Marketing of Bank Products for NCC Bank

The main purpose of this report is to get a clear idea about NCC Bank’s products they provide and the strategy they have to satisfy the customer which can help the bank to lead towards profit. Other focus areas are to observe the authorities, tasks and responsibilities of the bankers and understand about the foreign exchange activities. Finally observe the current marketing activities of NCCBL and evaluate the strategies and provide idea of a new product with the marketing plan.

Objectives of the Report:

1. To understand how the banking transactions take place in the banking sector of Bangladesh.
2. To observe the authorities, tasks & responsibilities of the bankers.
3. To get familiar with the banking rules and regulations.
4. To know the overall banking system of NCCBL
5. To understand the Financial and Accounting techniques of NCCBL.
6. To have the idea about the communication between the branch office and head office.
7. To better understand about the foreign exchange activities.
8. To observe the current marketing activities of NCCBL and evaluate the strategies.
9. To provide idea of a new product with the marketing plan.

Methodology of the Study:

This report is prepared by two sources:-

1. Primary Sources.
2. Secondary Sources.

For my primary research, I conducted a survey among the customers of NCC bank Ltd and its employees. To do this research I designed a questionnaire with different types of questions so as to get a range of useful data which helped me to answer my research questions. For conducting survey I took the sample size 50. I also took interview of different people related to the NCC Bank Ltd. Top level employees are among them.

For my secondary research I used data from website. For finding materials on the web, I used the standard search engines such as Google or Wikipedia as well as large reference sites and news sites. I also go for different business journals and newspapers for information.

Banking Sector in Bangladesh

Definition of Bank:

Whoever, being an individual firm, company or corporation generally a deal in the business of money and credit is 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 withdrawal by cheques, drafts 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 these 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 wells entrepreneurs.

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. 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, curability and growth.

Banking in Bangladesh Perspective:

Banking is the backbone of national economy; all sorts of economic and financial activities revolve round the axis of the bank. As the industry produces goods and commodities, so does the bank creates and controls money market and promotes formation of capital. From this point of view, ‘banking’ a technical profession can be termed as industry. Services to its customers are the products of banking industry besides being a pivotal factor in promoting capital formation in the country. As all economic and fiscal activities revolve round this important “Industry’, the role of banking can hardly be over emphasized.

Circumstances being such, it becomes imperative to find out the role of banks now playing in the country and analyze its operational aspects so as to ascertain the importance of this delicate financial sector and its overall impact on our national economy. To ascertain the role of banks and to analyze its operational aspects and its overall impacts on our national economy a thorough study as to its distribution, expansion and contribution is essential to comprehend its past, present and future bearings for the growth and development of the banking sector of the country. In the global context, the role of banks is far-reaching and more penetrating in the economic and fiscal discipline, trade, commerce, industry, export and import all carried through the bank. Banks are the only media through which international trade and commerce are being carried out and entire credit transactions, both national and international.

Banking Scenario of National Credit and Commerce Bank Ltd. (NCC Bank Ltd.):

NCC Bank Limited has been performing continuous progress in all areas of business including deposit collection, advance making and profile earning drive. In the year 2004 NCC Bank has been able to collect deposit of Tk. 16606.92 crore, registering 11.79 per cent growth. The growth in advance and profit was 18.36 per cent and 15.28 per cent respectively. NCC Bank in 2004 invested Tk. 1521.11 crore indifferent industrial and business enterprise against Tk. 1285.08 crore in 2003, registering 18.36 per cent growth the growth in profit of the bank in 2004 is 15.28 per cent by earning gross profit of Tk. 72.04 crore. The gross profit was Tk. 62.49 crore in 2003.

The bank bears a history as an investment company, which upgraded as a bank in 1985. The authorized capital of the bank remain unchanged at Tk. 750 million after inception but the paid-up capital stood at Tk. 607.81 million in 2004 as against Tk. 552.55 million in the previous year. The bank maintained the Capital Adequacy Ratio at 9.01% of risk-weighted assists. The ration of classified loans to total loans was 9.75 during 2003. The bank introduced some collateral free credit products under its small loans program for various sections of people which received tremendous response from the customers. Such loans have good recovery percentage.

With a view to patronizing Agro-based sector, the bank also extended credit facility to the North Bengal area of the country for maize cultivation, which brought tremendous result and received wide acclamation. Under this program a good number of marginal and small farmers of Dahagram and Angorpota the most remote Bangladesh territory, connected through an Indian corridor, are now farming maize. Not only those satellite communities, NCC Bank is offering a total of 1,600 farmers in Lalmonirhat district maize loan amounting Tk. 27.20 million this year.

NCC Bank started housing finance from last year and has approved Tk. 500 million in housing loan within last four months. Honoring the increasing demand of lease finance NCC Bank is going to open a separate Lease Finance window very soon. Total number of branches of the bank was 48 as on December 31, 2006.

The bank has computerized its operation over the country which is called “Online Banking”. The customers are getting the benefit of ATM services located at Dhaka, Sylhet and Chittagong. The Bank has been launch Credit Card recently, necessary ground works was under way to complete the job shortly.

