report on genaral banking of mercantile bank limited

8/12/2019 Report on Genaral Banking of Mercantile Bank Limited

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Present world is changing rapidly to face the challenge of competitive free market

economy. To keep pace with the trend banks need executive with modern knowledge and

provide fresh graduate with modern theoretical and practical knowledge in banking and

financial institution management. As the practical origination is an integral part of the

BBS degree reuirement! " was sent to #ercantile Bank $imited %#ain Branch& to take

the real life exposure of the activities of banking financial institution for three months

only starting from 'nd(ebruary. This research is a partial reuirement of #BA "nternship

Program in the Southeast )niversity and report is being prepared from three months

extensive knowledge and research.

1.3 Objective of the report

The primary ob*ective of this report is to comply with the reuirement of my course. But

the ob*ective behind this study is something broader.The principal intent of this report is

to analy+e the trends of overall banking and their customer,s satisfaction. -b*ectives of

the study are summari+ed in the following manner

To identify the present state of #ercantile Bank $imited %#B$&! #ain Branch.

To observe the customers and their satisfaction towards the #B$.

To observe the customers reaction towards service of #B$.

To describe the /eneral Banking! S#S Banking! AT# facilities and other facilities

provided by #B$.

To draw S0-T analysis of #B$! #ain branch.

To discuss the potential of #B$.

To provide the recommendation for improvement of #B$.

(inally! to sketch out the overview of #ercantile Bank $imited %#B$&.

1.4 Scope of the study

#ercantile Bank $imited is one of the new generation banks in Bangladesh. The scope of

the study is limited to the #ain Branch only. The report will cover the functions of


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different departments of #ercantile Bank $td %#B$&! #ain Branch like /eneral

banking! $oan and Advances! and (oreign xchange. "t will also present a brief scenario

of the #ercantile Bank $td in total.

" will include on my report first of the introduction of #ercantile Bank $td .Then the

overall banking activities! products and services. (inally! " shall provide an analytical

view on a real pro*ect that #ercantile Bank #ain Branch facing! and it is the special

focus of my report.

1.5 Methodoogy of d!tcoection

(or achieving the specific ob*ective of this study! " will collect the related data both from

primary 2 secondary sources. (or the primary sources of data collection3 customer,s

opinion will be collected through uestionnaire and also personal observation. To collect

the secondary sources of data " will go through the annual reports of #B$! different

papers of #B$! various records of the bank! unpublished data! different textbooks!

*ournals! booklets and web site of #B$ %www.mblbd.com&.

1." S!mping design

#!ri!bes Procedure$!rget Popu!tion Branch customers and employees.

S!mpe units Branch customers and employees.

S!mping %r!me

Priority customer! general customer! corporate

customer and also the different levels of employees in

the branch.

S!mping techni&ue Stratified sampling by different account holder.

S!mpe si'e 45.

S!mping P!n6ata gathered based on the focus group interview and

experience survey through the uestionnaire.

()ecutionAllocate sample by strata! select 4 strata and

conducted survey on them.

Table 1 Sampling design

1.* +imit!tions of the study


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http://www.mblbd.com/http://www.mblbd.com/


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A. Although " have obtained wholehearted co3operation from employees and

customers of #B$! #ain Branch but they could not manage enough time to deal

with my report.

B. The annual report is the main secondary source of the information but thisinformation was not enough to complete the report and it was not identified clear

idea about this bank.

8. 6ue to some policies of the bank " couldn,t collect the organi+ational hierarchy to

show the organi+ational decisions flow.

6. The main limitation for me was the fact " was working away from the "T

department section for one week for the internship program. Therefore! " have too

short time to understand the whole process of P8 bank under which the whole

online banking system is operated and there was some restriction for me such as "

couldn,t open their P8 and some program without their password. That,s why "

couldn,t able to provide precise data on "T department due to restriction.


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,.- ntroduction

,.1 M/+ in /!ng!desh

Banking system occupies an important place in a nation,s economy. Banking institution is

indispensable in a modern society and it plays a vital role in the economic development

of a country. Against the background of liberali+ation of economic policies in

Bangladesh! #ercantile bank $imited emerged as a new commercial bank to provide

efficient banking services with a view to improving the socio3economic development of

the country.

The Bank provides a broad range of financial services to its customers and corporate

clients. The Board of 6irectors consists of eminent personalities from the realm of

commerce and industries of the country.

,., 0istoric! b!cground

#ercantile Bank $imited is a scheduled private commercial bank established on #ay '5!

1::: under the Bank 8ompany Act! 1::1 and incorporated as a Public $imited 8ompany

under 8ompany Act! 1::9. The Bank started commercial banking operations from ;une 5'!

1:::. 6uring this short span of time! the Bank has been successful to position itself as a

progressive sand dynamic financial institution in the country.

The Bank had been widely welcome by the business community! from small

entrepreneurs for forward3looking business outlook business outlook and innovative

financing solutions. Thus! within this very short period it has been able to create an image



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for itself and has earned significant reputation in the country,s banking sector as a bank

with vision. The company Philosophy 3=efficiency is our strength> has been exactly the

essence of success of this Bank.

#ercantile Bank $imited has been licensed by the /overnment of Bangladesh as ascheduled Bank in the private sector in the process of the policy of liberali+ation of

banking and financial services or Bangladesh. "n view of the above! the Bank has! within

a period of eight years of its operation! achieved a remarkable success and has always

met up capital adeuacy reuirement set by Bangladesh Bank.

There are twenty3seven sponsors involved in creating #ercantile Bank $imited? the

sponsors of the Bank have a long heritage of trade! commerce and industry. They are

highly regarded for their entrepreneurial competence. The sponsors happen to be member

of different professional groups among whom are also renowned banking professionals

having vast range of banking knowledge. There are also members who are associated

with other financial institution like companies! leasing company,s etc.

The board of directors consists of '1 members elected from the sponsor of the bank. And

the board of directors is the apex body of e bank. All route matters beyond delegated

owners of management are decided upon by or routed through the executive committee!

sub*ect to ratification by the board of directors.

,.3. Objectives of the Merc!ntie /!n +imited


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%or the customers2Providing with caring services

by being innovative in the

development of new banking

products and services.

%or the sh!rehoders2

#aximi+ing wealth of the bank.

%or the empoyees2

especting worth and dignity of

individual employees devoting

their energies of the

progress of the bank.%or the community

Strengthening the corporate

values and taking environment

and social risks and reward into

account.

,.4 #ision Mission !nd ore v!ues


would make the finest

corporate citi+en

0ill become most caring!

focused for euitable growth

based on diversified

deployment of resources! and

nevertheless would remain

healthy and gainfully profitablebank


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,.5 At ! !nce of M/+

6!me #ercantile Bank $imited

7!te of incorpor!tion '5th#ay! 1:::

7!te of in!ugur!tion of oper!tion 'nd;une! 1:::

8egistered Office


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,.5.1 $0( O8PO8A$( S$8


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Audit ommittee

#d. Tabibul Gu

Subrota Darayan oy

Saber Gossain 8howdhury

M!n!ging 7irector 9 (O

6ewan #u*ibur ahman

Syful Shamsul Alam 2 8o.

8hartered Accountants

$!) Advisor

I # Gasan 2 8o.

8hartered Accountants


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,.5., M/+ $imeine


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,.5.3 6etwor of the /r!nches

#ercantile Bank has 91 existing branches and some other proposed branch all over

Bangladesh to provide better services to their valuable customer. The ob*ective of #B$ is

not only to earn profit but also keep the social commitment and to ensure its co3operationto the persons of all levels! to the businessmen! industrialists3specially who are engaged

in establishing large scale industries by consortium and the agro3based export oriented

medium and small scale industries by self inspiration. #B$ as the largest private bank is

committed to continue its endeavor by rapidly increasing the investment of honorable

shareholders into asset.


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(igure 1 Detwork of the Branches


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,.5.4/r!nch +oc!tion of M/+

(igure ' Branch $ocation of #B$


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,." $he org!ni'!tion! structure

The organi+ation structure and corporate of Merc!ntie /!n +imited =M/+>strongly

reflect its determination to establish! uphold and gain a stronger footing as an

organi+ation which is customer3oriented and transparent in its management.

