Professional Documents
Culture Documents
ON
SUPERVISOR MD. SHAHANSHA MOLLA ASSISTANT PROFESSOR DEPT. OF BUSINESS ADMINISTRATION LEADING UNIVERSITY SYLHET.
L E A D I N G
U N I V E R S I T Y S YLHET.
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DATE OF
SUBMISSION:
LETTER OF SUBMITTAL
Date: To MD. Shahansa Molla Associate Professor Leading University Sylhet. Subject: Limited. Submission of Internship Report on Prime Bank
Sir, It is a great a pleasure for me to submit the internship report on Prime Bank Limited for the partial fulfillment of the degree of Masters of Business Administration. Although the preparation of the study was not an easy task for me, I had enjoyed the challenge and tried to face the problems with patience. This study gave me a real life experience and opens my eyes about the actual business environment. It helps me in gathering various aspects of knowledge and increased observation power regarding a business and its regular operation. I have provided best effort to prepare this report. I hope my internship will meet your expectation. However, if you need any clarification from any part of this report then please let me know about it and I will try my best to make that understandable. Thanking you in anticipation. Sincerely Yours,
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MIRZA HUMAUN KABIR ID No: 0903010501 Department of Business Administration Leading University,sylhet.
LETTER OF CERTIFICATE
I am enormously please to declare that Mirza Humaun Kabir, a student of the Department of Business Administration of
Leading University, Sylhet has completed his internship in Prime Bank Limited. He has completed his internship report on the topic of Loan in Prime Bank Limited.
He has reviewed all the relevant literature and has surveyed a good number of people for the collection of both primary and secondary data. I have supervised him throughout the
preparation of the paper. I also certify that the paper is an original one and has not been submitted elsewhere previously for the publication in any form.
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ACKNOWLEDGEMENT
A great pleasure flowed from source of joy to individual or a group of individuals when he or they are asked to flash or give an expression to a specified task- in accordance, when a job is completed by fulfilling the required demands on behalf of it. I am told for such type of work for assigning a project paper to cover an assignment on The Loans on the perspective of financial institutions more precisely in the Prime Bank Ltd. Here, I have tried to complete the given joy from source touches me, whatever, arisen by surrounding the appropriateness task. Therefore, the the question maybe of this assignment.
For self-defense, I shall state my opinion especially, to the critics, our modest request to cast a glance on the scope of work, institutional and environmental limitations, lack of relevant and required resources or tools on which for a proper execution of any task depend. At least I tried here as my best to make this assignment little bit meaningful. I have to confess here, a lot of efforts, lot of supports, direct and indirect helps worked behind to establish the
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platform of this assignment. When I conducted the courses of action, at that time my honorable course teacher and my supervisor MD. Shahensa Molla without whose direct help and proper direction, it was not possible to accomplish the job encourages me, provides huge relevant information. Here I conveyed a special thanks to him. I also like to share the joy with all of my academic friends & the employees of Prime Bank Ltd. Syedpur Branch - who helped me to realize the actual fact by a long time open discussion method. Also conveying a greatful thanks to Mr. Md. Abu Sufian (The manager & VP, Prime Bank Ltd.), Mr. Amanat Hussain ( Officer, Prime Bank Ltd.),
Leading University
EXECUTIVE SUMMERY
This report is prepared on the basis of my twelve weeks practical experience at PRIME BANK LIMITED. This internship program helped me a lot to learn about the practical situation of a financial institution. Financial institution has played very wide range of activities in the economy of a country. Among the financial institution the bank industry played the most vital and crucial role of the economy. Banking business mainly is fully customer oriented. For this commercial bank are treated as service oriented organizations. Prospects and efficiency of a service oriented organization depends on quality of it services. So commercial banks try to enhance satisfaction of their customers through innovative services. My report is mainly about Credit service, During my internship period I always try to find out he effectiveness and Page| 5
efficiency of the bank in that side, in my report I try to analyses and measure their effectiveness in Customer Service under various functional areas such as account opening, credit section and trade finance. Han I have done SWOT analysis to identity strength, weakness, opportunity and threat, regarding to Customer Service of the bank. The report CREDIT MANAGEMENT OF PRIME BANK LIMITED is the picture of quality services provided by one of the very well reputed private bank of Bangladesh Prime Bank Limited. The function of the bank covers a wide range of banking and functional activities to individuals, firms, corporate bodies and other multinational agencies.
Introduction Background of the paper Origin o f the Report Object ive of the Report Methodology Limitat ions of the study
PART- 2
Literature Review
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Meaning of Bank Definit ion o f Service The services offered by the Bank The Role of Modern Banks
PART- 3
Historical Background of Prime Bank Ltd. Visio n, Mission and Strategic priorit ies Strategic Incorporation Corporate Social responsibilit ies Awards and recognit ions Organogram of Prime Bank Ltd. Automat ion in Banking Operat ion
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PART- 4
Accounts Opening Sect ion Understanding Observation Procedure of Account Opening Cheque Book Issues Account Closing Closing Process
Letter Of Credit Content of letter of Credit Procedure Invo lves in LC opening Form of LC Parties invo lve in LC Loan Facilit ies
PART- 5
SWOT Analysis
Strength
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IN T R O D U C T I O N
Banking in the 21st century has exceeded the conventional loan deposit conception. modern Rather banking than now maintaining emphasizes day on to day term
transaction,
long
relationship with customer, society and government. In recent times expansion and innovation of modern banking are
remarkable catalysts in Bangladesh. Furthermore, the ascend of information technology has blessed the banking system and thus people enjoy the classy banking. It also introduces
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enthusiasm and drive in economy s growth through providing such source of investment. Banking services are extremely
important in a free market economy. Consequently, Customer satisfaction should be the top priority of any bank. The Prime Bank being the first private sector bank is always one step ahead and of the other competitors Prime in Bank serving Ltd. the Was
customers
satisfying
them.
incorporated on 12th February 1995 under the company s Act. 1993 as per pioneer commercial bank in Bangladesh. Its goal is to meet customer s expectation through offering innovative financial services. The Bank started its function from 17th April 1995.
BACKGROUND
OF THE PAPER
A develop banking sector plays a vital role for financial stability of a country. In the MBA program, the report is one of the vital parts, which has to be done The program provides an opportunity to by every student. the students to
minimize the gap between theoretical and practical knowledge and will help in practical life. I got this opportunity to do my internship and ready my report paper on Prime Bank Ltd. I have completed the report based on theoretical and practical knowledge during my internship period.
ORIGIN
OF THE REPORT
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I am very glad to get the opportunity to accomplish my report paper by focusing the Customer services in the Prime Bank. This report is the partial requirement of MBA program under Leading University.
OBJECTIVE
The main
OF THE REPORT
objective
of
the
study
is
to
gather
knowledge
regarding overall services provided by Prime Bank through an intensive observation to their relevant operations. As my
report is about Customer Service, my objective is to find out how well the bank provides services to its customers & from that point of view, my objective is as follows:
To Gather Knowledge about Prime Bank s Product Line. To expose the functions of customer service & credit
section.
To study the existing Banker-Customer Relationship To
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METHODOLOGY
OF DATA COLLECTION
For achieving the specific objective of this study, data were gathered from both primary and secondary sources.
Primary Sources
Face to face conversation with the clients Observation of the banking activities by focusing the relevant sector.
Secondary Sources
Various record of the Bank Website of Prime Bank Limited Different newsletter of the Bank Annual report From different books related to banking concern.
LIMITATIONS
OF THE STUDY
Several drawbacks appeared at the time of preparing the report and hindered the total work process.
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It is difficult to make information based rich report in a short time Lack of the opportunity to work in all the departments Due to the banks policy of maintaining secrecy I could not collect sufficient data for the growth of many
accounts.
MEANING
OF
BANK
Banks are among the most important financial institution in the economy. A bank can be defined in terms of the economic functions it serves and the services it offers to its customers. Banks are financial intermediaries that collect money from surplus-spending individual and institutions and lend this fund to the deficit spending individuals and institution. In fact, a modern bank performs such a variety of functions that it is difficult to specify a precise and general definition of it. In a shorter sense, the term Bank defined here at below : A Bank is any offering deposit subject to withdrawal on demand & making loans of a commercial or business nature.
