Introduction

Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is the highest in the initial stage. Schumpeter (1933) regarded the banking system as one of the two main agents (other being entrepreneurship) in the whole process of development. Keynes also emphasized the role of banking services in the process of economic development of a country, while SHE was addressing the House of Lords regarding International and Monetary System (quoted in Sharma 1985). Moreover Alexander Gerschenkron (1962) in his popularly known “Gerschenkron’s Hypothesis” explained the banking system as the key role player at certain stage of the industrialization process.

Modern banking system plays a vital role for a nation’s economic development. Over the last few years the banking world has been undergoing a lot of changes due to deregulation, technological innovations, globalization etc. These changes in the banking system also brought revolutionary changes in a country’s economy. Present world is changing rapidly to face the challenge of competitive free market economy. It is well recognized that there is an urgent need for better, qualified management and better-trained staff in the dynamic global financial market. Bangladesh is no exceptions of this trend. Banking Sector in Bangladesh is facing challenges from different angles though its prospect is bright in the future.

The course under B.B.A program designed with an excellent combination of theoretical and practical aspects. The whole course is divided into eight (8) semesters of 6 months each. After the completion of 8^th semester consisting of theoretical exposure, the students are sent to different organization to obtain some practical exposure in different sectors which would help them in taking up more professional courses in M.BA. As a student of B.B.A, I have assigned to B.B. Avenue branch, The City Bank Ltd. for my internship.

As MY program director directed us to present the report in different way that will be based on the personal observations from each department. I have described each department I have worked in by following way:
(1) Understanding:
In this part I have tried to make acquaintance with the departments I have worked of this branch.
(2) Things are done here:
In this part I have tried to see the things what are being done in each department of the branch.
(3) Personal observations:
In this part I have tried to present my personal observations from each department of this branch. I had an opportunity to be acquainted with the practical banking prevailing in Banga Bandhu Avenue Branch, The City Bank Ltd. The knowledge, which has been acquired in my Internship Period, I have tried my level best to show in this report.

 Work schedule

Department Rotation:

NAME OF THE DEPARTMENT	FROM	TO	NUMBER OF DAYS
General Banking	24-05-06	18-06-06	26
Credit department	19-06-06	Till now

 
 
 
Schedule Source: Suggested by Branch Manager, City Bank Ltd, B. B. Avenue Branch.

Objectives of the study

The objective of the study is to gather practical knowledge on banking system and operation. This internship gives us a chance to co-ordinate with the theoretical knowledge and the practical experience. The following are of objective for internship in bank:

• To apply theoretical knowledge in the practical field.
• To have exposure to the functions of general banking section.
• To analyze the service procedure of Prime Bank Ltd.
• To know the banking operation.
• To know the area of General Credit.
• To know the process of loan disbursement.
• To know the process of loan collection.
• To know the documents of credit.
• To know the import & Export finance procedure.

Coverage of the study

In this report, three major areas in commercial banks have been covered which are:

• General banking section.
• Credit section.
• Foreign exchange seon

Methodology of the study

For smooth and accurate study every one has to follow some rules & regulations. The study input were collected from two sources:

1. Primary sources

• Practical desk work
• Face to face conversation with the officer
• Direct observation
• Face to face conversation with the client
• Consultation with the Following Persons

i)MR. Md. Abdul Halim, Senior Vice President & Manager, CBL, BB Avenue Br.

ii)Mr. A.S.M Shokrana, Vice President, PBL, BB Avenue Br.

iii)Mr. Mohammad Mortaja, Senior Executive Officer, Credit Department, CBL,BB Avenue Br.

iv)Md. Sohel Rana, Officer, Accounts Section.

   2.   Secondary sources

•   Annual report of City Bank Ltd.
• Files & Folders.
• Memos & Circulars.
• Daily diary (containing my activities of practical orientation) maintained by me.
• Various publications on Bank.
• Websites

Different circulars sent by Head Office and Bangladesh Bank.

 

Limitations of the Report

There were some problems while I have undergone the internship program. A wholehearted effort was applied to conduct the internship program and to bring a reliable and fruitful result. In spite of having the wholehearted effort, there exits some limitations, which acted as barrier. The limitations were —

• The study was limited only to the City Bank Limited, B.B. Avenue Branch.
• Another Problem was time constraints. The duration of my internship Program was only two months. But this time is not enough for a complete and fruitful study.
• The Bank was a busy one having heavy rush of people, whom officers need to deal with. So allocation of time for an internee is very much tough for the officers of the bank.
• Sometimes I was assigned to do some jobs without explaining why this work is to be done. This situation has created a lot of problems to understand why a specific function is being performed.

 

 
 

Overview of the Bank

Evolution of the Word ‘Bank’:

The word bank originated from Italian word “Banca” which means long bench. In ancient time Italian Jews merchant used to do business of lending money by sitting on the bench. It is assumed that the word “bank” derived from the word Banca. To meet the expense of war of 1171 one type of credit certificate was launched in Italy at an interest rate of 5%. It was called as Monte in Italian language and Banke in German language when German language was widely used in Italy. As a result the word Banke gradually changed to the word Banca from which the word Bank originated.
 

 The Emergence of Modern Banking:

 The linguistics and etymology suggests an interesting story about banking origins. Both the old French word “Banque” and the Italian word Banca were used centuries ago to mean a bench or moneychangers table. This describes quite well what historians have observed concerning the first bankers, who lived more than 2000 years ago. They were money changers, sitting usually at table or in a small shop in the commercial district, aiding travellers who came to town by exchanging foreign coins for local money or discounting commercial notes for a fee in order to supply merchants with working capital.
The first bankers probably used their own capital to fund their activities, but it was not long before the idea of attracting deposit and securing temporary loans from wealthy customers became a source of bank funding. Loans were then made to merchant’s shippers and landowners at rates of interests low as 6 percent per annum to as high as 48 percent a month for the riskiest ventures! Most of the early bank was Greek in origin.
The banking industry gradually spread outward from the classical civilizations of Greece and Rome into northern and western Europe. The early bank in Europe were places for safe keeping of valuable items (such as gold and silver bullion) as people were fearing loss of their asset due to war, theft, or expropriation by government. When colonies were established in North and South America, old world banking practices were transferred to the new world.

Banking in Bangladesh

Since early British rule, the history of banking in Bangladesh territory shows that the traditional trade-networks developed before the banks invaded rural areas. And the banking services have slowly flourished in Bangladesh territory. Even today, in many places, moneylenders provide credit services.  Small shopkeepers and businessman use informal credit at high interest rate, traditional Mahajan,s money lending business gradually declined due to expansion of bank and the micro credit programs of NGOs, Cooperative banks and government agencies.

Public Sector Banks:

During the liberation war in 1971, the economic, political, and social systems including the banking system were severally damaged. At that time, all big and medium financial institutions except two small banks had their head office in the West Pakistan. The non-Bengali owners and managers of the financial establishments that operated in East Pakistan had abandoned them. After independence in 1971, the new government had to take over management and ownership of all such institutions. The bank Nationalization Order 1972 was issued to nationalize banks and financial institutions (except those incorporated abroad) in order to control chaos in the field of ownership, party bureaucracy, the intelligentsia, and pressure group. By several orders six nationalized commercial banks (NCB), one industrial bank (BSB), one agricultural bank (BKB), and one industrial development financial institution (BSRS) were created
The banks and financial institutions, which originated during the Pakistan period and were merged, and renamed and functioning after independence of Bangladesh. In the year 1983, the government allowed private sector to participate in the banking business. The Pubali Bank and the Uttara Bank were denationalized in 1985, due to non-profitability. This action reduced the number of NCB’S to four.   Such restructuring of public sector banks was in order to play their role in industry, agriculture, exporting, self –employment etc.

Private commercial banks:

Taking advantage of the liberalization policy of the government regarding participation of private sector in the banking business, a number of private banks were established in –and –after 1983. With the emergence of private banks in Bangladesh, a competitive situation in the sector has been created. Now there are 52 commercial banks in Bangladesh. The emergence of private banks has added a new dimension to the banking system in Bangladesh. The private commercial banks show a steady growth in terms of number of branches deposits and advances.

 Foreign banks:

The state bank of India opened one branch July -September 1975. In 1975, the four foreign banks operating in Bangladesh were: American Express International Banking Corporation, Grind Lays Bank, The Chartered Bank and the State Bank of India. Now there are more than 15 foreign banks.
The historical process shows the influence of the various social groups in the governance of the country and the banking systems. During the British regime banking was concentrated only in the areas of commercial and administrative importance. With the independence of India and Pakistan, the banking sector had to be reshaped. The government of Pakistan had to take major initiatives for the growth and extension of banking services to the different sectors of the economy and also to different regions.
Independence of Bangladesh was yet another major change in the banking sector. Immediately after independence of Bangladesh, banks started their operations under full government ownership. Later, some of the banks were denationalized and the government allowed banks to be established in the private sector. Banking operations have been diversified and a number of specialized banks were established. Development finance institutions also exist to supplement the baking sector in an effort to boost the economy; government has been following a pragmatic policy relating to the banking sector in Bangladesh.
Despite many odds and problems now facing banking sector, it is expected that it would be able to meet up the challenges ahead, particularly of the nest century.
 

 Company Status

 
Background of City Bank Limited:
City Bank Ltd started its operations on 28 March 1983 with an authorized capital of Tk 200 million divided into 2,000,000 ordinary shares of Tk 100 each and paid up capital of Tk 34 million, of which Tk 30 million was paid up by its promoters and the remaining amount by the government of the People’s Republic of Bangladesh. In 2000, the bank’s paid up capital rose to Tk 160 million, of which Tk 80 million was subscribed by the sponsors/promoters and the remaining amount by the general public. On 31 December 2000, the bank’s reserve fund was Tk 263.1 million as compared to Tk 125.22 million in 1995. But there was shortfall in total capital adequacy ratio of the bank during 1997-2000 as per BIS (Bank for International Settlement) standards to be followed by banks operating in Bangladesh.
The management of the bank is vested in a 13-member board of directors. That includes the chairman and a vice-chairman. The managing director is the chief executive. Three deputy-managing directors, three executive vice presidents, fourteen vice presidents, fifty-four assistant vice presidents and some other employees of different categories assist him. The total number of employees of the bank stood at 1,845 at the end of business year 2000. That time the bank had 76 branches throughout the country. Sixty-one of them were urban and 15 were rural. It had 6 regional offices established at the 6 divisional towns/cities.
The bank conducts all types of commercial banking activities. Core businesses of the bank include deposit mobilization, lending and foreign exchange dealings. At the end of the initial year of its operations in 1983, the total deposits were Tk 320.2 million, which rose to Tk 11,603.2 million in 2000. Total and net loans and advances of the bank amounted to Tk 9,964.6 million and Tk 7,698.2 million respectively in December 2000. The broad economic sectors in which the bank provides lending are agriculture (0.80%), term loans to large and medium scale industries (18%), housing (1.75%), working capital and commercial lending (35%), import (9.9%), export (10.5%) and others (24.05%).
The quality of the bank’s lending assets deteriorated due to huge non-performing loans. The ratio of its classified loans was 43% in 1997, 40.85% in 1999 and 39.57% in 2000. Total assets of the bank including off-balance sheet items accounted for Tk 30,806.9 million in 2000, when its gross earning assets and liquid assets were valued at Tk 14,884.3 million and Tk 6,430.8 million respectively. In 1999, the total foreign exchange business handled by the bank stood at Tk 9,838.3 million (import 87%). Dealings in foreign remittances were only Tk 815 million during 1999. Out of its 76 branches, 19 are now authorized to deal in foreign exchange. The bank has correspondent relationships with 255 bank/bank offices and other financial institutions abroad.
Total investment of the bank at the close of the year 1999 was Tk 1,492.8 million, of which Tk 1,140 million was in treasury bills. Other investments included those in shares and securities. The income on all investments that year was Tk 101.1 million. The bank earned an operating income of Tk 1,356.5 million and incurred operating expenses of Tk 375.7 million in business year 2000. Net profit of the bank before deducting tax and provision for classified loans stood at Tk 188.3 million in the same year. After appropriation of operating profit with accumulated losses of Tk 121.6 million, the bank still suffered a cumulative loss of Tk 66.7 million up to December 2000.
Source: Internet
 