,.".1 /o!rd of 7irectors

The Board of 6irectors consists of '1 member elected from the sponsors of the Bank.

The Board of 6irectors is the apex body of the bank.

,."., /o!rd ommittees

The Board of 6irectors who also decides on the composition of each committee

determines the responsibilities of each committee.

,.".3 ()ecutive ommittees

All routine matter beyond delegated powers of management are decided upon by or

routed through the xecutive 8ommittee! sub*ect to ratification by the Board of

6irectors.

,.".4 Poicy ommittee

All mater relating to the principles! policies! rules! and regulation! ethics etc. for

operation and management of the bank are recommended by the 8ommittee to the Board

of 6irectors.

,.* M!n!gement

The management of the bank is vastly on a Board of 6irectors! for overall supervision

and directions on policy matters by the board. The power of general supervision and

control of the affairs of the bank is exercise by the president and managing director of the

bank who is the chief executive officer. Above all! the bank will be manned and managed

by a galaxy of talented professionals proficient in their individual fields and dedicated to

the cause of the bank.


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,.*.1 M!n!gement 0ier!rchy of M/+

The board of directors consists of eminent personalities from commerce and industry of

the country. #r. #d. Abdul ;alil! the (ounder 8hairman of this Bank! is the member of

parliament of the Dational Assembly and a businessperson! besides being an eminentpersonality of the country.

Gighly ualified and efficient professionals manage this bank. Board of 6irectors who

also decides the composition of each committee determines the responsibilities of each

committee. All routine matters beyond delegated powers of management are d decided by

or routed through the executive committee! sub*ect to rectification by the board of

directors.


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M!n!gement 0ier!rchy of M/+

Source: HRD, Head Oice M!"

(igure 7 #anagement Gierarchy of #B$


1

0 A 8 M A 6

M!n!ging director :087

()ecutive #ice President

omp!ny Secret!ry

Senior #ice President

/o!rd Of 7irectors hief Advisor

7eputy M!n!ging 7irector

7 $ 8(7$ 89P

7eputy M!n!ging 7irector

S7 A7 A9 / 79M

Senior #ice President Senior #ice President

#ice President

Senior Asstt. #ice President

Senior ()ecutive Officer

%.A.#.P

Princip! Officer

Asstt. #ice President

()ecutive Officer

Officer

Asst. Officer

Abbrevi!tions

S7 ener! Service 7ivision

A7 entr! Account 7ivision

AS Audit !nd nspect/ entr! b!n

79M 7eveoping 9 M!reting

7 ntern!tion! 7ivision

89P 8ese!rch !nd P!nning


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,.? 7ivision of M/+

#B$! being one of the best financial intermediaries in the country! blended in operation

in conventional banking! #erchant banking and etail banking. The blending has been

done with the ob*ective of diversifying the operations for catering to the needs of thecustomers of the different sterna of the society from one viewpoint and for having

sustainable growth in profitability and business with the least possible risk. The bank,s

operations were diversified into the following areas of activities as a dynamic financial

intermediary.

8onventional Banking operation

$ease finance operation

#erchant banking

etail banking

"n order to carry out the above operations of #ercantile Bank $td has set up the

following divisions! departments and units in its head office. (or the operations by the

above3mentioned divisions! the bank has established the following divisions to provide

support and internal services.

Guman resource division /eneral service division

"nformation Technology division #arketing divisionPublic relation division ShareKcustomer care division

(inancial administration division Branches control division

Table 7 6ivision of #B$

The professionalism! dedication and loyalty demonstrated by the client and people are the

corner stone of the success in this bank. And the main aim of #B$ is to improve the

competitive position in the chosen market segments and make steady investment in the

core business.


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,.@ Oper!tions

The importance of the mobili+ation of saving for economic development of our country

can hardly be over emphasi+ed. The bank considers savings and deposit as life3blood of

the bank. #ore the deposit! greater is the strength of the bank. So! they intends to launch

various new savings schemes with greater is the strength of the bank and prospect of

higher of return duly supported by a well3orchestrated system of customer services.

Technology such as computer! AT#! Tele3communication etc. all would be harmoni+ed

and adapted to the system in order to provide round3the3clock and any3branch services to

the clients. Travelers, cheues! credit cards and other ancillary services including

payment of different bills from one counter will also be introduced to achieve the

ultimate goal of -D3ST-P service to the customers, value.

The bank would cater to the credit needs of individuals as well as corporate clients.

"nitially it will emphasi+e on trade finance! which would be short3term and self3

liuidating in nature. 8onsidering the importance of xport and "mport and also handing

of foreign remittance business would be given top3most priority.

8ustomer credit is a relatively new field of micro3credit activities. People with limited

income can avail with this credit facility to buy any household effects including car!

computer and other durable. #ercantile Bank $imited %#B$& will play a vital roll in

extending the consumer credits in line with its policy of people3oriented banking.

$ease3(inance is an area of business where the bank would activity participates. Because

of certain built3in advantages! the industrial entrepreneurs are being increasingly attracted

to this type of financing. #oreover! #ercantile Bank $imited %#B$& intends to expand

the scope of this finance to include financing of agricultural euipmentLs as well.

The bank would not depend only on interest earnings? rather it would strive hard to go for

fee3based income from non3activities of the bank. This type of business include capital

market operations like )nderwriting! Portfolio management! #utual fund management!

"nvestors, account as well as commission3based business like $etter of /uarantee! "nland

remittance! (oreign remittance etc. These businesses usually do not involve bank,s fund!


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but on the contrary! offer immense opportunity and scope to expand bank services to the

members of public at large.

,[email protected] Services Provided

ener! /!ning

redit or +o!n 7ep!rtment

%oreign ()ch!nge /usiness


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3.- ntroduction


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Bangladesh is one of the less development countries. So the economic development of

the country depends largely on the activities of commercial Banks. So " need to emphasis

whether these commercial Banks are effectively and honestly performing their functions!

assign their duties! and responsibilities and whether the customers are really satisfy or

not. "n thus respect " need to know about the general banking function of #ercantile

Bank $imited! #ain Branch! 6haka.

The general banking department does the most important and basic works of the bank.

All other departments are linked with this department. "t also pays a vital role in deposit

mobili+ation of the branch. #B$ provides different types of accounts! locker facilities

and special types of saving scheme under general banking. (or proper functioning and

excellent customer service this department is divided into various sections namely as

follows.

Account Opening Section

+oc! 8emitt!nce Section

7eposit Schemes Section

Accounts Section

e!ring Section

oection Section

!sh Section

3.1 Account Opening Section

To establish a Banker and customer relationship account opening is the first step.

-pening of an account binds the banker and customer into contractual relationship. But

selection of customer for opening an account is very crucial for a Bank. "ndeed! fraud and

forgery of all kinds start by opening account. So! the Bank takes extremely cautious

measure in its selection of customers.


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3.1.1 $ypes of Account

#B$ has the following types of accounts

8urrent Account

Savings Account

(ixed 6eposit Account

3.1., Procedure to open !n Account2

%1& (or opening an account! at first the prospective account holder will apply for

opening an account by filling up account opening form. Account opening form

consists of the name of the branch! type of account! name of the applicant%s&!

present address! permanent address! passport number %if any&! date of birth!

nationality! occupation! nominee%s&! special instruction %if any&! initial deposit!

specimen signature%s& of the applicant%s&! introducer,s information etc.

%'& The prospective customer should be properly introduced by the followings

i. An existing customer of the bank.

ii. -fficials of the bank not below the rank of Assistant -fficer.

iii. A respectable person of the locality who is well known to the manager or

authori+ed officer.

%7& Two copies of passport si+e photograph duly attested by the introducer.

%9& Signature of the prospective account holder in the account opening form and on the

specimen signature card duly attested by the introducer.

%4& Then the concerned authority will allocate a number for the new account.

The customer than deposit the =initial deposit> by filling up a deposit slips. "nitial deposit

to open a current account in #B$ is Tk. 15555.55 and saving account is Tk. 4555.55.

0hen the following reuirements are fulfilled! the account is considered to be opened.

#B$ maintains all of its accounts in computer. After depositing the initial deposit! #B$

records it in the computer by giving new account number. Then it issues cheuebook

reuisition slip by the customer. Then it distributes all relevant papers to respective

department.


