a comprehensive analysis of the performance and customer satisfaction of commercial bank of ceylon...

1.1 Introduction

Commercial Bank of Ceylon Limited commenced its operation in Bangladesh by acquiring

the Bangladesh operations of Credit Agricole Indosuez (CAI) in 2003. The high performance

of Commercial Bank of Ceylon Limited is a reflection of the qualities and attributes that has

been accepted by people advocating good management practices in the corporate sector. The

event marked the first ever acquisition of multinational bank by a Sri Lankan bank and is a

direct consequence of Commercial Bank of Ceylon Ltd’s continued commitment towards

business expansion. The bank possesses a strong corporate clientele and it has set its vision to

be a strong regional bank providing superior personal banking services.

CBC was adjudged the Best Bank in Sri Lanka for 8 consecutive years up to 2006 by the

‘Global Finance’ Magazine based in US and for 5 consecutive years up to 2005 by ‘The

Banker’ magazine based in UK. In Sri Lanka, Commercial Bank of Ceylon Ltd. is known as

the largest and fully networked banking environment provider. The bank enjoys the

reputation of having an unrivalled employment of information technology and a very reliable

ATM network around the country.

In his report Managing Director of the bank remarked that the Bank's new Vision places a

premium on having a strong international presence by 2011. After outperforming its peers in

the home country, the bank is now in Bangladesh to continue with its legacy of success.

While emphasizing social responsibility and community services, Chairman of the bank

MJC Amarasuriya in his speech said the bank is committed to help build Bangladesh

economy by rendering professional banking services. He also expressed his interest in

offering SMR related services in future. The chairman CBCL would continue introducing

innovative products and services, providing more investment opportunities to individual

investors and business community. (The News Today,2006)

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1.2. Commercial Bank in Bangladesh

In 2003 Commercial Bank acquired Credit Agricole lndosuez (CAl) operations in Bangladesh

consisting of 2 branches in Dhaka and Chittagong and the 2 booths in Gulshan and

Sonargaon. CAI Bangladesh has been in operation since 1981 and is the second largest

foreign bank in Bangladesh. It is also a well-capitalized and profitable bank with healthy

financial ratios.

Credit Agricole, one of the largest banks in France, acquired Banque Indosuez in 1996 to

create the wholesale international banking arm. Today, CAI operates in 50 countries and

reported net banking income of EUR 2,644 million (about Rs. 286 billion) in 2002. (Sunday

Observer, 27 July 2003)

Though the proposed acquisition was on the basis of a fully-fledged branch operation,

Commercial Bank tried its best to preserve the national identity of the Bangladesh operation

and its banking traditions inherited from CAI, a statement said. CAI's disposal of Bangladeshi

operations was a part of the Bank's global repositioning strategy.

Commercial Bank, while continuing CAI's strategy would further extend the reach and range

of services in Bangladesh. Over a period, our bank would strengthen the retail banking side

as well, for which Commercial Bank has made its name in Sri Lanka.

This represents the first acquisition of a foreign bank by a Sri Lankan bank and paves the way

for Commercial Bank to become a regional player.

The formal taking over of CAI's Bangladeshi operation took place on November 6 2003. The

official opening ceremony was held on 10th December 2003 attended by Governor of Central

Bank of Sri Lanka, Governor of Bangladesh Bank and many other distinguished guests,

including diplomats, corporate customers, representatives of foreign multi-nationals and other

well wishers.

Apart from Sri Lanka, it operates in Bangladesh and contemplating exploring into the

Indian banking sector as well. In Bangladesh, it started its operation by taking over the

Bangladesh operations of credit Agricole Indosuez (CAI). In Sri Lanka, Commercial

Bank Of Ceylon Ltd. is known as the largest and fully networked banking service

provider. The bank enjoys the reputation of having an unrivalled employment of

information technology and a very reliable ATM network around the country.

It has been adjudicated the best bank in Sri Lanka by magazines like Global Finance,

The Banker, Business Today, Etc for several consecutive years at a row.

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1.3. An Introduction to the Private Sector Banking Industry in Bangladesh

A Bank is a financial institution whose task is to channelize funds from surplus unit to

deficit unit in the form of loans and advances to generate sufficient spread for its

sustainable existence

Banks and financial institutions play an important role in financial intermediation and

thereby contribute to the overall growth in the economy. At present the financial

system in Bangladesh consists of the central bank, commercial bank and other non-

bank financial institutions. Commercial banks can be divided into following groups.

Nationalized Banks

Specialized Banks

Private Commercial Banks

Traditional Private Commercial Bank

Islami Private Commercial Bank.

Foreign Banks

1.4. A Brief History of Commercial Bank of Ceylon Limited.

The journey started in 1920 when The Eastern Bank Ltd. opened a branch office at Chatham

Street, Colombo. In 1939, the branch Office of the Eastern Bank, situated at Chatham Street

was shifted to the previous Commercial Bank, City Office premises, situated at 57, Sir Baron

Jayathilake Mawatha.The Chartered Bank acquired the share capital of Eastern Bank Ltd in

1957.Finally in 1969 the Commercial Bank of Ceylon Limited was duly incorporated in Sri

Lanka then Ceylon with Eastern Bank holding 40% of its equity. It was incorporated in Sri

Lanka on June 25,1969, under the Companies Ordinance and quoted in the Colombo Stock

Exchange in March 1970.The following table summarizes Commercial Bank of Ceylon’s

journey.

Eighty Seven Years Tradition

Year Event(s)

1920 The Eastern Bank Ltd. opened a branch office at Chatham Street, Colombo

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1939 The Branch Office of the Eastern Bank, situated at Chatham Street, was shifted to the previous Commercial Bank, City Office premises, situated at 57, Sir Baron Jayathilake Mawatha.

1957 The share capital of Eastern Bank Ltd. was acquired by the Chartered Bank.

1969 The Commercial Bank of Ceylon Limited was duly incorporated in Sri Lanka (then Ceylon) with Eastern Bank holding 40% of its equity. The business of the Colombo branch of the Eastern Bank was acquired by the Commercial Bank of Ceylon Limited.

1971 The Business of the Eastern Bank Ltd. was taken over by the Chartered Bank.

1972 Two new Branches were opened at Galewela and Matale.

1973 A new branch was opened at Matara. The Business of the Galle, Jaffna and Kandy branches of the Mercantile Bank Ltd. was acquired by the Bank.

1974 Two new branches were opened at Wellawatte and Kollupitya.

1975 The Chartered Bank transferred its business to Standard Chartered Bank. A new branch was opened at Kotahena.

1979 The Foreign Currency Banking Unit was formed in order to promote off-shore banking business.

1980 The Bank promoted a property development company, namely Commercial Development Company Ltd., to construct a Headquarters building for the Bank. The Bank enjoyed 40% equity participation in this company.

1981 A new branch was opened at Negombo.

1983 A new branch was opened at Hikkaduwa.

1984 The Headquarters of the Bank was shifted to "Commercial House" , 21 Bristol Street, Colombo 1, bringing the operations of Head Office to a centralized location. The Bank embarked on a computerization programme which would progressively cover the entire branch network. A new branch was opened at Hingurakgoda.

1985 The Foreign Department of the Bank was elevated to the status of a fully-fledged branch. This move completed the reorganization process where by three independent offices representing City Office, Foreign Branch and Head Office were created, segregating the different operations.

1987 An associate company, Commercial Insurance Services (Pvt) Ltd., was formed in which the Bank enjoyed 40% equity participation.

1988 A new branch was opened at Maharagama. An associate Leasing Company, Commercial Leasing Ltd., was formed

1990 Three new branches were opened at Borella and Kegalle. Automated Teller Machines were installed at the Foreign, Borella, Nugegoda, Kotahena and Kollupitiya branches.

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1991 Two new branches were opened in the Katunayake Free Trade Zone and Narahenpita. An associate Company, Commercial Stock Brokers (Private) Ltd., commenced operations. The Bank enjoyed 40% equity participation in this company.

1992 Seven new branches were opened at Pettah, Battaramulla, Mutwal, Wennappuwa, Koggala, Embilipitiya and Galle. The Bank sponsored Fund Management Company, Commercial Fund Management (Pvt.) Ltd. was formed for the purpose of operating unit trusts. The Bank enjoyed 50% equity participation in this company.

1993 International Comprehensive Banking System (ICBS) was introduced linking nine metropolitan branches. Three new branches were opened at Kanadana, Maradana and Akuressa. An Automated Teller Machine was installed at Wellawatte Branch.

1994 Three new branches were opened at Minuwangoda, Keyzer Street, Panadura and they were linked to the International Comprehensive Banking System. ATMs were installed at City Office, Minuwangoda, Keyzer Street, Panadura, Maradana and Battaramulla Branches. Religious ceremonies were held and a special bonus of one month's salary was paid to mark the 25 th anniversary of the Bank.

1995 Two new branches linked to the ICBS were opened at Aluthgama and Kaduwela. The existing branches at Kurunegala, Mutwal and Pettah were linked to the ICBS. ATMS' were installed at Aluthgama, Kaduwela, Kurunegala, Mutwal and Pettah branches.

1996 Five new branches with ICBS linkage were opened at Old Moor Street, Katugastota, Nuwara-Eliya, Chilaw and Gampaha. The existing branches at Galle City, Matara, Negombo, Matale and Katunayake(FTZ) were also linked to the ICBS. ATMs were installed in these branches except in Katunayake (FTZ). The bank increased the Shareholding in Commercial Development Company Ltd., to 94.55% through a share swap.

1997 Eight new branches were opened at Ratmalana, Kirullapone, Union Place, Colombo 7, Ratnapura, Kuliyapitiya, Badulla and Anuradhapura. The existing branches at Kandy, Kandana, Maharagama, Hikkaduwa, Wennappuwa, and Kegalle were also linked to the ICBS. Automated Teller Machines were installed in these branches and in Katunayake (FTZ) branch.

1998 365 day branch at Colombo 7 Branch was opened. Sophisticated Online Banking System which permits clients to conduct a variety of banking transactions through their personal telephone, personal computer or laptop was installed. All branches except Jaffna were linked to the ICBS.

1999 Banking and supermarketing were combined by opening the first "MiniCom" at the Staple street Cargills Food City outlet. Rated as the Best Bank in Sri Lanka by Global Finance.

2000 Launched internet Banking. 5 new branches, 4 Customer Service Points and 2 MiniCom outlets were opened. Rated as the Best Bank for the second consecutive year.

2001 Received SL AA+ rating from Fitch Ratings Lanka Ltd. Rated as the Best Bank

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in Sri Lanka by Global Finance for the third consecutive year. Selected as the Bank of the Year by The Banker Magazine. Opened the 100th branch at Kaduruwela and Gold trading Unit at the Foreign Branch.

2002 Selected as the No.1 Corporate in Sri Lanka by "Business Today" Magazine. Rated as the Best Bank in Sri Lanka by "Global Finance" for the fourth consecutive year. Selected as the Bank of the Year by "The Banker" Magazine for the second consecutive year. Fitch Ratings Lanka Ltd. upholds the SL AA+ rating in their annual review. Winner of the overall National Award for HRM - 2002. South Asian Federation of Accountants (SAFA) ranks the Bank's Annual Report for 2001 to be the first in the Financial Sector.

2003 Rated as the Best Bank in Sri Lanka by "Global Finance" for the fifth consecutive year. Selected as the Bank of the Year by "The Banker" Magazine for the third consecutive year. Fitch Ratings Lanka Ltd. upholds the SL AA+ rating in their annual review. SAFA rates Annual Report 2002 as the Best Presented Accounts of the Financial Sector. The Institute of Chartered Accountants of Sri Lanka (ICASL) ranks the Annual Report 2001 of the Bank as the Overall Winner, the Winner of the Financial Sector and Winner of Corporate Governance Disclosure Award. The operations of Credit Agricole Indosuez in Bangladesh is taken over. The first service point at Arpico Super Centre was opened at Dehiwela.