Goals and objectives of The City Bank Limited

 

• To build up strong pillar of capital.
• To promote trade, commerce and industry.
• To discover strategies for achieving systematic growth.
• To improve and broaden the range of product and services.
• To develop human resource by increasing employment opportunities.
• To enhance asset of shareholders.
• To offer standard financial services to the people.
• To create congenial atmosphere so that the client becomes interested to deal with the prime bank limited.
• To keep business morality.
• To develop welfare oriented banking service.
• To offer highest possible benefit to customers.
• As to its position among its counterparts is held high to let the viewers cast their very first look at it.
• To carry on the business of discounting and dealing in exchange of specie and securities and all kinds of mercantile banking.
• To provide for safe-deposit vaults and the safe custody of valuables of all kinds.
• To carry on business as financiers, promoters, capitalists, financial and monitory agents, concessionaires and brokers.
• To act as agents for sale and purchase of any stock, shares or securities or for any other momentary or mercantile transaction.
• To establish and open offices and branches to carry on all or any of the business abroad and within the country provided prior permission is obtained from Bangladesh bank.

 

 Operation

The City Bank Limited, since its inception is an IT-focused Bank. The bank has by now a network of 77 branches strategically located in different cities. All the branches are functioning in computerized environment and integrated through Wide Area Network (WAN) .The branches are full –fledged units and can provide all commercial and investment banking service raging from small and medium enterprises to big business conglomerates and houses.
The Bank always tries to reduce its dependence on interest earnings by giving more emphasis on the fee – based income through introduction of capital market operation and Leasing .The Capital Market operation includes Portfolio Management, Investors Account, Underwriting, Mutual Fund Management etc.
The Bank introduced modern system of Leasing Operation as in practice with Banks in all other countries of the world. The Lease Finance portfolio of the bank is the first of its kind in a Commercial Bank in Bangladesh.
Entrepreneurship Development Training is arranged to impart operational skill and modern technique of management to introduce new entrepreneurs in the field of industrialization on the basis of participatory finance.
City Bank Limited is one of first few Bangladeshi Banks who have become member of SWIFT (Society for Worldwide Inter-Bank Financial Telecommunication). SWIFT is a member owned co-operative, which provides a fast and accurate communication network for financial transactions such as letters of Credit, Fund transfer etc.
Prime Bank Limited is operating branches on both interest based Banking and Islamic Sariah based Banking. The Islamic Sariah based Banking is completely different From the conventional one.
The Bank is Maintaining separate set of accounts for Islamic Banking branches according to the standard adopted by Financial Accounting and Auditing organization for Islamic Financial Institution.
City Bank Limited will try to achieve excellence in customer service. The customer is most important for them. Their policy is customer driven. The Bank has introduced Special Savings Schemes; Special Credit Scheme for the benefit of the low-income group, especially for the self –employment of the educated youth.
 

 Mission and vision of City Bank Limited

 
The effort of City Bank Limited is focused on delivery of quality service in all areas of banking activities with the aim to add increased value to shareholders investment and offer highest possible benefits to the customers. There must have the mission as well as vision what should back every efforts of the organization. as it is said that “ mission without vision is a daydream and vision without mission is a nightmare”.
v Mission: 
q  To contribute to the socio-economic development of the country.
q  To attain highest level of customer satisfaction through extension of services by dedicated and motivated team of professionals.
q  To maintain continuous growth of market share ensuring quality.
q  To maximise bank’s profits by ensuring its steady growth.
q  To maintain the high moral and ethical standards.
q  To ensure participative management system and empowerment of human resources.
q  To nurture an enabling environment where innovativeness and performance is rewarded.
v Vision:
To be the leading bank in the country with best practices and highest social commitment.
 

 Managerial Hierarchy of City Bank Ltd.

 
Chairman
Vice Chairman
 

Top Management

Directors
Managing Director
Asstt. Secretary
 
 

 

Executive Level Management

Deputy Managing Director
Senior Executive Vice President
Executive Vice President
Senior Vice President
Consultant
First Vice President
Vice President
Senior Assistant Vice President
Assistant Vice President
 
 
 

 

Mid Level Management

First Assistant Vice President
Senior Executive Officer
Executive Officer
Principal Officer
 
 

Junior Level Management

Senior Officer
Management Trainee
Officer
Junior Officer
Assistant Officer
 

SOWT Analysis

From my practical observation, I get the following Strength opportunity, weakness and threat (SOWT).
Strength:

• It has well reputation in the market
• Not engaged in unfair business practice.
• Concentrated market.
• Officers are highly educated.
• Executives are highly qualified and experienced.
• Bank has many attractive deposit schemes.
• Well-furnished and Air-conditioned Bank.
• Efficient management practice in the Bank.

Weakness:

• Deposit is lower than advance.
• Short time experience of the Bank.
• Officer has limited experience and not enough trained.
• Long-term credit is not sufficient.
• Small market shares in Banking-business.

Opportunities:
ü  Can increase the credit scheme.
ü  Can increase the advertising of the Bank.
ü  Private Banks becomes more reliable to local public.
ü Govt. has banned some ‘Jatiya Sanchaya patra’.
 

• Threat:
  • There are many competitors in the market.
  • Competitors have more deposit.
  • Ruling Government is not conducive in the viewpoint of the Bank.
  • Govt. imposes tax and VAT on profile.
  • Govt. pressures to reduce interest rate

 
 

Performance Review of The City Bank Ltd.

Performance at a Glance (amount in million TK.):

Particulars	2001	2002	2003	2004	2005
Authorized Capital	400.00	400.00	400.00	1750.00	1750.00
Paid-up- Capital	160.00	240.00	240.00	480.00	720.00
Statutory Reserve	160.00	173.10	213.81	378.42	604.61
Other Reserve	103.12	240.60	240.60	240.60	240.60
Retained Earnings	80.00	130.00	102.78	78.43	33.17
Total Shareholders Equity	503.12	783.70	797.21	1417.47	1958.40
Deposits	17183.98	19683.30	20046.31	22236.96	30647.83
Loans and Advance	12729.22	13884.90	14778.55	17027.84	23326.34
Import	13503.20	12262.60	17292.74	17909.94	21363.21
Export	3982.10	6213.50	7719.70	12198.69	18218.97
Investment	1977.95	2511.40	3379.26	3161.38	3648.27
Total Asset	20726.40	24481.60	23698.56	26375.56	35303.74
Total Income	1749.07	2120.89	2475.04	2707.84	3476.85
Total Expense	1341.68	1569.66	1799.17	1785.79	2227.99
Profit Before Provision	407.39	551.23	675.87	922.05	1248.86
Total Provision	1840.80	485.60	472.41	99.00	117.93
Profit Before Tax	222.59	65.63	203.46	823.05	1130.93
Provision for Tax	142.59	52.30	190.00	442.79	590.00
NET Profit After Tax	80.00	13.33	13.46	380.26	540.93
Return on Equity (%)	17.27%	2.07%	1.70%	34.34%	32.05%
Return on Asset	0.42%	0.06%	0.06%	1.52%	1.75%
Capital adequacy Ratio (%)	6.63%	8.16%	6.56%	9.78%	9.63%
Credit Deposit Ratio	74%	71%	74%	77%	76%
EPS (TK.)	50.00	5.55	5.61	79.22	75.13
Book Value Per Share (TK.)	314.45	326.54	329.37	230.70	272.00
market Value Per Share(TK.)	266.80	300.00	227.65	877.75	770.75
No. of employee	1688	1751	1692	1803	1829
Executive	141	142	164	178	203
Officers	958	1011	943	1032	1022
Staffs	589	598	585	593	604
No. of Branches	76	76	77	77	77
A/D Branches	20	20	20	20	20
No. of Shareholders	3256	3027	3247	3486	5678

Source: Annual Report 2005
Capital & Reserve
CBL as a first generation bank has strengthened its capital base by raising the authorized capital to TK. 1750 million and paid up capital to Tk.720 million. The capital adequacy ratio was 9.65 at the end of 2005.
 
Deposits
The deposit as at 31^st December 2005 rose to Tk.30648 million registering a growth of 38% over preceding year (Tk.22236 million).
Deposit mix of bank as on 31^st Dec. 2005 stood as follows:

S.L No	Type of Deposit	Amount in million Tk.	% of share
1.	Current and others	5090.48	16.61
2.	Savings	5820.42	18.99
3.	Short term	2324.90	7.59
4.	Fixed deposit	12451.65	40.63
5.	Scheme	4960.38	16.18
	Total	30647.83	100%

 
Loans and advances
The Bank continued to reengineering process to raise its assets portfolio by implementing new credit policy with diversified and well structured asset portfolio and separation of responsibilities and segmentation of divisions. The outstanding amount of loans and advances as on 31^st December 2005 stood at Tk.23326 million with a record growth of Tk.6298 million (37%). The outstanding amount at the same period of previous year was Tk.17027 million. City bank Limited has a plan to maintain the following proportions to design and maintain credit portfolio:

 Non-Performing Loan
Non-performing loan dropped to Tk.1332 (5.71% of total loan portfolio) million only from an amount of Tk.1800 (10.48% of total loan portfolio) million of previous year.

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
Import
Import growth in 2005 is19%(Tk.17910 in 2004 to Tk.21363 in 2005).

Export
The bank achieved significant growth (49%) in 2005.

