CHAPTER ONE INTRODUCTION

Introduction
As an MBA student, it is required to submit an Research Project paper which is a part of MBA program. Students are usually encouraged to work on economic, finance, monetary and other bank related topics keeping pace with their future career. Banks are dominant institutions of national and international financial system. It has become the heart of the economy. Banks cannot remain indifferent to developments in national as well as international financial system. Banks are highly leverage and exposed to exchange rate risk, country risk, and international interest rate risks. Nowadays we are living in a global village no country is insulated from the world economy. During the last decade, banking became the most competitive industries of Bangladesh with a huge amount of growth. A large number of new banks have made their way in the industry and yet there are more to come. In such a highly competitive service industry, customer satisfaction is a very important factor to consider. High customer satisfaction and loyalty give an organization a better base than its competitors and allows it to flourish in the industry.
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This project deals with the service quality and customer satisfaction of PRIME BANK LTD. Data has been collected on the basis of the questionnaire and a survey was conducted. Then the results of this survey are analyzed to identify the most important aspects of the service and determine different factors of overall satisfaction. Finally, a set of recommendations is given on the basis of the analysis of the survey, to improve the overall service quality according to customers expectations and thus satisfy its customers better.

The Prime Bank Ltd. being Banking Company has been registered under the companies Act 1913 with its registered office at 5 Rajuk Avenue Motijheel Commercial Area dhaka1000, Bangladesh. The Bank operates as a schedule Bank under a banking licensed issued by Bangladesh Bank, the Central Bank of the country. Prime Bank Ltd. incorporated in 12th February 1995 and started operation in 17th April 1995. A group of renowned industrialists, business houses and professionals of the country sponsor the Prime Bank Ltd. They are highly regarded for their entrepreneurial competence. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile. They are also members who are associated with other financial institutions like insurance companies, leasing companies etc. As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a highly professional, prompt, and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. The principal activities of the bank were banking and related businesses. The banking businesses included deposits taking, extending credit to corporate organization, retail and small & medium enterprises, trade financing, project financing, lease and hire purchase financing, issuance of local and international credit cards etc. The mode of banking included conventional and Islamic Banking. It also performs merchant banking function under the license issued by Securities and Exchange Commission, Dhaka, Bangladesh. The bank has already occupied an enviable position among its competitors after achieving success in all area of business operation. The growth of the deposit is growing fast. At the end of 2009 total deposits stood at TK.70512 million, a 28.85 percent increased compared to TK. 54724 million from the year before and total loan and advances increased by 28.15 percent from year 2008 to 2009.

1.2 Purpose of the Study

In this report I tried to find out all sorts of practical dealings that are conducted in case of handling various types of banking activities in each and every department, the theoretical aspects, that is what should be the procedures and requirements maintained from first to last, and actual practices as well as the ultimate gain for the bank in conducting financial activities are mainly discussed. It is tried to show various types of graphical design by which data and information has been presented in lucid manner. Naturally, loans and credit department and foreign exchange department are two main sources of earning for any bank. By pictorial description it is tried to find out the year wise earning variation from various department, loans and disbursement variation, foreign exchange earnings and its credit extension variation.

Prime Bank Limited, since its inception is a fully focused bank depending on technology. The bank has by now a network (On line banking facilities) of 80 branches strategically located in different cities. All the branches are functioning in computerized environment and integrated through Wide Area Network (WAN) .The branches are full fledged units and can provide all commercial and investment banking service raging from small and medium enterprises to big conglomerates and houses.

The Bank tries to reduce its dependence on interest earnings by giving more emphasis on the fee based income through introduction of capital market operation and leasing .The capital market operation will include Portfolio Management, Investors Account, and Underwriting Mutual Fund Management etc. The Bank introduces modern system of leasing operation as in practice with banks in all other countries of the world. The lease Finance portfolio of the bank will be the first of its kind in a Commercial Bank in Bangladesh. 3

1.3 Objective of the Study

The objective of the study is to gather practical knowledge on banking system and its operation. As a student of MBA program it is to make a bridge between theories and practical procedures of banking. And to observe the deviations, if any, exists between theory and practice. The specific objectives of this study are as follows: To know the organizational framework. To know the function of General Banking To know about the different Deposit Schemes facilities of Prime Bank Ltd. To identify the problem related to General Banking System. To suggest recommendation, if needed.

1.4 Methodology of the Study

The methodology of this report is totally different from conventional reports. I have emphasized on the practical observation. Almost the entire report consists of my practical observation. While preparing the report, I have taken information from the following sources:

1. Daily diary (containing my activities of practical orientation in PBL) maintained by me, 2. Various publications on Bank,

3. Websites, 4. Annual Report of the bank, 5. Practical deskwork. 6. Personal investigation with bankers, 7. Face to face interview with the clients. 8. Different circulars sent by Head Office and Bangladesh Bank.

1.5 Scope of the Study

The study is only related to Prime Bank Limited Khatungonj Branch Ctg. This report focuses on Different kinds of local remittance services Documents required for General Banking Procedures and system of General Banking Different kinds of credit facilities to the Customer Different kinds of inward and outward remittance

1.6 Limitations of the Study

Although I have got co-operation from employee of PBL and they also gave me much time to make this report properly in the way of my study, I have faced some problems that may be terms as the limitations/shortcoming of the study. 1) Time limits: It should be certainly mentioned that the time constraints is that first limitation of the study. Only three months is not sufficient for gathering perfect knowledge on the vast area of banking activities especially on the retail banking 2) Data Collection: In some cases the officials could not be able to supply my topic related data for preparing a more in depth presentation. It was also seen that maximum time they are found busy and many officers related tour topics were not able to give enough time and briefing due to insufficient of time. The study also suffered from inadequacy of data provided by PBL.

