Legal Constrain and Customer Desire Compared on NCC Bank Ltd

Executive Summary

National Credit and Commerce Bank Limited (NCC Bank) is a well-established Bank in Bangladesh. It is developing and expanding its branches in the country with innovative products and banking services, to gain greater acceptance as an effective and efficient means of intermediation and to contribute to the overall wealth creation. This report is prepared as a requirement of the internship phase of BBA program of Stamford University Bangladesh. This report focuses three months working experiences in National Credit and Commerce Bank Limited, Islampur Branch. This report will give a clear idea about the activities and operational strategies of National Credit and Commerce Bank Limited. The whole working process of NCCBL is divided into 3 sections-(1) General Banking, (2) Credit Section, (3) Foreign Exchange. Here first chapters basically discuss about the origin of the report, objectives and methodologies used in preparation of the report and limitation faced at preparation. The main objective is to identify the various activities provided to customers by National Credit and Commerce bank Ltd. and descriptive analysis about their operation. Next I have tried to concentrate on banking function (general banking, loan and advances and foreign exchange business) and marketing part on the basis of some specific topics. Finally I have tried to concentrate on my Internship duties how they work to satisfy customers. The objective of the internship program was to familiarize the student with the practical implementation of the knowledge provides the theoretical aspects of the practical life. It is a pleasure for me to submit the internship report titled “A Brief on how they work to satisfy customers: Legal Constrain and customer Desire Compared- A NCC Bank View”. While preparing this report; I have tried to gather as much information as possible.

 Introduction

 Customer Services

Customer services are one of the most talked about subject now a day. In banking, it is a major rule to earn a comparative edge. Customer service means to meet customer needs in a prompt and efficient way. In service-oriented organization like, quality means customer satisfaction, and customer satisfaction depends on the services provided by the organization. So, customer service section is the most important section in NCC Bank Limited. First of all customer want to collect information before taking services if he/ she satisfied with the information given by the customer-service section, then he/she come to take services. In the sense, it is very sensitive section in NCCBL. To satisfy the customer by giving better services all staff and officers of this section have to take responsibility, be cordial, frank and smiling appearance.

Functions of customer service section

• Account opening
• Remittance
• Clearing
• Collection
• Cash
• Others

 Dispatch section
Dispatch division operates the function of dispatching the intimation letter to the client, IBCA, IBDA, and OBC to the other banks for internal transaction with bank. The officer engaged in the dispatch division maintains two types of register books to entries for record of these documents particulars.
These two types of register books are:
Inward mail registers
Outward mail register

Concept of deposit

Deposits are the foundation on which banks thrive and grow. They are a unique item in a bank’s balance sheet that distinguishes it from other types of business firms. Deposits provide most of the raw material for bank loans and, thus, represent the ultimate source of bank profits and growth. Deposits generate legal reserves, and it is out of the excess legal reserves a bank holds that new loans are created. Important indicators of management effectiveness in any bank are whether or not deposited funds have been raised at the lowest possible cost and whether enough deposits are available to fund those loans the bank wishes to make.

Table 4.3: Rates of Different Deposit A/C of NCCBL

1.Fixed Deposit(59.87%), 2.Current Deposit(5.33%), 3.Short Term Deposit(4.88%), 4.Savings Deposit(11.38%), 5.Special Savings Scheme(7.13%), 6.Special Fixed Deposit Scheme(1.30%), 7.Bearer Certificate of Deposit(0.07%), 8.Sundry Deposit(5.87%), 9.Premium Term Deposite(0.81%), 10.Instant Earning Term Deposit(0.02%), 11.Money Double Programe(3.34%).

 Classification of Bank Account of NCCBL

NCC Bank has two types of Deposit Account, these Ares-

Demand deposit

 Time deposit

Demand deposit

There are mainly two types of demand deposit accounts, these Ares-

 Savings account

Current account

Both these accounts can be opened jointly or individually. Again current account can be for personal, partnership and proprietorship.

Savings account

Any individual person, local bodies, club, society, association house wife, student, non-profitable organization, etc. can open a saving bank deposit account with NCCBL. Savings bank deposit is both time and demand deposit, of which 10% is demand and 90% is time deposit and the account holder can withdraw his/her deposits twice in a week up to a certain limit.