Historical Background of NCC Bank Ltd.:

National Credit And Commerce Bank Limited (NCCBL) is a banking company registered under the company Act 1994 as a private commercial Bank. Before launching baking transactions it was established as an investment company at 25^thNovember 1985 in the Name of National Credit Limited. It is converted into a scheduled bank because of many restrictions in both collection and disbursement of fund while it was an investment company. During conversion period all types of transaction were closed for about 14 months from ‑22nd April 1992. After obtaining permission from the Government of the People’s Republic of Bangladesh and Bangladesh Bank, the investment company National Credit Limited, was converted into a fully fledged Commercial Bank. It started its banking operation on the 17th May, 1993 with 16 branches in the name and style of National Credit And Commerce Bank Limited. Now it has 53 branches all over Bangladesh.

Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere personalized service to its customers in a technology based environment.

The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business. Its various deposit & credit products have also attracted the clients-both corporate and individuals who feel comfort in doing business with the Bank.

Mission

To mobilize financial resources from within and abroad to contribute in Agriculture’s, Industry & Socio-economic development of the country and to play a catalytic role in the formation of capital market.

Vision

To become the Bank of choice in serving the Nation as a progressive and Socially Responsible financial institution by bringing credit & commerce together for profit and sustainable growth.

Objective:

• Quality earning generated in core markets.
• Providing a very efficient customer services at a competitive price.
• Delivered the highest quality services and performance so those customers choose them first.
• High Standard of corporate and business ethics.
• To be the best for the customer, NCCBL wants to build up a team that would manifest unfailing faith in their bank, show respect for colleagues and commit to the high standard of quality and professionalism.

Nature of Business:

NCCBL is a progressive commercial bank in private sector in Bangladesh. It creates now opportunities for its clients. It gives customized services and maintains harmonious banker – client relationship. It contributes towards formation of national capital, growth of savings and investment in trade, commerce and industrial sectors. It provides different types of commercial banking services to the customers of all strata in the society with in the stipulation laid down in the bank companies Act. 1999, rules and regulations framed by the Bangladesh Bank from time to time.

Suggestion for NCC Bank

• Islamic banking:

Islamic banking system has enormous opportunity in the local market based on mostly Muslim customers and NCC bank didn’t introduce it yet. So introducing new Islamic banking system or combining it with the existing banking system will bring huge profit to the bank.

• Strong marketing activities:

NCC bank lacks of clearly defined marketing objectives. It requires improvement in its current marketing strategies and mass implementation on that. This will contribute in earning more market share in the banking industry.

• Promising market growth:

In developing countries like Bangladesh banking sector is the best sources of financing. So the banking sector itself promises a significant growth for deserving banks. NCC bank can be one of the leading players if it utilizes the opportunity.

• Defaulters:

The common attitude of Bangladeshi clients to default can be a problem to the bank’s profit trend.

• The impact of centralized authority:

Delegation of authority is centralized which makes the employee to realize less responsibility. Thus the employee morale is deteriorated.

• Bureaucratic hassles in loan department:

The credit proposal evaluation process is lengthy. Therefore sometimes valuable clients are lost and Bank becomes unable to meet targets.

• Absence of employee evaluation:

No substantive use of Annual confidential Report to reward or to punish employees. Hence, the employees become inefficient.

• Ineffective portfolio:

The portfolio of Bank is not that much diversified because it inverts major portion of its fund on Government securities.

• Untouched rural sector:

The bank does not go for rural banking. But rural people are bankable which NCCBL can get from the activities of the NGOs.

• Lacks in promotional activities:

The Bank lacks aggressive advertising and promotional activities to get a broad geographical coverage.

• Impact of competitor’s strategies:

Multinational banks with various attractive means of providing commercial banking services can take the Bank’s lucrative clients away. Local competitors can also capture a huge market share by offering similar products and services provided by the Bank.

• Problems resulted from illegal micro credit firms:

Opening the recent no permitted new banks or micro credit firms, without implementation of the needed reforms, could lead the unethical competition and horse-trading in the local banking sector.

• Limited ATM service:

The bank has only a few ATM booths but not in mentionable places. So, the scope of the use of ATM card is limited and competitors can capture the potential market for ATM service.

• Preference to traditional methods:

Compared to its competitors the bank does banking activities through traditional methods and the management is not open minded enough to follow up with the new methods.

• Inefficient employees:

According to the employees remarkable portion of the total human resources is inefficient.

• Absence of R&D department:

The Bank does not have any research and development division which can react to the developing customer demands or competitor’s strategies.

• Impact of banking rules:

Bangladesh Bank sometimes require private Commercial Banks (PCBs) to be abide by such rules and regulations which is not suitable every commercial banks

• Limited branches:

NCC bank’s total numbers of branches are Lower than other competitors.

• Lack of proper customer service:

The customer service of the Bank is not too good like other banks. In the Foreign Banks, there are customer service department. But there is no Customer service department in NCC bank.

General Banking Department:

Introduction

General banking creates a vital link between customers and bank. It’s really a classic as crucial department for the bank. It is the introductory department of the bank to its customers. The NCCBL Jatrabari branch has all the required sections of general banking. Every day it receives deposits from customers and meets their demands for cash by honoring instruments. General banking department is that department which is mostly exposed to the maximum number of bank customer.

Functions of General Banking Department:

1. Account opening.
2. Account closing.
3. Cheque book issuing.
4. Telephone receiving
5. Account enquiry.
6. Providing accounts statement
7. Solvency certificate issuing
8. Account transfer.