3) Lack of Practical Knowledge: For the lack of practical knowledge, some shortcoming may be available in the paper. Because in some cases we could not practically involved because of banks limitations.

4) Personal Limitations Sometimes I was assigned to do some jobs without explaining why this work is to be done. This situation has created a lot of problems to understand why a specific function is being performed.

CHAPTER TWO GENERAL BANKING MANAGEMENT SYSTEM

General Banking department performs the majority functions of a Bank. It is the core department. In fact, bank operates with the peoples money. And this process starts with the General Banking department. The activity of the general Banking department of PBL is mainly divided into the following sections: I. Accounts Opening Section. II. Deposit Schemes Section. III. Remittance Section. IV. Online banking section. V. Clearing section. VI. Collection Section. VII. Cash Section. VIII. Accounts section.

2.1 Accounts Opening Section:

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

Procedure for opening of accounts:

a. Application on the prescribed form: For opening a account a customer has to apply in a prescribed form that is designed by Bangladesh Bank which is the regulating authority of the banks. b. Introduction of the customer by an account holder: It is the most important part in account opening because the customer who comes to the bank for opening a account is not previously known to the bank so it is very much necessary that one existing of that bank should introduce him for opening a account. c. Furnishing recent photographs (two) For opening a new account a customer has to provide two recent passport size photographs. One is used in the form of the customer and other one is used with signature cards to identify the owner of the account.

d. Duly attested by the introducer: The photos of the customer must be attested by the introducer for opening an account. e. Add national ID Card or passport copy: For the identification of a customer his fathers name, mothers name, date of birth and address of the customer a customers national ID Card or Passport is required. f. Mention nominee in the prescribed form: It is mandatory at present to mention nominee in the account opening form. It is necessary because if the account holder dies the owner of the account will be the nominee. If no nominee is mentioned then it will take more time to settle who will be the owner of the account after the death of the account holder. g. Furnishing nominees photograph: For identification of the nominee furnishing of nominee is necessary. h. Signature of the prospective account holder in the account opening form: The account holder has to sign in the accounting opening form for opening a account. i. Transaction profile (KYC):

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For opening a account filling up of transaction profile is necessary. By this transaction profile we allow the customer to deposit money or withdraw money as

per the business activity of the customer.

j. Allocation of account no by the officer: After filling up the account opening form and giving the required signature then account opening officer allocate a account number for the customer. The customer will operate his account with reference to the account number. k. The customer then deposit the initial deposit by filling up a deposit: After getting the account number initial deposit of the account is deposited in the account number by a deposit slip.

2.1.2 Types of Account:

PBL has the following types of accounts: 1) Current Account 2) Savings Account 3) STD Account 4) Fixed Deposit Account 5) Scheme Deposit Account

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2.1.3 Activities and papers necessary for opening an account:

Joint Account:

If the account is a joint account, then the joint account holder should submit a declaration and operational instructions of the account along with their signature. The declaration is Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability whatsoever incurred in respect of this account shall be joint and several. Partnership firm:

The following documents have to be submitted for preparing an account of a partnership firm: Partnership deed. (a) If the partnership firm is a registered one, then one copy of registration forms. (b) If not, then a copy of certificate from the notary public.

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Limited Company: For the opening of an account of a limited company, following documents have to be submitted: A copy of resolution of the company that the company decided to open an account

in the Prime Bank. ii) Certified true copy of the Memorandum & Articles of Association of the Company. iii) Certificate of Incorporation of the company for inspection and return along with a duly certified Photocopy for Banks records. iv) Certificate from the Registrar of Joint Stock Companies that the company is entitled to commence business (in case of Public Ltd. Co. for inspection and return) along with a duly certified Photocopy for Banks records. v) Latest copy of balance sheet. vi) Extract of Resolution of the Board/General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/Managing Director of the company. vii) List of Directors with addresses (a latest certified copy of Form-XII).

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Club/Society:

Following documents have to be obtained in case of the account of the club or society: Certified copy of Resolution for opening and operation of account. Certified copy of Bye-Law and Regulations/Constitution.

Copy of Government Approval (if registered).

Co-operative Society:

Following documents have to be obtained in case of the account of Co-operative Society: Copy of Bye-Law duly certified by the Co-operative Officer. Resolution of the Executive Committee as regard of the account. Certified copy of Certificate of Registration issued by the registrar, Co-operative

societies.

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Non-Govt. College / School / Madrasha / Muktab: Following documents have to be obtained in case of the account of non-govt. College / School / Madrasha / Muktab: Up-to-date list of Governing Body/Managing Committee. Copy of Resolution of the Governing Body/Managing Committee authorizing opening and operation of the account duly certified by Gazetted Officer.

Trustee Board:

Following documents have to be obtained in case of the account of trustee board: Prior approval of the Head Office of PBL. Certified copy of Deed of Trust, up to date list of members of the Trustee Board and certified copy of the Resolution of Trustee Board to open and operate the account.

Minors Account: Following documents have to be obtained in case of the account of minor: Putting the word MINOR after the title of the account. Recording of the special instruction of operation of the account.

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The AOF is to be filled in and signed by either the parents or the legal guardian appointed by the court of law and not by the minor.

Transfer of Account:

An account holder can 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 the account.

Who can introduce? i) ii) Existing account Holder Well known/ a respectable person of the locality/ Org. iii) Officials of the Bank. Why introduction is necessary? i) For identification of the client. ii) To avoid fraud and forgery. iii) To get protection under N.I. Act 1881

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Issuing Cheque-Book:

After the completion of above formalities, the bank provides the client a cheque book with a requisition slip. The cheque book can be of 10, 20 or 50 pages. It is dependent on the types of accounts. The 10 pages cheque book is issued to the Saving A/C holder and 20 and 50 pages cheque book are issued to the Current and STD A/C holder. The client has to fill up the requisition form for cheque book. Then the officer will get a new cheque book with filling up account number of the client and the branch name in each page of the cheque book. The name and the account number of the client are then registered in the cheque book issue register. The serial number of the cheque book is also entered in the computer for proper maintenance of records.

