Innovative and Development Plan in Marketing of Bank Products

The main objective of this report is to analysis Innovative and Development Plan in Marketing of Bank Products, here main focus on the procedure over E-Banking and SME Banking System of National Credit and Commerce Bank Limited. other objectives are identify the problem of that may be occurred in E-banking and identify the problems of giving SME loan. Finally identify possible solutions of the problem and identify E- Banking process. This report give a clear idea on how e- banking help customers and employees.

The primary Objective:

Prospect of E-Banking and SME Banking System in NCC Bank.

The Secondary Objectives:

• To identify the concepts and principles of different loan scheme.
• To identify the meaning of E-banking.
• Find out the policies and operations in giving loan.
• To identify the operations of giving SME loan.
• To identify the problem of that may be occurred in giving SME loan.
• To identify possible solutions of the problem.
• To identify E- Banking process.
• To see how the commercial are regulated and to earn practical knowledge.
• To observe the post important financing operations.
• To apply theoretical knowledge in the real situation.
• To have a clear idea  how e- banking help customers and employees.
• To do the practical work.
• To know the classification of the loan.
• To know the dealings process with the Bangladesh Bank (BB).

Historical Background of NCCBL :

National credit and commerce Bank Limited was incorporated in Bangladesh as a banking company on under the company’s act 1994, The Bank started its operation as on 1985 year. The principal place of business is the registered office at 7-8 Motijheel Commercial Area, Dhaka 1000. It has 60 branches all over Bangladesh till now. The Bank is listed in the Dhaka and Chittagong Stock Exchanges as a publicly quoted company for its shares.

With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of private sector banking through personalized services, innovative practices, customer services, dynamic approach and efficient management. The Bank, aiming to pay a leading role in the economic activities of the country, is firmly engaged in the development of the trade, commerce and industry through a creative credit price.

NCC Bank has also positioned itself as an established Correspondent Bank. Through a worldwide network of 260 correspondent banks NCC Bank is present in all key areas of the globe.

Economical Background of NCCBL

National Credit and Commerce Bank is a conversion of erstwhile National Credit Ltd (NCL), an investment company largest of its kind in the established on 25 Nov 1985. National Credit and Commerce Bank Ltd. started their new journey with the paid up capital of 5.00 crore taka of that time. But present paid up capital of the Bank stands at tk.1757.62 million.

About NCCBL Nawabpur

Nawabpur  is one of the crowed and busiest area in Dhaka city.  It stated near gulistan where most of the people do small business for their living. In Nawabpur  area most businessman sell electronic product like mobile accessories, various kind of lighting product, toilets fitting , etc. This small business people needed money very badly for their business. In 2006 NCC Bank realize this matter and open a branch there. In September 12 NCC Bank Nawabpur branch has inaugurated, on that day this branch is operating its operation successfully. In the inaugurated day there were only 12 employees but now they have 21 employees in that branch. There volt limit is increase 3 million to 7 million and they have insurance policy on that money. When the volt crosses its limit the branch transfer its money to the head office. That money is treated as loan to head office  with the interest rate of 9.5%, but if any branch take loan from head office  the interest rate will be 10%.

When NCC Bank nawbpur  branch  started their journey they take loan from the head office, for minimum volt limit. Within two month they pay all the money to the head office,  no other branch has done this before. It happens because of associate loan that is in total 150 coral in which NCC Bank nawbpur  branch gave 15 coral. It is one reason that bank came to a balance with head office.

Today NCC Bank nawbpur branch is giving banking service with proud. And they have achieve their goal three month before, that prove the branch doing good business.

GENERAL BANKING

NCCBL Nawabpur branch has their own code number it is 0047. This code represent NCCBL Nawabpur branch, who ever open account this number sit  first before their account number it does not matter which kind of account are you opening. In general banking there  are many sub-department, this sub department maintain various deposit product that means various type of deposit scheme. That are-

DEPOSIT ACCOUNT / SAVINGS ACCOUNT:

Opening of an account binds the banker and the customer into a commercial relationship initially all the accounts are opened with a deposit of money by the customer and hence these accounts are called deposit accounts. Accepting of deposits of money from the public is one of the essential functions of a banker according to the definition of banking given in the banking Act 1991.This is such kind of account that provides a rate of profit on the principal deposit. Saving account can be single or joint. Besides educational institutions, clubs/societies, associations and financial institution can also open the saving account. In the NCCBL saving account is denoted as SB. The interest rate is 6% for SB and the account numbers are denoted by 031.

CURRENT ACCOUNT :

This kind of account does not provide any interest on total balance; usually business persons/organizations opened such kind of account because this account provides the facility of unlimited times of withdrawal of money. The current account is denoted as CD/CA. In the bank, there are seven kinds of current accounts. Each account requires some documents. The table, given bellow will show the types of account. There are also some responsibilities both the customers and bankers. There is no interest on current account and 021 represent the cd/ca.

Fixed Deposit Receipt (FDR)

There are various kind of interest in FDR but the account number is same that is 0033.Revised rate of interest on deposits and IBTA as mentioned below will come into effect from 1^st February, 2006.

