Internship Report On General Banking Activities of Basic Bank

All businesses are concerned with earning profit through selling either a product or rendering
service. A bank doesnt produce any tangible product to sell but does offer a variety of financial
services to its customers. General banking is the starting point of all the banking operations. It is
the department, which provides day to day services to its customers.
Now a day, general banking, loans and advances and foreign trade plays a vital role in banking.
The general banking consists of deposit, pay order, Term Deposit Account, FDR Accounts, SND
Accounts, Clearing house, Clearing activities of branches, Inward and Outward clearing,
Endorsements, Outward Bill for Collection (OBC), Telegraphic Transfer (TT), IBCA, IBDA.
Now we are living in the age of competition at anything in any places. From that tendency
recently Education is also in the age of competition. So the procedures and standards of teaching
are upgraded by different universities and institutions in our country. In respect to that, internship
is mandatory for our MBA program offered by The University of Jahangirnagar. This program is
a partial fulfillment of our MBA curriculum. To do so I decided to complete my internship in
BASIC Bank Limited. In connecting, HRD of BASIC Bank Limited sent me to the
Dhanmondi Branch and assigned to prepare this report. I was sent to BASIC Bank Limited to
familiarize with day to day affairs of the bank from 21th November 2012 to 21th January 2013.
This report has been prepared in the light of practical as well as theoretical knowledge. Also it is
prepared under the guidance & supervision of Mr. Nilanjan Kumar Saha, Assistant Professor,
Department of Finance & Banking, Jahangirnagar University.
1.2
Objectives of the Report:
The prime objectives are
1.3
To fulfill the course requirement of MBA Program;

To examine the overall general banking systems of BASIC Bank Ltd;
To acquaint with daytoday functioning of service oriented banking business;
To examine various types of deposit;
To analysis the general banking activities through various statistical methods;
Methodology of the study:
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www.AssignmentPoint.com
Methodology includes direct observation, face-to-face discussion with employees of different

departments, study of files, circulars, etc. and practical work. In preparing this report, both
primary and secondary sources of information have been used.
For collecting primary data, I had to ask the respective officer (s). Others are like
Direct communication with the clients of BASIC bank Ltd, Dhanmondi Branch;
Exposure on different desk of the bank such as customer care, Loan & advances,
general banking ;
The secondary sources are
Annual Report of BASIC Bank Ltd.;

Periodicals published by the Bangladesh Bank;
Different publications regarding banking functions
Analysis method: My research is a Descriptive research. I have selected this topic
and at first make an exploratory research. I just collected data and made the report.
1.4
Limitations of the study:
Despite all out co-ordination from the bank officials, I have faced some limitations. The notable
some of these are:
Learning all the banking functions within just Three (3) months was really tough.
Another limitation of this report is Banks policy of not disclosing some data and
information for obvious reason, which could be very much useful.
Sufficient records, publications were not available as per my requirement.
3 months are very short time to prepare this.
Lack of opportunity to work in all the departments for a longer time.
Up to date data are not available.
Lack of opportunity to visit more than one branch
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CHAPTER Two
Overview of The BANK

Overview of The BANK
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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 travelers 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 merchants 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.
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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 NCBS 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.
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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 banking 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.
2.1 HISTORY OF BASIC BANK LTD.

Bangladesh Small Industries and Commerce (BASIC) Bank limited 1 is a banking company
registered under the Companies Act 1913. It was incorporated under the Act on the 2 nd of August
1988. The bank started its operations from the 21st of January 1989. It is governed by the
Banking Companies Act 1991. The bank was established as the policy makers of the country felt
the urgency for a bank in the private sector for financing Small-Scale Industries (SSIs). At the
outset, the bank started as a joint venture enterprise of the BCC Foundation with 70 percent
shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The
BCC Foundation being nonfunctional following the closure of the BCCI, the Government of
1
Bank has renamed as Bangladesh Small Industries and Commerce (BASIC) Bank Limited. Earlier it was Bank of
Small Induetries and Commerce (BASIC) Bangladesh Limited.
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Bangladesh took over 100 percent ownership of BASIC bank on 4 th June 1992. Thus, the bank is
state-owned. However, the bank is not nationalized; it operates a private bank as before.
BASIC bank is unique in its objectives. It is a blend of development and commercial banks. The
Memorandum and Articles of Association of the bank stipulate that 50 percent of loan able funds
shall be invested in small and cottage industries sector.
Capital Position
Authorized capital
Tk. 5000.00 million
Paid up capital
Tk. 2357.58 million
Total Reserve and Surplus up to

31.12.2012
Tk. 3124.17 million
The Bank is required to transfer 20 percent of its net profit before Tax to Capital Fund as per the
Banking Companies Act 1991.
2.2
MAIN FUNCTIONS OF BASIC Bank Ltd
The Bank offers:
Term loans to industries especially to small-scale enterprises.
Full-fledged commercial banking service including collection of deposit, short term

trade finance, working capital finance in processing and manufacturing units and
financing facilitating international trade.
Technical support to Small Scale Industries (SSIs) in order to enable them to run
their enterprises successfully.
Micro credit to the urban poor through linkage with Non Government
Organizations (NGOs) with a view to facilitating their access to the formal financial
market for the mobilization of funds.
In order to perform the above tasks, BASIC works closely with its clients, the regulatory
authorities, the shareholders (GOB), banks and other financial institutions.
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2.3
2.4
2.5
CORPORATE STRATEGY OF BASIC Bank Ltd
Financing establishment of small units of industries and businesses and facilitate

their growth
Small Balance Sheet size composed of quality assets
Steady and sustainable growth
Investment in a cautious way
Adoption of new banking technology
ORGANIZATIONAL GOALS OF BASIC Bank Ltd
To employ funds for profitable purposes in various fields with special emphasis on
small-scale industries
To undertake project promotion to identify profitable areas of investment
To search for newer avenues for investment and develop new products to suit such
needs
To establish linkage with other institutions which are engaged in financing micro
enterprises
To cooperate and collaborate with institutions entrusted with the responsibility of

promoting and aiding SSI sector.
ORGANIZATIONAL STRUCTURE OF BASIC Bank Ltd
To achieve its organizational goals, the bank conduct its operation in accordance with the major
policy guidelines laid down by the Board of Directors, the highest policy making body. The
management looks after the day to day operation of the Bank.
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Management Hierarchy of BASIC Bank Limited

B o a rd o f D ire c to rs
M a n a g in g D ire c to r
G e n e ra l M a n a g e r
D e p u ty G e n e ra l M a n a g e r
A s s is ta n t G e n e ra l M a n a g e r
M a n a g e r/ S y s te m A n a ly s t
D e p u ty M a n a g e r/ P ro g ra m m e r
A s s is ta n t M a n a g e r/ A s s ia ta n t P ro g ra m m e r
O ffic e r/ O ffic e r (C a s h , C o m p u te r)
A s s is ta n t O ffic e r, G ra d e -1 / S te n o g ra p h e r
A s s is ta n t O ffic e r, G ra d e - II/ C a s h , C o m p u te r, R e c e p tio n
C a s h ie r, R e c e p tio n is t, C o m p u te r O p e ra to r
D riv e r/ E le c tric ia n / C a re ta k e r
A rm e d G u a rd
M e ss e n g e r/ G u a rd -c u m -M e s s e n g e r
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Source: Personnel Department, Head Office, BASIC Bank Limited
A) Board of Directors:
The Government holds 100 percent ownership of the bank. The Government of Bangladesh
appoints all the Directors of the Board. The Secretary of the Ministry of Industries is the
Chairman of the Bank. Other Directors of the Bank are high government and central bank
executives.
The managing director is an ex-officio member of the board of directors. There are at
present 7 (seven) Directors including the Managing Director.
B) Management:
The Managing Director heads the management. Two General Managers and departmental
heads in the Head Office assist him. BASIC is different in respect of hierarchical
structure from other banks in that it is much more vertically integrated as far as reporting
to the Chief Executive is concerned. The Branch Managers of the Bank report directly to
the Managing Director and, for functional purposes, to the Heads of Departments.
Consequently, quick decision making in disposal of cases is ensured.
2.6
RESOURCES AND CAPABILITIES OF BASIC Bank Ltd
BASIC bank is well prepared to and capable of meeting the demand for a broad range of banking
services. It has got adequate resources, both human and physical, to provide the customers with
the best possible services.
Physical and Technological Resources

