Overall Performance of National Bank Limited

The main objective of this report is to analysis Overall Performance of the National Bank Limited. Other objectives are discuss on strategies of National Bank and implementing in constant prosperity of the company. Here also analysis the performance trends of the fast growing banking corporation and find out the Management problems and solve the problems. finally give some idea about its management and organization structure.

Objective Of The Report

The main objective of this report is to introduce myself with the Overall Activities and Performance of the bank and to give myself the opportunity to use this information in preparing a report on a firm.

The objective of the study may be viewed as: 1. General objective 2. Special objective

General Objective

The general objective of the study is to prepare and submit a report on the topic “Overall Activities and Performance of National Bank Ltd.”

Special Objective

• Identify the strategies for NBL Bank Ltd. implementing in constant prosperity of the company.
• Analyzing the performance trends of the fast growing banking corporation.
• To find out the Management problems and solve the problems
• To satisfy the shareholders by informing about the company.
• To give some idea about its management and organization structure.
• To develop our capabilities as an employee in realistic field of the job market.

Methodology

Data have been collected from both primary and secondary source.

Primary source

• Register and file study from different department of the branch.
• Computer data from accounts section of the branch.
• Officer’s desk papers, vouchers etc.
• Direct communication with the clients.

Secondary source:

• Different papers of National Bank Ltd.
• Annual report of National Bank Ltd.
• Paper cutting and textbook.

Historical Background of The National Bank Limited

The National Bank Limited (NBL) has a prolonged and glorious heritage in the banking industry in Bangladesh. It is the pioneer in the local private commercial was inaugurated on March 1983 under the supervision of Bangladesh Bank. A glorious fact of the National Bank Limited is its approval as first private commercial bank from Bangladesh Bank in our country.

Economic development activities in the post liberation period required service from private commercial Banks. To fulfill this demand as well as to improve the commercial banking ser-vice in Bangladesh, the National Bank Limited emerged as a private limited company. The National Bank Limited is a remarkable addition to the private sector branch banking in Bangladesh. Aiming at offering commercial banking service to the customer’s door around the country, the National Bank Limited established 100 branches up to this year. This is the highest number for any private commercial bank operating in Bangladesh. This organization achieve customer’s confidence immediately its establishment in domestic and international markets.

NBL took participation in Nepal Arab Bank Limited, Nepal in 1995.Under a technical service agreement, NBL is extending management service’s to NBIL, in 1997. Bank opened a representative office in Yangoon, Myanmar. NBL is proud to be, first private Bank in Bangladesh who introduce credit card (Master Card) both local and international. The Bank has made agreement with Western Union Remittance services for speedy transfer of money allover the world.

The National Bank limited provides financing in capital market, Credit line and project financing, investment counseling, Underwriting any guarantee, Port folio management etc along with traditional banking service, Sanchay Prokalpo and Bonus Deposit scheme are- – praiseworthy banking service for the middle and lower income group. Recently, this organization has taken operational decision of two projects: Consumer Credit scheme and Credit Card marketing to widen its service and customer base. The National Bank Limited is always emphasizing the improve banking service and betterment of living standard of the general people of Bangladesh.

Objective & Goals Of National Bank Ltd.

• NBL is always ready to maintain the highest quality of services by upgrading banking technology prudence management banking and by applying high standard of business ethics through its established commitment and heritage.
• The objective of NBL is not only earn profit but also to keep the social commitment and to ensure its co-operation to the person of all level, to the businessman, industrialist -especially who are engaged in establishing large scale industry by consortium and the agro-based export oriented medium and small industries by self inspiration.
• NBL is committed to ensure its contribution to national economy by increasing its profitability through professional and disciplined growth strategy for its customer and by creating corporate culture in international banking area.
• NBL believes in building up strong-based capitalization of the country.
• NBL is the first and largest private bank is committed to continue its endeavor by rapidly increasing the investment of honorable shareholders into assets.
• NBL has been working from the very beginnings to ensure the best uses of its creativity, well disciplined, well manage and perfect growth.
• NBL is playing a vital role in socio-economic development of Bangladesh by was of linkage with rest of the world by developing worldwide network in domestic and international operation.
• NBL is preoccupied to encourage the investors for purchasing its share by creating the opportunity of long-term investment and increasing the value of share through prosperity as developed by day.
• NBL is committed to continue its activities in the new horizon of business with a view to developing services oriented industry and culture of morality and its maintenance in banking.

Vision

The vision of the National Bank Limited is to develop Bangladesh’s economy by profitable investment of public money and build up their confidence to the private institution.

Mission

The missions of the National Bank are as follows:

• We aim to come one of the leading Banks in Bangladesh by our prudence, fair and quality of operation.
• We intend to meet the needs of our clients and enhance our profitability by creating corporate culture.
• We believe in strong capitalization.

• We aim to ensure our competitive advantages by upgrading banking technology and information system.
• We maintain high standard of corporate and business Seth’s.
• We provided high quality financial services to strengthen the well being and success of individual, industries and business communities.
• We intend to plat more important role in the economic development of Bangladesh and its finical relations with the rest of the world by interlining both domestic and international l operations.

Values of National Bank Limited:   

• To be one social investment by holding and guiding the following values:
• To have a strong customer focus and to build relationship based on integrity, superior service and mutual benefit.
• To strive for private and sound growth.
• To work as a team to serve the best interests of the organization.
• To work for continues business innovation and improvements.
• To value and respect people and make decisions based on merit.
• To provide recognition and reward on performance.
• To value open and honest communication.

Strategy

The strategic planning approach in NBL is top-down. Top management formulates strategy at the corporate level, and then it is transmitted through the division to the individual objectives. Board of directors or Executive committee usually takes the decision. In this process lower level manager are detached in making process, even brainstorming of lower level manager is absent in decision-making and planning process.