FDR rate base on category.

Special Savings Scheme (SSS)

1. Name of the Scheme is “NCC bank Special Savings Scheme”. (SSS)
2. Two types of Account can be opened under this scheme. One for term of 5 (Five) years and another for a term of 10 (ten years. Rules for both the accounts shall be the same.)
3. Monthly instalments of deposit will be Tk 500/= and its multiple up to Tk. 10,000/- only as mentioned below to be deposited every month during the entire period of the scheme as fixed at the time of opening the Account. Account may be opened for any instalments but later on the same is not changeable.
4. The depositor (s) will be paid a fixed amount after expiry of the term as follows:

Telegraphic Transfer.(TT):

This is a modem process of transferring money. In this process money is remitted through telex, telephone, or mobile phone. In this process, a party can transfer money within short time. The desire person can get money instantly. The most important part of a TT is its Test Number. The test number is important to make payment. If the test number of the originating branch matches with responding branch, only then the TT payment occurs. The process of incoming and outgoing TT has been described below.

PAY ORDER:

The pay order is an instrument used as an alteration of physical cash. It is applicable only for Dhaka City. They use specific Pay Order Block. They use specific Pay Order Block. It has some special features and they are-

• It is an order to pay the account mentioned on the pay order block.
• The issuing branch will make the payment
• Pay Order must be account payee.

DEMAND DRAFT (DD)

DD is a one kind of bill of exchange. DD is the most frequently used mode of inland remittance. DD is an unconditional order of the bank from one branch to another branch to pay certain amount of money to a certain person on demand. It is applicable outside the Dhaka City. The DD generally issued for party’s safety. If there is a huge amount to bear one place to another, then customer can do the DD and bear it to his destination instead of cash.

CREDIT CARD SERVICE

National Credit and Commerce Bank Limited introduces Credit card of VISA brand with access both in international and local market to ease financial worries at times of need.

Wide Acceptance:

NCC Bank Credit Card is accepted at over 3,500 Merchant outlets around the country. VISA merchants include hotels, restaurants, airlines & travel agent, Shopping malls, departmental stores, hospitals & diagnostic centers, jeweler shops, electronics & computer shops, leather goods, mobile & internet service providers, petrol pumps and many more! This number is increasing day by day.

Interest free, Credit facility:

NCCBL offers VISA Card with interest free credit facility. Pay in full total dues as mentioned on the statement within the payment due date and thus enjoy a free credit facility from 15 days to 45 days except cash withdrawals.

Cash advance facility:

Cash drawing facility, through approved channels, is available in some cases to meet of the emergency requirement up to 50% of credit limit.

Safe & Secured :

Do not need to carry cash anymore if anybody carrying NCC Bank Credit Card.

Supplementary Card Facility:

Anybody can apply for Supplementary Cards for his spouse, Parents, Friends or children over 18 years of age. For his peace of mind, he can assign monthly spending limit on each supplementary Card.

In Case of lost Card:

If the card is lost/stolen, the cardholder just reports it to the NCC Bank Card Division immediately to protect any misuse of his/her card.

Minimum payment due amount calculation:

• When the total due in the statement is less than or equal to anybodies approved credit card limit, minimum repayment for the current month is:
• For International Card: 5% of total due or USD 25 whichever is higher. If total due is less than USD 25, it must be paid in full.
• For local card: 5% of total due or Tk.500 whichever is higher. If the total due is less than Tk.500, It must be paid in full.
• In case of overdue amount :5% of total due plus minimum payment due amount of previous statement

NCCBL Credit card gives the opportunity of being flexible in the repayment schedule suiting to the convenience. The cardholder receives a monthly statement showing the details of his/her transactions. If he/she repay the minimum payment amount as shown on his/her statement of card account within the payment due to date, no late payment fee will be charged. In such way NCC Bank all-time allured to their customer service.

DEBIT CARD SERVICE :

National Credit and Commerce Bank is very much conscious for their service for their valuable clients. For this reason, NCCBL starts to use ATM card to the market in 1991. NCCBL believes that they can improve their customer services by this system.

The term and condition stated in this agreement relate to the availing of cash withdrawal and other electronic payment services by using NCCBL E-cash ATM/Debit card on the cardholder’s account designated for the purpose. There are some agreement purposes which between cardholder and NCCBL. For these agreements the bank gives service to his client or cardholder.

• “This agreement” means term and condition for each cardholder.
• “ETN” means Electronic Transactions Network Limited, provider of electro ways network of shared ATM,POS and other electronic payment service in Bangladesh;
• “Designated Account’ means the accounts approved by the bank to be accessed through the card;
• “Card” means NCCBL E-cash ATM/Debit card issued by the bank and ETN to the cardholder;
• “Cardholder” means the person to whom Card has been issued by the bank and ETN;
• “PIN” means personal identification number or password or any other form of electronic identification/signature issued by the bank and ETN to the Cardholder at the Cardholders request;
• “Transaction” means information regarding the money or other relevant particulars relating to the cardholder, or the account or any other transaction;
• “VAT” means any value added tax, including any tax of a similar nature that means replace it or be levied in addition to it;
• “ATM” means Automated Teller Machine;
• “POS” means point of Sale terminals.

