View with images and chartsCustomer satisfaction and General Banking Activities of National

Bank Limited

1.1 Historical Background of National Bank Limited 

The emergence of National Bank Limited in the private sector is an important event in the Banking arena of Bangladesh. When the nation was in the grip of severe recession, Govt. took the farsighted decision to allow in the private sector to revive the economy of the country. Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize the economy of the country. National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the private sector. 

National Bank Limited was incorporated in Bangladesh on 31st December 1981 and started its operation with effect from April 12, 1983. In 1983, the bank started with an authorized capital of Tk 100 million and paid up capital of Tk 44 million. The three types of shareholders of the bank are Group-A (Bangladeshi sponsors owning 50%), group-B (government of Bangladesh and public sector financial institutions owning 5%) and group-C (general public owning 45%). 

The management of the bank is vested in a board of directors consisting of 21 members including the managing director of the bank. Managing directors is the chief executive of the bank. The bank carries out all traditional functions which a commercial bank perform such a mobilization of deposits, investment of funds, financing of traders, businessmen, industrialist, importers and exporters etc., the National Bank Limited opened new branches only eight during 1983, rising the total number of branches 76 in 2004, total number of employees of the bank which 242 in 1983 and increased to 2187 in 2004, during the short periods of its operation the bank has made notable progress in various activities. Since, commencement of its activities on 23rd March 1983, the bank mobilized the deposit of tk. 2085.50 million and Tk 3507.50 million at the end of the year 1983 to 2004 respectively. Foreign exchange business handled by the Bank during the year 1983 to 2004 was both TK. 1005.50 and TK. 10150.30 million respectively. The Bank earned a profit of TK. 84.70 million in the year 1985, compare to the 52.10 million in the year 1984.  

NBL inaugurated a change when it substituted the prevalent austere and cold banking atmosphere with an intimate and warm one. The success of NBL is largely credited to its friendly co-operative approach, understanding the special Banking needs of each and every client and concern for their benefits and welfare. From the beginning the objectives of NBL was to increase capitalization, to maintain disciplined growth and high corporate ethics standard and enhance the health of shareholder. NBL is scattered all over the world consisting of 76 branches and 3 booths. In 1995, NBL acquired equity and management of Nepal Arab Bank Limited and in 1996 NBL opened a representative office in Myanmar. 

Since the very beginning, the Bank exerted much emphasis on overseas operation and handled a sizeable quantum of homebound foreign remittance. With a strong sense in all

business areas of commercial banking, NBL could foresee tremendous growth in home in homebound remittance from Bangladesh expatriates in U.S.A. and U.K., Middle East and different countries of the world. The Bank established extensive drawing arrangement network with Banks and Exchange Companies located in important countries of the world. Expatriates Bangladeshi wage earners residing in those countries can now easily remit their hard-earned money to the country with confidence, safety and speed. Consecutively NBL established a unique money remittance system with Western Union of USA for inbound and outbound remittance.

The year 2006 marked the addition of yet another golden stair in the chronicle of NBL’s success story. Compared to 2005, Foreign exchange business of the Bank increased by 34.40% to Tk. 5186 crore, of which export, import and remittance business increased by 34.16%, 31.27% and 56.50% respectively. Total assets of the Bank stood at Tk. 4483 crore on 30.09.2006.

Our Bank invested 25% equity in Gulf Overseas Exchange Company LLC, a joint venture Exchange Company in Oman, operating since November, 1985 under the management of our Bank. The Bank received Riyal Omani 11875 equivalent to Tk.2.10 million as dividend for the year 2006.

A team of highly qualified and experienced professionals headed by the Managing Director of the Bank who has vast banking experience operates bank and at the top there is an efficient Board of Directors for making policies. 

1.2 Overview of National Bank Limited 

National Bank Limited is one of the leading private commercial bank having a spread network of 102 branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2008. 

National Bank Limited has been licensed by the Government of Bangladesh as a Scheduled commercial bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the Bank within a period of 25 years of its operation achieved a remarkable success and met up capital adequacy requirement of Bangladesh Bank. 

With a wide range of modern corporate and consumer financial products National Bank has been operating in Bangladesh since 1985. In 1997, the bank introduced automated branch banking system to increase efficiency and improve customer service. The bank is one of the leading banks which introduced first Credit Card in Bangladesh. The technology has been upgraded to manage the growth of the bank and meet the demands of our customers. ATMs now allow customers to retrieve 24x7 hours cash withdrawals. They are concentrating on retail banking, side by side to business banking, in order to improve their yield on advances and diversity credit risk. Profit orientation is encouraged at all levels. With customer focus, sincere efforts, new products innovation and total involvement of the human capital of the Bank they are determined to improve business and profitability and occupy its justified position in the forefront of the industry. 

At present, NBL has been carrying on business through its 101 branches spread all over the country. Besides, the Bank has drawing arrangement with 415 correspondents in 75 countries

of the world as well as with 32 overseas Exchange Companies. NBL was the first domestic bank to establish agency arrangement with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use the latest information technology services of SWIFT and REUTERS. NBL has been continuing its small credit programmed for disbursement of collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving their lot. Alongside banking activities, NBL is actively involved in sports and games as well as in various Socio-Cultural activities.

Now NBL is on line to establish trade and communication with the Prime International banking companies of the world. As a result NBL will be able to build a strong root in international banking horizon. Bank has been drawing arrangement with well conversant money transfer service agency "Western Union". It has a full time arrangement for speedy transfer of money all over the world. Banking is not only a profit-oriented commercial institution but it has a public base and social commitment. Admitting this true NBL is going on with its diversified banking activities. NBL introduced National Bank Monthly Savings Scheme (NMS), Special Deposit Scheme, Consumer's Credit Scheme and NBL Housing Loan, NBL Small Business Loan, Small House Loan Scheme, Festival Small Business loan etc. to combine the people of lower and middle-income group. Inspired by its social obligation and commitment and responsibility, NBL has been running a School and College up to Class XII solely on its own guardianship. From the very inception, this institution has been maintaining a good track record of results at the SSC and HSC Examinations. Conducted by a well-educated and trained team of teachers, reputation of this institution has been increasing day-by-day as a result of their relentless and sincere endeavor. Transparency and accountability of a financial institution is reflected in its Annual Report containing its Balance Sheet and Profit & Loss Account. In recognition of this, NBL was awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by the Institute of Chartered Accountants of Bangladesh. National Bank Limited is a customer oriented financial institution. It remains dedicated to meet up with the ever growing expectations of the customer because at National Bank, customer is always at the center.

1.3 Vision of the National Bank Limited 

Establishing ourselves firmly at home and abroad as a front representative bank Of Bangladesh by ensuring highest standard of clientele services though best application of

modern information technology and making due contribution to the national economy is our cherished vision.

1.4 Mission of the National Bank Limited

Efforts for expansion of our activities at home and abroad by adding new dimensions to our business strategy are being continued unabated. Alongside, we are also putting highest priority to cost control, transparency, accountability, good governance, improved clientele service as well as to our commitment to serve the society, through which we want to get closer and closer to the people of all strata .wining an everlasting seat in the hearts of people as a caring companion in uplifting their living standard through continuous up gradation and diversification.

1.5 Organogram of NBL

1.6 Functions of NBL

• To maintain all types of deposit A/Cs.

Chairman

Director (MD)

Deputy Managing Director (DMD)

Executive Vince President (EVP)

Senior Vice president (SVP)

Vice president (VP)

Assistant Vice president (AVP)

Executive Level Officer level

Junior Officer

Grade -III (B) Officer

Grade –III(A) Officer

Grade -III Officer

Grade -II Officer

Grade -I Officer

• To make investment.• To conduct of foreign exchange business.• To conduct other Banking services.• To conduct social welfare activities.• To work for continues business innovation and improvements.• To build up strong-based capitalization of the country. To ensure the best uses of its creativity, well disciplined, well manages and perfect growth.

1.7 Objectives of National Bank Limited

o Offering quick and improved clientele service through application of modern information technology. Bringing modern Banking facilities to the doorstep of general public through diversification of Banking services, thereby arousing saving propensity among the people.  

o Playing an important role in the national progress by inculcating improved banking-customer relationship, thereby bringing us closer and closer to them.  

o Ensuring highest possible dividend to the respect shareholders by making best use of their equity.  

o Pursuing the policy of nurturing balance growth of bank in all sectors. o Consolidating our position in the competitive market by introducing

innovative banking products.  o Ensuring highest professional excellent for our work force through

enhancement of their work efficiency and technological knowledge. o Expanding the bank’s area of investment by taking part in syndicate large loan

financing.   o Upholding the image of the bank at home and abroad by pursing dynamic and

time-befitting banking activities.  o Ensuring capital adequacy, asset quality, efficient management, highest profit

and satisfactory liquidity through successful implementation of the programmed for Marketing Core Risk banking.

o To improve and broaden the range of product and services and offer highest possible benefit to customers.  

1.8 Business philosophy of National Bank Limited 

The business philosophy of NBL is to move and develop with the changing new era. Especially they want to operate their activities as much accurate as possible rather than other private banks operating in Bangladesh because this bank has come to this position through substantial step by step. By developing human resource and providing qualitative service they want to be leader in banking sector in the new private banking competitive market. Side by side they assist in the development of national economy. Alongside providing best service to the clients, patronizing and taking part in social development activities as well as making due contribution to growth of the national economy.   

1.9 Commitments

In Serving Customers

Customer-first

Quality-focus Credibility & secrecy

In Serving the Bank

Loyalty Total commitment & dedication Excellence through teamwork

In Carrying Ourselves at Work

Discipline Honesty & Integrity Sincerity Caring Creativity  

1.9.1Corporate Social Responsibilities

NBL is a vibrant and promising bank. Its activities are not limited only to business and financial matters. Earning the highest level of trust requires the balanced provision of value to four constitutions. These are:

1. Employment, 2. Education, 3. Sports and Cultural activities, 4. Disaster relief.

1.9.2 National Bank Foundation

NBL is a vibrant and promising bank. Its activities are not limited only to business and financial matters. Out of social responsibility, NBL has extended its support for expansion of educated in the country. With this objective, the National Bank Foundation was formed in 1989. Under the financial assistance of this Foundation, the National Bank Public School and College was established at Moghbazar in Dhaka.

1.9.3 Sports and Cultural Activities 

Since its inception, NBL has been playing a pioneering role in sponsoring sports and games in the country. NBL was the sponsor of Metropolis Football League and Senior Division Football League last year. Besides, NBL extended substantial patronization to Bangladesh Olympic Association and Bangladesh volleyball Federation in 2003.The Bank never hesitates to extend its helping hands to the people as in the days of crisis so also in the exuberant happy moments of cultural events.  

1.10 Product and Services offered by National Bank Ltd1. Different kind of Account

Savings Account

Current Account

Individual Account Joint Account Proprietorship Account Partnership Account

National Bank Monthly Deposit Scheme STD(Short Term Deposit)

NDS(National Bank Deposit Scheme)

2. Cheque Book Issue

3. Cash Receive/Payment 4. Payment Order(PO) 5. Pay sleep(PS) 6. Demand Draft(DD) 7. Telegraphic Transfer(TT) 8. Clearing 9. Bill Collection

LBC(Local Bill Collection) OBC(Outward Bill Collection) IBC(Inward Bill Collection) FBC(Foreign Bill Collection)

10. Advance

CC (Cash Credit) SOD(Secured Overdraft) FDR Loan General LDBP(Local Documentary Bill Purchased) LDBC(Local Documentary Bill Collection)

11. LC(Letter Of Credit)

12. Foreign Remittance 13. Western Union 14. SWIFT 15. Credit Card 16. Power Card(Debit Card)

1.11 Other Services

(A) Locker Service:

For safekeeping of customers' valuables like important documents and goods like jewelries and gold ornaments, National Bank locker service is available in most of the Branches in urban areas. For using a locker customer must have an account in National Bank Ltd.