Information and Communication Technology:

ICT has an important and great bearing over the policies and procedures of an organization towards management of bulk amount of data, facts and figures, MIS and information processing as well. It has just been introducing some new means of developed operating system in day-to-day operation of an organization especially of a Bank. To keep track on recent development of ICT and adjustment thereon could enable a Bank to use the ICT in an efficient way. NBL is also not behind of using ICT like other contemporary Banks. Introduction of Islamic Banking Version Integrated Pc BANK 2000 software at NBL enables to provide better service to our valued clients. We facilitate our customers Online Banking Facilities through intranet using V-SAT and Radio Link Connectivity. Out of 24 Branches, we have already brought 20 Branches under the network and within 2005we would be able to bring rest of the 4 branches under online. Moreover, using of SWIFT at 9 nos. of our AD branches has added something new and improved means of overseas communication system. To expand the area of services towards the customers, NBL has joined the ATM network under the management contract of M/S Electronic Transaction Limited (ETN).There are 20 ATM booths situated at metropolitan city of Dhaka, Chittagong & Sylhet and the customers are able to enjoy 24 hours remote banking facilities through using of NBL ATM Debit Card. Above all, Management of NBL is very keen to facilitate its customers IT based banking services like Remote banking facilities , EFT(Electronic Fund Transfer) Service i,e, SMS Banking, Phone banking etc., and considering the present and upcoming setup of IT, we have established a separate ICT Department staffed with some experienced computer professionals, who are directly response NBLs for the overall management of ICT within the bank and to explore the ideas of future innovation.

National Bank Ltd at a glance:

Showing five years financial activities of NBL from the year 2004 to 2008:

Company Analysis

SWOT analysis of the NBL

Strengths:

• NBL provides its customers excellent and consistent quality in every service. It is of highest priority that customer is totally satisfied.
• NBL draws its strength from the adaptabilssity and dynamism it possesses. It has quickly adapted to world class standard in terms banking services. NBL has also adapted state of the art technology to connect with world for better communication to integrate facilities.
• All the level of the management are solely directed to maintain  a culture for the betterment of the quality of the service and development a corporate brand image in the market through organization wide team approach and open communication system.
• NBL utilizes state of the art technology to ensure consistent quality and operation. The proof of that can be found in one of its branches, Scotia that is equipped with Reuters and SWIFT. All these facilities will be introduced in every branch vary shortly.
• On of the key-contributing factors behind the sources   of NBL are its employees who are highly trained and most competent in their own field.  NBL provides their employees training both in- house and out side job.
• NBL is free from dependence from the ever-disruptive owner supply of our public sources. The required power is enervated by the company through enervator fed on diesel. Water enervation at present is also done by deep tube wells on site and is abundant in quality.
• NBL provides its workforce an excellent place to work in. total complex has been centrally conditioned. The interior decoration was done exquisitely with the choice of soothing colors and blend of artistic that is comparable to any multinational bank.
• NBL provides the western union money transfer service for these customers are easily getting the foreign money.
• NBL also provide power card service facility. First year Bank is not providing any service charge for the power card.

 Weaknesses:

• NBL has very limited human resources compared to its financial activities. There are not many people to perform most of the tasks. As a result many of the employees are burdened with extra workloads and works late hours without any overtime facilities. This might cause high employee turnover that will prove to be too costly to avoid.
• Few of the NBL’s products offered to its clients like “Personal Credit (PC)” are lying idle due to proper marketing initiative from the management. These products call easily be made available in attractive way to increase its client base as well as its deposit status.

Opportunities:

• Government of Bangladesh has rendered its full support to the banking sector for a sound financial status of the country, as it is becoming one of the vital sources of employment in the country now. Such government concern will facilitate and support the long tern vision for NBL.
• Emergence of e-banking will open more scope for NBL to reach the clients not only in Bangladesh but also in global arena. It is also facilitate wide area network in between the buyer and the population units of NBL to smooth operation to meet the desired need with least deviation.

Threats:

• All sustain multinational banks and upcoming foreign, private banks posse’s enormous threats to National Bank Limited. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against an on slough of foreign the banks.

• The default risks of all terms of loan have to be minimizing in order to sustain in the financial market. Because, default risk leads the organization towards bankrupt. National Bank has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem if not elimination.

• The low compensation package of the employees from mid level to lower level position threats the employee motivation. As a result, good quality employees leave the organization and it effects the organization as a whole.

Analyzing of NBL Performance with financial ratios

Ratio Analysis

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of two mathematical impressions and as the relationship between two or more things. In financial analysis, a ratio is used as benchmark for evaluating the financial position and performance of a firm. We are describing some ratios for the measurement of the performance of the bank.

Return on Equity (ROE)

The rate of return on equity is a good condition last five years. ROE indicates the rate of return on equity capital. Generally bank stockholders prefer ROE to be high. Here, ROE is increased last four years, but last year’s ROE indicates lower than previous year. It is possible, however, that an increase in ROE indicates increased bank’s risk.

From the table we can see that ROE of NBL increasing except 2007. ROE of NBL were 30.79%, 70.54%, 82.94%, 40.55%, and 24.03% in the year 2003 2004 2005 2006 and 2007respectively. ROE has been increased as Net Income of the Bank has been increased over the years.

Return on Asset (ROA)

The rate of return on assets (ROA) measures the ability of management to utilize the real and financial resources of the bank to generate returns. ROA is most commonly used to evaluate bank management.

From the table we can see that ROA of NBL has been increased and decreased over the year from 2003 to 2007. Both ROA and TA of NBL over the last five years.

Net Profit Margin

Net profit margin ratio establishes a relationship between net income and operating income that indicates management efficiency in providing services, administrating     and selling the product. It reminds us that bank can increase their earnings and their returns to their stockholders by successfully controlling expenses and maximizing revenues.

Asset Utilization

The asset utilization ratio represents the ability of management to employ asset effectively to generate revenue. The more income generated per Taka of assets, the more profitable is the bank.

Net Interest Margin

Net Interest Margin measures the net return on the bank’s earning assets.

Loan Ratio

The loan ratio indicates the extent to which assets are devoted to loan as opposed to other assets.

From the table we can see that Loans and Advances Ratio of the bank has been increasing and decreasing. As bank generate its major portion of income from interest income. So, bank generates its major portion of income from interest income. So, bank has to disburse more Loans and Advances for maximizing their income. In the year 2007, the bank engaged 61.39% of its TA in loans and advances.

Risk Analysis

Capital Position of National Bank Ltd.:

(Figures in million taka)

Expansion of Customer Service

• Western Union Money Transfer

Joining the world largest money transfer service, NBL has introduced Bangladesh to the fastest track of money remittance. Western Union is a Very familiar name in the world of money transfer for sending speedy money from one country to another country in a few minutes. NBL has made an arrangement with Western Union Remittance Services, which has over 127 years experience for speedy remittance or money with more than 140 countries, Now NBL is on line to establish trade and communication with the prime international banking companies of the world. As a result NBL will be able to build a strong root in international banking horizon. Bank has been drawing arrangement with well conversant money transfer service agency “Western Union”. It has a full time arrangement for speedy transfer of money all over the world.