Account opening :

A person is treated as a customer when he/she opens an account on that bank. Then it becomes a contractual banker customer relationship. The account opening section of NCCBL Jatrabari branch is a very important section. This section takes care of all the relevant duties related to the opening of an account.

Account opening process:

There are different types of account facilities provided by this branch. These are:

• Current Deposit (CD):

Current deposit is an account where numerous transactions can be made by the account holder within the funds available in its credit. No interest is paid on these deposits. Current account is mainly suitable for businessmen though no body is debarred from opening such an account for any purpose. For opening CD account the initial deposit that is to be of minimum Tk. 5000 in NCCBL and the introducer must be current account holder. Different types of current deposits are as follows:

1. Individual current account
2. Joint account
3. Proprietorship account
4. Partnership account
5. Limited company account.

Saving Deposit (SD) :

To encourage saving habit amongst the general public, banks allow depositors to open savings accounts. As the name indicates, these accounts are opened for the purpose of savings. Interest is awarded on the balance of the account. For opening a savings account minimum Tk. 500 is taken as deposit. NCCBL offers attractive rate of profits of its saving deposits.

Fixed Deposit Receipt (FDR) :

The bank receives deposits for a fixed period ranging from 1 month to 3 years and above. Although the minimum period, for which a sum is received as a fixed deposit, is one month there is no maximum time limit for opening fixed deposit account but bank generally does not accept deposits, say 10 years. Interest on fixed deposit varies from maturity period. For opening a fixed deposit minimum Tk. 50000 is taken as deposit. Duration of this deposit is 5 years.

Short Term Deposit (STD) :

STD accounts are purely a time deposit account. The formalities for opening of this account are similar to those required for current account. The account runs like an ordinary current account with the exception that seven days notice is required to be given to the bank before each withdrawal interest is paid at prescribed rate. Generally Government, semi- Government, Autonomous Bodies etc maintain STD account. NCCBL offers attractive rate of profits to its shot-term deposits.

Account Closing :

A customer may close out his / her account 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 account less the amount of closing and other incidental charges and surrender the unused leaves of the cheque book. In case of joint account all the joint account holder should signed in the application for closing the account. On receipt of the application the following steps are taken:

1. The signature of the account is verified.
2. The number of unused leaves of the cheque book shall be noted thereon.
3. The manager will approve the application and incidental chares should debited the account.
4. The account holder is advised to draw the remaining balance from the account.

Chequebook issuing :

1. The In-charge of departmental stock of the chequebook will get know and to allow entering the departmental chequebook issued register.
2. Separate folios in the register are allotted for CD account of chequebook of 20 leaves and SB account chequebook of 10 leaves.
3. At the time of opening an account the customer is required to sign a chequebook requisition slip (No. S.F. 73). If the account opening form is found complete in all respect a chequebook is issued to the client.
4. The account number is written in each of the chequebook and its requisition slip.
5. The name and account number of the customer is also entered in the chequebook issued reregister against the particular chequebook series and is also recorded to the computer.
6. The requisition slip should be preserved as voucher.

Remittance Department:

Bank has a wide network of branches all over the country and offers various types of remittance facilities to the public. They serve as best media for remittance of funds from one place to another. This service is available to both customers as well as non-customers of the bank. The followings are some of the important modes of transferring funds from one to another bank. These are:

• Demand Drafts (DD) :

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

This is an order instrument in which the issuing branch gives instruction to the payee / drawer branch to pay certain amount of money to the order of certain person / firm / organization.

The payee or drawer branch on receipt of the message decodes the tested massage and being fully satisfied, pays the amount by crediting the payee’s account (if account is maintained with the payee branch). Telegraphic transfer may also be issued favoring the beneficiary who maintains account with other banks. In such case the payee branch issues pay order favoring the payee and hand over the P.O. to the concerned bank branch for effecting payment to the payee.

• Procedures of Issuing DD:

1. Obtain Demand draft application from duly filled in and signed by the purchaser / applicant.
2. Receive the amount in case / transfer with prescribed commission and postage amount.
3. Issue the DD duly filled in and signed by the authorized signatories.
4. Insert test number (where applicable).
5. Enter in the DD register.
6. Issue credit advice to the issuing branch.

 Procedure of Payment DD:

1. Examine genuinely of the DD viz. Amount; verify signature, test, series etc.
2. Enter in the DD payable register.
3. Verify with the IBCA / test etc.
4. Pass necessary vouchers.

Telephonic Transfer (TT) :

This is mode of transfer / remittance of customer’s money from a branch of one bank to another branch of the same bank of to a branch of another bank (with prior arrangement between those banks with the TT issuing branch) through telephonic message. The issuing branch used to send the message of such remittance / transfer to the drawer / payee branch through telephone adding certain code number of test number on the basis of text key apparatus developed by the concerned bank for its different branches.

Characteristics of TT:

1. Issued by one branch to other branch and massage is tale communicated.
2. Remittance / transfer of money is done through tested tale massage.
3. Remittance is affected on the basis of tested massage.
4. Test key apparatus is required.

Procedure of Issuing TT:

1. Obtain TT application form duly filled in and signed by the purchaser / applicant with full account particulars of the beneficiary.
2. Receive the amount in cash / transfer with prescribed commission, postage, telephone / telex etc. charge.
3. Prepare TT massage inserting test number (code number).
4. Enter in TT issue register.
5. Issue credit advice to the payee branch.