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3.1.3 Activities 9 p!pers necess!ry for opening !n !ccount

3.1.3.1 oint Account2

"f the account is a *oint account! then the *oint account holder should submit a declaration

and operational instructions of the account along with their signature. The declaration is

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 this account shall be joint and several.

3.1.3., P!rtnership firm2

The following documents have to be submitted for preparing an account of a partnership

firm

Partnership deed.

"f the partnership firm is a registered one! then one copy of registration forms.

"f not! then a copy of certificate from the notary public.

3.1.3.3 +imited omp!ny2

(or the opening of an account of a limited company! following documents have to be

submitted

A copy of resolution of the company that the company decided to open an account

in #ercantile Bank $imited.

8ertified true copy of the #emorandum 2 Articles of Association of the 8ompany.

8ertificate of "ncorporation of the company for inspection and return along with a

duly certified Photocopy for Bank,s records.

8ertificate from the egistrar of ;oint Stock 8ompanies that the company is

entitled to commence business %in case of Public $td. 8o. for inspection and

return& along with a duly certified Photocopy for Bank,s records.

$atest copy of balance sheet.

xtract of esolution of the BoardK/eneral #eeting of the company for opening

the account and authori+ation for its operation duly certified by the

8hairmanK#anaging 6irector of the company.

$ist of 6irectors with address %a latest certified copy of (orm3E""&.


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3.1.3.4 ubBSociety2

(ollowing documents have to be obtained in case of the account of the club or society

)p to date list of office bearers.

8ertified copy of esolution for opening and operation of account.

8ertified copy of Bye3$aw and egulationsK8onstitution.

8opy of /overnment Approval %if registered&.

3.1.3.5 ooper!tive Society2

(ollowing documents have to be obtained in case of the account of 8ooperative Society

8opy of Bye3$aw duly certified by the 8o3operative -fficer.

)p to date list of office bearers.

esolution of the xecutive 8ommittee as regard of the account.

8ertified copy of 8ertificate of egistration issued by the registrar! 8o3operative

societies.

3.1.3."Don3/ovt. 8ollege K School K #adrasha K #uktab

%oowing documents h!ve to be obt!ined in c!se of the !ccount of non:govt.

coege B schoo B m!dr!sh! B mut!b2

)p to date list of /overning BodyK#anaging 8ommittee.

8opy of esolution of the /overning BodyK#anaging 8ommittee authorising

opening and operation of the account duly certified by /a+etted -fficer.

3.1.3.* $rustee /o!rd2

(ollowing documents have to be obtained in case of the account of trustee board

Prior approval of the Gead -ffice of #B$.

8ertified copy of 6eed of Trust! up to date list of members of the Trustee Board

and certified copy of the esolution of Trustee Board to open and operate the

account.


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3.1.3.? MinorCs Account2

(ollowing documents have to be obtained in case of the account of minor

Putting the word =#"D-> after the title of the account.

ecording of the special instruction of operation of the account.

The A-( is to be filled in and signed by either the parents or the legal guardian appointed

by the court of law and not by the minor.

3., +oc! 8emitt!nce Section

$ocal remittance is one of the main components of general banking. The activities of

local remittance are 333

$eegr!phic $r!nsfer

7em!nd 7r!ft issue

P!y order.

3.,.1 $eegr!phic $r!nsfer

"t is an order from the issuing branch to the drawee bank K branch for payment of a certain

sum of money to the beneficiary. The payment instruction is sent by telex and funds are

paid to the beneficiary through his account maintained with the drawee branch or through

a pay order if no account is maintained with the drawee branch.

3.,.1.1 Procedure of issuing $$2

(ollowing procedures are followed while issuing of TT

The applicant fills up the relevant parts of the prescribed application form in

triplicate! duly signed the same and gives it to the /B.

/B will fill up the commission part for bank,s use and reuest the applicant to

deposit necessary cash or cheue at the cash booth.


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The first copy of the application form will be treated as 6ebit Ticket while the

second copy will be treated as 8redit Ticket. The third copy will be handed over

to the applicant as customer,s copy.

/B will prepare telex in appropriate form! sign it and send it to the telex operator

for transmission of the message.

/B will prepare necessary advice. 6ebit advice is sent to the client if clients

account is debited for the amount of T.T.

T.T. 8onfirmation Advice is sent to the drawee branch.

8redit Ticket %second copy of the application form& is used to credit the PB$

/eneral Account.

3.,.1., P!yment of $.$.

-n receipt of T.T. payment instructions the following entries are passed by the drawee

branch if the T.T. is found to be correct on verification of the Test number.

"n case the beneficiary does not maintain any account with the drawee branch a pay order

will be issued in favor of the payee and sent to his banker K local address as the case may

be.

very branch maintains a prescribed T.T. Payable egister. All the particulars off T.T. are

to be properly recorded in this register duly authenticated. A separate Type of T.T.

confirmation advice is sent to the drawee branch on the same day. -n receipt of T.T.

confirmation advice! the particulars of T.T. are verified with reference to particulars

already recorded in the T.T. payable register.

3.,., 7em!nd 7r!ft =77> ssue

Sometimes customers use demand draft for the transfer of money from one place to

another. (or getting a demand draft! customer has to fill up an application form. The form

contains date! name and address of the applicant! signature of the applicant! cheue

number %if cheue is given for issuing the 66&! draft number! name of the payee! name of

the branch on which the 66 will be drawn and the amount of the 66. The form will be


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duly signed by the applicant and by the authori+ed officer. #B$ charges .14M

commission on the face value of 66 as service charge.

3.,.,.1 Process of issuing +oc! 7r!ft2

(ollowed procedures are followed while issuing local draft3

/et the application form properly filled up and signed by the applicant.

8omplete the lower portion of the form for the bank,s use.

8alculate the total amount including the bank,s commission.

"f the cheue is presented for of the local draft! the officer should get the cheue

duly passed for payment by the authori+ed person and record the particulars of

local draft on the back of the cheue.

"f the client wants to debit his account for the payment of the draft amount! the

officer should get the account holder,s signature verified properly! from signature

card on record of the branch and debit clients account for the total amount

including commission.

The first copy of the application form will be treated as 6ebit Ticket while the

second copy will be treated as 8redit Ticket and kept by the /B. The third copy is

handed over to the applicant as customer,s copy.

The /B 6epartment maintains a prescribed $.6. "ssue egister. All the reuired

particulars of $6s issued and should be entered in that register duly authenticated.

3.,.,., ssue of 7upic!te 7r!ft2

6uplicate 6raft is not normally issued unless getting of satisfactory evidence is produced

regarding loss of the draft. "f the $.6. is reported to be lost or stolen! the issuing branch

on receipt of a written reuest from the purchaser may issue a duplicate draft.

Before issuing duplicate $.6. the branch should observe the followings3

Herify the purchaser,s signature on the reuest letter from the signature appearing

on the original application form.


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"mmediately issue a stop payment instruction to the drawee branch under advice of

head office and obtain confirmation of non3payment the $.6. in acuisition.

After the drawee branch has acknowledged the stop payment order and confirmed

that the local draft in acuisition remains unpaid at their end! the issuing branch

should obtain an "ndemnity Bond on stamp paper as per prescribed format from

the purchaser duly signed by him. The branch will thereafter write to head office

for their approval to issue a duplicate draft.

The head office on receipt of the reuest from the issuing branch will immediately

issue a caution circular to all the branches regarding the lost of the local draft

asking them to record stop payment.

The head office will thereafter issue clearance to the issuing branch for issuing for

issuing a duplicate draft in lieu of original reported lost.

-n receipt of the clearance from head office! the issuing branch will issue a

completely fresh draft marking clearly the words duplicate issued in lieu of

original draft no. dated .in bold letters on the top of the

front page of the draft. The printed serial number on the draft should not however

be struck off. "ntimation should be given to the drawee branch furnishing full

particulars of the duplicate draft.

The particulars of the duplicate draft must resemble those of the original draft in

all respects! i.e.! all the particulars to the duplicate draft must be identical with

those in the original draft. Do further "B8A is to be issued for the duplicate draft.

Prescribed duplicate issuance charge is to be recovered for issuing the duplicate

draft and credited to ="ncome Account>.

