Report by

Khirul Basar Mim

STUDENT OF FACULTY OF BAM,PATUAKHALI SCIENCE AND TECHNOLOGY UNIVERSITY

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April, 2013

ToM. Takibur RahmanChairmanDepartment of Finance and BankingFaculty of Business Administration and ManagementPatuakhali Science and Technology University

Subject: Submission of Internship Report.

Dear Sir,I am grateful to submit the Internship report on “Banking Practice in National Credit and Commerce Bank Ltd.”. This report has been prepared to fulfill the requirement of my internship program.

This is an excellent source of opportunity for me to acquaint more closely with the organization. The association and coordination of all respective officers & staffs with me are full of exciting, re-discovering and entertainment. I have my utmost effort to reflect experience, skill and knowledge, which I acquired at the time of working at NCC Bank.

I would like to express my sincere gratitude to you for kind guidance and suggestions in preparing the report. All of my efforts will be successful if you find this report useful and serve its purpose. I have tried my best to explain everything related with the report. I shall be happy to provide further explanation regarding this report.

Sincerely Yours,

………………………….Khirul Basar MimRegistration No: 01866ID No: 0803005Faculty of Business Administration and ManagementPatuakhali Science and Technology University

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Faculty of Business Administration and ManagementPatuakhali Science and Tecnology University

Dumki, Patuakhali-8602.

Certificate of the Supervisor

It is hereby certified that the report has thoroughly and carefully read and recommended to the Faculty of Business Administration and Management for acceptance. This report is prepared by Khirul Basar Mim, Examination roll no: 0803005, Registration no: 01866, Session 2008-09, Major in Finance and Banking, who has completed his internship program at National Credit And commerce Bank Limited, Khulna Branch, under my supervision from 20 January to 30 April, 2013 in partial fulfillment of the requirements for Bachelor of Business Administration in Faculty of Business Administration and Management of Patuakhali Science and Technology University.

…………………………………

M. Takibur RahmanChairman and SupervisorDepartment of Finance and BankingFaculty of Business Administration and Management

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Acknowledgement

To prepare this report considerable thinking and informative input from various sources where involved. But beginning I want to convey my sincere appreciation to almighty Allah for giving me strength and the ability to finish the task within the planned time.

Then I would like to express my sincere gratitude to everyone who contributes towards preparing this report successfully. Major contribution was received from the officers of National credit and Commerce Bank Limited as from department of general banking, credit and foreign exchange.

First of all I would like to express sincere and immense gratitude to my internship supervisor M. Takibur Rahman, Chairman, Department of Finance and Banking, Faculty of Business Administration and Management, Patuakhali Science and Technology University. I am deeply indebted to his hearted supervision, suggestion and guideline to prepare this report.

I would like to give specially thanks to Md. Fazle Mahmud, SAVP & Manager, and other officers & staffs of National Credit and Commerce Bank, Khulna Branch for close supervision and help in spite of their busy schedule.

I would also like to thank the authority of National Credit and Commerce Bank for giving me the opportunity to do my internship in their renowned bank.

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EXECUTIVE SUMMARY

Internship program is pre-request for the graduation in BBA, in order to provide a student with job exposure and an opportunity of the transition of theoretical knowledge into real life experience.

National Credit and Commerce Bank is one of the largest Private Commercial Banks from 1993 with new thinking where credit and commerce integrates. This report mainly divided into eight parts. First Part is introductory part which deals with my practical experience as an internee with origin, background, rationale, objective of the study, Second part describes the overview of the company. Third, Fourth, Fifth part of the report describes the general banking, credit and foreign exchange practices respectively and final parts deals with findings, recommendation and conclusion of the report. The report is a combination of three months internship program with NCC Bank. I acknowledged different banking functions and day-to-day banking operations on my way to complete internship. In this paper I have explained my best in respect of my real life experience gathered from different departments.

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TABLE OF CONTENTSParticulars Page

No.Letter of TransmittalLetter of SupervisorAcknowledgementExecutive Summary

iiiiiiiv

Chapter 1: Introduction

1.1 Origin of the study1.2 Background of the study1.3 Rationale of the study1.4 Objective of the study1.5 Scope of the study1.6 Methodology of the study1.7 Limitation of the study

1111223

Chapter 2: Overview of NCCBL

2.1 Background 2.2 Mission2.3 Vision2.4 Slogan2.5 Objective2.6 Information Technology Department2.7 Correspondent Relationship2.8 Organizational Structure2.9 Products and Services2.10 Cards2.11 Remittance products2.12 Financial Performance2.13 SWOT analysis

44444555678999

Chapter 3: General Banking Practice

3.1 Dispatch Section3.2 Account Section3.3 Cash Section3.4 Local Remittance3.5 Clearing and Bills collection

1111131415

Chapter 4: Credit Practice

4.1 Credit Profile4.2 Credit Policy4.3 Lending Products4.4 Functions of Credit Department4.5 Documents regarding Credit4.6 Procedure Of Sanctioning Loan

18181819192025

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4.7 Analysis of Credit Facilities

Chapter 5: Foreign Exchange Practice

5.1 Import Financing5.2 Export Financing5.3 Foreign Remittance 5.4 Function of Foreign Exchange5.4 SWIFT5.5 Foreign Exchange Business

272930303131

Chapter 6: Findings 33

Chapter 7: Recommendations 34

Chapter 8: Conclusion 35

Bibliography 36

LIST OF FIGURESPage

Figure 1 6Figure 2 25Figure 3 26Figure 4 31Figure 5 32

LIST OF TABLESPage

Table 1 7Table 2 8Table 3 9Table 4 26

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1.1 Origin of the Study

Bachelor of Business Administration (BBA) program under Faculty of Business Administration and Management at Patuakhali Science and Technology University requires 3 months internship program attachment with an organization. I took the opportunity to do my internship in National Credit and Commerce Bank Ltd (NCCBL), Khulna Branch. My topic of internship is “Banking practice in National Credit and Commerce Bank Limited” is authorized from the head office of NCC Bank Ltd. The report is prepared under the supervision of my honorable teacher M. Takibur Rahman, Chairman, Department of Finance and Banking. During the period I have learned organizational works with the help of the internal supervisor.