Table 2.1: Locker service

Nature of Service Nature of Charges Rate of ChargesCustody of Locker / Safe Rent a) Yearly TK.500/= for small size locker 

b) Yearly TK.1,000/= for large size locker   (B) Western Union Money Transfer: 

Joining with the world’s largest money transfer service “Western Union”, NBL has introduced Bangladesh to the faster track of money remittance. Now money transfer between Bangladesh and any other part of the globe is safer and faster than ever before. In 1993, National Bank has made and arrangement with Western Union Remittance services, which has over 127 years experience for speedy remittance of money with more then 140 countries. The bank handles a substantial number of inward remittances from Western Union. The beneficiaries receive payment within minutes and they do not need to maintain any bank account. During the year 2007 NBL received sizable amount of foreign exchange of USD 215.37 million with growth of 13.88 percent than the year 2006. 

(C)  SWIFT Service: 

National Bank Limited is one of the first few Bangladeshi Banks to obtain membership of SWIFT (Society for Worldwide Inter-bank Telecommunication). SWIFT is a members’ owned cooperative which provide a first and accurate communication network for financial transactions such as Letter of Credit, Fund Transfer etc. NBL has established Bilateral Key replacing obsolete test key arrangement. It has also established BKE with local banks.  

(D) Merchant Banking: 

NBL has been participated in capital market since long to generate more income. Besides investment in secondary market, the bank invested Tk. 13.05 crore in primary portfolio during 2007. It helped the capital market remain vibrant. The purchase price of total quoted shares held by the bank on 31.12.2007 was Tk. 99.23 crore, market price of which was Tk. 229.55 crore on that day. 

The bank earned Tk. 42.30 crore from share trading and received Tk. 4.21 crore as cash dividend the year 2007. The bank also earned Tk. 25.07 lac from its market intermediary activities i.e Banker to the issue, underwriter, etc.

NBL purchased a membership of the Dhaka Stock Exchange Limited and got registration as NBL Capital Services and become a corporate member of DSE.

(E) ATM Information

National Bank Power card (Debit Card) is an ATM card too. For withdrawal of cash the customer can use those ATMs where there is written Q-Cash & ATM.

(F) ATM

National Bank Ltd. has installed ATMs around the country to enable their Account Holders & Card Members to draw cash

(G) Banking Software

A to Z software, which is used for Total Banking Operation. The online banking is coming soon under this A to Z software is under process. Implementation is expected soon by National Bank Ltd. 

2.12 Future Plan

National Bank Ltd. has some future plan that they want to implement in the near future. In most ca they wants to extend their existing facilities that they are providing to their customer but they are now trying to grab more potential customer by implementing some lucrative features and these are:

They have planned to recruit more skilled human resource for the development of the bank.

They have planned to extend their ATM facilities They are going to launch the online banking very soon.

 1.13 Present Trends of the Bank 

1.13.1 Branches of NBL 

NBL, which started its operation at Dilkusha Branch on march 23, 1983, was the first and major private commercial Bank in Bangladesh operating throughout the country as well as the age of the Bank is  25 years. During this period it has established total 101 branches over the country and made a smooth network in side the country as well as throughout the world. The number of Branches as territory-wise is mentioned in the table. 

Table 2.2: Branch Name

SL.No. Branch Name SL.No. Branch Name SL.No. Branch Name  Dhaka Zone 38. Jatrabari 74. Nator 01. Dilkusha 39. Progoti Soroni 75. Shajadpur 02. Lake Circus 40. Valuka 76. Gaibandha 03. Narayangonj Cittagong Zone Khulna Zone04. Bangshal 41. Khathungonj 77. Kunla05. Elephant Road 42. Agrabad 78. Barishal06. F. Exchange 43. Comilla 79. Kalhati07. Narsingdhi 44. Feni 80. Satkhira 08. Tangail 45. Jubilee Road 81. Jessore 09. Mymensing 46. Chowmohoni 82. Kustia 10. Babu Bazar 47. B-Baira 83. Volla

11. Malibagh 48. Dagonbhuyan 84. Jhalokhati 12. Mohakhali 49. Chadpur 85. Naria 13. Bandura 50. Potiya 86. Vangga14. Kawranbazar 51. Sawndip 87. Chowgcha 15. North. BK.H. Ro 52. Chaktai 88. Charfashion 16. Pagla Bazar 53. Pahartoli Slyhet Zone17. Islampur 54. S.KMujib Raod 89. Laldighir Par18. Mothijheel 55. Cox’s Bazar 90 Moulobi bazaar19. Savar 56. Chuddagram 91. Sreemongal20. Dhanmondi 57. Muradpur 92. Mirpur Bazar21. Kishoregonj 58. Bashurhat 93. Tajpur22. Gulshan 59. Mirsorai 94. Jindabazar23. Uttara 60. Undurkella 95. Biyanibazar 24. Mirpur Rajshahi Zone 96. Shibgonj25. Gazipur 61. Rajshahi 97. Subid bazaar26. Jamalpur 62. Rangpur 98. Bishonath27. Sharpur 63. Bogura 99. Hobigonj28. Z.H.S.M. college 64. Pabna 100. Golapgonj29. Sree Nagar 65 Dinajpur 101. Sunamgonj30. Modhupur 66 Saiedpur 102. Kodomtali31. Lakecircus 67 Naogaon 103. Chakbazar32. Mohammadpur 68 Sirajgonj 104.  Zindabazar33. Kaliakoir 69. C.Nawab Gonj 34. Tongibari 70. Ishwardi 35. Shibchar 71. Joypurhat  36. Banani 72. Thakurgaon37. Imamgonj 73. Godagari  Table 2.3: Number of Branches.

Years 2003 2004 2005 2006 2007Number of Branches 76 76 76 91 101

1.13.2 Numbers of Employees:

National Bank is the pioneer in private banking sector. The numbers of employees increased throughout its life because of growing nature. In 2006 the number of employees was 2270, which were 2183 in 2005 and 2133 in 2004. Number will be increased when the number of branches will be increased.  

Table 2.4: Numbers of Employees.

Years 2003 2004 2005 2006 2007Number of Employees 2185 2133 2183 2270 2432

1.14 Number of Foreign Correspondents:

National Bank is the pioneer in private banking sector. In 2006 the Number of foreign correspondents are 400, which are 391 in 2005 and 358 in 2004. Number of Number of foreign correspondents will be increased when NBL is able to make contract with other oversees financial institution. 

Table 2.5:  Number of Foreign Correspondents.

Years 2003 2004 2005 2006 2007Number of foreign correspondents 358 410 391 400 405 1.15 Five Years Financial performance of National Bank Ltd at a glance

Table 2.6: Financial Performance 

(Taka In Million)  2003 2004 2005 2006 2007Income Statement          Interest Income 2,342.30 2,341.43 2,512.17 3,674.32 4,288.80Interest Expense 1,801.18 1,749.30 1,897.83 2,449.76 2,833.45Non-Interest Income 1,279.72 1,369.81 1,690.32 2,054.48 2,893.83Non-Interest expenses 8,75.75 1,226.79 1,453.34 2,132.26 2,134.08Profit Before Tax 336.09 484.21 581.13 1,058.73 2,035.10Profit After Tax 88.12 170.02 271.67 507.49 1,238.11Balance Sheet          Authorized Capital 1,000.00 1,000.00 1,000.00 2,450.00 2,450.00Paid up Capital 430.27 516.33 619.59 805.47 1,208.20Reserve Fund & Surplus 1,270.63 1,345.99 2,115.03 2,468.79 3,360.18Total Shareholders’ Equity 1,700.90 1,862.31 2,734.61 3,274.25 4,568.39Deposit 27,762.12 28,973.39 32,984.05 40,350.87 47,961.22Loans and advances 22,257.15 23,129.65 27,020.21 32,709.68 36,475.74Investments 4,044.20 4,374.17 3,564.84 6,239.38 7,760.38           Fixed Assets 889.61 895.35 1,431.23 1,627.29 1,842.28Total Assets 35,670.33 35,127.30 38,400.37 46,796.04 56,526.96

Off Balance Sheet items 11,114.08 12,897.65 16,645.75 19,737.75 26,801.07Foreign Exchange Business - - - - -Import 19,264.50 22,028.30 31,648.20 42,458.50 62,759.00Export 16,341.80 17,105.30 21,344.10 28,019.20 31,824.00Remittance 7,637.50 9,035.50 13,618.20 21,353.90 27,560.80BIS Capital Measures          Risk Weighted Assets 17,156.45 19,796.12 25,598.13 32,055.71 35,940.79Core Capital(Tier 1) 1,547.14 1,708.55 1,996.41 2,503.90 3,742.01Supplementary Capital(Tier 2) 361.77 380.13 661.61 733.97 969.46Tier 1 capital Ratio 9.02% 8.63% 7.87% 7.81% 10.41%Tier 2 Capital Ratio 2.11% 1.92% 2.58% 2.29% 2.70%Total Capital Adequacy Ratio 11.13% 10.55% 10.45% 10.10% 13.11%Credit Quality          Provision for Unclassified Loans 166.64 185.00 251.13 307.43 514.91

Provision for Classified Loan 2,995.22 1,747.64 716.07 854.18 947.74% of NPLs to Total Loans and advances

28.23% 17.37% 7.07% 6.01% 4.53%

Share Information          No of Share outstanding(million) 4.30 5.16 6.20 8.05 12.08Earning Per Share - - - - -Basic 17.07 27.44 43.85 63.01 102.47Diluted - - - - -Dividend Per Share          Cash(BDT) - - - - -Stock(Bonus Share) 20.00% 20.00% 30.00% 50.00% 55.00%Market Value Per Share(Taka) 226.61 475.25 746.50 760.50 1,494.00Price Earning Ratio(Times) 13 17 17 12 14Net Asset Value Per Share(Taka) 395.31 360.68 441.36 406.50 378.12Operating Performance Ratio          Credit Deposit Ratio 80.17% 79.83% 81.92% 81.06% 76.05%Cost of Funds 5.83% 5.47% 5.31% 6.15% 6.35%Cost of Funds with Establishment Costs 9.22% 8.78% 8.50% 9.32% 9.31%Yield on Loans and Advances 10.24% 10.32% 10.02% 12.28% 12.13%Return on Assets 2.61% 2.09% 2.22% 2.50% 4.29%Return on Equity 5.29% 9.54% 11.82% 16.89% 31.57%Other information          

Number of Branches 76 76 76 91 101Number of Employees 2,185 2,133 2,183 2,270 2,432Number of Foreign Correspondents 358 410 391 400 405 1.16 Capital Structure of National Bank Limited

National Bank LTD is one of the oldest banks in Bangladesh. It owns one of the strongest capital structures in the banking history of Bangladesh. Authorized capital is increased in 2006 which is 2450 millions. Apart from that paid up capital is also increased since it started its journey. On the report the paid up capital is reported Taka 805.47 million. Last year it was 619.59 million, which was lower than the amount reported in the year 2006.    Table 2.7: Capital Structure of NBL.