A great deal of investment for developing the physical resource base of the Bank has
been made. BASIC has its presence in all the major industrial and commercial hubs of
Bangladesh in order to cater to the needs of industry and trade. At present, there are fifty
three conveniently located branches throughout Bangladesh. There are four branches in
underway.
Major features of these branches are:

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Fully computerized accounts maintenance
Well decorated and air conditioned facilities
A fully operational computer network which is currently being implemented. The

work of Local Area Network (LAN) and Wide Area Network (WAN) installation
having reliable and secured communication between the branches and the Head
Office is in progress to facilitate any Branch Banking and ATM services.
Money counting machine for making cash transactions easy and prompt.
Forty out of 55 branches are authorized dealers of foreign exchange. This facilitates
speedy disposal of transaction of exports and import trade.
A group of professional bankers to render personalized services.
2.7
MONETARY / FINANCIAL RESOURCES
Like any other financial intermediaries, BASIC is no exception in performing its core functions
viz. mobilization of fund and utilizing such fund for profitable purposes.
A. Mobilization of fund
The main sources of fund for BASIC are:
i.
i.
Deposit
ii.
Borrowing
Deposit
Deposit is the mainstay of BASIC Banks sources of funds. The following includes the
usual types of deposits of the bank:
a) Current Deposit
b) Savings Deposit
c) Term Deposit
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ii.
Borrowing
Apart from deposit, BASIC received funds from:

a) Bangladesh Bank
b) Asian Development Bank (ADB)
c) KfW (Kreditanstalt fur Wieder-aufbau, Credit Institution for Reconstruction), a
German Development Bank
All of these funding sources are for relatively longer period. Receiving the credit lines from ADB
and KfW has been recognition of BASICs highly satisfactory performance.
B. Utilization of Fund
BASIC utilizes its funds in accordance with its organizational goals and corporate strategy. Main
use is for lending to industrial and trade sectors. Maintenance of cash and statutory liquidity
reserve with the Bangladesh Bank covers 20 percent of demand and time liabilities. Placement of
funds in NOSTRO ACCOUNTS to handle foreign trade and investment in money market is also
done as usual.
2.8
HUMAN RESOURCES
BASIC bank has a well-diversified pool of human resources, which is composed of people with
high academic background. As of 31st December 2000, the total employee strength is 453. The
strength is 345 excluding the menial staff. Most employees are comparatively young in age yet
mature in experience. And also their level of education comprises 55.07 % post-graduate, 42.90
% graduate and rest under graduate. BASIC has been investing its resources with a view to
developing an efficient and professional work force. Two approaches are mainly in this regard:
Training and Fresh Recruitment.
Training: Intensive training program, on a regular basis, is being imparted to employees of both
management and non-management levels to meet the challenges in the banking industry and to
help employees to adapt the changes and new working conditions. Human resource is the main
driving force and quality human resources are the key sources for the success of today's banking
business. Keeping this view in mind and recognizing the importance of training for professional
excellence BASIC Bank Ltd. has established its own training institute in 2005 with modern
facilities. In 2008 the institute arranged 27 training courses and provided training to as many as
517 employees of the bank. To cater to the needs of the employees and to keep pace with demand
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of the time it will continue to arrange regular training courses in the days ahead. During the year
2008, a total of 602 employees of the Bank were provided with training in various fields. Out of
them 11 employees participated in training courses held abroad. In 2007 total 122 employees of
various stages were given promotion which is almost 17.00 percent of total.
Fresh Recruitment: The bank follows a strict recruitment policy in order to ensure that only the
best people are recruited. The bank, so far, has recruited four batches of entry-level management
staff, all of whom have excellent academic background.
2.0.9 Progress at a Glance (2006-2011)

YEAR
2011
2010
2009
2008
From the Balance Sheet
2007
2006
(Million Taka)
Authorized Capital
5,000.00 2,000.00
2,000.00 2,000.00 2,000.00 2,000.00
Paid-up Capital
2,357.59 1,964.65
1,455.30 1,309.77 1,247.40
Reserve and Surplus
3,124.17 2,509.78
2,468.65 1,681.39 1,349.17 1,294.00
Shareholders' Equity
5,481.76 4,474.43
3,923.95 2,982.60 2,596.58 2,239.00
Fixed Assets
364.46
283.12
232.65
228.36
196.11
945.00
154.52
Total Assets
78,031.73 61,569.38 45,699.5646,651.53 38,773.91 29,417.09
Deposits
62,650.73 49,259.60 34,501.6938,368.23 31,947.98 24,084.65
Long- term Debt
2,788.15 2,718.46
2,875.16
1,708.4 1,385.81
830.06
Loans and Advances
56,884.76 46,341.51 29,261.5327,269.13 22,263.35 19,000.00
Placement & Investment
13,760.82 9,294.02 12,244.91 15,653.2 13,560.92 8,212.23
From the Income Statement
(Million Taka)
Gross Income
8,825.20 6,120.53
5,162.30 5,060.29 3,549.51 2,870.32
Gross Expenditure
6,476.70 4,403.49
3,593.96 3,526.18 2,741.37 1,858.69
Profit before Tax
2,348.50 1,717.05
1,568.34 1,534.11
Profit after Tax

Tax Paid (Cumulative)
976.11
660.93
5,987.61 4,948.64
648.85
1,011.62
282.96
554.14
4,225.37 3,538.09 2,790.98 2,245.16
Others
Import Business
549.95
808.14
(Million Taka)
47,087.80 42,205.90
33,976.627,359.77 21,266.57 17,804.27

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Export Business
33,061.10 23,998.80
19,887.722,270.87 16,794.96 15,463.74
Financial Ratios
(Percentage)
Capital Adequacy Ratio
10.13
9.41
13.48
12.02
12.91
11.98
Capital Fund to Deposit

Liabilities
8.75
9.08
11.37
7.81
9.23
10.34
Liquid Assets to Deposit

Liabilities
14.28
12.06
24.67
47.70
49.10
40.42
Loan to Deposit Liabilities
87.74
94.08
84.81
71.07
69.69
78.89
Earning Assets to Deposit

Liabilities
108.22
81.55
116.44
114.69
109.70
112.99
1.40
1.24
1.41
1.30
.83
1.94
11.06
10.80
12.57
10.87
7.97
19.31
139.76
95.15
135.79
137.08
176.80
211.72
After Tax Return on Equity
19.61
14.95
18.79
19.68
11.70
27.82
SMI/SSI Loan and Micro Credit

to Total Loan
54.67
56.78
56.93
59.32
56.73
53.43
45
34
32
31
30
28
1132
964
776
735
721
651
After Tax Return on Average

Assets
Net Profit to Gross Income
Interest Magin Cover
Number of Branches
Number of Employees
(Million Taka)
Deposit per Employee
55.35
51.10
44.46
52.20
44.31
37.00
Advance per Employee
50.25
48.07
37.71
37.10
30.88
29.19
2.07
1.78
2.02
2.09
1.51
1.55
Profit before Tax per Employee
(Source: BASIC Bank Main Branch)
2.10 SWOT Analysis