Procedure for payment TT:

1. Note the TT massage and verifying the test number and confirm if TT serial no Etc. is ok.
2. If ok, into TT payable register.
3. Pass necessary vouchers for payment.

Payment order / 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 / form / organization / department office within the same clearing house area of the pay order issuing branch.

Procedure for Issuing Payment Order:

1. Obtain PO application form duly filled in and signed by the purchaser / application.
2. Receive the amount in cash / transfer with commission amount.
3. Issue PO.
4. Enter in PO

Procedure of payment of PO:

1. Examine genuinely the pay order
2. Enter into PO register and give contra entry
3. Debit it fund ok for payment.

Mail Transfer (MT) :

MT is an instrument issued by a remitting bank to the paying bank advising in writing to make payment of certain amount of the specific beneficiary.

Clearing Department

Cheque clearing section of NCCBL, j

Jatrabari branch receive cheque, demand drafts and pay orders of their clients. Upon the receipt to the instrument the cheque clearing section examines:

Whether the paying bank is within Dhaka city.

1. Whether the paying bank is outside Dhaka
2. Whether the paying bank is from their own branch.

When The Paying Bank Is Within Or Outside Dhaka City:

The cheque clearing section of NCCBL, Jatrabari Branch sends inter Branch Debit Advice (IBDA) to the head office on the receiving day of the instruments. The main branch takes those instruments to the clearinghouse on the following day. If the instruments are dishonored, head office of NCCBL sends IBDA to the NCCBLJatrabari Branch. The total procedure takes three days to encase the instrument of everything goes orderly.

The Paying Bank of their own Branch:

The Cheque clearing section of NCCBL, Jatrabari Branch sends outward bills for collection (OBC) to the concerned paying branch to get Inter Branch Credit Advice (IBCA) from 13^th paying branch. If the paying branch dishonors the instrument, the paying branch returns it to the NCCBL, Jatrabari Branch describing why the instrument is dishonored.

Types of Cheque Collected by Clearing Department:

• Transfer Cheque: Transfer cheques are those cheques, which are collected and paid by the same branch of NCCBL.
• Local bills collection cheques (LBC): Local bills collection cheques are those cheques, which are collected and paid by two different branches of a bank situated in the same city.

Outward Bills Collection Cheques (OBC):

OBC cheques are those cheques, which are collected and paid by two different branches of same of different bank situated in the outstation.

Clearing House:

Clearing House is an arrangement under which member banks agree to meet, through their representatives, at an appointed time and place to deliver instruments draws on the other and in exchange, to receive instruments drawn on themselves. The net amount payable or receivable as the case may be, is settled through an account kept with the controlling bank.

Common procedure for all kinds of cheques etc:

1. Receiving and scrutinizing the cheque and other deposit instruments, and the pay-in-slip at the counter.
2. Affixing the stamps.
3. Scrutiny and receipt by the authorized officer.
4. Returning the counter-foil to the depositor.
5. Separate the cheques into transfer, LBC and clearing cheques.

Types of Clearing:

• 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 outward clearing for that particular branch.
• Inward Clearing: when a particular branch receives instruments, which on them and sent by other member bank for collection are treated as inward clearing.

Loans & Advance Department

Introduction: 

The main business of Bank is to settle loan & advance. Bank collects deposits of saving from one kind of people of society and invests these deposits as loan, subject to conditions, to other kind of people. Bank not sanction cash loan but also credit its good reputation, coincidence faith etc. To settle loan by the bank is called credit or loan and advance.

It can be mentioned that banks do business by savings or deposits collected from local people. So before settle loan the band must ensure about the security of the disbursed amount (loan) and he also ensures about the repayment of the loan.

Different Types of Credit Facilities:

All types of credit facilities can be broadly classified into two ways:

• Funded
• Non- Funded

Funded Credit:

A funded credit facility that a bank offers to a customer result in a actual disbursement of cash to the customer of to any designated supplier of the customer. l on order to provide funded facility to a customer the bank has to incur real liability before hand, i.e. the bank has to arrange for funds primarily through accepting deposits or otherwise. Funded facility affects the balance sheet of the bank both in terms of increase of liability and increase of assets. Types of Funded Credit are as follows:

Loans: Loans may be a demand loan of time loan or term loan demand loan is payable on demand which is allowed for a short period to meet short- term working capital need. Time loan is payable within one year and term loan is allowed for one year to five years, usually for capital expenditure such as construction of factory building purchase of new machinery, modernization of plant etc.

Types of loans:

• Loan general
• House building loan
• Loan against trust receipt (LTR)
• Loan against imported merchandise.

Cash credit: Cash credit facility is allowed against pledge or hypothecation of goods. Under this arrangement the borrower can borrow any time within the agreed limit and can deposit money to adjust whenever he does have surplus can in hand.

Types of Cash Credit:

• Cash credit (Hypothecation)
• Cash credit (Pledge)
• Cash credit (export)

Overdraft: Overdraft is an arrangement between a banker and his customer by which the latter is allowed to withdraw over and above his credit balance in his current account. This is a temporary accommodation of fund to the client. Academically, Basic difference between cash credit and overdraft is that businessmen use cash credit for longer period on yearly renewal basis, while overdraft is allowed occasionally and for short-term duration.