• Credit Card Activities:

National Bank Limited is the first local bank that introduced credit card: Master Card in Bangladesh in both local and international market in 1997. Master Card captured 35% of credit card through the world. However present market analysis reflects that a large number of people whose average income ranges in above Tk.10000 are using the credit card. Credit card division is continuing there all possible efforts for the participation in the globalize Master Card Program and the number of users of the credit cards huge been increasing day by day.

During the year the bank has ousted a profit of Tk. 96.70 million from credit card business. NBL also get licenses from international brand Visa Card, very soon, it will lunched.

• NBL ATM Service:

National bank limited introduced ATM service to its customer. The card will enable to save our valued customers from any kind of predicament in emergency situation and time consuming formalities. NBL ATM card will give our distinguished clients the to withdraw cash at any time, even in holidays, 24 hours a day a week.

Charges for ATM card: –

ATM cardholders have to pay 1000 taka annually and in the case of card lost subscriber also pay additional 300 taka.

• NBL Commitment to the society:

NBL always shows a strong and positive commitment to the services of the society. IN 1998, the bank donated Tk. 5.50 million to prime minister Relief fund for the flood- affected people of Bangladesh.

• NBL Power Card:

It is a prepaid card. No need of any account of NBL branch. Application form available at any NBL branch and card center. No annual fee for the first year. Renewal fee tk 200.00 only. Local card limit 1000at minimum or its multiple. International card limit-US$ 500.00 at minimum. Refill through any NBL branch. Drawing cash from NBL ATMs free of charge & from ATMs under Q-Cash network-Tk 10.00 per transaction from other ATM-Tk 100.00. Loading fee for international card will be charged @1% of the loaded amount. Cash withdraw fee (abroad) 2% of the cash drawn amount or US $.2.00, whichever is higher. Accepted at all VISA POS merchants. Cash withdrawal at all ATM booths bearing VISA and Q-Cash logo.( Except HSBC Bangladesh). Utility bill payment. It is a prepaid card. No need of any account of NBL branch. Application form available at any NBL branch and card center. No annual fee for the first year. Renewal fee Tk 200.00 only. Local card limit 1000at minimum or its multiple. International card limit-US$ 500.00 at minimum.

Division Of General Banking

General banking department is the heart of all banking activities. This is the busiest and important department of a branch, because funds are mobilized, cash transactions are made; clearing, remittance and accounting activities are done here.

Since bank is confined to provide the services everyday, general banking is also known as ‘retail banking’. In NBL Bank LTD, the following departments are under general banking section:

i) Account Opening Section

ii) Deposit Section

iii) Cash Section

iv) Remittance Section

v) Clearing Section

vi) Accounts Section

Account Opening Section:

a) Different Types of Accounts

Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account. A customer can open different types of accounts through this department. Such as

• Current Deposit.
• Savings Account.
• Short Term Deposit (STD)
• Fixed Deposit

Current Account

Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval.

Some Important Points are as follows-

• Minimum opening deposit of TK.1000/- is required;
• There is no withdrawal limit.
• No interest is given upon the deposited money;
• Minimum Tk.1000 balance must always maintain all the time;

Savings Account

This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a month. Heavy withdrawals are permitted only against prior notice. Some Important Points are as follows-

• Minimum opening deposit of Tk.5000 is required;
• Minimum Tk.1000 balance must always maintain all the time;
• Withdrawal amount should not be more than 1/4th of the total balance at a time and limit twice in a month.
• If withdrawal amount exceed 1/4th of the total balance at a time no interest is given upon the deposited money for that month.

Short Term Deposit (STD)

Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice.  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. Interest is calculated based on daily minimum product and paid two times in a year. Interest rate is 6.00%.

Fixed deposit:

The Local Remittance section of National Bank Ltd. Foreign Exchange Branch also issues FDR.

They are also known as time deposit or time liabilities. These are deposits, which are made with the bank for a fixed period, specified in advance. The bank need not maintain cash reserves against these deposits and therefore, the bank offers higher of interest on such deposits.

• Opening of fixed Deposit Account: The depositor has to fill an account form where in the mentions the amount of deposit, the period for which deposit is to be made and name/names is which the fixed deposit receipt is to be issued. In case of a Joint name National Bank Ltd. also takes the instructions regarding payment of money on maturity of the deposit. The banker also takes specimen signatures of the depositors. A fixed deposit account is then issued to the depositor acknowledging receipt of the sum of money mentioned there. It also contains the rate of interest and the date on which the deposit will fall due for payment.

• Term Deposits: These rates are not negotiable. In this table we can find out the percentage that is given by the bank for special period of time to the customer.

Fixed deposit 3 (three) month

Fixed deposit: 6 (six) month

Fixed deposit: 12 (twelve) month

• Payment of interest: It is usually paid on maturity of the fixed deposit. National Bank Ltd. calculates interest at each maturity date and provision is made on that “miscellaneous creditor expenditure payable accounts” is debited for the accrued interest.
• Encashment of FDR: In case of premature FDR National Bank Ltd. is not bound to accept surrender of the deposit before its maturity date. In order to deter such a tendency the interest on such a fixed deposit is made cut a certain percentage less the agreed rate. Normally savings bank deposit is allowed.
• Loss of FDR: In case of lost of FDR the customer is asked to record a GD (general diary) in the nearest police station. After that the customer has to furnish an Indemnity Bond to National Bank Ltd. a duplicate FDR is then issued to the customer by the bank.
• Renewal of FDR: In National Bank Ltd., the instrument is automatically renewed within seven days after the date of its maturity if the customer does not come to encash the FDR. The period for renewal is determined as the previous one.

b) Account Opening section

Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account. A customer can open different types of accounts through this department. Such as:

Account opening procedure

Documents required for opening account                                                    

Individual /Joint Account:

1. Introduction of the account.
2. Tow photographs of the signatories duly attested by the introducer.
3. Identity (copy of passport).
4. Joint Declaration Form (For joint a/c only).
5. Employee’s Certificate (in case of service holder).