Products and Services of City Bank Limited

Since commencement of banking operation, City bank Limited has not yet only gained enormous popularity but also been successful in mobilizing deposit and loan products. The bank has made significant progress within a very short time period due to its dynamic management and introduction of various consumer-friendly loan and deposit products. All the products and services offered by the bank can be classified under two major heads:

• Deposit Products
• Monthly Benefit Deposit Scheme
• Fixed Deposit Scheme
• Saving Deposit Account(Three Stage Saving Scheme)
• NFCD (Non Resident Foreign Currency Deposit Account)
• NITA (Non Resident Investor’s Taka Account)

 

• Loan Products
• Consumers’ Credit Scheme
• Lease Finance
• Hire Purchase
• Small and Medium Enterprise Credit Scheme
• Loan Against Shares and Securities
• House Building Financing Scheme
• Financing Scheme For Contractors
• Computer Software Financing Scheme
• City Bank Maser Credit Card
• City Bank VISA Credit Card
• Working Capital Financing
• Import Financing
• Export Financing
• Ø Industrial Financing

Other Service
Consistent with the modern edge and competing in the competitive market, City Bank Limited has introduced some innovative banking services that are remarkable in a country like Bangladesh. The services offered by the bank are as follows:
On-line Banking
The bank has set up Wide Area Network (WAN) across the country within its all branches to provide on-line branch banking facility to tits valued customers. The service named “Finacle Core” has opened up several possibilities of improved customer services. Under this facility client of one branch are able to do banking transaction at any other branch of the bank. The bank hosted its Web Site (www.citybank.com) to facilitate dissemination of information about the banking services and facilities of City Bank Limited all over the world.
Information Technology in Banking Operation
Prime Bank Limited has adopted automation in banking operation from the first day of its business. The main objective of this automation is to provide efficient and prompt services to its valued clients. At present all the branches of the bank are computerized under UNIX operating system to provide best security to the information. City Bank Limited is providing comprehensive range of banking services with utmost care and efficiency to its customers. Auto Teller Machine is used to count money properly to save client’s valuable time as well. The customer can draw money/cash from their account within a minute. s
SWIFT Service
City Bank Limited is one of the first few Bangladeshi Banks to obtain membership of SWIFT (Society for Worldwide Inter-bank Telecommunication). SWIFT is a members’ owned cooperative which provide a first and accurate communication network for financial transactions such as Letter of Credit, Fund Transfer etc.

Recent Performance at a glance of Banga Bandhu(B.B) Avenue Branch

Year	Deposit target (in crore)	Achievement (in crore)	%
2005	60	57.35	94.5
2006(JAN-JUNE)	73.67	73.34	99.55

Year	Profit target (in crore)	Achievement (in crore)	%
2005	7.00	6.20	88.57
2006(JAN-JUNE)	4.50	3.34	74.22

 

Year	Export target (in crore)	Achievement (in crore)	%
2005	52	73.05	140.45
2006(JAN-JUNE)	87.50	46.27	52.88

 

Year	Import target(in crore)	Achievement (in crore)	%
2005	100	134.14	134.14
2006(JAN-JUNE)	100	49.11	49.11

 

Year	Recovery target (in lac)	Achievement (in lac)	%
2005	180	18	10.00
2006(JAN-JUNE)	40	3.30	7.5

 
 
 
 

Year	Advance target (in crore)	Achievement (in crore)	%
2005	80	86.36	107.95
2006(JAN-JUNE)

105.6894.8289.72
 
Recovery of Classified Loans
Recovery of Classified Loans up to 31^st December 2000: TK.20.93 lac. After this year the year wise recovery position of classified accounts are given below:

Year	Classified amount at the year end (in 000 TK.)	Recovery during the year (in 000 TK.)
2001	23,777	3,266
2002	15,695	172
2003	14,855	13,353
2004	1,013	1,138
2005	1,232	2,502
2006(Jan.- June)	118.76 lac	2.30 lac

 
Statement of Overdue Bill of Entry
 

Year	2001	2002	2003	2004	2005	Total	Total Amount
B.B.Avn. Br.	Nill	2	Nill	Nill	3	5	U.S. $ 27,026.20

 
 
 
Recovery and defaulting installments and amount under consumer credit scheme for the month of May 2006:
 
1. No. of total borrowers        : 62
2. Total authorized loans         : TK. 4,466,710.00
3. Total amount disbursed      : TK. 4,466,710.00
4. Total amount recovered      : TK. 3,873,335.00
5. Total amount outstanding   : TK. 1,881,506.88
6. Total overdue amount         : TK. 509,300.00
 
Position of newly developed liability products (Jan-June 2006)
 

Name of the product	Total a/c opened	Total amount
TSS (Three Stage Saving Scheme)	768	2,400,000
MBS (Monthly Benefit Scheme)	06	2,250,000
JSS (Juniors Savers Scheme)	Nill	–
LSS (Lachpoti Savings Scheme)	Nill	–

 

 
 

General Banking

At first I have been placed in the General Banking Department. General Banking department performs the majority functions of a bank. It is the core department.
In fact, bank operates with the people’s money. And this process starts with the General Banking department. The activities of the General Banking Department of CBL are mainly divided into the following categories:
Ü  Account Opening Section,
Ü  Local Remittance Section,
Ü  Online Branch Banking Section,
Ü  One Stop Utility Services Section,
Ü  Deposit Schemes Section,
Ü  Clearing Section,
Ü  Collection Section,
Ü  Cash Section,
Ü Accounts Section,

Account Opening Section:

To establish a Banker and customer relationship Account opening is the first step. Opening of an account binds the Banker and customer into contractual relationship. But selection of customer for opening an account is very crucial for a Bank. Indeed, fraud and forgery of all kinds start by opening account. So, the Bank takes extremely cautious measure in its selection of customers.

Types of Account:

• Current Account.
• Savings Account.
• Fixed Deposit Account.

Procedure to open an Account:

• For opening an account, at first the prospective account holder will apply for opening an account by filling up account opening form. Account opening form consists of the name of the branch, type of account, name of the applicant(s), present address, permanent address, passport number (if any), date of birth, nationality, occupation, nominee(s), special instruction (if any), initial deposit, specimen signature(s) of the applicant(s), introducer’s information etc.
• The prospective customer should be properly introduced by the followings:

1. An existing customer of the bank.
2. Officials of the bank not below the rank of Assistant Officer.
3. A respectable person of the locality who is well known to the  manager or authorized officer.

• Two copies of passport size photograph duly attested by the introducer.
• Signature of the prospective account holder in the account opening form and on the specimen signature card duly attested by the introducer.
• Then the concerned authority will allocate a number for the new account.
• The customer than deposit the “initial deposit” by filling up a deposit slips. Initial deposit to open a current account in PBL is Tk. 1000.00 and saving account is Tk. 500.00.

After depositing the initial deposit, the account is considered to be opened. CBL maintains all of its accounts in computer. After depositing the initial deposit, CBL records it in the computer by giving new account number. Then it issues chequebook requisition slip by the customer. Then it distributes all relevant papers to respective department.

Activities and papers necessary for opening an account:

(A)             Joint Account:
If the account is a joint account, then the joint account holder should submit a declaration and operational instructions of the account along with their signature. The declaration is
“Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability whatsoever incurred in respect of this account shall be joint and several.”
 
(B)              Partnership firm:
The following documents have to be submitted for preparing an account of a partnership firm:

• Partnership deed.
• (a) If the partnership firm is a registered one, then one copy of registration forms.

(b) If not, then a copy of certificate from the notary   public.
 
(C)             Limited Company:
For the opening of an account of a limited company, following documents have to be submitted:

• A copy of resolution of the company that the company decided to open an account in the City Bank.
• Certified true copy of the Memorandum & Articles of Association of the Company.
• Certificate of Incorporation of the company for inspection and return along with a duly certified Photocopy for Bank’s records.
• Certificate from the Registrar of Joint Stock Companies that the company is entitled to commence business (in case of Public Ltd. Co.  for inspection and return) along with a duly certified Photocopy for Bank’s records.
• Latest copy of balance sheet.
• Extract of Resolution of the Board/General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/Managing Director of the company.
• vii) List of Directors with address (a latest certified copy of Form-XII)

 
(D)                         Club/Society:
Following documents have to be obtained in case of the account of the club or society:

• Up to date list of office bearers.
  • Certified copy of Resolution for opening and operation of   account.
  • Certified copy of Byelaw and Regulations/Constitution.
  • Copy of Government Approval (if registered).

(E)                          Cooperative Society:
Following documents have to be obtained in case of the account of Cooperative Society:

• Copy of Byelaw duly certified by the Co-operative Officer.
• Up to date list of office bearers.
  • Resolution of the Executive Committee as regard of the account.
  • Certified copy of Certificate of Registration issued by the registrar, Co-operative societies.

(F)              Non-Govt. College / School / Madrasha / Muktab:
Following documents have to be obtained in case of the account of non-govt. college / school / madrasha / muktab:

• Up-to-date list of Governing Body/Managing Committee.
  • Copy of Resolution of the Governing Body/Managing Committee authorising opening and operation of the account duly certified by Gazetted Officer.

(G)             Trustee Board:
Following documents have to be obtained in case of the account of trustee board:

• Prior approval of the Head Office of CBL.
  • Certified copy of Deed of Trust, up to date list of members of the Trustee Board and certified copy of the Resolution of Trustee Board to open and operate the account.

(H)             Minor’s Account:
Following documents have to be obtained in case of the account of minor:

• Putting the word “MINOR” after the title of the account.
• Recording of the special instruction of operation of the account.
• The AOF is to be filled in and signed by either the parents or the legal guardian appointed by the court of law and not by the minor.

 

Local Remittance:

Local remittance is one of the main components of general banking.  The activities of local remittance are —

1. Telegraphic Transfer,
2. Demand Draft issue,
3. Pay order.
4. iv. Pay slip.

Telegraphic Transfer (TT):

It is an order from the issuing branch to the drawee bank / branch for payment of a certain sum of money to the beneficiary. The payment instruction is sent by telex and funds are paid to the beneficiary through his account maintained with the drawee branch or through a pay order if no account is maintained with the drawee branch.
Procedure of issuing TT:
Following procedures are followed while issuing of TT:

• The applicant fills up the relevant parts of the prescribed application form in triplicate, duly signed the same and gives it to the GB.
• GB will fill up the commission part for bank’s use and request the applicant to deposit necessary cash or cheque at the cash booth.
• GB will prepare telex in appropriate form, sign it and send it to the telex operator for transmission of the message.
• GB will prepare necessary advice. Debit advice is sent to the client if client’s account is debited for the amount of T.T.
• T.T. Confirmation Advice is sent to the drawee branch.
  • Credit Ticket (second copy of the application form) is used to credit the CBL General Account.
  • The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket. The third copy will be handed over to the applicant as customer’s copy.

Accounting Treatment:
For telegraphic transfer, PBL gives the following entries—
Client’s Account                                 Dr.
City General Account                         Cr.
Telex Account                                     Cr.
Commission Account                          Cr.
Payment of T.T.
On receipt of T.T. the drawee branch passes payment instructions the following entries if the T.T. is found to be correct on verification of the Test number—
a) City  General Account                  Dr.
DAD Account – TT Payable              Cr.
b) DAD Account – TT Payable          Dr.
Client’s Account/Pay Order               Cr.
In case the beneficiary does not maintain any account with the drawee branch a pay order will be issued in favor of the payee and sent to his banker / local address as the case may be.
Every branch maintains a prescribed T.T. Payable Register. All the particulars off T.T. are to be properly recorded in this register duly authenticated. A separate Type of T.T. confirmation advice is sent to the drawee branch on the same day. On receipt of T.T. confirmation advice, the particulars of T.T. are verified with reference to particulars already recorded in the T.T. payable register.

Demand Draft (DD):

Sometimes customers use demand draft for the transfer of money from one place to another. For getting a demand draft, customer has to fill up an application form. The form contains date, name and address of the applicant, signature of the applicant, cheque number (if cheque is given for issuing the DD), draft number, name of the payee, name of the branch on which the DD will be drawn and the amount of the DD. The form will be duly signed by the applicant and by the authorized officer.
Process of issuing Local Draft:
Followed procedures are followed while issuing local draft—

• Get the application form properly filled up and signed by the applicant.
• Complete the lower portion of the form for the bank’s use.
• Calculate the total amount including the bank’s commission.
• If the cheque is presented for of the local draft, the officer should get the cheque duly passed for payment by the authorized person and record the particulars of local draft on the back of the cheque.
• If the client wants to debit his account for the payment of the draft amount, the officer should get the account holder’s signature verified properly, from signature card on record of the branch and debit clients account for the total amount including commission.
• The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket and kept by the GB. The third copy is handed over to the applicant as customer’s copy.
• The GB Department maintains a prescribed L.D. Issue Register. All the required particulars of LDs issued by CBL should be entered in that register duly authenticated.