SWOT ANALYSIS OF BASIC BANKS CREDIT POLICY
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STRENGTH
WEAKNESSES
1. Conservative approaches to reduce 1. The techniques specified for credit

the risk of classification.
appraisal is not sufficient.
2. Assign adequate power to the top 2. More dependency rests on government
management to monitor credit
sources for deposit mobilization.
operation.
3. Services offered are not adequate.
3. Clearly specifies the documentation
process to reduce the risk of
classification.
4. Provide guideline to furnish loans
only to small-scale industries for short
time, which minimizes hug loss.
5. Clearly defined measure in dealing
with foreign exchange transaction.
6. Strong procedure in selection of new
borrower
OPPORTUNITIES
THREATS
1. Suitable for small-scale business, 1. Not suitable for future competition in

which is growing day by day.
the market.
2. Government and other International 2. Reduced government support in future.
agencies positive attitude toward low
classification rate
Explanation of SWOT Analysis
Strength:
The main advantage of BASIC Banks credit policy is its conservative approach. The
entire policy is designed in a way that, it could always avoid default risk. In the credit
policy all kinds of documentation process, appraisal techniques are designed so that the
bank officials can take no excess risk.
In the credit policy top management are assigned adequate power to monitor the credit
operation at the branch level.
In most of the government bank we have seen that, the head office is not contributing
more for the supervision of the loans and advances. But in BASIC a handful number of
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top officers are engaged in monitoring day to day operation, which is reducing the
number of errors.
In the credit policy it has been clearly specified that, 50% of the total fund should be
invested in the in small and cottage industries for short time. And we all know short-term
loans are more secured than the long term. And also small investors are much more
honest than the large investors. So for this policy BASIC Bank is getting competitive
advantage.
All the investors know that, it is very difficult to get loan from BASIC Bank. They have
to satisfy the concerned body and should be very optimistic about the future of their
project. If any kind of loopholes exist in their procedure it will be very tough for them to
get any loan from the bank. This policy gives the bank small but strong borrower
portfolio that is important to keep the classification rate low.
Not only that, BASIC Bank is the one of those banks, which never takes any kind of,
uncovered risk in dealing with foreign trade. They provide the foreign trade facilities only
to their prime clients.
Weaknesses:
The technique that is being used in credit analysis is not adequate. Now-a-days it is not
possible to justify a client by analyzing only their projects production capacity. It is
important to analyze their financial statement and market share and make sure that the
project will last for long. BASICs credit policy does not clearly specify these techniques.
In the credit policy no emphasis is given for mobilizing deposit from private sources. But
private sources are the least costly sources and using it is possible to earn more profit
from investment.
Consumer credit is the most profitable business now from where bank can derive a lot of
service charge. BASIC does not provide such credit.
Opportunities:
Bangladesh is a country where it is very difficult to establish hi-tech industries because of
high capital asset cost. So the government of Bangladesh and other international bodies
are convincing to establish small and cottage industries first which will make the ground
for huge investment. As a result the numbers of small industries are increasing day by
day. And BASIC has a huge chance to progress if it can hunt this sector.
Not only that, international organizations and donor countries are continuously
convincing the government of Bangladesh to attenuate the high classified loan rate. Now
they are including the clause of reducing the classified rate before sanctioning donation
or loan to the country. As BASIC bank is successfully keeping the classification rate low
it is possible that, it will get international assistance from ADB and from other
organizations. And obviously these funds will have lower interest rate by which the bank
will be able to earn handful profit.
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Threats:
From 1990 the core concept of banking in Bangladesh is changing. Now banks are going
to the customer with services and try to convince them by it. Most of the banks have
increased its service range significantly to attract its clients and to satisfy them properly.
Along with that, now the banks are trying to accumulate more funds from the middle
class group. Alike insurance company most of the banks also have employed marketing
agents to convince the mass. All of said situation is happening because of the increase in
number of banks in the country and competition among them.
BASIC bank is not very keen in marketing its product. And in credit policy, it also not
specified significantly. Not only that, it does not have any marketing plan to grab the
market after 5 or 10 year. So if the bank does not change this attitude its profit will be
reduced for the abnormal competition in the market.
And also if the government sells its entire share to the private sector the bank will face
huge pressure from its competitors.
Matching of Strength and Opportunities with Weaknesses and Threats

In the credit policy we have found everything all right except the techniques used for
screening the client. BASIC bank has some very efficient and highly educated
professionals who can easily solve the problem if they concentrate on the issue. So the
weakness can be eliminated easily through its strength.
The credit policy of BASIC has been perfectly designed depending on the government
funds and assistance. But as it is sure that, government will sell its share in near future,
BASIC has to revise its credit policy by considering alternative source of fund.
International funds can be alternatives for government source if BASIC can continuously
reduce its classification rate.
Alike other bank BASIC can enforce its marketing operation to grab the small savings of
the middle class. And a small change is enough to do so as the strength of the present
credit policy is capable to take any pressure.
So from the SWOT analysis of the credit policy of the bank we have found that, the credit policy
of BASIC Bank is sound with some exception. And by small revise of the policy is can be the
best policy that can lead the bank to the peak of success.
CHAPTER THREE
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GENERAL BANKING
GENERAL BANKING
eneral Banking Department performs the core functions of the bank. It deals day to day
transactions. It takes the deposit from the customer and meets the customer demands for cash by
honoring their checks. Broadly, it has the following core heads-
1. Accounts Opening Section

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2.
3.
4.
5.
6.
FDR And Ancillary Services Section

Local Remittance Section
Collection And Clearing
Cash Section
Accounts Section.
3.0: ACCOUNTS OPENING SECTION

Banker-customer relationship begins with the opening of an account by the customer. Opening of
an account binds the same into a contractual relationship. But the selection of customer is very
crucial. In fact, fraud and forgery of all kinds start by opening of an account by the customer (s).
So, the bank takes extra care in its selection. One of the basic functions of commercial banks is
to accept deposits. For accepting deposits both demand and time, BASIC Bank Mirpur branch
offers the following types of accountsA.
Demand deposits (Withdrawable on demand)

1. Saving Bank Account
2. Current Account
B.
Time deposits (Payable at a fixed date or after a period of notice)

1. Fixed Deposit Receipt (FDR)
2. Short Term Deposit (STD)
1.1.1
TYPES OF ACCOUNTS WITH TERMS AND CONDITIONS
This part covers only following types of accounts1. Savings Bank Account
2. Current Account
3. Short Term Deposit (STD) Account
Savings Bank Account

This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a
week. Heavy withdrawals are permitted only against prior notice. Some Important Points are as
follows Minimum opening deposit of Tk.1000/= is required;
Check book issuing balance is also the same (Tk. 1000/=);
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Withdrawal amount should not be more than 1/4 th of the total balance at a time and
limit twice in a week;
Interest rate is 7.5% including 10% excise duty on interest rate. Interest paid twice in
a year depending on monthly minimum balance. When money is deposited within 5
of the following month, then it is counted as monthly minimum balance. If the
interest amount is more than Tk. 200 or more, the bank is paid the amount to the
customer. Otherwise it is treated as Banks Shadow Profit;
Can open the A/c individually or jointly. In case of joint a/c, Joint signature is
required if not authorized otherwise;
Minor (For withdrawal purpose), lunatic, insolvent, pardanshin women (Not
mandatory) cannot open such type of account.
Current Account
Current account is purely a demand deposit account. There is no restriction on withdrawing
money from the account. It is basically justified when funds are to be collected and money is to
be paid at frequent interval. It is most suitable for private individuals, traders, merchants,
importers and exporters, mill and factory owners, limited companys etc. Some Important Points
are as follows-
Minimum opening deposit of TK.5000/- is required;

There is no withdrawal limit. But in case of large amount say 2 lac or more, bank
requires one day before notice;
No interest is given upon the deposited money;
The Banker is under an obligation to repay these deposits on demand. So, they are
called demand liabilities of a Banker.
The primary objective of such account is to save big customers like businessmen, join
stock companies, public authorities, etc. from the risk of handling a lot of cash.
The cost of providing current account facilities is considerable to the Bank as they
make payments and collect the bills, drafts, and checks for any number of times daily.
The Bank is therefore, do not pay interest on current deposits. At the same time,
BASIC bank charges Tk. 200 as Incidental fee;
Minimum Tk. 1000 balance must always maintain all the time;
Minor can not open such type of account;
Account holder can enjoy SOD or even TOD facility.
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Chart-4.1: Deposit Mix as on November 11, 2011 (% of total deposits)
STD (Short Term Deposit) Account

Normally various big companies, organizations, Government Departments keep money in STD
account. Frequent withdrawal is discouraged and requires prior notice. In BASIC,
customers usually give an instruction that their current account will be debited whenever
its deposited amount crosses a certain limit and this amount will be transferred to the STD
account. The deposit should be kept for at least seven days to get interest. The interest
offered for STD is less than that of savings deposit. Interest is calculated based on daily
minimum product and paid two times in a year. Interest rate is 6.00% including 10% excise
duty on interest rate.
3.1.2
COMMON FORMALITIES REQUIRED FOR EVERY ACCOUNT
Duly filled up Account Opening Form.