Partnership Account:

1. Introduction of the account.
2. Two photographs of the signatories duly attested by the introducer.
3. Valid copy of Trade License.
4. Rubber stamp.
5. TIN number certificate.
6. Identity (Copy of passport).
7. Permission letter from DC/Magistrate (in case of newspaper

Limited company:

1. Introduction of the account.
2. Two photographs of the signatories duly attested by the Introducer.
3. Valid copy of Trade License.
4. Board resolution of opening A/C duly certified by the Chairman/Managing Director.
5. Certificate of Incorporation.
6. Certificate of Commencement (In case of Public limited company).
7. Certified (joint stock) true copy of the Memorandum and Article of Association of the Company duly attested by Chairman or Managing Director.
8. List of directors along with designation & specimen signature.
9. Latest certified copy of Form – xii (to be certified by register of joint stock companies) (In case of Directorship change).
10. Rubber Stamp (Seal with designation of each person)
11. Certificate of registration

(In case of Insurance Company – Obtained from department of Insurance form the Peoples Republic of BD.)

Club / societies account:

1. Introduction of the account.
2. Two photographs for Opening A/C duly certified by President/Secretary.
3. Board Resolution for Opening A/C duly certified by President/Secretary.
4. List of Existing Managing Committee.
5. Registration (if any).
6. Rubber Stamp.
7. Permission letter from Bureau of N.G.O. (In case of G.O. A/C).

Closing of an account

The closing of an account may happen

• If the customer is desirous to close the account,
• If the NBL Bank finds that the account is inoperative for a long duration.
• If the court of NBL Bank issues garnishee order.

A customer may close his/her account any time by submitting an application to the branch. The customer should be asked to draw the final check for the amount standing to the credit of his/her account less the amount of closing an other incidental charge and surrender the unused check leaves. The account should be debited for the account closing charge etc. and the authorized officer of the bank should destroy unused check. In case of joint account the application for closing the account should be signed by the joint account holder. The fee for closing of an account is Tk.50.

Different Schemes:

Saving Insurance Scheme (SIS)

NBL is going on with contribution to perform social commitment inspire of being profit based commercial bank of which saving insurance is one of them. Under this scheme the depositor shall enjoy death risk twice the amount of the deposit on his/ her normal death and trice the deposit amount on the depositor’s accidental death. Apart from death risk cover the depositor shall get usual rate of interest as prescribed for this amount.

Under this scheme, the beneficiary get equal the deposit in case of natural death of the account holder whereas in the event of accidental death of the account holder the beneficiary will receive twice the deposit. As for example if a customer picks up easy class (Tk. 50000/-) he/ she will get Tk. 50000/- for natural death and Tk. 100000/- for accidental death apart from his/ her deposited amount and interest.

Pension/ monthly savings scheme (PSS):

Secure your future with ease. A small savings today will provide you comfort tomorrow.

Eligibility for PSS Account: A person of 18 years of age and above having a sound mind will be eligible to open an account in his/her own name.

Bonus Payment:

If the account holder, from commencement to maturity of term, pays all the monthly installments in time (i.e. within 10th day of each month) and never defaults in paying monthly installments, the account holder will receive extra bonus payment equivalent to 3 (three) times of monthly installment for 5 years term and 6 (Six) times of monthly installment for 10 years term.

Income Tax Rebate:

Under this Scheme, income tax rebate will be available on the total amount payable i.e. after maturity of deposited amount; such amount will also be income tax free. Monthly installments to PSS will also qualify for showing as investments (like provident fund) in yearly Income Tax Return.

Payment of Pension:    

One can receive the entire deposited amount with interest at a time or receive a pension on monthly basis at a desirable amount of monthly installments.

Monthly installment:

The savings amount is to be deposited within the 10th of every month. In case of holidays the deposit amount is to be made on the following day.

The deposits may also be made in advance.

The depositor can have a separate account in the bank from which a standing instruction can be given to transfer the monthly deposit in the scheme’s account.

In case the depositor fails to make the monthly installment in time, then 2% on overdue installment amount will be charged. The charge will be added with the following month(s) installment.

With drawl:

Generally, withdrawal is not advised before a 5 year term, but if it is withdrawn before the above term, then interest will be paid at savings rate. However, no interest will be paid if the deposit is withdrawn within 1 year of opening the account. In that case Tk.200/- will be charged as bank service charge.

In case, the account is closed after 1 year but before completion of the term 3/5-year, the client will be paid back principal amount along with interest at Savings rate/PSS rate (whichever is lower) prevailing on the date of closure of the account, provided the client must deposit at least 12 installments to qualify under this clause.

Loan Advantage:

After three years of savings in this scheme the depositor (if an adult) is eligible for a loan up to 80% of his deposited amount (but not less than Tk.20000/-) against the lien of the PSS account to meet the personal need, educational expenses of his/her children or for medical treatment . In that case, interest rates on the loan will be applicable as per prevailing rate at that time.

Automatic closure of A/C and its re-validation:

On failure to pay 4(four) consecutive monthly installment the account will be closed automatically. Installment is to be paid between 1^st to 10^th days of each month. However, if the 10^th day of a month falls within a holiday the next working day will be eligible for deposit for revalidation of the account, the following rules will apply:

• If the client fails to deposit any monthly installment in the month when it is due, in that case he/she may deposit the same within 10^th of the following month by giving reasonable grounds in writing for cause of failure and the account will be revalidated when such installment will be deposited along with an additional amount of Tk.10/-,Tk.15/-, &Tk.25/-, being the penalty for late payment of monthly installment of Tk.500/-,Tk.1000/-, & Tk.2000/- respectively.
• If the client fails to deposit any monthly installment continuously for 3 consecutive months, in that case, within 10^th of the 4^th month, the client will have to give reasonable grounds in writing for failing and the account will be revalidated when the client will pay additional Tk.30/-, Tk.45/-, & Tk.75/- along with the overdue monthly installment of Tk.500/-, Tk.1000/- & Tk.2000/- respectively.
• Any account closed due to failure to deposit more than 3 installments will not be eligible for the revalidation irrespective of the duration of the account.
• The client will have options for revalidation of the account 2 times for 3 years term and 3 times for 5 years term.

Cash Department

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

Functions of Cash Department

• Cash packing:

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

• Allocation of currency:

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

Remittances Department

Carrying cash money is troublesome and risky. That’s why money can be transferred from one place to another through banking channel. This is called remittance. Remittances of funds are one of the most important aspects of the Commercial Banks in rendering services to its customers. Remittance is another significant part of the general Banking. The bank receives and transfers various types of bills through the remittance within the country. The bank charges commission on the basis of bill amount

TYPES OF REMITTANCE

1. Between banks and non banks customer
2. Between banks in the same country
3. Between banks in the different centers.
4. Between banks and central bank in the same country
5. Between central bank of different customers.

Clearing Section

Cheque, Pay Order (P.O), Demand Draft (D.D.) Collection of amount of other banks on behalf of its customer are a basic function of a Clearing Department.