 
Issue of Duplicate Draft:
Duplicate Draft is not normally issued unless getting of satisfactory evidence is produced regarding loss of the draft. If the L.D. is reported to be lost or stolen, the issuing branch on receipt of a written request from the purchaser may issue a duplicate draft
Before issuing duplicate L.D. the branch should observe the followings—
i)               Verify the purchaser’s signature on the request letter from the signature appearing on the original application form.
ii)                  Immediately issue a stop payment instruction to the drawee branch under advice of head office and obtain confirmation of non-payment the L.D. in acquisition.
iii)             After the drawee branch has acknowledged the stop payment order and confirmed that the local draft in acquisition remains unpaid at their end, the issuing branch should obtain an Indemnity Bond on stamp paper as per prescribed format from the purchaser duly signed by him. The branch will thereafter write to head office for their approval to issue a duplicate draft.
iv)             The head office on receipt of the request from the issuing branch will immediately issue a caution circular to all the branches regarding the lost of the local draft asking them to record stop payment.
v)                  The head office will thereafter issue clearance to the issuing branch for issuing for issuing a duplicate draft in lieu of original reported lost.
vi)                On receipt of the clearance from head office, the issuing branch will issue a completely fresh draft marking clearly the words duplicate issued in lieu of original draft no………………. dated …………….in bold letters on the top of the front page of the draft. The printed serial number on the draft should not however be struck off. Intimation should be given to the drawee branch furnishing full particulars of the duplicate draft.
vii)              The particulars of the duplicate draft must resemble those of the original draft in all respects, i.e., all the particulars to the duplicate draft must be identical with those in the original draft. No further IBCA is to be issued for the duplicate draft.
 
viii)            Prescribed duplicate issuance charge is to be recovered for issuing the duplicate draft and credited to “Income Account”.

 

Cancellation of Local Draft:

The followings are followed while canceling a L.D.—

• The purchaser should submit a written request for cancellation of the L.D. attaching therewith the original L.D.
• The signature of the purchaser will have to be verified from the original application form.
• Manager’s prior permission is to be obtained before refunding the amount of draft.
• Cancellation charge is to be recovered from the applicant and only the amount of the draft less cancellation charge should be refunded. Commission charge, posted charge etc. recovered for issuing the L.D. should not be refunded.
• The original entries are to be reversed giving proper narration. An IBDA for the cancelled L.D. should be issued on the drawee branch.
• Cancellation of L.D. should also be recorded in the L.D. Issue Register.

Payment of L.D.:
While payment of L.D. CBL performs the following functions—
i)                    On receipt of Credit Advice (IBCA) from the issuing branch the following entries are to be passed –
City General Account Dr.
DAD Account                        Cr.
 
ii)                  When L.D. is presented for payment at the paying branch, its details are to be carefully examined with reference to the following points—
a)            Whether the draft is drawn on the Local office.
b)            Whether the draft is crossed or not. Amount of crossed draft is not paid in cash to the payee but to be paid to his account with a bank.
c)            Draft must have to be signed by two authorized officers of the issuing branch. Their signatures are to be verified from the specimen signature book for being sure that draft that the draft is genuine. The verifier should put his initial.
d)           Endorsement on the back of the draft must be regular in case the draft is presented through clearing.
e)            The amount of the draft should not exceed the amount written in red ink at the top of the draft.
f)             The payee is to be properly identified in case of cash payment.
g)            The particulars of the draft i.e. the draft number, date, amount and the name of the payee should be verified from the L.D. Payable Register.
iii)                In case of payment, the draft should be cancelled with red ink. The date of payment should be recorded in the L.D. Payable Register.
 
Accounting Treatment:
While payment:
DAD –L.D. Payable Account              Dr.
Client’s Account                                 Cr.
 
An IBCA should be sent with this.
 
Stop payment of Local Draft:
The payee or purchaser of the draft cannot give stop payment instruction to the drawee branch. If the paying branch receives a request from the purchaser of the draft for stopping payment of the draft, it will ask the purchaser to approach the issuing branch about the purpose.  The paying branch should however exercise necessary precaution in this regard. Only the issuing branch can issue instruction for stop payment of the draft under special circumstances.
 

Pay Order (PO):

For issuing a pay order, the client is to submit an application to GB in the prescribed form. This form should be properly filled up and signed. For issuing pay order CBL charges commission on the following rate—
 
# For Party TK 50 plus VAT 15%
Other than Party:
# For  Tk. 1 to 50,000, the commission is Tk.50 plus VAT 15%
# For Tk. 50,001 and above, the commission s Tk. 100 plus VAT 15%
 
Payment of Pay Order:
The pay order is presented to the bank either through clearance or for credit to the client’s account.  While payment, relative entry is given in the pay order register with the date of payment.
Cancellation of Pay Order:
The following procedure should be followed for the cancellation of the pay order:

• The client should submit a written request for canceling the pay order attaching therewith the original pay order.
• The signature of the purchaser will have to be verified from the original application form.
• Manager’s prior permission is to be obtained before refunding the amount of the pay order.
• Cancellation charge is to be recovered from the applicant and only the amount of the pay order less cancellation charge should be refunded. Commission recorded for issuing of the original pay order should not be refunded.
• Then the officer should write “cancelled” on the pay order
• The original entries should be reversed with narration.
• Cancellation of the pay order should also be recorded in the register.

 

Online Banking:

Finacle Core:

The Bank has set up a Wide Area Network (WAN) across the country to provide Online Branch Banking facility to its valued clients. Under the Scheme, clients of any branch shall be able to do banking transaction at other branches of the bank.
Under this system a client will to be able to do following type of transactions:

• Cash withdrawal from his/her account at any branch of the Bank irrespective of location.
• Cash deposit in his/her account at any branch of the Bank irrespective of location.
• Cash deposit in other’s account at any branch of the Bank irrespective of location.
• Transfer of money from his/her account with any branch of the Bank.
• Any amount can be deposited or transferred under Prime Line. In the system, however, at present there is a limit for cash withdrawal through bearer or by account holder himself.

Requirement of Finacle Core service:

The Clients who has account in City bank or who will open account in City bank and would be interested to maintain substantial deposits in Savings, Current or STD accounts, will be eligible to get Finacle Core Service.
Intending and eligible clients have to apply in prescribed application form to the branch to get the online service from the bank. The client should submit two copies photographs and signature cards along with the application form. To avail the Finacle Core service, no charge should be paid for online transaction within a locality where the account is domiciled. But charges should be paid by the customer for inter city online transaction.
 
Online Transaction Membership Fee:
Membership fee of Tk. 50/- per month for the Online Branch Banking Service.

Deposit Schemes of City Bank Limited

Bank is the largest organization of mobilizing surplus domestic savings. For poverty alleviation, we need self-employment, for self-employment we need investment and for investment we need savings. In the other words, savings help capital formations and the capital formations help investments in the country. The investment in its turn helps industrialization leading towards creation of wealth of the country. And the wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the nation.
The savings rate in Bangladesh is one of the lowest in the world rate of domestic saving being 17.78 %. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive Savings Schemes so that the marginal propensity to save increases. The savings do not, of course, depend only on the quantum of income but largely depend on the habit of savings of the people.
CBL has formulated the following Savings Schemes:

• Monthly Benefit Deposit Scheme,
• Fixed Deposit Scheme,
• Ø Three Stage Savings Scheme,

Monthly Benefit Deposit Scheme

This is a Deposit Scheme where the depositor gets a fixed amount of profit every month without disturbance to the principle. The Scheme is designed to attract:
1)      The retirement benefits of service holders.
2)      The investment of Wage Earners who want to pay a fixed amount monthly to their family’s dependents in Bangladesh from the profit of their investment.
3)      The deposit of those persons who intend to meet the monthly expense of their family from the income of their deposit.
4)      Investment of fund of Trusts and Foundations which award monthly Scholarships / Stipends to students.
5)  Trusts and founders or other associations, which award monthly scholarship/stipends to students etc.

Features

v  Deposit Amount
Tk. 1,00,000 to TK. 1,00,00,000
v  Period
The scheme is for 2years/ 3 years/ 5 years.
v  Return

Term	Deposit (TK.)	Monthly Interest (TK.)	Interest After Tax (TK.)
2 years	1,00,000	900	810
3 years	1,00,000	900	810
5 years	1,00,000	945	850

v
* Taxes if any, applicable.
Additional Benefit
These MBDS allows you to enjoy loan facility up to 90% of your deposit amount.
Terms & Conditions

• Payment of monthly profit shall start from the subsequent month after a  clean minimum gap of 30 days from date of deposit.
• Normally, the deposit will not be encashable before maturity. But if any depositor intends to withdraw his deposit before maturity, the following rules will apply:

–          No benefit including interest shall be allowed for premature encashment within one year.
–          If the accounts/ deposits are closed/ encased after one year of its opening, benefit shall be allowed on the deposits at exiting savings deposits rate.
–          If the amount of monthly profit already paid exceeds the amount payable at exiting savings rate, the difference shall be realized from the principal deposit amount, if and when necessary.
–          If the client fails to deposit installment for consecutive 3 months, in this case the scheme will be closed for adjusting loan.

• In case of death of a depositor, the A/C shall cease to be operative and the amount deposited so far shall be paid to the nominee, as mentioned in the account opening form, and in absence of nominee, to the legal heirs of deceased as per rules in force.

 

Three Stage Savings Scheme (TSSS)

For regular income people it is a good opportunity to deposit money for long term in high interest rate. Details are:
 
Term:                     2 years/4 years/6 years
Monthly deposits:  Tk.500-Tk.5000
 
An example of total sum after maturity (where monthly installment Tk.500):
 

Term	Interest Rate	Total sum after maturity
1 year	8%	Tk.13, 093 (1st stage)
2 year	9%
3 year	10%	Tk.28, 955 (2nd stage)
4 year	11%
5 year	12%	Tk.48, 548 (3rd stage)
6 year	13%

Utility Services Scheme:

Like any other country of the world, the people living in the urban areas of our country lead a very busy life. Times are very valuable to them. Despite this, they are to waste their valuable time at the counter of.
Different Banks and other Institutions for payment of their monthly bills of different utility services like Electricity, Telephone etc. They, as such, face enormous difficulties for payment of their monthly bills in time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the bills of various utility services at one Point.
Scope of Services: –
The scheme is designed to provide all the required services to the customer in making payment of their following bills on their behalf from the counter of the Bank:

• To pay Electricity Bills
• To pay Telephone Bills
• To pay Gas Bills
• To pay WASA Bills
• To pay Insurance Premium
• To pay House Rent
• To collect House Rent
• To pay Municipal Taxes
• To collect Pension Money
• Issuance and Renewal of License of TV, Radio, etc.
• Ø Any other like Services.