FOREIGN EXCHANGE

Foreign Exchange department dial with every kind of foreign trangection. They communicate with the foreign client and help the customer to communicate. NCC bank Nawabpur do there all kind of  Foreign Exchange by NCC bank banshal. It is because Nawabpur branch is new and most important thing is  for Foreign Exchange every branch most need international permeation that has banshal branch. There are some service that  Foreign Exchange department gives they are…

LETTER OF CREDIT

According to Uniform Customs & practice for Documentary credit, 1993 revision, ICC Publication No. 500 the expressions “documentary(s)” and “Stand-by letter(s) of credit” hereinafter referred to as “credit(s)” means an arrangement however named or described, whereby a bank the issuing bank acting at the request and on the instructions of a customer (the applicant for the credit).

1. Letter of Credit is to make a payment to or the order of third a party (the beneficiary), or is to pay or accept bills of exchange (draft), drawn by the beneficiary.
2. Authorized another bank to effect such payment, or to pay, accept or negotiate such bills of exchange (drafts), against stipulated documents provided that the terms and conditions of the credit are complied with.

BILL OF EXCHANGE:

A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker directing a certain person to pay certain sum of money only to, or to the order of certain person or to the bearer of the instrument. The three principal parties of bill of exchange are drawer, drawee, and payee.

products of import section :

1. LTR
2. Lien
3. ABP
4. PAD
5. L/C opening

products of export section

1. PC (Packing credit)
2. FDBP
3. LDBP
4. SOD (export)
5. BTB L/C
6. CC (export)

MONEYGRAM

National Credit and Commerce Bank Limited is very happy to announce to have joined hands with MoneyGram Payment Systems Inc to serve expatriates to send money back home quickly from anywhere in the word. Moreover, money can also be sent quickly through MoneyGram from Bangladesh to other parts of the World as is done through the banking channel. At the moment we are concentrating on home remittances being sent by the expatriates.

MoneyGram Payment system Inc is a non-back provider of electronic money transfer service. MoneyGram is providing its customers a service of an unsurpassed quality and superior value. MoneyGram has over 25,000 Agent locations throughout the world. Persons anywhere require transferring cash quickly, reliably, conveniently and at attractive prices to more than 115 countries can depend MoneyGram agents for the service.

PRODUCTS OF LOANS & ADVANCES:

There are two types of loans and advances. They are­

1. Term loan.
2. Continuous loan.

Term loans are for fixed time period. They don’t have time extension facilities. On the other hand continuous loans are treated as advances and they are sanctioned for one year only and renewed for the each following year when it is expired.

Depending on the various nature of Financing, all the advances (lending) activities have been brought under the following major heads­

1. Cash credit (CC)
2. Secured Overdraft (SOD)
3. Loans (General)
4. House Building Loans (Staff/ General)
5. Small Business Loans
6. Personal Loans
7. Loans Against Import Merchandise (LIM)
8. Letter of trust receipt (LTR)
9. Loans Against Packing Craft (PC)
10. Inland Bills Purchased (IBP)
11. Payment Against Documents (PAD)
12. Foreign Documents Bills Purchased (FDBP)
13. Local Documents Bills Purchased (LDBP)
14. Project loan
15. Car loan
16. Consumer finance scheme
17. Lease Finance Scheme
18. Loan Against Investment (LAI)
19. House Repairing loan scheme

 Cash credit

Cash Credit is allowed to be businessmen, traders & industrialists etc. for meeting their working capital requirements. Cash Credit is always allowed against hypothecation or pledge of goods. Hence, Cash Credits are of two types­-

1. Cash Credit (Hypothecation)
2. Cash Credit (pledge)

SECURED OVERDRAFT (SOD-FO & G):

In case of Secured overdraft (FO) the number is start from 12… in the bank. Advances allowed to the individuals or firms against their financial obligations. Customers take SOD facility under lien of FDR, PSP etc. This may or may not be a continuous credit.

In case of Secured overdraft (G) the number is start from l4…. in the bank. Advances also allowed against assignment of work order for execution of contractual works. It is generally allowed for a definite period and for specific purpose. It is not a continuous credit.

LOAN (GENERAL):

Short term, Medium term & long term loans allowed to individual/firm/industries for a specific purpose but for a definite period and generally repayable by installments fall under this head.

HOUSING LOAN SCHEME:

Many people of different professions, who have no capacity to construct/purchase house/flat but have scope to repay the cost of the same from their earnings, provided they are facilitated with the sanction of institutional loans, with a view to creating financial capability of the prospective clients in purchasing flats/houses and in constructing houses and with the objective of exploring a profitable investment area “NCC Bank Housing Loan” scheme has been introduces.

• To help service holders, self employed persons, businessmen, professional and also those who have the capability to repay loan for purchase of flat/house/construct buildings and thereby improve their quality of life.
• To contribute to the reduction of acute housing problems of the country.
• To help the prospective clients get housing loans on easy terms and without any handles.
• To strengthen the banks lending base.
• To increase profitability of the bank.
• To contribute towards improvement of socio economic condition of the society.