• Clearing:

Clearing is a system by which a bank can collect customers fund from one bank to another through clearing house.

• Clearing House:

Clearing House is a place where the representatives of different banks get together to receive and deliver cheque with another banks.

• Member of clearing House:

National Bank LTD is a scheduled Bank. According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the Cheque drawn upon one another through the clearinghouse.

Types of Clearing:

A) Outward Clearing: When the Branches of a Bank receive Cheque form its customers drawn on the other Banks within the local clearing zone for collection through Clearing House, it is Outward Clearing.

B) Inward Clearing: When the Banks receive cheque drawn on them from other Banks in the Clearing House it is Inward Clearing.

Types of clearing house: There are two type of clearing house: Those are

1) Normal clearing house

2) Same day clearing house

Normal clearing house

• 1^st house: 1^st house normally stands at 10 am to 11 am
• 2^nd house: 2^nd house normally stands after 3 p.m. and it is known as return house.

Same day clearing house

• 1^st house: 1^st house normally stands at 11 a.m. to 12 pm
• 2^nd house: 2^nd house normally after 2 p.m. and it is known as return house.

Who will deposit cheques for Clearing:

Only the regular customers i.e. who have Savings, Current, STD & Loa Account in the Bank can deposit cheques for collection of fund through clearing house.

Precaution at the time of cheques receiving for Clearing, Collection of LBC, OBC & Transfer:

• Name of the account holder same in the Cheque & deposit slip.,
• Amount in The cheque & deposit slip must be same in words & in figure
• Date in cheque may be on or before (but not more than six months back) clearing house date.
• Bank & Branch name of the cheque, its number & date in the Deposit slip.
• Cheque must be signed.
• Signature for confirmation of date, amount in words / in figure Cutting & Mutilation of cheque.
• Cheque should be crossed (not for bearer cheque).
• Account number in the deposit slip must be clear.
• Depositor’s signature in the deposit slip.

Accounts Section

Accounts Department is called as the nerve Center of the bank. In banking business, transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors’ money. Improper recording of transactions will lead to the mismatch in the debit side and in the credit side. To avoid these mishaps, the bank provides a separate department; whose function is to check the mistakes in passing vouchers or wrong entries or fraud of forgery. This department is called as Accounts Department. If any discrepancy arises regarding any transaction this department repot to the concerned department. Besides these, the branch has to prepare some internal statements as well as some statutory statements, which are to be submitted to the Central Bank and the Head Office. This department prepares all these statements.

Workings of this department

• Recording the transactions in the cashbook.
• Recording the transactions in general and subsidiary ledger.
• Preparing the daily position of the branch comprising of deposit and cash.
• Preparing the daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately.
• Making payment of all the expenses of the branch.
• Recording inters branch fund transfer and providing accounting treatment in this regard.
• Preparing the monthly salary statements for the employees.
• Preparing the weekly position for the branch which is sent to the Head Office to maintain Cash Reserve Requirement (C.R.R)
• Preparing the monthly position for the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (S.L.R)
• Make charges for different types of duties.
• Preparing the budget for the branch by fixing the target regarding profit and deposit so as to take necessary steps to generate and mobilize deposit.
• Checking of Transaction List.
• Recording of the vouchers in the Voucher Register
• Packing of the correct vouchers according to the debit voucher and the credit voucher.

Several Instruments:

The main instruments used by the NBL Bank of remittance of funds are

1. PO (Pay Order)
2. DD (Demand Draft)
3. TT (Telegraphic Transfer)

PO (Pay Order)

Pay orders are the safest way of making payments, as they are drawn on the bank issuing them. So there is no scope of forgery. A pay order is issued only within the members of the Bangladesh bank clearing house (Dhaka Metro). It can be issued in favor of a customer holding an account, by debiting his account and crediting bills payable liability A/C. The account payees submit the pay order in their special banks. The banks then send the pay order to the clearinghouse where these are received by the respecting issuing banks. The issuing banks verify the pay order, which are then send back to the respecting banks and payment made by debiting the payable account.

NBL Bank charges different amount of commission on the basis of Payment Order amount. The bank charges for pay order are given in the following chart:

Commission for PO:        

National Bank Ltd. charges different amount of commission on the basis of Payment order amount. The bank charges for pay order are given in the following chart:

• DD (Demand Draft

A Demand Draft (DD) is an instrument containing an order by the issuing branch upon another branch known as drawee branch, to pay a certain sum of money to the payee.

Commission for Demand Draft (DD) is 0.1% of the principal amount and Vat .15% of the commission amount and telex charge is Tk. 30.00.

• TT (Telegraphic Transfer)

Issuing branch requests another branch to pay specified money to the special payee on demand by Telegraph /Telephone

Commission for Demand Draft (DD) is 0.1% of the principal amount and Vat .15% of the commission amount and telex charge is Tk. 30.00.

Test – key Arrangement:

Test key arrangement is a secret code maintained by the banks for the authentication for their telex messages. It is a systematic procedure by which a test number is and  the person to whom this number  is  given  can easily authenticate the same test number  by  maintaining  that same   procedure. National Bank Ltd. has test key arrangement with so many banks for the authentication of LC message and for making payment.

Lending Activities

Introduction

Loan is an asset of the bank. When a commercial bank makes a loan to a business, that loan represents a legal obligation of the business to repay the loan principal and interest to the lending bank within a specified period. Lending is the bread-and-butter business of commercial banks; loans compose the predominant category of assets held by commercial banks. The basic functions of bank are deposit extraction and credit extension. Credit is the hub of banking business. It helps this kind of organizations to earn more than 50% of the total revenue.

Loans and advance comprise the most important asset as well as the primary source of earning for the banking/financial institutions. To diversify the loans and advancement, National Bank Ltd provides the various types of loans and advances in profitable sectors. Recently the bank has introduced various types of loans and advances, which are essential for the people or borrowers and these new loans and advances will be profitable in future.

Credit Policy of National Bank Ltd:

The major controllable variables that affect demand for company’s products are sales prices, product quality, advertising and the firm’s Credit Policy. Actually Credit Policy is a set of decisions that includes a firm’s credit standards, credit terms, methods used to collect credit accounts. Credit Policy includes types of credit extended by banks, methods of judging the credit worthiness of borrowers, the collateral or securities that are accepted by the banks offer necessary finance set up and run the industries provides finance to agriculture and other sectors of the economy also. Besides, commercial banks are catalytic agents can create opportunities for the development of the national resources and employment on a large scale. As one of leading commercial bank of Bangladesh, National Bank Ltd. is contributing to the national economy through its banking activities. NBL is financing Industrial term loan, medium and large industries, small industries, foreign trade financing and many other

Why the Bank provides Investments to the Borrowers?