Objectives

• To help the customers in payment of their different utility Bills in time and thereby relieve them of their worries and save their valuable time.
• To help different corporations/ organizations in timely collection of their Bills.
• To help the senior citizens of the country in collecting their Pension Money every month.
• To extend financial assistance to the customers by way of overdraft in timely payment of their Bills.

 
Deposit Rate Offered by CBL

SL.	Particulars	Deposit Rate
01.	Short Term Deposit
	a) Below Tk.1.00 Crore	5.00%
	b) From Tk. 1.00 Crore but below  10.00 Crore	6.00%
	C) Tk 10.00 Crore and above	6.50%
02.	Saving Deposit	6%
03.	Fixed Deposit (FDR)	Up to 1.00 Crore
	a) 1-3 Months	11%
	b) 4-11 months	12%
	c) 1(One) Year and above	13%

 Clearing Section

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. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the cheque. Banks for credit of the proceeds to the customers’ accounts accept Cheque and other similar instruments. The bank receives many such instruments during the day from account holders. Many of these instruments are drawn payable at other banks. If they were to be presented at the drawee banks to collect the proceeds, it would be necessary to employ many messengers for the purpose. Similarly, there would be many cheque drawn on this the messengers of other banks would present bank and them at the counter. The whole process of collection and payment would involve considerable labour, delay, risk and expenditure.
All the labour, Risk, delay and expenditure are substantially reduced, by the representatives of all the banks meeting at a specified time, for exchanging the instruments and arriving at the net position regarding receipt or payment. The place where the banks meet and settle their dues is called the Clearinghouse.
 

 Activities of the Section:

(a) Preparation of Clearing Outward and Inward Lodgement and record maintenance of the same.
(b) Batch posting as and when required.
On receipt of instruments, the same is endorsed here. Then clearing section will sent IBDA to head Office for clearing purpose and on receipt of IBCA from Head Office amount is credited to customers account and vice versa. If the instrument is return then the same is given back to the customer.
 

Collection Section:

Checks, drafts etc. are drown on bank located outside clearing house are sent for collection. B.B. Avenue Branch collects its client’s above-mentioned instruments from other branches of CBL and branches other than CBL. In case of out ward bills for collection customers account is credited after finishing the collection processor. And in case of in ward bills customers account is debited for this purpose. So it place dual role as follows:
i)                    Collecting Banker
ii)                  Paying Banker.

Activities of the Section:

] Preparing of Outward and Inward Collection Item.
] Inter-Branch Transfer.
] Batch posting and checking as and when required.
] Other works as and when require.

Collection is done when

 (i) Paying Bank is located out side Dhaka City.

(ii) Paying Bank is other branches of PBL situated inside Dhaka City.
(i)                Paying Bank is outside Dhaka City:
CBL sends Outward Bills for Collection (OBC) to the concerned paying bank to get Inter Bank Credit Advice (IBCA) from paying Bank. If the paying bank dishonours the instrument, the same is returned to principal Branch.
(ii)             The Paying Bank of their own branches inside Dhaka City:
Collection Department sends transfer delivery item to other branches of same bank situated inside Dhaka City. Upon receiving IBCA customer’s a/c is credited.

Procedures for Outward Bills for Collection:

 
 

Entries are given in the Outward Clearing Register

Endorsement “Payee’s A/C will be Credited on realization” is given

 
Commission for Collection:
Minimum TK. 50 to maximum TK.700.
 

Accounts Section:

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. Any deviation in proper recording may hamper public confidence and the bank has to suffer a lot. Improper recording of transactions will lead to the mismatch in the debit side and 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 or forgery. This department is called Accounts 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.
 
 

Functions of Accounting Department:

We can divide the functions of accounting department into two categories. One is day-to-day task and another is periodical task.

1. a.  Day to day functions: Here day-to-day function refers to the every day tasks. Accounting department of CBL performs the following day to day functions:

] Recording of transaction in the cashbook, general and subsidiary ledger.
] Preparing the daily position of deposit and cash.
] Making the payment of the expense of the branch.
] Recordings of inter branch fund transfer.
] Checking whether all the vouchers are correctly passed.
] Recording the voucher in the voucher register.
] Packing and maintains the total debit and total credit vouchers.
b. Periodical functions: Periodical functions of accounts department include the preparation of different weekly, fortnightly, monthly, quarterly and annual statement. The accounts department prepares the following statements:
Ü  Monthly statement of deposits, loans and advances, profit and loss etc.
Ü  Quarterly statement of deposits, loans and advances, profit and loss etc.
Ü  Yearly statement of deposits, loans and advances, profit and loss etc.
Ü   Yearly statement of classified Loans and Advances.
Ü   Statement of Affairs.
Ü   Yearly Budget of the Branch, etc

Cash Section:

Cash section is a very sensitive organ of the branch and handle with extra care.  Operation of this section begins at the start of the banking hour. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a much-secured room. Keys to the room are kept under control of cash officer and branch in charge. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remain in the cash counter is put back in the vault and known as the closing balance. Money is received and paid in this section.
 

Cash Receipt:   

] At first the depositor fills up the Deposit in Slip. For saving account and current account same Deposit in Slip is used in this Branch.
] After filling the required deposit in slip, depositor deposits the money.
] Officers at the cash counter receives the money, count it, enter the amount of money in the register kept at the counter, seal the deposit in slip and sign on it with date and keep the banks’ part of the slip. Other part is given to the depositor.
] In this branch, i.e., B.B.A.Branch, two different officers maintain two different books for entering such entries. One officer and other accounts by another officer maintain all deposits of saving account.
] At the end of the day entries of both of these registers are cross checked with the register kept at the cash counter to see whether the transactions are correct or not.

Cash Payment:

L       When a person comes to the bank to cash a cheque, he/she first gives it to the computer desk to know the position of the check and posting of the cheque. If the account has sufficient fund the computer in charge will post it into the computer, will sign it and seal it.
L       This cheque is then sent to the concerned officer. There are two officers who verify the cheques – one for savings and similar types of account and another for current and similar types of account.
L       After receiving the cheque respective officer first checks it very carefully for any kind of fraudulent activity. (S) He also checks the date of the cheque, amount in word, amount in figure and signature of the drawer.
L       If the instrument is free of all kind of error the officer will ask the bearer to sign on the back of it.
L       He will then put his/her initial beside the bearers’ signature. S/he will also sign it on its face; will write down the amount by red pen.
L       Then the cheque will be sent to the cash counter. At the cash counter bearer will be asked again to sign on the back of the instrument.
L       The cash officer will then enter the details of the cheque in his/her register and will pay the money to the bearer.
L     At the end of the day these registers will be compared to ensure the correctness of the entries.

Conclusion

Bank is the largest organization of mobilizing surplus domestic savings. Attractive Savings Schemes are offered by CBL such as Contributory Savings Scheme, Monthly Benefit Deposit Scheme, Special Deposit Scheme, Education Savings Scheme, Fixed Deposit Scheme, City Bank Money Scheme, City Bank Insured Fixed Deposit Scheme as well as different accounts to save money. Schemes are designed concentrating in different purposes to help the fixed income group people to help in need. Bank-Officials are also whole-hearted and dedicated to serve their customer with utmost care.
 
Services Offered by Credit Department:
Bank is a financial intermediary whose prime function is to move scarce resources in the form of credit from savers to those who borrow for consumption and investment. The word “credit” is derived from the Latin word “credere”, which means to trust. The fundamental nature of credit is that an element of trust exists between buyer and seller-whether of goods or money.  In a modern industrial society Banks are uniquely important because of their ability to create money. Lending comprises a very large portion of a Bank’s total assets and forms the backbone of the Bank and interest on lending constitutes the highest proportion of income of a Bank. As such credit quality remains the prime indicator of its commercial success. Unsound credit reduces the ability of a Bank to provide credit towards profitable borrowers and undermine liquidity and solvency. Therefore lending is very important for the profitability and success of a Bank.
When a bank advances a loan, it does not pay the amount in cash. But it opens an account in his name and allows him to withdraw the required amount by cheque. Banks provide credit facilities to businessmen by way of loans and advances, overdraft and cash credit. When a loan is granted or overdraft is sanctioned, the amount of loan or overdraft is entered in the account of the customer and he is allowed to draw a cheques up to the amount agreed upon. Thus the bank creates a deposit in the name of the borrower. Basically credit is the function by which people can perform their job by depositing and lending money from the bank with an implied interest rate and bank performs here as a middleman.  Banks create money and credit. It happens in two ways. First, when a customer is granted loan, he has to sign a promissory note and receive in turn, a bank’s demand deposit, or cash. The promissory note does not act as money but it receives money and can readily spend almost everywhere. Thus it creates credit. Second, the entire systems of banks also create money as the deposits generated by lending flow from bank to bank. By law, each bank must set aside a fractional reserve behind each deposit it receives and the remaining excess can be loaned out. No single bank can lend out more than its excess reserves, the entire banking system can create a multiple volume of deposit money through credit creation.

Loan And Advance

 

Salient features of City bank’s Credit Policy:

• Assets are built based on customer’s deposit, which should not exceed 90% of customers based deposit.
• Rate of interest is variable based on customers’ integrity and risks associated.
• Type of security varies on the basis of risks associated in credit.
• Diversification from all angel viz. type of credit, geographical location, size of credit, sectors and sub-sectors etc.
• Credit operations are carried out in branch through branch credit committee as per authority delegated to head of branch and through Head Office Credit Committee in respect of   credit sanction authority delegated to the CEO.
• Credit Risk Grading is done in all cases.
• Assessment of volume or amount of credit properly.
• Utmost care is taken in providing loans to directors.

Credit Portfolios and Ratio of City Bank Limited:

The Bank continued to reengineering process to raise its assets portfolio by implementing new credit policy with diversified and well structured asset portfolio and separation of responsibilities and segmentation of divisions. The outstanding amount of loans and advances as on 31^st December 2005 stood at Tk.23326 million with a record growth of Tk.6298 million (37%). The outstanding amount at the same period of previous year was Tk.17027 million. City bank Limited has a plan to maintain the following proportions to design and maintain credit portfolio:

 
 

SL. No.	Sector	As on 31.12.05
		Amount (in million TK.)	TK. % of share
1	Agriculture	171.00	0.73
2	L & M Industry (Term Loan)	3542.30	15.19
3	Working Capital & Commercial lending	8739.79	37.47
4	Export Finance	3762.40	16.13
5	Import Finance	4094.61	17.55
6	Housing	224.46	0.96
7	Others	2791.74	11.97
	Total	23326.30	100.00

 

Types of Bank Credit

Modern banking operations touch almost every sphere of economic activity.  The extension of bank credit is necessary for expansion of business operations. Bank credit is a catalyst for bringing about economic development. Without adequate finance there can be no growth or maintenance of a stable output. Bank lending is important to the economy, for it makes possible the financing of agricultural, commercial and industrial activities of a nation. The credit facilities are generally allowed by the bank may be in two broad categories. They are:
 
1. Funded Facilities:
Funded facilities can also be divided into the following categories:
Loans:
i)          Continuous Loans
ii)         Demand Loans.
iii)                Term Loans up to 5 years
iv)                Term Loans over 5 years
v)            Short Term Agro-Credit and Micro credit
Overdrafts:

• Against hypothecation of goods/stock
•  Against pledge of goods/stock
•  Against any other permissible securities.

Other advances:

• Against import bills.
• Against imported merchandise.
• Against Trust receipts (T/R).
• Against Export Bills Purchased/Discounted
• Against Work order
• Against other securities.