Types of Overdraft:

• Secured overdraft (FD)
• Secured overdraft (RE)
• Temporary overdraft

Bill discounted and purchased:

Characteristics:

• In land bill purchase
• Foreign bill purchase
• Foreign documentary bill purchase
• Payment against document

Discount: Banks allow advance to the clients by discounting bill of exchange / promissory note, which matures after a fixed tenor. In this method, the bank calculates realizes the interest at a prefixed rate sand credit the amount after deduction the interest from the amount of instrument.

Types of Loans and Advances Offered by NCCBL:

Loan General :

When an advance is made in lump sum repayable either in fixed monthly installments of in lump sum and no subsequent debit is ordinarily allowed except by way of interest, incidental charges etc. called a loan is allowed for a single purpose where the entire amount may be required at a time of in a number of installments within a period of short span. After disbursement of entire loan amount, there will be only repayment by the borrower.

This bank offers three terms loan:

1. Short-term loan: Usually, short-term loans are allowed up to 1 year.
2. Mid-term: These types of loans are allowed for up to 3 years.
3. Long- term: Generally, long-term loans are allowed for over 3 years.

 b) House Building loan (HBL):

To solve the residential problem of our middle class people NCCBL take this scheme. Who is qualified to take this loan is depend upon the bank. Nevertheless, the borrower must have land on which the building is constructed. Period of loan is maximum 5 years. It depends upon customer baker relationship. Interest rate of this loan is 15.5% compounded monthly. Limit of the amount of the loan in depending on customer and banker relationship. But the value, location of the land etc. are important factors.

c) Loan against Trust Receipt (LTR):

This is a temporary loan, which is allowed to the customer against their application on the basis of, trusts and trusts only. It is call loan against trust receive. Validity of LTR will be allowed as per sanction letter. However it may be allowed for 30/60/90/120 days. Adjustment of LTR may be made partially or fully. Interest rate to this loan is higher. Interest rate on LTR is charged on monthly basis. It is allowed against security. Monthly interest charge is 1505%.

d) Loan against Imported Merchandise (LIM):

The temporary loan, which is allowed to the imported against their imported goods, is called loan against imported merchandise (LIM). Validity of the LIM will allowed as per sanction letter. LIM is generally disbursed once. Interest rate of this loan is higher and it is charged on monthly basis. Control over the imported goods to be absolutely maintain by the bank. These loans are allowed against security.

e) Cash credit (Hypothecation):

Hypothecation is a charge on company for a debt, but neither ownership nor possession passes to the creditors. In hypothecation, both ownership and possession remain with debtor. The charge is created by the debtor to the lender on his execution of a document in the said document, the debtor hinds himself to give possession of the hypothecated stock to the lender, if the lender so requires.

As the goods remain in the possession of the borrower, banks grant hypothecation facility normally to first parties. It depends mainly upon the trustworthy of the part.

Advance is generally allowed against hypothecation of the following:

• Raw materials
• Stock-in-trade
• Finished products
• Book debt of the debtor.

f) Cash credit (Pledge):

Cash credit allowed against pledge of goods is known as CC (Pledge) limit. Pledge is bailment of goods or securities. The bailment must be by the debtor of intending debtor of intending debtor or his duly authorized attorney. The attention of the pledge of the pledge or and pledge is that the goods bailed will serve as security for a debt and performance of a promise. The goods must be in the possession of the pledge.

g) Secured over Draft (SOD):

The overdraft is a kind of advance always allowed on a current account operated upon by cheque. The customer may be made any number of limits at the convenience of the borrower, provided the total amount overdrawn does not, at any time exceed the agreed limit. Interest is calculated and charge only on the actual debit balances on daily product basis.

Secured overdrafts (SOD) are four types on the basis of securities:

• SOD against FD
• SOD against PSP
• SOD against scheme
• SOD general

h) Payment against Document (PAD):

When issuing bank gets the original shipping documents from Negotiation bank against a letter of credit (L/C), then issuing bank goes through the shipping documents for scrutiny. After scrutiny of the shipping documents, if the issuing bank finds the shipping documents in order, I.e. per L/C terms, then issuing bank open a loan account on account importer. This total process may be defined as payment against document (PAD).

Valuation of Security:

Valuation of security is very important for the lending banker. Therefore valuation of security must be done with careful verification of sources, in respect of nature of procurement, quality, quantity and considering possible risks.

Loan Classification:

Like other banks, all types of loans of NCCBL fall into following four scales:

1. Unclassified: repayment is regular.
2. Substandard: Repayment is stopped or irregular but has reasonable prospect of improvement.
3. Doubtful debt: Unlikely to be repaid but special collection efforts may result in partial recovery.
4. Bad Debt: Very little chance of recovery.

Guarantee:

NCBL offers three types of guarantee, which are as follows:

1. Tender of bid bond guarantee: The tender guarantee assures the tender that tenders shall uphold the conditions of his tender during the period of the offer as binding and that he/she will also sign the contract in the event of the order being granted.
2. Performance guarantee: A performance guarantee expires on completion of the delivery or performance. Beneficiary finds that as a guarantee, the contract will be fulfilled in every respect and can retain the guarantee as per for long time. Including a clause stating that the supplier can claim, under the guarantee, by presenting an acceptance certificate signed by the buyer, can counteract this.

