An overview of Southeast Bank Limited:

Southeast Bank Limited is a listed scheduled bank in the private sector and
established under the ambit of Bank companies Act 1991 and incorporated as a
Public Limited Company under the Companies Act, 1994 on March 12, 1995.
The Bank started commercial banking operations effective from May 25, 1995.
During the short span of time the Bank had been widely acclaimed by the
business community raging from small entrepreneurs to large business houses
and industrial conglomerates, including the top-rated industrial borrowers for
visionary business outlook and innovative financing solutions. Thus within this
period of time the Bank has been able to create an image for itself and has
earned significant reputation in the country’s banking sector as a bank with
vision.

The Bank has been sponsored by a group of eminent entrepreneurs of the

country headed by Mr. Alamgir Kabir (FCA), Chairman of the board of
Directors. Currently it has 19 branches operating at the strategic location of the
country. In the third generation bank SBL has an excellent financial
performance in the new comers.

Highlights of the Bank:

 The Bank was incorporated on March 12, 1995 as a Public Limited Banking
Company.

 The Bank commenced its business on May 25, 1995 and has already
completed successful 7 years of operation.

 The Bank has been listed with the Dhaka Stock Exchange Limited and
Chittagong Stock Exchange Limited since 1999.

 The authorized capital of the Bank is TK. 500.00 million and paid up
capital is TK. 363.00 Million as on 30th June 2002.

 The Bank has been paying reasonable dividend to the shareholders every
year.

 The Bank has a network of 19 branches at May 5, 2003.

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 The Bank has been maintaining adequate provision against its non-
performing assets.

Special Features of the Bank:

a) It has been performing conventional commercial banking activity and
striving to introduce Islamic Banking functions.

b) It is the pioneer in introducing and launching different customer friendly

deposit schemes to tap the savings of the people for channeling the same
to the productive sectors of the economy.

c) For uplifting the standard of living of the limited income group of the
population the Bank has introduced Consumer Credit Schemes by
providing financial assistance in the form of loan to the consumers for
procuring household durables, which have had encouraging responses.

d) The Bank is committed to continuous research and development so as to

keep pace with modern banking.

e) The operations of the Bank are fully computerized so as to ensure quick,

prompt flawless and services to the customers.

f) The Bank has introduced camera monitor system (CCTV) to strengthen

the security services inside the Bank premises.

Mission of SBL:
After doubling itself in size and soundness Southeast Bank Limited has
been consolidating its position and preparing itself for the new
millennium by upgrading technology, training its work force,
restructuring organizationally and creating a new work culture.

• High quality financial services with state of the art technology

• Fast customer service
• Sustainable growth strategy
• Follow ethical standards in business
• Steady return on shareholders’ equity

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 • Innovative banking at a competitive price
• Attract and retain quality human resource
• Commitment to Corporate Social Responsibility

Establishment of Southeast Bank Ltd:

Southeast Bank Limited is a scheduled commercial bank in the private sector

established under the ambit of Bank Company Act, 1991 and incorporated as a
Public Limited Company under Companies Act, 1994 on March 12, 1995. The
Bank started commercial banking operations on May 25, 1995. During this
short span of time the Bank is successful in positioning itself as a progressive
and dynamic financial institution in the country. The bank had been widely
acclaimed by the business community, from small entrepreneurs to large
traders and industrial conglomerates, including the top-rated corporate
borrowers for its forward - looking business outlook and innovative financial
solutions. Thus within this very short period of time it has been able to create
an image and earn significant reputation in the country's banking sector as a
Bank with Vision. Presently, it has 30 branches. .

The Government of Bangladesh has licensed Southeast bank Limited to

provide banking and financial services and facilities in Bangladesh. In view of
the above, the Bank within a period of 10 years of its operation achieved a
remarkable success and met up capital adequacy requirement of Bangladesh
Bank.

It has been growing fast as one of the leaders of the new generation banks in
the private sector in respect of business and profitability as it is evident from
the financial statements for the last 11 years.

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Organizational Structure of Southeast Bank Ltd:

Southeast Bank divides the whole Bangladesh into four potentials divisions
and operates their banking activities and provides services for the consumers.

Management Structure:

4
 Organogram of Southeast Bank Ltd:

MD and President

DMD 1 DMD 2

SEVP

EVP

SVP

VP

First VP

SAVP

AVP

SPO

PO

EO

SO

Officer

Junior Officer

Board of Directors of Southeast Bank Limited:

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The board members are strong and prominent industrialist and business
entrepreneurs of the country. Each and every one has their own several
businesses in the field of manufacturing and services. Among the members
some of them are appointed as Chairman in some needy organization of
Bangladesh Government to accelerate and expand its business. The 15-member
board has the strongest teamwork to accelerate its business in the banking
sector.

