegated powers are expected to be exercised by the’ authorized Executives judiciously keeping the bank interest in mind. In exercising the powers so delegated authorized. Executives shall also have credit restriction, tools and regulations as governed by the
banking company Act Bangladesh bank and other usual credit norms.

However the following guidelines are laid down before the executives of Jamuna Bank Limited for exercising the delegated power:

• The borrower must be a man of integrity, and must enjoy good reputation in the market.
• The borrower must have the capacity and capability for utilizing credit properly and profitability.
• The enterprise of the borrower must be viable and profitable. The proposal of the borrower must be evaluated properly and carefully so as to ascertains its The enterprise must be able to generate sufficient fund for debt and servicing.
• A customer to whom credit is to be allowed should be far as possible within the command area.
• No sanctioning officer can sanction any credit to any for his near relations and to any firm/company where this relation has financial interest.
• There shall be no power to sanction clear advance.

Foreign Exchange Department

Every country has certain natural advantages and disadvantages in producing certain commodities while they have some natural disadvantages as well in other areas. As a result we find that some countries need to import certain commodities while others need to export their surpluses. Foreign trade brings the fruits of the earth to the homes of the humblest among the countries. These transactions are the basis upon which international trade is made.

As mote than one currency are involved in foreign trade, it gives rise to exchange of currencies which is known as Foreign Exchange. The term ‘Foreign Exchange’ has three principal meanings; Firstly it is a term used referring to the currencies of other countries in terms of any single one currency. To a Bangladeshi, Dollar, Pound Sterling, etc. are foreign currencies and as such foreign exchanges. Secondly, the term also commonly refer to some instruments used in international trade, such as bill of exchange, drafts, traveler’s cheque and other means of international remittance. Thirdly the term foreign exchange is also quite often referred to the balance in foreign currencies held by a country.

In terms of section 2(d) of the Foreign Exchange Regulations-1947, as adopted in Bangladesh foreign exchange means foreign currency and includes any instrument drawn, accepted, made or issued under clause 13 of article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and draft, travelers cheque, loiter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currencies.

In exercise of the powers conferred by sec. 3 of the Foreign Exchange Regulations-1947, Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers (AD). Licenses are also issued by Bangladesh Bank to persons or firms to exchange foreign currency instruments such as T.C., Currency notes and coins. They are known as Authorized Money Changers.

Foreign trade financing is an integral part of banking business. After finishing the my next respective area was foreign trade department. Banking business basically deals with both internally and as well as foreign correspondence. This foreign correspondence generally conducted through foreign currencies. Bangladesh Bank issues Authorized Dealer (AD) license by observing the Bank’s performance, and also the customers associated with the bank for conducting foreign dealings. The department that deals with foreign correspondence is known as foreign trade department. Foreign trade deals with:

• Letter of credit (L/C) operation and
• Foreign remittance

Steps for import L/C Operation – 8 steps operation 

Step 1 – Registration with CCI&E:

• For engaging in international, trade, every trader must be first registered with the Chief Controller of Import and Export,
• By paying specified registration fees to the CCI&E. the trader will get [RC/ERC (Import/Export Registration Certificate), to open L/C with bank, this IRC is must.

Step 2 – Determination terms of credit:

The terms of the letter of credit are depending upon the contract between the Importer and exporter. The terms of the credit specify the amount of credit, name and address of the beneficiary and opener, tenor of the bill of exchange, period and mode of shipment and of destination, nature of credit, expiry date, name and number of sets of shipping documents etc

Step 3 – Proposal for Opening of L/C:

To have an import LC limit an importer submits an application to department to Jamuna Bank. The proposal contains the following particulars:

• Full particulars of the bank account
• Nature of business
• Required amount of limit
• Payment terms and conditions
• Goods to be imported
• Offered security
• Repayment schedule

Step 4 – Application by importer to the banker to open letter of credit:

For opening L/C, the importer is required to fill up a prescribed application form provided by the banker along with the following documents:

Step 5 – Opening of L/C by the bank for the opener:

• Taking filled up application form from the importer.
• Collects credit report of exporter from exporter’s country through his foreign correspondence there.
• Opening bank then issues credit by air mail/TEL JM/SWIFT followed by L/C advice as asked by the opener through his foreign correspondent or branch as the case may be, at the place of beneficiary. The advising bank advises the L/C to the beneficiary on his own form where it is addressed to him or merely hand over the original L/C to the beneficiary if it is so addressed.