3.,.,.3 !nce!tion of +oc! 7r!ft

The followings are followed while canceling a $.6.3

The purchaser should submit a written reuest for cancellation of the $.6.

attaching therewith the original $.6.


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The signature of the purchaser will have to be verified from the original

application form.

#anager,s prior permission is to be obtained before refunding the amount of draft.

8ancellation charge is to be recovered from the applicant and only the amount ofthe draft less cancellation charge should be refunded. 8ommission charge! posted

charge etc. recovered for issuing the $.6. should not be refunded.

The original entries are to be reversed giving proper narration. An "B6A for the

cancelled $.6. should be issued on the drawee branch.

8ancellation of $.6. should also be recorded in the $.6. "ssue egister.

3.,.,.4 P!yment of +.7.

0hile payment of $.6. PB$ performs the following functions3

-n receipt of 8redit Advice %"B8A& from the issuing branch the receipt amount is

credited in responding branch.

0hen $.6. is presented for payment at the paying branch! its details are to be

carefully examined with reference to the following points3

0hether the draft is drawn on the $ocal office.

0hether the draft is crossed or not. Amount of crossed draft is not paid in cash

to the payee but to be paid to his account with a bank.

6raft must have to be signed by two authori+ed officers of the issuing branch.

Their signatures are to be verified from the specimen signature book for being

sure that draft that the draft is genuine. The verifier should put his initial.

ndorsement on the back of the draft must be regular in case the draft is

presented through clearing.

The amount of the draft should not exceed the amount written in red ink at the

top of the draft.

The payee is to be properly identified in case of cash payment.

The particulars of the draft i.e. the draft number! date! amount and the name of

the payee should be verified from the $.6. Payable egister.


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"n case of payment! the draft should be cancelled with red ink. The date of

payment should be recorded in the $.6. Payable egister.

3.,.,.5 Stop p!yment of +oc! 7r!ft

The payee or purchaser of the draft can not give stop payment instruction to the drawee

branch. "f the paying branch receives a reuest from the purchaser of the draft for

stopping payment of the draft! it will ask the purchaser to approach the issuing branch

about the purpose. The paying branch should however exercise necessary precaution in

this regard. -nly the issuing branch can issue instruction for stop payment of the draft

under special circumstances.

3.,.3 P!y Order

(or issuing a pay order! the client is to submit an application to /B in the prescribed

form. This form should be properly filled up and signed. The procedure of the issuing pay

order is similar to that of the $ocal 6raft. (or issuing pay order #B$ charges

commission on the following rate3

$ot! !mount of PO ommission #!t)p to TI. 15!555.55 TI. '4.55 Tk. 9

TI. 15!551.55 3 TI .1!55!555.55 TI. 45.55 Tk. TI. 1!55!551.55 3 TI. 4!55!555.55 TI. 155.55 Tk. 1 on the pay order.

The original entries should be reversed with narration.

8ancellation of the pay order should also be recorded in the register.

3.3 7eposit Scheme Section

Bank is the largest organi+ation of mobili+ing surplus domestic savings. (or poverty

alleviation! we need self3employment! for self3employment we need investment and for

investment we need savings. "n the other words! savings help capital formations and the

capital formations help investments in the country. The investment in its turn helpsindustriali+ation leading towards creation of wealth of the country. And the wealth finally

takes the country on road to progress and prosperity. As such! savings is considered the

very basis of prosperity of the country. The more the growth of savings! the more will be

the prosperity of the nation.

The savings rate in Bangladesh is one of the lowest in the world rate of domestic saving

being 1@.@ M. "n order to improve the savings rate! (inancial "nstitutions responsible for

mobili+ation of savings should offer attractive Savings Schemes so that the marginalpropensity to save increases. The savings do not! of course! depend only on the uantum

of income but largely depend on the habit of savings of the people.

#B$ has formulated the following Savings Schemes

7oube /enefit 7eposit Scheme =7/7S>


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$imes /enefit 7eposit Scheme

M!shi S!nch!y! Pro!p! =MSD> or Monthy S!vings Scheme =MSS>

%!miy M!inten!nce 7eposit =%M7>

Eu!rtery /enefit 7eposit Scheme

Adv!nce /enefit 7eposit Scheme =A/7S>

3.3.1 7oube /enefit 7eposit Scheme =7/7S>

Objectives Mode

/ive maximum benefit.

Gelp in meeting specific needs like

education! marriage etc.

6eposit becomes double in six years.

Tenure of the deposit is 5

Objectives Mode

Gelp the retired

persons for investing

their retirement

benefits. 8reate investment

opportunities for Don3

esident Bangladeshi. xplore investment

opportunities for

school! college!

university etc.

/ive investment

opportunities for Trust?

(oundation etc.

6eposit a fixed amount of money for

54 %(ive& years. 6epositor will get a certain sum of

money in each month proportion to

hisKher deposit during the entire tenure.

/enefits2

Tenure of deposit is 54 %(ive& years.

#inimum amount of reuired deposit

is TI.45!555.55 or its multiple


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7eposit Monthy /enefit =Amount in $D.>

1!55!555 1!555

'!55!555 '!555

7!55!555 7!555

Table (amily #aintenance 6eposit %(#6&

Other %e!tures

The #inimum amount of deposit is B6T 45!555.55 %(ifty thousand& or its multiples.

All taxesKdutyKlevy and Kor any other surcharges persently in force or that may beimposed by the /overnment of Bangladesh %/-B& from time to time will be

deductedK recovered from the deposit account under this scheme.

"n case of premature encashment interest will be paid on Saving AK8 ate.

A saving account will be needed to be maintained to receive uarterly benefit

payment.

$oan may be granted up to maximum 5M of the forced encashment value on the

date of loan processing. 6uring the period of continuation of loan! monthly

benefits of (#6 account will be credited only to loan account.

$oan processing fee be reali+ed B6T 45.55 only and stamp costs also be reali+ed.

3.3.5 Eu!rtery /enefit 7eposit Scheme

The LJuarterly Benefit 6eposit SchemeL will be maintained for a period of 7 %three& years

and the minimum amount of deposit is B6T 45!555.55 %fifty thousand& or its multiples.

"nterest will be paid on uarterly basis as per example given below. -n maturity the

principal amount will be paid back.


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()!mpe2

niti! 7eposit =/7$> $erm Eu!rtery /enefit P!y!be =/7$>

45!555 7 Nears 1!455

155!555 7 Nears 7!555'55!555 7 Nears

Table : Juarterly Benefit 6eposit Scheme

Other %e!tures

All taxesKdutyKlevy and Kor any other surcharges presently in force or that may be

imposed by the /overnment of Bangladesh %/-B& from time to time will be

deductedK recovered from the deposit account under this scheme.

"n case of premature encashment interest will be paid on Saving AK8 ate.

Gowever! no interest shall be paid if premature encashment take place before

expiry of 1 %one& year.

"n the event of death of the depositor before the maturity! the deposit account may

be encased %premature& as per rule or may be continued up to maturity on written

approach by the nominee%s&.

A saving account will be needed to be maintained to receive uarterly benefit

payment.

$oan may be granted up to maximum 5M of the forced encashment value on the

date of loan processing. 6uring the period of continuation of loan! uarterly

benefits will be credited only to loan account.

$oan processing fee be reali+ed B6T 45.55 only and usual stamp costs also be

reali+ed.

3.3." Adv!nce /enefit 7eposit Scheme =A/7S>

Objectives Mode

/et xtra benefit from #aintained for a period of '


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minimum

6eposit

%Two& years.

#inimum deposit amount

1!55!555 %-ne $ac& only.

"nterest ate per B6T -ne $ac

B6T 1 $ac %-ne $ac& Tk. 11!11'.55 for 1styear Tk. 17!555.55 for 'ndNear

Table 15 Advance Benefit 6eposit Scheme %AB6S&

Other %e!tures

All taxesKdutyKlevy andKor any other surcharges presently in force or that may be

imposed by the government of Bangladesh from time to time in 6eposit Accounts

will also be applicable for the account for the account opened under this scheme

and such taxesKdutyKlevy andKor any other surcharges shall be deductedK recovered

from the deposit account under this schemes.

$oan may be granted up to maximum @5M of deposit.