Years 2002 2003 2004 2005 2006 2007Authorized capital(in million) 1000.00 1,000.00 1000.00 1000 2450.00 2450.00

Paid up capital(in million) 430.27 430.27 516.33 619.59 805.47 1208.20

Reserve Fund(in million) 1198.7 1270.63 1345.99 2115.03 2468.79 3360.18 

1.17 Cash

Cash in hand stood at Tk. 107.71 crore in 2007 which is 49.24 percent higher than the previous year. It increased due to expansion of business activities through widening of branch network. 

1.18 Balances with Bangladesh Bank and its Agents

The balances maintained with Bangladesh bank and its agents increased by 40.83 percent at the end of December 2007. Due to the increase deposit the bank increased balances with Bangladesh Bank and its agents for maintaining proportionate Cash Requirement (CRR).  

1.19 Balances with other Banks/Financial Institutions

The balances maintained with other banks and financial institutions increased by 140.05 percent mainly due to transfer of funds to different banks for covering the payment against inward foreign remittances. 

1.20 Deposits of National Bank Limited

On 2007 total deposits of the bank stood at TK. 47961.2 million which is higher than last years 40350.9 millions and the growth rate is 18.86%. The increasing trend of collecting deposit is followed in last five year.

Table 2.8: Deposits of NBL.

Year 2003 2004 2005 2006 2007Deposits(in million) 22257.12 28973.39 32984.05 40350.9 47961.2Growth rate NIL 30.18% 13.84% 22.33% 18.86%

 1.21 Loans and Advances of National Bank Limited

With a view to improve the quality and soundness of Loan portfolio, the bank arranges more strict procedure for risk assessment, lending decisions and monitoring functions at the time of granting Loans and Advances. The emphasis on maintaining the quality of assets has rendered a diversified and well-structured advances portfolio. We have furnished below the loan and advance position of National Bank Limited to comparison its progress for last five years.

Table 2.9: Amount of different types of Advances in NBL (in million)

Year 2003 2004 2005 2006 2007Loans, Cash credit, Overdrafts etc. 21119.53 21613.77 24913.19 29619.6 33137.02

Others 1137.62 1226.67 2107.01 3090.08 3338.73Total 23122.53 23617.77 26918.19 31625.6 35144.02Growth rate NIL 13.12% 33.22% 22.41% 13.28% 

1.22 International Trade of National Bank Limited

In the year 2007 National Bank Limited remains highly active in the arena of international trade financed by offering a board spectrum of services namely, Issuance of Documentary Credit, Advising of Export L/Cs, Purchase and negotiation of export bills, Documentary collections, pre-shipment and post-shipment financed, Remittance Disbursement Activities etc.

1.22.1 Import:

In the year 2007, National Bank saw the highest ever growth rate in import business, which stood at Tk 62759.00 million, compared to 2006s volume of Tk 42458.50 million marking the increase of 47.81% from last year. The major import items of the year were: Coals, Steel items, HDPE, Raw cotton, Fabrics and Accessories, Industrial commodities and Seeds, poultry feeds, capital machineries etc

Table 2.10: Import of NBL.

Year 2003 2004 2005 2006 2007Import(in million) 19264.5 22028.3 31648.2 42458.5 62759Growth rate NIL 14.35% 43.67% 34.16% 47.81% 1.22.2 Export:

National Bank experienced sound growth of export business in 2007 from 2006. The volume of export business rose 28019.2 million from Tk 31824 million in 2007 showing and increase of around 13.58%. As before, Ready Made Garments still remained in the major export item of 2007 constituting more than 19.3%. The other export items were frozen fishes, which was 4.2% of total export.  

Table 2.11: Export of NBL.

Year 2003 2004 2005 2006 2007Export (in million) 16341.8 17105.3 21344.1 28019.2 31824Growth rate NIL 4.67% 24.78% 31.27% 13.58%   

1.23 Foreign Exchange Business

National Bank Limited has passed a successful year in foreign exchange business. NBL expended the foreign exchange business in different countries with different agencies in last year. National Bank made money transfer arrangements with Bolaka exchange house last year. NBL has the highest number of foreign correspondents in abroad. So it receives the major portion of remittance from the non-returning Bangladeshis and from the international importers. National Bank's remittance volume increased at a huge amount by 56.80% about Tk 21353.9 million from last year's Tk 13618.2million. It also increased by 29.07% in the year 2007.

Table 2.12: Foreign Remittance Business of NBL.

Year 2003 2004 2005 2006 2007

Foreign remittance (in million) 7637.5 9035.5 13618.2 21353.9 27560.8Growth rate NIL 18.30% 50.72% 56.80% 29.07% 

1.24 Profit of NBL

Profit performance of National Bank Limited proves that it is performing well in the last five years. In 2003, profit before tax was 336.09 millions. Profit became 88.12 millions, when tax for that year was deducting. Since then, the profit before tax and profit after tax are increasing at a faster growth rate. The highest amount of profit is earned in 2007. The profit of last five years suggests that NBL is managed well during that time. 

Table 2.13: Profit of NBL.

Year 2003 2004 2005 2006 2007Profit before tax (in million) 336.09 484.21 581.13 1058.73 2035.1Profit after tax (in million) 88.12 170.02 271.67 507.49 1238.11 1.25 Source & Utilization of Capital

Main part of the source of capital of NBL bank is Equity of Share Holder & Savings of mass people. That money is used by the bank for short term & long term debt/loan to the different enterprise & financial institutions and earns huge profit against that. 

1.26 SWOT AnalysisSWOT analysis is the detailed study of an organization’s exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the organization.

StrengthsNational Bank Limited has already established a favorable reputation in the banking industry of the country. It is one of the leading private sector commercial banks in Bangladesh. The

bank has already shown a tremendous growth in the profits and deposits sector. National Bank Limited has already achieved a high growth rate accompanied by an impressive profit growth rate in 2001. The number of deposits and the loans and advances are also increasing rapidly. National Bank has the reputation of being the provider of good quality services too its, potential customers.

Modern technology & computer:NBL has well decorated with modern equipment and facilities. For the speedy service to the customer NBL has installed money –counting machine in teller counter .The bank has computerize banking operation under the software

Weakness:The main important thing is that the bank has no clear mission statement and strategic plan. The banks not have any long-term strategies of whether it wants to focus on retail banking or become a corporate bank. The path of the future should be determined now with a strong feasible strategic plan. The bank failed to provide a strong quality-recruitment policy in the lower and some mid level position. As a result the services of the bank seem to be Deus in the present days. The poor service quality has become a major problem for the bank. The quality of the service at National Bank is higher than the Dhaka Bank, Prime Bank or Dutch Bangla Bank etc. But the bank has to compete with the multinational Bank located here. Some of the job in National Bank has no growth or advisement path. So lack of motivation exists in persons filling those positions. This is a weakness of National Bank that it is having a group of unsatisfied employees. In terms of promotional sector, National Bank has to more emphasized on the. They have to follow aggressive marketing campaign.

Opportunity:Business diversification:In order to reduce the business risk, National Bank has to expand their business portfolio. The management can consider options of starting merchant banking or diversify into leasing and insurance sector. The activity in the secondary financial market has direct impact on the primary financial market. Banks operate in the primary financial market. Investment in the secondary market governs the national economic activity. Activity in the national economy controls the business of the bank. Opportunity in retail banking lies in the fact that the country’s increased population is gradually learning to adopt consumer finance. The bulk of our population is middle class. Deferent types of retail lending products have great appeal to this class. So a wide variety of retail lending products has a very large and easily pregnable market. A large number of private banks coming into the market in the recent time. In this competitive environment National Bank must expand its product line to enhance its sustainable competitive advantage. In addition o f those things, National Bank can introduce special corporate scheme for the corporate customer or officer who have an income level higher form the service holed. At the same time, they can introduce scheme or loan for various service holders. And the scheme should be separate according to the professions, such as engineers, lawyers, doctors, etc.

Threats:

Increasing competitionAll sustain multinational banks and upcoming foreign, private banks posse’s enormous threats to National Bank Limited. If that happens the intensity of competition will use further

and banks will have to develop strategies to compete against an on slough of foreign the banks. Default culture:The default risks of all terms of loan have to be minimizing in order to sustain in the financial market. Because default risk leads the organization towards to bankrupt. National Bank has to remain vigilant about this problem so that proactive strategies are talent to minimize this problem if not elimination. The low compensation package of the employees from mid level to lower level position threats the employee motivation. As a result, good quality employees leave the organization and it effects the organization as a whole. National Bank Limited: (Lake Circus) Branch

2.0 (General banking)General banking department is the heart of all banking activities. This is the busiest and important department of a branch, because funds are mobilized, cash transactions are made; clearing, remittance and accounting activities are done here. Since bank is confined to provide the services everyday, general banking is also known as retail banking. In NBL Lake Circus Branch, the following departments are under general banking section:1. Account opening section2. Deposit section3. Cash section4. Remittance section5. Clearing section6. Credit card section8. Accounts section9. Western Union Money Transfer Section10. Dispatch

2.1 Account Opening section:

Account opening is the gateway for clients to enter into business with bank. It is the foun dation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account

Account opening procedure:

Step 1 The account should be properly introduced by Any one of the following: An existing Current Account holder of the Bank. Officials of the Bank not below the rank of an Assistant officer. A respectable person of the locality well known to the manager

/Sub- Manager of the Branch concernedStep 2 Receiving filled up application in bank’s prescribed form mentioning what

type of account is desired to be opened.Step 3 The form is filled up by the applicant himself / herself.

Two copies of passport size photographs from individual are taken, in case of firms photographs of all partners are taken.

Applicants must submit required documents Application must sign specimen signature sheet and give mandate Introducer’s signature and accounts number - verified by legal

officer. Step 4 Authorized Officer accepts the application.Step 5 Minimum balance is deposited - only cash is accepted.

A customer can open different types of accounts through this department. Such as:

Documents required for opening account:i Individual/Joint Account:1. Introduction of the account.2. Tow photographs of the signatories duly attested by the introducer.3. Identity (copy of passport).4. Joint Declaration Form (For joint a/c only).5. Employee’s Certificate (in case of service holder).

Partnership Account:1. Introduction of the account.2. Two photographs of the signatories duly attested by the introducer.3. Valid copy of Trade License.4. Rubber stamp.5. TIN number certificate.6. Identity (Copy of passport).7. Permission letter from DC/Magistrate (in case of newspaper)

Limited company:1. Introduction of the account.2. Two photographs of the signatories duly attested by the Introducer.3. Valid copy of Trade License.4. Board resolution of opening A/C duly certified by the Chairman/Managing Director.5. Certificate of Incorporation.6. Certificate of Commencement (In case of Public limited company).7. Certified (joint stock) true copy of the Memorandum and Article of Association of the Company duly attested by Chairman or Managing Director.8. List of directors along with designation & specimen signature.9. Latest certified copy of Form - xii (to be certified by register of joint stock companies) (In case of Directorship change).10. Rubber Stamp (Seal with designation of each person)11. Certificate of registration (In case of Insurance Company -. Obtainedfrom department of Insurance form the Peoples Republic of BD.)

Club / societies account:1. Introduction of the account.2. Two photographs for Opening A/C duly certified by President/Secretary.3. Board Resolution for Opening A/C duly certified by President/Secretary.4. List of Existing Managing Committee.5. Registration (if any).6. Rubber Stamp.7. Permission letter from Bureau of N.G.O. (In case of N.GO. A/C).

