prime bank final report

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1. INTRODUCTION

Prime Bank Ltd. is operating as a scheduled commercial bank under the license issued by Bangladesh Bank, the Central Bank of the country on April 17, 1995 through opening of its Motijheel Branch at Adamjee Court Annex Building, Motijheel commercial area, Dhaka-1000. PBL was actually registered under the Companies Act of 1913 with its registered office at 5, Rajuk Avenue, Motijheel commercial area, Dhaka-1000 which was later shifted to Adamjee Court Annex Building, 119-120, Motijheel commercial area, Dhaka-1000. As a fully licensed commercial bank, Prime Bank Limited has been managed by highly professional and dedicated team with long experience in banking. Further Details on Prime bank, its organization and its branches are provided in Appendix. Major banking functions of Prime Bank Limited are performed mainly through three departments. These are: General Banking Department, Foreign Exchange Department and Credit Department. General banking consists of sections like: Account Opening Section, Local Remittance Section, Online Branch Banking Section, One Stop Utility Services Section, Deposit Schemes Section, Clearing Section, Collection Section, Cash Section, and Accounts Section. Foreign Exchange Department consists of sections like: Remittance, Import and Export. Credit department consists of two sections. Such as : Corporate Credit and Retail Credit. The credit facilities generally provided by the bank can be divided in to two broad categories. They are: Non-Funded Facilities, such as: Letter of Credit (L/C), Letter of Guarantee (L/G) and. Funded Facilities, such as: Loans, Overdrafts and Other advances. Loans are provided through different schemes. Consumer Credit Scheme (CCS) is one of them. This study has focused on Consumer Credit Scheme.

Consumer Credit Scheme is a form of credit that is becoming very popular in recent years. Banks that can operate CCS effectively make huge profit from this scheme. The demand of this scheme is increasing day by day. Now a days the standard of living is very high and people want to consume more products. On the other hand, because of consistent inflation there is huge money but few products .So, the prices of all products are high. In this situation this scheme seems very attractive to people who wants to consume but do not have enough money to spend on this products at a time. Besides this people take loans for investing share market and purchasing fixed asset like land, building, flat etc. For all these reasons this scheme is becoming more popular. Prime Bank is one of those local banks who are successfully operating Consumer Credit Scheme. Prime bank provides eleven types of loan under this scheme. These loans can be classified in to two categories. Such as: secured loans like Home loan, Car loan, House hold durables, Doctors loan, Loan Against Salary and unsecured loans like Education loan, Any purpose loan, Marriage loan, CNG conversion loan, Hospitalization loan, Travel loan. Car Loan is offered to purchase Car, Jeep, Station Jeep, Pick up Van, Cover Van, Bus, Truck, Ambulance and any other vehicle for own use. Doctors Loan is offered for the Doctors only usually to procure professional instruments. Advance against Salary loan is offered to any qualified person who is working as an employee in certain organizations allowed by the bank. Education Loan is offered for study purpose only. Travel Loan is for traveling purpose. Wedding loan is for wedding only. CNG Conversion Loan is offered to convert vehicle into CNG. Any Purpose Loan is for emergency need. Hospitalization Loan is for treatment in hospital. These loans have to be repaid within a specific period. Any interested person within the age range of 25 to 60 and having a permanent job or regular income can apply for the CCS loan of Prime Bank. Under CCS program of Prime Bank Limited a borrower can get maximum of taka 50, 00,000. The down payment is 20% to 10% of the loan for each product. The interest rate charged by Prime bank is comparatively higher than that of other local banks. Prime Bank charges 1% service charge and 1% risk fund for all

products other than Car loan, Doctors loan, Advance against salary and CNG Conversion loan. To make its position more strong, PBL wants to make this scheme more attractive to the customer. So, they introduced CNG conversion loan which is a unique loan only offered by Prime Bank in Bangladesh. They are enjoying the sole competitive advantage in this loan. PBL should include more differentiate product in their CCS, such as Loans for professionals, Shop Financing Scheme, Personal Loan for Women etc. to gain competitive advantage. Prime Bank Ltd has some problems in CCS. Those are: sometimes the down payment paid by CCS customers is very high with PBL. Interest rate and payback period are very important criteria for any kind of loan but most of the clients are not satisfied to PBL Consumer Credit interest rate and loan repayment period. In compare with local banks services of Consumer Credit Scheme of Prime bank is very satisfactory but in compare with multinational and foreign bank the service under this scheme is not that much satisfactory. For this reason CCS of Prime bank can not attract high profile customers like multinational banks but it is mostly preferred by people who prefer local banks. If Prime Bank can overcome its problems and develop more effectivestrategy to compete with multinational and foreign banks they may became one of the dominating bank in banking sector of Bangladesh.