HOUSE REPAIRING & RENOVATION LOAN :

The scheme is meant for the genuine house/building/flat owners to undertake repairing/renovation works for better living or to improve the standard of living of the people for increasing rental income.

HOUSE BUILDING LOAN (STAFF):

Loans allowed to the bank employees for purchase/construction of house shall be known as Staff Loan (HBL).

HOUSE BUILDING LOAN (GENERAL) :

Loans allowed to individual! Enterprises for construction of house (residential or commercial) fall under this type of advance. The amount is repayable by monthly installment within a specified period. Such advances are known as Loan (HBL).

SMALL BUSINESS LOAN:

It has been observed that small business enterprises generally cannot provide collateral securities to avail loan facilities. Genuine business having entrepreneurship quality and honesty will come under the preview of this scheme.

PERSONAL LOAN:

To meet emergency financial requirement especially for medical treatment/surgical operation, marriage, admission of children/educational expenses, maternity the loan facility may be extended.

LOANS AGAINST IMPORT MERCHANDISE (LIM):

Advance allowed for retirement of shipping documents and release of goods in protect through L.C. talking effective control over the goods by pledge in godowns under bank’s lock & Key fall under this type of advance.

LETTER OF TRUST RECEIPT(LTR):

Advance allowed for retirement of shipping documents and release of goods imported through L.C. without effective control over the goods delivered to the customer falls are called lending trust receive.

INLAND BILLS PURCHASE (IBP):

Payment made through purchase of inland bills/cheques to meet urgent requirement of the customer falls under this of credit facility.

PAYMENT AGAINST DOCUMENTS (PAD):

Payment made by the bank against of shipping documents of goods imported through L/C. It is a temporary advance connected with import and is generally liquidated against payments usually made by the party for retirement of the documents for release of imported goods from the customer’s authority. It is also known as commercial lending.

LOANS AGAINST PACKING CRAFT (PC) :

Advance is allowed to a party against specific UCI firm contract for processing packing of goods to be exported falls under this head and is categorized as “Packing Credit”. The advance must be adjusted from proceeds of the relevant exports within 180 days.

FOREIGN DOCUMENTS BILLS PURCHASE (FD-BP):

Payment made to a party through purchase of a foreign documentary bolls fall under this head. This temporary advance is adjustable from the proceeds of the negotiable shipping/export documents.

Electronic banking

Evolution of science and technology brings pace in the world civilization. Banking is a changing industry. The use of computer banking activities in the 60s of the twentieth century was an unprecedented incident. The main purpose of which was to ensure mathematical accuracy and promptness in providing banking services like withdrawal and deposit. Every bank tries to use the latest technology to provide its customer high quality banking facilities. In this modern world, bank is one of those reliable institution thought which business contact with any corner of the world can be established. The improvement of information technology narrows down the unsurpassable distance.

Electronic banking is a modern computerized system of providing banking services by the banks to their customer. By using this modern technologies banker have become  able to provide their existing services more quickly, more accurately and more conveniently,. It has created revalution in the service delivery of the banking industry.

• Using these technologies in banking system, bank usually provide the following services.
• Self deposit and withdrawal facilities.
• Quick transfer of funds from one bank to other with the help of electronic fund transfer systems (EFTS)
• Payment of bills, salaries, and opening of letter of credit (L/C)other  utility services, while staying at home or at own chamber.
• Conducting internal banking activities with the help of electronic system

History E- Banking

The world history of electronic bank at a glens: 

• In the 1961 the first national city bank of new York introduced successfully the certificate of deposit under electronic system for the first time.
• In 1967, the Baeclays Bank of UK established cash dispenser at first.
• In 1972 Lioyd’s bank of UK established the very first online cash point
• At present time the E- Banking software has no boundaries. It has graphic chart, money transfer, in one word ever think.

Basic components of electronic banking

Electronic banking system requires the following four component

Banking system software

By using flora bank computer software package NCC  bank can deal with the transactions  of cash deposit, withdrawals, bill payment, bill collection, salary and settlement of provident funds, making accounting reports and statements etc. it does not require any use of papers to prepare journals, leger, vouchers or notes.

Communication network

communication network is an important issue in an online banking. In some case dial-up telephone and in other cases radio link is use for communication network. The usage of these networks depends on the practice of e- banking.

Delivery channel

these channels use in corporate and retail banking, as well as to the individual or family oriented banking. Modern banks and financial institution are providing facilities like balance reporting, accounts keeping, domestic banking and international payments, trade financing, monitoring, netting, cash withdrawal and factoring other sorts of service related to these by using bank, euro clear SWIFT etc.

Switching system

NCCBL use flora bank  to sort the transactions data in due places, electronic banking network and various communication tools in bank host computer requires the use of switching system. It helps to prepare various reports and monitor the implementation of those.

