Definition of Bank & Banking:

Bank is a financial institution that collects society’s surplus cash and gives a part of that as

loan to investors for earning profit. So, bank is an intermediary institution that makes

relationship between the owner of surplus savings and the investor of deficit capital. In this

process, banks earn profit by receiving interest from the borrowers who want to take short-

term and or long-term loans and making relatively lower interest payment to the depositors

for providing their funds for use by the bank.

Some widely accepted definitions of banks are given below:

A bank provides service activity and acts as an intermediary between creditor and lender. In a broader sense, it is said that bank is the heart of complex financial structure.

- American Institute of Bankers

Bank is an institution that is registered by central bank and mainly performs the following activities:

i. Receives current deposit and give withdrawal facilities to clients through chequeii. Receives term deposit and pay interest on it

iii. Discounting notes, approving loans and invest in government and other credit instrumentsiv. Collect cheque, draft and note etc.v. Issue draft and cashiers cheque

vi. Notification of depositors chequevii. Act as a trustee in accordance with government permission

- Dictionary of Banking and Finance

However the term “bank” means “ A business institution that receives surplus funds of individuals, trading or non-trading institution, government or private institution as deposit and surplus money with assurance of repayment against security in exchange of profit or interest to the relative parties.

Banking means “Accepting deposits for the purpose of lending or investment of deposits of money from public, repayable on demand or otherwise and withdraw by cheque, draft. The functions which the bank performs are known as banking.”

Banking in most general sense, is meant the business of receiving, conserving & utilizing the funds of community or of any special section of it”

Banking in Bangladesh

Bangladesh is a third world country with an under developed banking system, particularly in

terms of the services and customer care provided by the government run banks. Recently the

private banks are trying to imitate the banking structure of the more developed countries, but this

attempt is often foiled by inexpert or politically motivated government policies executed by the

central bank of Bangladesh, Bangladesh Bank. The outcome is a banking system fostering

corruption and illegal monetary activities/laundering etc. by the politically powerful and

criminals, while at the same time making the attainment of services or the performance of

international transactions difficult for the ordinary citizens, students studying abroad or through

distance learning, general customers etc..

History of Banking in Bangladesh

The banking system at independence (1971) consisted of two branch offices of the former State

Bank of Pakistan and seventeen large commercial banks, two of which were controlled

by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen

smaller commercial banks.

Virtually all banking services were concentrated in urban areas. The newly independent

government immediately designated the Dhaka branch of the State Bank of Pakistan as the

central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating

currency, controlling credit and monetary policy, and administering exchange control and the

official foreign exchange reserves. The Bangladesh government initially nationalized the entire

domestic banking system and proceeded to reorganize and rename the various banks. Foreign-

owned banks were permitted to continue doing business in Bangladesh. The insurance business

was also nationalized and became a source of potential investment funds. Cooperative credit

systems and postal savings offices handled service to small individual and rural accounts. The

new banking system succeeded in establishing reasonably efficient procedures for managing

credit and foreign exchange. The primary function of the credit system throughout the 1970s was

to finance trade and the public sector, which together absorbed 75 percent of total advances.

The government's encouragement during the late 1970s and early 1980s of agricultural

development and private industry brought changes in lending strategies. Managed by the

Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and

fishermen dramatically expanded.

The transformation of finance priorities has brought with it problems in administration. No sound

project-appraisal system was in place to identify viable borrowers and projects. Lending

institutions did not have adequate autonomy to choose borrowers and projects and were often

instructed by the political authorities. In addition, the incentive system for the banks stressed

disbursements rather than recoveries, and the accounting and debt collection systems were

inadequate to deal with the problems of loan recovery. It became more common for borrowers to

default on loans than to repay them; the lending system was simply disbursing grant assistance to

private individuals who qualified for loans more for political than for economic reasons.

One major exception to the management problems of Bangladeshi banks was the Grameen Bank,

begun as a government project in 1976 and established in 1983 as an independent bank. In the

late 1980s, the bank continued to provide financial resources to the poor on reasonable terms and

to generate productive self-employment without external assistance. Its customers were landless

persons who took small loans for all types of economic activities, including housing. About 70

percent of the borrowers were women, who were otherwise not much represented in institutional

finance.