DEFINITION
OF
SERVICE
A service is an act or performance offered by one party to another. It is intangible and does not normally result in ownership of any of the factors of production. Due to production and consumption of services at same time and some other special characteristics of service, various models have been developed to help practitioners and scholars comprehend the complex character of the service experience.
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SERVICES
y y y y y y y y y y y y y
OFFERED
BY
THE BANK
Carrying out currency exchange Discounting commercial notes and making business loans Safekeeping of valuable and certification of value Supporting Government activities with credit Offering checking accounts Offering trust services Granting consumer loans Financial advising Managing cash Offering equipment leasing Making venture capital loans Selling insurance services Offering merchant-banking service.
TH E
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The modern Bank has had to adopt many new roles to remain competitive force and responsiveness to public needs. Today, Bank plays several roles those include
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Value Role
Safeguarding a customer s valuables and appraising and certifying their true market value.
HISTORICAL
commitment
Prime Bank started its journey in the year 1995 with the firm of providing vision superior remained customer to be service best with a
difference.
Its
the
private
commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability. Having recorded progress in all areas PBL has now established itself as the leading and strongest among private commercial banks in Bangladesh. PBL was formally launched in April 1995 with one branch at Motijheel Commercial Area, Dhaka. It
started its Islamic Banking operations in December of the same year. It was listed with both the bourses of Bangladesh viz. Chittagong Stock Exchange and Dhaka Stock Exchange in 1999 and 2000 respectively through initial public offering.
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The Bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation. Prime Bank offers all kinds of commercial corporate and personal banking services covering all segments of society within the framework of Banking Company Act and rules &
regulations laid down by our Central Bank. Diversification of products and services include corporate Banking, Retail
Banking & consumer banking right from industry to agriculture and real-estate to software.
VISION,
Vision
To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound
Mission
To build Prime Bank Limited into an efficient, market driven, customer focused institution with good corporate governance structure. Continuous improvement in our business policies,
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Strategic Priority
To have sustained growth, broaden and improve range of
products and services in all areas of banking activities with the aim to add increased value to shareholders investment and offer highest possible benefits to our customers.
STRATEGIC
INCORPORATION
Preparation of Standard Operating Procedure: In order to further strengthen the bank s overall operations and streamline risk control feature in a more effective
manner, the Bank has entered into an agreement with South Asia Enterprise Development Facility (SEDF) for development of its Standard Operating Procedure (SOP) in line while
internationally accepted best practice. It is a part of SEDF technical assistance program to the financial assistance
CORPORATE
SOCIAL RESPONSIBILITIES
It is being widely recognized by the corporate sector that augmented Corporate Social Responsibility (CSR) designed to respond to huge unmet needs of the society can be one of the important means in the achievement of long term and persistent
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business value. The high level of awareness of CSR has also strongly come about as a result of the United Nations
Millennium Development Goals (MDG), in which a major goal is the increased contribution of assistance from a range of
organizations to help alleviate poverty and hunger, and for businesses to be more aware of their impact on society. In the context of current global and local scenarios, customers and public together with the development players and partners are very much aware of the CSR and its synergistic effects on national development process. There is no "one-size-fits-all" for pursuing a CSR approach. Each company has unique how it social CSR as
characteristics and circumstances that will affect views its operational One contexts of the and its defining about
responsibilities.
nicest
things
perceived by Prime Bank is the extent to which it takes real social and community problems or issues in the way bank does business and innovates responses to them. PBL supports the concept of "Triple Bottom Line" which focuses on: Good Good Good economic performance. social practice environmental practice
In respect of CSR, PBL has focused on following specific key areas of: Nation building Enhancement of market place Promotion of the work place Support to the community Page| 18
Protection of environment Nation building The best way to support the country is to do some thing better in the area of operation. PBL constantly showed strong Performance which has helped the stability of the banking sector. The local and international recognition of the
published accounts has helped to establish integrity of the country's financial system. PBL will continue to play the pivotal role in this regard. Retail and SME financing have become key to economic growth of the country and without opening up of the financial sector to semi urban and rural areas, the projected growth of 7 percent as per MTMF will not be achievable. PBL has given strong focus in these areas which are evident from the growth rate achieved during the year. Public service is still inefficient and as such emphasis is also given in infrastructure development which includes
financing for communication, telecommunication, bridge, roads & highways etc. This will have positive impact on national growth. Contribution to National Exchequer Prime Bank has contributed significantly to the
government effort in collection of revenue. As per law Bank deducts at source income taxes, VAT and excise duty from various payments and services and deposits the same to
government exchequer. Besides, Bank also pays income tax on its earnings.
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Support to the Community PBL has always laid emphasis on its commitment to the society and reinvested part of its profit for community welfare. In discharging its responsibilities the Bank formed a foundation styled as 'Prime Bank Foundation' in 2002. Meanwhile, PBL has strengthened the management capacity of its Foundation, the corporate responsibility wing, having staffed with right kind of human resources required to reinforce its commitment to the society. Aligning with its long term goal, the Prime Bank Foundation has chalked out a number of long and short terms projects focusing more on health and education to be rolled out over a period of next 3-5 years. The highlights of some of the projects initiated/implemented during the reporting period are as follows: Education Support Programme Having considered education as a tool for social change, Prime Bank Foundation has made an ignition required to remove the access barrier of some of many economic hardship-hit estimable students to their desired level of education. Under this
programme the underprivileged but meritorious students are being provided with financial support in the form of monthly stipends graduation for the persuasion in of the their graduation/postpublic sector
level
studies
country's
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easy to quantify. The reactions expressed by some of the parents and children echo the said statement. The National Heart Foundation having seen the success of the project (in terms of accessibility of the poor paediabic cardiac patients to hospital for necessary but expensive surgical interventions and positive outcome of the interventions on the patients as well as their families) has
expressed their interest to the PBF to turn this short-term project into an ongoing one and PBF has also started to rethink if it could be continued as approached. 1 located in different districts of the country. However, Rangpur Diabetic Association hospital being one of the oldest DAB affiliated associations could not establish any hospital like many other districts needed to provide diabetic
healthcare for the poverty stricken people of that area. It is providing limited healthcare services for the diabetic patients from an old building located on their own piece of land in Rangpur. Prime Bank Foundation made a significant contribution to Rangpur Diabetic building. hospital Association The of for the construction that the of their hospital
Foundation Rangpur
believes
newly
constructed to the
Diabetic
Association
will
cater
increased diabetic healthcare needs of the people of that locality in the days to come. The Foundation has a number of long term education and healthcare projects in its pipeline to be implemented on a priority basis over the next 1-3 years time.
AWARD
& RECOGNITION
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Prime Bank received many awards during 2007. For the third year in a row, PBL won the prestigious ICAB Award for being the best Bank in Bangladesh for Published Accounts and
Reports. It is also a great laurel to receive the prestigious "SAFA Merit Award" consecutively for three years for its
published accounts. It is a great honor and pride to be recognized by a mandate so comprehensive and by a body of such experts as the and Institute Asian of Chartered of Accountants Accountants. of We
Bangladesh
South
Federation
dedicate this triumph to our Patrons, Customers, Shareholders and Employees. It testifies compliance as well by as the Bank with
Bangladesh
Accounting
Standard
International
Accounting Standard.
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ORGANOGRAM
OF
Top
Executive committee
Managing Director
Executive Vice-President Senior Vice-President Vice-President Senior assistant Vice-President Assistant Vice-President
Junior Officer
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Credit Card
Prime Bank Limited obtained Principal Membership of Master-Card International in the month of May 1999. Within a period of 6 mo nths, the Bank successfully launched Master Card-Credit Card which created a new dimensio n in its customer service and consumer financing. The special feature of the Prime Bank Master Card is that its bears the card ho lder's photo on the card, which is the first of it s kind in Bangladesh and adds securit y against misuse. Prime Bank Limited issues 4 t ypes o f cards. These are Go ld Local & Internat iona l and Silver Local & Internat ional. Local cards can be used in Bangladesh only.