NCC Bank signs deal with Flora Systems for online banking

National Credit and Commerce Bank Limited (NCCBL) has signed an agreement with Flora Systems Limited to implement “Flora Bank” Core Online Banking Software in its all core banking operations.Mustafa Rafiqul Islam, Chairman and Managing Director of Flora Systems Ltd. and Md. Nurul Amin, Managing Director of NCCBL exchanged the agreement copies on behalf of their respective organisations after signing it.Chairman of NCCBL Tofazzel Hossain, senior Vice President of NCCBL ASM Mainuddin Monem and other senior officials from both the companies were also present at the signing ceremony held at Radisson Water Garden Hotel.

Present Facility of NCCBL Because of Flora Bank

As a result of this agreement with Flora Systems Limited

• All the existing 53 branch offices of NCCBL as well as its future branches will offer real time online banking with retail E- Banking service.
• Corporate and private banking services including ATM, POS, SMS, Tele-banking.
• Internet banking and Swift Services through the homegrown.
• Integrated Flora Bank Core Banking Application Software, replacing the previously used Micro Banker from In flex, USA.
• Flora Bank Internet Banking facility would now allow NCCBL customers to do anytime anywhere transactions including deposit and withdrawal, foreign remittance and LC handling both within the country and from abroad.
• Flora Bank software is already interfaced with local ATM Networks like E-cash, Q-cash, Dutch Bangla as well as Visa International.

Future facility of NCCBL Because of Flora Bank

In near future NCC bank will give some facility by Flora Bank that is SMS Banking and Tele-Banking services on the other hand would allow customers to do balance checking, to make payment of utility bills and other permissible banking transactions using their mobile phone and many more.

SME Banking

A large section of our business community consists of small & medium business owners who are conducting their business with their own resources without availing much support from financial institutions. Such businessmen are generally sincere, honest and hard working but are often short of working capital not to mention the capital finance for expansion. Now a day’s SME banking system is very important for a development of a country. That’s the rezone our government is giving presser to all bank to give SME loan for the development of our country. SME represent Small and Medium Enterprise banking system that means loan or the service for small business man. In normal science SME loan are those loan that is taken for five year and loan amount is not more than taka 5 lac. As businesses are major contributor to national GDP, so the second highest percentage of loan is given to this sector. In 2008, 35.46% loans are provided to different businesses.

Eligibility

• Creditor most be age between 20 to 55 years
• Worthy businessman having trade license, VAT certificate and TIN
• Women entrepreneur are anchorage

Employees :

• Semi Govt. and Autonomous Bodies
• Banks and financial institutions
• Senior teachers of University, School, College and Madrasha
• Executives/Officers of Multinational Companies and renowned NGOs
• Employees must be permanent.

General Procedure of Sanctioning Loan

Party’s Application

At first borrower had to submit an application to the respective branch for loan. He/she has to clearly specify the reason for loan. After receiving the application from the borrower the Bank officer verifies all the information carefully. He also checks the account maintains by the borrower with the Bank. If the official becomes satisfied then he gives form-A (prescribed application form of Bank) to the prospective borrower.

Filling Form –A

It is the prescribed form provides by the respective branch that contains information of the borrower. It contains- Name of the concern with its factory location, Official address and Telephone number, Details of past and present business, it achievement and failures, type of loan availed etc.

Collecting CIB Report from Bangladesh Bank

After receiving the application for advance, NCC Bank sends a letter to Bangladesh Bank for obtaining a report from there. This report is called CIB (Credit Information Bureau) report. NCC Bank generally seeks this report from the head office for all kinds of Investment. The purpose of this report is to being informed that whether the borrower has taken loan from any other Bank; if ‘yes’ then whether the party has any overdue amount or not.

Processing Loan Proposal

After receiving CIB report, respective branch prepare an Investment proposal, which contains terms and conditions of Investment for approval of Head Office. Documents those are necessary for sending Investment proposal are Loan application, photograph of the borrower duly attested, personal information of borrower, CIB report, legal opinion, trade license, stock report, net worth calculation of business & individual, working capital assessment, financial statement, SME information and CRG.

NCC Bank prepares the proposal in a specific form. It contains following relevant information- Borrower, capital structure, address, Account opening date, introduced by type of business, particulars of previous sanctions, security (existing and proposed), components on the conduct of the account, Details of deposit, liabilities with other Banks, CIB report, Rated capacity of the project (item wise), Production/purchase during the period, Sales during the period, Earning received for the period.

NCC Bank prepares the proposal in a specific form. It contains following relevant information- Borrower, capital structure, address, Account opening date, introduced by type of business, particulars of previous sanctions, security (existing and proposed), components on the conduct of the account, Details of deposit, liabilities with other Banks, CIB report, Rated capacity of the project (item wise), Production/purchase during the period, Sales during the period, Earning received for the period.

Project Appraisal

It is the pre-investment analysis done by the officer before approval of the project. Project appraisal in the Banking sector is needed for the following reasons:

• To justify the soundness of an investment,
• To ensure repayment of Bank finance,
• To achieve organizational goals,
• To recommend if the project is not designed properly.