Introducers signature on Account Opening Form to be verified by Manager under full
signature.
Two copies of passport size photograph of account opener(s) duly attested by the
introducer.
Note: Mandate or authority form filled up by an individual (s) or account openers are to be
obtained if the customer wants to authorize another person to operate an account on behalf of
him/ them.
3.1.3
DOCUMENTS REQUIRED FOR EACH ACCOUNT SEPARATELY

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In case of Proprietorship Firm
Declaration of proprietorship.
Trade licence.
Tax Identification No (TIN) directed by Bangladesh Bank.
In case of Partnership Firm
Account must be opened in the name of the firm.

The firm should describe the names and addresses of all partners.
Board Resolution signed by all partners to open the A/C.
Photocopy of partnership deed duly attested by notary public.
Letter of partnership duly signed by all partners.
Trade licence from municipality.
In case of Private Limited Join Stock Company
Memorandum of Association and Articles of Association duly certified by Chairman

or Secretary.
Board Resolution duly certified by Chairman/ Secretary authorizing to open the A/C
with the bank and mentioning the name of the person (s) who will operate the A/C as
per provisions of Articles of Association.
Certificate of incorporation duly certified by Chairman or Secretary.
List of all Directors with Designation, Address & Specimen Signature duly certified
by Chairman or Secretary (Form XII).
Latest copy of Balance Sheet
Power of attorney.
In case of Public Limited Join Stock Company
Photocopy of Registration certificate certified by Chairman or Secretary.
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Memorandum of Association and Articles of Association duly certified by Chairman

or Secretary.
Board Resolution duly certified by Chairman/ Secretary authorizing to open the A/C
with the bank and mentioning the name of the person (s) who will operate the A/C as
per provisions of Articles of Association.
Certificate of commencement duly certified by Chairman or Secretary.
List of members of Managing/ Executive duly certified by Chairman or Secretary.
In case of Societies/Clubs
Certified copy of Registration certificate under the societies Registration Act, 1962.
Certified copy of Resolution for opening and operation of account.
Certified copy of Bye-laws & Regulations/ Constitution.
Power of Attorney.
In case of Cooperative Society
Copy of Bye-law duly certified by the Co-operative officer.

Up to date list of office bearers.
Resolution of executive Committee as regards of the account.
Certified copy of Certificate of Registration issued by Registrar, Co-operative
Societies.
In case of Non-Government College/ School/ Madrasha,
Up to date list of the Governing Body/ Managing Committee.

Copy of Resolution of the Governing Body/Managing Committee authorizing opening
and operation of the account duly certified by Gazetted Officer.
In case of Minors account

Putting the word MINOR after the title of the account.
Recording special instruction of operation of the account.
The account opening form is to be filled in and signed by either of the parents or the
legal guardian appointed by the Court of Law & not by the Minor.
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Account Opening Procedure in a flow chart:

Duly filled-up prescribed Application Form by the Applicant with
introductory reference by an account holder
Duly fill up the specimen signature card in front of a concerned person
by the applicant
Verify the introductory reference and examine the documents by the
authorized person
Issue the deposit slip and make deposit in cash. No cheque or draft
is acceptable.
Issue one cheque book & a pay- inslip book
ACCOUNT IS OPENED
3.1.4
ISSUING CHEQUE BOOK
For New and Old Account

Fresh checkbook is issued to the account holder only against requisition on the prescribed
application form. In case of old account, requisition made on the prescribed requisition slip
attached with the checkbook issued earlier. Generate a security no randomly for every check
leaf by Manager or authorized person. Prepare the instrument with respective security no on
the back of each leaf and signed by the authorized person. Make necessary entries in Check
Issue Register. Finally issue the checkbook for client (s).
For Duplicate Check Book
Duplicate checkbook in lieu of lost one is issued only when an A/C holder personally
approaches to the bank with an application agreeing to indemnify the bank for the lost check
book. Verify signature of the A/C holder with the specimen signature card. Series number of
lost checkbook is recorded in the stop payment register and caution should be exercised to
guard against fraudulent payment.
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3.1.5 ACCOUNT ENQUIRY
A customer can obtain the statement of his A/C by submission of an application in prescribed
balance enquiry receipt. Normally it is supplied two times in a year. In addition, customer can
know his current deposit position informally.
3.1.6. TRANSFER OF AN ACCOUNT
Account holder may transfer his account from one branch to another. For this, he/she must apply
with proper reason to the manager of the branch where he is maintaining account. Manager then
requests to the manager of that branch where the A/C holder wants to transfer his account.
Besides, he also sends original copy of account opening form and SSC (Specimen Signature
Card) and photocopy of application for transferring the account with the balance remained in the
account.
3.1.7 CLOSING OF AN ACCOUNT
An account may close When the customer desirous to close the account.
When the account is inoperative for a long time.
In case of customers death, insanity or insolvency.
When the court on that particular A/C issues Garnishee Order.
To close an account, the checkbook is to be returned to the bank. BASIC bank charges Tk. 200/=
for the same by debiting the amount from his account and rest amount is then paid to the
customer. Necessary entries are given to the account closing register and computer. Finally make
sure that A/C holder is completely free from all dues.
Table-4.1: Excise Duties Applicable: For All Kinds of Deposits
Sl. No. Deposit Amount Limit
Charge
3.
Up to 10,000
Zero
2.
10,001 to 1,00,000
Tk. 120
Sl. No. Deposit Amount Limit
Charge
3.
1,00,001 to 10,00,000
Tk. 250
4.
10,00,001 to 1,00,00,000
Tk. 500
5.
1,00,00,001 to 5,00,00,000
Tk. 2500
6.
5,00,00,001 and above
Tk. 5000
Source: SRO no.137-Aine/96/248-excise, date 28-7-96, NBR
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3.2: FDR AND ANCILLARY SERVICES SECTION

3.2.1
FIXED DEPOSIT RECEIPT (FDR)
FDR Account
Fixed deposits are time deposits or time liabilities. These are the deposits in which an amount of
cash is deposited in Bank for a fixed period specified in advance. Before opening a Fixed
Deposit Account a customer has to fill up an application form which contains the followings
Amount in figures
Beneficiarys name and address
Time period
Rate of Interest
Date of Issue
Date of maturity
How the account will be operated ( singly or jointly)
Signature (s)
F.D.R. no.
Special instructions (if any)

After fulfilling the above information and depositing the amount, FDR account is opened and a
FDR receipt is issued and it is recorded in the FDR Register which contains the following
information
FDR account no.

FDR (Fixed Deposit Receipt ) no.
Name of the FDR holder with address
Maturity period
Maturity date
Interest Rate
In case of FDR Account, the bank does not have to maintain a cash reserve. So, BASIC bank
offers a high interest rate in these accounts. The revised interest rates for FDR effected from
January 31, 2012 followed by BASIC area)
b)
c)
d)
For 1 month
For 3 months
For 6 months
For 24 months
@ 12.5 %
@ 12.5 %
@ 12.5 %
@ 12.5 %
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In case of encashment of FDR [say for Tk.X ] on maturity, following accounting treatments are
givenInterest on FDR A/C -------------------------------Cr. [say Tk. P]
Excise Duty on FDR -------------------------------Dr [say Tk. Q]
10 % Income Tax on interest --------------------- Dr. [say Tk. R]
FDR A/C ---------------------------------------------Dr. [Tk. (X+P-Q-R)]
Cash A/C ---------------------------------------------Cr. [Tk. (X+P-Q-R)]
If the customer wants to draw the interest only, then the following entries are given
Interest on FDR A/C --------------------------------Dr.
Cash A/C ---------------------------------------------Cr.
Renewal of FDR
Customer supposes to inform the bank in writing 15 days before the maturity date for
encashment. If not, bank normally renews the amount just after the maturity date. Renewal will
be for previously agreed maturity period.
Loss of FDR
If the instrument is lost from the possession of the holder, the holder is asked to fulfill the
following requirementsa) Holder should inform the bank immediately
b) Record a GD (General Diary) in the nearest Police Station.
c) Furnish an Indemnity Bond
On fulfilling the above requirements, BASIC bank is then issued a duplicate FDR.
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Table-4.2:
Pre-mature Encashment of FDR
Period
Pre-mature Encashment
Before 30 days
01
3 months
Every completed calendar SB (Savings Bank) Rate

months
Before 3 months
02
03
6 months
Interest Rate
No Interest
SB Rate
Before
maturity
but Interest payable at 3 months Rate for
completes 3 months
a period of 3 months
Before 3 months
SB Rate
Before expiry of 6 months
Interest payable at 3 months rate for