2. SCOPE OF THE STUDY

The study intends to provide a brief but complete idea about the functions of Consumer credit of Prime Bank Limited. Through this study an evaluation of the performance of Prime Bank limited in Consumer Credit Scheme has done and some problems have been

identified that hinder the better performance. Finally, recommendations have been prescribed to improve the performance of the bank in CCS sector.

3. RATIONALE OF THE STUDYIn this study the activities consumer credit scheme of Prime Bank Limited has been described. As this Scheme is in the growing stage this sector has to face dynamic changes and has to handle diversified clients with diversified demand. By this study the functions of CCS in different steps of loan sanctioning has been described. Through this study a current scenario of the performance of CCS of Prime Bank in compare with other banks has been stated. This study will help to find out the problems of CCS of Prime Bank which negatively affect the performance of CCS. At the end of this study some recommendation has also been prescribed that can be helpful for Prime Bank to improve their performance in CCS.

4. OBJECTIVES OF THE STUDY4.1. Broad Objective:The broad objective of the study is to describe the Consumer Credit Scheme of Prime Bank limited.

4.2. Specific Objectives: To identify the functions of Consumer Credit Scheme of Prime Bank Limited. To evaluate the performance of Prime Bank limited in Consumer Credit Scheme.

To identify the problems observed in the Consumer Credit Scheme of Prime Bank Limited. To prescribe some recommendations to improve the performance of Credit department of PBL.

5. RESEARCH METHODOLOGY:This research is an exploratory research. Only secondary sources are used in this study for data collection. In this study secondary sources are used because of their availability, authenticity and accuracy. Secondary sources used in this study are: different Procedure Manual published by PBL, Annual Report, study of old files, previous internship reports, web sites. No specific statistical technique is used in this study for data analysis.

6. LIMITATIONS OF THE REPORT:The study had to be completed under certain constraints, which obstruct it to be more effective. Some of these constraints are listed: Insufficient time to know all activities of the branch and prepare the report. Shortages of sufficient data for comparing It was very difficult to collect the information from various personnel for their job constraint. Every organization has their own secrecy that is not exposed to others. Errors rise from the lack of practical knowledge and experience.

For these limitations this study may not cover all areas and may have unintentional errors and omissions.

7. DISCUSSIONS, ANALYSES & FINDINGS

Prime bank provides eleven types of loan under Consumer Credit Scheme. These are: car loan, household loan, home loan, advance against salary, education loans, travel loan, marriage loan, CNG conversion loan, any purpose loan, hospitalization loan and doctors loan. . Any interested person within the age of 25 to 60 can apply for loans. Prime Bank charges 1% service charge and 1% risk fund for all products other than for car loan, doctors loan, advance against salary and CNG conversion loan. For car loan the stamp fee is taka 600, for household durables and home loans the stamp fee is taka 450 and for other loans under CCS the stamp fee is taka 300. For more details the PPG and credit policy are provided as appendix. The discussion, analysis and findings part of this study is divided in to three sections. These are: functions, evaluation and problems of consumer credit scheme of prime bank.

7.1. Functions of CCS of Prime Bank:To find out the functions of CCS at first loan sanctioning process have to be understood, because all the activities of CCS arise from this process. At first, Customers approach any commercial branch of the bank or banks agents approach to the clients. Then bank receives relevant documents from the customers. Then they forward a proposal to the Head Office. Head office analyzes the customers credit worthiness. In this step bank also verify the customers by third party. After assessment the Head office select the eligible consumers and sanction the loan. Head Office then forwa