Beginning in late 1985, the government pursued a tight monetary policy aimed at limiting the

growth of domestic private credit and government borrowing from the banking system. The

policy was largely successful in reducing the growth of the money supply and total domestic

credit. Net credit to the government actually declined in FY 1986. The problem of credit

recovery remained a threat to monetary stability, responsible for serious resource misallocation

and harsh inequities. Although the government had begun effective measures to improve

financial discipline, the draconian contraction of credit availability contained the risk of

inadvertently discouraging new economic activity.

Present Scenario of Banking in Bangladesh

Financial System is the set of well-organized institutional set up which helps to transfer excess

funds from surplus unit to deficit unit. The financial system in Bangladesh includes Bangladesh

Bank (the Central Bank), scheduled banks, and non-bank financial institutions like leasing etc.

Microfinance institutions (MFIs), insurance companies, co-operative banks, credit rating

agencies and stock exchange. Banking sector occupies the lion portion share of financial system

in Bangladesh. Bangladesh bank is authorized for regulating and supervising financial

institutions in Bangladesh. At present there are 6 state owned commercial banks, 2 state-owned

specialized banks, 5 non-scheduled specialized banks, 39 commercial banks including 8 Islamic

commercial banks, 9 foreign commercial banks and 2 non-scheduled banks.

List of Banks

SL. No Name of the Bank Establishment Period

Central Bank

Bangladesh Bank 16 December 1971 ( Pursuant to Bangladesh Bank Order,1972)

State Owned Commercial Banks

01. Sonali Bank Limited Nationalization Order 1972 ( Presidential Order-26)

02. Janata Bank Limited Nationalization Order 1972 ( Presidential Order-26)

03. Agrani Bank Limited Nationalization Order 1972 ( Presidential Order-26)

04. Rupali Bank Limited Nationalization Order 1972 ( Presidential Order-26)

05. BASIC Bank Limited 21 January 1989

06. Bangladesh Development Bank Limited 3 January 2010

State Owned Specialized Banks (Scheduled)

01. Rajshahi Krishi Unnoyon Bank (RKUB) 15 March 1987

02. Bangladesh Krishi Bank Limited 1961 ( Presidential Order No. 27 of 1972)

Non- Scheduled Specialized Banks

01. Karmasangsthan Bank 22 September 1998

02. Probashi Kallyan Bank 19 April 2011

03. Palli Sanchay Bank 31 August 2014

04. Ansar-VDP Unnayan Bank 1996

05. Bangladesh Samabaya Bank Ltd 1971

Private Commercial Bank ( Local)