Issuing Cheque BookThere are three types, of cheque book in the National Bank ltd. those are:

•Ten leaves cheque book: -Ten leaves cheque book use only for savings account. Twenty leaves cheque book: -Twenty leaves cheque book is use for current account.Fifty leaves cheque book: - Filly leaves cheque book use for current account but this is provided those depositors who are loyal customer or those whose transaction has done randomly.

Chequebook issue to a new account holderNew account holder has to fill up an application form that is provided by NBL. After verifying depositor signature the authorized officer put branch seal and put his signature then dale, name of the account holder, account number, cheque number are recorded in the register book. When all this function is successfully completed the client gets his cheque book and put his signature on the register book.

Cheque book issue to existing account holderWhen a existing deposit holder wants to withdraw a new cheque book then he should be give a requisition slip to the bank which he get from previous cheque book then authorized officer verifying deposit holder signature. After verifying signature authorized officer put breach seal, and his signature on new cheque book then date, name of account, account number, cheque no, are recorded in the register book then client get his cheque book and put his signature on the register book.

In the case of lost Cheque-bookIt has been observed that when the account holder has lost a cheque book, then account holder must have filled an indemnity bond that has been authorized by the introducer.

2.2 Deposit SectionDeposit is the lifeblood of a bank. From the history and origin of the banking system. We know that deposit collection is the main function of a bank.

Accepting deposits:The deposits that are accepted by NBL like other banks may be classified in to,a) Demand Depositsb) Time Deposits

Demand deposits:These deposits are withdrawn able without notice, e.g. current deposits. National Bank Limited accepts demand deposits through the opening of,a) Current accountb) Savings accountc) Call deposits from the fellow bankers

Time deposits:A deposit which is payable at a fixed date or after a period of notice is a time deposit. National Bank Limited accepts time deposits through Fixed Deposit Receipt (FDR), Short Term Deposit (STD) and Beared Certificate Deposit (BCD) etc.While accepting these deposits, a contract is done between the bank and the customer. When the banker opens an account in the name of a customer, there arises a contract between the two. This contract will be valid one only when both the parties are competent to enter into contracts. As account opening initiates the fundamental relationship & since the banker has to

deal with different kinds of persons with different legal status, National Bank Limited officials remain very much careful about the competency of the customers.

2.3 Cash SectionBanks, as a financial institution, accept surplus money from the people as deposit and give them opportunity to withdraw the same by check, etc. But amount the banking activities, cash department play an important role. It does the main function of a commercial bank i. e, receiving the deposit and paying the cash on demand. As this department deals directly with the customers, the reputation of the bank depends much on it. The functions of a cash department are described below:

Functions of Cash Department:Cash Payment 1. Cash payment is made only against Check

2. This is the unique function of the banking system which is known as “payment on demand”.3. It makes payment only against its printed valid Check

Cash Receipt 1. It receives deposits from the depositors in form of cash2. So it is the “mobilization unit” of the banking system3.It collects money only its receipts forms

Cash receivingWhen customers want to deposit his money then he deposited it by pay slip in the cash counter. After receiving money and pay slip from client, officer done following functions which is arrange at sequentially:Officer ensure that all the writing on pay slip have been right.& Then count money and write denomination in the backside of the pay slip.Then officer put cash receive seal on the carbon copy of the pay slip.Officer put his signature on the carbon copy pay slipThen register in cash receive register book, following give a format of cash receiving register book: In cash receive seal contains some components, which are as follows: National Bank Ltd. Name of BankLake Circusr Branch Branch nameDate Date

Cash paymentWhen depositor wants to withdraw his money then he present or order cheque for withdrawing cash from cash counter. At first deposit holder present his cheque on the computer desk. Then the authorized officer checks that cheque and amount has been balance in his account. When every things right then the amount has been debited from the depositor account on which the cheque has been drawn. If there is any doubt in the signature which has been appeared on the specimen signature card has verified. When every thing ok then payment seal put on the cheque Then bearer has signed on the back side of the cheque and authorized officer made payment. The authorized officer must have to maintain cash payment register. Following give the components of cash payment register book; Cheque number, Account number, Payment amount, Authorized signature, Payment date.

Transaction cash moneyAt the beginning of the banking our in charge of cash department provides some money from the vault to the counter officer for meet clients demand. Cash department in charge keep

record that amount. At the end of the banking hour balance must be adjust with recorded transaction. At last the received balance and payment must be equal with the balance on the receiving and payment register book.

Cash balance bookIn cash balance book keep record of that cash has maintained by the incharge. In cash balance book opening balance have to be always the previous days closing balance. At the end of the banking hour all receives have to be added with opening balance then deducted all his payment from the total balance. Remaining balance has continued as the opening balance of next transactions day.

Evening bankingEvening banking hour begin after original banking hour. This evening banking hour begin from 3pm to 5 pm.

2.4 Remittance Section:Local carrying cash money is troublesome and risky, that’s why money can be transferred from one place to another through banking channel. This is called remittance. Remittances of funds are one of the most important aspects of the Commercial Banks in rendering services to its customers. For transferring money National bank ltd offers different instruments such as:• Telegraphic transfer (TT)• Pay order (PO)• Demand draft (DD))• Pay slip

Type of remittance: Between banks and non banks customer Between banks in the same country Between banks in the different centers. Between banks and central bank in the same country Between central bank of different customers.

Points Pay Order Demand Draft TT

Explanation Pay order gives the payee the right to claim payment from the issuing bank

Demand Draft is an order of issuing bank on another branch of the same bank to pay specified sum of money to payee on demand.

Issuing branchrequests anotherbranch to pay specified money to the specific payee on demand by Telegraphy Telephone

Payment from Payment fromIssuing branch

Payment from ordered branch

Payment from ordered branch

Generallyused to Remitfund

Within the clearinghouse area of issuing branch

Outside the clearinghouse area of issuing branch.

Anywhere in the country

Payee can also be the purchaser.

PaymentProcess of thepaying bank

payment is made through clearing

1. Confirm that the DD is not forged one.2. Confirm with sent advice3. Check the ‘Test Code’4. Make payment

1. Confirm issuing branch2. Confirm Payee AIC3. Confirm amount4. Make payment5. Receive advice

Charge Only Commission Commission + telex charge

Commission + telephone

2.4. 1.Telegraphic transfer (TT)Telegraphic transfer (TT) is the quickest and self way of transferring money from one destiny to another destiny. It is done by telephone massage, telex massage. T he message is authenticated by prefixing of suffixing a cheque cypher. A cheque chyper for any remittance is worked out on test key table and a code block which is allowed only authorized officer.Elements of the test code for TT:Code for amountCode for dateCode for branch`This test code is generally given by the authorized officer because it is confidential.

Requirements for sending TT:1) TT incoming & 2) TT outgoingProcedure for sending TT: When client want to transfer money from NBL, Lake Circus branch to NBL, AgrabadBranch (suppose) then following ways he should follow:At first collect TT form from remittance division•Deposit money in cash department which he mentioned in TT form.•Client should have account in National at KB branch and sending place. C1ient should paid commission, VAT and telex chargeThen client collect cost memo from remittance division, this cost memo work as an evidence in favor of client.The authorized officer put test code and registers it in the TT payment register book then authorized officer send massage to the Agrabad branch by telephone or telex. This massage contains Client account number, test number, amount, Commission of TT:• Up to 25000 commissions is 25 takaAbove 25000, for every one thousand pay one taka as commission.VAT: - 15% of commissionsTelex charge: - It is always 40 taka

2.4.2 Pay order (P0)

Pay order is an order by an issuing branch or bank upon client for made payment of the amount mentioned there in that named pay on according to client order. Pay order issued only for local payment.Commission: For issuing pay order client should pay 10 take as commission and 2 taka for VAT.Procedure for cancel pay order: It has been seen that usually pay order cancel in two certain situation which is as follows:-

Situation one:-When client issued any pay order in the name of any payee. If payee does not accept the pay order then payee put his seal and signature back side on the pay order then payee returns to the client. The client of the pay order has deposited it on his account after that authorized officer issue one debit and credit voucher. Debit voucher: - pay order accountsCredit voucher: - clients account

Situation two:-If clients wants to cancel his pay order before submitted then have to submit as application for deposited that pay order amount to his account. In this client should paid cancellation charges. Which as follows:Up to 500 taka charge 10 taka•Above 500 taka charge 25 taka

2.4.3 Demand draft (DD) 1) DD incoming & 2) DD outgoingRequirements for sending DD:Procedure for sending DD: When client want to transfer money from NBL, branch to Kawranbazar NBL, AgrabadBranch (suppose) then following ways he should follow : At first collect DD form from remittance division•Deposit money in cash department which he mentioned in DD form.•Client should have account in National at KB branch and sending place. C1ient should paid commission, VAT.Then client collect cost memo from remittance division, this cost memo work as an evidence in favor of client.The authorized officer put test code and registers it in the DD payment register book then authorized officer send massage to the Agrabad branch by telephone or telex. This massage contains Client account number, test number, amount.

Characteristics of demand draft (DD):• It is drawn on one branch upon another branch of’ the same bank• Its payment cans only that whose name is mentioned in the pay orders.

Commission:-Up to 25000 taka commission 25 takaAbove 25000 taka every one thousand carry 1 takaVAT: - VAT is 15% of commission.

2.4-4 Pay slipPay slip is used only bank internal payment purpose such as different types bills payment.

2.5 Clearing Section:Cheque, Pay Order (P.O), Demand Draft (D.D.) Collection of amount of other banks on behalf of its customer are a basic function of a Clearing Department.

2.5.1 Clearing:Clearing is a system by which a bank can collect customers fund from one bank to another through clearing house.

2.5.2 Clearing House:Clearing House is a place where the representatives of different banks get together to receive and deliver check with another banks.

2.5.3 Member of clearing House:NATIONAL Bank LTD is a scheduled Bank. According to the Article 3 7(2) of Bangladesh Bank Order, 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the cheque drawn upon one another through the clearinghouse.

2.5.4 Types of Clearing:

2.5.4(A) Outward Clearing: When the Branches of a Bank receive cheque form its customers drawn on the other Banks within the local clearing zone for collection through Clearing House, it is Outward Clearing.2.5.4(B) Inward Clearing: When the Banks receive check drawn on them from other Banks in the Clearing House it is Inward Clearing.

2.5.5 Types of clearing house: There are two type of clearing house: Those are1) Normal clearing house2) Same day clearing house

2.5.5(1) Normal clearing house:1) 1st house: 1st house normally stands at 10 am to 11 am2) 2nd house: 2nd house normally stands after 3 p.m. and it is known as return house.

2.5.5(1) same day clearing house:1) 1st house: l house normally stands at 11 a.m. to 12 pm2) 2nd ’ house: 2nd ’ house normally after 2 p.m. and it is known as return house.• Who will deposit cheque for Clearing: Only the regular customers i.e. who have Savings, Current, STD & Loan Account in the Bank can deposit cheque for collection of fund through clearing house.• Precaution at the time of cheque receiving for Clearing, Collection of LBC, OBC &Transfer:1. Name of the account holder same in the cheque & deposit slip.,2. Amount in The cheque & deposit slip must be same in words & in figure3. Date in cheque may be on or before (but not more than six months back) clearing house date.4. Bank & Branch name of the cheque, it’s number & date in the Deposit slip.5. Cheque must be signed.

6. Signature for confirmation of date, amount in words / in figure Cutting & Mutilation of cheque.7. Cheque should be crossed (not for bearer cheque).8. Account number in the deposit slip must be clear.9. Depositor’s signature in the deposit slip.