Techniques of Project Appraisal

An appraisal is a systematic exercise to establish that the proposed project is a viable preposition. Appraising officer checks the various details submitted by the promoter in first information sheet, application for Investment and Investment proposal.

NCC Bank considers the following aspects in appraising a proposal.

• Technical viability
• Commercial viability
• Financial viability
• Economic viability

The Head Office (HO) mainly checks the technical, commercial and financial viability of the project. For others HO is dependent on branch’s information. But when the investment size is big, then the HO verifies the authenticity of information physically.

Head Office Approval

Upon receipt of the Investment proposal from the branch, the Head Office again appraises the project. If it seems to be a viable one, the HO sends it to the Board of Directors for the approval of the Investment. The Board of Directors (BOD) considers the proposal and takes decision whether to approve the Investment or not. If the BOD approves the Investment, the HO sends the approval to the concerned branch.

The respective officer of Head Office appraises the project by preparing a summary named “Top Sheet” or “Executive Summary”. Then he sends it to the Head Office Credit Division for the approval of the Loan. The Head Office Credit Division considers the proposal and takes decision whether to approve the Investment or not. If the committee approves the Investment; the HO sends the approval to the concerned branch.

Sanction Letter

After getting the approval of the HO the branch issues sanction letter to the borrower. A sanction letter contains:

• Name of borrower,
• Facility allowed,
• Purpose,
• Rate of interest,
• Period of the Investment and mode of adjustment,
• Security and Other terms and condition.

Documentation

If the borrower accepts the sanction letter, the Documentation starts. Documentation is a written statement of fact evidencing certain transactions covering the legal aspects duly signed by the authorized persons having the legal status. The most common documents used by the NCC Bank for sanctioning different kinds of Investment are:

• Joint Promissory Note,
• Letter of Arrangement,
• Letter of Disbursement,
• Letter of Installment,
• Letter of Continuity,
• Trust Receipt,
• Counter Guarantee,
• Stock Report,
• Letter of Lien,
• Status Report,
• Letter of Hypothecation,
• Letter of Guarantee
• Documents Relating to Mortgage.

Disbursement

Finally respective officer disburses the loan after sanction and completion of all formalities. The officer writes cheque and provides it to the borrower. For this borrower has to open an account thorough which he/she can withdraw the money.

If a person wanted to take loan under SME loan he/she needs to submit some information on applicant bank they are

• Party’s application.
• Application in the bank format
• Stock report in the bank format (how much good he have)
• Up-to-date trade license of the application (In case of business)
• Two copies of P.P size photograph of the applicant.
• Two copies of P.P size photograph of the spouse.
• Two guarantor person.
• Two copies of P.P size photograph of the guarantors.
• Up-to-date trade license of the guarantor (in case of business)
• Up-to-date salary certificate of the guarantor(in case of service holder)
• Bank account statement of last six month.
• CIB Report.
• Photo copy of the possession deed/rental deed of the shop.
• Declaration of the land lord (in case of rental deed)
• Account open.
• Photographs of the shop.

For SME loan this entire document is needed, but sometime more information is need depending on the criteria of the loan. These entire documents especially the CIB (credit information biro) report satisfies the bank, they will give the loan. Most of the time the creditor need to give some mortgage to take loan. The bank gives loan agents the value of mortgage market value

CIB (credit information biro)

The central bank or Bangladesh bank has database on loan. This database contains information on the entire creditor in Bangladesh. When a bank asks they give the information to the required bank, this report is called CIB report. It informs the bank that the applicant have loan in any other bank or not, if he has loan are he paying the loan correctly and many other information. If the CIB report is good then there is no problem to give loan.

SME Financing Scheme in NCCBL

There are many small and medium entrepreneurs in the country that have innovative, spirit & potentially to do something productive for local consumers as will as export abroad. They can generate income and contribute to the national GDP. They may also provide employment, development and growth of small & medium enterprise is vital for national development. NCCBL is committed to play positive role in the overall socio-economic development of the country. So NCCBL introduce “Small & Medium Enterprise (SME) Financing Scheme” for the small and medium entrepreneurs. Interest rate is 17%.

This SME financing scheme is provided to the small and medium size entrepreneurs located in urban & sub-urban areas and easily accessible by their branches.

The main purpose of the SME loan scheme is to make the working capital of the business, capital machinery and delivery van/transport for business purpose.

Small Enterprise

Medium Enterprise

From the above chart it is shown that, bank has invests a greater amount in demand loan. Second highest loan is given to term loan category. Sanction of SME loan has fallen in comparison of financial year 2004. Because bank now focus on term loan and demand loan as these sector earns a higher interest rate than SME loan. Also, default risk is low in these two categories.