• To earn profit from the borrowers and give the depositors profit.
• To accelerate economic development by providing different industrial as well as agricultural investment.
• To create employment by providing industrial investments.
• To pay the employees as well as meeting the profit groups.

There are different types of lending principles:                                   

• Safety
• Liquidity
• Security
• Diversity
• Adequate yield

Safety: Safety should get the prior importance in the time of sanctioning the loan. At the time of maturity the borrowers may not will or May unable to pay the loan amount. Therefore in the time of sanctioning the loan securities should be taken from the borrowers to recover the loan, Bankers should not scarify safety for profitability.

 National Bank Ltd. Exercises the lending function only when it is safe. Safety depends upon

• The security offered by the borrower and
• The repaying capacity and willingness of the debtor to repay the loan with interest

Liquidity: Banker should consider the liquidity of the loan in time of sanctioning it. Liquidity is necessary to meet the consumer need.

Security: Banker should be careful in the selection of security to maintain the safety of the loan. Banker should proper value of the security. If the estimated value is less than or equal to loan amount. The loan should be giver against such securities

Adequate Yield:

As a commercial origination, Banker should consider the profitability. So banker should consider the profit rate when go for lending. Always Banker should fix such a profit rate for

its lending which should be higher than its savings deposits profit rate. To ensure this profitability Banker should consider the prospect of the project.

Diversity: Banker should minimize the portfolio risk by putting its fund in the different fields. If Bank put its entire loan able fund in one sector it will increase the risk. Banker should distribute its loan able fund in different sectors. Sp if it faces any problem in any sector it can be covered by the profit of another sector.

Loan facilities parameters:

National bank ltd extends and will credit for various genuine purpose. One types of advance requires to be treated different from other types. Depending on the types financed ownership pattern, business mode, cash flow, security and other related maters facility parameters are to be set.

1. Nature of advanced:

Each advanced to be made will be categorized under one of the arranged types and will be governed under the terms and conditions related thereto.

2. Purpose:

Our leading will be guided by legitimate purpose, financing for hoarding, speculative purpose and which will be utilized for degrading the character of the people will avoided. Credit, which will contribute to production, trade, commerce, import, export, and development of industry, development activities.

3. Limit/ amount of facility/ maximum size:

Facility will be considered based on assessment of requirement & justification subject to the overall leading caps as per Bangladesh bank single party exposure limit.

4. Margin/ Equity:

It will be the general policy of the bank to judiciously ensure stake of the borrower in any financing plan. Margin will however be subject to institution policy in this regard and central bank policy where applicable.

5. Rate of interest/ Commission:

Rate of interest will be charged as per declared rate of the bank. Pricing will be basically risk based. Higher price will be considered for riskier borrower because of higher risk involved. (I.e. lower score obtain by an obligor as per CRG score sheet is called a risky client). Similarly lower prices will be considered for prime clients on the basis of their low risk. (Low risk grade client means where an obligor obtained higher aggregate score as per CRG score sheet or 100% cash covered or govt. international top bank guarantee).

6. Insurance:

Our bank have insurable interest on a property an asset obtain insurance policy as per norms against credit facilities extended in order to protect our banks interest. Insurance policy shall take timely basis. Insurance should take from a reputed company.

7. Security:

Our bank mostly relies/ will continue to rely on security based leading taking into consideration the character of the borrower nature of business cash flow, environmental, economical, business and other influencing factor.

Collateral security of acceptable type having adequate market sale value is accepted. Collateral property is judiciously valued before accepting the same. The branch official values the property by applying prudence and considering prevailing rate in the location area of the property.

Investment Classification   

Investment classification is a process by which the risk or loss potential associated with the Investment accounts of a bank on a particular date is identified and quantified to measure accurately the level of reserves to be maintained by the bank to provide for the probable loss on account those risky Investment.

Like other banks, all types of Investments of National Bank fall into following four scales:

Unclassified: Repayment is regular.

Substandard: A loan value of which is impaired by evidence that the borrower is unable to repay but where there is a reasonable prospect that the loan’s condition can be improved is considered as substandard.

Doubtful debt: A loan is doubtful when its value is impaired by evidence that it is unlikely to be repaid in full but that special collection efforts might eventually result in partial recovery.

Bad/Loss: A loan is considered as bad when it is very unlikely that the loan can be recovered.

Creation of charges for securing investment:

For the safety of Investment, bank requires security from the Investment so that it can recover the Investment by selling security if borrower fails to repay. Creation of a charge means making it available as a cover for an advance. The method of charging should be ledger, perfect and complete. Importance of charging security:

• Protection of profit’
• Ensuring the recovery of the money lent
• Provision against unexpected change
• Commitment of the borrower

Securities:

To make the Investment secured, charging sufficient security on the credit facilities is very important. The banker cannot afford to take the risk of non-recovery of the money lent. National Bank charges the following two types of security.

1. Primary security: These are the security taken by the ownership of the items for which bank provides the facility.
2. Collateral security: Collateral securities refer to the securities deposited by the third party to secure the advance for the borrower in narrow sense. In wider sense, it denotes any type of security on which the bank has a personal right of action on the debtor in respect of the advance.

Modes of Charging Security:

There are different modes of charging the bank exercises security:

1. Pledge:

Pledge in the bailment of the goods as security for payment of a debt or performance of a promise. A pledge may be in respect of goods including stocks and share as well as documents of title to goods such as railway receipt, bills of lading, dock warrants etc. duly endorsed in bank’s favor.

2. Hypothecation:

In case of hypothecation the possession and the ownership of the goods both rest the borrower. The borrower to the banker creates an equitable charge on the security. The borrower does this by executing a document known as Agreement of Hypothecation in favor of the lending bank.

3. Lien:

Lien is the right of the banker to retain the goods of the borrower until the Investment is repaid. The banker’s lien is general lien. A banker can retain all securities in his possession till all claims against the concern person are satisfied.

4. Mortgage:

According to section (58) of the Transfer of Property, Act, 1882 mortgage is the “Transfer of a profit in special immovable property for the purpose of secreting the payment of money advanced or to be advanced by way of Investment, existing or future debt or the performance of an engagement which may give rise to a pecuniary liability”. In this case the mortgagor dose not transfer the ownership of the special immovable property to the mortgagee only transfers some of his rights as an owner. The banker exercises the equitable mortgage.