Deposit Schemes of Prime Bank Limited

Bank is the largest organization of mobilizing surplus domestic savings. For poverty alleviation, we need self-employment, for self-employment we need investment and for investment we need savings. In the other words, savings help capital formations and the capital formations help investments in the country. The investment in its turn helps industrialization leading towards creation of wealth of the country. And the wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the nation. The savings rate in Bangladesh is one of the lowest in the world rate of domestic saving being 19.23 %. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive Savings Schemes so that the marginal

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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.

Prime Bank formulated the following saving schemes Contributory Savings Scheme(CSS) Monthly Benefit Deposit Scheme(MBDS) Lakhopothy Deposit Scheme(LDS) Fixed Deposit Receipt(FDR) Double Benefit Scheme(DBS) Special Deposit Scheme Prime Millionaire Scheme Prime House Building Scheme Education Savings Scheme

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2.2.1 Contributory Savings Scheme

This is a Savings Scheme in which a person gets the opportunity to build up savings by contributing monthly installments and receives an attractive fixed amount at the end of a specified term. The Scheme is designed to help the fixed income group to save money. The salient Feature of the Scheme are given below The size of the monthly installment is Tk.500 to Tk.25000 to be deposited every

month throughout the saving term. The term of saving shall be for 5(five) years.

The size of return after 5(five) years is Tk.40000 to Tk.2006000 on the basis of size

of installment. At present Income Tax on interest will not be applicable but in future for any change in Govt. rule of taxation, the bank reserves the right to deduct Income Tax.

The installment should be payable by the 8th day of every month. Advance payment
of installment is acceptable. Account under the Scheme can be opened on the separate Form designed for the purpose.

The

chosen size of installment, at the time of opening the account will not be

allowed to change afterwards. 19

 Account may be opened in the name of individual or joint names of two individuals. Account in the name of minors can be opened under the Scheme to be operated by the guardian.

A person can open more than one account for different size of installments in any
Branch of the Bank. The Account holder may appoint a nominee (s) to receive the balance in the account.

The specified amount on maturity at any slab shall be paid after one month from the
date of deposit of the final installment. Normally no withdrawal shall be allowed before 5 (five) years. But, if any depositor intends to withdraw his savings due to certain unavoidable reasons before 5 (five) years, he will be allowed to do so, in the following manner:

No benefit or interest shall be allowed for pre mature encashment within one year.

If the account is closed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate.

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2.2.2 Monthly Benefit Deposit Scheme

This is a Deposit Scheme where the depositor gets a fixed amount of profit every month without disturbance of the principle. The Scheme is designed to attract: 1) The retirement benefits of service holders. 2) The investment of Wage Earners who want to pay a fixed amount monthly to their families dependents in Bangladesh from the profit of their investment. 3) The deposit of those persons who intend to meet the monthly expense of their family from the income of their deposit. 4) Investment of fund of Trusts and Foundations which award monthly Scholarships / Stipends to students. 5) Parents who want to defray the educational expenses of their children from the monthly benefit of their deposit with the bank. The salient Features of the Scheme are given bellow Deposit of Tk.25000.00 and multiples there of shall be acceptable for the Scheme. The Deposit shall be for a period of 5(five) years. The Principal amount is refundable on maturity. 21

 The payment of monthly profit will start after minimum gap of 30 days from the date of deposit.

Normally, the deposit will not be encashable before 5 (five) years. But if any depositor intends to withdraw his deposit due to certain unavoidable reasons, he would be allowed to do so, in the following manner: No benefit including interest shall be allowed for per mature encashment within one year. If the accounts/ deposits are closed / encashed after one year of its opening, benefit shall be allowed on the deposit at normal Saving Deposit rate. If the amount of monthly profit already paid exceeds the amount payable at normal Savings rate, the difference shall be deducted from the principal deposit amount. In case of death of the depositor, the amount will be payable to the nominee or in the absence of nominee, to the legal heirs of the depositor on production of Succession Certificate. Separate Application Form specially designed for the purpose shall be obtained duly filled in and signed by the depositor. In addition to this, the depositor must have a

Separate Savings Bank Account with the Branch wherein the benefit on the amount
so deposited shall be credited every month.

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 A specially designed Receipt shall be issued for the deposit under the Scheme in the same manner as issued in case of FDR. The Receipt will not be transferable.

Advance against lien on such Receipt can be allowed up to 80% of the deposit bearing normal rate of interest prevalent at the time on Overdraft / Loan. During the period of such Overdraft / Loan, the monthly benefit will be credited to the concerned Overdraft / Loan Account. Income Tax, if any, on the income received from the deposit shall have to be borne by the depositor.

2.2.3 Lakhopoty Deposit Scheme

This is also a Savings Scheme in which a person gets the opportunity to build up savings by contributing monthly installments and receives an attractive fixed amount at the end of a specified term. The Scheme is designed to help the fixed income group to save money. The salient Feature of the Scheme are given below The size of the monthly installment is Tk250, Tk.500, Tk1285, and Tk.2400 to be

deposited every month throughout the saving term. The term of saving shall be for 15 years, 10 years, 5 years, 3, years. 23

Amount shall be paid to the depositor after maturity of respective terms of savings

as per the following table:

Size of monthly deposit 250/500/1285/2400/-

Duration 15 Years 10 Years 5 Years 3 Years

Amount payable at maturity 100000/100000/100000/100000/-

At present Income Tax on interest will not be applicable but in future for any change in Govt. rule of taxation, the bank reserves the right to deduct Income Tax.