2004 Rated as the Best Bank in Sri Lanka by "Global Finance" for the sixth consecutive year. Selected as the Bank of the Year by "The Banker" Magazine for the fourth consecutive year. Fitch Ratings Lanka Ltd. upholds the AA+ (sri) rating in their annual review. SAFA rates Annual Reports 2002 and 2003 as the Best Presented Accounts of the Financial Sector. The ICASL ranks the Annual Reports 2002 and 2003 of the Bank as follows:

Award 2003 2002

Overall Winner Winner

Banking Sector Winner Winner

Corporate Governance Disclosure Joint 1st Runners up Winner

Corporate Social Responsibility Joint 1st Runners up Joint 2nd Runners up

Overall HRM winner in the Large Service Sector and winner - most innovative HR Practices. Commercial Bank Social Responsibility Trust was set up in September.

2005 Rated as the Best Bank in Sri Lanka by “Global Finance” for the seventh consecutive year. Selected as the Bank of the Year by “The Banker” Magazine for the fifth consecutive year. Fitch Ratings Lanka Ltd. upholds the AA+ (sri) rating in their annual review. SAFA rates Annual Report 2004 as the Overall Winner and the Best Presented Accounts of the Financial Sector. The ICASL ranks the Annual Report 2004 of the Bank as the Overall Winner, the Winner of the Financial Sector and the Winner of Corporate Governance Disclosure Award. Won three awards at the ‘National Business Excellence Awards - 2005’ organized by the National Chamber of Commerce. Raises US $ 65 million 2-year syndicated loan with an option

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to extend it for a further year at the option of the lender, the first such loan by a non-sovereign corporate in the country. Makes a scrip issue on the basis of 1:1. Introduces the first mobile ATM in the country.

1.5. Corporate Information about Commercial Bank of Ceylon Limited.

Commercial Bank of Ceylon Limited is a Sri Lankan bank with its head office at

"Commercial House", 21, Bristol Street, P.O. Box 856, Colombo 1, Sri Lanka. It is a public

limited liability company incorporated in Sri Lanka on June 25, 1969 under the Companies

Ordinance No. 51 of 1938 and quoted in the Colombo Stock Exchange in March 1970.A

licensed commercial bank under the Banking Act No. 30 of 1988. The Company Registration

Number is PBS 600 and Tax Payer Identification Number (TIN) is 124006007.

1.6. Commercial Bank of Ceylon Limited Achievements

"Robintex - Financial Mirror - Partex Business Awards 2006"

Commercial Bank of Ceylon Limited was adjudged as the "Best Foreign Bank" in

Bangladesh at the "Robintex - Financial Mirror - Partex Business Awards 2006".

'Best Performing Foreign bank' in Bangladesh - 2005

Bangladesh branch of Commercial Bank of Ceylon recently won the Financial News Services

(FNS) Business Award 2005 for the 'Best Performing Foreign Bank' at a gala ceremony at the

hotel Purbani on 4th December 2005.

Arthakantha Business Award – 2004

Commercial Bank of Ceylon Ltd received the Business Award for 2004 - Banking sector

awarded by the Arthakantha magazine in Bangladesh on May 20, 2005 at the Winter Garden

of Dhaka Sheraton Hotel. Commercial Bank of Ceylon was chosen as the recipient of the

award as a successful organization with high dynamism, global competitiveness and ethical

standards who have made outstanding contribution to its respective sector.

'Best Foreign Bank' in Bangladesh - 2004

The Commercial Bank's Bangladesh branch has been adjudged the 'Best Foreign Bank' at the

'The Industry Business Awards 2004', held recently in Bangladesh organized by the

Bangladesh's "Weekly Industry Magazine". The award was presented to Commercial Bank

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for its outstanding performance in providing banking services as well as the contribution

made to the country's economy.

AA from CRISL

Commercial Bank of Ceylon Limited received a rating of AA from Credit Rating Information

Services Limited (CRISL). It was the highest ever rating for any financial institution in

Bangladesh.

1.7. Bank Deposit Mobilization

Since independence deposit mobilization in Bangladesh has grown significantly thanks

to the phenomenal growth of private banks and NGOs offering limited banking

services in the rural areas.

1.7.1. Fig: Deposit Growth Trend in Bangladesh

(Source: www.bangladesh-bank.org)

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2.1. Scope of the Study

This internship report covers the activities performed by the Customer Service Department of

Commercial Bank of Ceylon Limited, Sylhet Branch such as Account opening, Payment

procedure of TT, Chequebook issuing procedure etc. Besides this, finding problems in the

total process and provide possible solutions for Commercial Bank of Ceylon Limited will be

another scope of this report. The project limits itself to understanding and analyzing the

activities of Customer Service Department than aiming for an extensive analysis of the entire

business handled by Commercial Bank of Ceylon Limited. A performance analysis of the

activities of Customer Service Department was carried out to determine the progress made

since Commercial Bank of Ceylon Limited’s inception and the potential it holds for the years

to come.

2.2. Rationale of the study

Contemplated as the best bank in Sri Lanka by magazines like Global Finance, The Banker,

Business Today, etc. for several consecutive years, Commercial Bank of Ceylon commenced

its operation in Bangladesh in 2003 by acquiring the Bangladesh operations of Credit

Agricole Indosuez (CAI). The bank enjoys the reputation of having an unrivalled

employment of information technology and a very reliable ATM network around the country.

It wants to see itself as a growth oriented regional bank with a vision to be a strong south

Asian regional player. It emphasizes its responsibilities as a corporate citizen and ensures

high ethical standards in overall conducts. Moreover it wants to be the market leader in

introduction of products and services. The internship report covers an extensive analysis of

the activities of the Customer Service Department of Commercial Bank of Ceylon Limited to

determine the functioning of a multinational bank in our country.

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2.3. Objective of the Study

2.3.1. Objective in General

To gain job experience and view the application of theoretical knowledge in the real life.

2.3.2. Project Objective

The objectives of the internship report are highlighted as follows:

To represent the unique features of Commercial Bank of Ceylon Limited.

To cover an extensive analysis of the activities of Customer Service department of

Commercial Bank of Ceylon Limited and indicating the steps taken by the bank to

improve the quality of services provided to customers.

To study the various products offered by the Customer Service Department of

Commercial Bank of Ceylon Limited to its clients contributed by the new inventions

of information technology (IT).

To show the strengths, weaknesses, opportunities and threats for Commercial Bank of

Ceylon Limited.

To determine the level of satisfaction regarding various bank-services from the

viewpoint of customers.

Finding problems in the processes performed by the Customer Service Department

and providing possible solutions to rectify them.

2.4. Methodology of the Study

For collecting relevant and adequate data it is necessary to follow proper methodology. No

one can collect relevant information without proper methodology. It is impossible to prepare

an effective report without correct and proper information,

To collect the relevant information, I adopted the following methods:

Studying Financial Statements of Commercial Bank of Ceylon Limited.

Conducting questionnaire survey.

Browsing different websites.

Meeting with employees of Commercial Bank of Ceylon Limited.

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Consult the book of Bangladesh Bank Guidelines.

Examining different product brochures of Commercial Bank of Ceylon Limited.

2.5. Data Analysis Techniques

A questionnaire report was prepared to gather data from the clients of the bank in respect of

customer satisfaction. The features of Commercial Bank of Ceylon Limited and benefits

offered to customers by it were compared with those of two other foreign banks. The

attributes of a nationalized bank were also compared with the features of Commercial Bank

of Ceylon Limited. Data were also collected from secondary sources and analyzed.

2.6. Limitations of the Study

I faced some limitations while preparing the report that are mentioned below.

One major limitation was the time constraint.

Due to time restriction, the project is concentrated on data collection as much as

possible.

Some essential data could not be gathered because of confidentiality concerns.

Another limitation was that the data gathered could not be verified for accuracy.

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3.1. Commercial Bank of Ceylon Limited Bangladesh under probe

3.1.1.Mission

“Redefining Convenience in financial services”

One of its prime future targets is consolidation and growth in the corporate banking sector. At

the same time, it also wants to diversify into personal banking as well. Commercial Bank of

Ceylon Ltd. wants to focus on contributing to the Bangladesh economy at corporate as well

as personal banking level which is totally in line with its mission. And while doing so it

intends to differentiate itself from its competitors by its superior service.

Commercial Bank of Ceylon Ltd. wants to see it as a growth oriented regional bank with a

vision to be a strong south Asian regional player. It emphasizes its responsibilities as a

corporate citizen and ensures high ethical standards in overall conducts. Moreover, it wants to

be the market leader in introduction of products and services. And in achieving its goals it

relies on its well-trained and knowledgeable work force. In Sri Lanka, Commercial Bank of

Ceylon became the Overall Winner of the ‘National HRM Award-2002’, at the first ever

National HRM Awards Convention. The bank not only concentrates on upgrading the

knowledge of its workforce but also developing loyalty, among its employees, to the

organization. From the Chairman’s review it is evident that the goal is to provide a broad

array of options and make banking and financial services truly customer friendly.

3.1.2. Capital & Reserve

The reserve ratio constitutes of two parts-the cash reserve ratio and the statutory liquidity

ratio. The cash reserve has to be maintained in cash. And the CRR is 4% at present. On the

other hand, the statutory liquidity reserve can be maintained by securities, such as the

treasury bill, along with cash. At present, the SLR is 12%.

3.1.3. Capital Base

Commercial Bank of Ceylon Limited’s paid up capital is BDT 1,000,000,000

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3.1.4. Mission Statement

To deliver optimum value to the

Customers

Employees

Shareholders and

The nation.

3.1.5. Vision “To be THE preferred financial services organization in Sri Lanka, having an international

presence by the year 2010.”

3.1.6. Slogan

Our interest is in You!

3.1.7. Future Targets

Consolidation and growth in corporate banking

Diversification into personal banking, targeting ambitious growth in this sector

with the help of new products.

Focus on contributing to the Bangladesh economy at corporate as well as personal

banking level.

Differentiating itself in the market by its superior service.

3.1.8. Values

Integrity

Effectiveness

Passion

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Innovation

Leadership

3.1.9. Workforce

The total number of employees of Commercial Bank of Ceylon in Bangladesh is around 128

at present. The Bank’s total staff strength as at end 2006 was 3415. Of them,388 are new

recruits during the year.

3.2. Branches

Commercial Bank of Ceylon started its operation only in 2003 after acquiring Credit Agricole

Indosuez. Consequently, Commercial Bank of Ceylon Ltd. began its operation with the

branches and booths owned by CAI, which included 2 branches in Dhaka and Chittagong and

2 booths in Gulshan and Sonargaon. Thereafter, Commercial Bank of Ceylon Limited has

opened up two other branches in Dhaka, which are located at Dhanmondi and Uttara, and

another in Sylhet. Its network is still very limited in terms of its number of branches.

However, the bank looks forward to setting up more branches in the near future. In Sri Lanka

the number of delivery points in the network is 150 comprising of 125 branches, 7 CSPs, 17

Supermarket outlets and a Counter and 269 ATMs.

3.2.1. Organogram of Bangladesh Operation of CBC

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Gulshan Booth

Sonargaon Booth

Uttara Branch

Bangladesh operation of CBC

Dhaka Operation Chittagong Operation

Dhanmondi Branch

Agrabad Branch

Motijheel Branch

Sylhet Operation

Dargahgate Branch

3.2.2. Ways to Bank with Commercial Bank of Ceylon Limited.

Commercial Bank of Ceylon Limited manage banking the way that’s most convenient for the

customer and the way one do business-face to face, or via the Internet.

Branch Banking: Full counter service is available at 5 branches, 2 booths across the

country and trained staff and the same high level of service in all of the branches.