 
2. Non-Funded Facilities:

• Letter of credit (L/C)
• Letter of Guarantee (L/G)

 

Types of Advances Offered by CBL:

Secured Advances:

     A.   The following type of secured advances are allowed against tangible securities subject to margin restrictions:

• Loan (General)
• House Building Loan
• Other Loans to Staff
• Cash Credit (Hypothecation)
• Cash Credit (Pledge)
• Hire-Purchase
• Lease Financing
• Consumers’ Credit
• SOD (FO)
• SOD (WO)
• SOD (OT)
• SOD (EXPORT)
• SOD (IMPORT)
• PAD (Payment Against Documents)
• BLC (Bills Against Letter of Credit)
• LIM (Loan Against Import Merchandise)
• LTR (Loan Against Trust receipt)
• IBP
• Packing Credit
• FDBP (Foreign)
• FDBP (Local)
• Ø FBP

    B.  These advances are allowed against the following securities:

• Shares of various Companies approved by Head Office from time to time and listed in the Stock Exchange.
• Term Deposit Receipts issued by any Branch of our Bank.
• Lien on balance in Savings A/C, Current A/C. and other Savings Schemes
• Government Promissory Notes.
• Various Sanchaya Patras
• Surrender value of Life Insurance Policies.
• WEDB
• Assignment of bills against work orders/supply orders and receivables.
• Stock of goods in trade (Permissible goods only) pledged or hypothecated.
• Hypothecation of power driven vehicles or watercraft.
• Hypothecation of capital Machineries and equipments.
• Immovable Property.
• Imported merchandise – pledged or hypothecated.
• Trust Receipts.
• Import Bills (PADs)
• Bills Purchased
• Scheduled Bank/Insurance Guarantees
• Export Bills
• Inland Bills.
• Personal Guarantee
• Corporate Guarantee

 Unsecured Advances:

An unsecured or clean Advance is one, which is granted to a constituent without obtaining any security. In such case only charge documents are held an unsecured facility may be allowed in exceptional circumstances, only for a short period, with definite repayment arrangement, subject to restrictions imposed by Bangladesh Bank or any other competent authority, with prior approval of Head Office, to a customer on the basis of his personal credit worthiness, standing and reliability.
 A. Unsecured Advances include:
i)          Clean Overdrafts, and
i)                    Clean Loans.
B.

1. A customer should not ordinarily be permitted to overdraw his account without security. However, an unsecured facility may be allowed in exceptional circumstances, only for a short period, with definite repayment arrangement, subject to restrictions imposed by Bangladesh Bank or any other competent authority, with prior approval of Head Office, to a customer on the basis of his personal credit worthiness, standing and reliability.

1. II.   It shall not be granted unless the Sanctioning Authority has full confidence in the ability and reputation of the customer to repay it, on demand, or at its maturity if it is a loan. Definite arrangements for repayment, whether by installments or otherwise, must, as a rule, be made.

 

Procedure of Giving Advance:

1. The borrower has to apply to CBL for loan by filling up of a specific application form.
2. After receiving loan application form, CBL sends a letter to Bangladesh Bank for obtaining a report when loan amount exceed 100 lac. This report is called CIB (Credit Information Bureau) report.
3. After receiving CIB report, if the bank thinks that the prospective borrower will be a good borrower, then the bank will scrutinize the documents. In this stage, the bank will look whether the documents are properly filled up and signed.
4. Then come processing stage. In this stage, the bank will prepare a proposal. A proposal contains all relevant information (e.g. name of the client, type of the loan, amount of the loan, period of giving loan, security, date of application, financial data, etc.) Branch incumbent  (Local Office) has the discretionary power to sanction loan (SOD) up to Tk.25 lac against financial obligations by informing head office. But in that case, the branch manager has to give attention on the following matters:
a)      The interest of the loan must not be less than 14%, and
b)      The borrower must maintain 10% margin.
 
Except this case, the branch manager has to send a proposal to the head office. It Is fall under the delegation of Managing Director (MD), the MD approves the loan. If it is again beyond the delegation of MD, head office will prepare a proposal and submit it before the executive committee of the Board. The proposal has to be approved by the executive committee (EC).
 
After getting the proposal approved head office issue a sanction advice. According to that sanction advice, at the branch the following activities are done:
1. A sanction advice will be prepared in favour of the client.

1. After the sanction advice, bank will collect necessary documents (charge documents).
2. After receiving all the documents, the bank will disburse the loan to the borrowers. For withdrawing the loan amount, customer creates a current account and the loan amount is transferred to this account.

 

Lending Principles:

The bankers have to follow some principles or policies or take into consideration some factors for lending money on sound basis. In working out these principles, or constituents a banker is exposed to the following three basic questions.

• Is the borrower credit worthy?
• Are loan terms, or in other words, loan agreements properly structured and documented?
• Has the bank been able to perfect its claim on the assets or securities?

 
If a banker handling a credit can find the answers to the above three basic questions in a proper fashion lending operation carried out by him based on the same is expected to be sound. To answer the question as to whether the borrower is credit worthy a banker is to have clear idea about the following C’s concerning the borrowers.

1.                                                                                                                                       i.      Character
2.                                                                                                                                     ii.      Capacity
3.                                                                                                                                   iii.      Cash Flow
4.                                                                                                                                   iv.      Collateral
5.                                                                                                                                     v.      Condition
6.                                                                                                                                   vi.      Control

 
The 6C’s reflect the following points, which should be kept in mind for sound lending:
Þ                                           Judicious selection of Customers
Þ                                           Purpose
Þ                Safety
Þ                                           Security
Þ                                           Liquidity
Þ                                           Adequate return (Profitability)
Þ                                           Supervision
Þ                                           National/Social interest
Þ                                           Credit Control Policy of Bangladesh Bank
 
It is to be always remembered that the Bank is the custodian of public money and as such we must be judicious, careful and selective while lending out the depositors’ money to ensure timely recovery. The deciding factors for recovery of loans are selection of right type of borrowers, end-use of credits and effective follow-up and proper supervision.

Securities:

To make the loan 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. CBL charges the following two types of security, –

• Primary security: These are the security taken by the ownership of the items for which bank provides the facility.
• 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 security are exercised by the bank:

1. 1.      Pledge:

Pledge is 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 favour.

1. 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 favour of the lending bank.

1. 3.      Lien:

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

1. 4.      Mortgage:

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

Documentation:

Documentation can be described as the process or technique of obtaining the relevant documents. In spite of the fact that banker lends credit to a borrower after inquiring about the character, capacity and capital of the borrower, he must obtain proper documents executed from the borrower to protect him against wilful defaults. Moreover, when money is lent against some security of some assets, the document must be executed in order to give the banker a legal and binding charge against those assets. Documents contain the precise terms of granting loans and they serve as important evidence in the law courts if the circumstances so desire. That’s why all approval procedure and proper documentation shall be completed prior to the disbursement of the facilities.

Charge Documents:

Following charge documents are necessary while giving loans.

 Letter of guarantee:
This is a document given by the proprietor, directors or the third party in favor of the principal debtor.  The beneficiary of this document is the bank. Surety is bound to pay the guaranteed amount if such situation arises.
Counter guarantee:
The principal debtor agreeing that if the guarantor pays any amount, the principal debtor is bound to pay this amount gives this guarantee.
Letter of authority:
By this letter, the principal debtor gives the authority to the bank to debit the current account or investment account of the principal debtor for the following cases:

1. Wages of the stock keeper and stock guard.
2. Rent of the stock.
3. Insurance premium and
4. iv.                Any other expenses regarding these functions.

Letter of recall the loan:
This letter is given to the bank by the borrower, giving the bank the right of recalling the loan amount at any time if the borrower fails to repay any one of the installments. And the borrower cannot protest such recalling.
Letter of continuity:
By this letter, the borrower agrees that the promissory note given by the bank will be act as security for the repayment of the ultimate balance or sum remaining unpaid on account of the overdraft or advance.
 Letter of revival:
By this letter, the borrower agrees that he will be liable to bank for payment of the promissory note with interest in respect of all present and future indebtedness liabilities secured thereby which promissory note is to remain in force with all relative securities, agreements and obligations.
Joint promissory note:
This promissory note is given to the bank by the borrower if the borrowers are more than one person.
Single promissory note:
The borrower to the bank gives this promissory note if the borrower is a single person.
Letter of undertaking
This document is given to the banker by the borrower acknowledging the right to cancel the facility at any time with or without intimation to the borrower.
Loan disbursement letter:
By this letter, the borrower request to disburse the loan sanctioned in his favor by the bank. All the persons, in whose names the account is opened, should sign the letter.
Charge over bonds or certificate of shares etc.:
It is a document given by the borrower to the banker declaring that the stocks, shares, debentures, securities and investments which are now deposited to the bank and which may from time to time be deposited by the borrower shall stand charged and hypothecated to bank as security for the payment to bank on demand of the balance of the loan amount and of any other indebtedness and liability to the bank of any kind whether mature or accruing and whether incurred alone or jointly with others and whether as principal or surety including all interest document, commission, expenses, charges and costs incurred by the bank in relation any such indebtedness or liability.
Letter of lien against fixed deposit receipt:
By this letter, the borrower gives the right to the bank to hold the Fixed Deposit Receipt (FDR) if the borrower fails to repay or adjust the loan on demand or discharge the liabilities to bank. In this letter, FDR number, issuing branch, name of the favoring person and amount are written.
Letter of authority to encash FDR:
By this letter, the borrower gives the right to bank to encash the FDR in case of need. Here the amount and address of the bank of issue and the signature of the holders are given.
Memorandum of deposit of title deeds:
It is a deed that is necessary in case of mortgage by deposit of title deed or equitable mortgage. Here the mortgagor agrees that he has deposited necessary documents of the property to the bank.
Hypothecation of goods to secured a demand cash credit or overdraft or loan account:
Here the amount of loan, interest, and the name of the borrowers are written. Here the bank and the borrowers agree on the following terms:
ü  Security
ü  Balance due to the bank
ü  Borrowers not to the encumber or parts of the goods
ü  Sale
ü  Inspection
ü  Insurance
ü  Margin
ü  Interest rate
ü  Repayment
ü  Sale of goods
ü  Deficiency
ü  Surplus
ü  Statement of account
ü  Continuing security
ü  Title
ü  Saving
ü  Change of borrowers and
ü  Notices.
Guarantee by third party:
Sometimes third party guarantee is needed for allowing loan. Here third party gives the guarantee that of the principal debtor fails to repay the loan, and then the guarantor will be bound to repay the loan to bank.
Hypothecation of vehicle:
This document is necessary in case of transport loan. Here the borrower hypothecated the vehicle to the bank. In case of failure of repay the loan, bank will sell the vehicle to collect the money.

Documents required for relevant advances:

1. Loan:

1. D P Note signed on revenue stamp
2. Letter of arrangement.
3. Letter of disbursement.
4. Letter of partnership (partnership firm) or Board of resolution (limited companies).
5. Letter of pledge.
6. Letter of hypothecation.
7. Letter of lien and ownership / share transfer form (in case of advance against share).
8. Letter of lien for packing credit.
9. Letter of lien (in case of advance against F D R)
10. Letter of lien and transfer authority.(in case of advance against P S P, B S P)
11. Legal documents for mortgage of property (As draft by legal adviser)
12. Copy of sanction letter mentioning details of terms and condition duly acknowledge by the borrower
13. Trust receipt.