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ACCOUNT
OPENING SECTION
Understanding
In PBL, Syepur Branch, this section is engage to provide better customer It services serves both and of various the account opening who come
facilities.
customers
Observation
To open any type of account in PBL, there are some requirements which must have to be filled. During my job on this desk I have observed the, the process of account opening and the documents which are necessary for this. I was also engaged to provide various types customer service in this section. To open an account a person must have to go through the following procedures-
Account Opening
Like cash department Account opening department is
However this section also operates in the shadow of Bangladesh Bank. Under this department, PBL officer opens different types of account on the request of clients and the responsible persons for opening customer account are very much cordial with their clients and customer never face any problem while opining an account with the bank.
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Collect an Account opening form from the Bank. Fill all the requirements of the form. Nominee is must be specified. Photograph is most important for any account. The account holder s sign in front of the authorized
Officer.
The banks issue cheque book to their client with a great care and customers don t face any problem to withdraw the money from any of the branches of Prime Bank Limited in Bangladesh because the Bank offers Online Banking facility to the customers.
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Prime Bank also provides ATM service to their customers for cash withdrawal at any time from specific ATM Booth. Some rules and regulation that are strongly followed by banks prove that they are on the right track to keep clients privacy and confidentiality.
Only the account holder or authorized person is permitted to be informed about the balance and transactions.
Bank
never
discloses
any
information
without
prior
consent of signatory.
Cheque
book
is
not
issued
unless
the
presence
of
necessary signature and sealing is present. In case of bearing, a bearer slip must be filled up to issue a cheque book.
Account Closing
For two reasons, one account can be closed. One is by banker and other is by the customer.
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By
Banker:
If
any
customer
doesn t
maintain
any
transaction within six years and the A/C balance becomes lower than the minimum balance, banker has the right to close an A/C.
After Then
receiving
customer s
application
the
officer
verifies the balance of the A/C. he calculates the interest and other charges
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for long time. In this situation, at first the A/C becomes dormant and ultimately it is closed by the bank.
LETTER
OF CREDIT
OBSERVATION This section of Prime Bank Sylhet Branch deals only the issue about Letter of Credit (L/C), L/C opening procedure, import procedure, import financing etc. I have observed the following methods of L/C opening and will discuss these
aspects on the basis of my theoretical knowledge and practical observation in the Bank.
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different Banks may be different. In general, L/C contains the following information:
Trade terms Tenor of the Draft Expiration date Documents required General description of the merchandise
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L/C Application Form is a sort of an agreement between the customer and the bank based on which letter of credit is opened. Usually the importer gives the following information
Full name and address of the importer. Date and place of expiry of the credit. The mode of the transmission of document. Whether the confirmation of the credit is requested by
of the credit by sight acceptance/negotiation/ deferred payment. time bar presented. within which the document
payment should be
Sales terms. Account number. L/C amount. Shipping mark. IRC Number. LCA Number. Insurance cover note. Country of origin.
Presentation of the Documents As soon as the seller/exporter receives the L/C and is
satisfied that he can deliver the goods mentioning in the L/C he is going to make shipment of the required goods to the buyer and after that, he presents the documents evidencing Page| 33
dispatching of goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving all the documents, the negotiating bank then checks the documents
against the credit. The documents are sent to the issuing bank and then the banks scrutinize all the documents and terms and conditions mentioning in the L/C. The PBL checks the
following documents:
Insurance cover note; Commercial/Performa Invoice; Bill of lading; Certificate of origin; Packing list Shipping advice Bill of exchange Pre-shipment inspection report; Shipment certificate Clean report of finding (CFR)
j Examination of Documents The documents generally include the following basic points :
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Letter of Credit
The documents should have been negotiated or presented before expiry of the credit. The amount which drawn should available under the credit. not exceed the amount
Commercial Invoice
It has to be verified that the commercial invoice has been properly drawn and signed by the beneficiary according to the terms and conditions of L/C. The beneficiary should properly invoice the merchandise. The merchandise is invoiced to the importer on whose
account the L/C is opened. The description of merchandise and the unit price
correspond with that given in the L/C. The import license or IRC number and of the importer, of Credit
indenter s
registration
number
Letter
Bill of Exchange
It has to be verified that the bill of exchange has been properly drawn and signed by the beneficiary according to the terms and conditions of L/C. The amount in the Bill is identical with amount mentioned in the invoice. The amount drawn does not exceed the amount mentioned in the L/C.
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The amount in words and figures should be same. The bill of exchange should be properly endorsed.
The shipping company or their authorized agents properly sign the B/L. The date on the B/L is not stale which means it is not dated in unreasonably long time prior to negotiation.
Does the insurance cover the risks mentioned in the credit in the currency of the credit and for the prescribed amount but not less than CIF value?
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dated
not
later
than
the
Does the insurance policy/Certificate agree with other documents as regards description, weight & marks of the goods, mode of transport & the route?
Does
the
insurance
company
attached
and
as
far
as
Certificate of Origin
The Merchandise described accordance with the L/C. in the Certificate is in
Securitization After receiving the application form with other required documents submitted by the opener, they are to be thoroughly scrutinized. The ABBL Official scrutinizes the
Eligibility of the goods to import The L/C must not be opened in favor of the importer. Radioactivity report in case of food item. Survey report or certificate in case of old machinery
along with the application are in order, the financial position and credit worthiness of the importer, market demand of the good will be assessed. Margin for letter of Page| 37
credit depends
will on
also the
be
determined.
The
rate of
of
margin banker,
financial
condition
the
importers previous performance, status of relationship with the importer, nature of goods etc.
j Advising a Letter of Credit The advising is the bank through which the L/C is advised to the exporter. It is a bank situated in the exporting country and it may be a branch of the opening bank. It becomes customary to
advise a credit to the beneficiary through an advising bank. Advising depicts the proof of authenticity of the credit to the seller. The opening bank has a
corresponding relationship or arrangement throughout the world by which the L/C is advised. Actually, the advising bank does not take any liability if otherwise not
confirmation. Confirming bank is a bank, which adds its confirmation to the credit, and it is done at the request of the issuing bank. The confirming bank may or may not be the advising bank. The advising bank usually does not do it if there is not a prior arrangement with the issuing bank. By being involved as a confirming agent the advising bank undertakes to negotiate beneficiary s bill without recourse to him.
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j Transmitting Letter of credit can be transmitted to the advising bank through SWIFT (Society for Worldwide Inter bank Financial Telecommunication).
j Negotiating letter of
The credit
beneficiary from
(exporter) bank.
receives After
the
advising
proper
shipment of goods as per terms and conditions of the L/C, required Lading, documents and bill like of Commercial are Invoice, presented Bill to of the
exchange
negotiating bank by the beneficiary for negotiation. If the documents are in order as per L/C then the
negotiating bank negotiates the drafts making payment to the beneficiary. Then the negotiating bank forwards the drafts along with the shipping documents to the L/C
opening bank. The negotiating bank reimburses the amount paid against by the draft bank) from by reimbursement debiting A/C of bank the
(authorized
opening
opening bank. Negotiating banks have the option to send the drafts and documents to the opening bank for
collection.
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j Amendment After opening of L/C sometime alteration to the original terms and conditions become necessary. These amendments involve changes in Unit price Extension of validity the L/C Such amendments can be affected only if all the concerned parties agree i.e. the beneficiary, the importer, the issuing bank and the advising bank. For any amendment the importer must request the issuing bank in writing duly supported by revised Indent/Proforma invoice. The issuing bank then advises the required amendment to the advising bank. L/C amendment commission including postage is charged to the clients A/C.
change of any clause or canceled by consent of the exporter and importer is known as revocable letter of credit. A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice to the beneficiary. It does not constitute a legally binding
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b) Irrevocable
L/C
If
any
letter
of
credit
can
not
be
changed or amendment without the consent of the importer and exporter is known as irrevocable letter of credit. Irrevocable credit constitutions a firm undertaking by the issuing bank to make payment.
to purchases some commodity or commodities. The importer, the exporter and the issuing bank are parties to the letter of credit. There are however, one or more than one banks that are involved in various capacities and at various stages to play an important role in the total operation of the credit.