The nearest branch banking service is at:

Mukti Bhaban 71,Agrabad Commercial Area, Chittagong. Tel: 713325-7, 713322, 713324

BEPZA Complex, House 19D, Road 6Dhanmondi R/A, Dhaka 1205. Tel: 9676768, 8652784-5

47 Motijheel C/A, P.O. Box 3490, Dhaka 1000. Tel: 9566565, 9566566

Plot#12, road # 14, Sector # 4, Uttara Model Town, Dhaka. Tel:0189-229388

982, Dargagate, Sylhet. Tel:0189-245519.

Booths:73, Gulshan Avenue, Dhaka.Tel:9882774, 8824275, 8824380

Pan Pacific Sonargaon, Room L-112

107, Kazi Nazrul Islam Avenue, Dhaka 1215. Tel: 8111959

Offsite ATMs:42, Satmosjid Road, Dhanmondi R/A, Dhaka

Sanmar Ocean City, Shop No. 1 & 2, 997 CDA Avenue, East Nasirabad, GEC Circle,

Chittagong.

3.2.3. Chart: Branches and ATM Expansion

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3.3. Key Areas of OperationSome major areas where Commercial Bank of Ceylon Ltd. specializes as a bank are stated

below.

Corporate BankingThe Corporate Banking Division comprises of the Foreign Branch, the Corporate Finance

Unit (CFU), the Off-shore Banking center and the Bangladesh operations. This division with

its expertise in Trade Finance, Corporate Finance, Project Financing, Leasing Factoring,

Working Capital Financing and related services caters mainly to the banking needs of the

large to medium sized domestic corporate customers and multinational corporate clients.

Personal Banking

The Personal Banking Division is responsible for the successful operation of the network of

delivery channels that caters mainly to the banking needs of personal customers and small

and medium enterprises.

The Bank continues to have one of the largest computer networks in the country with a total

of 150 branches/service points and 269 ATMs as at end of 2006.

The Personal Banking Division is responsible for the following activities:

• Successful operation of the extensive network of delivery channels, which caters mainly to

the banking needs of personal customers and small & medium enterprises. .

• The eight Regional Offices which make an important contribution to the excellent

performance of this Division by decentralizing and expediting the process of decision making

relating to credit and operations of Branches. .

•Issue of "CAT", ATM cards and Credit & Debit cards under franchises.

• Channeling low cost funds mobilized in excess of the lending requirements of this Division

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to the Corporate Banking Division and the Treasury for their lending and investment

activities.

TreasuryThe Treasury is primarily responsible for the following activities.

Managing the liquidity

Exchange positions

Exposure to market risks

Mobilizing resources from domestic as well as international markets.

Achieving preferred balance sheet mix and

Maximizing the returns there from whilst minimizing the risk to the Bank.

The contribution made by the three broad business divisions viz. the Corporate Banking, the

Personal Banking and the Treasury to the profits and business volumes of the Bank is

summarized below:

2006 2005

Rs. Mn. % Rs. Mn. %

Profit before Tax:

- Corporate Banking 1,681.16 39.90 1,635.09 44.90

- Personal Banking 2,225.61 52.82 1,760.38 48.34

- Treasury 306.78 7.28 246.49 6.76

Total 4,213.55 100.00 3,641.96 100.00

Loans and Advances (Gross):



Total 154,174.35 100.00 122,030.41 100.00

Deposits:


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Total 157,634.07 100.00 127,601.28 100.00

3.4. Management Information System

From the beginning of its journey in 2003 Commercial Bank Ceylon has been laying great

emphasis on the use of improved technology. It has started its banking in Bangladesh with

online operation system. Commercial Bank of Ceylon Ltd. operates through a very

sophisticated and in-depth computer system called ICBS. All data regarding all departments

are integrated client wise. Different sub-menu and software make friendly and optimum use

by its employees and on-lone user. As a result the bank is able to give the services of

international standards.

Commercial Bank of Ceylon Ltd. Bangladesh is connected through VSAT with Colombo,

Head Office. In Bangladesh it operates through VSAT, DDN,and Lease line. The chart below

is showing their connectivity.

3.4.1. Organogram of Management Information System of

Commercial Bank of Ceylon Limited.

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Commercial Bank of Ceylon Ltd.Head Office, Colombo

Commercial Bank of Ceylon Ltd.

Chittagong Office.

Commercial Bank of Ceylon Ltd.Motijheel Head Office, Dhaka


Dhanmondi Branch Office


Sylhet Office.


Uttara Branch Office

3.5. The Softwares used by Commercial Bank of Ceylon Limited.

The softwares used by Commercial Bank of Ceylon Limited are described below.

ICBS (International Comprehensive Banking System)This is the core software of the bank. All the banking transactions can be done through it. It

enables new models to add in the system.

AS 400Based on Colombo, the software is the database of ICBS. It is used for opening accounts and

any account related information can be obtained through it.

Lotus NotesIBM developed this software and Commercial Bank of Ceylon Ltd. is licensed user of it. It is

basically a e-mail software with a maximum limit of 25 mb. If the limit is exceeded then

mails are transferred to another local mail software. Outsider mail is scanned through virus

scanner before enable the employees to open it.

SWIFT (Society for Worldwide Interbank Financial Telecommunication)

It is universally accepted banking software used by many banks all over the world. Unlike

Telex and Fax, it is a better and authenticated media. Here for every transaction message

format is different.

ABT (Alliant Branch Network)It is a teller-based network. This is interfaced with AS400. It has online mode and offline

mode. All the transactions are done through it.

EximbillsThis module is dedicated for Trade Finance activities. At the end of the day IT department

uploads data into AS400.

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Commercial Bank of Ceylon Ltd.Sonargaon Booth

Commercial Bank of Ceylon Ltd.Gulshan Booth

SRP (Salary Remittance Package)By using this software commercial bank enables its corporate customers to make online

payments such as salaries, overtime, commission etc. Through it client can make the payment

to staff by forwarding a data diskette to the bank. As this is totally online process staffs can

withdraw money from the nearest ATM.

3.6. Organogram of the Organizational Hierarchy of Commercial Bank of Ceylon Limited.

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Country Manager

Chief Operating Officer General ManagerCorporate Banking

General ManagerRisk and Compliance

Deputy General ManagerInternational Trade

Consultant BusinessPromotion

Deputy General Manager

Deputy General ManagerChittagong Branch

Senior Manager Treasury

Senior ManagerCustomer Service

Senior ManagerFinance/Accounting

Senior ManagerInformation Technology

Deputy ManagerInternal Audit

ManagerTreasury Back Office

ManagerPersonal Banking/ Dhanmondi Branch

ManagerGulshan Booth

Deputy ManagerSonargaon Booth

ManagerSylhet Branch

ManagerUttara Branch

3.7. Correspondent RelationshipThe Bank established correspondent relationships with a number of foreign banks. The bank

has set up letter of credit on behalf of its valued customers using its correspondents as

advising and reimbursing Banks. The Bank maintains a need based correspondent policy,

which is gradually expanding. The number of foreign Correspondents is 23.

3.8. Departments of Commercial Bank of Ceylon Limited.Departmentation helps to ensure efficiency and specialization in an organization. It’s

especially, pivotal when it comes to large organizations. If it were not for departmentation,

the limitation on the number of subordinates that can be directly managed would have

restricted the size of the organizations. Grouping activities and people into departments make

it feasible to expand organizations. The following departments help Commercial Bank of

Ceylon Limited run efficiently.

Customer ServiceThis department deals with the regular transactions. The cash section accepts deposits,

receives/pays cash and deals with the clearinghouse. The remittance section deals with fixed

deposit, draft, pay order, telegraphic transfer, account opening, retail foreign currency trade,

etc.

Trade FinanceThis department deals with letter of credits for both import & export purposes. Its

responsibilities also include bank guarantees.

Corporate BankingThis department, with its expertise in Trade Finance, Corporate Finance, Project Financing,

Leasing, Factoring, Working Capital Financing and related services caters mainly to the

banking needs of the multinational corporate clients and large to medium size domestic

corporate customers. The Corporate Banking Division comprises of the Foreign Branch, the

21

Assistant Manager Administration

Corporate Finance Unit (CFU), the Off-Shore Banking Centre and the Bangladesh

operations.

Personal Banking Division.

The Personal Banking Division is responsible for the operation of the network of delivery

channels, which caters mainly to the banking needs of personal customers, and small and

medium enterprises.

Forex and TreasuryThe responsibilities of the department include management of liquidity and exposure to

market risk, mobilization of resources from domestic as well as international institutions and

banks.

Human Resources DepartmentThe HRD is responsible for recruiting, training and retaining the workforce of Commercial

Bank of Ceylon Ltd. It also deals with their compensation package. The department keeps

track of the employees in order to evaluate their performance.

AdministrationThis department manages all the administrative chores related to the regular upkeep of

Commercial Bank of Ceylon Ltd.. Moreover, its responsibilities include taking care of all the

rental agreements, insurance, advertisement, notice publishing, etc.

Credit Department

The credit department looks after all the risk related issues of the bank and measures credit

risk. This department provides the customers with the loan and keeps track of it to make sure

the loan would be repaid.

Accounts DepartmentThis department is liable for preparing the financial statements and report Commercial Bank

of Ceylon Ltd.’s financial performance during a period. It also prepares and manages the

budget.

Information Systems DepartmentCommercial Bank of Ceylon Ltd.’s Bangladesh operation is linked via satellite to Colombo.

This department looks after that. It also handles the bank’s It based functions.

22

Audit and ComplianceInternal auditing is the prime activity of this department. Periodically, this department audits

the financial statements and makes sure that the Bangladesh Bank guidelines are properly

followed. This department also assists the external auditors.

RiskThis department deals with measurement of risk of different organizations, projects and

individuals and determining if a loan facility can be extended and if the return is fair enough

for assuming the risk.

3.8.1. Organogram of Departments of Commercial Bank of Ceylon

Limited.

23

Board of Directors

Managing Director

Corporate Banking

Personal Banking

Treasury Finance &Planning

Information Technology

HR Services Inspection

4.1. Financial Performance of Commercial Bank of Ceylon Limited.

Commercial Bank of Ceylon is a comparatively new bank in the banking scenario of

Bangladesh. Having already proved its efficiency in Sri Lanka, where it’s virtually unrivalled

and deemed the best by many, it’s only a matter of time before it establishes itself as one of

the leading banks here.

The Bank received ‘A’ rating by CAMEL Rating. The five indicators used in the rating

system are: (i) Capital Adequacy (ii) Asset Quality (iii) Management Soundness (iv) Earnings

and (v) Liquidity.

4.1.1. Capital

Commercial Bank of Ceylon Limited’s paid-up capital is Tk 1,000,000,000.

Year

2002 2003 2004 2005 2006

Capital employed (Rs.Mn) 7754 11684 13911 15768 15843

Share capital (Rs.Mn) 1324 2603 2603 3327 2428

(Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

24

4.1.2. Assets

As of 31st December, total assets of Commercial Bank of Ceylon Limited amounted

Rs.223974 million. The Group's total assets grew from Rs. 180.135 billion to Rs. 224.061

billion at end 2006 representing a growth of Rs.43.926 billion or 24.38%.

Year 2002 2003 2004 2005 2006

Total Assets (Rs. Mn) 73352 110280 138473 180077 223974


25

4.1.3. DepositsAs of 31 December 2006, Deposits of the bank stood at Rs. 157.634 billion. Below is an

autopsy of this amount. Bank’s deposits grew by 23.54%.

Year 2002 2003 2004 2005 2006

Deposits (Rs. Mn) 54585 75705 98730 127601 157634


The deposit mix of Commercial bank of Ceylon Limited in the year 2006 is shown below.