Foreign Exchange

Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign Exchange Department (FED) is the international department Bangladesh bank issues license to scheduled banks to deal with foreign exchange. These banks are known as authorized dealers.  If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries.  Therefore, National Bank Ltd, principal branch is an authorized dealer.

The Principal Of Comparative Objective

It is only common sense that countries will produce and export goods for which they are uniquely qualified. But there is a deeper principle underlying all trade. The principal of comparative holds that a country can benefit from trade even if it is absolutely more efficient (or absolutely lees efficient) then other countries in the production of every good.

The Principle of comparative advantage holds that each country will benefit if it specializes in the production and export of those goods that it can produce at relatively low cost. Conversely, each Country will benefit if it imports those goods that it produces at relatively high cost. This simple principal provides the unshakeable basis for international trade. No country is self-sufficient. One country has to depend on other countries for various reasons. One country may have a sound structure in one sector while its other sectors are not so well structured. As a result naturally it has to depend on another country to minimize these lacking of those sectors. On the other hand according to Ricardo’s comparative analysis theory. If a country is good at various sectors then it will continue its operations in its best sector, while for other sectors it will depend on others. When countries concentrate on their areas of comparative advantage under tree trade each country is better off. The underlying assumption here is that countries can concentrate properly in a specified area. As a result efficiency in production will increase. Product quality will increase while the price is lower. Countries will be able to market their products at a lower price. The surplus production will be sold outside of the county which known as export. By doing so countries will earn foreign currency. Again by spending those currencies they will buy the required goods from other countries for them that are known as import. The whole transaction is known as Foreign Trade and through the exchange of foreign currency the transaction ends up. Foreign trade is divided into import, export and remittance

There are three kinds of foreign exchange transaction:

• Import
•  Export
•  Remittance.

Foreign Trade And Foreign Exchange Operation

a) Authorized Dealer or AD Holder Bank

As per section 2 of Foreign Exchange Regulation Act 1947, Authorized Dealers means a person, for the time being authorized under section 3 to deal in Foreign exchange. In other words Authorized Dealers means a Bank, Authorized by Bangladesh Bank to deal in Foreign under FER Act 1947.

b) License for Authorized Dealer

To get a License for Authorized Dealer, a Bank will apply the General Manager, Foreign Exchange Policy Department of Bangladesh Bank, Head Office, Dhaka complying following conditions­-

• The Bank will commit to deal in Foreign exchange with in the limit and     will submit periodical returns as instructed by Bangladesh Bank.
• The Bank meticulously complies with the instruction of Bangladesh Bank.
• Prospect to attract reasonable volume of Foreign exchange business in desire location.
• The Bank must have adequate manpower trained in Foreign Exchange.

c) Functions of authorized Dealers

Authorized dealer can handle all kinds of Foreign exchange instruction as per FER Act 1947 under the instruction of Bangladesh Bank. Following are the main function of an Authorized Dealer

• Exchange of Foreign Currencies.
• To make arrangement with Foreign Correspondent.
• Buying & Selling Foreign Currencies
• Handling inward & outward Remittance.
• Opening of L/C Settlement of payment.
• Investment in Foreign Trade.
• Opening and Maintenance of Accounts with foreign Banks under intimation of Bangladesh Bank.
• Export documents handling.

Import:

To import, a person should be competent to be an importer’. According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration (IRC) to the importer. In an international business environment, buyers and sellers are generally unknown to each other. So seller of goods always seeks security for the payment of his exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Thus, the contract between importer and exporter is given a legal shape by the banker by ‘Letter of Credit’.

Definition of Letter of Credit:

A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain conditions mentioned in the letter gave been complied with.

Parties to the L/C:

Foreign remittance:

This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a bank must provide some services to the clients regarding foreign exchange and this department provides these services.

The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place at an agreed rate of exchange, which the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender.

Remittance procedures of foreign currency:

There are two type of remittance:

1. Inward remittance
2. Outward remittance.

Inward Foreign Remittance:

Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.

Outward Foreign Remittance:

Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired.

Working of this department:

1. Issuance of TC, Cash Dollar /Pound
2. Issuance of FDD, FTT & purchasing, Payment of the same.
3. Passport endorsement.
4. Encashment certificate.
5. F/C Account opening &filing.
6. Opening of Export FC retention Quota A/C& maintain.
7. Maintenance of ledger of Cash Dollar, FC Deposit A/C & TC.
8. Maintain FBC register &follow up FBC.
9. Opening of Student file &Maintain.
10. Preparation of all related statement, Voucher & posting.
11. Preparation of Weekly, Monthly, Yearly Statement for Bangladesh Bank returns timely.
12. Attending all related correspondence to other Bank or Institutions.

Modes

The remittance process involves the following four modes:

In these processes of remittance, bank must have to make profit as a business institution. Profit is made in two ways:

1. Commission Charged
2. Difference in the buying and selling rate

Miscellaneous services by this department:

Student file: students who are desirous to study abroad can open file in the bank. By opening this file, bank assures the remittance of funds in abroad for study.

• C Accounts: Foreign Currency Accounts opened in the names of Bangladeshi nationals or persons of Bangladeshi origin working or self – employed abroad can now are maintained as long as the account holders desires.

• RFCD: Stands for Resident Foreign Currency Accounts. Person’s ordinary resident in Bangladesh may maintain foreign currency accounts with foreign exchange brought in at abroad. Balance of such accounts is freely remittable abroad.

Formalities for opening foreign currency (FC) Account:

The AD may without prior approval of the Bangladesh Bank open Foreign Currency

(FC) account in the name of:

1. Bangladesh national residing abroad.
2. Foreign nationals residing abroad/ in Bangladesh and also foreign firms
3. Registered abroad and operating in Bangladesh and abstract foreign missions and their expatriate employees.
4. Resident of Bangladesh nationals working with the foreign / international organization operating in Bangladesh provided their salary in paid in foreign currency.

Foreign exchange earned through business done or service rendered in Bangladesh cannot be put into these accounts.

No payment in foreign currency (FC) may be made to any resident in Bangladesh out of the foreign currency (FC) account.

All citizens of Bangladesh and other persons are residing to Bangladesh who became the owner of any foreign currency (FC).

Papers required:

• Application duly billed in and signed.
• Photograph (two copies).
• Passport photocopy.
• Work permit from board investment. (In case of foreign nationals).