01. AB Bank Limited 12 April 1982

02. Bangladesh Commerce Bank Limited 16 September 1999

03. Bank Asia Limited 27 November 1999

04. BRAC Bank Limited 4 July 2001

05. Dhaka Bank Limited 5 July 1995

06. Dutch Bangla Bank Limited 3 June 1996

07. Eastern Bank Limited August 1992

08. IFIC Bank Limited 1983

09. Jamuna Bank Limited 3 June 2001

10. Meghna Bank Limited 9 May 2013

11. Mercantile Bank Limited 2 June 1999

12. Midland Bank Limited 9 April 2013

13. Modhumoti Bank Limited 17 June 2013

14. Mutual Trust Bank Limited 24 October 1999

15. National Bank Limited 23 March 1983

16. NCC Bank Limited 17 May 1993

17. NRB Bank Limited 28 May 2013

18. NRB Commercial Bank Limited 25 March 2013

19. NRB Global Bank Limited 25 July 2013

20. One Bank Limited July 1999

21. Prime Bank Limited 17 April 1995

22. Pubali Bank Limited 19 May 1959 ( Nationalized in 1972, privatized in 1983)

23. South Bangla Agriculture and Commerce Bank

Limited

20 March 2013

24. Southeast Bank Limited 12 March 1995

25. Standard Bank Limited 3 June 1999

26. The City Bank Limited 27 March 1983

27. The Farmers Bank Limited 3 June 2013

28. The Premier Bank Limited 26 October 1999

29. Trust Bank Limited 3 June 2001

30. United Commercial Bank Limited 29 June 1983

31. Uttara Bank Limited 28 January 1965 ( Nationalized in 1972, privatized in 1983)

Private Islamic Commercial Banks

01. Islami Bank Bangladesh Limited 13 March 1983

02. Export Import Bank of Bangladesh Limited 3 August 1999

03. Social Islami Bank Limited 22 November 1995

04. Shahjalal islami Bank Limited 10 May 2001

05. First Security Islami Bank Limited 25 October 1999

06. ICB Islamic Bank Limited 20 May 1987

07. Union Bank Limited 20 May 2013

08. Al-Arafah Islami Bank Limited 27 September 1995

Foreign Commercial Banks

01. Bank Al-Falah 16 May 2005

02. Citibank NA 24 June 1995

03. Commercial Bank of Ceylon 6 November 2003

04. Habib Bank Limited 9 July 1976

05. HSBC (The Hong Kong and Shanghai Banking

Corporation Ltd.)

17 December 1996

06. National Bank of Pakistan 31 August 1994

07. Standard Chartered Bank 1905

08. State Bank of India 5 May 1975

09. Woori Bank 21 September 1996

Other Non-Scheduled Banks

01. Grameen Bank 2 October 1983

02. Jubilee BankLtd. 2013

1. Findings and Critical Observations Lack of dynamic and prompt customer service

Since a number of new banks are coming to existence with their extended customer service pattern in a completely competitive manner. Customer services must be made dynamic and prompt. Now a day, people have very little time to waste but want fastest and unique services in short time. Moreover they seek the bank which will provide more facilities and attractive offer compare to other bank. Therefore southeast bank should think sincerely about the renovation of their customer service and facilities which will be more attractive and innovative rather than traditional one.

2. Lack of Proper Division of Labor and man power

There is lack of division of labor in the branch. Therefore everybody has to handle every type of banking services. Moreover if one personnel is absence in a department then extra burden will fall to another. This decreases the level of performance of the personnel, though it reduces monotonousness. But lack of division of labor hampers the discipline of working environment. So customers have to wait for some time for the desired service, which is contrary to the Premium Banking objective.

3. Lack of Proper compilations & Maintenance of Files

Sonali Bank Ltd, Jhigatola Branch gives personalized services. All the officers have to give concentration to the customers, while doing this they cannot properly completed and maintain the customer files. In many cases, most of the files and papers are kept here and there by the officers during the busy hour.

4. Shortage of availability of Machineries

Jhigatola Branch is supposed to be very well equipped by advance and available machineries. But there are shortages of photocopy and printing machine therefore most of the time employees activities are hampered for maintaining serial as well as it create gathering on their short space. This loses its glamour. Moreover because of lacking of maintenance and over used when one machine of any department stops working then the load shift to another department badly.

5. Employee Dissatisfaction

Because of late promotion and longer probationary period there is dissatisfaction among the employees. Moreover some sort of internal politics also another reason behind proper recognition and promotion of employees. In addition most of the time over duties and huge working pressure makes their life monotonous and hamper their family life.

6. Lack of Computer Knowledge

All the organizations including banks are now mostly depends on computer but employees do not have much knowledge on computer.

7. Absence of proper Decoration and congested office area

Decoration of the SBL has become old. So, young people are not attracted to this branch as well as employees are not getting the congenial environment. Customers are also facing the problem with as because of its congested office area. Most of the time at busy hour customer rarely get any seat which hamper their service as well as such gathering also hamper office environment.

8. Unsatisfactory software performance

Sonali bank use software for performing their banking activities. But the software often hanged as because of slower upgrade of data by vender. Therefore it delays to performing banking activities at time.

9. No desk and specific task for internee

Sonali bank doesn’t arrange any desk and fixed any task for their internee. Therefore they don’t get any chance to learn banking activities by doing practical task. It is not possible for any fresh graduate to learn banking activities by getting few lecture from specific personnel rather if they involve them to some specific activities it would be easy for them to learn more and fell confident to perform any activities properly. Moreover as they do not pay any allowance to internee so some time it does not motivated them to present and learn eagerly.