Requirements for opening SB A/C: Requirements may vary from types of the organization, such as

Individual

Personal ID
Copy of a Passport or ward commissioner certificate
any introducer of that respective bank
Nominee’s photograph

Fill up Know Your Customer (KYC) form.

Joint Owner

Trade license
Proprietor’s ID
Any introducer of that respective bank
Fill up Know Your Customer (KYC) form.

Features of SB A/C: SB accounts have the following features:
1) Any matured but not unsound mind can open a savings account.
2) One account holder can transfer his or her account in the branch to another branch
without any cost if he or she interested.
3) Minimum deposit Tk 2,000 to open an A/C
4) SB A/C offers 6% interest charges semi-annually to the depositor’s account.
5) One time at least within 6 months an A/C holder must transaction with the bank to
continue the A/C.
6) Charges Tk.250 for close

Current Account

Current account is an account where the account holder within the funds can make numerous transactions available in its credits. No interest is paid on those deposits. Requirements to open an account are almost same to that of savings account except the initial deposit and the introducer must be the current account holder. Requirement for different types of current account holder are given below:

Limited company

A separate account opening form is used for Limited company. The bank should be cautious about opening account for this type of customer. Requirements to open an account are as follows:

• Articles of association
• Two copies of attested photograph
• Letter of commencement
• Letter of incorporation
• List of directors, their number of shares and status
• Memorandum of Association
• Registration-which the company is registered and certificate relating to this issue, is obtained from the registration office of Joint Stock Company.

Partnership firm

Same account opening form for partnership firm is used. Instruction of account is given in this form. Documents required to open this type of account are as follows:

• Two copies attested photograph of those who will operate the account.
• Partnership deed
• Resolution of the firm regarding account opening should be given
• Trade license

Personal current account

Same account opening form for partnership firm is used. Instruction of account is given in this form. Document required to open   personal current account are given below:

• Two copies photograph of   who will operate the account
• The guarantor who is already maintaining an account introduces personal.

Current proprietorship account

Requirements for opening this type of account are as follows:

(a)    The guarantor attests two copies photograph of who will operate the   account.

(b)   Photocopy of trade license.

 Banks are maintained a signature card and different types of register to open every types of accounts. An account number is given for each account and the description of the account entered in the computer. According to rules of the bank a letter of thank should be given to the account holder and to the introducer but in practice it is not done.

Time deposit:

Short Term Deposit (STD)

 Fixed Deposit receipt (FDR)

 Special Savings Scheme (SSS)

Short Term Deposit (STD)

In short term deposit, the deposit should be kept for at least seven days to get interest. The interest offered for STD is less than that of savings deposit. In PBL, various big companies, organization, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice.

 Fixed Deposit Receipt (FDR):

This type of deposit should be kept for a fixed term or period. Prime Bank Limited deals with the following terms deposit.

Special Savings Scheme (SSS):

Two types of Account can open under this scheme.

1) 5 years

2) 10 years

The depositors to be paid on the basis of their installments amount and time period as follows:

A person is allowed to open more than one account for different installments in the same branch or in the same Bank. No withdrawal shall usually allow before five years. If anyone withdraws before five years s/he will get interest at prevailing rate on Savings account along with the principle. No interest will be paid on the deposited amount if the Account is closed before Six months. Installment must be deposited by 10^th day of each month. In case of holidays, Deposit can be paid on next working day. If anyone fails to pay installment in time, he/she will have to pay Tk. 10 for each installment with subsequent deposit.

 Remittance Section of NCC Bank Ltd.

Remittance means transferring of fund through different instruments other than cheque.
The following two types of Remittance are performed by NCCBL.
Local remittance.
Foreign remittance.

 Local Remittance:

 Demand Draft (DD):

This is an instrument through which customers money is remitted to another person /firm /organization in outstation from a branch of one bank to another outstation branch of the same bank or to a branch of another bank (with prior arrangement between that bank with the issuing bank).