3.4 Account Section

"n banking business transactions are done every day and these transactions are to be

recorded properly and systematically as the banks deal with the depositors, money. Any

deviation in proper recording may hamper public confidence and the bank has to suffer a

lot. "mproper recording of transactions will lead to the mismatch in the debit side and

credit side. To avoid these mishaps! the bank provides a separate department whose

function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery.

This department is called Accounts 6epartment.

Besides these! the branch has to prepare some internal statements as well as some

statutory statements! which are to be submitted to the 8entral Bank and the Gead -ffice.

This department prepares all these statements.

3.4.1 %unctions of Accounting 7ep!rtment

0e can divide the functions of accounting department into two categories. This are3


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!. 7!y to d!y functions2 Gere day3to3day function refers to the every day tasks.

Accounting department of #B$ performs the following day to day functions

ecording of transaction in the cashbook! general and subsidiary ledger.

Preparing the daily position of deposit and cash.

#aking the payment of the expense of the branch.

ecordings of inter branch fund transfer.

8hecking whether all the vouchers are correctly passed.

ecording the voucher in the voucher register.

Packing and maintains the total debit and total credit vouchers.

b. Periodic! functions2 Periodical functions of accounts department include the

preparation of different weekly! fortnightly! monthly! uarterly and annual statement.

The accounts department prepares the following statements

#onthly statement of deposits! loans and advances! profit and loss etc.

Juarterly statement of deposits! loans and advances! profit and loss etc.

Nearly statement of deposits! loans and advances! profit and loss etc.

Nearly statement of classified $oans and Advances.

Statement of Affairs.

Nearly Budget of the Branch! etc.

3.5 e!ring 0ouse2

According through the 7@%'& of Bangladesh Bank -rder 1:@'! which are the member of

the clearinghouse! are called as Scheduled Bank. The scheduled banks clear the cheues

drawn upon one another through the clearinghouse. This is an arrangement by the central

Bank where every day representative of the member banks gather to clear the cheues.

Banks for credit of the proceeds to the customers account accept cheues and othersimilar instruments. The banks receive many such instruments during the from account

holders. #any of these instruments are drawn payable at other banks. "f they were to be

presented at the drawer banks to collect the proceeds it would be necessary to employ

many messengers for the purpose. Similarly there would many cheue drawn on this the

messengers of other banks would present bank and then at the counter. The whole process


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of collection and payment would involve considerable labor! delay! risk and expenditure.

All the labor! risk! delay and expenditure are substantially reduced by the representative

of all the banks meeting at a specified time! for exchanging the instruments and arriving

at the net position regarding receipt of payment.

The place where the banks meet and settle their dues is called the 8learinghouse. The

8learinghouse sits for two times a working day. The members submit the climbable

cheue in the respective desks of the banks and vice3versa. 8onseuently the debit and

credit entries are given. At the debit summation and the credit summation are calculated.

Then the banks clear the balances through the cheue of Bangladesh Bank. The

dishonored cheue are sorted and returned with return memo.

3.5.1 Processing for ce!ring che&ue coection

The following procedures are taken for collection


9'

Payees AK8 8redited> and disbursement

=eceived> seal is stamped on the cheue

8rossing the cheues are done

ntries are given in the -utward 8learing egister.


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(igure 9 Processing for clearing cheue collection

3.5., Procedures for outw!rd bis for coection =O/>

(igure 4 Procedures for outward bills for collection %-B8&

3." !sh Section


97

8heues are sorted bank wise and entries are given

to the computer

=8learing> seal is given on cheue

ntries are given to the =8learing Gouse egister>

6epositing the cheue along with deposit slip6epositing the cheue along with deposit slip

8rossing of the cheues are done indicating

Principal Branch as collecting bank

8rossing of the cheues are done indicatingPrincipal Branch as collecting bank

ndorsement = Payees AK8 will be credited on

reali+ation = is given

ndorsement = Payees AK8 will be credited on

reali+ation = is given

ntries are given in the outward clearing

register

ntries are given in the outward clearingregister


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8ash section is a very sensitive organ of the branch and handle with extra care.

-peration of this section begins at the start of the banking hour. 8ash officer begins

hisKher transaction with taking money from the vault! known as the opening cash balance.

Hault is kept in a much secured room. Ieys to the room are kept under control of cash

officer and branch in charge. The amount of opening cash balance is entered into a

register. After whole days, transaction! the surplus money remain in the cash counter is

put back in the vault and known as the closing balance. #oney is received and paid in

this section.

3.".1 !sh 8eceipt

At first the depositors fill up the 6eposit in Slip. (or saving account and current

account same 6eposit in Slip is used in this Branch.

After filling the reuired deposit in slip! depositor deposits the money.

-fficers at the cash counter receives the money! count it! enter the amount of money

in the register kept at the counter! seal the deposit in slip and sign on it with date and

keep the banks, part of the slip. -ther part is given to the depositor.

"n this branch! i.e.! lephant oad Branch! two different officers maintain two

different books for entering such entries. All deposits of saving account are

maintained by one officer and other accounts by another officer.

At the end of the day entries of both of these registers are cross checked with the

register kept at the cash counter to see whether the transactions are correct or not.

3."., !sh P!yment

0hen a person comes to the bank to cash a cheue! sKhe first gives it to the

computer desk to know the position of the check and posting of the cheue. "f the

account has sufficient fund the computer in charge will post it into the computer!

will sign it and seal it.

This cheue is then sent to the concerned officer. There are two officers who

verify the cheues 3 one for savings and similar types of account and another for

current and similar types of account.


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After receiving the cheue respective officer first checks it very carefully for any

kind of fraudulent activity. SKhe also checks the date of the cheue! amount in

word! amount in figure and signature of the drawer.

"f the instrument is free of all kind of error the officer will ask the bearer to sign

on the back of it.

Ge will then put hisKher initial beside the bearers, signature. SKhe will also sign it

on its face? will write down the amount by red pen.

Then the cheue will be sent to the cash counter. At the cash counter bearer will

be asked again to sign on the back of the instrument.

The cash officer will then enter the details of the cheue in hisKher register and

will pay the money to the bearer.

At the end of the day these registers will be compared to ensure the correctness of

the entries.


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4.-ntroduction

The telecommunications industry worldwide has scrambled to bring what is available to

networked computers to mobile devices. Presently! the use of electronic banking is

considerably high and as more and more users sign up for electronic3 banking! the

maturity as regards remote banking %i.e. banking outside the banking hall& is on the

increase. 0ith electronic banking! users can now conveniently carry out banking

transactions! but this convenience cannot be achieved if the user does not have access to

the internet! hence! in other words! the user cannot carry out a banking transaction while

waiting for a bus! or perhaps while having lunch in a restaurant. 0ith S#S banking!

convenience can be achieved '9 hours a day. This is because a user has access to his

mobile phone all day! at all times. So! to effectively achieve a truly convenient banking

mode! a truly mobile mode of banking has to be explored! hence the need for S#S

Banking.


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The S#S banking solution targets the retail banking industry and enables customers to

make account enuiries and transact bank accounts through mobile phones. Banks can

automatically send transaction notifications and alerts to mobile phones! if specific events

in the banking business work3flow occur. The solution provides convenient and latest

front3end technology and a flexible architecture to support an S#S based delivery

channel and to provide significant benefits for both the bank and the customer.

As the time goes by! life style changes. To keep up! #B$ welcomes to S#S Banking

Service! one of the most modern banking services. #B$ S#S banking Service is

convenient! safe! low3cost! fast and available round the clock. #ercantile Bank provides

the following S#S banking services.

1. Access to !ccount b!!nce

,. +!st 3 tr!ns!ction in&uiry

3. he&ue st!tus in&uiry

4.1 $o get Account /!!nce

S#S format BA$AP"D - BA$AP"DAK8 Do or Serial.

esponse )P3to date available balance will appear

xample

(igure


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S#S format TEDAP"D - TEDAP"DAK8 Do or Serial.

esponse $ast 7 Transaction %6rK8r& will appear

xample

(igure @ To get last 7 Transactions

4.3 nform!tion !bout he&ue e!f St!tus

S#S format 8GJSP"D8heue number

esponse 8heue 15


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(igure : S#S Banking Service application form

(ill in the attached form clearly and completely and *ust send in or drop it to the branch

that maintains your account.