Types of Accounts Percentage of totalCurrent Accounts 9%Savings Deposits 27%

Time deposits 30%Certificate of deposit 2%

Current Accounts-FCY 3%Savings Deposits-FCY 14%

Time Deposits 15%(Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

26

4.1.4. LoanThe amount of loans disbursed in recent years and sector wise classification of loans are shown below.

Year 2002 2003 2004 2005 2006Gross loans and advances(Rs Mn)

55549 71392 96223 124433 156504


Sectoral Classification of loans and advances are shown below.

Sectors Percentage of total Sectors Percentage of totalExports 11% Imports 13%Tourism & Allied 3% Consumption 4%Industrial 16% Services 13%Agriculture & Fishing 1% Housing &

Construction6%

Commercial Trading 6% Others 27%(Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

27

4.1.5. ProfitThe pre-tax profit of the Bank increased to Rs. 4,213.545 million after providing for Rs.

1.654 billion towards the pension plan and the payment of Financial VAT for the year ended

December 31, 2006 as against a pre-tax profit of Rs. 3,641.960 million in 2005, recording a

growth of 15.69%. Net income increased by 41.03% to reach Rs. 12.515 billion

Year 2002 2003 2004 2005 2006

Profit before tax (Rs. Mn) 1525 1954 2504 3642 4214

Profit after tax (Rs. Mn) 1206 1477 1685 2364 2013


4.2. Financial Goals and Achievements

The table below shows the financial achievements of Commercial Bank of Ceylon Limited.

Goal Achievements Goal Achievements

Financial Indicator (%) 2006 2005Return on Average Assets Over 2 1.00 1.48Return on Average Shareholders’ Funds Over 20 12.73 15.93Growth in Income Over 20 51.99 31.00

28

Growth in Profit after Taxation Over 20 (14.87) 40.33Growth in Total Assets Over 20 24.38 30.04Dividend Rate Over 40 50.00 45.00 Capital Adequacy Ratios (Group)Tier I Over 8 7.62 9.68 Tier I & II (Total Capital) Over 13 11.58 12.08

4.3.Financial Highlights:

4.3.1.Growth in Business Volume

Year 2002 2003 2004 2005 2006Net Loans & Advances 50 63 90 120 150Deposits 58 67 93 124 155


29

4.3.2. Revenue to Government


Year 2002 2003 2004 2005 2006To Government of Sri Lanka (Rs.Mn) 500 550 1000 1500 2650To Government of Bangladesh (Rs.Mn) 0 250 250 400 550

30

4.3.3. Sources and Distribution of Income

For the year ended December 31 2006 2005 2004 2003 2002

Rs.

Mn.Rs. Mn.Rs. Mn.Rs. Mn. Rs. Mn.

Sources of IncomeInterest Income 19,532 13,033 9,584 7,931 6,613Foreign Exchange Profit 1,439 587 874 397 464Commission Income 2,011 1,760 1,377 1,051 824Investment Income 305 441 217 401 179Others 1,182 279 238 279 284

24,469 16,100 12,290 10,059 8,364Distribution of IncomeTo Depositors/ Debenture holders as Interest 11,955 7,226 4,878 4,218 3,747To Employees as Emoluments 4,374 2,364 2,132 1,697 1,312Depreciation set aside 376 299 260 222 200Provision for possible Loan Losses 655 415 699 623 402To Providers of Supplies & Services 1,919 1,527 1,373 1,069 920To Governments as Taxation (Including Deferred Tax)

3,178 1,905 1,264 753 579

-Income Tax 2,201 1,278 819 477 321-National Security Levy - - - - 257-Debits Tax 6 4 4 4 1-Financial Value Added Tax 971 623 441 272 -To Shareholders as Dividends 911 869 650 538 327To Reserves 1,101 1,495 1,034 939 877

24,469 16,100 12,290 10,059 8,364


4.3. Operating Highlights

31

Bank’s Deposits Grew By 23.54% to Reach Rs. 157.634 Billion

Bank’s Loans & Advances Grew By 25.77% to Reach Rs. 156.504 Billion.

The Growth Rates Of Both Deposits And Advances Of The Bank Are Believed To Be Higher Than The Industry Averages Bank’s Total Assets Grew By 24.38% To Reach Rs. 223.974 Billion. Bank’s ROA Dropped To 1.00%, which was 1.48% in 2005. Bank’s Provision Cover 60.41% which was 53.85% in 2005.

Bank’s Non-Performing Assets Ratio (NPA) is 2.74%, which was 3.22% in 2005.

Group’s Pre-Financial Vat And Pre-Tax Profit Rs. 5.292 Billion which was Rs. 4.293 Billion in 2005.

Group's Pre-Tax Profit Rs. 4.321 Billion which was Rs. 3.668 Billion in 2005.

Group's Post-Tax Profit Rs. 2.072 Billion which was Rs. 2.358 Billion in 2005 -

Group's Capital Adequacy Ratios Tier I & Tier I & Ii7.62% & 11.58% which were - 9.68% & 12.08% in 2005.


4.4. Income Statement

32

For the year ended December 31, 2006 2005 Change in

2006

US$ ’000 US$ ’000 %

Income 227,624 157,809 44.24

Interest income 181,691 127,758 42.21Less: Interest expenses 111,206 70,830 57.00

Net interest income 70,485 56,928 23.81Foreign exchange profit 13,386 5,753 132.68Fee and commission income 18,710 17,249 8.47Other income 13,837 7,049 96.30

116,418 86,979 33.85

Less: Operating expenses

Personnel costs 23,811 20,860 14.15Premises, equipment and

establishment expenses 13,046 11,406 14.38Provision for staff retirement benefits 16,873 2,313 629.49Loan losses and provisions 6,094 4,066 49.88Other overhead expenses 17,398 12,635 37.70

77,222 51,280 50.59

Profit from operations 39,196 35,699 9.80Add/(Less): Share of profit/(Loss)

before tax of Associate Companies - - -

Profit before taxation 39,196 35,699 9.80Less: Provision for taxation 20,474 12,524 63.48

Profit after taxation 18,722 23,175 (19.21)

Attributable to:

Equityholders of the parent - - -Minority Interest - - -

- - -

33

Basic Earnings per Ordinary Share 0.12 0.15 (20.00)

Diluted Earnings per Ordinary Share 0.12 0.14 (14.29)

Dividend per Ordinary Share 0.05 0.04 25.00

Exchange Rate of 1 US Dollar was Rs. 107.50 as at 31.12.2006 (Rs. 102.02 as at 31.12.2005)

Balance Sheet

As at December 31, 2006 2005 Change in 2006 US$ ’000 US$ ’000 %

ASSETS Cash and short-term funds 127,802 182,933 (30.14)Balances with Central Banks 116,964 88,661 31.92Government Treasury Bills and Bonds 112,003 111,842 0.14Commercial paper 3,933 3,995 (1.55)Securities purchased under re-sale agreements 42,726 7,921 439.40Dealing securities 1,348 1,786 (24.52)Investments held for sale 2,032 - -Investments held to maturity 12,965 30,302 (57.21)Treasury Bonds maturing after one year 186,278 96,143 93.75Bills of Exchange 30,588 27,351 11.84Loans & advances 1,281,171 1,067,283 20.04Lease receivable within one year 28,237 24,350 15.96Lease receivable from one to five years 60,141 45,052 33.49Lease receivable after five years 162 78 107.69

2,006,350 1,687,697 18.88

Investments in associate companies 412 1,050 (60.76)Investments in subsidiary companies 4,034 4,251 (5.10)Interest and fees receivable 15,246 11,602 31.41Other assets 26,008 29,328 (11.32)Property, Plant & Equipment 29,928 29,723 0.69Intangible assets 1,503 1,470 2.24

34

Total Assets 2,083,481 1,765,121 18.04

LIABILITIES

Deposits from customers 1,466,363 1,250,748 17.24Dividends payable 1,047 2,258 (53.63)Borrowings 176,224 131,220 34.30

Securities sold under

re-purchase agreements 133,302 111,637 19.41Other liabilities 78,177 59,948 30.41Tax payable 13,449 8,016 67.78Deferred taxation 5,400 2,099 157.27Debentures 62,144 44,633 39.23

1,936,106 1,610,55 20.21

SHAREHOLDERS’ FUNDS

Share capital 22,588 32,615 (30.74)Statutory Reserve Fund 13,288 13,929 (4.60)Reserves 111,499 108,018 3.22

Shareholders’ funds 147,375 154,562 (4.65)Minority Interest - - -

Total shareholders' funds and

Minority interest 147,375 154,562 (4.65)

Total liabilities, shareholders’ fundsand minority interest 2,083,481 1,765,121 18.04

Commitments and contingencies 498,827 462,203 7.92

Net Assets Value per Ordinary Share (US $) 0.97 0.95 2.11

35

4.5.Decade at a Glance

(Rs. Mn.) 2002 2003 2004 2005 2006 CAGR %

For the year ended December 31Operating ResultsIncome 8,364 10,059 12,290 16,100 24,470 21.95

Interest income 6,613 7,931 9,584 13,034 19,532 Interest expenses (3,747) (4,218) (4,878) (7,226) (11,955) Foreign Exchange profit 464 397 874 587 1,439 Commission & other income 1,097 1,731 1,832 2,479 3,499 Operating expenses & provisions (2,902) (3,887) (4,908) (5,232) (8,301)

Profit before income tax 1,525 1,954 2,504 3,642 4,214 21.93 Income tax on profit (321) (477) (819) (1,278) (2,201)

Net profit for the year 1,204 1,477 1,685 2,364 2,013 16.61

As at December 31AssetsCash and short-term funds 1,835 9,002 12,136 18,663 13,739 Balances with Central Banks 3,244 5,233 6,320 9,045 12,574 Government Treasury Bills and Bonds 8,654 15,930 5,522 11,410 12,040 Commercial paper 1,080 546 560 408 423 Securities purchased under re-sale agreements 832 6,184 399 808 4,593 Dealing Securities & Investments held for sale _ _ 110 182 363 Investments held to maturity 905 2,006 2,340 3,091 1,394

Treasury Bonds maturing after one year 782 600 14,378 9,808 20,025

Bills of Exchange 2,552 2,495 2,799 2,790 3,288 25.34

Loans and advances 47,350 60,585 82,605 108,884 137,7261,921 3,364 5,317 7,088 9,518

BankLease receivable 1,921 3,364 5,317 7,088 9,518

69,155 105,945 132,486 172,177 215,683

36

Investments in associate companies 78 78 109 107 44 Investments in subsidiary companies 424 429 429 434 434 Other assets 2,149 2,167 2,553 4,177 4,434 Property, Plant & Equipment and Intangible Assets 1,546 1,661 2,896 3,182 3,379

TOTAL ASSETS 73,352 110,280 138,473 180,077 223,974 24.35

LiabilitiesDeposits from customers 54,585 75,185 98,730 127,601 157,634 25.23 Dividends Payable 118 190 230 230 113 Borrowings 4,200 5,406 9,090 13,387 18,944 Securities sold under re-purchase agreements 1,938 10,580 9,050 11,389 14,330 Other liabilities & Deferred Taxation 4,218 4,843 3,735 6,331 8,984 Tax Payable 39 148 483 818 1,446 Debentures 500 2,244 3,244 4,553 6,680

65,598 98,596 124,562 164,310 208,131

Shareholders' FundsShare capital 1,324 2,603* • 2,603 3,327** 2,428***Reserve fund 1,009 1,009 1,009 1,421 1,429 Reserves 5,421 8,072 10,299 11,020 11,986