1.2 Background of the Study

I have worked in various departments of NCC Bank Ltd, Khulna Branch. In this report, I will try to make an overall analysis on activities of NCC Bank Ltd focuses on “Banking practice in NCC Bank ltd. By preparing this report, I want to apply my theoretical knowledge in the daily bank transaction to make my study fruitful.

1.3 Rationale of the study

This report is a part of my academic program. Theoretical knowledge is not enough for a business student as there is a far gap between theoretical knowledge and practical field. The period of internship program has set for three months to make bridge between these gaps. This study will be beside me in future, especially if I have got involve myself in banks or other financial institutions. This program helped me a lot to understand the working environment and behavior of the staffs.

1.4 Objective of the Study

The study has been undertaken with the following objectives:

To know the all kinds of banking practices in the National Credit and Commerce Bank Limited.To identify about the performance of NCC Bank Ltd.To get an overall idea about general banking, credit, foreign exchange of NCC Bank Ltd.To have clear idea about purpose, scope, guideline of financial product in NCC Bank Ltd.1.5 Scope of the Study

Since, working at National Credit & Commerce Bank Limited, Khulna Branch, I got the opportunity to learn different parts of banking system. Management of the bank divided the whole banking system in three parts; as a result I got the opportunity to work in all the three divisions (General Banking Division, Credit Division, and Foreign Exchange Division). As I was attached to these divisions, I had to deal with so many customers who come to open accounts, take loan or already took loan, deal with import and export and to take remittance from NCC Bank. This report also focuses on different product and services provided to the customer and other practices associated with General Banking, Credit and Foreign Exchange Division. It also covers some shortfalls of National Credit and Commerce bank Lt. Finally I have given some recommendations.

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1.6 Methodology of the StudySources of data collectionBoth primary and secondary data sources will be used to generate this report.

Primary data collectionPrimary data sources are informal discussion with professionals and observation while working in different desks.

Secondary data collectionThe secondary data sources are Annual reports of NCC Bank limitedCirculars, letters, manuals and brochures issued by the bank and regulatory organization like Bangladesh bank.Newspaper and journals.Internet.

Methods of data collection

Observation Analysis Examine tools and systems

1.7 Limitation of the Study

In this study, it has been tried to collect the related information and to analyze the data in spite of the following limitations:The main constraint of the study was time as the duration of the program was three months only.The research was limited to the Khulna branch; it does not cover head office and other branches. So it is not possible to cover the analysis of overall practice in NCC bank ltd. Some papers and documents are strictly prohibited for confidentiality issues.The employees of the bank are so much busy that they cannot provide me enough information.Sufficient data for analysis is not available.

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2.1 Background of NCC Bank Limited

National Credit and Commerce Bank Ltd. bears a unique history of its own. The organization started its journey in the financial sector of the country as an investment company back in 1985. The company operated up to 1992 with 16 branches and thereafter with the permission of the Central Bank converted in to a fully fledged private commercial Bank in 1993 with paid up capital of Tk. 39.00 corer to serve the nation from a broader platform. Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere personalized service to its customers in a technology based environment. The Bank has set up a new standard in financing in the industrial, trade and foreign exchange business. Its various deposit & credit products have also attracted the clients-both corporate and individuals who feel comfort in doing business with the bank.

2.2 Mission

To mobilize financial resources from within and abroad to contribute in Agriculture's, Industry & Socio-economic development of the country and to play a catalytic role in the formation of capital market.

2.3 VisionTo become the Bank of choice in serving the Nation as a progressive and Socially Responsible financial institution by bringing credit & commerce together for profit and sustainable growth.2.4 SloganWhere Credit & Commerce Integrates.

2.5 Objectives

Be one of the best banks of Bangladesh.Achieve excellence in customer service next to none and superior to all competitors.Use state-of the art technology in all spheres of banking.To remain as the market leader through diversification of the business and automation of the banking operations.To create a fully integrated financial service system.To create Employment opportunity for contribution to the community.

2.6 Information Technology DivisionNCC Bank Ltd., established in 1993, has since progressed through various stages of developments particularly in IT and automation areas. Due to a visional strategic decision, taken by the Board of Directors and Management Executives, NCC Bank integrated IT commenced on September 23, 2008, with a view to streamline customer and banking service as well as complying with the Bangladesh bank ICT guideline. It was quite a remarkable achievement in the year 2008 that NCCBL successfully implemented a robust Online Banking Solution throughout its branches.NCC Bank IT is headed teamed with 45 dedicated IT personnel who work round the clock with a view to provide support in core banking Flora UBS software operations along with system, hardware and network maintenance support to all its branches and Head Office.

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NCC bank has inaugurated a new state of the art Disaster Recovery (DR) center at Uttara, Dhaka. The DR site of NCC Bank Ltd. has fulfilled all the necessary conditions of Bangladesh bank’s ICT Guideline.

2.7 Correspondent Relationship

The Bank established correspondent relationships with a number of foreign banks, namely American Express Bank, Bank of Tokyo, Standard Chartered bank, Mashreq Bank, Hong Kong Shanghai Banking Corporation, CITI Bank NA-New York and AB Bank Ltd. The Bank is maintaining foreign exchange accounts in New York, Tokyo, Calcutta, and London. 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 relationship policy, which is gradually expanding.

2.8 Organizational Structure

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Figure1: Organizational Structure

2.9 Product and Services

The product and services that are currently available are given below:

2.9.1 Deposit Product

NCC Bank Limited is now offering different types product for mobilizing the savings of the general people.