 (a) Issuing procedure of D.D:

• Obtain demand draft application form duly filled in and signed by the purchaser /applicant.
• Receive the amount in case/ transfer with prescribed commission and postage amount.
• Insert test number.
• Enter in the D.D. register.

Issue advice to the payee branch

 (b) Payment procedure of D.D:

• Examine generally of the D.D. viz. Amount, verify signature, test, series, etc.
• Enter in the DD payable register.
• Verify with the ICBA /test etc.
• Pass necessary vouchers.

 Telegraphic Transfer (TT):

This is a mode of transfer / remittance of customer money from a branch of one bank to another branch of the same bank or to a branch of another bank with prior arrangement between the banks with the TT issuing branch through telephonic message. Characteristics of TT are:

• Issued by one branch to other branch and message is tale- communicated.
• Remittance / transfer of money are done through tested tale-messages.
• Remittance is affected on the basis of tested message.
• Test key apparatus required.

 (a) TT issuing procedure

• Obtain TT application form duly filled in and signed by the purchaser/ applicant with full account particulars of the beneficiary.
• Receive the amount in cash/ transfer with prescribed commission, postage, telephone/telex etc.
• Prepare TT message inserting code number.
• Enter in TT issue register.
• Issue advice to the payee branch.

(b) TT payments procedure

• Note the TT message and verify the test number and confirm if TT serial no. Etc. is OK.
• If ok, enter into TT payable register.
• Pass necessary voucher for payment.

Pay order (PO):

This is an instrument issued by the branch of a bank for enabling the customer/ purchaser to pay certain amount of money to the order of a certain person/ firm/ organization/ department/office with in the same clearinghouse area of the pay order-issuing branch. Pay order has different characteristics:

• The issuing branch and the paying branch are same.
• Application for payment with in the clearing house area of the issuing branch.
• This may be open or can be crossed.

(a) Procedure of P.O. issue:

• Obtain PO application form duly filled in and signed by the applicant.
• Receive the amount in cash/transfer with commission amount.
• Issues pay order.
• Enter in pay order register.

(b) Procedures of pay order payments:

• Examine genuinely of the pay order.
• Enter in to pay order register and give contra entry.
• Debit if fund ok for payment.

 Foreign Remittance:

NCC Bank is the member of Money Gram and SWIFT networks. Using the services of this global network, non-resident Bangladesh nationals can send money from abroad to their home country within a few minutes without any risk.

 Types of Foreign remittance of NCCBL:

 Money Gram:

Money Gram is represented in over 115 countries and is available at more than 25,000 locations worldwide. In the USA alone Money Gram is available at more than 15,000 locations.
No. Which has to be passed to the receiver?

NCC Bank makes an enquiry on the Money Gram computer network to obtain authorization to pay recipient and recipient receives the fund.
Money Gram is one of the fastest ways to transfer money. Customers using Money Gram can send or receive money usually within 10 minutes from any world.
To get the money the recipient need not to have a bank account with NCC Bank Ltd. NCCBL does not levy extra charge. It gives better exchange rate to the recipient.

 Placid Express:

In March 2002, the bank has entered a Taka drawing arrangement with Placid Express, for home remittances of Bangladeshi expatriates in the United States.

X-press money:

The X press Money Services would like to welcome NCCBL to their network. X press Money (XM) is a web-based person-to-person money transfer system that allows an individual to send/receive money through any of our network agents instantly. All transactions are done through secure servers using 128-bit encryption technology so as to provide maximum security.

 Al Fardan:

Al Fardan Exchange, the pioneer in money exchange and worldwide remittance services in the U.A.E., established in 1971, is a trusted name for millions of residents and expatriates. A modern exchange house with advanced infrastructure and Courteous staff has an extensive network of correspondent banks all over the world to facilitate faster, completely reliable transactions.

 Habib express:

Habib express is another important medium through which wage earner remittance is accepted by NCC Bank. Here head office at first enter in system
server and received necessary information about the amount of remittance, beneficiary
who will receive the amount and any reference number which work as security for Bank as well as beneficiary. Head office gives information through fax to it respective branch from where receiver will receive money.