TOTAL LIABILITIES & SHAREHOLDERS' FUNDS 73,352 110,280 138,473 180,077 223,974 24.35

Commitments and contingencies 24,082 38,158 43,942 47,154 53,624

2002 2003 2004 2005 2006 Ratios

Return on average - shareholders' funds (%) 16.61 15.20 13.16 15.93 12.73Income growth (%) 1.96 20.26 22.17 31.00 51.99Return on average assets (%) 1.82 1.61 1.35 1.48 1.00Rate of dividend (%) 50.00 50.00 60.00 45.00 50.00Ordinary share dividend cover (times) 5.20 3.70 3.48 3.34 2.54Gross dividends to ordinary shareholders (Rs. Mn.) 208.95 348.25 418.10 639.36 714.00Advances to deposits and refinance (%) 92.59 86.16 89.52 90.64 92.49Property, Plant & Equipment to shareholders' funds (%) 19.93 14.22 20.81 20.75 21.33Total assets to shareholders' funds (times) 9.46 9.44 9.95 11.42 14.14Capital Funds to Liabilities including Contingent Liabilities (%) 8.65 8.54 8.26 7.46 6.05Cost/Income Ratio (%) 55.46 55.87 56.78 54.28 61.10Liquid assets to liabilities (%) 27.88 23.95 23.17 24.51 22.64

(As specified in the Banking Act No. 30 of 1988)

Group Capital Adequacy (%) Tier I 14.94 13.43 10.78 9.68 7.62Tier I & II 15.07 15.46 13.16 12.08 11.58

37

Information on Ordinary Shares

Market value of a voting share (Rs.) 200 144 159.75 135.50 190.00Basic earnings per share (Rs.) 8 9 10 15 13Price earnings ratio (times) 8 8 8 9 15Net assets value per share (Rs.) 48 69 84 98 104Earnings yield (%) 13 13 13 11 7Dividend payout ratio (%) 18 27 29 30 39

Other Information

No. of employees 2,399 2,648 2,863 3,168 3,415No. of branches/CSPs/MiniComs/ Service Points - Sri Lanka 109 116 125 134 150No. of branches/booths – Bangladesh _ 4 4 5 7No. of Automated Teller Machines 143 166 188 223 278

5.1. The Products and Services Offered by Customer Service Department

Commercial bank’s creative banking solutions are served with hi-tech backbone offering

worldwide access. It is committed to fulfill every possible customer need by providing

modern banking facilities to the customer. Commercial Bank of Ceylon Limited has built up

a track record of success in capital and asset management. Its team of dedicated professionals

is committed to provide an unparalleled service and to bring maximum benefits for the

stakeholders. It’s a great pleasure for Commercial Bank of Ceylon Ltd. to introduce different

packages.

5.1.1. Depository productCommercial Bank of Ceylon Limited is now offering different types product for mobilizing

the savings of the general people.

5.1.2. Loan ProductCommercial Bank of Ceylon Limited is offering the following loan and advance product to

the client for financing different purpose that fulfill the requirements of the bank and have

good return to the investment as well as satisfy the client.

Deposit Products

Current DepositSaving deposit AccountBonus Savings AccountSHAMRIDDHISTD AccountMoney Market AccountFixed DepositDream Planners Savings DOLLARSMART

Loan Products

Personal Loan SchemeProject FinanceWorking Capital FinancingIndustry FinancingShort Term Loan

Long Term Loan38

The innovative products and services available are as follows: ATM Facility with Bangla Screen

Holiday Banking

Foreign Currency & Non Resident Foreign Currency Account

Salary Remittance Package

Internet Banking.

5.1.3. Interest Rate paid to different Deposit Liabilities

Serial Application Up to Tk.2 M

2 M & above

1. Current Account Nil Nil

2. Savings Account(Half Yearly Interest)

5.00% 5.00%

3. Savings Account(Monthly Interest)

4.75% 4.75%

4. Bonus Savings(Half Yearly Interest)

5.00% 5.00%

5. ‘SHAMRIDDHI’ Tiered Savings (Half-Yearly Interest) 4.50%-7.00%

4.50%-7.00%

6. STD-General Customers-Minimum Balance BDT 100 MIO

*Applicable for the customers who agree to maintain the respective minimum balances at all times to get benefit of the rates

4.50% 4.50%7.50%

7. Money Market Account (MMA)Interest Paid Monthly; Rate will be revised on the first day every month; Minimum Balance to earn interest=100K; Minimum Interest rate=General STD Rate

5.00% 5.00%

39

5.2. Salient Features of Different Products and Services Offered by

Commercial Bank of Ceylon Limited

DOLLARSMART

It is a term deposit account in USD.DOLLARSMART can be opened for 3,6 or 12 month

periods and is a truly convenient offer. Loans for NRB up to 90% can be taken against

DOLLARSMART.

BenefitsHigh rates of interest on the deposits is one reason, but there are several more important

reasons that make DOLLARSMART so attractive. The interest is paid in US dollars. Both the

interest and the principal are repatriable for NRB and foreigners. And to top it all, the interest

is tax-free for NRB.

Eligibility Nonresident Bangladeshis (NRB) or foreigners in Bangladesh can avail DOLLARSMART.

On the corporate side, Bangladeshi exporters with FCY retention deposits and 100% foreign

owned companies in the EPZ can also avail DOLLARSMART.

Savings AccountCBC has designed a savings account with the potential to earn half-yearly interest. Current

interest rate is 5.00% p.a.

Features Opening balance any amount

Minimum balance to earn interest is BDT 25,000

Interest is calculated daily and paid half yearly

ATM card & Internet Banking facility.

Eligibility: Anyone

Short Term DepositIt’s a penalty free, instant access account which gives competitive rate of interest. Sweep

facility is available on this account. Unlimited Deposits/ withdrawals are possible from this

account.

Bonus savings AccountBonus Savings Account is a savings account with the potential to earn half-yearly interest

bonuses. At first, the client earns the standard savings account interest rate (currently 5.00%)

applicable to his or her funds-make no more than 2 withdrawals during the 6 month period

between the 1st January to 30th June or between the 1st July to 31st December to earn half-

40

yearly 50% interest bonus. If withdrawal requirements are exceeded during the year, the

interest rate reverts to the standard interest rate.

Features:

Open the account with BDT 100,000

A minimum ongoing balance of BDT 25,000 to earn interest.

Interest is calculated daily and paid half yearly.

ATM Card Facility

Internet Banking Facility

And if not more than two withdrawals are made then customer is awarded with 50 %

bonus on interest.

Eligibility: Anyone SHAMRIDDHI Savings Account

Shamriddhi is an innovative Tiered Savings account specially designed to offer higher returns

for higher balances. Combining all the scattered savings a client can reap elevated returns

with the following features.

Features:

Minimum balance Tk. 50,000/-

Higher the balance –Higher the Interest

No restrictions on withdrawals

ATM card facility

Loan/overdraft facility of deposit balance.

Free of charge Internet Banking facility.

Eligibility: Anyone

Balance Range Rate of Interest

50,000-100,000 0.5% below the normal savings rate

100,001-500,000 0.5% above normal savings

500,001-1000,000 1% above normal savings

1,000,000-2,000,000 1.5% above normal savings

Above 2,000,000 2% above normal savings

*Present savings rate –5%

Money Market AccountThis is a deposit account combining the flexibility of a call deposit account with the high

interest applicable on Time Deposits. Commercial Bank’s Money Market Account is a

revolutionary deposit product designed to increase the earning power of customer’s fund.

41

Money market account is a short-term deposit with high returns. Commercial Bank of Ceylon

Limited is the only bank, which is offering this unique product. The client receives all the

features he needs to run his organization on a daily basis, plus an attractive rate of interest

(based on Money Market rates) coupled with easy, immediate access to his money- no notice

required. The rate of interest is reviewed every month- this rate will operate for 1 month. The

interest is calculated daily and it is paid on the last business day of each month. The current

interest rate is 7.00% p.a. and is effective from 1 st September,2006.

Features:

Based on Money Market Rates

Minimum Deposit BDT 100,000

Interest calculated daily and paid monthly

No notice period to access funds/withdrawals.

ATM card facility

Internet Banking facility.

Interest is fixed on last Monday of every month depending on the market condition.

So if the market is better performing then high return is guaranteed.

Eligibility: Anyone.

Dream Planner Savings (Deposit Pension Scheme) (DPS)It is an all-new Deposit Pension Savings Account, which guarantees an attractive return for

monthly deposit at the end of the guaranteed period. In this scheme, available deposit

monthly installments are BDT 1000, 2000, 3000,5000, and 7000 after 3, 5, 7 years depositors

receive a handsome amount of money.

Features: Monthly deposit may be deposited on any business day of each month.

It gives higher interest rate for the monthly deposit.

The customer can choose a monthly affordable deposit amount from BDT 1000, 2000,

3000, 5000 or 7000.

Plan the realization of his dream from the optional periods of 3, 5 or 7 years.

In emergency one may encash his deposit prematurely at any time. If it is withdrawn

after 6 months of opening, interest will be paid at the rate applicable to a normal

savings account.

The customer may also avail loan facility up to 80% of his principal amount in

deposit against the lien of DPS after 2 years of opening the account.

42

Monthly Deposit In 3 years In 5 years In 7 years

BDT 1000 39,662.00 70,065.00 103,624.00

BDT 2000 79,325.00 140,131.00 207,250.00

BDT 3000 118,988.00 210,197.00 310,875.00

BDT 5000 198,314.00 350,328.00 518,125.00

BDT 7000 277,639.00 490,459.00 725,375.00


Penalty: In case of failure to deposit monthly installment in time, an amount of tk.50 per

month will be charged with the next installment.

Fixed Term Deposit:Fixed Term Deposits offer the customer maximum returns on his large cash deposits. One

can select from a range of investment terms and investment amounts suitable to his needs and

get a guaranteed rate of return over the term of the investment. In emergency client is allowed

to take 95% loan of deposit amount.


Interest Rate paid to FDR

Serial Application Interest Rate Any Amount1 FDR for 3 months (Annual Interest) 9.00%

2 FDR for 6 months (Annual Interest) 9.50%3 FDR for 1 year (Annual Interest)

30<and≤50 Mio10.00%

4. FDR for 2 year 10.00%5. FDR for 3 year 10.00%

6. 5 year FDR (High 5 FD) 12.00%

FDR- Monthly Interest7. 1 year FDR- (Monthly Interest)

9.60% Any

Amount8. 2 year FDR- (Monthly Interest) 9.60%

9. 3 Year FDR- (Monthly Interest) 9.60%

ATM Facility with Bengali ScreenCommercial Bank provides the first ever ATM facilities with Bangla Screen in Bangladesh.

The customers can enjoy ATM facilities in their mother tongue with many attractive features.

43

Holiday Banking (Dhanmondi Branch)Commercial Bank of Ceylon offers Holiday Banking facility to all CBC customers on all

holidays from 9:30 am to 12:30pm at the Holiday Banking Centre, Dhanmondi Branch.

Foreign Currency Accounts (FC accounts) and Non-Resident Foreign Currency Deposit Accounts (NFCD)

Foreign Currency Accounts can be opened in the names of

Bangladeshis employed overseas

Nonresident foreigners

Foreign companies (100% foreign owned)

Type-A companies in Bangladesh

Such accounts now can be maintained as long as the account holders desire.

FC Plus is a high yielding Foreign Currency Account where the interest rate is linked to the

LIBOR (London Inter Bank Offered Rate), internationally accepted benchmark of foreign

currency interest rates. It guarantees progressively higher interest rates for higher balances,

giving the best return on foreign currency investment.

FC PLUS account pays more than any other foreign currency account and more than overseas

deposit rates. It gives progressively higher interest rates for higher balances for deposit

maintained in US Dollar (USD), Euro (EUR), Australian Dollar (AUD) and Pound Sterling

(GBP).

Upto 4,000(USD,EUR,GBP,AUD)

For 4,001 to 25,000

For 25,001 to 50,000

For 50,001 to 100,000

For 100,001 and above

Regular Foreign CurrencySavings Rate

1 month LIBOR rate

1 month LIBOR Rate+0.10%



(LIBOR-London Inter Bank Offered Rate)

Non-Resident Foreign Currency Deposit Accounts (NFCD) These are special accounts primarily meant for Bangladeshi nationals working abroad. The

customer may open this account either while he is employed abroad or within 30 days of his

return to Bangladesh. The NRFC account enables to save hard-earned foreign exchange and

earn interest too in the same foreign currency. Joint accounts are possible provided all

account holders are employed abroad. Funds from these accounts are freely remittable to any

country. The accounts can be opened either in Euro Dollar or in US dollar at the option of the

account holder.