Current A/C Savings Bank Deposit A/C Special Notice Deposit (SND) A/C

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Term Deposit A/C Premium Term Deposit A/C Instant Earnings Term Deposit A/C Special Savings Scheme Special Fixed Deposit SchemeNon-Resident Foreign Currency deposit Account (NFCD)Resident Foreign Currency Deposit Scheme (RFCD) Money Double Program

Table 1: Interest Rate paid to different Deposit liabilities:

Deposit Product RatesSavings Bank Deposit A/C: 6.00% - 7.00%Special Notice Deposit (SND) A/C -- Below Taka 1 (one) Crore:

6.00%-11.00%

Special Savings Scheme : 13.00%Fixed Deposit for 1 Month 10.00% - 11.00%Fixed Deposit for 3 Months : 12.50%Fixed Deposit for 6 Months : 12.50%Fixed Deposit for 12 Months : 12.50%Fixed Deposit for 24 Months : 11.00%Fixed Deposit for Corporate Bodies : - ----

Data Source: Website (http://www.nccbank.com.bd) on March 20, 2013

2.9.2 Loan and Advance Product

The NCC Bank 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. The loan and advance products are:

Working Capital Financing Commercial and Trade Financing Long Term (Capital) Financing House Building Financing Retail and Consumer Financing SME Financing Agricultural Financing Import and Export Financing

Table 2: Interest rate charged on different loans & advances

Loan & Advance Products RatesWorking Capital Financing 14.00%

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Commercial and Trade Financing 14.50%

House Building Financing 14.00%Retail and Consumer Financing 16.00%SME Financing 16.00%Agricultural Financing 11.50%Import and Export Financing 7.00% Long Term (Capital) Financing 14.00%

Data source: Website: (http://www.nccbank.com.bd) on 20 March 2013

2.10 Cards of NCC bank

mPower VISA Electron Debit cardNCC Bank mPower Visa Electron Debit Card is accepted at over 6,000 merchant outlets around the country. Our wide range of merchants include Hotels, Restaurants, Airline and Travel Agents, Shopping Malls, Hospitals, Jewelry Shops, Mobile Phone and Internet Service Providers, Petrol Pumps and many more. Now NCC Bank Visa Credit Cards can also be used worldwide at all the VISA ATM Booths and POS (Point of Sale).

Credit Card (Local, International and Dual)NCC Bank has launched its Visa Credit Card Service offering three types of cards which are Visa Classic, Visa Gold (Local) and Visa Dual Currency Card (Globally and locally). Since then were able to reach 5000 cards, both corporate and general.

MBridge CardNCC bank introduces a foreign payment card, MBridge, to not only accelerate faster, safer receiving also allowing to draw any amount from anywhere round the clock.

2.11 Remittance Products Special Interest rate on Savings and Term Deposits Wage Earners Welfare Deposit Pension Scheme Loans for Real Estate (Land purchase and House construction/renovation) Advance against Regular Remittance

2.12 Financial Performance of NCCBLThe NCC Bank Limited is one of the most successful private sector commercial bank in our country. It has achieved the trust of the general people and made reasonable contribution to the economy of the country by helping the people investing allowing credit facility.

Table 3: Financial Performance from 2008 to 2011Taka in Million (Where applicable)

2008 2009 2009 2010 2011

Authorized Capital

2 ,500.00

2 ,500.00

5,000.00

10,000.00

10,000.00

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Paid up Capital

1352.01

1757.62

2284.90

4501.25

501.25

Deposits 34901.77

46904.66

53900.15

67,961.24

81,127.17

Loans and Advances

32687.75

46332.69

50387.68

63230.14

72,733.54

Investments

6266.62

6526.82

9671.53

10980.81

20,840.29

Import Business

28779.21

38796.88

33078.44

41245.21

55,044.49

Export Business

9 ,577.92

12,522.04

11,903.72

16,125.52

20,981.99

Remittance

7 ,444.00

12,098.00

13,392.00

12,504.85

16,079.26

Operating Income

5 ,269.03

7,417.64

9,333.03

10,157.99

10,157.99

Retained Profit

8.13 5.34 46.47 388.11 253.79

Fixed Assets

522.00

775.31 849.10 1,191.49

1,506.77

Advance Deposit Ratio (%)

93.66%

98.78%

93.48%

93.04%

83.00%

2.13 SWOT Analysis

SWOT analysis is an important tool for evaluating company’s Strength, Weakness, Opportunities and Threats. It helps the organization to identify the how to evaluate its performance and environment, which in turn would help the organization to navigate in the turbulent ocean of competition.Strengths:

NCCBL has 94 well equipped branches (7 SME/Agri branches) in Bangladesh.Qualified mid level officials and talented management teams are operating the overall business.Agreement with foreign banks and financial institutions.The Banking network.Quality of services.Realistic decisions by management.Reputation of the Bank.Innovation of new products like Young star accounts, Festival loans.Modern facilities and Online Banking.Interactive corporate Culture.

Weaknesses:

Lack of Advertising and promotional activities.Lack of employee satisfaction.Relatively uncomfortable working environment comparing to industry competitors.Lack of resources when needed.

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Manual working techniques in some vital stages (Remittance processing).Lack of real qualified employees in junior level. (Under probationary officers).Lack of administrative control over all level of the bank.Limitation of Information System.

Opportunities:

The bank easily can capture the largest market share in Bangladesh.Opportunity of introducing new generation banking in Bangladesh.Opportunity of customer service improvements.Opportunity of improve quality of service by modifying weak wings of the bank.Opportunity to enter and invest innovative business sectors. Threats:

Rapid growth of industry competitors.Innovation skill of industry competitors.Political environment.Bureaucracy in government decisions.

3.1 Dispatch section

Dispatch division operates the function of dispatching the intimation letter to the client, IBCA, IBDA, and OBC to the other banks for internal transaction with bank. The officer engaged in the dispatch division maintains two types of register books to entries for record of these documents particulars. These two types of register books are: 1. Inward mail registers. 2. Outward mail registers.