12 months
After expiry of 6 months Interest payable at 6 months rate for

but before maturity
Before 3 months
04
24 months
SB Rate
After expiry of 6 months Interest may be allowed at 6 months

but before maturity
rate for a period of 6 months
After expiry of 12 months Interest may be allowed at 12
but before maturity
months rate for a period of 12
months
Source: Main Branch, BASIC Bank Ltd.
3.3 : LOCAL REMITTANCE SECTION

Cash remitting from one place to another is risky. So, Banks remit funds on behalf of the
customer (s) to save them from any awkward happening through network of their branches.
There are three modes of remitting funds. These are
Pay Order (PO)

Demand draft (DD)
Telegraphic Transfer (TT)
Call Deposit Receipt (CDR).
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3.3.1
PAY ORDER (PO)
Pay order is an instrument, used to remit fund within a clearing zone. Unlike cheque, there is no
possibility of dishonoring PO. The PO can only be encashed through the branch that has issued
the instrument.
Pay Order Issuing Process

For issuing a PO, following formalities are to be maintained. These are-
Duly filled up the application form by the customer.

Deposit money either in cash or by cheque with necessary charges.
Prepare the instrument and make necessary entries in the Bills Payable Register
where payees name, date, PO no. etc are noted.
Deliver the instrument to the customer after scrutinized and approved by authority
by taking signature of the customer on the counterpart.
PO Working Procedure, Shows in a Flow Chart
Purchaser has an account with BASIC

and fills up the relevant form with a
credit voucher
Purchase the PO in favor of a person

or company
If any A/C with BASIC
Collecting Bank
sends an IBDA
Deposit the PO in his account with

BASIC or another Bank by the
beneficiary
If deposited to another bank
Payees account credited with

collecting Banker
The collecting Banker presents the PO to paying
Banker through clearing house
Payees account credited with collecting Banker
29 | P a g e
Accounting Entry for Pay Order

Drawers/Issuers A/C ----------------------------Debit
Bills Payable (PO) A/C----------------------------------Credit
Income A/C Commission----------------- --------------Credit
Income A/C Postage--------------------------------------Credit.
Payment order is a current liability on the part of bank, which is required to be discharged by the
beneficiaries against payment in cash or through an account.
Modes of Purchasing Pay Order

a) By cash
b) By account
c) By transfer of money.
Payment of Pay order

As the PO issued by the bank is crossed one it is not paid over the counter. On the contrary, this
amount is transferred to the payees account. To transfer the amount the payee must duly stamp
the PO. The a/c treatments will beBills Payable A/C----------------------Debit
HO A/C Y branch--------------------------Credit.
Note: Before payment is made, it is duty for issuing bank to examine whether endorsement was
given by the collecting bank or not. If not, dishonor the instrument and marking the instrument
Endorsement Requirement.
The Payee deposits it to his
Collecting Banker
Collecting Bank sends the P.O. to the issuing

Bank through clearing house arrangement
The Pay Order is passed and

cancelled in the deposit section
Payment is given and is registered

in Incoming PO Payment Register.
30 | P a g e
Cancellation of PO
The following procedure is followed to refund the pay order by cancellation:
1.
2.
3.
4.
5.
6.
7.
Submit written request to refund the pay order attaching therewith the original PO.
Verify purchasers signature with the original application form on record.
Manager/ authorized persons prior permission is required before refunding the
amount of pay order.
Pay order should be affixed with a stamp cancelled under proper authentication
and the authorized officers signature on the pay order.
No charge is created for cancellation. Refund only the pay order amount.
The original entries are to be reversed with proper narration.
Record the cancelled pay order in the Pay Order Issue Register.
Loss of Pay Order

If the instrument is lost, the holder is asked to fulfill the following requirementsa)
b)
c)
Holder should inform the bank immediately.

Record a GD (General Diary) in the nearest Police Station.
Furnish an Indemnity Bond.
On fulfilling the above requirements, BASIC bank is then issued a duplicate pay order and
marked In lieu of. Banker will also mark stop payment on the Bills Payable Register.
Collection of Pay Order

If the payee is a customer of Mirpur branch, he will deposit it for collection. Then the branch
gives necessary endorsement as a collecting bank. Then the instrument places the issuing bank
through clearing house.
PO Charge
A commission of TK.40/= is charged for a pay order.
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3.3.2
DEMAND DRAFT (DD)
DD is called Bankers Draft. It is an instrument, issued by a particular branch, drawn on

another branch of the same bank, instructing to pay a certain sum of money. It is very popular
instrument for remitting fund from one corner of a country to another. DD is issued in favour of a
customer who maintains an a/c with BASIC Bank branch. It can be issued against Cash or
Cheque. If DD amount is more than Tk.50000/=, a test code is given on IBCA. The a/c
treatments will beWhen DD is issued:
Cash/Customer A/CDebit
H/O A/C X branchCredit
Income A/c commission..Credit.
After giving these entries an Inter Bank Credit Advice (IBCA) is prepared which contains the
controlling number, depicted that the branch is credited to whom it is issued. An IBCA implies
the following entriesH/O A/C issuing branchDebit
Drawn on branchCredit.
DD Working Procedure: Shows in a Flow Chart
Applicant has an A/C
with BASIC bank
DD is handed over the

customer where paying
Bank is mentioned and
payment will be made
from another Bank
He fills up the relevant

form with a credit
voucher for the Bank
If DD comes to the Bank on which

it is drawn, the Bank honors it.
An IBCA along with

photocopy of DD is sent
to the paying Bank.
Payment Process of DD
After receiving the instrument, the IBCA lodgment is done by the branch. Necessary entries are
given in DD Inward Register. Controlling number of the IBCA should match with the serial
number of this register. The following accounting entries are made in following cases-
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When IBCA comes

H/O A/C Issuing branchDr
DD Payable A/C ...Cr
When instrument comes
DD payable A/C....Dr
Customers A/C..Cr
If advice does not come but instrument comes
Suspense A/C.Dr
Party A/CCr
When advice comes
HO A/C Issuing Branch .Dr
Suspense A/C..Cr
The banker even on receiving instructions from the remitter cannot stop the payment of the
instrument. Stop payment can be done in the following casesi)
ii)
Loss of draft before endorsement: In this case, Draft reported to be lost,

payees endorsement requires verification is marked.
Loss of draft after endorsement: In this case, the branch first satisfies itself
about the claimant and the endorsement in his favor.
Cancellation of DD
To cancel an issued DD, the client has to submit an application. Issuing branch then sends an
Inter Branch Debit Advice (I.B.D.A.) to the drawn branch against previously issued Inter Branch
Credit Advice (IBCA).
After that the following entries are givenH/O A/C drawn on branch-------------------------Dr.
Clients A/C ----------------------------------------Cr.
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Issuing of Duplicate DD
If the customer wants a duplicate DD, he then is asked to do the following formalities1. Throwing an application immediately by the original DD holder.
2. Making a General Diary (GD) in the nearest Police Station.
3. Furnishing an Indemnity Bond.
4. Put a CAUTION mark in the register.
5. Inform to the Head Office by the issuing branch.
6. Inform all the branches by the HO for stop payment.
7. Issue a new DD (Put the same DD no. and mark DUPLICATE).
DD Charge
Commission @ 0.15% but minimum Tk.50/=.
Postage charge Tk. 20/= (Fixed).
DD cancellation charge Tk. 50/= (Fixed).
3.3.3
TELEGRAPHIC TRANSFER (TT)
Sometimes the remitter of the funds requires fund immediately. In that case, the banker is
requested to remit the funds telegraphically. Different modes are Telegram, Telephone, Telex,
Fax. Telegraphic Transfer is the most rapid and convenient but expensive method. The drawer
and the payee should have accounts with BASIC bank. TT is issued against cash, cheque, and
letter of instruction.
Flow Chart Shows How TT Works (Outward)
Applicant has an
account with BASIC
Applicant fills up the relevant

form with a credit voucher
(Income A/C) for the Bank.
Text of telex is written

or the relevant
information along with
Test code is sent to the
payee Bank through fax
or telephone.
Another 2 copies of the

text is sent through
courier to the Payees
Bank.
The reconciliation department reconciles
two copies and detects the fraud or
forgery if any
One copy from drawers Bank and

another from Payees Bank are sent to the
reconciliation department of HO
34 | P a g e
Before that the Payees Bank decode