 DhakaJanata:

Dhaka Janata is introduces to provide remittance facilities to emigrant and other people of Bangladeshi who work as contractual basis in the Italy. Here Dhaka Janata also maintain same procedure of getting information from system server including the name, reference number, amount, Phone number etc. Here head office sends information through fax to all respective branches. All receivers when come to bank, respective branch check his information with information received from head office.

Clearing Section

Generally speaking, clearing means settlement but from Banker’s point of view it refers to the procedure of receipts & payments of proceeds of cheques and other instruments through banks.

Clearing House is a place where the representatives of all member banks meet together and settle mutual obligations of banks arising out of cheques& other instruments drawn on one bank and deposited with another bank for collection, under a special arrangement. The characteristic of the clearing house is that at the time of coming to this place the representative of very bank brings with him all cheques etc. drawn on other banks along with schedules and delivers the cheques to the clearing house and receives cheques etc. drawn on his bank and on the basis of cheques etc. delivered & received the mutual obligations between banks is ascertained and settled through their respective bank accounts maintained with the Central Bank or any other bank which conducts the clearing house.

Types of Clearing

There are two types of Clearing, such as (a) Internal or Inter-branch Clearing and (b) Inter-Bank Clearing. Under the 1^st type all branches of the same bank situated in a particular city settle their mutual obligations through the main branch of the bank.

In some banks the term “Transfer Delivery” is used to mean internal clearing. In the other case, in one city the obligations between all banks are settled. In this case Bangladesh Bank or Sonali Bank performs the function of the Clearing House in Bangladesh.

 Kinds of Clearing

The Clearing House activities may be grouped into two likes-

Outward clearing:Outward clearing means when a particular branch receives instruments drawn on the other bank within the clearing zone and those instruments for

collection through the clearing arrangement is considered as outward clearing for that particular branch.

(a) Outward Clearing Procedure

• Receipt of instrument with paying in slip.
• Checking of instrument & paying in slip.
• Affixing of seal
  • Special Crossing seal.
  • Clearing Seal (Instrument & Paying in slip)
  • Endorsement Seal with signature.
  • Singing of counterfoil and returning it with seal to the depositor.
  • Separation of instrument from paying in slip.
  • Sorting of instrument bank wise and branch wise.
  • Preparation of schedule- branch wise.
  • Preparation Bank wise schedule.
  • Preparation of clearing House sheet.
  • Tallying of totals of paying in slips with the totals of Clearing House sheet.
  • Making of entries in Clearing Register (Outward)
  • Preparation of vouchers.
  • Sending of instruments to main branch with schedule.
  • Collection of credit advice from Main Branch.

Inward clearing: The bank provides the instruments to other banks through clearing house which have been collected from different clients. It performs this kind of service for its clients without requiring any charge or the remittance.

 (a) Inward Clearing Procedure

• Receipt of instruments with schedule
• Checking of instruments.
• Sending of instruments to different Departments/Sections for posting
• Preparation of Vouchers and sending of credit advice to main branch.

 Clearing Return Procedures

• Outward clearing Return
  • Preparation of return memo.
  • Making of entry in clearing return Register.
  • Preparation of schedule.
  • Sending of instruments to main branch before second clearing.

• Inward Clearing Return
  • Receipt of instrument with return memo.
  • Preparation of Party debit Voucher.
  • Making of entry in cheque return Register.
  • Sending of instrument with return memo and party debit advice to party by post or through peon.

Collection

The collecting banker is who on his customer’s behalf, presents to the paying banker, either directly or through the clearing channels, the cheques paid into credit by his customers, or obtained payment from the paying banker of the cheques so presented. However, the law has not imposed any duty on the bank to collect the cheque, dividend warrants and other allied instruments. When a banker collects his customer’s cheques, he acts either;

1. As an agent of the customer
2. As a holder of value

 Dishonor of Cheques

There are some reasons for Dishonor of Cheques. These reasons are given below-

1. Insufficient Fund
2. Amount in figure and word differs
3. Cheque out of date/post-dated
4. Drawer’s signature  differs
5. Payment stopped by drawer
6. Crossed cheque to be presented through a bank
7. Not mentioned signature
8. Mention amount in figure but not  mention in word
9. Mention in word but not mention amount in figure