4.4., (nroment Procedure2

After submitting the filled3in application form you will receive a P"D on your mobile

phone confirming your reuest. #emories or save the P"D to avail of S#S Banking

Service.

4.4.3 etting St!rted

-nce you have confirmed P"D through a return message! you are ready to use S#S

operation. )se the same P"D and send S#S at the format mentioned below to mobile

phone Dumber 51@175997 and en*oy #B$ S#S banking facilities.

4.4.4 SMS form!t !nd Dey words

esponse All commands and S#S format will be sent to your mobile phone.

0rite GelpP"DIeyword

Send to -1*13-44?3?

esponse Ieyword usages and details.

4.5 Method of SMS /!ning

S#S service conducted under the two procedures by which customer get all the facilities.

The procedures are

4.5.1 SMS Push service


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0hen any amount is debited or credited from client,s account then within 4315 seconds

he will get a message. The message includes the beginning balance! the amount debited

or credited and the last balance. This facility is only available for /rameen Phone and

8ity cell subscribers.

4.5., SMS Pu service

very registered /rameen Phone and 8ity cell subscribers can check their account

balance through this service. They can get a mini statement of last five transactions of

their account.

4." /usiness Process2

S#S Banking is a #obile technology that allows you to reuest and receive banking

information from your bank on your mobile phone via Short #essage Service %S#S&.

"ndividuals or corporate bodies can manage their bank accounts! check their account

balances! perform check reuests! money transfers! pay some bills! and perform other

banking transactions using their mobile phones. There are two methods of S#S widely

used in applications? they are the P)SG 2 P)$$. Push S#S is sending a message from

an application %i.e. S#S Server in this case& to the #obile Phone. "t is a one way

message. "n other words! it,s the mobile application %in this case! the S#S banking

application& that initiates a message. An example could be a deposit alert! which alerts the

user when a deposit is made to hisKher account. Pull S#S is sending a reuest and

obtaining a reply. This is a full duplex scenario where a user sends a reuest to the S#S

banking application and the application replies with the information reuested. An

xample is when a user reuests his bank account balance.

A customer willing to have this service has to have an account with #ercantile Bank. Ge

can open his account following the traditional method but he has to mention about the

specific services at the time of opening the account to get S#S banking facilities. The

customer must be a subscriber of /rameenPhone or 8itycell Telecommunication

8ompany. #ercantile Bank maintains a symmetric dedicated line with /rameenPhone

and 8itycell. This line is like intranet and not for public use. A customer willing to have


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this service will provide his account number and P"D code through sms to a specific

number provided by the bank. After getting the S#S /rameenPhone or 8itycell will

check the code and tracking number of the customer. Then the companies will send the

reuirement of the customer with the specific tracking number to #ercantile Bank.

#ercantile Bank will then check the number whether they match with the information

kept by them. "f the information matches with the information kept in the database of the

bank then the bank send the information to the /rameenPhone or 8itycell. Then the

company provides the information to the customer.


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AT# machine at 14 corresponding branches and is also in the process of setting up its

own AT# network at every focused point in the city with a view of providing retail

banking services.

5.1 /enefits of M/+ c!rds2

6o !sh ;ithdr!w! %ee2(or withdrawals of cash from #B$ AT# by #B$

cardholders no cash advance fee is necessary and from any other J3cash AT# the

fee is Tk.15 only. #B$ is the only bank offering such uniue facility. #oreover!

our H"SA 8ardholders can also withdraw cash from any Hisa logo AT# locally

and internationally.

Accept!biity2 "nternationalK6ual card is accepted all over the world at millions

of outlets and AT#s. A 6ual card is also accepted in most of the big cities like

6haka! 8hittagong! Ihulna! a*shahi! Sylhet at more than 15!555 outlets

including 9455 P-S. "t covers various kinds of merchants like hospital! hotel!

restaurant! department store and the card has accessibility to any outlet having

H"SA logo.

redit %!ciity2#ercantile Bank $td. Hisa 8redit card offers maximum 94 days

credit facilities free of interest and minimum payment is 4M of outstanding billing

payment for easy repayment and convenience of the customers.

Suppement!ry !rd2A Principal cardholder %local& may apply for more than

one supplementary card where one supplementary card is free. xpenses made by

supplementary card will be charged to the principal card.

Adv!nce !g!inst redit c!rd2#B$ cardholder can take advance as term loan up

to 45M of the card limit to be repaid on the monthly installment basis. Any P-S

transaction over TI. '5555 but not exceeding 45M of the credit limit is convertible

to Personal loanK88S and to be repaid on monthly installment basis. epaymentperiod of such loan may be from < months to 7< months.

Overdr!ft %!ciities2-verdraft facilities up to 5M of the credit card limit may

also be allowed for payment of the installment of scheme deposit with our Bank.

P!yment of


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5., M/+CS !rds

7u! !rd =two in one>2Single 8ard with double benefits. Do hassle to carry

two cards %local and international&. A single credit card can be used both locally

and internationally to withdraw cash from AT# for P-S transaction. This is the

special feature of #B$ Hisa card.

7ebit !rd2Hisa debit card is mainly tagged with deposit account %86KSBKST6&

that is automatically debited from the AK8 having available balance. 6ebit card

can also be used for purchasing goods! services! payment of utility bills etc as

well as withdrawal of cash from AT#.

Pre:P!id !rd2 Those who have no account with #B$ may avail Pre3Paid card

facilities. The Pre3Paid cardholders pay first buy later. Pre3Paid card offers the

convenience and security of electronic payment in situations where one might otherwise

use cash! such as birthday gift or a monthly allowance for a young adult. xamples

include gift cards and salary payment etc.

5.3 P!persBdocuments re&uired for issu!nce !rd

5.3.1 %or +oc! redit !rd

"tems with asterisk %Q& are mandatory. 6epending on customer profile and business

relation bank may ask for other documents if necessary on case3to3case basis.

6!me of 7ocumentsService

0oderProprietorship P!rtnership

+imited

omp!ny

, copies of p!ssport si'e Nes Nes Nes Nes


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photogr!ph

$6 ertific!teF Nes Nes Nes Nes

$r!de +icenseF Nes

S!!ry ertific!teF Nes

+etter of omfort =%rom

empoyer>Nes

/!n St!tement(or last

< months

(or last 1 year

personal 2 8o.AK8

(or last 1

year personal2 8o. AK8

(or last 1

yearpersonal 2

8o. AK8

Proof of 8esidence2

!sB(ectricityBMobie Phone

/iB+!nd Phone /i

Nes Nes Nes Nes

/ue /oo of own #ehice =if

!ppic!be>Nes Nes Nes Nes

Other /!n redit !rd bi =if

!ppic!be>

Nes Nes Nes Nes

Memor!ndum !nd Artice of

Associ!tionNes

7eed of P!rtnership Nes

+etter of ncorpor!tion Nes

orpor!te u!r!ntee Nes

+etter of ommencement(or Public

$imited 8o.

opy of P!ssportB7rivingB

+icenseB#isiting !rdNes Nes Nes Nes

ub Membership if !ny Nes Nes Nes Nes


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Table 11 PapersKdocuments reuired for issuance $ocal 8redit 8ard

Gowever! minimum charge documents %6P Dote! $etter of $ien! $etter of ncashment!

$etter of /uarantee etc.& to be obtained.

5.3., %or 7ebit !rdBPre:P!id !rd

Two copies of passport si+e photograph.

8ustomer should maintain a deposit %SBK86KST6& AK8 with any branch of #B$.

-ther than #B$ account holders may also avail Pre3Paid card against deposit of

money.

5.3.3 %or ntern!tion! redit !rd

Two copies of passport si+e photograph.

T"D certificate.

Photocopy of passport from 1 to @ pages including endorsement pages if any.

$ien confirmation of (86 AK8 is reuired from the concerned BranchKBank for

issuance of card against (86 AK8.

(or issuance of card against the balance in J AK8 maintained with us or with

other bank! lien confirmation should be obtained from the respective

BankKbranch.

(or issuance of card against new exporters and importersKproducers uota relevant

papers such as! recommendation letter from PBK copy of tax return etc. is

reuired.