Clearing DivisionNBL, Lake Circus branch receive cheque, demand draft, pay order from their clients for clearing. It has been seen that when the instrument of other banks have deposited in the NBL; Lake Circus branch , then the officer has to check the particulars of the credit voucher ,he ensure that giving instrument and credit voucher account number , amount should be same. When officer receive any instrument he should ensure that instrument issuing date should not exceed six months. When every thing ok then authorized officer put a received seal on the carbon copy of credit voucher, then authorized officer put a cross seal on that instrument. Cross seal as like as follows:— National Bank Ltd

Lake Circus after receipt of instruments the authorized officer examines following things:a) The paying bank is another bank, which is situated with in Dhaka city.b) The paying bank is another branch of National bank, which is situated in Dhaka

city.c) The paying bank is situated outside of Dhaka city its may be another bank or

another branch of NBL

a) When the paying bank is another bank, which is situated with in Dhaka city. When the authorized officer examines that the instruments paying bank is another bank which is situated in Dhaka city then officer put an endorsement seal opposite side of instruments and in this case clearing process made by clearing house.Endorsement components:Received payment and payees account Credited for National Bank Ltd, Lake Circus Branch, Dhaka.Before send instrument the clearing house the authorized officer put a seal on the front side of the instrument, which is as like: National Bank LtdLake Circusr branchClearing dateClearing House

Then authorized officer has been slotting or arranging those instruments and put serial number. Then officer has give entry in the computer according bank name. branch name, cheque no, account number, cheque serial number, issuing date and amount of those instrument. Then officer made a schedule paper which contains instruments particulars and total figures. All this functions has been done by special software. Then send them to the local principle office (NBL, Dilkusha branch) for clearing and credit voucher send to the cash department of Mahibugli branch for crediting parties account. Before clearing process parties account yet not credited.

When authorized officer send instruments for clearing, he made one debit and credit voucher. This is as follows:

After clearing process some instruments is made cleared and some instrument might be retune. Then local principle office sends a credit advice and all instruments those have been send for clearing.

When Lake Circus branch get advice and instruments then authorized officer made following voucher:-

After receiving credit advice Lake Circus branch authorized officer has to respond on the credit advice’ (IBCA) send by local office. IBCA bears the documents of the total amount of instruments received by the local office from Lake Circus branch. IBCA has described that NBL Lake Circus branch general accounts have credited.

Return ChequeIn the time of clearing process some instruments might be returned. If client wants to get back their return cheque then authorized officer issue a debit voucher, which is as follows:-

And this debit voucher posted on cash departments computer by debating parties account.

2.5.6 Return house:Return House means 2 houses where the representatives of the Bank meet after 3 p.m. to receive and deliver dishonored cheque, which place in the Clearing I-louse.Cheque may be dishonored for any one of the following reasons:1) Insufficient fund.2) Amount in figure and word differs.3) Cheque out of date! Post- dated.4) Payment stopped by the drawer.5) Payee’s endorsement irregular! Illegible I required.6) Drawer’s signature differs required.7) Crossed cheque to be presented through a bank.8) Other specific reasons not mentioned above.The dishonor cheque entry in the Return Register & the party is informed about it. Party’s signature required in the return register to deliver the dishonor cheque. After duration, the return cheque is sent to the party’s mailing address with Return Memo.Responsibility of the concerned officer for the Clearing Cheque:1) Crossing of the cheque.

Debit head: sundry Assets clearing Adjustment A/CNarration:- Being the amount .. . .of clearing instrument sent for collection.Credit head: - Parties account

Credit head: - S/A clearing Adjustment A/CNarration: - being the amount ... No of clearing Instrument send for collection now realizedThe whole clearing process takes time three working days.

Debit head: - CIBTA Dilkusha (local principle office)Narration:. - Being the amount --no clearing instrument send for collection and honored expect return unpaid.

Debit head: - Parties accountNarration: - Being the amount return on cheque no drowns on. .(Name of drawn Bank) return on paid

2) (Computer) posting of the cheque.3) Clearing seal & proper endorsement of the cheque.4) Separation of cheque from deposit slip.5) Sorting of cheque 1St bank wise and then on branch wise.6) Computer print Clearing House computer validation sheet.7) Examine computer validation sheet with the deposit slip to justify the computer posting.8) Copy of computer posting in the floppy disk.

2.5.7 Bills 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 bank’s duty is to collect bills on behalf of their customer.

2.5.8 Types of Bills for Collectiona) Outward Bills for Collection (OBC)b) Inward Bills for Collection (IBC)

2.5.8. (a) What is OBC?OBC means Outward Bills for Collection. OBC exists with different branches of differentbanks outside the local clearinghouse. Normally two types of OBC:1) OBC with different branches of other banks2) OBC with different branches of the same bank

Procedure of OBC:1) Entry in the OBC register.2) Put OBC number in the cheque.3) “Crossing seal” on the left corner of the cheque & “payees account will be Credited on realization” seal on the back of the cheque with signature of the Concerned officer.4) Dispatch the OBC cheque with forwarding.5) Reserve the photocopy of the cheque, carbon copy of the forwarding and depositSlip of the cheque in the OBC file.

3.5.8 (b) Inward bills for collection (IBC)When the banks collect bills as an agent of the collecting branch, the system is known asIBC. In this case the bank will work as an agent of the collection bank. The branch receives a forwarding letter and the bill.

Procedure of IBC:1. IBC against OBC: To receive the OBC cheque first we have to give entry in the IBC Register. The IBC number should put on the forwarding of the OBC with date.2. Deposit of OBC amount: OBC cheque amount is put into the “sundry deposit sundry Creditors account”, prepare debit & credit vouch of it. If the OBC cheque is honored, send credit advice (IBCA) with signature & advice number of the concern branch for the OBC amount.3. If the OBC cheque is dishonored, the concerned branch is informed about it.4. Again place in the clearing house or send the OBC cheque with Return Memo to the issuing branch according to their information.

2.6 Credit Card Section

Carrying of cash is not so safe in today’s world. There is always a chance of losing or hijacking of cash. On the other hand, the desire to purchase any desired item of one may not be fulfilled for the want of cash at the time of that willingness. To remove these problems, credit card has been introduced which is very popular to face the mentioned problems.

2.6.1 What is Credit Card?It is a card (usually plastic) that assures a seller that the person using it has a satisfactory credit rating and that the issuer will see to it that the seller receives payment for the merchandise delivered.

2.6.2 NBL & Credit CardNBL is the first local bank, which introduced credit card & MasterCard in Bangladesh in both local and international market in 1997. MasterCard captured 35% of credit card through the world. However present market analysis reflects that a large number of people whose average income ranges in above Tk.l0000 are using the credit card. Credit card division is continuing their all-possible efforts for the participation in the globalize MasterCard program. The number of users of the credit cards is increasing day by day. During the year 2004 the bank has got a profit of Tk.104.25 million from credit card business. NBL also has got the licenses from international brand Visa Card and very soon, it will be launched in the country

2.6.3 Types of Credit CardNational Bank Limited offers mainly two type of credit card according to the geographical area. These are Local credit card and International credit card. According to the level of income the local and international credit cards are divided into two categories viz. Gold card and Silver card. These types of credit cards are described below:

a) Local credit card:(b) International Credit Card:

(a) Local credit card:Local credit card is valid only in Bangladesh. Out side Bangladesh, the card is invalid. Local card are two types. They are Gold local card and Silver local card. The card limit of gold local card is Tk.50000 to Tk. 100000 and silver local card is below Tk, 50000.

(b) International Credit Card:International credit card is valid mainly outside Bangladesh. But for the payment of roaming facilities for Grameen phone, cardholders can use international credit card in Bangladesh. International credit cards are of two types. These are gold international credit card and silver international credit card. The card limit of gold international credit card is $ 2000 to $4000 and silver international credit card below $2000.

2.6.4 Yearly Charges on credit cardNational Bank Limited receive card fee for new card and renew card from the cardholder.The rate of card fee for new card and renew card are the same, In case of new card the bank receives the card fee with the next month’s bill. The rates of card fee are given in below:

Yearly charges on credit card

Type of card Local InternationalGold card Tk.2000.00 US$70.00Silver Card Tk.1200.00 US$ 35.00

Source: National Bank brochure 2005

2.6.5 Documentation for a credit cardAny person whose monthly income is over 10000 can be a credit card holder of NBL. The requirements of a card are:

For Local card:1. The fulfillment of the application form.2. 2 copies of photographs. (If supplementary card is taken then 2 copies of photographs

of the nominee).3. TIN certificate.4. A security. (MSS, SDS or FDR as lien).5. Charge documents.

For International card:1. The fulfillment of the application form.2. 2 copies of photographs. (If supplementary card is taken then 2 copies photographs of

the nominee).3. TIN certificate.4. A security. (MSS, SDS or FDR as lien).5. Charge documents.6. The photocopy of passport.

2.6.6 Billing of a credit cardNational Bank Limited offers the cardholder 15 to 45 days credit facilities. For the proper billing the bank divided the cardholder into three cycles. These are 0 cycle, 3 cycle and 5cycle.

In 0 cycle bill are prepare and send to the cardholder 1st day or every month and last date of payment is 15th day of the month.

In 3cycle bill are prepare and send to the cardholder 3rd day of every month and last date of payment is 181h day of the month.

5cycle bill are prepare and send to the cardholder 5th day of every month and last date of payment is 20th day of the month.

The cardholder can pay the bill any branch of the National Bank. If any cardholder fails to pay the bill within the last date then he/she must pay 2% monthly interest and his/her card stop automatically.

But if the cardholder pay minimum bill (10% of the bill) then he/she must pay the interest on the balancing amount and can use the card as usual. On the other hand, if the card holder withdraws any cash amount from the ATM booth (maximum limit is 20% of card limit) a monthly charge of 2.5% is to be charged from the date of withdraw. In that case the cardholder will not get the 45 days credit payment facility.

ATM card

ATM means automated teller machine. NBL ATM card give opportunity to their customer that they can withdraw their money at any time, any days even holidays. By using ATM subscriber can give various utility bill such as telephone, gas, electricity bills etc. actually ATM card is a debit card.Charges for ATM card: -ATM card holders have to pay 1000 taka annually and in the case of’ card lost subscriber also pay additional 300 taka.

2.7 Accounts sectionAccounts Department is called as the nerve Center of the bank. 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. Improper recording of transactions will lead to the mismatch in the debit side and in the 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 of forgery. This department is called as Accounts Department. If any discrepancy arises regarding any transaction this department repot to the concerned 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. Workings of this department:• Recording the transactions in the cash book.• Recording the transactions in general and subsidiary ledger.• Preparing the daily position of the branch comprising of deposit and cash.• Preparing the daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately.• Making payment of all the expenses of the branch.• Recording inters branch fund transfer and providing accounting treatment in this regard.• Preparing the monthly salary statements for the employees.• Preparing the weekly position for the branch which is sent to the Head Office to maintain

Cash

Reserve Requirement (C.R.R)• Preparing the monthly position for the branch which is sent to the Head Office to maintain

Statutory Liquidity Requirement (S,L.R)• Make charges for different types of duties.• Preparing the budget for the branch by fixing the target regarding profit and deposit so as to take necessary steps to generate and mobilize deposit.• Checking of Transaction List.• Recording of the vouchers in the Voucher Register• Packing of the correct vouchers according to the debit voucher and the credit voucher.• Prepare advice• Prepare incomes and expenditures statement• All administrative work

When accounts officer receive any types of voucher then he has to identify whether it areClearing, Cash, Transfer.