SME Product on NCC Bank nawbpur

Most of the loan and advance that is under SME loan system. As a private bank they are mostly favor able to small loan. Sometime they give long term loan but most of the time associate with other bank. NCC Bank nawbpur branch is in sweet able place for SME loan. In Nawabpur  area most business man sell electronic product like mobile accessories, various kind of lighting product, toilets fitting , etc. This small business people needed money very badly for their business. Nawabpur is one of the crowded and busiest areas in Dhaka city.  It stated near gulistan where most of the people do small business for their living. The people here are mostly import oriented so mostly they need short term money it is one region of the success of NCCBL Nawabpur. Up to this year they have given near about  5 billion money for SME loan. There are various product in SME so that Clint can choose his best product. Bellow there is a table that sow us the limit and wiredraw of the loan item, there is also the rate and number of people who has taken the loan. Not all of the people has taken this loan as SME loan for five year, their some people who took this loan for more than five year and also over five lac. Those are exceptional in this report I am not consideration those exceptional condition. Without those condition NCCBL Nawabpur have those loan and advance category.

Up to September 2010 Ncc Bank Nawabpur .

Small Business Loan

Small businessman has taken a large portion of our country’s business industries. In the absence of sufficient capital of them they cannot manage their business properly. They have not sufficient asset to make a security against loan, as a result they are failure to take a loan from bank or other financial assistance institution. If a loan give to them with easy terms and condition then this energetic small businessman not only manage and increase their business properly but also they take important role in development of our country. To meet up this purpose, NCCBL start Small Business Loan scheme.

This loan is offered to the small and promising entrepreneurs to meet their capital requirement and enable them to operate and expand the business purposely. It is apporved against collateral and estimation of the revenue generation of the project for which the loan is sanctioned. The range of this type of loan is Tk.1 Lac to Tk.5 Lac. Loan repayment period is maximum 5 years.

Small Business Loan in NCCBL Nawabpur

Nawabpur branch of NCCBL is taking a good role for the local business men, most of this people have small and madam business. The people here are mostly import oriented so mostly they need short term money it is one region of the success of NCCBL Nawabpur. Now every year they are giving 10 million money for small business loan. Up to September data there are 41 people who took loan under small business loan. The rate of small business loan is 17% and duration is only fiver.

Conditions

The creditor have to remember those condition that is applied for NCCBL Nawabpur branch.

• Rate of interest: 17%
• Possessing free: 1%
• Application free: tk. 500 only.
• Risk fund: 1%.
• Duration of the advance: 01,02,03,04,05, years.
• Grace period: no grace period.
• Compounding interest system.

Cash Credit

In Nawabpur branch the limit for Cash Credit up to September 2010 is 165700000 that is quite high. There are some coeditor who did not fall in condition of SME. Most of creditor taken this loan as under SME loan. At the date 30 September 2010 the withdraw amount is 116700278.5.  Forty  people who has taken this loan for their various purpose. If this  creditor any how fail to pay the installment they first receive call from the bank after that they will called classified.

A Cash Credit (CC) is an arrangement by which the customer is allowed to borrow money up to a limit. This is a permanent arrangement and the customer need not draw the sanctioned amount at once, but draw the amount as and when required. They can put back any surplus amount, which they may find with them. Thus Cash Credit (CC) is an active and running account, which deposits and withdrawals may be affected frequently. Interest is charged only for the amount withdrawn and not for the whole amount charged. If the customer does not use the Cash Credit (CC) limit to the full extent, a commitment charge is made by the bank. This charge is imposed on the unutilized portion of Cash Credit (CC) only.

Cash Credit (CC) provides an elastic form of borrowing since the limit fluctuates according to the needs of the business. Cash Credit (CC) is the most favorite mode of borrowing by large commercial and industrial concerns in our country. It is allowed to be businessman, traders & industrialists etc. for meeting their working capital requirements. Cash Credit is always allowed against hypothecation or pledge of goods.

Hence, Cash Credits are of two types­-

1. Cash Credit (Hypothecation)
2. Cash Credit (Pledge)

Cash Credit (Hypothecation):

This type of credit is allowed to the traders and industrial borrowers for promoting trade and commerce and industries. The mortgage of movable property for securing loan is called hypothecation. Hypothecation is a legal transaction where goods are made available to the lending banker as security for a debt without transferring or possession of the property. The banker has only equitable charge on stocks, which practically means nothing. Since the goods always remain in the physical possession of the borrower, there is much risk to the bank. So, it is granted to parties of undoubted means with highest integrity. Interest rate is 17% under S.M.E Loan repayment period is maximum 1 year.

Cash Credit (Pledge):

Allowed for promoting trade, commerce and industries of the country against pledge of stock in trade under Bank’s control. In case of Cash Credit (Pledge), the bank acquires the possession of the goods or a right to hold goods until the repayment of credit. The borrower has no right to deal with them. If loan is not repaid in due time then bank sells goods to collect money. But at present, bank didn’t give this loan because it has to maintain warehouse which creates extra burden on officers. Interest rate is 17% under SME.

Lease finance Scheme

It is a very popular scheme whereby a client is given the opportunity to have an exclusive right to use an asset, usually for an agreed period of time, against payment of rent. Of late, the lease finance has become very popular in almost all the countries of the world. An obvious advantage of the lease is to use an asset without having to buy it. The lessee is obligated to make lease payments until the expiration of the lease agreement which corresponds to the useful life of the assets. In a capital scarce economy like ours. Lease financing is suitable for firms to acquire capital, Machinery, Equipments, medical Instruments and Automobiles etc. And thereby employ their own resources more advantageously in some other investments.