3.2 Account SectionAccount opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account customer can open different types of accounts through this department. Such as:Current Deposit Account (CD)Savings Bank Account (SB)Short Notice Deposit (SND)Special savings Scheme (SSS)Special fixed deposit Scheme (SFDS)Fixed deposit (FDR)Money doubles program (MDP)Money Triples program (MTP)

Current Deposit (CD) Account (A/C): Any businessman, firm, limited companies, local bodies, corporate bodies, etc. can open a current A/C with NCCBL. Current deposit is 100% demand deposit

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and account holder can deposit/withdraw his/her deposits frequently without any limit. Different types of documents are needed to open different parties account. Like for Limited Companies Memorandum of Articles (MOA), Association of Articles (AOA), Certificate of Incorporation, are needed. Minimum Tk. 2,000 should be submitted to the bank to open a current account. Saving Bank Deposit (SB): Any individual person, local bodies, club, society, association, house wife, student, non-profitable organization, etc. can open a saving bank deposit account with NCCBL. Savings bank deposit is both time and demand deposit, of which 10% is demand and 90% is time deposit and the account holder can withdraw his/her deposits twice in a week up to a certain limit. Minimum deposit is Tk. 1,000 to open an account.Fixed Deposit Account (FDR): Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies, etc. can open Fixed Deposit A/C with NCCBL. FDR is 100% time deposit and A/C holder can usually withdraw his/her deposits after maturity of the fixed deposit. However, depositors of FDR can withdraw their deposits before maturity if they desire.Short Notice deposit (SND): Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies, etc. can open a short term deposit account with NCCBL. STD is 100% time deposit and an account holder can withdraw his/her deposits with prior notice to the bank. Special savings Scheme (SSS): Any individual person can open a special savings scheme deposit account with NCCBL for tenure of 5/10 years with monthly deposit of Tk.500 up to Tk. 25,000. SSS A/C is 100% term deposit and account holder can withdraw his/her deposits after maturity of SSS/A/C.Special deposit Scheme (SDS): Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate bodies, etc. can open a SDS A/C with NCCBL. SDS is a term deposit with payment of interest is payable on monthly basis. An account holder can withdraw his/her deposits after maturity of SDS A/C.Steps of acoounts opening are given below:

Step 1

The account should be introduced by one of the following:An existing current account holder in case of savings it could be savings account holder. Officials of the bank not below the rank of Assistant Officer.A respectable person of the locality well known to the manager.For SSS and fixed account no introducer is needed.

Step 2

Receiving filled up in banks prescribed form mentioning what type of account is desired.

Step 3

The form has to be filled by the applicant himself.Applicant should provide two passport copy photos, required documents such as National ID. Must Sign in specimen signature sheet. The introducer (sign and account number) must verified by the account officer.

Step 4

Authorized officers accept the application.

Step 5

Minimum balance should be deposited(only cash is accepted)

Step 6

Account is opened and necessary instruments (like cheque book, deposit slip, certificates or other proves of account) are provided to the applicant.

With the basic functions the Account Section opens debit cards, pays all expenditure, prepares monthly salary statement, monthly budget, daily position statement on behalf of branch, checks whether all vouchers are correctly passed and maintained to ensure inter branch transactions, issue and deliver cheque book, transfer funds, etc.3.3 Cash SectionBanks, as a financial institution, accept surplus money from the people as deposit and give them opportunity to withdraw the same by cheque, etc. But among the banking activities, cash department

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play an important role. It does the main function of a commercial bank i.e. receiving the deposit and paying the cash on demand. As this department deals directly with the customers, the reputation of the bank depends much on it.Some tasks done by cash counter in NCCBL are given below:Cash Receive.Cash Payment.Fund management by maintaining sufficient amount of cash each day.Cash Packing.

3.3.1 Cash receiving procedure:The work of cash receiving counter is examining deposit slips. Depositors will use the prescribed deposit slip supplied by the bank to deposit cash, cheque, draft, pay order etc. In all types of receiving the following things should be checked:The slip has been properly account and its number.The amount in figure and in words is same.Instrument signed depositors.Date of the instrument.

3.3.2 Cash payment procedure:In order to cash payment procedure, the paying banker has to observe the following things-A cheque must be looked whether it is an open or crossed cheque.The paying officer should see whether the cheque is drawn on his/her branch.He must check whether the cheque is post or pre dated.A teller must not pay any post dated cheque.The officer must compare the signature of the cheque with the signature on the specimen signature card.The officer may allow the cheque if prior arrangement is done with the bank.

Cash packing:After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial.

Allocation of currency:Before starting the banking hour all tellers give the requisition of money through “Teller cash proof”. The head teller writes the number of the packet denomination wise in “Reserve sheet” at the end of the day; all the notes remained are recorded in the sheet.

3.4 Local RemittanceCarrying cash money is troublesome and risky. That’s why money can be transferred from one place to another through banking channel. This is called remittance. Remittances of funds are one of the most important aspects of the commercial Banks in rendering services t o i t s c u s t o m e r s . B a n k s c h a r g e c o m m i s s i o n s o n t h e b a s i s o f b i l l a m o u n t . N C C B L remittances are safe, inexpensive and simple. Types of remittance are:A ) P a y O r d e r ( P O )B) Demand Draft (DD)

A) Pay Order (PO):

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Payment order is an instrument that contains an order for payment to the payee only in case of local payment whether on behalf of the bank or its constitution. Unlike cheque, there is no possibility of dishonoring pay order. NCCBL charges different amount of commission on the basis of pay order amount. It has some following characteristics-The issuing branch & the paying branch are same.Application for payment within the clearing house.This may be open or crossed.

Procedure of PO issue:Obtain PO application form duly filled in and signed by the applicant.Received the amount in cash/transfer with commission amount.Issue pay order.Enter in pay order register.

B) Demand draft (DD):By DD any person can send money from one branch to branch of NCC bank. To send the m o n e y h e / s h e m u s t fi l l u p t h e N C C B L ’ s p r e s c r i b e d f o r m o f D D a n d p a i d c h a r g e commission and receive DD block. The following information is included in the DD block:

Name of the sender & receiver branch.Name and account of the party who receive the money.For security purpose a confidential test number is included in DD block.Amount of money to be transmitted.

Procedure of DD issue:

The sender sends this block to the receiver branch of DD.DD block receive by the receiver branch.The authorized officer of receiver branch tests the DD confidential number and if the test is proved then he/she gives the money to the payee.Enter in the DD number.Issue advice to the branch.