Parties to the documentary credit may be an issuing bank, an advising bank, a confirming bank, a reimbursing bank or a negotiating bank. a) Issuing Bank : The Issuing Bank or the Opening Bank is one which issues the credit, i.e., undertakes, independent of the undertaking of the applicant, to make payment provided the terms and conditions of the credit have been complied with. b) Advising Bank : The Advising Bank advises the credit to the beneficiary thereby authenticating the genuineness of the credit. The advising bank is normally situated in the
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Issuing Bank
Reimbursing Bank
Advising Bank
Negotiating Bank
c) Confirming Bank : A Confirming Bank is one which adds its guarantee to the credit opened by another bank, thereby, undertaking the responsibility of
payment/negotiation/acceptance under the credit in addition to that of the issuing bank. A confirming bank normally does so if requested by the issuing bank and it is normally the advising bank.
d) Negotiating Bank : A Negotiating Bank is the bank nominated or authorized by the issuing bank to to pay, to incur or a to
deferred
payment
liability,
accept
drafts
e) Reimbursing
Bank
Reimbursing
Bank
is
the
bank
authorized to honor the reimbursement claims in settlement of negotiation/acceptance/ payment lodged with it by the negotiating bank or accepting bank. It is normally the bank with which the issuing bank has account from which payment is to be made.
DEPOSIT
y y y y y y y y y y y y
PRODUCTS
Contributory Savings Scheme Education Savings Scheme Short Term Deposit Double Benefit Deposit Scheme Resident Foreign currency Deposit Account House Building Deposit Scheme Monthly Benefit Deposit Scheme Fixed Deposit Scheme Lakhopoti Deposit Scheme Foreign Currency Account Non Resident Foreign Currency Deposit Account Non Resident Investors Taka Account
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LOAN
y y y y y y
PRODUCTS
LEASE FINANCE HOUSE BUILDING FINANCING SCHEME SMALL & MEDIUM ENTERPRISE CREDIT SCHEMES CONSUMERS CREDIT SCHEME HIRE-PURCHASE ADVANCE AGAINST SHARE
DEPOSIT
SCHEME
Bank is the largest mobilizer of surplus domestic savings. For poverty alleviation, we need self employment , for selfemployment 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.
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The savings rate in Bangladesh is one of the lowest in the world. 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. Interest rate of Savings Deposit Account is 6.00% for the year 2008. We have formulated the following Savings Schemes y y y y y y y y y y y y y CONTRIBUTORY SAVINGS SCHEME EDUCATION SAVINGS SCHEME SHORT TERM DEPOSIT DOUBLE BENEFIT DEPOSIT SCHEME RESIDENT FOREIGN
CURRENCY
DEPOSIT ACCOUNT
HOUSE BUILDING DEPOSIT SCHEME MONTHLY BENEFIT DEPOSIT SCHEME FIXED DEPOSIT SCHEME LAKHOPOTI DEPOSIT SCHEME FOREIGN CURRENCY ACCOUNT NON RESIDENT FOREIGN CURRENCY DEPOSIT ACCOUNT NON RESIDENT INVESTORS TAKA ACCOUNT PRIME MILLIONAIRE SCHEME
LOAN SCHEME
Depending on the various nature of financing, all the lending activities have been brought under the following General Loan: Short term Loan Page| 45
Medium term Loan Long term Loan 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 (2) Others.
LEASE FINANCE
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Lease
financing
is
one
of
the
most
convenient
long
term
sources of acquiring capital machinery and equipment. It is a very popular scheme whereby a client is given the opportunity to have an exclusive right to use an asset, usually for an agreed period of time, against payment of rent. Of late, the lease finance has become very popular in almost all the
countries of the world. An obvious advantage of the lease is to use an asset without having to buy it. The lessee is obligated to make lease payments until the expiration of the lease agreement, which corresponds to the useful life of the asset. In a capital scarce economy like ours, Lease Financing is suitable for firms to acquire Capital Machinery, Equipments, Medical Instruments, and Automobiles etc. And thereby employ their own resources Lease more advantageously also helps tax a in some to and other reap by
investments. significant
financing benefit
firm saving
economic
through
reducing the risk of the equipments becoming obsolete due to the technological advancement.
Objective : Prime Bank Ltd. has introduced the lease finance with the following objectives: 01. To assist the genuine and capable entrepreneurs for
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02.
country.
HOUSE BUILDING FINANCING 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). HIRE-PURCHASE Hire Purchase is a type of installment credit under which the Hire Purchase agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of Principal as well as interest for adjustment of the loan within a specified period. ADVANCE AGAINST SHARE In order to contribute to the development of the Capital Market of the country Prime Bank Limited extends credit facilities against pledge of Shares to the individuals as well as to the Member of DSE & CSE.
Terms & Conditions:
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01. For availing of credit facilities against pledge of shares the intending borrowers shall deposit shares of at least three (3) Companies which are preferably registered in his/her name. 02. Credit facilities in the form of Secured Overdraft (SOD) Limit may be allowed upto 50% of the Value of shares pledged calculated on the basis of current market prices or previous 6 months' average market prices, whichever is lower. 03. In case of ICB Unit Certificates SOD limit upto 80% of the face value Certificate may be extended. 04. The Share Certificates must be accompanied by Form -117 containing the signature of the Shareholders duly checked and verified. 05. The maximum ceiling individual borrowers. shall be Tk. 20.00 Lac for
SMALL & MEDIUM ENTERPRISE CREDIT SCHEMES Bangladesh is a densely populated country. Job opportunity here is very scanty; Unemployment rate is approximately 40%. Population below poverty line is 36%. Therefore, it is the prime concern for the nation to generate income through
creation of job opportunity & employment. Creation of job opportunity at large scale by us is not possible. What can be done better is to help self-employment through financial
support. There are many small and medium entrepreneurs in the country that have innovative idea, spirit and potentiality to do something productive for local consumers as well as export abroad.
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They can generate income and contribute to the GDP. They may also provide employment to other people. Development and
growth of Small and Medium Enterprise is vital for national development. Such type of beneficial enterprises borrower can not go a long way for want of financial support because they have no access to institutional credit facilities, as they cannot provide collateral security as demanded for such credit facility. Prime Bank Limited is committed to play positive role in the overall socioeconomic development of the country. There is also a statement in the objective clause of Memorandum of Association of Prime Bank Limited as under: To advance or lend money to the unemployed persons for self employment and rehabilitation in the Society. To finance the Small and Cottage Industries for Industrialization and also to create employment opportunities. It may be mentioned here that as per decision of the Board of Directors in its 78th meeting held on 17.11.1999 a Medium Enterprise (SME) Cell Small &
In respect of small businesses, an eminent American scholar Mr. John Naisbitt in his book RETHINKING under: Now you can replicate quality anywhere in the world. So, the competitive differentiation comes from swiftness to market and innovation. And in this regard, small companies right down to
THE
FUTURE remarked as
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the individual can beat big bureaucratic companies ten out of ten times. It is the small companies who are creating the global economy, not the fortune-500. 50% of United States exports are created by companies with 19(nineteen) or fewer employees. The global economy of the 21st century will be dominated by Small and Medium sized players. If we look at South East Asia, China, Taiwan, Hong Kong, South Korea etc we will find that Small and Medium Businesses are the real engine of growth in those countries. In view of the above a credit scheme titled SMALL
AND
MEDIUM
ENTERPRISE CREDIT SCHEME has been formulated as follows. It may also be mentioned that USAID has approved our bank to receive their guarantee facility to lend money to Small and Medium business Houses. 50% of losses, if any, be paid by USAID.
Objective 01. To provide credit facilities to the small and medium size entrepreneurs located in Urban & Sub-urban areas and easily accessible by our Branches. 02. To encourage the new and educated young entrepreneurs to undertake productive venture and demonstrate their creativity and thereby participate in the national development. To flow credit for creation of employment and generation of income on a sustainable basis through development of small & medium enterprises.