44

These accounts could be opened with a minimum of USD 5,000 or equivalent or more, for

periods ranging from 1,3,6 and 12 months where higher rates of interest are paid.Interest will

be calculated on the daily balance and credited to the account quarterly enabling the customer

to earn much more than published rates. Special rates of interest could be negotiated for

larger Fixed Deposits. The interest earned on NRFC accounts is free of all taxes. All types of

inward remittances in foreign currency will be accepted in the credit of NRFC ACCOUNTS.

Salary PackageThis wonderful scheme is only for the corporate clients who maintain their company Account

with the Bank. If the company has more than 15 employees and average salary of each

employee is above BDT 15,000 can avail the following benefits.

Benefits:

Zero service charge on their account.

Zero charge for any transfer between branches of CBC in Bangladesh.

Zero charge for chequebook.

Internet banking facility at reduced fee of BDT 500/-

Free ATM card.

Internet BankingManages finances from a PC or laptop ComBank Online is a simple, convenient and secure

way of accessing Commercial Bank accounts on-line. In order to access our Internet Banking

service one will need to have an account with Commercial Bank and Internet access available

on their computer.

ComBank Online allows to monitor payments, view real-time information (account balances

and transaction details), move money between commercial Bank accounts, pay bills instantly,

download account information to software packages, view account history up to the last 5

years, order a copy statement or chequebook, and communicate with the Bank using the

secure messaging facility.

45

5.3. Organogram of Customer Service Department, Commercial Bank of

Ceylon Limited.

Head of Customer Service DepartmentSenior Manager

Assistant ManagerOverall cash supervisor

Assistant ManagerCorporate remittance

Reporting through Motijheel

Deputy ManagerSonargaon Booth

Assistant ManagerFDR/CDR

issuance and encashment

OfficerValidation and cancellation of all types of cheque

Junior OfficerValidation and cancellation of all types of cheque

OfficerClearing Representative

Junior OfficerCash deposit and payment

ClerkCash deposit and payment

ClerkCash deposit and payment

OfficerSenior Clerk

Assistant ManagerAccount opening

delivery of statements

Senior ClerkTravelers’ cheque, FC

notes sale/purchase

Senior OfficerPrepares overall weekly, monthly and quarterly report for Bangladesh Bank

Banking AssistantAssisting in Bangladesh

Bank reporting

46

5.3.1.Organogram of Customer Service Department, Commercial

Bank of Ceylon Limited (Sylhet Branch)

5.4. Types of Deposit Accounts and their formalities.There are several types of Deposit Accounts, which a customer can select to suit the

flexibility and the tenure of investment one requires.

Savings AccountsSavings accounts encourage savings habit among the general public. Only Bangladeshi

nationals are allowed to open savings accounts with Commercial Bank of Ceylon Limited.

The account can be open only in BDT and the minimum deposit to open the account shall not

be less than tk.25000 (twenty five thousand) only. Interest is awarded on the balance of the

Head of Branch

Assistant Branch Head OfficerPersonal Banking

ExecutivePersonal Banking

ExecutivePersonal Banking

Officer (Credit)

Officer(Customer Service)

Officer(Cash & Clearing)

Officer(Foreign Exchange)

GT GT GT GT GT GT GT GT

47

account. The number of withdrawals is generally restricted. Requirements to open an account

are as follows:

1.The applicant should duly fill up the application form.

2. Specimen signature card duly completed.

3.Two passport size photograph of the Account holder/Authorized Signatories to be attested

by the introducer.

4. Nominee form duly completed with the photograph.

5. Introductory reference to be obtained from account holder acceptable to the bank.

6.Copy of valid passport of the account holder/ or certificate from Ward

Commissioner/Chairman’s citizen identification.

Commercial Bank of Ceylon Limited offers following types of accounts and the formalities

in addition to the previous are as follows:

Current account

In the name of individual:

Current account can be maintained either by Bangladeshi nationals or foreign nationals. The

accounts can be maintained in either Bangladeshi Taka or any other foreign currency. The

minimum amount require to open a current account in local currency is tk. 25,000 (twenty

five thousand) only. Followings are the formalities of opening a current account:

1.The client has to fill up an account opening form; terms and conditions are printed on the

back of the form. The form contains the declaration clause, special instructions etc.

2.Speciman signature card should be duly filled.

3.Two copies of passport size photograph affixed with the form.

4.Copy of valid passport of the account holder/Voter ID or certificate from Ward

Commissioner/Chairman’s citizen identification.

5.Nominee form duly completed.

6. Letter from organization, where applicable.

Documents required to open Sole proprietorship Accounts

Specimen Signature Card duly completed

Copy of Trade Licence duly attested (original to be shown to the Branch Manager)

2 photographs of the proprietor’s and authorized signatories if any duly attested by the

introducer.

48

Copy of valid Passport of Proprietor and Authorized Signatories or Identification

Letter/Card from employer or certificate from Ward Commissioners/ Chairman’s

citizen identification.

Certificate of seal impression, where applicable.

***and or any document /paper as may be required by the Branch Manager.

Documents required to open Partnership Accounts


Copy of Trade Licence (original to be shown) duly attested

Copy of Registered/Notarized contract/partnership deed duly attested (original to be

shown)

Copy of valid Passport of all the Partners and Authorized Signatories or Identification



2 photographs of all partners and authorized signatories if any duly attested by the

introducer.


Documents required to open Personal/Joint Accounts

Individuals/Joint Account


2 photographs of the Account holder/ Authorized signatories to be attested by the

introducer.

Copy of valid Passport of Account holder and Authorized Signatories or Identification



Letter from Organization, where applicable.

Nominee form duly completed.

Special conditions for Joint Accounts

Any balance to the credit of the account is and shall be owned by us as joint

depositors.

Any liability whatsoever incurred in respect of the account shall be joint and

several.

Number of signature required to withdraw funds.

49

Joint account in the name of minor:

A minor cannot open an account in his own name due to the incapacity to enter into a

contract. He can open an account in Commercial Bank of Ceylon Limited in joint name of

another person who will be the guardian of the minor.

An account opening register for every types of account is maintained in the bank. An account

number is given for each account and the description of the account is entered in the

computer. According to the rules of the bank a letter of thanks is sent to the account holder.

FC Account-individuals


2 photographs attested by the introducer.

Copy of valid Passport with valid visa .

Letter of Introduction from mission/embassy/organization, where applicable.

Copy of Work permit where applicable.

Permission under 18 A from Bangladesh Bank, where applicable.

Employers Certificate (For Bangladeshi Wage Earners)*

Nominee form duly completed, where applicable.


Documents required for opening Limited Company-BDT

To open an account for a limited company, Officer asks for the following documents.

Specimen Signature Card Duly Completed with details of delegation.

Particulars of all director/authorized signatory, duly certified by Chairman/ company

secretary as per attached specimen.

Copy of Minutes of board resolution concerning opening and operation of bank

accounts duly certified by the Chairman/Company secretary.

Certified Copy of Certificate of incorporation.

Copy of certificate of commencement of business from the register of Joint Stock of

companies, where applicable duly attested.

Copy of certified Memorandum and Articles of Association from the Register of Joint

Stock of Companies duly attested.

Two photographs of director/authorized signatories attested by the introducer.

50

Copy of valid passport of each director/authorized signatories/major shareholders

duly attested.

Copy of Power of Attorney of signatories duly attested-if any.

Copy of Certified Form XII from Joint Stock Company concerning updated list of

directors.

Latest copy of Balance sheet.

Documents required to open Limited Company/Branch/Liaison

Office- FC

Specimen Signature Card Duly Completed with details of delegation.

Particulars of all director/authorized signatory, duly certified by Chairman/ company

secretary as per attached specimen.

Copy of valid passport of Directors/authorized signatories/major shareholders with

visa (applicable for residents)

Copy of Work permits where necessary.

Two photographs of director/authorized signatories attested by the introducer.

Copy of Govt. Registration (BOI/EPZ)

Copy of Board resolution regarding opening and operation of bank accounts duly

certified by the Chairman/Company secretary.

Power of Attorney of signatories, if any.

Copy of certified Memorandum and Articles of Association duly attested.

Certified Copy of Certificate of incorporation.

Copy of certificate of commencement of business, where applicable .

Copy of Permission under 18A/18B from Bangladesh Bank copy of contract, where

applicable. Certified Copy of Certificate of incorporation.


Documents required to open Accounts by Clubs/Societies/Associations/NGO’s:

In case of these sorts of accounts Commercial Bank of Ceylon Limited requires the following

documents:

Particulars of all Executive Committee Members/authorized signatories as per

specimen attached duly certified by the Chairman/President.

51

Two photographs of all Executive Committee Members/Office bearers/authorized

signatories attested by the introducer.

Copy of all valid passport of associates/Office bearers/authorized signatories.

Copy of certified constitutions by laws.

Copy of minutes of Executive Committee meeting authorizing opening of account and

authorization to the signatories duly certified by the Chairman/President.

Copy of certificate of Registration duly attested, where applicable.

Copy of Registration from the NGO Bureau, applicable for NGO’s duly attested.

5.5. Most important Task and Responsibilities of Customer Service Department1. Opening of different kinds of accounts.

2. Issuance of chequebooks.

3. Closing of accounts.

4. Marketing of Bank’s products to the customers and also to non-customers who

expected to be valued clients.

5. Preparation & posting of vouchers related to account opening.

6. Issue of Letter of thanks to the Account opener, scanning of signature & photographs.

7. To issue & encash FDR and perform all other functions related to FDR.

8. To attend office 15 minutes ahead of the office hours and shall not leave office

without completion of daily works and initimation to Branch Manager.

9. To perform any other job as and when assigned by the superiors for the interest of the

bank.

5.6. Cheque Book Prepare

According to section 6 of negotiable instruments act, 1881, a cheque is “A Bill of Exchange

drawn on a specified banker and not expressed to be payable other wise than on demand.” To

facilitate withdrawals and payments to third parties by the customer, Commercial Bank of

Ceylon Limited provides a chequebook to the customer. Cheque Book contains 25 leaves for

savings account while for current account; it is 50 leaves. A chequebook issuing register is

maintained which contains name of the account holder, account number, the chequebook

number, leaf number and issuing date.

The chequebook contains requisition slip, which is used by the customer to obtain new

chequebook. When all the leaves are used, the customer submits slip to the bank. A senior

official then issues a new chequebook and subsequent entries given in the register.

52

If the chequebook is lost, the customer has to inform it to the bank. It is then noted in the

system and all the transaction from the previous chequebook is stopped. Customers then fill

new requisition slip and after fulfilling all the formalities, a new chequebook is issued.

5.6.1.Cheque Book Issue procedure:

5.7.Responsibilities of the Officer: Describe the products and services offered by the bank to the customer attractively.

Give quick service to the client.

Handling them with smiling face.

Maintaining a good customer relationship.

Customer duly fills up the requisition slip

After submitting by the customer a senior officer verifies the signature and other relevant information

Then it is delivered to the assigned officer responsible for issuing chequebook. He in turn verifies the information.

Assigned officer put the entry in Chequebook issuing register.

The name of the account holder, account type and account number is typed in the Stencil Paper.

And finally chequebook is printed and kept it in the basket from where it is delivered to the customer

The name of the account holder, account type and account number is typed in the Stencil paper

53

Checking account no, balance no, cheque serial and date carefully.

Take each customer with greater importance.