Mr. Alamgir Kabir, a prominent industrialist, business entrepreneur and

philanthropist are the present Chairman of the Board of Directors of Southeast
Bank Limited. He is the pioneer industrialist, Chairman, Managing Director
and an active social worker of the country. Several numbers of Schools,
Colleges, Madrasas, Mosques and Roads are constructed and funded in
university by his contribution in the country.

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List of the Board of Directors:

01. Mr. Alamgir Kabir - Chairman

02. Mr. Ragib Ali - Vice Chairman
03. Mr. Muhammad Abul Kashem - Director
04. Mr. Azim Uddin Ahmed - Director
05. Mr. Tahnoun A. Harun - Director
06. Mr. Md. Akikur Rahman - Director
07. Mr. Syed Shahid Ali - Director
08. Mr. M. A. Ahad - Director
09. Mr. Sirat Monira - Director
10. Mrs. Jusna Ara Kashem - Director
11. Mrs. Duluma Ahmed - Director
12. Mrs. Rehana Rahman - Director
13. Mrs. Rabeya Khatun Chowdhury - Director
14. Mr. A.H.M Moazzem Hossain - Director
15. Dr. Ziadi Sattar - Director
16. Mr. Mahbubul Alam - M an ag in g D irecto r

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SBL has 06 individual departments to perform different banking
function operation and many legal affairs. These are:

Division of Bank

Administration Division

The division controls all the administrative activities of the bank.

General Banking Division

Activities regarding general banking are cash affairs, opening new branches,
customer service and legal affairs.

Audit and Inspection Division

The role of this division is to conduct extensive visit to various branches all the
branches and check and observe their performances and take notes on the
issues, which they think are not fit to the originality.

Credit Division

Various types of loans and advances are initiated, followed up and recovered
through this division.

Financial Control Division

Central accounts division does all the A/Cs related activities here. All the
branches send their monthly and daily statement to the Head Office. This bank
is using PC Bank 2000 for their electronic data management system.

International Division

To deal foreign exchanges business, which is known as international division.

Management Strategy
The deposit schemes of SBL include current, savings and fixed deposits. In
Line with other banks in the peer group this bank has also introduced several
attractive savings packages like Pension Savings Scheme (PSS), Education
Savings Scheme (ESS), Marriage Savings Scheme (MSS), and savers benefit
deposit scheme. SBL has a wide Cluster of lending packages, which include
commercial lending, working capital, house building loan, small medium and

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large scale industry loan, loan against export, and other consumer loans. SBL
has always been one of the major players in the country in promoting
diversified banking services. Over the years it has provided sincere and timely
services through the innovation of multifarious modern banking products. The
major areas where SBL provides financing facilities are corporate banking,
micro credit financing, investment in leasing and house building financing
companies and various loan syndication. SBL has introduced SWIFT to
facilitate quick fund transfer and Reuter to facilitate foreign trading. With eight
other banks this bank gives its customers the facilities of shared ATM services
throughout day and night; i.e. 24 hours banking.

The business strategy of SBL is to strengthen its traditional lending in small

retail business, following a conservative lending approach in the areas of large
and medium industrial ventures. The management approach of maintaining
loan quality is also appreciable. Although Bangladesh economy is led by
garments sector, it is worth noting that the exposure of the bank in this sector is
negligible. Therefore, the existing depressed scenario of garments will have
little impact on the bank. The bank is constrained by limited branch network.

Management Information System

Presently the bank uses PC Bank/M, a branch banking software developed by
Leads Corporation developed on SQL on Windows platform. The Head office
and the branches use the software for book keeping, automatic interest
calculation, daily transaction listing and audit trails, auto maturity and auto
renewal of FDRS, automatic integration of customer’s ledger and general
ledger, printing of General Ledger position including balance of subscribers,
monthly income and expenditure position etc. The bank has joined the shares
ATM Network Bangladesh offered by ETN along with eight member banks.
This service is presently available in Dhaka, Chittagong and Sylhet. SBL is a
member of SWIFT. It has also installed Reuter System at the head office to
have live access to information from international money market for detailed in
Foreign Exchange. But from the viewpoint of ideal requirement for a modern
bank, completing with international banks, the IT facilities of SBL need further
improvement.

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Types of Account:

• Current Deposits Account:

• Savings Account:

• Short Term Deposits (STD):

• Fixed Deposit Receipt (FDR):

• Monthly savings scheme:

• Monthly income scheme:

Characteristics of different accounts of Southeast bank:

Current Deposits Account:

The characteristics of the current account are different from savings account. In
current account there is no interest on the current account. The depositor can
withdraw the money from any time when he needs money, but withdraw at must be in
transaction hour. The minimum limit of opening a current account in the Southeast
Bank is TK.5000. But in order to enjoy the facilities of current account an account
holder must pay TK. 2000 per year as service charge to the bank.