The installment should be payable by the 8th day of every month. Advance payment
of instalment is acceptable. Account under the Scheme can be opened on the separate Form designed for the purpose. The chosen size of instalment, at the time of opening the account will not be allowed to change afterwards. Account may be opened in the name of individual or joint names of two individuals. Account in the name of minors can be opened under the Scheme to be operated by the guardian.

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 A person can open more than one account for different size of installments in any
Branch of the Bank.

The Account holder must appoint a nominee to receive the balance at the time of any accident. Normally no withdrawal shall be allowed before 5 (five) years. But, if any depositor intends to withdraw his savings due to certain unavoidable reasons before 5 (five) years, he will be allowed to do so, in the following manner: No benefit or interest shall be allowed for pre mature encashment within one year. If the account is closed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate.

2.2.4 Double Benefit Scheme

Under this type of scheme one can deposit at a prescribed amount of money and will get double of it after the period of maturity that is 6 years. 1. Deposit of Tk.25000.00 and multiples therefore shall acceptable under the scheme.

2. 3.

An instrument shall be issued for 6 years term.

At maturity after 6 years double the amount of deposit will be paid to the depositor. 25

4. Photograph of the nominee duly attested by the depositor shall be obtained at the time of opening the account.

5. Normally no withdrawal shall be allowed before 5 (five) years. But, if any depositor intends to withdraw his savings due to certain unavoidable reasons before 6 years, he will be allowed to do so, in the following manner:

No benefit or interest shall be allowed for pre mature encashment within one year.

If the account is closed after one year of its opening, benefit shall be allowed on the deposit at normal Savings Deposit rate.

6. In case of death of depositor, the amount of the instrument will be paid to the nominee or in the absence of nominee to the legal heirs of the depositor on production of succession certificate. 7. In case of instrument gets lost the procedure for the issuance of a duplicate receipt will be the same as applicable in case of loss of FDR. 8. Income Tax may be deducted as imposed by the government on the interest amount at the time of maturity/payment.

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2.2.5 Special Deposit Scheme

This is a deposit scheme where an instrument is issued for the full amount payable after a specified period against deposit of a certain amount. The scheme is specially designed to provide for children education, marriage and old age security. It will create good opportunities for attractive investment of provident fund, trust fund, reserve fund / Security fund of institutions and organization. It will also provide opportunities for the wage earners towards profitable investment of their funds. The salient features of the scheme are given below: 1. Deposit of Tk.10000.00 and multiples therefore shall acceptable under the scheme. 2. An instrument shall be issued for 5 years and above up to 10 years term. 3. Bank will issue order instrument payable to a particular person, organization, firm etc. for an amount payable at maturity as written on the face of the instrument as per the following table:

Term 5 years 7 years 10 years

Initial Deposit (Taka) 1,00,000 1,00,000 1,00,000

Value payable at maturity 1,65,000 2,00,000 3,00,000 27

Amount payable with profit at maturity will vary proportionately as per above table according to the size of initial deposit amount.

2.2.6 Education Savings Scheme

The educational expenses particularly the expenses for higher education are sharply increasing day by day in our country. Sometimes, the children are deprived of getting the desired level of education because of the inability of the parents to meet their educational expenses. But the parents would not feel any difficulty to defray such expenses if a proper financial planning is made much ahead of time. Moreover, Prime Bank Ltd. is receiving demands from the Islamic minded people of our country for an attractive Savings Scheme on the basis of Islamic shariah so as to encourage them to save in Islamic way for education of their children. With this end in view, Prime Bank Limited has introduced a Savings Scheme entitled Education Savings Scheme in accordance with the principles of Islamic Shariah i.e., on the basis of profit and loss sharing. The scheme provides a unique opportunity to the parents to make a future provision for the educational expenses of their children when they enter into Schools, Colleges and University out of the benefit of a small amount of savings with the Bank at an opportune moment.

The salient feature of the Scheme is given below

1. Name of the Scheme shall be Education Savings Scheme. 2. The Scheme shall be implemented through our Islamic Banking Branch. Deposit under the Scheme is accepted at any branch of the Bank. The fund shall be transferred to 28

Islamic Banking Branch. Similarly, the issuing Branch shall also make the payment of the Instrument under the Scheme on behalf of the Islamic Banking Branch.

3.

Deposit of Tk.25, 000/- and multiples there of at a time will be accepted under the Scheme.

4. The instrument shall be issued for 7 years, 10 years, 15 years or 20 years term. 5. The deposit is payable at maturity with benefit either in lump sum or on monthly basis as education allowance for 6 (six) years starting from the completion of the respective term as per the following table:

Term

Initial Deposit (Taka)

Lump sum amount Amount of education payable at maturity 55,000 77,000 1,36,000 2,40,000 allowance per month (6 Years) 1,000 1,500 2,500 4,500

7 years 10 years 15 years 20 years

25,000 25,000 25,000 25,000

The lump sum amount and the monthly installment shown in the above table are computed approximate basis.

2.2.7 One Stop Utility Services Scheme

Like any other country of the world, the people living in the urban areas of our country lead a very busy life. Times are very valuable to them. Despite this, they are to waste their valuable time at the counter of.

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Different Banks and other Institutions for payment of their monthly bills of different utility services like Electricity, Telephone etc. They, as such, face enormous difficulties for payment of their monthly bills in time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the bills of various utility services at one Point.