Clearing and Bills collection 3.5.1 ClearingCheques, Pay Order (P.O), Demand Draft (D.D.) amount collection of other banks on behalf of its customer are basic function of a clearing department in NCCBL.Types of Clearing:Outward Clearing :When the branches of a bank receive cheque from its customers drawn on the other Banks within the local clearing zone for collection through clearinghouse, it is Outward Clearing.Inward Clearing:When the banks receive cheque drawn on them from other banks in the Clearing House, it is Inward Clearing.Precaution at the time of cheque receiving for Clearing:1) Name of the account holder same in the cheque & deposit slip.2) Amount in the cheque & deposit slip must be same in words & in figure.3) Date in the cheque may be on or before (but not more than six months back) clearinghouse date.4) Bank & branch name of the cheque, its number & date in the deposit slip.5) Cheque must be signed.

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6) Signature for confirmation of date, amount in words / in figure of cheque.7) Account number in the deposit slip must be clear.8) Depositor’s signature in the deposit slip.

Cheque may be dishonored for any one of the following reasons:1 ) I n s u f f i c i e n t f u n d .2) Amount in f igure and word differs.3) Cheque out of date/ post- dated.4) Payment stopped by the drawer.5) Drawer’s signature differs / required.7) Crossed cheque to be presented through a bank.The dishonor cheque entry in the return register & the party is informed about it. Party’s signature required in the return register to deliver the dishonor cheque.

Responsibility of the concerned officer for the Clearing Cheque:1) Crossing of the cheque.2) (Computer) posting of the cheque.3) Clearing seal & proper endorsement of the cheque.4) Separation of cheque from deposit slip.5) Sorting of cheque 1st bank wise and then on branch wise.6) Computer print 1st branch wise & then bank wise.7) Preparation of 1st clearing house computer validation sheet.8) Examine computer val idation sheet with the deposit s l ip to just ify the computer posting.9) Copy of computer posting in the floppy disk.

3.5.2 Bills Collection:In modern banking the mechanism has become complex as far as smooth transaction and safety is concerned. Customer does pay and receive bill from their counterpart as a result of transaction. Commercial bank’s duty is to collect bills on behalf of their customer.

Types of Bills for Collection:Outward Bills for Collection (OBC).Inward Bills for collection (IBC).Outward bills for collection (OBC):OBC exists with different branches of different banks outside the local clearing house. Normally two types of OBC:1) OBC with different branches of other banks.2) OBC with different branches of the same bank.Procedure of OBC:1) Entry in the OBC register.2) Put OBC number in the cheque.3) “Crossing seal” on the left corner of the cheque & “payees account will be credited on realization” seal on the back of the cheque with signature of the concerned officer.4) Dispatch the OBC cheque with forwarding.5) Reserve the photocopy of the cheque, carbon copy of the forwarding and deposit slip on file of OBC.

Inward bills for collection (IBC):

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When the banks collect bills as an agent of the collecting branch, the system is known as IBC. In this case the bank will work as an agent of the collection bank. The branch receives a forwarding letter and the bill.Procedure of IBC:1. IBC against OBC: To receive the OBC cheque first give the entry in the IBC Register .The IBC number should put on the forwarding of the OBC with date. 2 . Deposit of OBC amount: OBC cheque amount is put into the “sundry deposit-sundry Creditors account”, prepare debit & credit voucher of it. If the OBC cheque is honored, send credit advice (IBCA) with signature & advice number of the concern branch for the OBC amount.3. If the OBC cheque is dishonored, the concerned branch is informed about it.4. Again place in the clearing house or send the OBC cheque with Return Memo to the issuing branch according to their information.4.1 Credit profile

The objective of the credit management is to maximize the performing asset and the minimization of the non-performing asset as well as ensuring the optimal point of loan and advance with efficient management. Credit management is a dynamic field where a certain standard of long-range planning is needed to allocate the fund in diverse field and to minimize the risk and maximizing the return on the invested fund. Continuous supervision, monitoring and follow-up are highly required for ensuring the timely repayment and minimizing the default. Actually the credit portfolio is not only constituted the bank’s asset structure but also a vital factor of the bank’s success. The overall success in credit management depends on the banks credit policy, portfolio of credit, monitoring, supervision and follow-up of the loan and advance.

4.2 Credit Policy of NCCBL

One of the most important ways, a bank can make sure that its loan meet organizational and regulatory standards and they are profitable is to establish a loan policy. Such a policy gives loan management a specific guideline in making individual loans decisions and in shaping the bank’s overall loan portfolio. In NCC Bank Limited there is perhaps a credit policy but there is no credit written policy.

4.3 Lending products of NCCBL:

Continuous loans:

These are the advances having no fixed repayment schedule but have a date at which it is renewable on satisfactory performance of the clients. Continuous loan mainly includes:a) Secured over draft Against Financial obligationb) Secured over draft against Work order/Real Estate etc.c) Cash Credit (Hypothecation)d) Cash Credit (pledge)e) Export Cash credit

Demand loan:

Demand loans mainly includes:

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a) Loan generalb) Festival Business Loanc) Payment Against Document (PAD)d) Loan Against Imported Merchandise (LIM)e) Loan Against Trust receipt (LTR)

Term loans:These are the advances made by the bank with a fixed repayment schedule. Terms loans mainly includes:

a) Project Loanb) Transport Loanc) House Building Loand) Small Business Loane) Consumer Finance Schemef) Lease Financeg) Personal Loan

4.4 Functions of Credit Department

Credit AdministrationThe aspects that is critically tracked and monitored by Credit Administrations are: Past dues Excess over limit Document Deficiency ReportingCredit expiry

Loan MonitoringThe important aspects of this part are:Follow approval termsProper disbursementMonitor interest paymentMonitor principal RepaymentBalance with general ledger

4.5 Documents:For execution of different types of loans the bank usually uses two types of documents. One is application form and other is charge document. A detail of these documents are given below:

a) Application Form: NCC bank ltd uses two types of application form for different types of loans. For CC (H), CC (P), Loan (G), Project / Term loan etc, the application form contains:

1. Name of the Applicant /Firm/ Company.2. Applicant’s Address.3. Nature of the A/C

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4. Telephone/ Fax number.5. Particulars of proprietor.6. Nature of Business/ Industry.7. Trade License No. and Validity.8. Date of Establishment/ Commencement/ Incorporation of Business.9. Nature and Amount of Limit.10. Purpose.11. Period.12. Mode of Repayment.13. Details of Security Offered.14. Particular of Guarantor.15. Photograph (two copies).16. Other Relevant Particular/ Information.17. Declaration.18. Certificate of the organization.

b) Charge Document: Before disbursing the loan, the following documents must be completed by borrower. On these documents, the stamp needed for legislative reasons, which is paid by the borrower.