Clearing: When accounts officer receive clearing voucher then he send it to the clearing division.

Cash: When accounts officer receive cash voucher then payment made by clients.

Transfer: When accounts officer receive transfer voucher that means this amount should be transfer of account head to another account head. In this case accounts officer register it in register hook before computer posting. Before register this voucher in register book officer put a serial number that is register in register book. In transfer register book contains debit and credit side, particulars and amount. End of banking hour accounts officer calculate the transferred amount and debit balance and credit balance should he equal and he make sure that the debit balance and credit balance of transfer, clearing and cash position should be same figure.Every day accounts division prepared daily statement affairs and send them to the every department.

National bank Ltd. signed an agreement with the Western Union Financial services, USA in 1993. Millions of people from different parts of the world are sending money with confidence to their near and dear through the western union has the most modern technology for remitting money within quiets possible time from any part of the world through their more than 170000 representatives in 190 countries and regions has established a unique money transfer system with western union of. Through an online computer systems finds can be instantly of the world. 114.9million dollar was remitted to this bank through this organization during the year 2005 .NBL brought a substantial amount of foreign exchanges in to the country through the western union in 2005, which is 79% higher than that of 2004.

The western union is a globally reputed name in money transfer services and data exchange forever 150 years. Western union has continued its tradition of possessing the latest technology and handling wide scale remittances.

Payment of remittance by expatriate Bangladeshis through the western union are being made at 92 branches of NBL. These branches are connected with the on-line computer system of the western union.

The special feature of services is as follows:Fast: Remits money in minutesSafe: World class security systemEasy: Over 2, 00,000 agent locations across 200Countries and territories worldwideReliable: Trusted by millions for over 150 years.• To preserve the par value of the Bangladesh Taka (currency);• To promote and maintain a high level of production, employment and real income in Bangladesh; and• To foster growth and development of the country’s productive resources for the national interest.

Reconciliation :The reconciliation division collects the CIBTA (computerized inter bank transaction advice) related voucher. Foreign exchange division take seine voucher which is related to-their division and rest of the vouchers are supposed to make advice. l3etbre written advice,

accounts officer slotting those vouchers according to IBCA (inter branch credit advice) IBDA (inter branch debit advice) responding and originating wise.. When all are complete then those are posting in computer and take a print of originating and responding sheet and make extract.

Dispatch:The main function et dispatch division is dispatching all types of documents such as OBC, LBC, and different types of letter, different advice. Beside dispatch division receives letter and documents, which are may be coming from head office, all other branches of National Bank Ltd. other banks, negotiation and opening bank (incase of Import and Export) in the name of National Bank Ltd Lake Circus branch. Following arc given a graph which shown the activities are done by dispatch division: DispatchIn ward mail Out word mailBy courier, DHL/Fed EX, Register postThe officer engaged in the dispatch division maintain two types of mail, which isInward mailOutward mail

Inward mailWhen officer receives any letter or documents from out side of the branch then he done following function which is arrange at sequentially:. First put receive seal on that letter or document Put a serial numberRegister in the inward register book with receiving date.

Outward mail- it is necessary to dispatch any types of letter or document out side of the Lake Circus branch the dispatch officer done following job which are arrange sequentially: - Put serial number Register on outward mail register book with date

Outward dispatch is three ways, such as:By courier service: - Courier services are use when documents or letters dispatch to other breeches of National Bank Ltd. it has been seen that courier services payment has made by monthly basis.

DHL/ Fed Ex: - These types of courier services are use when foreign documents or letter are dispatch. Its payment also made by monthly basis.

Register post: — Register post is use when any types of confidential or important documents are dispatch. Register poses use for keeping evidence.

Dispatch officer always maintain petty cash account to full fill the dispatch division requirements, which name is: Suspense A/C Advance against postage”

At the beginning of the month dispatch officer withdraws money from bank by’ issuing a debit voucher for the payment of dispatching bills. At the end of the month he calculate his total expanse, if his debit amount has surplus after all expanses then he refund it to the bank by a credit voucher.

3.0 Loans & Advances

3.1 Introduction:This is the survival unit of the bank. The reason is, until and unless the success of this section, the survival is a big question. This is the main earning unit of the bank. Banks accepts deposits from the depositors in condition of providing interest to the depositors in condition of providing interest to them. Now the question is how bank provides interest to their clients. The simple answer is — interest from advances. The bank provides interest to the borrowers because:• To earn interest from borrowers and give depositors the interests get back. The rest are the profit of the bank.• To accelerate economic development.• To meet the interest groups.

Credit is a continuous process. Recovery of one credit gives rise to another credit. In this process of revolving funds, bank earns income in the form of interest. A bank can invest its fund in many ways. Bank provides loans and advances to traders, businessmen and industrialists. Moreover, nature of credit may differ in terms of security requirement, disbursement provision, terms and conditions etc.

Bank often uses loans and advances as an alternative to one another. But, academically this concept is incorrect. Academically, Advances is the combination such items where loans is a part only. For this credit section of the banks is known as advance section.

Advance division is heart for any bank. A big portion of income of the National bank Ltd is comes from this advance division. This income comes from different Types of investment of depository money. Investment decision is the most important which is taken by the management of the National bank lid. NBL advance division plays a vital role for economical development.

NBL has an investment committee they are responsible following things:•To ensure the cash liquidity requirement and can this cash liquidity meetTo identify new investment portfolio and this is profitable for the National bank.•To examine banks deposit, investment and identify their surplus money. They should be active for recovery their substandard, doubtful and bed loan.•They should be take short-term investment but this investment return is comparably high.They should aware about market study and existing portfolio of investment.•They should aware to identify new sources of investment.NBL invests in two ways which is• Head office investment• Branch investment

Head office investment: Bangladesh bank has a regulation that every commercial bank should reserve 15% of their total depository money in central bank. Head investments are two types. Such as they invest in treasury bills, prize bond, share, debenture etc.

They purchase securities for liquidity purpose. The largest portion of security investment is in government obligation. They invest in short term government securities. This type of investment risk is zero and market risk is low. ((Figure in Crore)

Loan

Current loan

Demand loan

Term loan

Cash credit SODHypo Pledge

Import Export

CCS

HBL

LTR

PAD

General FO(bid bond)

IDBP

ABPFDBP

PC

Car Loan

EHBL

LIM

Year 2001 2002 2003 2004 2005

Investment 289.20 383.96 404.42 437.42 391.51

Own investment by the National Bank Ltd last fives executive five years:Branch investment: Branch invests indifferent sectors and they have no limitation for selecting investment sector but they should responsible for selecting profitable sector. Breach makes their investment to the general public, bank employees, business men, and some cases in securities market. More then 70% investment money comes from deposited money.

3.2 Types of AdvancesIt is not possible to discuss all these types of advances in details in this report but an attempt has been made to analyze the basic difference and characteristics of these advances all in the following manner:

3.3 Types of loan:By the nature of loans are three types.

Following describe different types of loan by a structure

3.4 Current or continuous loan:Current loan is also cal1ed revolving credit. Current loan holder can withdraw or deposit money in his account in several times with in the loan period. If loan holder wants to renew his loan amount then it can be done with the authorization of the bank. Current loan duration time is one year and interest is charged by quart lay basis. End of the duration period loan holder must have to pay loan amount with the interest.

3.4.1Current loan is two types:Cash credit (CC)Security over draft (SOD) End of the duration loan holder must have to pay loan amount with interest rate. Risk fund and service charge is not needed for cash credit. Collateral security is essential for cash credit .Cash credit is offer for those peoples whose need working capital or there is a Shortage in their capital.

Cash credit (CC) also two types:Cash credit (hypothecation)Cash credit (Pledge)

3.4.1.1 Cash credit (Hypo) In the case of cash credit (Hypo) the borrower sign a letter of hypothecation and physical possession of the goods are control by the borrower but borrower binding himself to the national bank ltd at Lake Circus branch. In the case of CC(hypo) bank always prefer legal equitable mortgage of properties (land, building) as a collateral securities.

Charge documents for Cash credit (Hypo):Promissory note (DP note)Letter a of arrangementLetter of continuityLetter of hypothecationLetter of guarantee.

3.4.1.2 Cash credit (pledge)In the ease of cash credit (pledge) loan is issue against the security of goods its may be finished goods or row materials. When borrower wants CC (pledge) then he has to singe a letter of pledge. Where the physical possession of that goods pledge under NBL, Malibugh branch control but ownership with borrowers. In this case the goods are stored in bank store

and a caretaker is joining for take care of that goods. This caretaker salary bears by the borrowers.Charge documents for cash credit (pledge):Promissory note (DP note)Letter of arrangementLetter of continuityLetter of pledgeLetter of guarantee.

3.5. Secured over draft (SOD)Nature of secured over draft (SOD):SOD loan issue against FDR or Work order duration of loan is one yearBank issue letter of lies if loan is against FDRSOD loan is offer for those persons whose need money to meet his financial obligationSecured over draft (SOD) loan are two types:

3.5.1. SOD (G) against work order:Basis of bills receivable. When SOD issued against work order party gives the power of attorney for draw the cheques. SOD against work order loan involves three parties such as bank, loan holder, and work giver. Bills receivable calculation following ways :( Total value of work- (17.5% of work value+ cheque receive) bills receivable.Charge documents for SOD against work order:Promissory note (DP note)Letter of arrangementLetter of continuityLetter of guarantee.

SOD (Bid Bond)SOD (Rid Bond) is gives for those borrowers who want to participating an\ bid for collect work. In SOD Bid Bond payment is making by the pay order. If borrower gets that work then interest is charger of that amount. If borrower does not get that work then he deposit that amount which he has issued by pay order.Charge documents for SOD (Bid Bond): Promissory note (DP note) Letter of arrangement Letter of continuity Letter of guarantee. Letter of disbursement

3.5.2. SOD against FDR:Some times NBL give SOD loan against FDR. In this case the loan amount is 80% of FDR account. In SOD against FDR interest rate is 3% more then FDR interest rate. This loan is more secured then other types of loan. In the case of SOD loan against FDR party gives power to the bank if borrower unable to pay loan amount then bank can withdrawn his loan amount from parties FDR account.

3.5.3. Demand loanIt has been seen [hat demand loan usually used in import export purpose.Following are given different types of demand loan:Import related loan

For encourages our import business National bank offer following loan facility for import purpose:LTR (loan against trust receive)PAD (purchase against document)LIM (loan against import merchandise)For encourages our export NBL ,offers following loan facility for export:IDBP (inland documentary bills purchased)FDBP (foreign documentary bills purchased)PC (Packing credit)ABP (accepted bills for payment)

3.5.4. Term loanTerm loan holder can withdraw his loan amount in several times but he should be repayment with a specific date and installment basis .national bank offer different types of term loans for general public, businessmen, or employees. Different types of term loan as follows: —Consumer credit scheme (CCS)Employees house building loan (EHBL)House building loan (HBL)Car loan

3.5.4. 1 Employee Loan:For the betterment of its own employees NBL provides loans. The branch managers and executives get this facility. Repayment is adjusted from their monthly salary on an equal monthly installment. 10% of basic is contributed by employee in every month. The staffs can also take loan, which is known as Staff Loan against Provident Fund (SPF). The repayment is adjusted from their monthly salary. 10% of basic is also contributed to the PF by the bank.