This kind of account is most suitable for private, individuals, traders, merchants,
importers and exporters, mills and factory owners etc.

There are different types of current account. They are and their requirements are:

Individual current account:

a. Introducer
b. Photograph attested by the introducer
c. Passport/commissioner certificate
d. Nominee signature & photograph

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Proprietorship Account:
a. Introducer
b. Photograph attested by the introducer
c. Passport/commissioner certificate
d. Nominee signature & photograph
e. Trade license
f. TIN certificate
g. Seal

Partnership Account:
a. Introducer
b. Photograph attested by the introducer
c. Passport/commissioner certificate
d. Trade license
e. TIN certificate
f. Partnership Deed registered with joint stock company
g. Seal

Private Limited Company Account:

a. Photograph of directors & signatories
b. Passport/commissioner certificate
c. Trade license
d. TIN certificate
e. Certified copy of Memorandum & Articles of Association
f. Certificate of incorporation
g. Bio data of each director or list of Directors as per return of joint stock
company with signature
h. Board Resolution for opening Account with the Bank
i. Seal

Public Limited Company Account:

a. Photograph of directors & signatories
b. Passport/commissioner certificate
c. Trade license
d. TIN certificate
e. Certified copy of Memorandum & Articles of Association
f. Certificate of Incorporation
g. Certificate of commencement of Business
h. Bio data of each director or list of directors as per return of joint stock
company with signature
i. Board Resolution for opening Account with the Bank
j. Seal

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Account:
Southeast Bank provides savings account primarily for
Small - scale savers. The main objective of this account is to boost up of thrift. Hence,
there is restriction on with drawers in a month. It is a monthly product. Heavy
withdrawn are permitted only against prior permission. The bank gives 6% interest
rate against savings account and also charge tk 1000 per year as service charge.

o Minimum amount of tk 5000 is required as initial deposit.

o Frequent withdrawal is not encouraged.

o Normally withdrawal is not allowed more than ¼ Th of the balance.

o 7 days notice is required for withdraw of large amount.

o The rate of interest is 6% on this account.

Short Term Deposits (STD):

In short term deposit account, the deposit should

be kept for at least six months to get the interest. Southeast Bank offers 5.5 %
interest on STD account. Normally various big companies, organizations
Government Departments keep money in STD account. For this type of account
frequent withdrawal is discouraged. Deposit should be kept for at least seven days
to get interest prior notice is required for withdrawal at the money from STD
account.

Fixed Deposit Receipt (FDR):

Fixed deposits are the deposits in which an

amount of cash is deposited in bank for a fixed period specified in advance. These
deposits are time deposits. Normally the money on a fixed deposit is not repayable
before the maturity data of a fixed period. At the time of opening the deposit
account, the banker issues a receipt acknowledging the receipt of money on
deposit account. It is popularly known as FDR. Southeast Bank gives different
interest rate for different interest rate for different period of such as-

But if the account holder is 60 years old then he will get interest rate 13 % and his
designation will be senior citizen.

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 Period Interest
1 month 11.50 %
2 month 11.75 %
3 month 12.50 %
4 month 12.50 %
5 month 12.50 %

Monthly savings scheme:

A small savings today will provide account

holder comfort tomorrow. It is a monthly savings scheme that secures people is
future with ease.

Savings period & monthly installment rate:

The savings period is for 5,8,10

on 12 years. Monthly installment rate is tk 500/-, 1000/-, 2000/-, on 5000/- up to
50000/-.

Interest rate of monthly savings scheme:

Southeast Bank introduces this
scheme for the middle class people. On the basis of this scheme, people can saves
a big amount & can reinvest their big amount in another scheme. As a result, it
helps to accumulate a big capital, the market. The interest rate of this scheme is
12.50 %.

o Monthly installment deposit

o The savings amount is to be deposited within the 10th of every month. In case
holidays the deposit amount is to make on the following day.

o The deposits may also be made in advance.

o The depositor can have a separate account in the bank from which a standing
instruction can be given to transfer the monthly deposit in the scheme’s
account.

o In case the depositors fail to main the monthly installment in time, then 5 % on
over due installment amount will be charged. The charge will be added with
the following months installment and the lowest charge will be tk 10/-.

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 Matured Amount (Taka)
Payment on Maturity
Monthly installment (Tk 3 years 5years
500 on multiple up to tk
50000)
500/- 20700/- 38135/-
1000/- 41400/- 76270/-
5000/- 207000/- 381350/-
10000/- 414000/- 762700/-
50000/- 2070000/- 3813500/-

In case of urgent, depositors can avail a loan of maximum 80 % against the lien of
MSS amount deposited.