Payees account credited www.AssignmentPoint.com
the test and if test is agreed
Procedure for Issuing TT

Following procedure is followed for issuing a TT.
a)
b)
c)
d)
e)
Deposit money by the customer along with application form.

In receipt of money a cost memo is given to the customer containing TT serial
number which informs the awaiting party of the paying branch by the customer.
Tested telex message is prepared where TT serial number, notifying partys name is
mentioned.
The telex department confirms transmission of the message.
Necessary entry is given to the TT Outgoing Register. Entries are as followsCash/Respective A/C (Issuer)..Dr
HO A/C Paying branch....Cr (Principal amount)
Income A/C (Commission)..Cr
Procedure for Incoming TT

After receiving the telex, it is authenticated by tested. TT serial number is verified with the TT
Incoming- Concern branch Register. Voucher is released in this regard giving the following
accounting entriesHO A/C Paying branch------------------------------Dr
Customer A/C----------------------------------------Cr.
TT Charge
Commission @ 0.15% of the Principal Amount but minimum Tk.200/=.
Telex charge Tk. 50/= (Fixed).
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3.4 CALL DEPOST RECEIPT (CDR)

CDR is also an instrument, issued by a particular branch, drawn on another branch of the same
bank, instructing to pay a certain sum of money not over the counter to a certain person or his
order. It is as like as Pay Order (PO), but main difference is that PO is treated as bills payable
and CDR is treated as sundry deposit. From bankers point of view, it is always desirable but its
practice is limited. Only Tk. 40/= (Fixed) is charged for this facility. If CDR amount is more than
Tk.50000/=, a test code is given on IBCA.
When issuing the instrument, accounting treatment will beParty A/C-----------------------------Debit
HO A/C drawn on branch----------------Credit.
After receiving the instrument, accounting treatment will beHO A/C Issuing branch--------------Debit.
Party A/C------------------------------------Credit.
Besides, Staff and very Valued Customers of the bank enjoy Direct Fund Transfer facility. In
this case, no commission is charged.
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CHAPTER Four
SECTION
SECTION
COLLECTION AND CLEARING

COLLECTION AND CLEARING
37 | P a g e
4.0: COLLECTION AND CLEARING
4.1
SECTION
COLLECTION
In modern banking the mechanism has become complex as far as smooth transaction and safety
is concerned. Customer does pay and receive bill from their counterpart as a result of transaction.
Commercial banks duty is to collect bills on behalf of their customer.
Flow Chart Shows Collection Procedure
Received seal is stamped on the counterfoil of the
pay-in-slip.
Special Crossing in favor of cheque-receiving

branch is affixed on the cheque.
NIKASH Posting is made and gives code no.
Segregate cheque from Pay-in-slip.
Give respective endorsement.
Gets total from NIKASH2 and also get total from Pay-in-slip.
If both are same, sort the cheques according to
banks.
Get all the schedules from
NIKASH2
Affix schedules to the corresponding Banks
cheques.
After that, the following entries are given and a debit voucher is preparedBalance with Bangladesh Bank------------------Debit
Customers A/C ----------------------------------------Credit .
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4.1.1 Receiving Cheques For Collection

In BASIC Bank Limited, cheques of its customers are received for collection from other banks.
In case of receiving cheques, following points should be checked very carefully1)
2)
3)
4)
5)
The check should not carry a date older than the receiving date for more than 6
months. In that case it will be a Stale Check. Again the check should not be a Post
dated one.
The amount both in words and figures of the pay-in-slip should be the same and also it
should be in conformity with the checks amount both in figures and words.
The name mentioned both in the check and the pay-in-slip should be the same.
The check must be crossed.
Collecting banker must check whether endorsement is done properly or not.
ENDORSEMENT
IN CASE OF
Payees A/C will be credited on realization
Bills for collection
4.1.2 Types of Bills for Collection

i.
ii.
Outward Bills for Collection

Inward Bills for Collection.
A. Outward Bills for Collection (OBC)

If the bill is beyond the clearing range then it is collected by OBC mechanism. Customer
deposits cheques, drafts etc. for collection, attaching with their deposit slip. Instruments outside
the clearing range are collected through OBC mechanism. A customer of BASIC bank
Dhanmondi branch is depositing a check say of Janata Bank, Kotchandpur branch, Jhenidah.
Now as a collecting bank, Dhanmondi branch will perform the following tasksProcedure of OBC
a) Depositing the cheque along with deposit-slip
b) Crossing of cheques are done indicating Dhanmondi Br. as a collecting bank
c) Endorsement Payees A/C will be Credited on realization is given
d) Entries are given in the Outward Clearing Register.
39 | P a g e
Collecting bank can collect it either by its branch or by the drawers bank. They will forward the
bill to that particular branch. OBC number will give on the forwarding letter. Now following
procedures will take place in case of the following two cases.
Bills Collected through Branch

Collecting branch will receive an I.B.C.A. from that particular branch. Accounting treatment
from collecting branchs point of view will beHO A/C concerned branch .......................Debit
Customer A/C ............................................Credit
Income A/C on commission/ Postage.Credit.
The process of collection is described below:
a)
If the bill is drawn on BASIC Bank Main Branch
i.
ii.
iii.
b)
If the bill is drawn on another Bank and there is a branch of BASIC
i.
ii.
iii.
C)
Bills are sent to that branch through mail or courier;

Branch collects the bills and sends an IBCA to that Branch;
Depositors account is credited.
Branch sends the bill direct to the branch of BASIC by OBC schedule.
Request them to send the proceeds by IBCA and collect the bill.
That branch of BASIC can collect the through clearing house arrangement
exists there.
If the bill is drawn on another bank but there is no branch of BASICi.
Bill is directly sent to that Bank
ii.
iii.
iv.
Request them to send a draft in favour of this bank by an OBC schedule.

That bank sends a DD mentioning the Paying Bank
Then the bill is collected through clearing house process.
Balance Sheet Effect

OBC creates asset and liabilities simultaneously for bank. When send for collection, it is banks
liability and as well as customers liability i.e. banks asset.
Liability head Bills for collection being bills receivable as per contra
Asset head Bills receivable being bills for collection as per contra.
40 | P a g e
Customers liability A/CDebit

Bankers liability A/CCredit.
After realization (Even if dishonored)
Bankers liability A/CDebit
Customer liabilities A/CCredit.
After realization the contra is settled. This item is a stock variable of balance sheet at a particular
date.
Balancing
Balancing is done on the bankers liability account. The year end balance is shown on balance
sheet.
B. Inward bills for collection (IBC)
When the banks collect bills as an agent of the collecting branch, the system is known as IBC. In
this case the bank will work as an agent of the collection bank. The branch receives a forwarding
letter and the bill. Next steps are as followsi.
Entry in the IBC register
ii.
An IBC number is given on the bill.
iii.
Endorsement given- Our branch endorsement confirmed
iv.
The instrument is sent for clearing.
Accounting EntriesClearing..........................................Debit
Miscellaneous Creditor A/C OBC .Credit.
If honored, the accounting treatment will beMiscellaneous Creditor A/C OBCDebit
H.O. Collecting branch A/C..Credit.
An IBCA is dispatched in this regard
HO A/C agent branchDebit
HO A/C collection branch....Credit.
If dishonored,
The instrument is returned to the collecting branch along with a return memo.
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4.2
CLEARING
According to the Article 37 (2) of Bangladesh Bank Order, 1972, the banks which are a member
of the clearing house are called as Scheduled Banks. The scheduled banks clear the cheques
drawn upon one another through the clearing house. This is an arrangement by the central bank
where everyday the representative of the member banks sits to clear the cheques. For clearing
there is a department in every Bank. This department receives cheques, drafts and like
instruments from its customers for the purpose of collection with a deposit slip over the counter
crediting their accounts. Clearing of cheque is done through the clearing house in Bangladesh
Bank. Everyday the first hour starts at 10.00 a.m. and returns house at 5.00 p.m.
4.2.1 Types of cheques for clearing

i.
ii.
Inward clearing cheques.