3.5.4..2 Employees house building loan (EHBL)The employee of NBL can take house-building loan from bank but the range of loan amount depends on person’s designations. Simple interest rate is charge on employee’s house building loan and interest rate is 8%. 3.5.4..3 House building loan (HBL)National bank provide house-building loan for their target groups. In the case ofHBL interest rate is 14.5%. For HBL loan bank keep land as a collateral securityfor their safety.

3.5.4. 4 Consumer Credit Scheme:National Bank’s Consumer Credit Scheme gives a great opportunity to buy household and office items on easy installments. This scheme gives the advantage of part payment to cope with the high price tags of many necessary home and office appliances.To lead a better life NBL provides this credit to consumers to purchase household items as Television, Refrigerator, Personal Computer, Furniture, Car etc. The people with fixed income get this credit. It is a 24 to 48 installment system of 14% interest. The amount allowed to the borrower is 10000/- to 300000/-.

3.5.5. Inland Bills Purchased (IBP):Bank purchases two types of Inland Bill — Clean Bill and Documentary Bill. • Clean Bill:

Clean bill are those that requires no payment for documents cheque, Demand Draft, Telegraphic Transfer, and Mail transfer.• Documentary Bills:Documentary bills are those which require related documents for payments like Bills of Exchange, Railway/Shipment receipt and invoice etc. This bill is often created in businesses and bank purchases these before their maturity. Thus, purchases of these bills are one kind of credit to these before their maturity. As bank purchases these bills on behalf of the business so it is one kind of credit to those businesses. After maturity, bank presents it to the drawee for encashment.

3.6. Classification loanLoan can be classified into three types. Which is as follows:Sub stranded (SS) loan: — Sub stranded is that types of loan which does not collect last six months.Doubt full loan: - When loam amount doesn’t collect last nine months.Bad loan: — Bad loan is that types of loan which there is no change to repayment. Badloan create when any outstanding loan doesn’t collect last one year.

Provision for classified loan

Unclassified: For Unclassified loan provision must be keep 1% of outstanding loan amount.

Sub stranded (SS): For sub stranded loan provision must be keep 20% of outstanding loan amount.

Doubt full loan: For doubt full loan provision must be keep 50% of outstanding loan amount.Bad loan: In the case of bad loan provision must be keep 100% of outstanding bad loan.

Write offOne account can be write-off without absolving the borrower from the payment of the loan. It is done only to make the banks account or recorded showing better.

3.7. Creation of charges for securing LoansFor the safety of the loan, bank requires security from the borrower so that it can recover the loan by selling security if borrower fails to repay. Creation of charge means making it available as a cover for an advance. The method of charging should be legal, perfect and complete. Securities are charges in order to:* Protection of interest.* Ensuring the recovery of the money lent.* Provision against unexpected change.* Commitment of the borrower.A brief description about the securities that is kept against the loans is described below:

3.7.1: Primary Security: Security deposited the borrower himself to the loan such as — FDR, Cash, and MSS.

3.7.2. Collateral Security: • Narrow Sense — security deposited by a third party to secure the advances for the borrower.

• Wider sense — any types of security on which the creditor has a personal right of action on the debtor in respect of advance common method of charging security and their nature of security.Lien:It is the right of the banker to hold the debtor’s property until the debt is discharged — generally retained by the bank in its own custody or to the hands of the third party with lien marked. The third party cannot discharge it without the permission of the bank. In case of need bank needs permission of the court to sell the property.Assignment:Borrower transfers the right of property or debt to the bank. Life Insurance Policy, supply bills, book debt of the borrower can be assigned.Pledge:It is one kind of lien but the bank enjoys more rights on it. In this case, physical transfer of the goods is must to the bank. Bank can sell the property without the intervention of the court in case of default on loan.

Mortgage:Mortgage is the transfer of special movable property — like land, building, plant etc. Most common type of mortgage is legal mortgage in which ownership is transferred to the bank by registration of the mortgage deed.Another method called equitable mortgage is also used in bank for creation of charges. Registration is not required. In both the cases, the mortgaged property is retained in hand of the property.

3.8. Principles of sound lendingIn order to secure a balance between liquidity Profitability, and security, NBL following principles of sound lending:

3.8. 1.Liquidity:While lending adequate care is taken to ensure the liquidity of the lien item. In this case, NBL choose such securities, which possess such liquidity.When banker sanctioning any loan then they should ensure the liquidity position of National Bank Limited.

3.8. 2 Safety:National Bank exercises the lending function only it is safe and the risk factor is adequately mitigated and covered. Safety depends upon the security offered by the borrower safety is the most important for sanctioning loan. At the time of repayment borrower may be not able to pay the loan amount. For that reasons when bank sanctioning loan they should take collateral security from the borrowers.

3.8. 3 Diversity of risk:Bank should not invest in one or two sector. If it is happened then their investment risk is higher then market risk. Bank should maintain investment portfolios for reducing their risk. In this case when one investment makes loss another investment will cover that loss. In order to minimize the risk, National Bank invests its fund in different industries of different industries situated in different regions of the country.

3.8. 4. Adequate Yield:

From the commercial point of view, National Bank considers sufficient yield of return while financing a project. Banker should select those investment which interest rate is higher then savings interest rate.

3.8. 5.Productive Purpose:National Bank exercises its lending function only on productive purpose.3.8. 6.National or Social Interest:National Bank also considers national aspect of any project while financing. They take utmost care so that the project cannot be determined to the society as well as to the nation.3.7.3 (G) Security: - Banker should be aware in the selections of security for their loan. They should properly evaluate the value of security it should not less then or equal of loan amount. When bank take any land, building as a collateral security then banker should checking CS , SA, RS porcha.

3.9. Selection of BorrowerIn lending, the most important step is the selection of the borrower. Due, to the asymmetric information and moral hazard, banks have to suffer a lot due to the classified loans and advances, which weakens the financial soundness of the bank. If the selection of the borrower is correct, that is the borrower is a good character, capital and capacity or Reliability, resourceful and responsible the bank can easily get the return from them. This point of view, NBL follows the following procedures:

3.9.1 Studying past track record:After getting a application for a loan the past record of the applicant is carefully studied. Generally such studies includes -i. Account balances and past transactionsii. Credit report from other banksiii. Information of the industry by studying market feasibilityiv. Financial statements (balance sheet, cash flow statement, and income statement). If the borrower is a sole proprietor then the single entry accounting treatment is converted into double entry system.v. If the amount is more then TK. 10 lacs then report from credit information bureau of Bangladesh Bank is collected.

3.9. 2. Borrower analysis:Borrower analysis is based on 5-c’s (character, capital, capacity, collateral, creditworthiness) and 3-r (responsibility, reliability and resourcefulness). It follows that the bank forms a rational judgment about the integrity of the borrower, which should be undoubted.

3.9.3. Credit approval procedure:After receiving the application from the client, National Bank Limited prepares a CreditLine Proposal (CLP) and forwards the same to the Head Office to place before Head Office Credit Committee (HOCC) for approval. It includes-

Request for credit limit of customer. Project profile! Profile of business.

Copy of trade license duty attested. Copy of T I N certificate. Certificate copy of Memorandum & Articles of Association, certificate of

incorporation, certificate of commencement of business, Resolution of the Board, Partnership Deed (where applicable).

3 years balance sheet and profit & loss account. Personal net worth statement of the owner! Directors! Partners etc Valuation certificate of the collateral security in bank’s form with photograph of the

security. CIB enquiry form duly filled in (for proposal of above 10 lacs). Credit report from other banks. Stock report duly verified. Indent! Performa invoice! Quotation. & Statement of accounts.

4.1 Service Quality and Customer Satisfaction

In the case of pure service, service quality will be the dominant element in customers’ evaluations. In cases of where customer service or services are offered in combination with a physical product, service quality may also be very critical in determining customer satisfaction. Consumers judge the quality of services based on their perceptions of the technical outcome provided, the process by which that outcome was delivered and the quality of physical surroundings where the service is delivered. The relationship between customer satisfaction and service quality has been shown graphically.

From the figure above we can see that customer satisfaction depends on service quality along with product quality and price in a certain situational and personal condition. As banking sector is categorized as pure service, the dominant feature that influences customer satisfaction is the service quality. Offerings of the bank change within short term frequently. Price for service also fluctuates within a short range of time. So service quality is the dominant factor that should be maintained a certain level to retain customer satisfaction and loyalty.

Service Quality DimensionsMany researchers who research on customer satisfaction of service; identified five specific dimensions of service quality such as reliability, responsiveness, assurance, empathy and tangibles. These dimensions represent how customers organize information about service quality in their minds. These are described below:-

Reliability

Reliability is defined as the ability to perform the promised service dependably and accurately. In its broadest sense, reliability means that the company delivers on its promises-

Service Quality

Reliability

Personal Factors

Customer SatisfactionProduct

Quality

Price

Responsiveness

Empathy

Assurance

Tangibles

Situational Factors

Customer Loyalty

Figure 01: Customer Perception of Quality and Customer Satisfaction

promises about delivery, service provision, problem solution and pricing. Customers want to do business with companies that keep their promises, particularly their promises about the service outcomes and core service attributes.

Responsiveness

Responsiveness is the willingness to help customers and to provide prompt service. This dimension emphasizes attentiveness and promptness in dealing with customer request, complaints and problems. Responsiveness is communicated to customers by the length of time they have to wait for assistance, answers to questions or attention to problems. Responsiveness also captures the notion of flexibility and ability to customize the service to customer needs. To excel on the dimension of responsiveness, a company must be certain to view the process of service delivery and the handling of requests from the customer’s point of view rather than from the company’s point of view.

Assurance

Assurance is defined as employee’s knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence. This dimension is likely to be particularly important for services that the customer perceives as involving high risk and/or about which they feel uncertain about their ability to evaluate outcomes.

Empathy

Empathy is defined as the caring, individualized attention the firm provides its customers. The essence of empathy is conveying through personalized or customized service, that customers are unique and special. Customers want to feel understood by and important to firms that provide service to them

Tangibles

Tangibles are defined as the appearance of physical facilities, equipment, personnel and communication materials. All of these provide physical representations or image of the service that customer, particularly new customers consider evaluating service quality.

5.1. Analysis and Findings

5.2. Service Quality Dimensions of National Bank Limited

From the above figure, it is figure out that rating for the responsiveness (4.00) is the highest for National Bank Limited. The other ratings are 3.97, 3.95, 3.86 and 3.78 for Assurance, Tangibility, Reliability and Empathy respectively. This rating indicates that National Bank Limited have more responsiveness compare to other service quality dimensions where Empathy is low. (Appendix-I)

5.2.1 ReliabilityThe reliability score 3.86 indicates that customers are agree to the services of National Bank Limited is reliable (Based on their consent collected by questionnaire). By the questions for measure of reliability (question number 7, 8 and 9); it is found that the aggregate score of reliability is 3.86 (Appendix-XX).

45% customers are strongly agree, 26% moderately agree, 14% agree and 15% customers moderately disagree that National Bank limited are capable to provide to promised services, which is denoted by reliability measurement question no 07, Showed by the figure (Appendix-II) 41 % customers are strongly agree, 30% are moderately agree, 27% are agree and 2% are moderately disagree that when they face service related problems, employees of National Bank Limited shows sincere enough to solving it; that is found from the reliability measurement question no 08. Showed by the graph (Appendix-III) In case of question no-09, Showed by the graph (Appendix-IV) denotes that 25% customers are strongly agree, 30% are moderately agree, 23% are agree, 10% are moderately disagree and 12% are strongly disagree that the National Bank charges a reasonable price for the service they provide.