Other terms & Conditions:

One can close his account before maturity.

If the monthly installment remains unrealized due to insufficient balance for four
consecutive months , the account will be automatically closed.

In case of premature & automatic closure of the account the account will be settled as
per the terms detailed below:

Relationship Rate of interest

Less than 12 installments. Nil
12 on more but less than 36 installments. Prevailing saving rate.
36 on more but a than 60 installments. 3 years matured amount rest as per
prevailing savings rate.

Monthly income scheme:

A monthly income scheme that really manes good sure.

Sure investments for steady returns are:

1. Highlights of the scheme.

2. Minimum deposit tk 25000/-.

3. Higher monthly income for higher deposit.

4. The scheme is for a 3 or 5 years period.

5. Monthly income will be credited to the depositor’s account on the 5th each
month.

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 Deposit account Income
Tk. 25,000 250
Tk.50, 000 500
Tk.1, 00,000 1,000
Tk.2, 00,000 2,000
Tk.5, 00,000 5,000
Tk.10, 00,000 10,000

Double Benefit Scheme:

Southeast bank have different types of account rather

than traditional account. This account secures a capital after a specified period and
also provides benefit at the death of the account holder. If a depositors deposit Tk
100000 now he will get Tk 200000 after 6 years. But if the depositors die after
anytime after deposit money then his nominee will get double immediately that is
of death of depositors.

Types of Loan:

Bank lending is important for the economy in the sense that it can
simultaneously finance all of the sub-sectors of financial arena, which
comprises agricultural, commercial and industrial activities of a nation.

By the primary security, we mean the financial claim of holder against the real
sector of economy. In banking sector, the financial claim of bank against
issuer, (called investors, borrowers and deficit units). The credit department of
the bank performs this core function of a bank. In This case, the relationship of
bank and customer is that of the creditor and debtor.

The word “CREDIT” is derived from Latin word “credo” meaning ‘I believe’.
In general credit means the granting of a period of time by a creditor to a debtor
at the expiration of which the latter must pay the debt.

From a banker’s point of view, credit is the confidence of the lender on the

15
ability and willingness of the borrower to repay the debts at a future date.

The credit policy of any banking institution is a combination of certain

accepted, time tested standards and other dynamic factors dictated by the
realities of changing situations in different market places.

The accepted standards relate to safety, liquidity and profitability of the

advance whereas the dynamic factors relate to aspects such as the nature and
extent of risk, interest on margin, credit spread and credit dispersal. In
formulating a credit judgment and making quality credit decision the lending
officer must be equipped with all information needed to evaluate a borrower’s
character, management competence, capacity, capital, ability to provide
collaterals and external conditions which may affect his ability in meeting
financial obligation.

Types of Loans and Advances Offered By SBL:

SBL offers the following types of loans and advances:
• Secured Overdraft (SOD)
• Loan (General)
• House Building Loan (Staff)
• Demand Loan
• Transport loan
• Industrial Credit
• House Building Loan (General)
• Transport Loan (Staff)
• Cash Credit (Hypothecation)
• Past Due Bills.
• Loan against Trust Receipt (LTR)

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 Different types of interest rate charged on advances offered by SBL:

Types of Advances Interest Features

Rate

Secured Overdraft 13% -- 15% Continuous advance facility given for one year but can be renewed
(SOD) after the expiry of the time. Given against I.C.B. unit, FDR,
Sanchaypatras and Work Orders.

Loan (General) 12% -- 15% Given against Personal guarantee, Hypothecation of goods and land
and building.

House Building 7% Given against Personal guarantee, land and building.

Loan (Staff)

House Building 15% Given against Personal guarantee, land and building.
Loan (General)

Transport Loan 7% Given against Personal guarantee and hypothecation of vehicle.

(Staff)

Transport Loan 15% Given against Personal guarantee and hypothecation of vehicle.
(General)

Demand Loan 7% -- 14.5% Given against Personal guarantee and cash collateral securities.

Industrial Credit 12.5% -- Given against land and building along with machinery, personal
15% guarantee of Directors and hypothecation of raw materials.

Cash Credit 11% -- 15% The bank sanctions a short-term arrangement by which a customer is
(Hypothecation) allowed to borrow money up to a certain limit for a certain time. Given
against Registered mortgage of land and building, hypothecation of
goods and personal guarantee of Directors.

Past Due Bills 15% Given against Bills Receivables.