Advanced payment guarantee (APG): This type guarantee is given against work order. This idea can be made clear with the help of an example. Before the beginning of Jamuna bridge construction, the Govt. collected money from different sources to pay the contractors in advance. But there was a risk for the Govt. that the contractors might not do there construction work even they were paid in advance. So the Govt. asked band Guarantee from them. Then the contractors submitted Band Guarantee to the Government. This type of guarantee is called advanced payment Guarantee.

Issuance procedure of Guarantee:

Banding guarantee is a contractual relationship between the account (client) and the beneficiary. For issuing bank guarantee, customers have to apply to NCCBL in their own pad. Normally the bank prepares the format of the guarantee. The proposal for bank guarantee contains the following particulars:

• Name of the Borrower with address
• Nature of facility
• Purpose
• Security
• Margin
• Commission
• Validity
• Beneficiary
• Liability position of Borrower
• Nature of facility
• Extent of facility
• Drawing power
• Margin Account
• Outstanding / net exposure(Tk.)

The Bank issue bank guarantee on judicial stamp. The conditions for issuing bank guarantee are:

• The customer must maintain a current deposit (CD) account
• They must keep certain percentage of guaranteed money (usually 2%) as margin.
• Bank charges of 0.50% commission on the guaranteed money per 3 months.

• After realizing all the above charges, bank then issues the guarantee. For this issuance, banker’s liability is created and the following entries are given:

Customers Liability…………………………..Dr.

Bankers…………………………………………….Cr.

When the guarantee is expired, the guarantee is marked as cancelled and the following entries are given:

Customers Liability …………………………Dr.

Customers Liability ………………………… Cr.

Revolving Guarantee:

NCCBL also issues revolving guarantee. This guarantee issue register is maintained to record following information about guarantee:

• NCCBL Name of the customer
• Account No
• Guarantee No
• Issuing Data
• Date of approval / reference No
• Beneficiary of the guarantee
• Margin (percent and amount)
• Commission
• Data expiry.

Pricing

Fixed Deposit:

Fixed deposit account may be opened in the names of two or more persons and even in names of minors jointly with guardians. No introductory reference is required furnished for opening fixed deposit account. NCCB offers attractive following rates of profits to its fixed deposits.

Special Deposit Scheme

Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies etc. can open a Special Deposit Scheme A/c with NCC Bank Limited. Special Deposit Scheme A/c is a term deposit of 3 (Three) years and interest is payable on monthly basis. Special Deposit Scheme is 100% term deposit and account holder can withdraw his/their deposits (Principle amount) after expiry of maturity of deposit.

Upon enhancement of rate of interest to 13.40% the fresh depositor will get monthly dividend/interest against Special Deposit Scheme (SDS) as per following break up :

The following criteria should be applied to the product:

1. The duration of time between deposit and payment of first dividend/interest mest be minimum 30 (Thirty) days

2. Income Tax levied by the government on interest against bank deposit shall have to be borne by the depositor and that amount  to be realized from the monthly dividend.

3. In case of premature encashment of Deposit before completion of one year, depositor will not be entitled to get dividend/interest, so amount of dividend /interest paid earlier shall have to be realized from the principal amount.

4. In case of premature encashment of Deposit before 03 (Three) years but after one year the depositor shall be entitled for interest  as per following schedule and amount of dividend paid earlier shall have to be adjusted from the net amount payable.

• After 1 (One) year but before 2 (Two) years – Prevailing interest Rate of SB a/c
• After 2 (Two) years but before 3 (Three) years – Prevailing interest Rate of SB a/c + 0.50%

In case of Lending against pledge of SDS Receipt, interests at the rate of 16.50% have to be charged against loan outstanding. This interest rate is fixed and applicable in all cases without further consideration

Special Fixed Deposit Scheme:

Monthly interest will be given to the depositors against the deposited amount according to the following schedule.

NCCBL Special Saving Scheme:

Like ‘Deposit pension scheme’ this scheme includes the following features for the convenience of the clients.

• The duration of this scheme is 5 years to 10 years.
• The monthly installments of Tk. 100 to Tk. 2500 may be deposited every month during the entire period of the scheme; installments of Tk. 5000 % Tk. 10000 are for 10 years only.

The deposited will be paid a specified amount on the expiry of the fixed period as per the following table:

Rate 13%

A depositor may open one or more accounts of different installments in the same Branch. Loan may be extended up to 80% of the deposited amount.

Note: From 1^st June 2011 this scheme was closed. Because of under this scheme bank fulfill target.