Concepts
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01. Small
Enterprise Small Enterprise refers to those enterprises: where goods are produced, recycled, repaired or traded in traditional way; where total bank investment is limited to Tk.250,000 where 10 or less workers are engaged on wages or commission basis;
02. Medium
Enterprise Medium Enterprise refers to those enterprises: Where goods are produced, recycled, repaired or traded applying some capital machinery; Where 20 or less people are engaged on wages or commission basis; Where total bank investment does not exceed Tk.75, 00,000. The net fixed assets (excluding land and buildings) borrowers may not exceed Tk. equivalent of US $250,000. of
Target Group Initially, Small & Medium Size Entrepreneurs located within the accessible area of our branches will be the target area under this program. The Entrepreneurs should have an existing profitable business or a viable business plan. Eligibility for Credit Facilities The following criteria have to be met by the applicant to qualify for a loan from Prime Bank Limited under its SME Credit Scheme: 01. The entrepreneurs must be literate i.e. capable of
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02. /
The entrepreneurs should be skilled in managing his her business and has experience of successfully
managing the business for at least 02(two) years. 03. The age of the entrepreneurs must range between 25
Borrower is a company/firm or other business entity it must be registered in owned by Bangladeshi s. 05. The applicant must be 100% privately owned, Bangladesh and majority shares
controlled and operated; 06. The applicant s principal place of business must be
in Bangladesh; 07. If acceptable the collateral should security arrange cannot for be
provided,
borrower
02(two)
guarantors acceptable to the Bank. The type of guarantors depends on size of the loan and business. In accepting a person as guarantor his social standing, income and asset shall be considered. Any default loanee or unreliable person shall not be accepted as guarantor. However,
guarantor will be determined on a case to case basis. 08. The project shall be financially viable and socially
society.
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10.
loan will be considered as proven track record of the applicant for renewal & enhancement of credit facility. Restricted Business 01. Production, Marketing, Trading of alcoholic, narcotic and other intoxicating drug or liquor. 02. Production and Trading of any item banned by the Government. 03. Any activity not permissible by the law of the land. Loan Ceiling 01. For small enterprise: Maximum Tk.2, 50,000/02. For medium enterprise: Maximum Tk.75, 00,000/No loan proposal for less than Tk.1, 00,000/- be entertained.
Mode of Finance 01. 02. 03. Interest 8% above bank Rate presently 15%. Penal Interest: If any borrower fails to adjust loan within validity period or to repay consecutive 02(two)-installments, penal interest @0.25% per month shall be charged on the defaulted amount. Cash Credit (Hypo/Pledge); Hire purchase/ Lease Finance; Term Loan.
Securities Page| 54
It is a supervisory credit scheme. Tangible security in the form of mortgage may not be available in all the cases. So mortgages will not be mandatory. Security will be stipulated on a case to case basis interalia as under(one or several of the following):
Registered mortgage of land & building. Mortgage/Assignment of possession right. Assignment of security money, advance rent, if any. Assignment of Trade Receivables not older than 90
days. 05. Hypothecation of machineries, equipment, vehicles, raw materials, work-in-process and
obligations.
CONSUMERS CREDIT SCHEME In order to provide financial assistance to the limited income group for raising their standard of living by acquiring domestic durables like Refrigerator, T.V., Washing machine, Furniture, Computer, Motor Car, etc., we have introduced a Scheme to improve the quality of life particularly of the fixed income earner of the society and this scheme is known as Consumer Credit Scheme.
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Eligibility for Credit The persons having confirmed/permanent job in any one of the following organizations and age between 20 to 50 years are eligible for availing of Credit facilities under the Scheme. 01. Government Organization 02. Semi-Government and Autonomous Bodies 03. Banks, Insurances Companies or any other Financial Institutions 04. Armed Forces, B.D.R, Police and Ansar. 05. Private Organizations having corporate structure 06. Teachers of Universities, Colleges and Schools Besides the above, Professionals like Doctors, Engineers, Architects, Lawyers, Journalists, Chartered Accountants; Self Employed Business Executives are also eligible for enjoying credit facilities under this scheme subject to the providing of Bank Guarantee or Insurance Guarantee for the amount of Credit. Consumer Credit Products y y y y y y y y y y HOUSEHOLD DURABLE LOAN DOCTORS LOAN ANY PURPOSE LOAN TRAVEL LOAN CNG CONVERSION LOAN CAR LOAN ADVANCE AGAINST SALARY EDUCATION LOAN MARRIAGE LOAN HOSPITALIZATION LOAN
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Household durable loan will be sanctioned against guarantee of third parties acceptable to the bank or pledge of FDR, Saving instrument of Banks and assignment of salary where applicable. Eligible Items / Articles 01. 02. 03. 04. 05. 06. 07. 08. 09. 10. 11. Motor Cycle Personal Computer Photocopier / Fax Machine Small PABX System Television Mobile Phone Set Refrigerator Audio-Video Equipment Other Home Electric Appliance Furniture Any Other Household Durables
Loan Limit and Period of Loans Name of the Item Motor Cycle PC/Lap Top Photocopier/Fax Other Item/Furniture Required Documents 01. 02. 03. 04. 05. Security 01. 02. Two Personal Guarantee Undated Cheques DOCTORS LOAN Employer Certificate for Service Holders Photocopy of Trade License for Businessmen Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Loan Limit Tk. 1,00,000 Tk. 1,00,000 Tk. 1,00,000 Tk. 5,00,000 Duration of the Loan 2-yrs 2-yrs 2-yrs 3-yrs
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Any Bangladesh citizen who is a graduate in Medical Science / Dentist / Eye / Allopathic / General Practioners desiring to set up chamber, medical store with necessary medical equipments and to become self-employed have the opportunity to take this loan. Loan Limit and Period of Loans Type of Customer Loan Limit Duration of the Loan 4-yrs 5-yrs
Required Documents 01. Employer Certificate for Service Holders 02. Photocopy of Tin Certificate, if any 03. Bank Account Statement of last six months 04. Photocopy of Passport, Telephone(T&T) Bill, if any 05. Attested Photocopy of the Certificates of the last degree and BMA membership certificate Security 01. must 02. 03. The ownership of medical equipments to be purchased be hypothecated to the Bank under hire purchase mode Two personal guarantee Undated cheques
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ANY PURPOSE LOAN This scheme is to meet the emergency need for fund by fixed income group of salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./ Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead. Letter of introduction including name, fathers name, designation, date of birth, date of joining, place of posting, date of last promotion, date of retirement, basic salary, total emolument, take home salary etc. will be required. This scheme is only for service holder.
Loan Limit and Period of Loans Type of Customer Salaried Person Loan Limit Tk. 1,50,000 Duration of the Loan 2-yrs
Required Documents 01. 02. 03. 04. Employer Certificate Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any
Security 01. Undated Cheques 02. Lien on Service benefit of the concerned employee from the employer
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TRAVEL LOAN This scheme is for meeting fund for travel purpose of salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead and businessman having adequate cash flow.
Loan Limit and Period of Loans Type of Customer Salaried Person/ Businessman Loan Limit Tk. 2,00,000 Duration of the Loan 3-yrs
Required Documents 01. 02. 03. 04. 05. 06. Employer Certificate for Service Holders Photocopy of Trade License for Businessmen Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Evidence thereof
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CNG CONVERSION LOAN This scheme is to meet the funds requirement for CNG conversion of vehicles for those who are salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead, businessman having adequate cash flow and corporate Bodies. Loan Limit and Period of Loans Type of Customer Owner / Valid user of the vehicle Corporate Bodies Loan Limit Tk. 60,000 Tk. 1,00,000 Duration of the Loan 1.5-yrs 1.5-yrs
Required Documents 01. 02. 03. 04. 05. 06. 07. Security 01. One or two personal guarantee from family member (effective member i.e. spouse / father / mother / brother Employer Certificate for Service Holders Photocopy of Trade License for Businessmen Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Photocopy of the Blue Book etc. Photocopy of the registration of the Vehicle.