Loan against Trust 11% -- 15% Advance allowed for retirement of shipping documents and release of
Receipt (LTR) goods imported through L/C. the goods are handed over to the
Funded Credit Non-Funded
Facility importer under trust with the arrangement that saleFacility
Credit proceeds should be
deposited to liquidate the advances within a given period. Given
against Bills Receivables, hypothecation of imported goods, Trust
Receipt, personal guarantee, registered mortgage of land and building.
Overdraft Cash Credit Letter of Credit Letter of
Term Loan
(OD) (CC) (L/C) Guarantee

SOD TOD Different advances offered by SBL

CC CC
Pledge Hypothecation

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House Staff Loan Staff House
Transport Loan Project
Building against Building
Loan General Loan
Loan Provident Fund Loan
Different Types of Credit Facilities:

All types of credit facilities can be broadly classified into two:

 Funded and

 Non funded

6.1 Funded Credit:

A Funded credit facility that a bank offers to a customer, result in actual
disbursement of cash to the customer or to any designated supplier of the
customer. In order to provide funded facility to a customer, the bank has to
incur real liability before hand, i.e., the bark has to arrange for funds primarily
through accepting deposits or otherwise. Funded facility affects the balance
sheet of the bank both in terms of increase of liability and increase of assets.
Funded credit facilities may be classified into four types:
I) Loans
II) Cash Credit
Ill) Overdraft and
IV) Bill purchased & discount.
Loans may be a ‘demand loan’ or ‘time loan’ or term, loan’. Demand loan is
payable on demand which is allowed for a short period to meet short-term

18
 working capital need. Time loan is payable within one year and term loan is
allowed for one year to five years, usually for capital expenditure such as
construction of factory building, purchase of new machinery, modernization of
plant etc

Cash Credit facility is allowed against pledge or hypothecation of goods.

Under this arrangement the borrower can borrow any time within the agreed
limit and can deposit money to adjust whenever he does have surplus cash in
hand.

Overdraft is an arrangement between a banker and his customer by which the

latter is allowed to withdraw over and above his credit balance in his current
account. This is a temporary accommodation of fund to the client.

Academically, basic difference between cash credit and overdraft is that

businessmen use cash credit for longer period on yearly renewal basis, while
overdraft is allowed occasionally and for short-term duration.

Bill discounted and purchased:

o Discount:

Banks allow advances to the clients by discounting bill of Exchange / pro. note
which matures after a fixed tenor. In this method, the bank calculates and
realizes the interest at a prefixed rate and credit the amount after deducting the
interest from the amount of instrument.

o Purchase of bill:

Banks also make advances by purchasing bills, instead of discounting, which

are accompanied by documents of title of goods such as bill of lading or
railway receipts etc. In this case the bank becomes the purchaser/ owner of
such bill, which are treated as security for the advance. This is allowed
primarily relying on the credit worthiness of the client.

19
 Other important funded advances / facilities are:
i) Against import bills (Bills under L/C, i.e., BLC)
Advance against Bills under Letter of Credit are originated from the
lodgment of shipping documents received from foreign banks against
letter of credit established by the bank.
ii) Loan against Imported Merchandise (LIM)
Under loan against imported merchandise bank release the imported goods
through the nominated clearing agent of the bank. In this case bank holds the
possession of the goods. Importer takes delivery of the goods from the bank’s
warehouse against payment. It is one type of forced loan.
iii) Trust Receipt (TR)
Advance against Trust Receipt to the client are to release shipping
documents for taking delivery of merchandise, which is hypothecated, to
the bank.
iv) Packing Credit
It is one type of Pre-Shipment export finance. Packing Credit is a short-
term credit granted by a bank to an exporter to facilitate purchase of raw
materials for the purpose of manufacturing processing, packing and
exporting the finished goods. The credit is granted after the evidence of
a letter of credit or a firm contract in favor of the borrower and against
the security of inventory purchased by the borrower.

Non-Funded Credit:
Non-funded credit facility to a customer refers to a bank’s commitment to a
third party on behalf of the customer. The commitment itself constitutes facility
but does not involve cash outflow from the bank. The bank’s commitment
essentially states that in the event of occurrence/non occurrence of a particular
event, within a particular date, due4 to a particular reason or reasons, the bank
shall pay a specific sum of money to the third party upon claim in a particular
manner. Though these types of facilities are primarily none funded in nature
but at times it may turn into funded facility. As such a liability against these
types of credit facilities are termed as ‘contingent liability’ and do not affect
the balance sheet of the bank at the time of commitment but contain the

20
possibility. The non-funded facilities are:
Letter of Credit:
A banker’s documentary credit is an instrument or letter issued by a bank on
behalf of and for the account of the buyer of the merchandise. By this
instrument the bank undertakes that the bill(s) of exchange of the beneficiary
(the seller of the merchandise) drawn on the buyer, or on the issuing bank, or
on another bank designated in the instrument, strictly according to the
conditions stipulated in the instrument, will be dully honored by acceptance
and/or payment depending upon the issuance of the bill(s) of exchange in
questing

Guarantee
In banking, it is an irrevocable obligation of a bank to pay a certain sum of
money in the event of non-performance of a contract by the third party. The
basis of guarantee is always a contractual relationship between principal debtor
(account holder) and creditor (beneficiary), which is either a contract that has
been definitely concluded or a relationship in its pre-contracted as is the case
with the tender guarantee. This relationship is referred to as the principal or
underlying relationship or contract. The contract of guarantee is independent of
this underlying relationship.