Outward clearing cheques.
A. Inward Clearing Bills

It refers the instument drawn on BASIC bank Mirpur Branch Limited, received from other banks
in the clearing house by their representative (s). Settlement processBills collected from other
banks through clearing house
by Main Branch Drawn on
BASIC MainBr.
BB debits the A/C

of Main Br.
Maintained with
BB.
Main Branch
sends the bills
to BASIC Main
Branch with an
IBDA
BASIC Main Branch debits customers respective A/C
Accounting entry passed by this branch:

Respective A/C Debit
Head Office A/C (Main Br.) ....Credit.
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If cheques are returned, BASIC Bank Main Branch passes an IBDA to Main Branch. Then the
necessary accounting entries will beHO A/C (Main Br.) .....Debit
Respective A/C .Credit.
C. Outward Clearing Bills

It refers the instruments drawn on the other banks received by BASIC bank Main Branch. They
are of three kinds as follows
a)
Cheques drawn on another branch of BASIC. The settlement process

Cheques are directly sent
to the respective branch
OBC received along

the instrument by the
respective branch
When IBCA comes, customers account is

credited.
b)
Entry passed in
OBC register of
that branch
IBCA is sent from that

branch to this branch.
Cheques drawn on another Bank which is situated within clearing house area.
Mirpur
Branch
collects cheques.
IBDA along with

bills are sent to Main
Branch.
These bills are sent to

clearing house from MainBr.
through Main Branch
Depositors account is credited with BASIC Main Branch.
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CHAPTER FIVE
Cash Section
Cash Section
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5.0: CASH SECTION

Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the
branch. This section deals with all types of negotiable instruments and it includes vault, used as
the store of cash, instruments. The vault is insured up to Tk.20 lac. Insured amount yet to be
enhanced to Tk. 40 lac. Operation of this section begins when the banking hour starts. Cash
officer begins his/her transaction with taking money from the vault, known as the opening cash
balance. Vault is kept in a more secured place. The amount of opening cash balance is entered
into a register. After whole days transaction, the surplus money remains in the cash counter is
put back in the vault and known as the closing balance. If the cash stock goes beyond this
limit, the excess cash is then transferred to BASIC bank main branch. The main
functions of this section are1.
2.
5.1
Cash Receipt
Cash Payment
CASH RECEIPT
Cash receipt procedure is given belowi.

ii.
iii.
iv.
v.
The depositor first fills up the Deposit-in-Slip.

Depositor deposits the money.
Officer receives the money, counts and then enters in the Cash Receipt Register,
and finally signs with seal and dates the deposit-in-slip.
Slip is then passed to another officer, who enters the receipt details like serial no,
amount, etc. in his register, signs the slip and keeps the banks part of the slip.
Other part is given to the depositor.
At the end of the day, entries are cross checked with the register kept at the cash
counter to see whether the transactions are correct or not.
Accounting treatment -
When cash received, the following entries are madeCash A/C.Debit

Partys A/C.Credit
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CASH PAYMENT
5.2
Some important check points for making the payment are as follows-
1.
Endorsement
Endorsement is done by putting signature of the drawer on the back of the negotiable
instrument for the purpose of negotiation. By blank endorsement, an order instrument is
made as bearer. BASIC bank limited endorses the instrument in the following ways-
ENDORSEMENT
IN CASE OF
Payees A/C credited
Pay to Mr.X
Received payment
Pay to BASIC bank, Mr.X
Payees A/C credited

Payees A/C credited
2.
Pay to Mr.X , BASIC bank
Crossing
Generally two types of crossing are practiced, namely- General Crossing and Special
Crossing. Basically it gives a direction to the paying bank not to pay the check amount over
the counter. General crossing includes A/C payee crossing only. Drawing two parallel and
transverse lines do it. On the other hand, special crossing is like general crossing but in
addition bank name is also mentioned. This gives the direction to the same to pay the check
only to the banker, whose name appears in the crossing or to his agent.
Cash payment procedure is given belowi.
ii.
iii.
iv.
v.
Customer first deposits the check (s) to the cash section. Authorized individual
checks whether it is materially altered, proper endorsed, crossed or not. Being
satisfied the total requirements; he passes it to the computer for checking the
balance. Operator verifies the check leaf security no. If matched, then operator
signs. Otherwise noticed to the individual for stop payment;
Authorized officer is then verified the signature with the Specimen Signature Card
(SSC);
Send the instrument to the computer section once again for posting;
Cash officer is then asked the bearer to sign on the back of the instrument. At the
same he just enters the payment details in his register and pays the money to the
bearer;
At the end of the day, these information must be tallied with computer postings to
ensure the correctness of payment.
46 | P a g e
Accounting treatmentWhen cash paid, the following entries are madeParty A/C.Debit
Cash A/C..Credit
Dishonor of Cheque
If the cheque is dishonored, BASIC bank sends a memorandum (cheque return memo) to the
customer stating the reason in the following wayi.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
xvi.
xvii.
xviii.
Refer to drawer
Not arranged for.
Effects not cleared. May be presented again.
Exceeds arrangements.
Full cover not received.
Payment stopped by drawer.
-----------------Payees endorsement irregular/ illegible/ required.
----------------- Payees endorsement irregular/ require Banks confirmation.
Drawers signature differs/ required.
Alteration in date/ figures/ words requires drawers full signature.
Cheque is post dated/ out of date/ mutilated.
Amount in words and figures differs.
Crossed cheque must be presented through a bank.
Clearing stamp required/ requires cancellation.
Addition to Banks discharge should be authenticated.
Cheque crossed Account Payee Only
Collecting Banks discharge irregular/ required.
------------------------------------------------------
If the check is dishonored due to insufficiency of funds, BASIC bank charges Tk.100/= as
penalty.
47 | P a g e
CHAPTER Six
Account Section
Account Section
48 | P a g e
6.0: ACCOUNTS SECTION

Accounts department maintains all records of transactions and all types of statement. At the end
of transaction hour all concerned section sends vouchers of transactions to this department.
Accounts department compares all figures/ amount, contents of transactions with supplementary
statement prepared by computer. If any discrepancy arises regarding any transaction then this
department reports to the concerned department. Following are the activities of accounts
department:
To record all transaction in the cash book.
To prepare daily, weekly, monthly, half-yearly and yearly fund position.
To prepare all kinds of statements related to Bangladesh Bank, Head office and
National Board of Revenue (NBR).
To prepare monthly salary statement, provident fund statement and administrative
expenditure statement.
To make charges for different types of duty.
Table-4.5: Showing different types statements prepared by the Branch
Bangladesh Bank Related Statements

Weekly fund position (CRR-4% and SLR-16%)
Monthly sector corporation
Monthly Schedule Bank Statements-1 (SBS-1)
Quarterly Schedule Bank Statements-2 (SBS-2)
Quarterly statement of exchange of torn/ dirty notes
Half-yearly Schedule Bank Statements-3 (SBS-3)
Half-yearly deposit insurance pension scheme
49 | P a g e
Head Office Related Statements