1. Letter of Guarantee2. Letter of Hypothecation.3. Demand Promissory Note.4. Letter of Disbursement.5. Letter of Agreement.6. Letter of Authority.7. Letter of installment.

4.6 Procedure for Sanctioning Loan:

Step -1: Duly filled up information sheetFirst information sheet in the prescribed form provided by the respective branch that contain the basic information of the borrower such as name of the concern with its factory location, office address, and telephone no, name of the sponsors, business experience of the sponsors, details of fixed assets personally owned by the sponsors, details of liabilities, purpose of loan, estimated cost of the project & means of finance.

Step-2: Application for credit lineIt includes name; address; telephone no of factory, date & place of establishment, name & net worth of directors, capital structure, details of properties, name & address of the subsidiaries, nature of business, latest audited/ in-audited financial statement, management structure, details of securities offered, type; extent; & period of credit facilities required.

Step-3: Selection of borrowerIt is the most important step in lending. After getting the application for loan NCCBL official studies the past track record of the applicant. Generally the study includes:

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a. Account balance & past transaction.b. Credit report from other bank.c. Information of the industry by studying market feasibility.d. Past & projected financial statement analysis.

Borrower analysis: The quality of the applicant depends on following things:

Character:

Integrity:Past activities of the borrowerAnalyzing collected documentsTransaction analysisAnalyzing the period of relation with the bank

Reliability:Fulfillment of promise or repayment of earlier loans properlyProper usage of earlier loansSocial StatusRealistic Business plan

Capacity:

Business capacity: To select the borrower, the most important thing is borrower’s business. From the followings, one can have idea about the business capacity:Business’s previous growthCompetitive advantageAbility to use the strength and remove the weaknessCash flow

Management Capacity: The capacity of the owner, director, managers depends on the several things such as physical ability, educational qualification, training, experience, willing to work perseverance, self-confidence, self-reliability, presence of mind etc.

Capital: Capital is a compulsory item to run the business. To know the condition of capital the following things are analyzed:

Asset and liability PositionThe probability of owner to provide additional capitalRatio Analysis

Condition: The following things should be considered to have an idea about the related condition of the business:Growth of the IndustryCompetitive conditionThreat of new entryGovernment assistance

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Demand of the product

Collateral: Which assets are acceptable as collateral can be known by analyzing the following things:Whether the ownership of property and documents of ownership are correct?Whether the connected assets can be mortgaged?Whether the borrower can influence the legal authority?The size, type, and location of property should be such that it can be take over?Whether any other person or organization has taken authority over the assets?Do the assets have demand in the market?How much time will be required to sale the assets by taking legal steps?How much would be the approximate expenditure to sale the assets?What is the present market value of the assets?

Step-4: Collection of CIB report from the Bangladesh Bank.

Seep-5: Making credit line proposal

Step-6: Project appraisal

Project appraisal in banking sector is needed for following reasons:a) To justify the soundness of an investment.b) To ensure about repayment of loan.c) To achieve organizational goals.

Step-7: Credit approval process

Step-8: Head office approval

.Step-9: Sanction letter

Step-10: Acceptance by the borrower

Step-11: Documentation of loan & advancesCommon charge of documents for all sorts of advances:a) Demand promissory note duly signed with revenue stampb) Letter of arrangementc) Letter of acceptance

Additional charge documents required for the following sorts of advance:Loan general:Letter of installmentLetter of disbursementLetter of authority

Over draft:Letter of continuityLetter of installment

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Cash credit (Hypo):Letter of hypothecationInsurance cover noteLetter of guaranteeStock report signed by borrowerLetter of continuity

Cash credit (Pledge):Letter of pledgeInsurance cover noteLetter of guaranteeStock report signed by borrower

Step-12: Disbursement

Step-13: Monitoring and Follow-up:Regular checking of the balance of the clients account. Banks recover the continuous and demand loan by daily recover basis and recover the term loan by installment basis (monthly).Regular communication with the defaulting customer and guarantors physically/ over telephone.Issuance of letter to customers immediately after dishonor of cheque.Issuance of letter to defaulting customers and respective guarantors.Contacting the employers of the defaulting customers ( after their overdue installments)Issuance of legal notice to the customers and guarantors prior classification of loans.Issuance of application/ greeting letter to the regular customers.Periodical visit to the customer to maintain relationship and supervision of supplied goods/ items.Legal actions to be taken after all possible efforts to recover the bank’s dues have in vain.

Step-14: Recovery Steps:

A) General steps:Normal procedure:Preparation of list of Borrowers Categorically.Maintenance of diaryFollow up to --Personal Approach.Through Letters.Notices etc.Some Special Techniques:Moral Persuasion.Social Persuasion.Political Persuasion.Persuasion through Guarantors etc.

B) Steps from Head office:Letters from H.O.Formation of Recovery team i.e. supervisory/ recovery.Issuance of Circulars, Notices allowing some incentives.

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Negotiation with the borrowers for arrangement of selling securities for recovery.

C) Alternative Measure for Recovery:Rescheduling/ Restructuring:Rescheduling with Block A/C.Technical, Management, Marketing Restructuring.