Deposit Rate Offered by PBL

SL. 01. Particulars Short Term Deposit Rate/Revised Rate of Interest Deposit(for 3.00% 5.00% 5.50%

Customer) a) Below Tk.1.00 Crore b) Tk.5.00 Crore and 02. 03. Above Savings Deposit Fixed Deposit a) 1(one) months 1)Below Tk.50.00 lac 2)Tk.1.00 Crore and above but below Tk.5.00 Crore 3)Tk. 5.00 Crore and above b) 3(Three) months 1)Below Tk.50.00 lac 2)Tk.50.00 lac and above but below Tk.1.00 Crore 3)Tk. 5.00 Crore and above c) 6(Six) months 1)Below Tk.50.00 lac 2)Tk.50.00 lac and above but below Tk.1.00 Crore 3)Tk. 5.00 Crore and above d)1(One )Year and above 1)Below Tk.50.00 lac

5.00% 5.00% 5.00% 8.50% 8.75% 9.00% 8.50% 8.75% 9.00% 8.50% 30

2)Tk.50.00 lac and above but below Tk.1.00 Crore 3)Tk. 5.00 Crore and above

8.75% 9.00%

Source: Financial Administration Division, PBL (September 29, 2010) However, the following conditions will prevail: a) Interest on Bank Deposit will be dealt with separately by treasury division. b) For the senior citizenship scheme 0.25% higher rate may be offered only for an amount of maximum Tk. 50.00 lac (maximum ceiling of deposit is Tk.50.00 lac per customer) c) The revised rate of interest will be applicable with immediate effect.

2.3 Remittance:
Foreign Remittance:
Foreign remittance refers to the transfer of fund from one country to another either through the office channel i.e. banking channel, Post office or the informal channel. In Bangladesh still informal market is playing a significant role. However, we shall limit our discussion within the official channel. PBL places an important role to transfer money from other countries to Bangladesh and Bangladesh to other countries. Inward and outward T.T, M.T and draft are the main components of foreign exchange remittance.

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Inflowof foreig rem n ittance2005-2009

25000 20000 15000 10000 5000 0 2005 2006 2007 2008 2009 3688 15050 15905 22669 26447

Foreign exchange earnings are very low as export earnings are very limited while import spending are huge which makes the balance of trade position in a chronic deficit situation. Foreign remittance is very important for the country as valuable foreign exchange is involved in the transfer mechanism. From the year 1990, financial liberalization has been started which is still going on. Due to liberalization, restrictions on foreign remittance become ease. Bangladeshi Taka. is convertible for current account transactions on March 24, 1994 with the view to achieve better exchange rate management system. And from April 1994 Bangladesh Government has accepted the status of Article VIII of international monetary fund. Foreign remittance has two wings i.e. inward and outward remittance. This can be shown below:

Foreign Remittance

Foreign Inward Remittance

Foreign Outward Remittance

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

Pay order Demand Draft issue

2.3.1 Telegraphic Transfer (TT):

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

Procedure of issuing TT:

Following procedures are followed while issuing of TT:

The applicant fills up the relevant parts of the prescribed application form in triplicate, duly signed the same and gives it to the GB.

GB will fill up the commission part for banks use and request the applicant to deposit necessary cash or cheque at the cash booth.

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The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket. The third copy will be handed over to the applicant as customers copy.

GB will prepare telex in appropriate form, sign it and send it to the telex operator for transmission of the message. GB will prepare necessary advice. Debit advice is sent to the client if clients account is debited for the amount of T.T. T.T. Confirmation Advice is sent to the drawee branch. Credit Ticket (second copy of the application form) is used to credit the PBL General Account. Accounting Treatment: For telegraphic transfer, PBL gives the following entries-Clients Account Prime General Account Telex Account Commission Account Cr. Dr. Cr. Cr.

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Payment of T.T.

On receipt of T.T. payment instructions the following entries are passed by the drawee branch if the T.T. is found to be correct on verification of the Test number a) Prime General Account TT Payable b) TT Payable Clients Account/Pay Order Dr. Cr. Dr. Cr.

In case the beneficiary does not maintain any account with the drawee branch a pay order will be issued in favor of the payee and sent to his banker / local address as the case may be. Every branch maintains a prescribed T.T. Payable Register. All the particulars off T.T. are to be properly recorded in this register duly authenticated. A separate Type of T.T. confirmation advice is sent to the drawee branch on the same day. On receipt of T.T. confirmation advice, the particulars of T.T. are verified with reference to particulars already recorded in the T.T. payable register.

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2.3.2 Pay Order Issue:

Followed procedures are followed while issuing Pay Order Get the application form properly filled up and signed by the applicant. Complete the lower portion of the form for the banks use. Calculate the total amount including the banks commission. If the cheque is presented for of the Pay Order, the officer should get the cheque duly passed for payment by the authorized person and record the particulars of Pay Order on the back of the cheque.

If the client wants to debit his account for the payment of the draft amount, the officer should get the account holders signature verified properly, from signature card on record of the branch and debit clients account for the total amount including commission.

The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket and kept by the GB. The third copy is handed over to the applicant as customers copy.

The GB Department maintains a prescribed P.O. Issue Register. All the required particulars of LDs issued by PBL should be entered in that register duly authenticated.

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Cancellation of P.O.:

The followings are followed while canceling a P.O. The purchaser should submit a written request for cancellation of the P.O. attaching therewith the original P.O. The signature of the purchaser will have to be verified from the original application form. Managers prior permission is to be obtained before refunding the amount of draft. Cancellation charge is to be recovered from the applicant and only the amount of the draft less cancellation charge should be refunded. Commission charge, posted charge etc. recovered for issuing the P.O. should not be refunded.

Cancellation of P.O. should also be recorded in the P.O. Issue Register. Payment of P.O.:

While payment of P.O. PBL performs the following functions On receipt of Credit Advice (IBCA) from the issuing branch the following entries are to be passed Prime General Account P.O. Payable Account Cr. Dr.

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Stop payment of Pay Order

The payee or purchaser of the draft can not give stop payment instruction to the drawee branch. If the paying branch receives a request from the purchaser of the draft for stopping payment of the draft, it will ask the purchaser to approach the issuing branch about the purpose. The paying branch should however exercise necessary precaution in this regard. Only the issuing branch can issue instruction for stop payment of the draft under special circumstances.