Functions of Credit Department:

The followings are the functions of credit department:
1) Interviewing the prospective borrower.
2) Receiving the credit information assembled and placed in the customer’s
credit file.
3) Processing and sanctioning of credit facilities to the customer.
4) Disbursement of credit facilities to borrowers in accordance with
established procedures.
5) Recording of credit facilities.
6) Preparing vouchers pertaining to credit facilities disbursed and recording
of relevant entries.
7) Controlling of securities and proper custody of documents.
8) Follow up and recovery of credit as per due date.

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 9) Computation and checking of interest accrued on loans and advances
and recording entries thereof.
Credit and Marketing Fundamentals:
a) To place a high priority on the quality of credit exposure, new proposals
must meet Bank’s credit criteria and existing portfolio should be under
constant review for improving risk positions.

b) Maximization of profit is the basic aim of the bank, as such every profit
opportunity should be explored and professional skills be employed in this
direction.

c) Growth of the size of customer base through constant alertness towards

profitable business opportunity.

d) To avoid unnecessary wastage of time and energy, clear, concise and

summary type communications should be used.

e) To be thoroughly familiar with the Bank’s policies and functions.

f) To put every effort in reducing and containing the size of classified

advance portfolio.

g) To keep the expense burden of credit operations to he barest minimum

and endeavor to improve the cost efficiency of credit operation.

h) To contribute one’s best in all matters where his approval, concurrence

or other action is involved.

i) To apply strong commonsense in all credit matters by raising question-

Does this makes sense? Is there a better way? How to improve on this?

j) To avoid all temptations which may jeopardize or compromise the

Bank’s risk assets?

The Initial Loan Interview;

The initial interview is generally held at the officer’s bank or, on occasion, at
the client’s business. The objective of an initial loan interview is to ascertain
whether the loan request warrants further consideration (and the additional time
and expense) that is entailed in a credit investigation, follow-up interviews and
financial statement analysis.

22
 The beginning of a loan interview sets the tone for all that follows. The credit
officer of SBL should establish a relaxed but business like atmosphere. The
credit officer should greet the client with a warm handshake, introduce him or
herself by name and ask the client fell ill at ease, which can hinder
communication during the interview. A small amount of light conversation
before the interview can be helpful. There is, however, a distinction between
being friendly and being unprofessional. Referring to a client using a flip term
such as buddy may perhaps be well intentioned but it is certainly
unprofessional.

Process of handling loans:

Getting loan proposal Collecting Evaluating project

from the Client information and proposal

Evaluating
by agent
About Client About Projects

Legal Evaluating
assessment Collateral

Supervision Disbursing Sanctioning and Decision Branch level

of the loan loan Documentation evaluation
of loan

Recovery of
the loan Head office Branch
Level Level

Usual Legal
recovery recovery

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Functions of Southeast Bank Ltd:

Banking Operation of Southeast Bank Limited:

General Banking:
This is the department where the most transaction of a commercial bank takes
place. This department includes:
♦ Deposit Banking
♦ Cash Department
♦ Transfer of Remittance through Demand Draft (DD), Telegraphic
Transfer (TT), Pay Order (PO), Outward Bills for Collection (OBC),
Inward Bills for Collection (IBC), Bankers Cheque (BC) and Security
Deposit Repayment (SDR).
♦ Customer Relation and
♦ Other parts of General Banking
♦ Clearing and reconciling different balances through Bangladesh Bank
Human Resources Development:
Human is the resources that were developed through professional training and
orientation courses that are organized by Bangladesh Institute of Bank
Management (BIBM), other professional institutions and officers were also
send to different institution and seminar held abroad under the auspicious of the
banks a major correspondents. Moreover staffs were also update through on the
job training, which is the integral part of the job. The various function of a
bank (in branch) is given in the following:
Cash Department:
This is the department where all sort of transaction are considered in cash. Cash
is receipt from the client to deposit to their account or to the concern client for
transaction as well as disbursement.
Remittance:
Remittance is the main part of general banking. The banks receipt and disburse
various types of bills through remittance within the country. Remittance is
another important sector of Southeast Bank Limited from where it earns a lot of
foreign exchange every year. Remittance means to send or transfer money from
one place to another. Against this bank charges some commission from the

24
client. Moreover bank charges commission on the basis of the bills amount.
Mainly there are two types of remittances they are Inward remittance and
Outward remittance.
a. Inward Remittance:
Inward remittance deals with funds from overseas. It can be
i. Cash remittance through TT (Telegraphic Transfer)
ii. Remittance due to export

b. Outward Remittance:
Outward remittance is fund remitted to overseas on behalf of performed in the
following way:
i. Telegraphic Transfer
ii. Demand Draft (DD)
iii. Mail Transfer
iv. Remittance due to import.