10. Limitations in technical support

There is limitation of technological support such as available ATM booths at different places

Recommendations

1. Renovation of customer service

Sonali bank should make its service prompt so that people need not give more time in the banking activities and fell easy to perform all respective activities. Moreover they have to come up with new facilities and offer which will attract more client and help to ensure their premium as well as loyal customer forever. Therefore they have to ensure-

The working process faster with better computers and operating systems Trained, experienced, smart, knowledgeable as well as intellectual personnel to provide

fastest and the best services. Individual attention can be given to customers in order to better understand the

customer’s needs and better satisfy them More ATM booth in merchant location More Gifts, Discounts as well as differentiated interest rates on several loan and deposit

schemes for the Premium Customers Car parking facility

2. Ensure Proper Division of Labor and man power

The human resource departments of Sonali bank have to ensure proper division of labor in desk for handling the rash of customer in an efficient way. Therefore based on importance and work load they have to ensure proper division of labor. Moreover by increasing the numbers of personnel try to maintain the premium banking objective. Mainly the number of human resources is needed in Front Desk and in clearing section which really insufficient for giving services to huge number of customers.

3. Ensure Proper compilations &Maintenance of Files

Ensuring proper customer service is a continuous process in banking business. Which is vital for it success. The service starts from the first day of customer interaction with banker. To know customer, maintain interaction, conducting banking activities and for the security purposes the file maintenance of individual client is most important. If one single paper is missing then it can create a big problem as well as hazard to both banker and their customer. Therefore both branch management and all personnel should more conscious about the proper compilations as well as decoration for keeping important files.

4. Ensure availability of Machineries

Every department should ensure the availability and proper maintenance of necessary machines like photocopy and printing machines.

5. Ensure employee satisfaction

Management of the bank has to provide time to time recognition of their employee. Moreover short probationary period and on time promotion motivated the employee to perform well in their day to day activities. But the most important thing is the overall motivational activities should be proceeding under fair judgment based on performance rather internal politics. In addition through assurance of proper division of labor, incentive for over duty and mandatory leave help to overcome huge working load and enjoy a sound as well as healthy life. Besides good relationship amongst employee and sound working environment also help the employee to be satisfied with their job.

6. Ensure proper promotional activities

They must prepare an organized set of plan regarding the advertising and promotional activities which should include billboards, internet advertising and sponsorship. The sales team and

officers should provide periodic training on interacting and dealing with different classes of potential and existing customers.

7. Ensure effective computer literacy

As the bank is now mostly depends on computer therefore to increase the computer skills of employees, the bank should provide training. Though they have knowledge about computer but it is not enough. So bank should provide training to their employees to make them efficient in computer.

8. Ensure of proper Decoration and expanded office area

Jhigatola branch authorization should have to be more conscious and innovative in their interior decoration to attract client from all ages. As dhanmondi area is the business area so the rush of client is the common scenario of this branch so the space should be extended for conducting and performing sound banking activities, service as well.

9. Should use fastest software

Sonali Bank should uses more first and modernizes software for internal transaction or entry the information to compete with foreign bank. So I think the new software can help to perform internal work more easily and swiftly.

10. Ensure internship desk and specific task

This branch is renowned for the internship. So bank should provide the internship desk and some specific task for gathering some real life experience which they can utilize in their future job. Moreover small amount of remuneration should provide to internee for realize their importance as well as motivate to perform the task properly.

Moreover some other recommendations are as follows:

SBL should provide more computers for each branch.

SBL also take proper step to improve their online banking services and provide best services to

customer.

SBL Credit Policy mainly focuses on Macro Economic Development which is blessing for

middle and large scale business house and industry. They should provide more loans to

small and lower scale business with easy conditions.

SBL Should use Data Base Networking in Information Technology (IT) Department. In foreign

exchange department it is required to communicate with foreign banks frequently and

quickly. To make the process easy modem communication media for example e-

mail, Fax and win fax, Internet etc. Should be used.

SBL not providing the credit cards in market which now a day’s one of the most important part of

banking. So they are losing too many customers. They should provide Credit Card to

Customers.