Step 6 – Shipment of goods and lodgment of documents by exporter:

• Then exporter ships the goods to the destination of the importer country.
• Sends die documents to the L/C opening bank through his negotiating bank. Generally the following documents are sent to the Opening Banker with L/C:

Step 7 – Lodgment of Documents by the opening Bank from the negotiating bank:

After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy found, it informs the importer, if importer accepts the fault, then opening bankers call importer retiring the document. At this time many thing can happen. These are indicated in the following:

• Discrepancy found but the importer accepts – no problem occurs in lodgment.
• Discrepancy found and importer not agreed to accept – In this case, importer protest and send back all the documents to the exporter and request his to make in the specified manner. Here banker is not bound to pay because the documents send by exporter is not in accordance with the terms of L/C.
• Documents are OK but importer is willing to retire the documents – In this case bank is obligated to pay the price of exported goods. Since importer did not pay for bill of exchange, this payment by bank is one kind of credit to the importer and this credit in banking is known as PAD.
• Everything is O.K. but importer fails to clear goods from the port and request bank to clear – In this case banks clear the goods and takes delivery of the same by paying customs duty and sales tax etc. So, this expenditure is debited to the importer’s account and in banking it is called LIM.

Step 8 – Retirement:

The importer receives the intimation and gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping document to clear the imported goods from the customs authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for LTR (Loan against Trust Receipt.

Export

The goods and services sold by Bangladesh to foreign households, businessmen and Government are called export. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year, The ERC number is to be incorporated on EXP forms and other documents connected with exports. The formalities and procedure are enumerated as following:

• Obtaining exports LC: To get export LC form exporter issued by the importer.
• Submission of export documents; Exporter has to submit all necessary documents to the collecting bank after shipping of goods.
• Checking of export documents; after getting the documents banker used to

Check the documents as per LC terms.

• Negotiation of export documents; if the bank accepts the document and pays the value draft to the exporter and forward the document to issuing bank that is called a negotiating bank. IF the bank does buy the LC then the bank normally acts as collecting bank.
• Realization of proceeds: This is the period when the issuing bank has realized the payment.
• Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank has to report to respective department of Bangladesh bank by mentioning latest payment.
• Issue to proceeds realization certificate (PRC): Bank has to issue precede realization certificate of export LC to the supplier/ exporter for getting cash assistant.

Types of Letter of Credit

• Confirmed letter of credit: In confirmed letter of credit the beneficiary receives not only an undertaking by the issuing bank but also an independent promise of payment on the part of the correspondent bank.
• Unconfirmed letter of credit: The letter of credit which does not itself give any undertaking to pay and is under no obligation to honor documents presented by the beneficiary is known as unconfirmed letter of credit.
• Documentary letter of credit: A documentary letter of credit is an undertaking made by a bank at the request of the applicant for the credit to pay a specified amount in an agreed currency to a beneficiary presents stipulated documents within a prescribed time limit.
• Clean letter of credit: The letter of credit in which the bank imposes no conditions for honoring is called clean letter of credit.
• Revolving letter of credit: Revolving letter of credit can be used by the beneficiary for a particular time period and for a particular amount by revocation.
• Fixed letter of credit: The letter of credit which is opened for a particular period of time and amount and it is cancelled after the expiry of such time or if such amount is used up.
• Revocable or open letter of credit: A revocable letter of credit is a letter of credit which can be amended or cancelled by the issuing bank at any time without prior notice to the beneficiary is known as open letter of credt.
• Irrevocable or firm letter of credit: An irrevocable letter of credit cannot be amended or cancelled by the issuing bank at any time without prior notice to the beneficiary is known as firm letter of credit.
• Marginal letter of credit: The letter of credit whish’s margin contains a form and the exporter is asked to make the bill on it is the marginal letter of credit.

Anticipatory letter of credit: An anticipatory letter of credit which is opens with a condition of making advance payment is known as anticipatory letter of credit.

FINDINGS

In JBL Motijheel Branch I have seen these types of improvement and problem.

• Total profit and deposit increase of JBL Motijheel Branch than before.
• Total advances also increase that means company’s asset has been increased.
• Due to absence of legal framework of JBL, the bank is facing problems in its transactions to handle its value added customer.
• Lack of computer literacy of its employees.
• Inner side of the branch is very much congested; there is no enough space to stand the customers freely.
• Employee-customer relationship is not so good. I am completing my survey to take 50 customers. Among them 44% are not fully satisfied with the employee of JBL.
• Interpersonal relationships of the employees (Top to Bottom) are not satisfactory level.
• Lack of enough business communication skills of the employees.
• Only tile urgent works are done and all normal works remain unattended and pending.
• There are no file lists.
• To adjust L/C liability without creating any liability such as PAD, etc. in case of Non AD branches.
• To give IBCA to Head Office before obtaining shipping documents and adjust L/C liability.
• Bank should provide modern service, modern equipment, light behavior, physical facilities and so on.
• Jamuna Bank can fulfill their 56% client expectation through their Service. But this 56% client is not strong position in their comments. They can Swiss any time. That’s why Bank can take action about their client and also their system. Because 56% satisfy client is not better for them.
• The working condition or the working facility for the employee is not good. They are doing work but there is no good system for doing the work perfectly.
• Absence of attractive remuneration package and motivation for the employee.
• Improper allocation of employee.
• Poor conditions of Balance of Payments of JBL.
• Lack of enthusiastic scheme for exporter & importer.
• In sufficient presence of modern Communication equipment’s,
• Little application of modern technology such as computerization.
• For all type of work this branch is depend on head office. So they can’t give proper and prompt service for the satisfaction of their customer.
• The monitoring system of the foreign exchange department of JBL is excellent.