Types of Remittance are:

 PO (Pay Order)
 TT (Telegraphic Transfer)
 DD (Demand Draft)
 IBC (Inward Bills for Collection)
 OBC (Outward Bills for Transfer)

Pay Order (PO):

Pay Order is a system of making payments that were drawn on the bank issuing
them. There is no sort of fraud or any of cheque bouncing. A pay order is
issued within the city, which are the members (Bank) of the Bangladesh Bank
clearing house (metro city). It is issued the client, who have the account
relationship with the bank, by debiting the clients account and credit bills
account payable. In case of no-customer, pay order amount of commission
were receipt in cash and kept in the daily suspense account until payments
made through clearing house.
When the clients submit PO in their bank, the bank then send it to the
clearinghouse for collection. And as it was receipt by the member (issuing

25
bank) of the clearance house, then they verify it and send bank to the respecting
bank and payment made by debiting the accounts payable. Entering in Boucher
through fund transfer system held these transactions.
Demand Draft (DD):
DD is same as PO but it can be drawn other branches of Southeast Bank, Sonali
Bank and Bangladesh Bank. Usually DD is within the country were as PO
within the city.
Telegraph Transfer (TT):
Telegraph is one of the fastest ways of transferring fund. All incoming out
going telexes are in the telex room and test key examined by a designated
officer. Payment of incoming TT’s is made either issuing DD or PO depending
upon the client’s requirement. All the time TT’s were issued to clients, who
have account relationship the bank. No TT’s were accepted unless they have
the account in the bank.
Sanchayapatras:
Sanchayapatras are other types of business of the bank or any other financial
institution, who gives interest on the basis of deposit and maturity. There are
various types of sanchaypatras on the basis of maturity and amount. They are
given below:
 Eight years Protirakkha Sanchaypatra (PSP)
 Five years Bangladesh Sanchaypatra (BSP)
 Six-month interest bearing Sanchaypatra (SP)
 Three-month interest bearing Sanchaypatra (SP)
Other Services:
SBL has other services and products like:
o Locker Services
o Grameen Phone Bill Collection
o Convertible Taka Account
o Foreign Currency Account
o Different Consumer Savings Schemes
 Pension Savings Schemes (PSS)
 Education Savings Schemes (ESS

26
  Marriage Savings Schemes (MSS)

Foreign Exchange:
Types of Foreign Exchange:

There are many types of services regarding foreign exchange provided by the
SBL. These can be segregated in to three categories:
• Export,
• Import,
• Foreign Remittance.
It is important to know about the process of export and import.
• Opening Letter of Credit (L/C).
• Receiving goods and services from overseas through import.
• Sending goods and services to overseas through export.
• Issuing travelers cheque.

Letter of Credit:
Letter of Credit is an agreement between an importer and the bank (issuing
bank). Documentary Letter of Credit is a Conditional Undertaking of Payment.
The bank provides letter of credit in order of purchase goods from the exporter.
The bank act on behalf of the both clients to deal with the exporter and the
clients make the payments after receiving the good accordingly.
To open an L/C the following things are required:
• Current Account holder with good transaction
• IRC (Import Registration certificate)
• Import Policy.
• Letter of Credit authorization form duly registered with.
• Contract/Indent.
• Insurance Coverage.
• Contingency Liability Boucher
• L/C Registration.

Negotiating Documents:
A negotiation of documents under L/C is the usual method of finance by
exporter at the post shipment stage. In this system, after shipment of goods the
exporter present relative documents to the negotiating bank for negotiation. An
exporter is required to submit the following documents for negotiation.
• Bill of exchange: Exporter generally used it.
• Bill of Lading: Bill of lading is a shipping document that the
shipping agencies issued by captain of the ship after receiving the
goods.
• Commercial Invoice: It generally contains the buyer name and
address, seller name and address, detail description of the goods,
unit and total amount.

27
 • Certificate of Origin: This is the document of the goods origin. It
provides the chamber of commerce or the govt. authorization
organization.
• Packing List: A list of goods exported by the exporter company.
• Insurance Coverage: Provided insurance companies after covering
insurance.
• IMP form: Provides by Bangladesh Bank.