Daily reconciliation statement
Weekly & monthly statement of affairs with income, expenditure & subsidiaries
Monthly comparative statement
Half-yearly statement of privilege creditors
Half-yearly detailed statement of sundry debtors
Half-yearly & yearly statement of sundry creditors
Half-yearly statement of other assets
Half-yearly statement of suspense A/C
Six column basis data sheet (deposit, loans, gross income & exp., net profit/ loss)
National Board of Revenue (NBR) Related Statements
Monthly challan regarding VAT
Monthly progress report
Quarterly challan regarding Income Tax of staff
Half-yearly challan regarding 10% source tax on interest of deposits
Half-yearly and yearly statement of fixed assets
Yearly challan of excise duty.
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CHAPTER Seven
CONCLUSION & BIBLIOGRAPHY

CONCLUSION & BIBLIOGRAPHY
51 | P a g e
FINDINGS, RECOMMENDATIONS AND CONCLUSION

Dhanmondi Branch, BASIC Bank Ltd. is very in the point of customer satisfaction. A good no.
of Govt. a/c is maintained satisfactorily that increases deposit position of the branch. Besides, I
have observed some irregularities. Based on my observation some recommendations have made
to improve the prevailing situation of the branch. The observations and pertinent suggestions are
as follows
1. In case of account opening, terms and conditions are not printed on the back of the A/C
opening form. But if it is so, applicants open their A/C being fully aware of the same. At the
same time, bankers can easily follow the terms and conditions strictly.
2. There is a provision of depositing a minimum amount of money at the time of opening an
account and also maintain a minimum balance all the time. But it is not strictly followed,
particularly for prospective customers. I think the amount should be fixed at a level that is
not altered from customer to customer.
3. Every account opening must have some documentary requirement (s). Without proper
documentation, sometimes accounts are opened. Bankers should take special care in this
arena to safe guard his position.
4. Trade license must be renewed by the a/c holder every year and that copy should be
deposited in the branch. But getting certified copy is very tough after opening the a/c. I think
bank can impose some sort of monetary penalty to the a/c holder if he/ she fails so
intentionally that ultimately motivates his/ her to update the documentary requirement.
5. Letter of thanks is to be sent to the introducer as well as to the a/c holder to confirm the
authenticity of a/c holder and to get feedback from the introducer if finds any dissimilarity by
him. But it is not practiced. It should be implemented soon for the aforesaid reason. In
addition, it also builds up banker-customer relationship.
6. No customer is allowed to issue any PO or TT until he has no a/c with BASIC Bank Limited.
This policy is being followed according to the Bangladesh Bank Order to restrain Hoondi
business.
7. Demand liabilities particularly cash payment is made within maximum 5 minutes that helps
the branch to attract more customer (s), doing banking business with the bank. This is
handled with personal care.
52 | P a g e
8. Flexible banking hour attracts more clients doing banking transactions with the branch. In
some cases, customers, coming outside the banking hour can honour the cheque without
delay. As per Bangladesh Bank Order, transaction hour is now9am to 2 pm (During Romadan) and
10 am to 4 pm (Normal)
On the other hand, personnel dissatisfaction is also observed. To resolve this problem, bank can
introduce some monetary awards/ incentives to the cash related people.
Conclusion
Banking sector is the chief financial Intermediary in a country. It is a very challenging institution
and in age of globalization and free trade, the process and the system of running a bank is
changing. BASIC Bank Limited already managed itself with this changing environment. The
company strategies are clear and concise. Their return is pretty good. If the company goes this
way, one can expect that in near future BASIC Bank Limited may become one of the top
performers.
From the discussion it can be concluded that BASIC Bank Limited playing an important role in
the economic development of the country and it has a prospect future to have a very good
position in the banking sector. To do this it should increase promotional activities to reach to the
people easily. From the learning and experience point of view I can say that I really enjoyed my
internship at BASIC Bank Limited. from the very first day.
.
53 | P a g e
ACRONYMS
AD
Authorized Dealer
AWB
Air Way Bill
BASIC
Bangladesh Small Industries & Commerce
BGMEA
Bangladesh Garments Manufacturers & Exporters

Association
BB
Bangladesh Bank
BCC
Branch Credit Committee
BL
Bill of Lading
CC
Cash Credit
CCI & E
Chief Comptroller of Import & Export
C&F
Clearing & Forwarding
CIB
Credit Information Bureau
CLP
Credit Line Proposal
CRF
Clean Report Findings
EBL
Eastern Bank Limited
EPB
Export Promotion Bureau
ERC
Export Registration Certificate
HOCC
Head Office Credit Committee
HS Code
Harmonic Symbolized Code
IBCA
Inter Branch Credit Advice
IBCT
Inter branch Credit Transaction
IBDA
Inter Branch Debit Advice
ICD
Industrial Credit Division
ID
International Division
IMP Form
Import Form
54 | P a g e
LIM
Loan Against Imported Merchandise
LTR
Loan Against Trust Receipt
MBM
Masters in Bank Management
MSI
Medium Scale Industries
OBC
Outward Bills for Collection
PAD
Payment Against Document
PRC
Proceeds Realization Certification
SOD
Secured Overdraft
SSI
Small-scale Industries
SWIFT
Society for Worldwide Interbank Financial Telecommunication
TIN
Tax Identification Number
TOD
Temporary Overdraft
UCPDC
Uniform Customs & Practices for Documentary Credit
55 | P a g e

Internship Report On General Banking Activities of Basic Bank

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Internship Report On General Banking Activities of Basic Bank

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All businesses are concerned with earning profit through selling either a product or rendering

Objectives of the Report:

The prime objectives are

To fulfill the course requirement of MBA Program;

Methodology of the study:

Methodology includes direct observation, face-to-face discussion with employees of different

The secondary sources are

Annual Report of BASIC Bank Ltd.;

Limitations of the study:

Overview of The BANK

Evolution of the Word Bank:

The Emergence of Modern Banking:

Public Sector Banks:

Private commercial banks:

2.1 HISTORY OF BASIC BANK LTD.

Tk. 5000.00 million

Tk. 2357.58 million

Total Reserve and Surplus up to

Tk. 3124.17 million

MAIN FUNCTIONS OF BASIC Bank Ltd

The Bank offers:

Term loans to industries especially to small-scale enterprises.

Full-fledged commercial banking service including collection of deposit, short term

CORPORATE STRATEGY OF BASIC Bank Ltd

Financing establishment of small units of industries and businesses and facilitate

Small Balance Sheet size composed of quality assets

Steady and sustainable growth

Investment in a cautious way

Adoption of new banking technology

ORGANIZATIONAL GOALS OF BASIC Bank Ltd

To undertake project promotion to identify profitable areas of investment

To cooperate and collaborate with institutions entrusted with the responsibility of

ORGANIZATIONAL STRUCTURE OF BASIC Bank Ltd

Management Hierarchy of BASIC Bank Limited

Source: Personnel Department, Head Office, BASIC Bank Limited

RESOURCES AND CAPABILITIES OF BASIC Bank Ltd

Physical and Technological Resources

Major features of these branches are:

Fully computerized accounts maintenance

Well decorated and air conditioned facilities

A fully operational computer network which is currently being implemented. The

A group of professional bankers to render personalized services.

Apart from deposit, BASIC received funds from:

2.0.9 Progress at a Glance (2006-2011)

From the Balance Sheet

2,000.00 2,000.00 2,000.00 2,000.00

1,455.30 1,309.77 1,247.40

Reserve and Surplus

2,468.65 1,681.39 1,349.17 1,294.00

3,923.95 2,982.60 2,596.58 2,239.00

78,031.73 61,569.38 45,699.5646,651.53 38,773.91 29,417.09

62,650.73 49,259.60 34,501.6938,368.23 31,947.98 24,084.65

Long- term Debt

Loans and Advances

56,884.76 46,341.51 29,261.5327,269.13 22,263.35 19,000.00

Placement & Investment

13,760.82 9,294.02 12,244.91 15,653.2 13,560.92 8,212.23

From the Income Statement

5,162.30 5,060.29 3,549.51 2,870.32

3,593.96 3,526.18 2,741.37 1,858.69

Profit before Tax

Profit after Tax