2.3.3 Demand Draft (DD) Issue:

Sometimes customers use demand draft for the transfer of money from one place to another. For getting a demand draft, customer has to fill up an application form. The form contains date, name and address of the applicant, signature of the applicant, cheque number (if cheque is given for issuing the DD), draft number, name of the payee, name of the branch on which the DD will be drawn and the amount of the DD. The form will be duly signed by the applicant and by the authorized officer. commission on the face value of DD as service charge. PBL charges .15%

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2.4 Online Branch Banking Section:

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

Under this system a client will to be able to do following type of transactions: Cash withdrawal from his/her account at any branch of the Bank irrespective of

location. Cash deposit in his/her account at any branch of the Bank irrespective of location.

Cash deposit in other's account at any branch of the Bank irrespective of location. Transfer of money from his/her account with any branch of the Bank.

Any amount can be deposited or transferred under Prime Line. In the system,

however, at present there is a limit for cash withdrawal through bearer or by account holder himself.

2.4.1 Requirement of Prime Line service:

39

The Clients who has account in prime bank or who will open account in prime bank and would be interested to maintain substantial deposits in Savings, Current or STD accounts, will be eligible to get Prime Line Service.

Intending and eligible clients have to apply in prescribed application form to the branch to get the online service from the bank. The client should submit two copies photographs and signature cards along with the application form. To avail the Prime Line service, no charge should be paid for online transaction within a locality where the account is domiciled. But charges should be paid by the customer for inter city online transaction. Online Transaction Membership Fee:

Membership fee of Tk.50/- per month for the Online Branch Banking Service.

2.4.2 Charges for Online Transaction:

01. There will be no charge for transaction within the city where the account is domiciled. 02. Fee Tk.50/- will be realized from the customers account for each remote transaction (inter-city) for amount upto Tk.1, 00,000 (one lac). 40

03. Fee at the rate of 0.075% will be realized from the customers account for each remote transaction of amount more than Tk.1,00,000 (one lac).

2.5 Clearing Section:

According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the chouse drawn upon one another through the clearinghouse. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the chouse. Banks for credit of the proceeds to the customers accounts accept Chouse and other similar instruments. The bank receives many such instruments during the day from account holders. Many of these instruments are drawn payable at other banks. If they were to be presented at the drawee banks to collect the proceeds, it would be necessary to employ many messengers for the purpose. Similarly, there would be many chouse drawn on this the messengers of other banks would present bank and them at the counter. The whole process of collection and payment would involve considerable labor, delay, risk and expenditure.

2.5.1 Activities of the Section:

(a) Preparation of Clearing Outward and Inward Lodgment and record maintenance is same. (b) Batch posting as and when required. On receipt of instruments, the same is endorsed here. Then clearing section will sent IBDA to head Office for clearing purpose and on receipt of IBCA from Head Office 41

amount is credited to customers account and vice versa. If the instrument is return then the same is given back to the customer.

Accounting Entries: For inward instruments: Customer A/C ----------------------------------Debit Prime General A/C ---------------------------Credit In case of return: Prime General A/C ------------------------Debit Customers A/C -----------------------------Credit For Outward instruments: Prime General A/C -------------------------Debit Customers A/C -------------------------------Credit. In case of return: Customer A/C --------------------------------Debit Prime General A/C---------------------------Credit.

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2.5.2 Collection Section:

Checks, drafts etc. are drown on bank located outside clearing house are sent for collection. Motijheel Branch collects its clients above-mentioned instruments from other branches of PBL and branches other than PBL. In case of out ward bills for collection customers account is credited after finishing the collection processor. And in case of inward bills customers account is debited for this purpose. So it place dual role as follows: Collecting Banker Paying Banker. There is one Officer working over desk in this department.

2.5.3 Activities of the Section:

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

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Other works as and when require.

2.5.4 Collection is done when

(i) Paying Bank is located outside Dhaka City.

(ii) Paying Bank is other branches of PBL situated inside Dhaka City.

2.5.5 Paying Bank is outside Dhaka City:

Collection department of Motijheel Branch (Principal Branch), PBL sends outward bills for collection (OBC) to the concerned paying bank to get inter Bank Credit Advice (IBCA) from paying Bank. If the paying bank dishonors the instrument, the same is returned to principal Branch.

2.5.6 The Paying Bank of their own branches inside Dhaka City:
Collection Department sends transfer delivery item to other branches of same bank situated inside Dhaka City. Upon receiving IBCA customers a/c is credited.

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2.5.7 Procedures for Outward Bills for Collection:

Depositing the check along with depositslip Crossing of the chouse are done indicating Principal Branch as collecting bank Endorsement Payees A/C will be Credited on realization is given Entries are given in the Outward Clearing Register

2.6 Accounts Section: In banking business transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors money. Any deviation in proper recording may hamper public confidence and the bank has to suffer a 45

lot. Improper recording of transactions will lead to the mismatch in the debit side and credit side. To avoid these mishaps, the bank provides a separate department whose function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery. This department is called Accounts Department.

Besides these, the branch has to prepare some internal statements as well as some statutory statements, which are to be submitted to the Central Bank and the Head Office. This department prepares all these statements.

2.6.1 Functions of Accounting Department:

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

Day to day functions: Here day-to-day function refers to the every day tasks. Accounting department of PBL performs the following day to day functions: Recording of transaction in the cashbook, general and subsidiary ledger. Preparing the daily position of deposit and cash Making the payment of the expense of the branch. Recordings of inter branch fund transfer. Checking whether all the vouchers are correctly passed. Recording the voucher in the voucher register. 46

Packing and maintains the total debit and total credit vouchers.