 
2. Overdraft:

1.                    a.            D P Note.
2.                   b.            Letter of partnership.
3.                    c.            Letter of arrangement.
4.                   d.            Letter of continuity.
5.                    e.            Letter of lien.
6.                    f.            Letter of lien and ownership /share transfer form (in case of advance against share).
7.                   g.            Letter of lien and transfer authority.
8.                   h.            Legal documents for mortgage of property.

3. Cash Credit:

1.                    a.            D P Note.
2.                   b.            Letter of partnership.(in case of partnership farm) or Board of resolution (in case of limited company)
3.                    c.            Letter of arrangement.
4.                   d.            Letter of continuity
5.                    e.            Letter of hypothecation [In case of cash credit (Hypothecation)]
6.                    f.            Legal documents for mortgage of property
7.                   g.            Letter of pledge or Agreement of pledge. [In case of cash credit (pledge)]

4. Bills purchased:

1. D P Note.
2. Letter of partnership. (in case of partnership farm) or Board of resolution( in case of limited company)
3. Letter of arrangement.
4. Letter of acceptance, where it calls for acceptance by the drawee.
5. Letter of hypothecation of bill.

 

Loan Schemes Offered By CBL:

v  Consumer Credit Scheme
v  General Loan Scheme
v  Lease Finance
v  Small and Medium Enterprise
v  House Building/Apartment Loan Scheme
 

Consumer Credit Scheme:

Consumer Credit is the credit, which is provided to people having fixed but regular income for acquiring consumer durables and other assets for personal use to service from their monthly income. Consumer credit is a collateral free credit.
v  Objectives of the scheme:

• To sell our services to a wide range of customers and increases our CCS portfolio.
• To introduce and carry on collateral free credit operation.
• To improve the standard of living of the fixed income bracket people.
• To take part in the socio-economic development of the country.
• To ensure access to credit by mass people as far as possible.

v    Security:

1. The client will submit crossed cheque in advance for all the stipulated instalments in favour of the bank towards repayment of loan including interest.
2. The customer will provide following personal guarantee/Bank Guarantee/Insurance guarantee according to the Bank’s Prescribe forms/financial instruments.

 

Name of security	Particulars

Personal GuaranteeFor Employee of govt. semi-govt.& corporate organizations.For Businessmen and employees of Non Corporate Private Organizations.Financial InstrumentsPersonal Guarantee will be waived.
Bank
GuaranteePersonal Guarantee will be waived.Insurance GuaranteePersonal Guarantee will be waivedOwnership of vehiclesSole name of Bank/Joint name of Bank and customer.Insurance for VehicleComprehensive coverage from acceptable
Insurance companies.Corporate GuaranteeFor corporate arrangement with Head Office approval.
 
v    Charge Documents:

• Letter of declaration
• Demand Promissory Note
• Loan agreement under consumers Credit Scheme
• Letter of Hypothecation
• Letter of Guarantee
• Letter of Authority
• Other Required charge documents

For a car or any other vehicles:

• Photocopy of Blue Book/ Certificate of Registration
• Photocopy of Certificate of Insurance.

 
v  Supervision and Monitoring:
The mechanism of supervision and monitoring are as follows.

• Regular checking the balance of clients SB/CD A/C’s.
•  Regular communication with defaulting customers and guarantors- physically/over telephone.
  • Issuance of letter to customers immediately after dishonour of cheque.
    • Issuance of letter to defaulting customers and respective guarantors.
    • Contact the employers of the defaulting customers (After 03 overdue instalment).
    • Issuance of legal notice to the customers and guarantors prior to the classification of the loan
    • Issuance of appreciation / greeting letter to the regular customers.
    • Periodical visit to the customer to maintain relationship and supervision of supplied articles.
    • Legal actions to be taken after all possible efforts to recover the Bank’s dues have gone in vain.

General Loan Scheme

Depending on the various nature of financing, all the lending activities have been brought under the following General Loan:
v  Short term Loan
v  Medium term Loan
v  Long term Loan
 
More specifically this is classified as follows:
            i)          Continuous Loans: For Small Enterprise Financing(SEF), Consumer Financing(CF), Orher than SEF &CF etc.
            ii)         Demand Loans: For SEF, CF,& others.
i)                    Term Loans up to 5 years: For SEF, CF (other than HF &LP), House Financing (HF),
Loans for Professionals to Set Up Business (LP), Others(other than SME & CF)
vi)                Term Loans over 5 years: For the same as previous.
vii)              Short Term Agro-Credit and Micro credit
 
The loans are allowed to individual/firm/industries for a specific purpose but for a definite period and generally repayable by installments fall under this head. This type of lending are mainly allowed to accommodate financing under the categories (i) Large & Medium Scale Industry and (ii) Small & Cottage Industry. Very often term financing for (1) Agriculture (ii) Others.
 

Lease Finance

Lease financing is one of the most convenient long-term sources of acquiring capital machinery and equipment. A client is given the opportunity to have a right to use an asset, usually for an agreed period of time, against payment of rent. The lease is obligated to make lease payment until the expiration of the lease agreement, which corresponds to the useful life of the asset.
v Objectives
City Bank Ltd. has introduced the lease finance with the following objectives:

• To assist the genuine and capable entrepreneurs for acquiring    Capital Machinery and Equipments to undertake enterprises without equity.
• To encourage the new and educated young entrepreneurs to undertake productive venture and demonstrate their creativity and thereby participate in the national development.
  • To participate in the industrial development of the country.

v Lease Items/ Equipment
City Bank Ltd. offers lease finance for acquiring the use capital     machinery, equipments, medical instruments, automobiles etc. The customers are entitled to decide the specification, price and model of the lease item/ equipment.  Bank will purchase the item (s) in accordance with the specifications given by the clients.
v Security
The entrepreneur will be required to provide the following securities:
1.The lease items will remain in the name of the Bank i.e. Bank will be the sole owner of the leased items.
2.Collateral securities having liquidation value covering at least 100% of the amount of finance.
3.Deposit of Listed Shares, National Savings certificates, ICB unit certificates, Assignment of Life Insurance Policies, Bank Guarantee, and Insurance Guarantee etc. will also be acceptable as collateral securities.
4.In case of existing industrial units requiring BMRE, change may be created the existing Fixed Assets as collateral securities for the finances. In case of existing Automobile enterprise, creation of charge on the existing vehicles will also be acceptable as collateral securities.
5.

• In case of default in payment of lease rental for consecutive 2 (two) months, the Bank will take over the lease items without giving any prior notice.
  • In case of taking over the lease items by the Bank before   maturity the Lessee will be liable for the loss, if any, caused to the Bank for such Premature taking over.
  • The Bank will exercise close and intensive supervision of such project. An officer of the Bank will be engaged separately for supervision of such projects to ensure proper utilization of the lease items and time repayment   of   the   monthly   rentals.

 
v Transport Leasing: 
Transport is one of the most widely traded lease items in the developed as well as developing countries of the world. The reasons behind success of transport leasing in many countries could by attributed to tax benefit, efficiency in found management and above all to the fact that user could exclusively use the leased transport by paying reasonable rental.
The major issues of transport leasing are detailed below:
1.  Selection of Vehicle
The customer has the right to decide the brand of vehicle, negotiate the price with the manufacturers of dealers, and arrange after sales services with the supplier.
2. Acquisition Cost
The acquisition cost shall be the actual purchase price after bargaining and all other incidental expenses incurred by the Bank including financial expenses.
3. Lease Term
In case of Transport leasing, the term shall be maximum 4 (four) years starting from the date of execution. But when the lease is cancelled for any reason the lessee will have to return the vehicle to the Bank together with the stipulated loss value mentioned in the agreement.
4. Lease Rental
Lease rentals calculated on the basis of acquisition cost and lease term shall be paid monthly.
5. Insurance
The vehicle shall be covered by Insurance throughout the lease term with the coverage decided by the Bank. The lessee shall pay the premium.
6. Repair & Maintenance
The lessee shall be obliged to maintain the vehicle for ensuring its normal operation and shall be solely responsible for loss/ damage as long as it is in his possession. Accordingly, repairing and maintenance cost for normal operation during the lease period shall be borne by the lessee.
7. Registration
The lessee will arrange the registration of the vehicle in the name of the Bank at his own cost and also pay annual taxes and fees payable to the concerned authority. In case of his failure, Bank will do it and recover the cost from him.

Small and Medium Enterprise Credit scheme:

It is the prime concern for the nation to generate income through creation of job opportunity and employment. Creation of job opportunity in large scale is not a easy task. What can be done is to help self-employment through financial support. For this Reason City Bank has chosen the scheme SME to boost up entrepreneurs with innovative idea, spirit and potentiality.
v Objectives of the Scheme:
To Provide credit Facilities to the Small and Medium size entrepreneurs in urban and sub-urban areas.

• To flow credit for creation of employment and generation of income
• To assist potential entrepreneurs.
• To assist dependence on moneylender.
• To make the small and medium enterprise self-reliant.

• To develop saving habit and making acquaintance with banking facilities.

• To inspire for undertaking small projects for creation of employment.

v  Securities
 a) Registered mortgage of loan and building (if available).
 b) Mortgage / Assignment of possession right.
c) Assignment of security money, advance rent,
if any.
d) Assignment of trade receivable not older than 90 days.
e) Hypothecation of machineries, equipment, vehicles, stock-in-trade, raw materials, work-in-process and finished good.
f) Personal Guarantee from person acceptable to the bank.
g) Post dated cheque.
h) Lien on deposits/saving certificates/financial certificates.
i) Any other securities to be deemed suitable by the bank depending on the situation like insurance guarantee, assignment of contract, security money etc.
v  Period of Loan:
a) In case of continuous loan: 01(one) year.
b) In case of Term Loan: 5(five) years or above.
 
v  Mode of Repayment:
i) In case of continuous loan credit turnover in the account must be equal to the limit in a quarter and full adjustment within the validity period.
ii) In case of term loan, the loan should be repaid by monthly instalments through post-date cheques as per schedule.
iii) Sale proceed should be deposited in the account regularly.
 

House Building / Apartment Loan Scheme

Loans allowed to individual/enterprises for construction of house (residential or commercial) fall under this type of advance. The amount is repayable by monthly installment within a specified period. Such advances are known as Loan (HBL-GEN).
Loans allowed to our Bank Employees for purchase /construction of house shall be headed Staff Loan (HBL-STAFF).

Issuing Of Bank Guarantee:

Bank Guarantee is a profitable product of a bank.  Sometimes customers need bank guarantee for their business purposes.  CBL offers three types of guarantee –

1. i.                    Bid bond: This guarantee is given to the business people for the purpose of participating in the tender.
2. ii.                  Performance guarantee: This guarantee is in favour of the client for assuring that the client will perform some specific works.
3. iii.                Advance payment security: By this guarantee, CBL gives assurance of payment in case of advance payment. It helps in deposit mobilization.

The procedure of each guarantee is same. For issuing bank guarantee, customers have to apply to CBL in their own pad. Then bank issue guarantee on judicial stamp. But the conditions for issuing bank guarantee are that —

1. Customers must maintain a current account.
2. Customers must keep certain percentage of guaranteed money as margin.
3. Furthermore, customer has to maintain certain some other requirements.