D) Government and Bangladesh bank’s Role for Recovery:Issuance of Circulars, Notices etc.Preparation of list for defaulting borrowers for publication through papers.Imposing Restrictions for participation in some activities like election, other social activities etc. for defaulting borrowers and even for guarantors if any.Support for legal actions if necessary.

E) Legal Steps:Serving Legal Notices.Serving Notices to the Guarantors.Assessment and Identifications of securities in respect of nature, quality and valuation etc.Attachment of the other properties etc. (if necessary) along with the properties of Guarantor.

Some Problems of Recovery:1. Exemption of interest by the bank/ government.2. Exemption of loan including interest by the Govt.3. Political pressure and misunderstanding etc.4. Interest waiving and rescheduling culture.

4.7 Analysis of Credit facilities:In NCCBL, the amount of credit is increasing that means assets of the bank is increasing as well. Because of all kinds of loan is asset from the bank’s point of view. Industry and Business sectors are given more emphasizes. Here, Nonperforming asset to outstanding loans and advances ratio is 2.68% and Advance to Deposit ratio is 83%.

Loans and Advances over years

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Loans and Advance0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

20072008200920102011

Figure 2: Loans and Advance over years

Table 4: Sector wise loans on December 2011(Figures in Crore Taka)

Agriculture 44.03Industry 2533.28Construction 115.43Transport and Communication 41.33Storage 29.46Business 1481.53Others 44.70

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Sector wise loans

AgricultureIndustryConstructionTransport and CommunicationStorageBusinessOthers

Figure 3: Sector wise loans

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Foreign Exchange is a process which is converted one national currency into another and transferred money from one country to other countries. Foreign exchange is the rate of exchange in the both country’s currency. It is the most vital income generating sector of NCCBL. In here, the Foreign Exchange Department is divided into three wings:

Import FinancingExport FinancingForeign Remittance

5.1 Import Financing: Import of merchandise involves two things: bringing of goods physically into the country and remittance of foreign exchange towards the cost of the merchandise and services connected with its dispatch to the importer. By opening a Letter of Credit on behalf of customer in favor of exporter, bank undertakes to make payment compliance with terms giving title to goods to the importer. The import processes are:

RegistrationDetermination terms of creditProposal for opening L/CApplication by the importer to open L/CShipment of goods and lodgments of documents by exporterLodgments of documents by the opening bank from negotiating bank.Departure

Application for Opening L/C: At first, an importer will request banker to open L/C along with the following documents:

Indent or Pro forma InvoiceImport Registration Certificate (IRC)Taxpayer Identification Number (TIN)Insurance cover note with money receiptA bank account

L/C Application: NCCBL provides a painted form for opening of L/C to the importer. The importer gives the following information is that form:• Full name & address of importer.• Date & place of expiry of the credit.• The mode of transmission of document (courier/mail/telex)• Whether the confirmation of the credit is requested by the beneficiary or not.• Whether the partial shipment is allowed or not.• The type of loading (loading on boarding).• Brief description of the goods to be imported.• Within the specific time duration the document should be presented.•Sales terms (FOB/CIF/C & F).• Account number.• L/C amount.• Shipping mark.• H.S. code number of the goods to be imported.

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• IRC number.• LCA number• Insurance cover note.• Country of origin.The above information is given along with the following documents:•Pro forma Invoice, which gives description of the goods including quantity, Unit price.•Four set of IMP form.

Parties to a Letter Of Credit: The importer, the exporter and the issuing bank are parties to the letter of credit. There are however, one or more than one banks that are involved in various capacities and at various stages to play an important role in the total operation of the credit.

A) The opening party/ Importerb) The Opening Bankc) The Advising Bankd) The Beneficiarye) The Negotiating Bankf) The Paying Bankg) The confirming Bank

Back to Back Credit:

The beneficiary of a documentary credit may, for the purpose of fulfilling his obligation under the credit, open a counter credit in favor of another party to ship the goods of his purchaser (importer). This is known as Back to back credit and is issued conditional terms except prices and invoices. The difference in the prices goes to the benefit of the original beneficiary.

Post Import Finance: LTR (Letter of Trust Receipt): Letter of Trust Receipt occurs when an importer fills up the LTR form and applies for it LTR is permissible only if the importer is a reputed, trust worthy and having done business with the particular bank for a long time. LTR creates an option for the importer to pay due by future installment.

Loan against Imported Merchandise (LIM): Loan facility up to a satisfactory limit to the traders customers by the bank against security of the value of the given only to the selective customers who have been doing business with the bank for a long time.

Payment against Documents (PAD): After receiving the documents sent by the foreign exporter which include bill of exchange, shipping documents etc. the importer pays the dues against the documents received by the bank and latter on releases the merchandises from the port. So, after due payments, which include commissions, product price, charges for SWIFT, and miscellaneous, the party is eligible to take the release documents from the bank on this payment is called PAD.

5.2 Export Financing:

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The import and export trade of Bangladesh is controlled under the Import and Export Control Act, 1950. There are two types of formalities allowed by the bank to the exporter in relation to export credit:Pre-shipment FinancePost-shipment finance

Export processes are:

Obtaining export L/CSubmission of export documentsChecking of export documentsNegotiation of export documentsRealization proceedsIssue to Proceeds Realization Certificate

Documents for export purposeFollowing major documents are required for export purpose:Commercial invoiceBill of lading EXP form Bill of exchangeL/C copyPacking listCertificate of originInspection certificateQuality control certificate.

5.3 Foreign remittance

Foreign remittance is the money directly received by the remitters target banks. Different exchange companies or money transfer organizations work as a medium for foreign remittance. NCC Bank is the member of SWIFT networks and 23 remittance sending partners. Using the services of this global network, non-resident Bangladeshis can send money from abroad to home within a few minutes without any risk. National Credit and Commerce Bank Ltd is now handling more than 32 remittance products from different foreign exchanges or banks. Such as MoneyGram, Xpress Money, Placid Express, Habib Qatar, Qata Instant Cash World Wide, Al Farhan Ex, Qatar First Solution, Tele Money (Arab Normal Bank), KSA Dhaka Janata, National Exchange Co. srl, Italy Federal Exchange, Wall Street Exchange, Zeni Exchange, Bahrain Majan Exchange, Oman Three Star Remittance, Malaysia Itua Unibanco, Japan Unicredito Italiano, Malaysia Al Zaman Exchange, Qatar Al Mulla International Ex. Co., Kuwait Transmit International inc. USA Different software and mechanisms are used for processing the data received from this exchanges regarding remittance. For receiving the remittance proof of receiver is needed like national ID, passport etc.