2.6.2 Periodical functions:

Periodical functions of accounts department include the preparation of different weekly, fortnightly, monthly, quarterly and annual statement. . The accounts department prepares the following statements: Monthly statement of deposits, loans and advances, profit and loss etc. Quarterly statement of deposits, loans and advances, profit and loss etc. Yearly statement of deposits, loans and advances, profit and loss etc. Yearly statement of classified Loans and Advances. Statement of Affairs. Yearly Budget of the Branch, etc

2.7 Cash section:

Cash section is a very sensitive organ of the branch and handle with extra care. Operation of this section begins at the start of the banking hour. Cash officer begins his/her 47

transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a very secured room. Keys to the room are kept under control of cash officer and branch in charge. The amount of opening cash balance is entered into a register. After whole days transaction, the surplus money remain in the cash counter is put back in the vault and known as the closing balance. Money is received and paid in this section.

2.7.1 Cash Receipt:

At first the depositor fills up the Deposit in Slip. For saving account and current account same Deposit in Slip is used in this Branch. After filling the required deposit in slip, depositor deposits the money. Officers at the cash counter receives the money, count it, enter the amount of money in the register kept at the counter, seal the deposit in slip and sign on it with date and keep the banks part of the slip. Other part is given to the depositor. In this branch, i.e., Khatungonj Branch, two different officers maintain two different books for entering such entries. All deposits of saving account are maintained by one officer and other accounts by another officer.

At the end of the day entries of both of these registers are cross checked with the register kept at the cash counter to see whether the transactions are correct or not.

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2.7.2 Cash Payment

When a person comes to the bank to cash a cheque, she/he first gives it to the computer desk to know the position of the check and posting of the cheque. If the account has sufficient fund the computer in charge will post it into the computer, will sign it and seal it. This check is then sent to the concerned officer. There are two officers who verify the checkups one for savings and similar types of account and another for current and similar types of account. After receiving the cheque respective officer first checks it very carefully for any kind of fraudulent activity. She/he also checks the date of the cheque, amount in word, amount in figure and signature of the drawer. If the instrument is free of all kind of error the officer will ask the bearer to sign on the back of it.

He will then put his/her initial beside the bearers signature. She/he will also sign it on its face, will write down the amount by red pen. Then the cheque will be sent to the cash counter. At the cash counter bearer will be asked again to sign on the back of the instrument.

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CHAPTER THREE SOWT ANALYSIS

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By analysing the credit performance of the Bank, we get the following Strength opportunity, weakness and threat (SOWT).

3.1 STRENGTH: 3.1.1. It has well reputation in the market: Prime Bank Limited has a great reputation in the market as a peoples bank. It has variety of products for different types of customers. Its officers and staffs are very much cordial to the customers. 3.1.2 Not engaged in unfair business practice:

Prime Bank Limited from the beginning of its business always doing their business fairly. It has always follow the rules of its governing body Bangladesh Bank. 3.1.3 Concentrated market:

Prime Bank Limited from the starting of its business started to concentrate on market share increase. It has developed a variety of products to attract people with intelligent and industrious work force.

3.1.4

Officers are highly educated:

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Officers who are recruited in Prime Bank Limited are highly educated and selected with quality examination. After recruitment they are properly trained for their job responsibilities. 3.1.5 Executives are highly qualified and experienced :

Executives are highly qualified and experienced. In Prime Bank Limited highly qualified and experienced persons are selected as the executives. So that they operating the different branches of Prime Bank Limited with great expertise and good profit. 3.1.6 Bank has many attractive deposit schemes:

Only Prime Bank Limited offers so many attractive deposit scheme. Other private commercial banks do not offer. So more people are attracted to Prime Bank Limited for banking service. 3.1.7 Well-furnished and Air-conditioned Bank:

Bank has a well furnished and air-conditioned premise for the customer. This premise help the customer to perform their banking job with a pleasant environment. 3.1.8 Efficient management practice in the Bank:

Prime Bank Limited always practices efficient management practice in all its branches and divisions for the better management practice. It has a very strong corporate culture in all its branches and divisions.

3.2 Weakness:

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3.2.1 Deposit is lower than advance: In most of the Prime Bank Limited Branches deposit is lower than the advance. Which is a weak point in banking business. So Bank should try to increase their deposit against the advance. 3.2.2 Short time experience of the Bank: Prime Bank Limited has short time experience of the Bank. As it is a new generation bank it has short time experience of the banking so the people who are engaged in banking in PBL has less experience than some old generation bank. 3.2.3 Officer has limited experience and not enough trained: Most of the officers has limited experience and they have not got enough training for banking. So for better banking adequate training is necessary. 3.2.4 Long-term credit is not sufficient: In Prime Bank Limited long term credit is not sufficient. Due to different types of shortcomings long term credit is not given sufficiently. Long term credit gives the bank long term income opportunities.

3.2.5

Small market shares in Banking-business:

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Prime Bank Limited has small business shares in the market. For better banking it has increase its business shares. It has tried its best to increase its market shares with its diversified efforts.

3.3 Opportunities: 3.3.1 Can increase the credit scheme: Prime Bank Limited can increase the number of its credit scheme for more investment for better and strong banking business. For better business and help the people of the grass root people. 3.3.2 Can increase the advertising of the Bank: By increasing the advertising of the bank, bank can go to the people to inform that they can deposit their money in banks in a risk free and secure environment. The bank may make its products more attractive to the clients by advertising. 3.3.3 Private Banks becomes more reliable to local public: At present private banks are more reliable to the people for prompt, quick and quality service. Prime Bank Limited is the best in its type.

3.3.4

Govt. has banned some Jatiya Sanchaya patra: As government has banned some Jatiya Sanchaya Patra people who want their money to be risk free and have a considerable income are depending more on the

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Private Commercial Banks for their Investment. So Prime Bank Limited has very good opportunity to boost up its deposit.

3.4 Threat:

3.4.1

There are many competitors in the market: As at present there are almost more than 40 Private Commercial Banks in operation in Bangladesh competition between the banks are very high. If one fails to maintain quality operation standards it has to lacking behind in the market. It may loose its market share while the bank which can be able to maintain a high standard can gain more market shares.