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/ earning son, Corporate guarantee in the case of Company or as the case may be acceptable in the bank). 02. Undated cheques in favor of the Bank covering the whole amount
CAR LOAN Car Loan will be sanctioned against Registration of the Vehicle in the name of the Bank. Instead of down payment, the Customers shall have option to avail loan against their FDR or any other savings instruments up to 90% of the loan amount. Eligible Items / Articles 01. Car 02. Jeep 03. Station Wagon 04. Any other vehicles for own use 05. Pick up Van 06. Cover Van 07. Bus / Truck for Corporate Bodies (own use) 08. Ambulance for Corporate Bodies / Medical Professionals Loan Limit and Period of Loans
Name of the Item New Vehicle Recondition Vehicle Bus / Truck for
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Corporate Bodies for own use only Required Documents 01. 02. 03. 04. 05. Security 01. 02. Undated Cheques Registration of the vehicle in the name of the Bank ADVANCE AGAINST SALARY This scheme is for salaried Bangladeshi person in Govt./Semi govt. /Autonomous bodies/ Multinational Co. / Banks / Insurance / Financial Inst. / Educational Inst. with confirmed 3-years service ahead. A Letter of introduction including name, fathers name, designation, date of birth, date of joining, place of posting, date of last promotion, date of retirement, basic salary, total emolument, total in PF, take home salary etc. will be required. Loan limit is 8 times of gross salary who have Salary A/C with us and 6 times of gross salary who have not Salary A/C with us subject to highest Tk. 3.00 lac Employer Certificate for Service Holders Photocopy of Trade License for Businessmen Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any
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Required Documents 01. 02. 03. 04. Employer Certificate Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any
Security 01. 02. from Undated Cheques Lien on Service benefit of the concerned employee the employer.
EDUCATION LOAN This scheme is for meeting the fund requirement for higher education of children of salaried persons in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead and businessman having adequate cash flow. Loan Limit and Period of Loans
Required Documents
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Employer Certificate for Service Holders Photocopy of Trade License for Businessmen Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Evidence thereof
MARRIAGE LOAN This scheme is to meet the fund requirement for marriage purpose of salaried person in Govt./Semi govt. /Autonomous bodies/ Multinational Co./Banks/Insurance/Financial Inst./Educational Inst. with confirmed 3-years service ahead and businessman having adequate cash flow. Loan Limit and Period of Loans Type of Customer Salaried Person/ Businessman Loan Limit Tk. 3,00,000 Duration of the Loan 3-yrs
Required Documents
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Employer Certificate for Service Holders Photocopy of Trade License for Businessmen Photocopy of Tin Certificate, if any Bank Account Statement of last six months Photocopy of Passport, Telephone(T&T) Bill, if any Evidence thereof
HOSPITALIZATION LOAN Hospitalization loan will be provided for treatment purpose or surgery where hospitalization is necessary. The loan shall be available for the salaried person, i.e., employee of the Govt. Organizations / Semi-Government Organizations / Autonomous Bodies / Multinational Companies / Banks / Insurance Companies / Educational Institutions / Corporate Bodies. Loan Limit and Period of Loans
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Required Documents 01. 02. 03. Employer Certificate Photocopy of Tin Certificate, if any Photocopy of Passport, Telephone(T&T) Bill, if any
Security 01. Personal guarantee from an individual having means, standing and social status acceptable to the bank and another from his/her family. 02. Undated cheques in favor of the Bank covering the whole amount 03. Letter of Assurance from the Employer / Authority.
3.10. Selected of Borrower & processing/ appraisal of investment proposal Selection of Borrower The first step in the sanctioning process of investment in favors of a customer in the interview between the bank and the client. During the discussion, the bank Manager/ investment In charge on the has to focus following points (particularly in case of new prospective borrower). Borrowers identify, family background, reputation in business circle, friends, competitors, employees, qualification, experience, security offered, physical fitness against the investment, own stake in business, expected terms of repayment, other sources of income, normal expenditure for maintenance of his family and knowledge to run business/project etc. Banker may also try to ascertain whether he indulge in speculative business, when he started business, assumed popularity and marketability of product, availability of raw materials , transport and communication, liabilities and involvement in other business in other if any.
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Keeping these fundamental points in mind, the banker will forma balanced opinion in regard to his (a) Moral risk i,e borrowers reliability/character. (b) Business risk i,e borrowers capacity and (c) Property risk i,e borrowers capital/means. Formal Modes of Investment policies and procedures of PBL
Theoretical concept of Investment policies and Procedures: Based on PBL
The second step starts when the borrower submits formal investment application to the banker duly signed with relevant papers. The investment application forms bear a series of question exception the client to furnish required information/ declaration regarding related facts/figures about him. The banker receives the application keeping suitable record and starts processing of the proposal. The third step in the process is the banker responsibility to collect the information about the party/firm/company/project available sources. The fourth step in the process is preparation of credit report. On the basis of information obtained through interview/conversation and from different sources as above, the banker has to prepare a credit report for individual client/borrower recording there in borrowers brief history and all relevant information as far as possible. This report is however revisable at least on quarterly basis in case of trading/manufacturing units. The fifth step is the Managers decision about suitability of the proposed investment. On the basis of the above four steps manager will decide whether to proceed for making an investment or to refuse the proposal. The sixth step is assessment of investment need of the cases which seem suitable for extending investment. At this stage, the banker takes up the issue of assessment of investment need. Since investment are of different types, the requirement of investment to be assessed in different ways or process depending on activities of the firm/company/business etc. Formal Modes of Investment policies and procedures of Prime Bank
3.11 Processing of investment proposal The proposal should accompany the following papers/documents:
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01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Application of the client. Photograph of the client duly attested by the branch incumbent. CIB inquiry from duly filled-in by the client. Up-to-date Trade License Up-to-date TIN certificate. IF-48 &IF-49 duly filled-in by the client. Resolution of the broad of Directors regarding investment from SIBL. (in case of limited company)
Memorandum & Artists of Association. (in case of limited company) Certificate of Incorporation. (in case of limited company) Certificate of Commence cement of business. (in case of limited company) Registered Partnership Deed. (in case of limited company) Legal opinion ( the opinion should be clean & without ambiguity) on collateral security. Letter of consent along with attested photograph of the mortgagor. Valuation certificate by the banks panel surveyor. Valuation certificate by the branch officials as per Head office format. Managers certificate on genuineness of collateral security as per Head Office format. Visit report on the clients business establishment. Declaration of assets & liabilities of the client. Declaration of movable assets of the client. Declaration of stock in trade. Profit & loss A/C of last three years (In case of new company, projected profit & loss A/C is to be taken.) 22 Balance sheet of last three years (In case of new company, projected balance sheet is to be taken.) 23 Investment Risk grading (IRG) 24 Statement of AWCD/MSD A/C of last 1 year. 25 Cost estimate (In case of HPSM RE investment). 26 Projected income statement (In case of HPSM RE investment) 27 Copy of work order (in case of Bank Guarantee facility). 28 Projected profile (in case projected investment) Table : processing of investment proposal
Formal Modes of Credit policies and procedures of PBL 3.12 Charge Documents- required filling up both the borrowers and the officers: Letter of authority. Promissory note. Demand promissory note. Letter of installment. Balance confirmation letter.