5.4 /usiness Process2

After opening a bank account in the bank the customer is provided with AT# card and

also his password. 8ustomer will go to any AT# booth of the bank and punch his card

and then provide the password with mentioning the reuired amount of money. 0hen he

provides his password the bank check it with their database information. "f there is

balance in the customer,s account the server of the bank give the AT# machine

confirmation to provide the customer the reuired money.


4


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".- ntroduction

#ercantile Bank $imited is a third generation bank! which is committed to provide high

uality financial servicesKproducts to contribute to /6P through stimulating trade 2

commerce! accelerating the pace of industriali+ation and boosting up export by allowing

credit facilities. The failure of the commercial bank is mainly occurs due to bad loans!

which occurs due to inefficient management of the loan and advance portfolio. The

ob*ective of the credit management is to maximi+e the performing asset and the

minimi+ation of the non3performing asset as well as ensuring the optimal point of loan

and advance and their efficient management. 8redit management is a dynamic field

where a certain standard of long3range planning is needed to allocate the fund in diverse

field and to minimi+e the risk and maximi+ing the return on the invested fund.

8ontinuous supervision! monitoring and follow3up are highly reuired for ensuring the

timely repayment and minimi+ing the default.

/eneral loan scheme! depending on the various nature of financing! all the lending

activities has been brought under the following /eneral loan

1. Short $erm +o!n

,. Medium $erm +o!n

3. +ong $erm +o!n

".1 $ypes of redit or +o!n

".1.1 Secured Overdr!ft =SO7>2

"t is a continuous advance facility.By this agreement the banker allows his customer to

overdraft his current account up to his credit limits sanctioned by the bank.The interest is

charged on the amount! which he withdraws! not on the sanctioned amount. #B$

sanctions S-6 against different security.Based on different types of security! we can

divide the following category of the facility


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SO7 =ener!>2 Advances allowed to the individualsKfirms against financial

obligations i.e. lien of (.6. or 6efense Savings 8ertificate %P.S.P&! "8B )nit

8ertificate etc.

SO7 =Others>2Advances allowed against assignment of work order for execution

of contractual works falls under this head. The advance is generally allowed for

specific purposes."t is not a continuous loan.

".1., !sh redit2

8ash credit is a favorite mode of borrowing by traders! industrialist,s etc . for meeting

their working capital reuirements."t is operated like overdraft account .6epending on

the needs of the business! the borrower can draw on his cash credit account at different

time and when he gets money can ad*ust the liability .#B$ charges interest on the daily

balance in the account.6epending on charging security there are two forms of cash

credit

!sh redit =hypothec!tion>2"t is a short3term arrangement by which a customer is

allowed to borrow money up to a certain limit sanctioned by the bank for a certain time.

)nder he condition the borrower is reuired to submit the stock fortnightly in the bank

specimen form. "t is allowed to maximum a period of one year.

!sh redit =pedge>2 "t is also a continuous loan allowed against pledge of

goods as primary securities fall under this head of advance.

".1.3 %oreign 7ocument!ry /is Purch!sed =%7/P>2

Payment made against documents representing sell of goods to local export oriented

industries! which are deemed as exports! and which are denominated in $ocal currencyK

foreign currency falls under this head. The bill of exchange is held as the primary

security.The client submits the usance bill and the bank discounts it . This temporary

liability is ad*ustable from the proceeds of the bills.

".1.4 $erm +o!n2

#B$ considers the loans! which are sanctioned for more than one year as term loan .

)nder this facility! an enterprise is financed from the starting to its finishing! i .e. from


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installation to its production.#B$ offers this facility only to big industries. The loans are

allowed to individual or firm or industries for a specific purpose but for a definite period

and generally repayable by installments fall under this lead. These types of lending are

mainly allowed to accommodate financing under the categories.

+!rge 9 Medium Sc!e ndustry

Sm! 9 ott!ge ndustries !nd

Agricuture

#ercantile Bank has offered the public! the businessperson! or the entrepreneur! even

service holder! to know the policy and get the benefit this policy. This bank has also

offered this scheme

onsumers credit Scheme =S>

!r +o!n Scheme

7octors redit Scheme

8ur! 7eveopment Scheme

+e!se %in!ncing

Person! +o!n

Sm! +o!n

This bank also formulated its policy to give priority to small and medium businessperson

while financing large3scale enterprises through consortium banks. Total loans and

advances of the bank stood at B6T 7@!@@.< million as end of 6ecember 71! '55.

Trade and commerce! garment "ndustry! large and medium scale industries and

construction are ma*or sectors to which this bank extended its credit.



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*.- ntroduction

The foreign exchange has played a vital role in the last decade or so in guiding the

purchase and sale of goods! services and raw materials globally. very country has

certain natural advantages and disadvantages in producing certain commodities while

they have some natural disadvantages as well in other areas. As a result! we find that

some countries need to import certain commodities while others need to export their

surpluses. (oreign trade brings the fruits of the earth to the homes of the humblest among

the countries. These transactions are the basis upon which international trade is made.

As more than one currency is involved in foreign trade! it gives rise to exchange of

currencies! which is known as (oreign xchange. The term O(oreign xchange, has three

principal meanings. (irstly! it is a term used referring to the currencies of other countries

in terms of any single one currency. To a Bangladeshi! 6ollar! Pound Sterling! etc. are

foreign currencies and as such foreign exchanges. Secondly! the term also commonly

refers to some instruments used in international trade! such as bill of exchange! drafts!

travelers, cheue and other means of international remittance. Thirdly! the term foreign

exchange is also uite often referred to the balance is foreign currencies held by a

country.

"n the fiscal year '55< Bangladesh economy was confronted with serious challenge!

among others! the impact of divesting floods! the excessive price hike of oil and some

other importable in the international market! in addition to the termination of the multi

fiber arrangement. To cope with these challenges! the government and the Bangladesh

Bank adopted a series of policies to enhance the resilience of the economy! while

maintaining macroeconomic stability. These polices significantly contributed toward

maintaining real /6P growth at a satisfactory level of 4.9 percent in the fiscal year '55

%oreign 8emitt!nce

*.1.1 mport /usiness

"mport means purchase of goods and services from the foreign countries into Bangladesh.

Dormally consumers! firms industries and /overnment of Bangladesh import foreign

goods Kmaterials to meet their various necessities. So! in brief! it can say that import in



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-utward (oreign emittance and

"nward (oreign emittance.



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?.1 /!!nce Sheet of M/+

#ercantile Bank $imitedBalance Sheet as at 6ecember 71! '55

P-PTN AD6 ASSTS6otes

,--?

=/7$>

,--*

=/7$>

!sh 7 43*411@34- 3*1*354-@5

8ash in hand %"ncluding (oreign 8urrencies& 997!79'!44 94'!5

/!!nce with Other /!ns !nd %in!nci!

nstitutions9 3,*@115-? ,-@,-1,@@

"n Bangladesh 1@@!:'!7 1'

Money !t ! !nd Short 6otice 4 3 5,-------

"nvestments < *"@-1,1*"* *-@@@""?*?

/overnment 4!

Other Assets : ?5@",31"4 @,,@51"3"

6on:/!ning Assets 3 3

$ot! Assets 55@,?*,144@ 44@4-53*1-?

$"AB"$"T"S AD6 8AP"TA$

+i!biities

/orrowings from other /!ns %in!nci!

nstitutions !nd Agents15 ,3,"3,5--- **4,5----

7eposits !nd other Accounts 11 4"3*41*??33 3?13@@-1*"*

8urrent Accounts and -ther Accounts 11.1 4!71!


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Bills Payable 11.'

-(( BA$AD8 SGT "T#S

O6$6(6$ +A/+$(S A

Acceptances and ndorsements 1@ !14@!9@@!555 4!@5!@5L1!555

$etters of /uarantee [email protected] 7!


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Profit and $oss Account

(or the year ended 6ecember 71! '55

6otes,--?

=/7$>,--*

=/7$>

"nterest "ncome 1.1 9!@4!'91!@: 7!$ess "nterest Paid on 6eposits!