3.4.2

Competitors have more deposit: Some of the private banks have more deposit than Prime Bank Limited. It is a great threat to Prime Bank Limited but it is trying its best to increase its deposit.

3.4.3

Ruling Government is not conducive in the viewpoint of the Bank: Ruling Government is not conductive in the viewpoint of the Bank so it is a threat to the banks. 55

3.4.4

Govt. imposes tax and VAT on profile: Govt imposes 45% tax on the total income of the bank. Which reduces the retain earning of the bank. Which hiders the growth of the bank.

3.4.5

Govt. pressures to reduce interest rate: Govt. pressures to reduce interest rate for betterment of the general people. But bank has adjusted its interest rates with its deposit rates or the income of the bank reduce. So it is great threat to the bank.

CHAPTER FOUR

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PROBLEMS, RECOMMENDATION AND CONCLUSION

Problems
The problems as I have observed during my at PBL, Khatungonj Branch, Chittagong are as follows:
1. 2. 3. 4. 5. 6. 7. 8. 9.

All of the branches of the bank are not fully providing online services. Bank having a large amount of idle deposited money. Prime Bank Ltd has not enough ATM booth in our country. Their Check book charge and other relative fees are higher than other bank. Efficiency has been reduced due to the shortage of employees. Advertising, in the from of electronic media is not strong. Contribution of retail loan is also very low which is only 2.89 % the total loan. Security service is not well. There is only one gunman and two guard. All employees need to training facilities by yearly

Recommendations
At the time of working at Prime Bank Limited, Khatungonj Branch, it has been observed by me that the branch is committed with several positive activities in the banking arena including management pattern, banking operation and performance. Since todays banking sector is highly competitive, it has to improve and change its operational process for better survival. For the improvement of the shortfall mentioned in this report following measures should be taken:

1. The bank should take necessary initiatives to facilitate online service through all of the branches in the country. 2. Banks give long term industrial loans of idle deposited money, as well as help the unemployment problem. 57

3. 24 hours banking facilities to be include setup enough ATM booth in our country and provide credit card facilities. 4. Prime Bank Ltd should decrease the check book charge and other relative fees to compete in the banking sector. 5. Increase the number of employees in customer service & clearing section to give service to huge number of customers. 6. Prime Bank Ltd may increase their advertisement and also increase their social activities. 7. Set individual target for all employees of branch and ensure its implementation with the spirit of oneness. 8. There need to security camera, three gunman and enough guard to provide well service. 9. Prime Bank Ltd takes a step to give a well trained by yearly all employees to improve customers service. 10. New branch may be established in the commercial area. 11. Recreation facilities may be provided of all employees. 12. The branch should minimize its official unnecessary expenses.

Conclusion
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General banking Management of Prime Bank contains an important part in overall operation of the Bank. Our industrial sector that are operating their business in different countries getting a good benefit from this department. Although there have some limitation in total operation process including online disturbance, management process, code fore, authorization, technical problem etc. Bank now trying their best to improve such problem and to enhance their operation and customer services. For more facilities Prime bank have a good steps to serve in rural areas. They made a deal with an ego, which facilitates them for more service in this sector. Moreover they have taken steps to open new 5 branches in different area for wide operation. Due to clear and transparent operation bank have introduces Corporate Governance where board reviews and approves various policies for compliance by the management. The Board/ Executive committee reviews the polices / guidelines issued by the Central Bank regarding operation of the Industry. The Board / executive committee of the board approves the credit proposal as per approved policy and Bangladesh Bank guidelines/regulations. Due to maintaining different level of transparency bank are now receiving more profit in every year. And here General banking management plays a good role to booster this profit.

REFERENCES
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1. Asian Development Bank, (2005). Quarterly Economic Update. Bangladesh Resident Mission. 2. C.R Kotheri, Research Methodology Second Edition, 2005-2006, Wishwa Prakashan, Calcutta, India.
3.

Banking & Industrial Development: A Case Study of Bangladesh, Journal of Business Studies, Vol. xxiv, No. 1, June 2008

4. http://www.prime-bank .com 5. http://www.role of remittance in bangladesh economy 6. http://www.role of remittance in global economy 7. Annual Report (2009) Prime Bank Limited 8. Various journals, booklets, vouchers published by PBL 9. http://www.bangladeshinfo.com 10. 11. www.reportbd.com http://www.bangladeshinfo.com

APPENDIX Appendix-A

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Size of monthly deposit

After 5 years the terminal Pension for next 5 years value according to the size according to the size of of installment 40000 80000 160000 240000 320000 401000 641000 802000 962000 1123000 1444000 1604000 2006000 installment 870 1739 3457 5186 6915 8644 13831 17289 20746 24204 31120 34578 43222

500 1000 2000 3000 4000 5000 8000 10000 12000 14000 18000 20000 25000

Secure your Future with DPS in Prime Bank Limited

Different FD rates:
Table: Showing different FD rates: Tenure /Amount 01 Month 03 Months 06 Months Amount below Tk 1 crore 12.00% 8.25% 8.25% Amount Tk 1 crore to below Tk 5.00 crore 9.00% 9.00% 9.00% 61

12Months 24 Months 36 Months

9.00% 9.25% 9.50%

9.25% 9.50% 9.50%

Appendix-B
Special Deposit Scheme (SDS)

Monthly Amount

Revised interest Interest rate

Tax (10%)

deduction Net payable

amount

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payable against every lac of customer deposit TK.1.0 9.50%pa initial TK.791.67 TK.79.17 TK.712.50

Deposit Double Scheme (DDS) Revised Tenure Revised interest rate New product code 7 years and 6 Months 9.50% 329-for conventional banking branch. This product is not available for Islamic Banking Branches.

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