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PROCEDURE FOR GIVING ADVANCE: The potential borrower will submit application to bank or financial institution for loan by filling up of a specific Application form. The Application form (request for Credit Limit) contains following particulars: a) Name of the Borrower ----b) A/C No. ------------c) Business address (with telephone no.) [Residential address and Permanent address] -----d) Introducers name, A/C no. & address -----
e) Date of establishment/ incorporation -----f) Trade license number, date and expiry date (Photocopy of trade license enclosed) -------g) GIR/TR no. & amount of income tax paid last year -----h) Constitution/ Status (Mention whether sole proprietorship/ partnership/ Public Ltd. company/ Private Ltd. company) -------i) Particulars of individual/ Proprietor/ Partners/ Directors (Name & Designation, fathers/ Husbands name, present & permanent address with Telephone no., % of shares held) -----j) Experience and background of Individual/Proprietors/ Partners/ Directors -------k) Full particulars of assets in the personal name of Individual/ Proprietor/ Partners/ Directors with valuation ----------l) Names of Subsidiaries/ Affiliates, percentage of share holding and nature of business -----m) Nature and details of business/ products (for which credit facility is applied for), Markets Page| 70
(Present market price per unite, Factory price), Estimated sales for next one year ............ n) Credit facilities required (type, amount, period, purpose, and mode of adjustment) .......... o) Details of securities offered with estimated value (Primary security, Collateral security, market value of the security) .......... p) Details of liabilities in the name of the client or in the name of any other partners/Directors or Subsidiaries/Affiliates Nature of advance, amount, security and validity of limit) ..... q) Balance Sheet/ Income Statement of Statement of Accounts of the following years attached (Preferably last 3 years) ........ r) Other relevant information ......... s) Proposed debt/equity ratio ......... t) Signature of the Applicant .............. ? After receiving the loan application form, bank or financial institution sends a letter to Bangladesh Bank for obtaining a report from there. This report is called CIB (Credit information Bureau) report. This report is usually collects this report if the loan amount exceeds Tk. 50 Lac. But banks or financial institutions usually collects this report if the loan amount exceeds Tk.1 Lac. The purpose of this report is to being informed that whether the borrower has taken loan from any other bank; if yes then whether these loans are classified or not. ? 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. ? Then comes processing stage. In this stage, the Bank will prepare a Proposal A proposal contains following relevant information ....... a) Name of the Borrower --b) Nature of Limit ----c) Purpose of Limit -----d) Extent of Limit --e) Security --f) Margin --g) Rate of Interest ------h) Repayment ------i) Validity -------
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Branch incumbent has the discretionary power to sanction loan (SOD) up to a fixed amount against financial obligations by informing Head Office. But in that case, the Branch Manager has to give attention to the following matters: - The interest rate of the loan must not be less than 4.5% and - The borrower must maintain 10% margin. Except this case, the branch has to send the proposal to the Head Office. Head Office will prepare a minute and submit it before the Executive Committee (EC). The minute has to be passed by EC. After passing the minute, it will be sent to Central Bank (Bangladesh Bank) for approval in case of following: ........ If the proposed limit exceeds 15% of Banks equity; ......... If the proposed limit against cash collateral securities exceeds 25% of Banks equity. ? After the sanction advice, Bank will collect necessary documents (charge documents). These documents are -------a) Joint Promissory Note b) Single Promissory Note c) Letter of Undertaking d) Loan Disbursement Letter a) Debit Figure Confirmation Sheet b) Letter of Continuity c) Letter of Authority d) Letter of Revival e) Right of Recall the Loan. f) Letter of Guarantee g) Letter of Indemnity h) Trust Receipt i) Hypothecation of Goods j) Hypothecation of Vehicles k) Counter Guarantee l) Letter of Lien m) Letter of Lien in case of advance against FDR n) Letter of Lien And Authority for advances to third parties against Fixed Deposit/Call Deposit/Special Deposit or Margin or margin deposits. o) Letter of Authority to encase FDR p) Letter of Agreement for Packing Credit q) Letter of Guarantee for opening L/C r) Charges over Bonds or Certificates or shares etc. by third person, firm or company to secure specific and general liability. s) Memorandum of Deposit of Title Deeds t) Hypothecation of goods to secure a Demand Cash Credit Or Overdraft/Loan amount u) Guarantee by Third party.
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For withdrawing the loan amount, the customer creates a CD account and the loan is transferred to the CD A/C. Afterwards the customer can withdraw the money. FEASIBILITY REPORT: This report is from borrowers point of view. He or she prepares this report and submitted to the bank. CREDIT LINE PROPOSAL: In this step of the term loan the branch sends a credit line proposal to the head office for approval of the term loan. The credit line proposal contains the following particulars: ? Fresh/Renewal/Revision of the term loan ? Borrower name ? Types of business ? Capital structure ? Particulars of previous transaction ? Existing vis-a-vis proposed credit limits ? Movement of the accounts ? Liabilities of sister concerns PROJECT APPRAISAL: It is the reinvestment analysis done by the banker before a project he approved. Project appraisal in the banking sector needed for the following reasons: ? To justify the soundness of an investment ? To ensure repayment of bank finance ? To achieve organizational goals ? To recommend if the project is not designed properly TECHNIQUES OF PROJECT APPRAISAL: An appraisal is a systematic exercise to establish that the proposed project is a viable preposition. The appraising officer checks the various details submitted by the promoter in first information sheet, credit application form, feasibility report. SIBL considers the following aspects in apprising: ? Entrepreneur ? Viability of the project: o Technical viability (location and site of the project). o Commercial viability (This study indicates evaluation of a projects feasibility in terms of market). o Financial viability. o Economic Viability. o Management and organization viability.
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Credit risk is the risk of financial loss if a customer or counterparty fails to meet a payment obligation under a contract. It arises principally from direct lending, trade finance and leasing business, but also from off-balance sheet products such as guarantees and credit derivatives, and from holdings of debt securities. Among the risks SBI Bangladesh engages in, credit risk generates the largest regulatory capital requirement. The aims of credit risk management, underpinning sustainably profitable business, are principally: to maintain a strong culture of responsible lending, supported by a robust risk policy and control framework; to both partner and challenge business originators effectively in defining and implementing risk appetite, and its re-evaluation under actual and scenario conditions: and to ensure independent, expert scrutiny and approval of credit risks, their costs and their mitigation The standardized approach is applied for risk weighting of exposure as per directive of Bangladesh Bank. It requires banks to use risk assessments prepared by External Credit Assessment institutions (ECAIs) to determine the risk weightings applied to rated counter parties. We have already advised our clients to get themselves rated by the ECAIs approved by Bangladesh Bank. It is SBIs policy to establish that loans are within the customers capacity to repay, rather than to rely excessively on security Depending on the customers standing and the type of product, facilities may be unsecured. Nevertheless, collateral can be an important tool for mitigation of credit risk The bank has guidelines on the acceptability of specific classes of collateral or credit risk mitigation, and suitable valuation parameters. Such parameters are expected to be conservative, reviewed regularly and supported by empirical evidence. Security structures and legal covenants are required to be subject to regular review to ensure that they continue to fulfill their intended purpose and remain in line with local market practice. The principal collateral types are as follows: Cash collateral In the personal sector, mortgages over residential properties
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In the commercial and industrial sector, charge over business assets such as premises, stock and debtors Special attention is paid to problem loans and appropriate action is initiated to protect the Banks position on a timely basis and to ensure that loan impairment methodologies result in losses being recognized when they are incurred. The objective of credit risk management is to minimize the probable losses and maintain credit risk exposure within acceptable parameters. Historically, SBI has sought to maintain a conservative, constructive and competitive credit risk culture. This has served the group well, through successive economic cycles and remains valid today. This culture is determined and underpinned by the disciplined credit risk control environment which the group has put in place to govern and manage credit risk, and which is embodied in the formal policies and procedures adopted by SBI Bangladesh. These are articulated through group credit policies supplemented by Regional and Local Area Lending Guidelines, backed up by the Bangladesh Banks Managing Core Risks in Banking- Credit Risk Management- Industry Best Practices. Formal policies and procedures cover all areas of credit lending and monitoring processes including: The Group Credit Risk Policy Framework Risk appetite and evaluation of facilities Key lending constraints and higher- risk sectors Risk rating systems Facility structures Lending to banks, non-banks and sovereigns Personal lending Corporate and commercial lending Portfolio management and stress testing Monitoring, control and management of problem exposures Impairments and allowances
At the heart of these processes is a robust framework of accountability. SBI Bangladesh operates on a system of personal credit authorities, not credit committee structures. Relationship Managers are held accountable for both the profitability and growth of their loan portfolios as well as the losses that may arise within them. The Bank has also established separate Risk and Credit Control Department, which looks after Loan Review Mechanism and also helps in ensuring credit compliance with the post-sanction processes/procedures laid down by the Bank from time to time. It involves taking up independent account-specific reviews of individual credit exposures as per the approved lending guidelines. Risk department also monitors various credit concentration limits. The Bank has in place a risk grading of the customers, including financial condition and performance, quality of disclosures, management, facility structure, collateral and country risk assessment where necessary. Maximum counterparty/group exposures are limited to 15% (funded) of the banks capital base as stipulated by Bangladesh Bank. Where a higher limit is required for projects of national importance prior approval of Bangladesh Bank is to be obtained.