RECOMMENDATIONS

I had the practical exposure in Jamuna Bank Ltd. for just three months, with my little experience in the bank in comparison with vast and complex banking system; it is not so easy to recommend some suggestion to enhance the performance level of the organization. I have observed some shortcomings regarding operational and other aspects of their banking. On the basis of my observation I would like to present the following recommendations-

• To attract more clients JBL has to create a new marketing strategy, which will increase the total export-import business.
• Effective and efficient initiatives are necessary to recover the default loans.
• Attractive incentive package for the exporter will help to increase the export and accordingly it will diminish the balance of payment gap of JBL.
• Long-term training very much required for the foreign exchange official.
• Computerized banking system and latest communication device are the most important elements for this century. So, for the sound and stable foreign exchange operation, JBL has no alternative but the modernization.
• Foreign exchange operations of other banks are more dynamic and less time consuming. JBL should take some initiative to compete with those banks
• In our country financial problem is a great constraint in foreign trade. JBL is very conservative for post-shipment finance. If it stays in liberal position the exporters can easily over-come their financial constraint.
• Bank can provide foreign market reports, which will enable the exporter to evaluate the demand for their products in foreign countries.
• Segregation of International Trade transaction from the existing situation i.e. Credit aspect to be looked after by credit analyst in that department.
• There are more gaps are showing between perception and expectation of the respondents. As soon as possible remove this gap, which are existing between clients and Bank.
• Bank can introduce more advanced MIS system to mobilize its day to day activities. It will help the employee to do their works more quickly and at the same time maintaining their quality of work.
• The Bank should be fully improved the service of the banking and provided smooth service and less time consumption regarding General Banking.
• The innovative loan scheme and service should be offered and should be more flexible in terms of repayment.
• The bank should introduce new innovative products to attract new potential customers and also keep its existing customer happy.
• The bank should provide sufficient manpower in Motijheel Branch and to grow the sense of belongingness more or to motivate the employees and also bank must adopt strict supervision and monitoring.
• Improve own ATM network and maintain sufficient fund in ATM booth.
• Management should employ at least few more employees in Credit, Foreign Exchange and department of Motijheel Branch. I have seen from my practical experience that many customers wait for a long time for any service as they see that the some concerned officials are doing their best to meet the requirements of the customers.
• To gather the social image, JBL needs to participate in the social welfare.
• Advertisement in various media must be considered for promoting the product.
• For better delivery the product Mystery shoppers is needed.

CONCLUSIONS

Banking is becoming more and more vital for economic development of Bangladesh in mobilizing capital and other resources. Jamuna Bank, being a third generation bank, is also extending such contributions as to the advancement of the socioeconomic condition of the country. It is not possible to get 100% from anywhere especially for those organizations which with mass people. JBL has some problems but it is encouraging that they are trying to overcome these obstacles. To keep pace with the current demand JBL should be more responsive. It should take necessary steps & spread over their products all over the country. Without a strong footing of deposit it is not possible to grant huge amount of loans and advances i.e. one of the major sources of income of a bank. And without huge amount it is not possible to attract the major portion that enjoys credit facilities. It will more justify for JBL to concentrate on corporate banking than consumer banking i.e. the major portion of the profit will be generated from corporate sector not from consumer section.

I am a student of BBA Program (Marketing). But I have completed my Internship from Jamuna Bank Limited. Because I want to build up my carrier with Banking Sector. My main objective of doing internship in a bank was to know about the Banking procedures. Though my topic is “General Banking  Jamuna Bank Limited: A Case study on Motijheel Branch, Motijheel, Dhaka.” I have spent most of the time in Department. Jamuna bank is almost a new player in the banking sector and is committed to provide high quality services to its constituent through different financial products and profitable utilization of fund and contribute to the growth of GDP of country. For the reason it takes the necessary steps to spread over their products all over the country by its qualitative and effective management system.  Without a strong footing of deposit it is not possible to grant huge amount of loans and advances possible to attract the major portion that enjoys credit facilities. To keep pace with the current demand JBL should be more responsive. My experience in JBL has provided me with an insight in the day -to- day operations of a bank. During the 12 weeks internship program at JBL, I have observed more and more gaining knowledge of practical banking. Though all departments and sections are covered in the internship program, it is not possible to go to the depth of each activities of decision because of time limitation.

From the findings it can be observed, as a new bank JBL has a positive participation in the economic development. Although JBL could not reach still in the highest position but its growth rate is continuously increasing. Based on the performance, hope that JBL will be able to achieve its goals and would become a finest corporate citizen’s in the banking industry.

However, I have enjoyed my three months internship at JBL. There were some problems in case of preparing report. But I have tried at my level best to prepare my report effectively.

From the above analysis of information we can draw some key decision, Jamuna Bank Limited have the opportunity and possibility to hold major market share for its quality, availability and company image. It can make itself market leader with proper utilization of its resources.