 

Accounting Treatment Regarding Bank Guarantee:

While issuing guarantee, bank performs the following function:
Customer’s Liability   Dr.
Banker’s Liability       Cr.
Banker’s liability becomes credit because the guarantee becomes the liability of the bank.  If the bank pays the guaranteed amount to the beneficiary, then CBL reverses the entry and collects money from the customer and issues the bank draft. But sometimes, while the guarantee remains unused, customer gives another written in his own pad. Then again bank reverse the previous entry. CBL also issue revolving bank guarantee.

Credit Disbursement:

Having completely and accurately prepare the necessary loan documents, the loan officer ready to disburse the loan to the borrower’s loan account. After disbursement, the loan needs to be monitored to ensure whether the terms and conditions of the loan fulfilled by both bank and client or not.

Credit Monitoring, Follow-Up And Supervision:

Credit monitoring implies that the checking of the pattern of use of the disbursed fund to ensure whether it is used for the right purpose or not.
CBL Officer checks on the following points:
a. The borrower’s behaviour of turnover.
b. The information regarding the profitability, liquidity, cash flow situation and trend in sales in maintaining various ratios.
Lending Rate Offered by CBL:
 

Sl.	Particulars	Lending Rate
1	Term Loan (Project Loan)	14.00% to 16.00%
2	Working Capital Funding	16.00%
3	Pre-Shipment Export Credit (Packing Credit)	7.00%
4	Trade Finance (Cash Credit, Hire Purchase, TR Loan, IBP etc)	16.00%
5	Small/Cottage and SME (Term Loan)	16.00% to 18.00%
6	Other Special Program (Other than Commercial)	16.00%
7	Others: –
	a) Loan against FDR, MBDS, CCS and all other scheme Deposit of Prime Bank Limited	3.00% above the Deposit Rate
	b) Loan against Shares	14.00% to 16.00%

Source: Advance Department, City Bank, B.B. Avenue Branch

 Classification Procedure:

After the date of expiry, if the borrowers do not adjust their loan, CBL at first gives a notice to them. The period of giving notice depends on the nature of the loan. For continuous loan, CBL gives notice for three months. For five-year term loan, CBL gives notice for six months. And for more than five-year term loan, CBL gives notice for more than 12 months.
After giving notice, if the borrower does not repay the loan, the loan will be considered as classified.
5^th STAGE CLASSIFICATION

	Classification Status	Length of overdue				Rate of Provision
		Demand Loan	Continuous Loan	Term Loan (Below 5 Yr)	Term Loan (Above 5 Yr)
Unclassified (UC)	Standard	0 to 2 months	0 to 2 months	0 to 2 months	0 to 2 months	1%
	Special Mention Account (SMA)	3 months or above but below 6 months	3 months or above but below 6 months	3 months or above but below 6 months	3 months or above but below 12 months	5%
Classified (CL)	Substandard (SS)	6 months or above but below 9 months	6 months and above but below 9 months	6 months or above but below 12 months	12 months or above but below 18 months	20%
	Doubtful

(DF)9 months or above but below 12 months

9 months and above but below 12 months

12 months or above but below 18 months

18 months or above but below 24 months

50%

Bad & Loss (BL)12 months or above

12 months and above

18 months or above

24 months or above

100%

 
 
Following measures are available for non-repayment of loan-

• To issue notice for adjustment
• To issue legal notice for filing suite.
• To encash securities (in case of demand loan)
• To issue legal notice for selling the hypothecated goods (in case of transport loan, cash credit-hypo).
• To issue suite for foreclosure.
• Finally to sue in money loan court or insolvency court which is suitable.

 

Conclusion

Credit Management policies and techniques used in CBL at present is comparable to international standards. The officials follow the policy very strictly. They are choosy and conservative in sanctioning loan. The proposal is thoroughly scrutinized by the loan sanctioning authority. The total function of the credit division is monitored periodically. The bank’s classified loan to the total Advance is very low. Management and others related to City Bank are trying to formulate new services and products.

Last Review

Problems

City Bank Ltd. is one of the most potential Banks in the banking sector. It has a large portfolio with huge assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and managers in all level of management. So it is not an easy job to find out the drawbacks of this branch. According to my observation and study the following limitations are prevailing:

v Insufficient industrial loans:
It seemed to me that the bank having a large amount of deposit is not encouraging the large scale producers that much of long term industrial loans to accelerate the economy as well as to help the economy to solve unemployment problem.
v Improper Division of Labour In The Desk:
There is lack of division of labour in the branch. Therefore every body has to handle every type of banking services. This decreases the level of performance of the personnel, though it reduces monotonousness. But lack of division of labour hampers the discipline of working environment. So customers are to wait for some time for the desired service, which is contrary to the Baking’s objective.
v Insufficient Manpower:
The number of human resources in import section and in clearing section is really insufficient to give services to huge number of customers. So, number of staff should be increased in those sections.
v Lack of having Business Knowledge
Most of the personnel have no business education. So the are making mistakes in some cases like selection of customers, financial analysis, dealing with customers, selection of account holders and in some other cases.
v Semi skilled Human Resources:
Human resource is another sector for the branch to be developed urgently. Human resources, in many cases, have limited banking knowledge. Majority of the human resources have limited basic knowledge regarding money, banking, finance and accounting.
v Insufficient Cash Counting Facility:
Cash section is not well equipped. Limited cash counting machines create bottleneck which delay to serve to customer.
v Improper Maintenance of Files:
City Bank Ltd. gives personalized services. They cannot properly maintain the customer files. In many cases, application forms are not properly filled up and documents are not properly filed.
v Improper Maintenance of Office Premises:
B. B. Ave. Branch is supposed to be very neat and clean and well decorated. But sometimes it loses its glamour. The cleaners are not regular in their duties and files and papers are kept here and there by the officers during the busy hour. Moreover, the sitting arrangement is very insufficient comparing with the number of customers.
v Incomplete Communication System and Maintenance of Machineries:
Sometimes Communication System remains out of order and it is also true for the photocopiers. Less attention is given on proper maintenance of phone, computer, fax machine and photocopier.
v Insufficient Forms and Vouchers:
There are always shortages of application forms, vouchers, etc. in the branch.
v Slow online service:
Online service is not dynamic and modernized. Sometimes services are being delayed. For this reasons, customers are to wait for long time, which is a threat for loosing customer.

Recommendation

It is a large organization and banking is a complex and comprehensive task. So it is difficult for me, by my little knowledge, to recommend to solve the problems. But as an eyewitness of some problems I am just giving some instructions, which may be followed.
So for the improvement of the service the following measures may be taken:
v Providing more industrial loans:
Much of long term industrial loans should be provided to accelerate the economy as well as to help the economy to solve unemployment problem.
v Ensure Proper Division of Labor In The Desk:
To ensure proper service proper division should be maintained.
v Ensure Sufficient Manpower:
The number of human resources in import section and in clearing section is really insufficient to give services to huge number of customers. So, number of staff should be increased in those sections.
v Need Personnel having Business Knowledge
Most of the personnel have no business education. So selection of employee from business school can give proper solution.
v Development of Human Resources:
Human resource is another sector for the branch to be developed urgently. Human resources, in the branch, need to be equipped with adequate banking knowledge. Majority of the human resources must have basic knowledge regarding money, banking, finance and accounting. Without proper knowledge in these subjects, efficiency cannot be optimized. Bank can arrange training program on these subjects.
v Cash Counting Procedure Should Be Developed:
Cash section should be well equipped. More cash counting machine should set up.
v Ensure Proper Maintenance of Files:
City Bank Ltd. gives personalized services. All the officers have to give concentration to the customers, while maintaining the customer files. Every staff should try to reduce these irregularities.
v Ensure Proper Maintenance of Office Premises:
B. B. Ave. Branch is supposed to be very neat and clean and well decorated.  This habit must be changed. Moreover, the sitting arrangement is very insufficient comparing with the number of customers. So this branch of CBL must pay attention to this issue.
v Ensure Proper Communication System and Maintenance of Machineries:
Sometimes Communication System remains out of order and it is also true for the photocopiers. Attention should be given on proper maintenance of phone, computer, fax machine and photocopier.
v Ensure Sufficient Forms and Vouchers:
There are always shortages of application forms, vouchers, etc. in the branch. These Forms and vouchers must be maintained in sufficient quantity. Otherwise, customer service will be hampered
v Offer Some Loan and Deposit Scheme Exclusively for The Premium Customers:
All the lending and savings packages offered to the Premium customers are same as offered to the general customers, excepting the waiver of service charges for Premium Ones. City Bank Limited should try to introduce more attractive lending and savings scheme to its Premium customers to create more business for the Bank. The Bank can pay more attention to this segment of customers, as it is the most solvent group from which income can be generated if the package is designed properly.
v More Gifts and Discounts for The Premium Customers:
Premium Customer should be offered occasional gifts and discounts, which can make the Premium Service more attractive and keep consumer delight. The interest rates on several loan and deposit schemes should be differentiated for the Premium customers.
v Fast online service:
Online service should be dynamic and modernized. Sometimes services are being delayed. For this reasons, customers are to wait for long time, which is a threat for loosing customer.
 

Conclusion

Notwithstanding some limitations The City Bank Ltd. is doing better and holding a good percentages of market share in banking sector. CBL, the first generation bank in Bangladesh came into being in 1983 under the entrepreneurship of 12 prominent businessmen in the country. Established with the objective of bringing about a qualitative change in the sphere of banking and financial management, the bank today serves its customers spread across 77 branches within Bangladesh and 300 overseas connections.

CBL provides services tailored to the specific needs of the customers in the area of trade, comers and industry, besides the domestic network. While services like Credit Cards, ATMs and SWIFT payment systems are already in place, the bank plans to introduce Real Time Online Integrated Banking System with all modern delivery channels in the future.
CBL has earned recognition at the national and international level. It was one of the 12 banks in Bangladesh to be evaluated by ASIA WEEK for Asset, Deposit and Profit and was ranked among the top 500 banks in Asia. Besides, the bank also received the “Top Ten Company” awarded from the Prime Minister of The People’s Republic of Bangladesh for the period 1992-93. So, if the Bank can remove all of its present problems, it will be able to reach to its mission & vision.
 

Bibliography:

• Brochures of City Bank Limited.
• City Bank’s Website-www.citybank.com
• City Bank Annual Report 2005.
• George H. Hempel and Donald G. Simonson (1998), Bank Management: Test and Cases, 5^th Edition, New York: South-Western Pub.

 

• Joel Bessis (2001) Risk Management in Banking, 3^rd Edition, New York:  John Wiley & Sons Ins.

 

• Peter S. Rose (2001), Commercial Bank Management, 5^th Edition, New York: Irwin Professional Pub.

 

• Peter S. Rose and Sylvia Conway Hudgins (2003), Bank Management & Financial Services, 5^th Edition, New York: McGraw-Hill.

 

• Reading Materials on General Banking & Credit Department.

 

• Radhaswami, M. and S. V. Vasudevan (2000), Text Book of Banking, 3^rd Edition, New Delhi: S. Chand & Company Limited.

 

• Timothy W. Koch and Steven Scott Macdonald (2002), Bank Management, 5^th Edition, New York: South- Western Pub.

 

• Woelfel, Charles J. (1994), Encyclopedia of Banking and Finance – 10^th Edition, New Delhi: S. Chand & Company Limited.