Borrowings etc.1: 9!594!:@5!19' 7!14:!':4!''@

6et nterest ncome ?,@,*1*3* 5,*11@-55

"nvestment "ncome 1.9 @41!155!455 @

6irectorsL fees '' '!1


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Provision for Taxation 1'.1.1

etained Surplus 7


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'5 arning Per Share %B6T&79.'9

7 ,--* =/7$>

A. !sh %ows %rom Oper!ting Activities

"nterest eceived 4!9'7!17@!7199!74!947!9@

"nterest Paid %7!9'9!

"ncome Tax Paid %

xchange /ain 94!144!5:9'9!591!19'

-ther -perating "ncome 775!7:!'7 71:!


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$egal xpanses %4!594!'78hief xecutiveLs Salary and (ees %

-ther xpenses %1@:!7':!:1=5-35*,-4-1>

Other Assets =tem:wise> =3,51"5"11> =5*?311?">

Advance 6eposits %1!555!4&%11:!''1&

Stock of Stationery %15!919!:


@'


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66 paid without advice %'95!555&%'!59@!555&

Premium on Bond 3%1'9!957&

#ercantile Bank /eneral Account 3 4'!7'!71

Ad*usting Account 6ebit %'55!1'

7eposit from ustomers 41@4,**-""5"**41-,*1

Other +i!biities on !ccount of

ustomers: :

Other +i!biities ,",51"-*=*1-535,3>

6et !sh 8eceived from Oper!ting

Activities1?-,4*4@,@

,"5,-*-*",

/. !sh %ows %rom nvesting Activities

Sale proceeds of (ixed Assets 451!@@ 3

6ividend eceived '!94@!11:@45!555

PurchaseKSale of Property! Plant and

uipment

%149!7@

%1@


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6et !sh from %in!ncing Activities 33

7 6et ncre!seB=7ecre!se> of !sh !nd

!sh (&uiv!ent =AH/H>1-"-@-,535

15???,34*?

ffect of xchange ate 8hanges on 8ash

2 8ash uivalent 3

( Opening !sh 9 !sh (&uiv!ent@3,,,35*43

**3341,,"5

% osing !sh 9 !sh (&uiv!ent

=7H(>F

1-3?313?,*? @3,,,35*43

?.5 %in!nci! Summ!ry of M/+


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@.- S;O$ An!ysis

very organi+ation is composed if some internal strengths and weaknesses and has some

external opportunities and threats in its whole life cycle. The following will briefly

introduce the customers to the mercantile bank ltd. internal strengths and weaknesses!

external opportunities and threats as " have exposed in the past few weeks.

@.1 S$8(6$0S

Superior &u!ity2 #ercantile Bank $td. provides its customers excellent and

consistent uality in every service. "t is of priority that customer is very satisfied.

7yn!mism2#ercantile bank $td. draws from the adaptability and dynamism it

possesses. "t has uickly adapted to excellent standard in terms of banking

services. #ercantile Bank $td has also adapted state of the art technology to

connect with the world better communication to integrate facilities.

(fficient M!n!gement2all the levels of the management of #ercantile Bank $td

limited are solely directed to maintain a culture for the betterment of the uality of

the service and development of a corporate brand image in the market through

organi+ation wide team approach and open communication system.

St!te of the Art $echnoogy2#ercantile Bank $td utili+es of the art technology

to ensure consistent uality and operation. The corporate office is euipped with

euters screen and S0"(T. All other A6 branches are also euipped with S0"(T

system.

xpertsthe key3contributing factor behind the success of #ercantile Bank $td is

its employees! who are highly trained and most components in their own field.

#ercantile bank ltd provides their employees training both in house and outside

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"n house utility#ercantile Bank $td is free from dependence on ever3disruptive

power supply of our public sources. The company generates the reuired power

through generator fed on diesel.

@., ;(AD6(SS(S

+imited ;orforce2 #ercantile Bank $imited has limited human resources

compared to its financial activities. There are not many people to perform most of

the task. As a result many of the employees are burdened with extra workloads

and work late hours without any overtime facilities. This might cause high

employee turnover that will prove to be too costly to avoid.

Probem n 7eivery2(ew of the products that mercantile bank are offered to its

clients as if =Personal 8redit %P8&> is lying idle due to proper marketing initiative

from the management these products can easily be made available in attractive

ways to increase its client base as well as its deposit status.

Poor "nformation valuation System The performance evaluation system in

#ercantile Bank $imited is faulty. Though it is a private organi+ation! many times

are performance is evaluated in light of political performance.

Poor "nformation (acilityAs it has no library facility as this result! they cannot

provide total information. -therwise! they cannot provide and update their

website.

()tern! forces2As a new bank #B$ wants to follow the rules and regulation of

Bangladesh Bank very strictly! but other banks do not doing the same as they are

facing serious challenges in the market as well as to attaining their target also.

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of the vital sources of employment in the country now. Such government concern

will facilitate and support the long3term vision of #ercantile Bank $imited.

nvest Opportunity2 There is a great opportunity to take new dimension of

banking such as "slamic banking! speciali+ed banking. -therwise! there are many

sectors where this can give special privileges.

(voution of (:/!ning2mergence of 3Banking will open more scope for

#ercantile Bank $imited to reach the clients not only in Bangladesh but also in

the global banking arena. The bank has already entered the world of 3banking

and providing full electronic banking facilities to its customer.

nform!tion $echnoogy2Banking and information technology might give the

bank leverage to its competitors. Devertheless! there are many opportunities for

#ercantile Bank $imited to go for product innovation in lie with the modern day

need. The bank has yet to develop credit card facilities! lease financing and

merchant banking.

@.4 $08(A$S

Merger !nd Ac&uisition2The worldwide trend of merging and acuisition in

financial institution is causing concentration. The industry and competitors are

increasing in power in their respective areas.

Poor $eecommunic!tion nfr!structure2As previously mentioned! the world is

advancing Technology very rapidly. Though #ercantile Bank $imited has taken

effort to *oin the stream of information technology? it is not possible to complete the

mission due to poor technological infrastructure of our country.

nsufficient Attr!ctive Product2#any banks are entering the market with new

and lucrative products. Actually! the market for banking industry is now a buyer3

dominated market. )nless #ercantile Bank $imited can come up with attractive

financial products in the market? it will have to face steep competition in the days

to come.


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1-.- Soci! 8esponsibiity of this /!n

#ercantile Bank $imited has able to manage a sound liuidity positions for it is an

innovative deposits scheme. #B$ has performed well in the foreign trade. The volume of

trade is growing in both import and export business. The bank is increasing its level of

performance! which is evident in the increase of asset utili+ation ratio! net profit! and

asset portfolio. "n observation! we see that #ercantile Bank has a suitable position for its

foreign exchange reserve! liuidity positions and relationship with financial intuitions.

But the bank cannot operate with its full capacity for its conservative nature.

6espite the stiff competition in the banking industry! this bank also considers it essential

for company to behave in responsible manner towards both the environment and society.

This belief exists on two pillars.

(irst! to be successful on a long3term basis! they need to trust their stakeholders!

shareholders! customers! employee patrons and well3wishers and society.

Behaving responsibility towards society and the environment strengthens this

trust.

Second! by taking ecological and social risks and reward into account.

This bank commitment has always been to behave ethically and to contribute towards the

uality of life of our Rpeople! the local community and generally the society. The

corporate social responsibility focuses on

1-.1 Sust!in!be /!ning products


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These have introduced a number of banking products for people who have traditionally

been excluded from the banking services. And also introduced O0oman ntrepreneurs

6evelopment Scheme, for the women who have experience but do not have seed capital

to start business. This #ercantile Bank have also offered S# banking products for

marginal people. Small and marginal savers are encouraged to use banking services and

attractive rates of interest are offered for offered foe small savers as well.

1-., Supporting (duc!tion

This bank offers financial awards to #B# %#asters in Bank #anagement& students at

Bangladesh institution of Bank #anagement %B"B#& who excel in their studies! also

contribute to academic research. (or this reason! this bank contributed B6T 1.55 million

to Bangla Academy for research in Bangal literature.

1-.3 Supporting Sports !nd uture

#ercantile Bank limited has promoted a number of non3profit initiatives. #B$ sponsored

Dational 8hess 8hampionship and Tennis 8ompetition in '55

8/12/2019 Report on Genaral Banking of Mercantile Bank Limi

report on genaral banking of mercantile bank limited

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