5.8. Other tasks

Pay order issuing procedure

Pay order payment procedure

TT issuing procedure

5.9. RemittanceThe main instruments used for remittance of funds from one place to another are as follows.

Telegraphic Transfer

It involves sending advice of transfer by the bank to the branch of a correspondent bank

through telegraphic message. Where the money is required to be sent urgently, telegraphic

transfer may be requested by the sender. He is required to pay the cost of telegram and other

expenses.

Demand Drafts (DD)Demand Draft is an order to pay money, drawn by the bank upon the correspondent bank for

a sum of money payable to order on demand. A draft cannot be drawn payable to bearer of a

named payee or payable to bearer.

Issuance of demand DraftWhile issuing demand draft an official must be confirmed about the branch where the DD is

to be issued or drawn as asked by the applicant. Applicants on banks prescribed from for DD

is obtained from the applicant duty filled and exchange/commission computed correctly at

the prescribed rate. On receipt of cash voucher, DD will be issued and record to DD issue

register filling the appropriate columns.

54

5.9.1.Local Remittance

Pay order Issue ProcedureA pay order is a written unconditional order, to pay a certain sum of money, to a specified

person or to his order. In other words, it can be said as the banker cheque. It is payable at the

bank branch wherefrom it is issued. The drawer and the drawee is the same bank/ branch. In

whose favor, the pay order is issued is called the payee (i.e. the beneficiary). It is used to

transfer money from one person to another, where payment through cheque is not acceptable

to someone. Sometimes banks also use pay orders for settlement of payment of their own.

Filling up P.O. application i.e. Form G 9 by the client

Signature verify by the authorized officer

By transfer Cheque By cash payment

Receive the cheque and confirm the acceptability of the cheque i.e. whether the cheque should be honored or not.

Cash received by the officer and signed and sealed by him in the voucher

If honored debit the amount in the client’s personal account and signed & sealed by the officer in the voucher.

Posting in the Pay Order Module and pass entries in the PO register

Preparation of the Pay Order, putting protector and signed by two officers

Issue to the client and signature is received on the Form G 9

55

5.9.2. Foreign RemittanceForeign Remittance includes inward remittance and outward remittance.

Inward Remittance includes the followings:

TT

DD

TC Purchase

Cash Dollar Purchase

Outward Remittance includes the followings.

TT

DD

TC Sale

Cash Dollar Sale

Student remittance

Most common method of remitting money from one place to another is through Bank Drafts.

A bank draft is an order by one bank to the correspondent bank to pay a specified sum of

money to the person named therein or to his order.

Bank Draft Issue Procedure

56

Filling up Bank Draft application or Form G 9 by the client

Receive cash or transfer cheque from the client Authorized officer verifies the signature on the application form

If the receiving currency from the client and sending currency of the Bank Draft is not same (e.g. BDT to USD) then Form TM is filled up by the client

Then in the draft block name of the account holder, account number, favoring person or institutions name, amount and date of issue is written.

Entry is passed on the Bank Draft Register. Bank draft is prepared and protector is put. Two authorized officers then sign it.

Bank Draft is given to the customer for his signature on the form G 9.

5.10.Telegraphic Transfer through SWIFT

Telegraphic transfers are by far the quickest method of transferring funds from one place to

another. The remaining branch sends a telegraphic message to the other end, to pay a certain

sum of money to a named payee. Such a message is sent through SWIFT. Access to it is

allowed only to authorized officers. The receiving branch, after thoroughly checking the

SWIFT message, acts on it.

TT Issue Procedure

5.11.Student Remittance

57

Filling up Swift application or Form G 9 by the client Filling of TT application by the client

Receive cash/transfer cheque from the client

Authorized officer verifies the signature on the application form

If the receiving currency from the client and sending currency of the TT is not same (e.g. BDT to USD) then Form TM is filled up by the client.

Entry is given to the Outgoing Remittance Register. Message is prepared on the system. And sent to the desired destination.

Every transaction should be informed to the Dealing Room

Commercial Bank of Ceylon Limited releases foreign exchange to the Bangladeshi nationals

going abroad for studies. Fulfillment of Certain requirements of Bangladesh Bank is

necessary. Student remittance is allowed for regular course of studies:

Undergraduate

Graduate

Post-graduate

in recognized foreign educational institutions in any foreign country. It is the proper way of

remitting money for the students as per Bangladesh Foreign Exchange Guideline.

5.11.1. Salient features of Student Remittance CBC maintains a specialized and exclusive department equipped by experienced

officers of the bank.

Application processing fee of CBC is the lowest amongst the multinational banks in

Bangladesh.

Wire transfer of payment through SWIFT is quick and safe.

Remittance can be possible in 13 different currencies.

58

6.1. Industry Analysis

Industry analysis reviews industry trends and competitive strategies. Analyzing the industry

environment requires an assessment of the competitive structure of the organization’s

industry. It also requires analysis of the nature, stage, dynamics and history of the industry.

Internal analysis serves to pinpoint the strengths and weaknesses of the organization as.

company strengths lead to superior performance whereas company weaknesses translate into

inferior performance.

The need is to identify the key emerging factors, trends and threats, opportunities and

strategic uncertainties that can guide information gathering and analysis. Porter’s approach

can be applied where the basic idea is that the attractiveness of an industry or market as

measured by five factors on which firm depends largely.

6.1.1. Chart: Porter’s five forces model (adopted from Hill & Jones, 2004)

59

Risk of entry by potential competitors

Brand LoyaltyAbsolute Cost advantage

Economies of scaleCustomer Switching costs

Government regulation

Bargaining power of suppliers

No of substitutesThreat of Forward

integrationSwitching costs

No of buyers

Intensity of rivalry among established firms

Industry Competitive Structure

Industry DemandExit Barriers

Bargaining power of buyers

Threat of backward integration

No. of suppliersSwitching costs

Buyer Concentration and size

Large quantity purchase leverage

Threat of substitutes

No of close substitutesThe relative price and

performance of substitutes

Rivalry among Existing competitorsThe rivalry refers to the competitive struggle among the competitors and the growth in the

industry depends upon the intensity of competition. A high amount of competition is

observed in the banking sector of Bangladesh. Banks compete against other banks using

competitive weapons such as their low cost of operation and syndication. Commercial Bank

of Ceylon Limited is a new entrant in Bangladesh Banking Industry as a multinational bank.

There are other international and local banks that also take part in the competition and are

aggressive in nature.

Risk of entry by potential competitorsPotential competitors are companies that are not currently competing in an industry but have

the capability to do so if they choose. The banking sector of Bangladesh seriously faces the

risk of entry by potential competitors. However, the risk is two way in nature. The arrival of

the multinational banks and their branch expansion as a result of the booming energy sector

and the continuous entry of local banks with lower cost structure pose a severe threat to this

industry. The various new and upcoming banks pose a significant threat in the context of

Commercial Bank of Ceylon Ltd. So it is trying to expand countrywide to make the sector

unattractive and to create entry barriers.

Bargaining Power of BuyersThe third of Porter’s five competitive forces is the bargaining power of buyers. Finally buyers

may use their purchasing power to influence the producers or service providers.

A large number of commercial banks in the banking sector of Bangladesh are providing

similar services. Customers have a wide range of options in deciding where to bank. They

can either choose multinational banks or turn to new local banks for getting quality service.

Nationalized banks are preferred for large credit facilities. In order to attract the customers

banks have to pursue them by providing customized packages with attractive interest rates.

Commercial Bank of Ceylon Ltd. has its own policies to carry out its operations and

employees follow those rules to deal with the customers. But while dealing with the clients

too much rigidity in the prevailing policies may under cut its client base as well as

profitability. A positive as well as personalized approach to the needs of customer has

become Commercial Bank of Ceylon Ltd’s motto.

Bargaining Power of Suppliers

60

The fourth of Porter’s five competitive forces is the bargaining power of suppliers. In the

context of Commercial Bank of Ceylon Ltd. suppliers are those customers and organizations

that provide financing to the firm via depository schemes. Companies may pursue vertical

integration strategies to reduce the bargaining power of suppliers. If the cost of financing

rises, then Commercial Bank of Ceylon Ltd. will have to decrease the interest rate that it

charges to its customer in order to remain in the business. This may result in customer

dissatisfaction, which can lead to poor profitability.

Threat of Substitute ProductsSubstitutes- products of different businesses or industries that can satisfy similar customer

needs that satisfy the same customer needs are important sources of competition.

Commercial Bank of Ceylon Ltd. continuously faces the threat of various substitute products

launched by its strong competitors in the market place such as-

1.Launch of DPS by DHAKA Bank.

2.Various consumer credit schemes offered by other banks with lower interest rates and cost.

3. The lower service charges at other local banks discourage a wide group of customers to

hold account in Commercial Bank of Ceylon Ltd.

6.2. Evaluation of External and Internal Environment of Commercial Bank of Ceylon Limited.

61

Strength

Weakness

Opportunity

The overall evaluation of a company’s strengths, weaknesses, opportunities and threats is

called SWOT analysis. (Kotler, 2003-2004) Its central purpose is to identify the strategies

that will best align, fit or match a company’s resources and capabilities to the demands of the

environment in which it operates. (Hiil & Jones, 2004). The SWOT analysis comprises of the

organization’s internal strength and weakness and external opportunities and threats. SWOT

analysis gives an organization an insight of what they can do in the future and how they can

compete with their existing competitors.

STRENGTHS

DynamismCommercial Bank of Ceylon Ltd draws its strength from the adaptability and dynamism it

possesses. It has quickly adapted the world class standard in terms of banking services.

Financial Potency

Commercial Bank of Ceylon Ltd. received AA rating by the Credit Rating information

Services Ltd (CRISL). It was the highest ever rating for any financial institution in

Bangladesh.

Well-organized ManagementAll the levels of the management are solely directed towards maintaining a culture for the

betterment of quality of service and development of a corporate brand image in the market

through organization wide team approach and open communication system.

State of Art TechnologyCommercial Bank of Ceylon Ltd utilizes state-of-art technology to ensure consistent quality

and operation. The branches are equipped with SWIFT. Commercial Bank of Ceylon Ltd has

also adapted state of the art technology to connect the world for better communication to

integrate facilities.

ExpertiseOne of the key-contributing factors behind the success of Commercial Bank of Ceylon Ltd. is

its highly trained employees who are most competent in their own field. Commercial Bank of

Ceylon Ltd. provides their employees training both in-house and outside job.

62

Threat

In-house UtilityCommercial Bank of Ceylon Ltd. is free from dependence from the ever disruptive power

supply of our public sources. The company generates the required power through generator

fed on diesel when power supply is disrupted.

Excellent Working EnvironmentCommercial Bank of Ceylon Ltd. provides its workforce an excellent place to work in. Total

complex has been centrally conditioned. It is renovating the interior decoration with the

exquisite choice of soothing colors and blend of artistic that is comparable to any

multinational bank.

Introduction of products and servicesIn 2003, Commercial Bank of Ceylon Ltd. started its operation in Bangladesh. But with in a

short period of time it has already adopted with environment of the country. It has introduced

products like Money Market Account for the first time in Bangladesh.

Weaknesses

Inadequate WorkforceCommercial Bank of Ceylon Ltd has very limited human resources compared to its financial

activities. There are few people to perform most of the tasks. As a result many of the

employees are burdened with extra workloads and works late hours without any overtime

facilities. This might cause high employee turnover that will prove too costly to avoid.

Insufficient DepositAs Commercial Bank of Ceylon Ltd is comparatively new bank in Bangladesh, it is faced

with deposit limitation than its competitors. Proper marketing initiative from the management

can easily make its products available and thus increase its client base as well as deposit

status.

Fewer BranchesCommercial Bank of Ceylon Ltd has fewer branches than its multinational and domestic

competitors. Such as Standard Chartered Bank has 18 branches and Uttara Bank Limited has

198 branches and 12 regional offices whereas it is consists only 5 branches and two booths.