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Past dues and impaired exposures are defined in accordance with the relevant Bangladesh Bank regulations. Specific and general provisions are computed periodically in accordance with the Bangladesh Bank regulations. Credit Risk Mitigation Collateral as a tool for risk mitigation is defined as the assets or rights provided to the Bank by the borrower or a third party in order to secure a credit facility. SBI determines the appropriate collateral for each facility based on the type of product and counter party. In case of corporate and medium enterprise financing, fixed assets are generally taken as security for long tenor loans and current assets for working capital finance. For project finance, present and future assets of the underlying project are generally taken. In addition, in some cases, additional security such as mortgage of other land and building, pledge of shares, cash collateral and charge on receivables is also taken. For small and medium enterprise loan, security has been taken as defined in the SME credit policy of the Bank. Housing loans and automobile loans are secured by the property/automobile being financed. The valuation of the properties is carried out by an approved valuation agency. The decision on type and quantum of collateral for each transaction is taken by the credit approving authority as delegated by the management. While calculating regulatory capital under Basel II framework, credit exposure to counter party is reduced to the extent of risk mitigation provided by the eligible collateral. The bank adjusts the value of any collateral received to adjust for possible future fluctuations in the value of the collateral in line with the requirements specified by Bangladesh Bank guidelines. These adjustments are also referred to as haircuts to produce volatility adjusted amounts for collateral. The bank recognizes only specified types of financial collateral to be eligible for providing capital relief in line with Basel II guidelines. This includes cash or deposit with the bank, gold, approved debt securities, and equities. The Bank has adopted the simple approach for credit risk mitigation under the standardized approach where only the cash collaterals are considered against the exposure with applicable haircut. Quantative Disclosure A) total Exposures of Credit Risk Funded a) b) Domestic Overseas 6,571,195,720.00 6,571,195,720.00 Non-Funded a) b) Domestic Overseas 915,029,443.00 3,650,097,597.00 4,565,127,040.00 Distribution of risk exposure by claims Claims on sovereigns and central banks Claims on other official entities Claims on banks and securities firms Claims on corporate (Including Medium Enterprise loans of Tk. 276,082,573.00) Claims included in the retail portfolio and small enterprises (consumer loan to be shown separately) Claims secured by residential property Claims secured by commercial real estate 4,459,187,925.00
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Credit Risk Mitigation Claims secured by financial collateral Haircuts of exposure Claims secured by eligible Guarantee 490,476,812.11 613,021,562.08 1,103,498,374.19
ADVANTAGES
Islamic Banking
on both conventional interest based banking & Islamic Shariah principle based Banking. The Islamic Banking operations are completely separate from the conventional banking.
Merchant Banking
executive & officers having long experience in capital market operation since it came into operation in 1995.
PBL among
gives banks
emphasis &
on
financial
institutions. The Bank has so far arranged a number of loan syndication under its lead management. It has participated in the syndication of loan arranged by other banks.
Prime
Bank
adopted automation in banking operation from the first day of its operation.
y y
Information Technology in banking operation. On-line branch banking. PBL is committed in continuous
Customer Relationship
relationship management to
SW O T
ANALYSIS
Strengths
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First
generation
bank
and
highly
reputed
in
banking
sector. y y y y y y y Low transaction charges and diversified benefit schemes. Sound and profound managerial structure. Highly skilled and motivated workforces. Availability of branches all over the country. Providing online Banking System Good interior decorations with central air condition. Availability of training and development facility for the employee, that s why the employee are always motivated y y Huge number of loyal clients Good corporate image in the banking sector.
Weaknesses y Insufficient marketing campaigns. y Lack of ATM booths. y Lack of loan recovery team. y Shortage of employee. Opportunities
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y It has opportunity to penetrate all over the country. y Using goodwill and reputation it can diversify its
business.
Threats
y Government
regulation.
imposing
newer
and
harder
rules
and
y International
and
local
politics
turned
the
banking
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FINDINGS
Several findings have been stumbled upon with which have been summarized and discussed below; The bank is constantly expanding and improving its
performance. The current offers for the personal loan is Lucrative one, there is still scope for further improvement, which would be beneficial for the bank as well as the customers. The empirical evidence of the product suggests that it is performing quite well and contributes a good portion to the overall profitability of the bank. Products banks. Recently launched some new products. New products have been gradually improved according to the choices of the customers and for their satisfaction. PBL should endow with SMS Banking. are not much attractive than those of others
Prime Bank is one of the oldest banks in Bangladesh. It has more experience in local conditions that many of the local banks. But the current market scenario is totally different any other time in the past. Monopoly on the basis of image and institutional back up are no longer sufficient to attract the customers unless they are matched by insurance of proper
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customer care. In the final analysis, it is the customer who can make difference between making the business. Therefore, the bank should be on a constant vigil to ensure reasonable and competitive level of customer services and satisfaction.
Most of the Clients normally they are satisfied with the present services but they want better service in some of the areas like ATM Boots, SMS Banking.
RECOMMENDATION
From my point of view, I have found some problems and on the basis of this the following recommendations can be judged and applied for the banks betterment.
Branch has to deal with a lot of customers of the bank that is what it needs to focus more on efficient service and more staffs are required on the front office According to their product verity huge number of customers at each and every product should be increased It does not have an effective promotional activity. Branch is much centralized. For each activity branch office has to go for permission from the head office. It should pursue more advertisement campaign in order to build a strong image among the people. It should develop more strategic planning to compete with its rivals bank,
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Expertise should be involved in the process of forecasting future prospect or the banks. The decision making process and the implementation should be more fast. Prospect of financing in the new sectors like, agriculture, real Estate, and IT etc should be more explored out. Mobilize more deposits scheme through better marketing and incentive measure. It should provide SMS banking. 24 hours banking hour should be increased to add a new dimension in the customer service. Proper individual attention and caring should be more to highly satisfy customer. ATM services should be extended to some of the selected shops.
CONCLUSION
Financial institutions have always played an imperative role in strengthening the economic infrastructure of the country and Prime Bank has been at the forefront on this role. Banking services are extremely important in a free market economy. From my study of Prime Bank on the topic Credit Management, I found that the Bank serves on the basis of two primary
purposes. First, by supplying customers with the basic medium of exchange (cash, current account and credit cards) it plays a key role in the way goods and services are purchased. Second, by accepting many deposits from savers and then lend
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the money to the borrowers. Although right now the products contribution in comparison to other products is not that high, it can certainly be hoped that with proper modification and policy change it will surely become a large profit-earning sector for the bank. The different features of the product identify it as a convenient way for the consumers to avail those products for a variety of purposes to asses the
different aspects of the products applicant. The performance of the product also shows clear indication about the
increasing trend of the products customer base. Finally it can be argued that product development for consumer s credit
program of the Bank has been operating more or less in the desired direction. However, I have identified some loophole of the program, which needs special attention. With a bulk of qualified and experienced human resource, Prime Bank can
exploit any opportunity in the banking sector. They should give more emphasize on SME banking with the development of new products. Implementation of reform may involve pain and costs, but experience in the world suggests that the longer the delay, the greater the pain, sacrifice and costs. I hope that if the existing problems are addressed properly the bank will be able to expand the program as per their target and it will continue to provide more revenues in maximizing the wealth of the bank in the years to come.
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ACRONYMS
Short Forms
Abbreviation
DBI
ETP
FDR IBCA
Inter Branch Debit Advice Import Know you Customers Letter of Credit Application Form
MIS
PIN
SME
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STD TR TIN
REFERENCES
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