Charge of Various types of Remittance:

Collection charges of CHQ, OBC, Bills:

DD / TT / MT:

Commission                                                                 :           Tk.10% min Tk. 20

Telex / Telephone charge                                           :           Tk. 30

Telegram                                                                     :           Tk. 30

Collection charge                                                         :           Tk. 30

PO / SRD / Issuance:

Up to Tk. 1 lac                                                                        :           Tk. 10

Above Tk. 1 lac but not exceeding Tk. 5 lac               :           Tk. 20

Over Tk. 5 lac                                                             :           Tk. 50

Purchase of Cheques:

Place

NCC Bank has one Head Office and 59 branches under its control. For remaining of sufficient branches NCC bank can give some special customer services to the customer as for examples:-

• Remittance facilities can be provided to the customer very cheaply because, inter office indebtedness can be more easily adjusted.
• Clearing of cheques is comparatively easy since cheques deposited at a branch in the city where there is a clearing house and can be cleared in the customary way.
• By the difference branch NCC Bank can serve the customer services more efficiently.
• For Branch banking NCC Bank increases the mobility of capital which brings uniformity of interest rates.
• NCC Bank can create handsome deposits from customers by branch banking.
• There are some problems raised for the place decision of NCC Bank Ltd. They are,
• If any one branch of NCC Bank failed to achieve customer satisfaction then the effect spared all over the branches.
• For any kind of critical banking decision the branch manager has to get permission of Head Office & it is lengthily process. And which brings totally ignorant of customers.
• If a branch operates his banking in that area where traffic jam is higher than most of people hesitate to continue their all sorts banking. NCC Bank, Jatrabari Branch is also facing the same situation.
• NCC Bank should analysis their strategy when are likely to be opened new branches in Bangladesh for which they have not followed this strategy for port city Khulna. They should increase their branch in Khulna.

Promotion

Modern Marketing calls for more than just developing a good product. Pricing it attractively and making it available to target customer. Companies also must communicate with their customers and what they communicate should not be left to chance.

This theory is also applicable for banking business. To communicate well bank often hire advertising agencies to develop effective advertisement, give appointment to active experienced officers and executives, gives on-line services to the big businessmen or organization, create a private relationship with clients.

The marketing communication program of a company or a banking business is called “Promotion mix”-consist of specific blend of advertising, personal selling, sales promotion and public relation tools that the bank uses pursue its marketing objects.

Definition of the four major promotion tools as follows:

• Advertising: Any paid form of non- personal presentation and promotion of ideas, goods or services by an identified sponsor.
• Personal Selling: Oral presentation in a conversation with one or more prospective purchase for the purpose of marketing sales of services.
• Sales Promotion: Short-term incentive to encourage the purchase or sales or a products or services is called sales promotion.
• Public Relation: Building good relation with the organization’s various public by obtaining favorable publicity, building up a good “corporate image”, and handling or heading off unfavorable reamers, stories and events.

The following tools are used with NCC Bank Ltd. are given:-

Advertising:

Advertising is one of the most important tools of promotion. The NCC Bank Ltd. is to arrange to publicity or to draw attention of businessmen to various media regarding their product or service. On the other hand the Bank is always to the door of their clients if any new service is arranged. In connection with this they distribute their prospectus to the clients. At the end of 1999 NCC Bank Ltd. issue their shares to the market. NCC Bank Ltd. issued/offered share of Tk. 19,50,00,000 out of which public offer is Tk. 5,25,000 shares @Tk. 100 each. NCC Bank Ltd. tries to draw the attention of general public and businessmen regarding their shares, which has been already issued, in the market through “The Daily Prothom Alo” and “The Daily Financial Express”.

In the meantime they market public of their best services as to prospectus with the newspaper by each month and they distribute it to service holder and clients. Even though it is very important for any bank to make introduce them in the market of their products and services as needed but NCC Bank is not achieved this capability as yet. But it goes without as that an established bank can lose his name and fame with their clients as well as deposits due to proper and effective advertisement which can activate the clients to lessen their deposits. We can say here as for example “The American Express Bank Ltd.” Standard Chartered Bank is not only in Bangladesh they are always ahead than others all over the world implementing the advertisement if needed. They at least make sure their clients about services in each week through add by newspapers as well as any reputed magazines. I think NCC Bank should follow this strategy of Standard Chartered Bank Ltd. NCC Bank can make introduce them to the public by banner in the busiest area and can hang signboard on the road as public can recall their business thinking first.

Meanwhile NCC Bank Ltd. published well calendar, pocket calendar, and desk calendar as well as diary every starting year what they distribute to the clients and to the service holders.

As matter of fact we already became to introduce ourselves with the different cable channels and Internet in which NCC Bank Ltd. may give there add with effectively. On the long run it is to say that without add or publicity any product or service would be boneless since how a client can introduce himself with this service. So NCC Bank Ltd. should consider this case. And all should accept the strategy of perfect advertising.

Personal Selling:

The business of any bank, which is to be reached to the client’s knowledge and to trying have motivate to purchase their services, is called Personal selling. This is why it is most important to take training of officers and executives of Bank specially.

I have completed my internship for two months with NCC Bank Ltd., Jatrabari Branch, Dhaka as it is integral part of my under graduation. I found all executives and officers well conscious about their personal selling. They help to the new and old both clients to choose the option of new service and motivate them to continue and start purchasing their services. NCC Bank Ltd. always accelerates their activities to the customer’s existing with them and assists to get prompt services. By this way they try to expand their name and fame in the market.

Sales Promotion:

According to banking business, short-term incentive to encourage the sales of services or products of Bank is called sales promotion. They sometime reduce the interest of loan and enhance the interest of deposit as client may remain with them. As banking activities is service related, so they may emphasis on the services marketing.

Public Relation:

Public relation means building a good relation with other bank and with various publics by obtaining favorable publicity, building up a good corporate image and handling unfavorable reamers, stories and events.

A Bank can participate in any domestic or international fair and jointly with other bank they can participate in the workshop to produce their goodwill. On the other hand they can sponsor any domestic or International popular games like cricket, football etc. But NCC Bank till today didn’t do this.