5.2.2 ResponsivenessNational Bank Limited response to its customers promptly and always willing to help them that is denoted from the score of responsiveness is 4.00. From the responsiveness measurement questions (Questions no -10 and 11) it is stated that the aggregate score 4.00 (Appendix-XX).40% customers are strongly agree, 33% are moderately agree, 15% are agree, 5% are moderately disagree and 7% are strongly disagree that employees in the National Bank Limited provide prompt service which is denoted from the responsiveness measurements questions (Questions no: 10) which is showed by the graph (Appendix-V) It was also found that 30% customers are strongly agree, 46% are moderately agree and 24% are agree that employees in the Bank are always willing to co-operated which is measure by reliability questions (Questions no 11) which is showed by graph (Appendix-VI)

5.2.3 AssuranceThe score of assurance is 3.97, which mean that customers of the National Bank Limited agree (near to moderately agree) that the Bank provides assured services. The aggregate score of assurance is 3.97, which are calculated by arithmetical mean of assurance measurements questions (Questions no 12, 13 and 14). (Appendix-XX)

37% customers are strongly agree, 32% are moderately agree, 20% agree, 7% are moderately disagree and 4% are strongly disagree to the behavior of employees of the National Bank Limited generates confidence about the service quality that is denoted from assurance question (Questions no 12) which is showed by graph (Appendix-VII) It was also found that 27% customers are strongly agree, 43% are moderately agree, 27% are agree and 3% are moderately disagree to the employees of National Bank Limited are consistently courteous with the customers (By the question no 13) which is showed by graph (Appendix-VIII) 37% customers are strongly agree, 35% are moderately agree, 24% are agree 4% are moderately disagree that employees in National Bank Limited have knowledge to answer the customers’ questions (It was found from question no 14) which is showed by graph (Appendix-IX)

5.2.4 EmpathyThe score of the empathy is 3.78 that indicate the customers agree that employees are caring and give individualized attention to them. The means of Q-15 and Q-16 are 3.88 and 3.68. Thus the average value of empathy is 3.78 (Appendix-XX).It was found that (which is showed by following figure) 32% customers are strongly agree, 38% are moderately agree, 21% are agree, 4% are moderately disagree and 5% are strongly disagree that employees give individual attention to the customers (By Empathy measure questions no 15, Appendix-X) Findings from the question no-16, 25% customers are strongly agree, 34% are moderately agree, 30% are agree, 6% are moderately disagree and 5% are strongly disagree that employees of the Bank understand specific needs of the customers which is showed by graph (Appendix-XI)

5.2.5 TangiblesThe score of the tangibles is 3.95 that mean customers of the Bank Asia Limited agree (near to moderately agree) that the BANK has modern looking equipment and the physical facilities of the BANK are visually appealing. The mean values of Q - 17, Q - 18 and Q - 19 are 4.45, 3.59 and 3.80 respectively which give the aggregate score of tangibles 3.95 (Appendix-XX)Findings from the question no -17(Appendix-XII) denotes that 65% customers are strongly agree, 20% are moderately agree, 10% are agree and 5% are moderately disagree that the Bank has modern looking environment. 32% customers are strongly agree, 25% are moderately agree, 20% are agree, 16% are moderately disagree and 7% are strongly disagree that the company’s physical facilities (ATM Card, Check Book etc) are visually appealing which was found by tangibility measurements questions (Questions no: 18) showed by graph (Appendix-XIII) 32% customers are strongly agree, 39% are moderately agree, 10% are agree, 15% are moderately disagree and 4% are strongly disagree that the Bank’s employees appear are smart that was found from the (questions no 19, Appendix-XIV) 5.3 Demographic analysis5.3.1 Types of AccountAmong the respondents, 35 customers maintain current account, 25 maintain savings accounts, 10 have FDR, 15 respondents are for Pay Order/Demand Draft, 10 are Term loan and 5 are SOD. (Appendix-XV) 5.3.2 ProfessionAmong the respondents, 27 customers are private job holders, 35 are Businessmen, 19 are civil service, 10 are students, 4 are housewives and 5 from other professions.(Appendix-XVI) 5.3.3IncomeIncome range of customers is categorized into four categories. Students, housewives, retired persons and a few civil service holders belong to the first range. The second range includes mostly the private sector service holders. They are basically executives of range-one officers. The third category includes small and medium business owners and to some extent

executives and officers of MNCs. The highest income range includes medium or large business owners and mid and top management of the companies. (Appendix-XVII)

5.3.4 AgeAmong 100 respondents 35% Customer are 41-50 age range, 29% are 31-40 age range, 24% are 21-30 age range, and 12% are above 50 age range. The age ranges of customers are shown in the figure (Appendix-XVIII)

Findings, Conclusion&

Recommendation

6.1Findings It is difficult for me to identify any shortcoming of NBL with my little working experience of only 3 months duration. Following I have tried to provide some shortcoming which I have observed in my internship period.

General banking Department

In general banking department they follow the traditional banking system,. The entire general banking procedure is not fully computerized. Under Information Technology (IT) Department they do not have sufficient facilities of Data Base Networking management. They transfer data from branch to branch and branch to head office by using floppy disk. According to some clients, introducer is one of the problems to open an account. If a person who is new of the city wants to open account, it is a problem for him/her to arrange an introducer of SB or CD accounts holder.

Western Union Money Transfer Section:Most of the time the desk is very busy. Some time clients were kept waiting because internet speed is slow and some time the online connection gets disrupted. Only one officer provides service that is not enough to serve the number of customers need service there.

Loans and Advances Department:Political influence is one of the major problems in Bangladesh. Due to political intervention the bank becomes obliged to provide loans in most of the cases, which are rarely recovered. Bank has to face this in convenience situation almost every year. Sometimes the employees of the bank too unlawfully help the client deliberately overvalues the securities taken against the loan. As a result if the client fails to repay the loan the bank authority cannot collect even the principal money invested by selling those assets. It is also a very important factor the leads to loan default. National Bank doesn’t advertisement much. As a competitive market it is important for any organization to advertise and increase their marketing activities. NBL has huge amount of idle money which increase their cost of capital. Most of the employees do not have sufficient knowledge of computer and management does not take much initiative to train them or encourage them to have basic computer knowledge.

Customer Satisfaction:

Lake Circus branch always wants to satisfy those customers first. It was also observed that customers of Lake Circus Branch are satisfied to National Bank Ltd except few products and services. From an informal conversation with customers it was known that they are satisfied to cash department because they rarely faces long queue for payment or receipt. Interior and exterior decoration of Lake Circus branch are so nice that provide customers friendly environment. It was also observed that the behavior of employees attracts customers and customers think employees are for them. Customers are satisfied to online facilities of National Bank because National Bank charges no fee for online Banking. But in some extend customers were also dissatisfied to few products and services. Customers of National Bank are quite dissatisfied to ATM and Credit card services of Bank. Customers sometimes complain for extra charge of ATM and Credit services. Customers were quite bored to rules and regulations for Accounts opening; they want some flexibility to open a bank account. Sometimes customers suggest the employee to recommend the Manager of National Bank Ltd to offer new products and services. Customers also dissatisfied in that sense that National Bank Ltd has few branches and them face problems to transaction.

7.1 Recommendation:• The entire general banking system is needed to computerize as the customers will be

more satisfied by faster services.• They should establish better networking system with their branches so that it can easily

transfer data within short time.• If they cancel the introducer system they can collect more deposit through opening of

new accounts and, hence, it will also satisfy the customers .They can collect passport or voter id card or office id or student id instead of introducer system.

To collect more deposit NBL can increase rate of interest on deposit. For this they should try to reduce the bad debt so that the cost of capital will reduce.

• Try to avoid giving loan the political person who had bad reputation of loan repaying.• Evaluate the securities value properly to avoid the risk of loan recovery. The

punishment system should be established to discourage the unlawful activities of the employees.

• The Bank should give more attention to advertisement to enlarge the customer base and increase both the deposit collection ad number of customers it can reach.

Service quality dimensions like empathy rate is 3.78 which is minimum. National Bank should emphasis more on empathy to customers which means that National Bank should take more attention to individual care of customers and solves their specific needs.

Among other things the bank should also try to implement the followings: Establish a true On-Line Banking solution Diversification of debit and credit Card Products, for instance debit cards and credit

cards may be extended to students and other market segments. Diversification of Deposit Base by securing low cost & no cost Deposit Branch Network expansion in strategic location of the country Increase of Exchange House arrangement Maintenance of healthy Credit Deposit ratio

Human Resources: Enhancement of capabilities of existing Human Resources through motivation &

training Recruitment of appropriate Personnel

Introduction of performance based evaluation & implementation of Reward and Punishment System

Identification of outstanding performers & appropriate Rewarding Creation of Team Sprit through participating Management Concept and

Exchanging views and ideas among the officers & executives both at Branches and HO level

Branding of NBLThe image of NBL should be engraved in the People’s hearts which says;

“We are the pioneer local establishment in the banking arena”.

Which include effective measurement to be taken for branding of NBL through the use of followings?

o Appropriate Media Exposure, both Paper and Electronic o Mass Promotional Activitieso Decoration of Branches in Identical formo Corporate Culture

8.1Conclusion:National bank Ltd. has established goodwill through innovative products and services. It has many problems but is followed very sincerely the rules, regulations and advice of Bangladesh bank during the last ten years. Technological developments have opened up a new dimension in the development of creative products, efficient services and customer satisfaction. National Bank Ltd. must cope with this technological advancement to retain its present status. Many new generation private commercial banks have already introduced online banking. But National Bank Ltd. Could not established it till now. The bank must take initiative to established on-line banking.

Overall rating of National Bank Limited is 3.91, which is satisfactory. From the analysis it has been observed that significant number of customers is dissatisfied about the promise of the bank. In some cases the bank failed to keep promises such as ATM facility, consumer loans, etc. But the other factors like caring attention of the employees and comparative service charges have regained customer satisfaction in term of reliability.Responsiveness of the bank towards customers has managed to satisfy them. The willingness of the employees to help the customers and especially prompt services have made the customer satisfied.

The employees of the bank have assured the customers about courteous service that generates confidence in the customers’ mind about quality services. That is the reason; most of the customers are pleased by the courteous, caring service of the bank.

Dealing with specific needs of each and every customer National Bank Limited has created the impression of a “Modern banking facilities” financial institution. But 9% customers are dissatisfied to get individual attention to their specific needs for financial services. Bank should emphasis more on these customers to reduce their dissatisfaction.

9.1 Reference & Bibliography : 

Annual Report 2008 of National Bank Limited.

National Bank Ltd prospectus National Bank Ltd, Guidelines Manual of 2008. National Bank Ltd, Daily Affairs of Lake Circus Branch. Reading Materials on General Banking & Credit Department. http://www.google/ bank/Bangladesh.com http://www.nblbd.com

  10.1 Acronyms Used In This Report1. A/C : Account2. AD : Authorized Dealer3. BB : Bangladesh Bank4. CFR : Cost & Freight5. CIB : Credit Information Bureau6. DD : Demand Draft7. DP Note : Demand Promissory Note8. EPB : Export promotion Bureau9. FC : Foreign Currency10. IBC : Inward Bills for Collection11. IBCA : Inter Branch Credit Advice12. IBDA : Inter Branch Debit Advice13. IRC : Import Registration Certificate14. PO : Payment Order15. SWIFT : Society for Worldwide Inter bank Financial Telecommunication.16. TC : Travelers Cheque17. TR : Truck Receipt18. TT : Telegraphic Transfer19. STD : Short Term Deposit20. VAT : Value Added Tax