Centralized System

63

Commercial Bank of Ceylon Ltd is more hierarchy-driven compared to other multi-national

banks. The organization needs to achieve flat-management structure.

Opportunities

Vast marketThe population of Bangladesh is continuously increasing at a rate of 7.3% per annum. The

country’s growing population is gradually and increasingly learning adaptation of consumer

finance. As the bulk of our population is middle class, different types of products have very

large and easily approachable market.

Huge consumer Base

Bangladesh has a huge consumer base maintaining several accounts. So Commercial Bank of

Ceylon Ltd has the opportunity to keep these middle class segments.

Government SupportAs it is becoming one of the vital sources of employment, Government of Bangladesh has

rendered its full support to the banking sector. Such government concern will facilitate and

support the long-term vision of Commercial Bank of Ceylon Ltd.

Threats

Frequent Currency devaluationFrequent Taka devaluation and foreign exchange rate fluctuations and particularly Southeast

Asian currency crisis adversely affects the business globally.

Emergence of competitorsDue to the existence of unserved demand in financial sector, it is expected that more financial

institutions will be introduced in the industry very shortly. And lots of new banks are coming

in the scenario with new services. Commercial Bank of Ceylon Limited should always be

prepared for the competition in the coming years.

6.3. Highlights of the Bank’s Activities in 2006

• Deposits grew by 26.35% and Loans & Advances recorded a lower growth of 17.84%, in

Taka, consolidating CBC’s position in Bangladesh further.

• Two more branches were opened at Sylhet and Uttara bringing the total number of branches

and booths in Bangladesh to seven and increased the number of ATMs to 9 including 2 at off-

64

site locations, reflecting commitment of the bank to the country and exhibiting the desire to

gradually move into Retail Banking.

• The number of "CAT" cards issued during the year exceeded 3,000.

• Agreement was signed with the Bangladesh Export Processing Zone Authority (BEPZA) to

open a booth at its Chittagong premises with a view to provide better services and to facilitate

the investors.

• Three new products were introduced namely, "High5FD", a unique 5-year fixed deposit

account, "Shamriddhi", a tiered savings account designed to offer higher returns and

"DotCom", a savings account for teenagers.

• e-Banking Unit was set up offering settlement of payments through electronic transaction

system, assistance in remittances from foreign countries, Internet Banking Services etc.

6.4. Commercial Bank of Ceylon Limited-A Comparison to Other Multinational

Banks.

Savings and Current Accounts

Product Features


Standard Chartered Bank

HSBC

65

Minimum Account Balance

BDT 25,000(Savings)BDT 50,000(Current)

Monthly average balance of BDT 100,000 (Savings)BDT 50,000 (Current)

BDT 50,000

Minimum Balance Fee

None None None

Calculation and Payment of Interest

Interest is calculated on daily balance from BDT 25,000 and above and paid half yearly or monthly.

Interest is calculated on average monthly balance and paid half yearly

Interest is calculated on daily balance from BDT 50,000 and above and paid half yearly

Account Closing Fee

BDT 230 BDT 200 BDT 300

Time taken to delivery Chequebook

1 working day after opening account

With ATM card cheque book is provided instantly

2 working days after opening account

Relationship Fee

None BDT 500 half yearly BDT 300 per quarter

Restriction on number of withdrawals

No restrictions on withdrawals or upper interest limit

Monthly interest is forfeited if customer withdraws or issue cheque/transfer more than 1/10th of balance or writes more than 2 cheques a week, without 7 days prior notice.

No restrictions on withdrawals or upper interest limit.

Ledger Fee BDT 500 annually No Fee No Fee

Phone Banking

N/A Free Free

ATM Booth Total ATM 04 Total ATM 21 Total ATM 11

Annual ATM charge

None (BDT 345 once in issuing)

BDT 150 Free

Card replacement fee

BDT 300 per card BDT 300 per card BDT 150

Credit Cardfacility

N/A Yes Yes

Branch coverage

07 30 09

66

Deposit facility in ATM booth

1 (only available in Chittagong )

In all booths In all booths

Online Transaction Fee

Nil Yes Yes

Chequebook Fee

Yes yes Yes

Counter Cheque

Free BDT 50 BDT 200

Inter city transaction

Free Applicable Free

Inter Banking BDT 1500 annually None None

Financial kiosk

Nil Yes Yes

SMS Banking Nil Yes Yes

Bills pay Center

Nil Yes Yes

Distinctive product

Money Market Account

Business Account Nil

Holiday Banking Service

Available N/A N/A

Fixed Deposit Account

Product Features



HSBC

ProductName

FDR Monthly Interest Bearing Fixed

Deposit

FixedDeposit

EZEE FDR

Time Deposit

Monthly Interest Bearing

Time Deposit

67

Minimum Balance

BDT50,000

BDT50,000

BDT100,000

BDT100,000

BDT500,000

BDT500,000

Interest Cycle Interest is paid on maturity

Interest is paid on a monthly basis

Interest is paid on maturity

Interest is paid at quarterly intervals

Interest is paid on maturity

Interest is paid on a monthly basis

Tenure 3,6,12 months and 1,2,3 years

1,2,3 years

3,6,12 months and 2,3 years

3,6,12 months and 2,3 years

1,3,6,12 months

1 and 2 years

Condition for premature encashment

If withdrawal is made before 6 months, interest is paid at savings rate and after 6 months, 3 months FDR rate is applicable.

No interest if withdrawn in 1 month and savings account interest rate if withdrawn before maturity.

No interest if withdrawn in 1 month and savings account interest rate if withdrawn before maturity.

Foreign Currency Account

Product Features



HSBC

Opening Balance

USD/GBP 500 USD/GBP 1000 USD/GBP 1000

Time taken to delivery

Cheque Book

1 working day after opening account



Ledger Fee USD 10 yearly Monthly USD 2.3 NoneMinimum

Relationship Fee

None None BDT 300 per quarter

FC ATM Card Not Available Not Available Available against NFCD or RFCD

6.5.Analysis Based on Questionnaire Survey

1. Client comment on preference about the products offered by CBC:

50% 0f the total interviewee mentioned that the Money Market Account is the most attractive

package among the innovative offers of CBC. DOLLARSMART was preferred by only 5%

of them.

Product Percentage of Client

68

Money Market Account 50%

Short Term Deposit 12%

Bonus Savings Account 10%

Dream Planner Savings 10%

Dollarsmart 5%

Fig: products preferred by the clients.

2. Client comment on branch network of CBC

40% of the interviewee faced problems because of limited branch network .

Fig: Percentage of clients faced problems because of limited branch network

3.The number of clients using ATM cards is about 60% of the total.

4.Client comment on interest calculation and payment method of CBC:

50% of interviewee made comment on the interest calculation and payment method of CBC

is very good where only 15% said that interest calculation and payment method of CBC is not

satisfactory.

69

Very Good Good Not satisfactory Should be changed

50% 35% 15% None

Fig: Interest payment method of CBC- Comments of clients.

5.The clients are enjoying Internet Banking service with Commercial Bank of Ceylon.

Internet Banking offers the following services-

Balance inquiry

Request for cheque books

Printing own bank statement

Account History for 5 years

Setting up of standing orders

Payment of Bills

Status of deposited cheques

Option to download historical data

Combank international and other credit Card settlements.

6.Client comment on the problems faced by them.

The problems faced by the customers of Commercial Bank of Ceylon Limited are as follows:

90% of the Client complained about the ATM service and while low interest rates and

inadequate product packages was also mentioned.

Problems Percentage of the clients

ATM service 90%

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Lower interest rate (compared with local banks) 70%

Lack of Consumer loan packages 40%

Findings

1. The package that attract clients attention more than any other packages is the Money

Market Account because of its distinctive nature and interest calculation and payment

method. Large part of the interviewee find the interest calculation and payment method of

CBC attractive and innovative compared to other multinational banks. They think Money

Market Account is the most attractive package because of its daily interest calculation

method.

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2. The entire interviewees think that CBC branches are very few for providing banking

services all over the country. They also said that the location of some other banks is better

than Sylhet Branch, CBC.

3.The clients possess a positive idea about the service charge imposed by CBC compared to

other multinational banks.

4. Commercial Bank of Ceylon Limited provides online transaction services which are

viewed positively by the clients. Online transaction system surpass traditional way of

transactions by the following points:

Promptness

Security and confidentiality of customer information

Easy access to information

5. Most of the interviewee has introduced other customers to Commercial Bank of Ceylon

Limited, which is a very positive sign for the well being of the bank. It also reflects the fact

that CBC has been able to build effective customer relationship.

6.Holiday Banking Service is a new addition by the Commercial Bank of Ceylon in the era of

banking service, which is available only at Dhanmondi Branch. The local clients are very

much interested about Holiday Banking Service. Introducing such services can generate huge

response in this region.

7.The clients are satisfied with the CBC remittance services. Sylhet is the leading foreign

currency earning region of the country. Transmitting money through SWIFT technology is of

great use to the customers.

8. The customers are facing problems because of the following reasons.

Only one ATM booth has been installed in Sylhet.

The ATM booth is not always effective for withdrawal of money.

There is lack of some packages in the area of consumer loan and student

remittance. The customers have suggested that Commercial Bank of Ceylon

Limited should emphasize on consumer loan schemes and student remittance.

Though the clients appreciate the interest calculation and payment method of

Commercial Bank of Ceylon Limited. But the interest rate is much lower in

relation to that of local Commercial Banks.

9. The customers mentioned the followings that they thought needed for promoting the

packages of CBC.

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Using electronic and print media

Introducing innovative products

Offering higher interest rates

Sponsoring social Programs

8.1. Recommendations

Taking into account all the findings and data the following recommendations are made.

Improving the service quality should be focused and in order to do that proper

attention and equal contribution of higher authorities with the employees are required

to keep the work updated.

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To survive in competitive market, SBL in Sylhet branch should be offer retail banking

and SME banking. For this, SBL in Sylhet branch can be improve in their investment

sectors.

Branch management right to approve minimum TK. 5 lac to sanction credit by branch

manager.

Establishment of performance-based salary system and job rotation can lead to the

followings.

Interaction and cooperation among employees will increase.

Employee knowledge and skills will improve. Employees should be trained with the

basic knowledge of how each department works.

More skilled and competent personnel can be identified and properly nurtured.

The electronic banking services should be strengthened to play a vital role in the well

being of the bank.

New products and services should be launched to meet the diversified needs of

customers offering competitive interest rates. The bank can provide souvenirs and

gifts to the customers as a token of friendship. CBC can participate in various social

programs to build a socially responsible image that can help in building customer

trust.

Electronic and print media can be used to promote the products.

These above recommendations will help to rearranging some infrastructures, which will

support the large customers based service of Commercial Bank of Ceylon Limited.

8.2. Conclusion

Commercial Bank of Ceylon Limited is comparatively new in the banking industry of

Bangladesh though it has been able to portray itself as a reliable bank and the growing

number of its customers indicates its acceptance among clients.

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The opportunities given to me as an internee of knowing how Commercial Bank of Ceylon

Limited uses its competitive advantage and its growth in Bangladesh and through out the

world are valuable.

In the highly competitive banking industry, the commercial banks are trying to promote their

products with innovative and specialized financial services. Advances in information

technology made it easier for banks to offer those financial services conveniently. The

demand for services in a convenient and secured way has given customers the opportunity to

choose among the service providers, the banks. Aided with various competitive advantages

Commercial Bank of Ceylon Limited tries to establish its presence in the SAARC region with

the 100% integrated online banking services. In this regard Commercial Bank of Ceylon

Limited has a customer-oriented approach, which leads to its superior service quality. The

effort to write the internship report on an analysis of the activities and performance of

Commercial Bank of Ceylon Limited is a mere step to portray its aptness in context of

present modern and dynamic banking business.

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a comprehensive analysis of the performance and customer satisfaction of commercial bank of ceylon...

Documents

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