Regulatory Body Of Foreign Exchange

Our foreign Exchange transactions are being controlled by the following local regulations.

Foreign Exchange Regulation Act:

Foreign Exchange Regulation FER Act 1947 enacted on 11th March 1947 in the then British India provides the legal basis for regulating the Foreign Exchange. This Act was adopted in Pakistan ad lastly in Bangladesh.

Guidelines for Foreign exchange Transaction:

This Publication issued by Bangladesh Bank in the year 1996 in two volumes. This is compilation of the instructions to be followed by the Authorized Dealers in Transitions relating to Foreign Exchange.

F.E Circular:

Bangladesh Bank issue F.E circulars from time to time control the Export, Import Business and Remittance to control the Foreign Exchange.

Export-Import Policy:

Ministry of Commerce issue Export Policy and import Policy giving basic formalities for Import and Export

Policy Notice:

Sometimes CCI&E issues public notice for any kind of change in foreign Transaction.

Instruction from Different Ministry:

Different Ministry of the Govt. sometimes instructs the Authorized Dealer directly or through Bangladesh Bank to follow something required for the Government.

ICC:

International Chamber of Commerce is a world wide Non-Governmental Organization of thousand of companies. It was founded in 1919. ICC National committees throughout the World present, ICC views to their Governments and alert headquarters to national business concerns. ICC has issued some publications like­-

• UCPDC-500
• URC
• URR

This is being following by all the member countries. There is also an international Court of Arbitration to solve the international business disputes.

WTO:

World Trade Organization is another International Trade Organization established on 1st January 1995. GATT (General Agreement on Tariff & Trade) was established on 01.01.1948. After completion of its 8th round, the organization has been abolished & replaced by WTO. This organization has vital role in international Trade, through its 124 member countries.

SWIFT

SWIFT the Society for World Wide inter-Bank Financial Telecommunication is the Bank owned co-operative serving the financial community worldwide. The SWIFT Transport Network (STN) is a dedicated global network for secure communication between SWIFT Customer. Swift supports the financial data communication and processing needs of financial institution, through a range of financial messaging service and value-added processing. As well as, access through the STN and interface and application software. In short, SWIFT is a pioneer in the automation of the global financial industry.

In 1973 SWIFT was founded by 239 Banks in 15 countries having its headquarter in La-Hulpe, Belgium with the mission to standardize and automate international payment messaging for the benefit of Banks throughout the world In 1977 the first message was sent and 513 Banks in 15 countries joined SWIFT as its member. Now over 7000 financial institutions around 192 countries use SWIFT everyday.

Objectives of SWIFT:

Security at SWIFT meets 4 objectives:

• Confidentiality: Information is only disclosed to authorize person at authorized location.
• Integrity: Information can be relied upon to be completing accurate and unchanged.
• Availability: Information and associate service is accessible and usable when needed.
• Accountability: Every individual authorize to use the system is accountable.

Process: (The system architecture comprises 3 levels)

• Customer interface-the link to SWIFT at the customer level.
• Communication Network-a web of international telecommunication links.
• Message Processing System – Servers are central to the data processing system. They route message. Check the integrity of the contents and monitor the network.

Categories of messages:

• System messages.
• Customer payments and cheques.
• Financial institution Transfers.
• Foreign Exchange. Money markets & Derivatives.
• Collections & Cash Letters.
• Securities Markets.
• Precious Metals & Syndications.
• Documentary Credits & Guarantees.
• Travelers Cheques.
• Cash management & Customer Status

Findings

Problems of National Bank Ltd:

General Banking department

• In general banking department they follow the traditional banking system. The entire general banking procedure is not fully computerized.
• They are not using database networking in information technology (it) department. So they have to transfer data from branch to branch and branch to head office by using floppy disk and sure, it is not a good system.
• According to some clients, opinion introducer is one of the problems to open an account. If a person who is new of the city wants to open account, it is a problem for him/her to arrange an introducer of SB or CD accounts holder.

Loans and Advances Department:

• Political influence is one of the major problems in Bangladesh. Due to political intervention, the bank becomes obliged to provide loans in most of the cases, which are rarely recovered. Bank has to face this in convenience situation almost every year.
• Sometimes the employee to unlawfully help the client deliberately overvalues the securities taken against the loan. As a result if the client fails to repay the loan the bank authority cannot collect even the principal money invested by the selling those assets. It is also a very important factor that leads to loan default.
• CIB report is not readily available from Bangladesh bank.

Foreign Exchange Department:

• In foreign exchange department, it is required to communicate with foreign banks and international division of social investment bank frequently and quickly. To make the process easily modern communication media for example e-mil, fax, internet etc. Should be used. But the bank has not so much practice of using these media.
• Modern technical equipment such as computer is not sufficient in foreign exchange department. As a result, the exchange process makes delay and it is complicated.
• They have no own certificate of authorization of dealer.

Recommendation:

General banking department

• If the enter general banking system is fully computerized then they satisfy the customer by provide fast service.
• If they cancel the introducer system then they can collect more deposit through new account and it also satisfied the customer.

Loan and advance department:

• Try to avoid giving loan the political person who had bad reputation of loan repaying.
• Evaluate the securities value properly to avoid the risk of loan recovery. The punishment system should be established to discourage the unlawful activities of employee.
• Bangladesh bank should more active to provide CIB report.

Foreign exchange department:

• In foreign exchange department it is require communicating with foreign bank frequently and quickly. To make the process easy and quick the whole system should be computerized and modern communication media for example e-mail, fax, internet should be used.

Conclusion

As an internee of social investment bank ltd, I have truly enjoying my internship from the learning and experience viewpoint. I am confident that this three months internship program at National Bank Ltd. will definitely help me to realize my further carrier in the job market.

National Bank Ltd. has converted all of their system and policy of traditional banking to I think that is a very practical and bold decision. As there are lots of local and foreign banks in Bangladesh the National Bank Ltd. is promising commercial bank among them. In this competitive market National Bank Ltd.has to compete not only the others commercial banks but also with the public bank. National Bank Ltd. is more capable of contributing towards economic development as compared with other bank. National Bank ltd. invested more funds in export and import business. It is obvious that the right thinking of this bank including establishing a successful network over the country and increasing resources will be able to play a considerable role in the portfolio of development. Success in the banking business largely depends on effective lending. Less the amount of loan losses, the more the income will be from credit operations the more will be the profit of the social investment bank limited and here lays the success of credit financing.