 Cash and Others

Procedure of cash receipts

• While receiving cash the receiving cashier should see that the paying in slip has been properly filled in
• The paying in slip does not bear the name of another branch or the customer has not mentioned the name of another branch.
• The title and number of account have been mentioned on the paying in slip and the counterfoil.
• The amount in words and figures are the same.
• The particulars and amount on the pay-in slip and the counterfoil are same.
• The Cashier should receive money, count it and mention the denomination of notes on the back of the paying in slip and see that the total tallies with the amount of the paying in slip.
• He should count the notes again and verify the amount from that mentioned on the paying in slip.
• He should enter the particulars as to the name of the party, account number and amount in the Receipt Register.
• He should sign on both the parts of the paying in slip i.e. voucher and the counterfoil.
• He should then hand over the paying in slip and the Receipt Register to the authorized person, Officer in Charge/Head Cashier.
• For the amount received on account of commission, Telegram and postal charges where no separate voucher is passed he should maintain record in a separate book or enter the same in Receipt Register immediately. He should prepare relevant vouchers and hand over the same to the authorized person for affixing the “CASH RECEIVED” stamp and obtain counter signature from the officer.
• After the close of business hours, he should balance the cash receipts from the register, and should keep the cash ready for checking by the authorized person.

Procedure of Cash Payments

(a) For Payment of Cheques

• Payment Cashier should see that the cheque is in order i.e. the amount in words and figures is same. The cheque is neither postdated nor state.
• He should then request the presenter of the cheque to sign on the back of the cheque.
• The paying cashier sees that the signature of the ledger keeper and in case of big amount cheques, the signature of the officer and the Manager are there on the cheque as a token of having posted and supervised the cheque.
• If the cheque is payable to the order of payee, the payee or the endorsee (if endorsed) has been properly identified.
• Then he should take out cash and call out the name of the party and ask him about the amount of the cheque and his token number. If the amount stated by the party differs from the amount of the cheque, he should tally the token number, if the token number is the same and the amount differs, he should report the matter to the Officer in charge/ Manager.
• He should obtain another signature of the party on the back of the cheque. He should now see that the second signature tallies with the first one already on it.
• In case the signatures do not tally, he should not make the payment and report to the Officer in charge.
• Before making the payment he should obtain the token from the party and see that the amount and token number are the same.
• He should, once again, ask the party about the amount of his cheque and count the cash for the second time before making payment. When satisfied in all respects he should make payment.
• He should affix the “CASH PAID” stamp bearing the date of payment.
• He should put his full signature under the cash paid stamp.
• He should enter the particulars of the cash payment in his payment Register.
• He should keep the cheques so paid in his safe custody till the Officer in charge/Manager checks his payment register.

 (b) For Cash Payment of other instruments

• In case of cash payment of Drafts, Pay Orders and Pay Slips, he should see that the payee has been properly identified, and in case of Pay Slips, the beneficiary has signed on proper revenue stamp.
• The Officer/ Officers has/ have signed under the stamp “PAY CASH”
• In other respects, so far as applicable, the same procedure is to be followed as in payment of cheques.

 (c) For Payment on Cash Debit Vouchers

For payment on cash debit voucher he should see that two persons holding “Power of Attorney” have signed the voucher.

• The Manager has signed on the cash debit voucher giving his assent.
• The proper Account has been charged.
• The recipient has signed on the back of the voucher
• If the amount is TK. 20/= (twenty) and above the recipient has signed on proper revenue stamp.
• If the payment is being made to a person other than a staff member, the “payee” must have been properly identified

Procedure of Cash Handling

The Cashier should know to differentiate defective, Mutilated, Burnt, Torn etc. notes from good notes. As a matter of rule such notes should not be accepted over the counter as deposits or in exchange of good notes. These notes, under special circumstances, may be accepted only on “collection basis”. These notes should immediately be sent to Bangladesh Bank/ Sonali Bank for receiving payment of exchange value.

Some are parts:

Legal Constrain and Customer Desire Compared on NCC Bank Ltd (Part 1)

Legal Constrain and Customer Desire Compared on NCC Bank Ltd (Part 2)