An entrepreneur, under this scheme, may avail of the lease facilities to procure industrial machinery (without having to purchase it by down payment) with easy repayment schedule. The clients also get special rebate in their income tax payment under the scheme. It is one of the most convenient long term sources of acquiring capital machinery and equipment.

Lease finance loan period is 3 to 5 year. Maximum loan facility is tk. 15 lac. Rate of interest is 15%. For lease financing, registered mortgage of land & building as collateral is required.

In Nawabpur branch the limit for lease finance scheme up to September 2010 is 168113800that is quite high. There are some coeditor who did not fall in condition of SME. Most of creditor taken this loan as under SME loan. At the date 30 September 2010 the withdraw amount is 14287290.  Fourteen people who has taken this loan for their various purpose. If this  creditor any how fail to pay the installment they first receive call from the bank after that they will called classified. There are some condition for the creditor  to maintain for lease finance scheme

Condition

• Rate of interest: 16%
• Monitoring free: 1%
• Risk fund: 1%.
• Lease Deposit: Equal to three month’s installment (Refundable after adjustment of loan)
• Duration of the advance: 1-5 years.
• Loan

Classified

It is one kind of notice, when a Clint is not able to pay his loan for one year he is inform by the bank to pay his loan. If the bank is not able to reach him or not able to do any kind of contract with him, then only his or her loan account is classified by the branch bank. The branch informs that to head office and the head office inform it to central bank. This classified is one kind of loss for bank, so that they go for rescheduling.

Rescheduling

It is giving chance to the classified client to pay its loan. After the notice of branch bank head office give a chance of paying loan to the creditor. If both parties are agree the loan is rescheduled. It is the remaining amount of loan with the interest that has taken as new loan amount. This new loan amount is shown as loan for the client for new time limit.

SWOT ANALYSIS

There are many government  and non government private banks  with some multinational banks in our country. So why should one come to NCC Bank Nawabpur branch? The simple answer will be there co-operation with you and helpful service from their employees. You will have online banking service and the advice you most need for the loan and advance.

Strength

• New-Product Development and Product Life-Cycle Strategies.
• Advertising, Sales Promotion, and Public Relations.
• Online banking facility.
• E- Banking gives you online money transfer .
• You get reminder to pay the installment .
• Necessary advice for the loan and advice.
• General Banking is very swift in daily Banking.

Weakness

• It is little bit lengthy process because of CIB report.
• Some commercial banks charge less interest rate than this bank.
• Some multinational banks provides more rage of loan amount than this bank.

Opportunity

• Within next year 100 ATM will be install in various part of our country.
• ATM card facility should be increase.
• Bank provides a pleasant service for the customers
• It providing some special features, but they can offer some extra features.

Threat

• Lots of time creditor called classified.
• Sometime creditor is unable to pay installment.
• Some foreign banks provides some special features
• Low Investors/ Clients for this scheme

FINDINGES OF THE STUDY

From my personal observation and from customer’s suggestions, following findings are creating problem in progress of bank products:

• It is little bit lengthy process because of CIB report .
• Calling the client increase variable cost.
• Sometime creditor is unable to pay installment.
• To get the loan Clint have to open an account in the bank
• Bank charges average interest rate
• Giving lots of SME is not good a small brench.
• There are some other charges.
• Offer a little bit special features
• Lots of time creditor called classified.
• It is not a good idea to reschedule most of the classified creditor.

Recommendations

I have observed some problems and difficulties with their services while doing my internship. From my personal observation and from customer’s suggestions, following recommendations can be made for future progress in SME banking and E-banking of NCC bank Nawabpur:

• Bank should introduce new service time to time.
• Software should be upgraded.
• sufficient ATM booth is required.
• Personal relationship with customer is to be developed.
• Bank should motivate their clients about SME loan.
• NCCBL Nawabpur should encourage on other advance product.
• They should give some discount, who pay installment timely.
• They should change their strategy according to the Clients need
• They should renew their Scheme rate by proper authorization of Bangladesh bank
• They should create awareness among the new investors for this Scheme by providing some advertisement in newspaper, magazine or in other media.

CONCLUSION

The internship program is one of the compulsory for BBA. Program. I have already completed my internship program from National Credit and Commerce Bank Limited on the topics of “Prospect of E-Banking and SME Banking System in NCC Bank at Nawabpur Branch” and made a report on this topic. From observation & by analyzing various data it has found that the present condition of SME bank product is well. Debit card, Credit card & specially online banking system plays an important role to attract customers. Services of various products are relatively lower than other banks.

The growth of activities of various department is increasing day by day through existing plan . In recent years of banking business, National Credit and Commerce Bank Limited has shown better performance comparing with other first generation banks through innovative & development plan of E- Banking.

I expect the National Credit and Commerce Bank Limited may hold its prospect in future and can contribute a vital role in the socio-economic prospective. But I hope that this report would be able to show a meaningful picture of  E-Banking and SME Banking System in NCC Bank at Nawabpur Branch.