Here, MoneyGram is an interactive web based procedure of getting money in minutes worldwide. The receiver needs to enter his reference number in software provided by Monyegram called Deltaworks to get money. The basic features of Xpress Money are similar as Moneygram. It’s also an instant cash

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system where receivers get specific PIN number and branch officials confirm the payment by signing in a website of Xpress Money. Placid Spot cash is a web based remittance product like other instant cash products. Like other similar products in Placid SP, Beneficiary gets a PIN No for executing his/her payment. The dedicated server to Placid helps to execute the payments.

5.4 Function of Foreign Exchange

NCCBL acts as a media for the system of foreign exchange policy. For this reason, the employee who is related of the bank to foreign exchange, especially foreign business should have knowledge of these following functions:

i) Rate of exchange.ii) How the rate of exchange works.iii) Forward and spot rate.iv) Methods of quoting exchange rate.v) Premium and discount.vi) Risk of exchange rate.vii) Causes of exchange rate.viii) Exchange control.ix) Convertibility.x) Foreign exchange trading and Foreign exchange transaction.xi) Rules and Regulation used in foreign trade. xii) Export and import letter of credit.xiii) Non-commercial letter of trade.xiv) Financing of foreign trade.xv) Nature and function of foreign exchange market.

5.5 SWIFT:NCC Bank is a member of society for worldwide interbank financial telecommunication. SWIFT is a member-owned cooperative through which the financial world conducts its business operations with speed, certainty and confidence. It ensures secure messaging having a global reach of more than 10,000 financial institutions and corporations in 212 countries, 24 hours a day. SWIFT global network carries an average 4 million message daily and estimated average value of payment messages is USD 2 trillion.SWIFT is highly secured messaging network enables NCCBL to send and receive fund transfer, L/C related and other free format messages to and from any bank active in the network. Having SWIFT facility, bank will be able to serve its customers more profitable by providing L/C, payment and other messages.

5.6 Foreign exchange Business

Banks Foreign Exchange Business contributed largely to its profitability year by year. During 2011, the bank handled import and export business of Taka 55,044.49 and 20,981.99 millions. Numbers of AD branches are growing for better utilization of foreign exchange. In future, the bank management should careful about the needs of the importer and exporter.

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(Taka in Millions)

2007 2008 2009 2010 20110.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00 Import (2007-2011)

Figure 4: Import over years

(Taka in Millions)

2007 2008 2009 2010 20110.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

Export (2007-2011)

Figure 5: Export over years

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6.0 Findings

After go through, bases on observation and interpretation come up with some findings. Some of the tasks which NCC Bank does are very much traditional. In today’s modern banking system which is much different from that. Some findings are given below:

Bank saves all kinds of data in papers.Sometimes very simple work is done by the head office which takes time and makes difficult.Lack of co-ordination with other related divisions which cause lot of sufferings to the officers as well as customers.Due to centralized banking systems bank has maintained a very week relationship with the valued customer. The customers are very much dissatisfied with this worst situation of delaying approval.The Credit officers have insufficient time for risk assessment for huge workload and hurries in paper work and loan approval to prevent them from thorough assessment.Credit quality depends on the lack of follow-up and monitoring. But it is not strongly maintained.Lack of promotional activities, especially thorough mass media.Backdated tools for services are used, which ultimately affects the performance of the bank.Absence of motivation programs which sometimes cause employee dissatisfaction.Lack of innovative product development and marketing.Absence of taking advantage of ATM booths.The foreign exchange division is expanding its service day by day but more emphasis is needed to attract customers.Sensitive works are done with experienced employees.

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7.0 Recommendation:

Decentralization may reduce the time and cost of decision making.The NCCBL can go for introducing MIS in all level.NCCBL should ensure strong monitoring of Human Resource Department over employee discipline and satisfaction.The NCCBL can award limited decision making authority to mid level managers for implementing short term projects.The NCCBL should maintain quality of the lower level officers for better customer and banking service.The compensation should increase so that they can match their compensation with their responsibility.More emphasis should need in credit risk assessment and recovery. NCC Bank should give more attention to personal accomplishment and recognition of the employee to increase the level of job satisfaction.Regular training program and workshop should be introduced to keep officers updated relating new issues.The NCCBL should take decisions by analyzing industry competitors steps.NCCBL should launch more promotional programs/products in home and abroad for attracting target customers.

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8.0 Conclusion:

National Credit and Commerce Bank Limited is committed to provide high quality financial services/products to contribute into the growth of GDP of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of income and overall sustainable socio-economic development of the country. In this competitive business world, customer satisfaction is always important. So, NCC Bank makes a strong position through its varies activities. Its number of clients, amount of deposit and investment money increases day by day. This bank already has shown impressive performance in investment. So far NCC Bank Limited has been able to manage its customers skillfully and kept the classified products practices of the bank. But consumers are more or less satisfied with the present services of the bank. So the bank should think to start new services and take different types of marketing strategy to get more customers in this competition market of banking.

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Bibliography Khan R.A. DR., “Bank Management”.2008. Ruby Publication, First Edition.Bhuiya , M. A.B. (1996), “Bangladesh Laws on Banks & Banking”, Dhaka: M/S Tawakkal Press, 2nd edition.Annual report-2008, 2009, 2010, 2011 of National Credit and Commerce Bank.Third quarter report of 2012 of National Credit and Commerce Bank.NCC bank website. http://www.nccbank.com.bdBangladesh Bank website. Http://bangladesh-bank.org

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