Sponsorship:

NCCBL considers sponsorship concept as one of their major tools for marketing. The bank has already sponsored many social welfare programs to show its interest on corporate social responsibility. Beside this the bank has also helped to build up many beautiful monuments at Dhaka city like the one at Science laboratory.

SWOT Analysis OF NCCBL Ltd:

Every business organization is required to judge the performance from the aspects of its strength, weakness, opportunity and threat. The Strength, Weakness, Opportunity and Threat (SWOT) analysis of the Bank is a follows:

 Strengths:

1. NCCBL is a financially sound company.
2. The Bank provides quality service to the clients compared to its other contemporary competitors.
3. Experienced bankers and corporate personnel have formed the management of the Bank, which formulates business strategies.
4. The Bank is also a member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunication) Alliance Access which enables the Bank to exchange critical financial messages swiftly and cost effectively.
5. The bank has earned customer loyalty as organizational loyalty.
6. National Credit and Commerce Bank Limited has already achieved a goodwill among the clients that helps it to retain valuable clients.

Weaknesses:

1. Delegation of authority is centralized which makes the employee to realize less responsibility. Thus the employee morale is deteriorated.
2. The credit proposal evaluation process is lengthy. Therefore sometimes valuable clients are lost and Bank becomes unable to meet targets.
3. No substantive use of Annual confidential Report to reward or to punish employees. Hence, the employees become inefficient.
4. The portfolio of Bank is not that much diversified because it inverts major portion of its fund on Government securities.
5. The bank has no ATM booths.
6. Compared to its competitors the bank does traditional activities.
7. A remarkable portion of the total human resources is inefficient.
8. The Bank does not have any research and development division.

Opportunities:

1. The Bank can introduce more innovative and modern customer services to better survive in the competition.
2. The bank has to launch ATM-card facility as early as possible to reach the target customer.
3. They can also offer micro credit business for individual and small business.
4. The bank can diversify its portfolio by introducing new sector.

Threats:

1. The common attitude of Bangladeshi clients to default.
2. Multinational banks with various attractive means of providing commercial banking services can take the Bank’s lucrative clients away.
3. Local competitors can also capture a huge market share by offering similar products and services provided by the Bank.

Findings

In the frequency table, it shows that most of the clients of NCC Bank are from business and service category. The most important reason for choosing NCC Bank is its good service. Most of the respondents come to know about NCC Bank through WOM (Word of Mouth). 38% of the respondents are satisfied with the current marketing strategy which is followed by the NCC Bank, so the Bank should take some steps to improve its strategy, which is shown in frequency graph that 42% are agreed that NCC Bank needs to improve its marketing strategy. 26% of the respondents are satisfied with NCC Bank, 30% of the respondents are not satisfied and 44% are not sure. So, they should improve their strategy.

In the regression table, it shows that there is significant relation between the satisfactions with NCC Bank and its current marketing strategy. So, the null hypothesis should be rejected. As a result, the alternative hypothesis-NCC Bank’s marketing strategies for its products are satisfying its customers and have positive profit trends.

In the cross tabs, there is no relationship between profession of customers and satisfaction with NCC Bank Ltd. But there is relationship between current strategy of marketing and satisfaction with NCC Bank, and improvement need or not in marketing strategies and satisfaction with NCC Bank.

At the end it is to be said that NCC Bank needs some improvement in its marketing strategies though its doing well with its current strategies and it has positive impact on its profit trends.

Conclusion

National Credit Commerce Bank Limited (NCCBL) is serving the market with almost full range of services. As the number of branches implies, still Bank has limited operation in our country, but it should also be noted that within the next few years from its establishment, no bank could make as good standing as NCCBL has now done.

The bank is following a certain traditional marketing strategy and it is doing well. This marketing strategy is quite satisfying customers and it has positive impact on its profit trend. But with this modern age, the bank should improve its marketing strategy. If it improves its marketing strategy, then it can attract more customers towards this Bank and it will have more positive impact towards its profit trend.

Recommendations

• Today’s and tomorrow’s business world is more challenging. To face the challenge bankers must have knowledge about different economic and business variable. So the bank must recruit business graduate like BBA and MBA holders as a probationary officer.
• The bank should made advertisement on newspaper and TV so that every initiatives and special facilities of the bank can go at the door of the customers.
• 24 hours banking facilities like credit card ATM card should be made within short period.
• The bank should introduce new short term schemes like micro credit for poor and urban people.
• Changes in industry trends may directly affect business so that it calls no longer completely Profitable. Therefore, the Bank should keep information about the environment of each industry in which its customers operate.
• To attract more clients NCCBL has to create a new marketing strategy, which will increase the total export Import business.
• Attractive incentive package for the exporter will help to increase the Export and accordingly it will diminish the balance of payment gap of NCCBL.
• Different types of training very much required for the bank officials.
• Computerized banking system and latest communication device are the most important elements for this century. So, for the sound and stable Banking operation, NCCIBL has no alternative but the modernization.
• Foreign exchange operations of other banks are more dynamic and less time consuming. NCCBL should take some initiative to compete with those Banks.
• NCCBL should change the desk of the officers on rotation basis so that their skill can be increased.
• The bank should be the more responsive to societal issues.
• The bank should try to keep more diversification among its products and services.