Export:
Export is the process of selling goods and services to other country. It has an
immense contribution to generating income for the bank. The total volume of
export handled by bank in 2001 was Tk. 2,675.05 million against Tk. 1,319.51
million in 2000.
Requirement for the Export Procedure:

To export any goods or services to overseas, the exporter should have to attach
the photocopies if the following documents with the update the export
registration certificate (ERC).

• Bill of Exchange
• Commercial Invoice
• Certificate of Origin
• Packing List.
• Insurance Coverage.
• Beneficiary certificate where the exporter tells about the goods want
to export.
• Beneficiary mail address including fax no

28
Opening back to back L/C:

Back to back L/C is a letter of Credit backed by the original L/C of mother L/C
to open a new L/C. The bank provides it to the exporter to import the raw
material from overseas in order to produce the exportable commodity for the
importer. It encourages the exporter to produce more exportable goods. In this
case the bank offers some additional facilities i.e. 120 days to pay back the
money where in case of Import; L/C is issued for 60 days.

Import:

In line with the experience of developing countries import payments of

increased over the years. The total import business handle by the SBL in the
year 2001 was Tk. 12,187.37 million and in the year 2000 it was Tk. 11,239.14
million. The imported items were mainly industrial raw material, consumer
goods, fertilizer, machinery, old ships for scrapping, recondition car etc. The
growth in import business was increased to 8.44% to previous year.

Import formalities:

To import an item the importer makes an agreement with the supplier. If

supplier have any local agent, then importer use mail or fax. The importer
holds a valid import registration certificate (IRC) to import goods in
Bangladesh provided that the goods are permissible item as per govt. import
policy. To import anything in large quantity L/C is the easiest way of
transaction, where both party gets benefit. This import transaction are
conducted with the help of documentary letter of credit established by the
importers bank in favor of the supplier and advise through an agent bank
located in the supplier’s country.

29
L/C Margin:

L/C margin varies customer-to-customer and bank-to-bank. Generally it

depends:
 Relationship between banker and customer
 Seasonal factor
 Feature of goods

Special Functions of Southeast Bank Limited:

ATM:

This is the fastest growing modern banking concept. SBL should grab this
opportunity and take preparations for launching ATM. Since SBL is a local
bank, they can form an alliance with other contemporary banks in launching
the ATM. Standard Chartered has already successfully launched the ATM.

Credit Cards and Tele banking:

These are the new retail banking services provided by the foreign banks. SBL
can evaluate the option of launching credit cards and Telebanking system.
There are the recent developments in the banking sector and SBL should also
evaluate the option of doing it.

On-line banking:

SBL should move towards the on line banking operations. It is high time that
they should go for this because the foreign banks as well as some local banks
are already in to the on line banking operations.

30
Introduction of SBL’s own savings scheme:

This can be another new retail product for SBL. They can start introducing
their own savings scheme or pension scheme for different professions. For
example, Standard Chartered Grindlays has SYFANZ and PLANZ and
Standard Chartered also has similar offers. Therefore for attracting more
depositors, the management should consider the option of its own savings
scheme.

 Corporate scheme:

This is an innovative way of attracting corporate clients to the bank. Instead of

providing CCS to executives of various companies, SBL can introduce a
special scheme for corporate officers for the purchase of consumer durable at
an attractive interest rate. In this way, the bank will be able to attract a lot of
corporate clients and in the long run the bank would be benefited by getting
business for the bank from the corporate clients in terms of L/C, Loans and
advances etc. for example, officers of BTC, Lever Brothers, Square,
Beximco can be entered in to the corporate scheme.

31
SWOT Analysis

SWOT Analysis is an important tool for evaluating the company’s Strengths,

Weaknesses, Opportunities and Threats. It helps the organization to identify
how to evaluate its performance and scan the macro environment, which in turn
would help the organization to navigate in the turbulent ocean of competition.

Strengths
Company Reputation

SBL has already established a favorable reputation in the banking industry of

the country particularly among the new comers. With in a period of seven
years, SBL has already established a firm footing in the banking sector having
tremendous growth in the profits and deposits. All these have leaded them to
earn a reputation in the banking field.

Sponsors:

SBL has been founded by a group of prominent entrepreneur of the country.

Each of them belongs to large industrial conglomerate of the country Mr. Ragib
Ali, head of the Board, Mr. Yusuf A. Harun former president of FBBCI and
Mr. Azim Uddin Ahmed, Vice Chairman of the bank.

Leadership:

The Management Executives of Southeast Bank is headed by Mr. Syed Abu

Naser Bukthtear Ahmed, President & Management Director, who has more
than 32 years of banking experience in Bangladesh and overseas.

To perform banking operation and other banking related activities Mr. M. A.

Muhith, Deputy Managing Director and of Human Resources Division,
working actively here for growth, expansion and diversification.

Top management:

Like the CEO and DMD the top management of the bank is also a major
strength for the SBL and has contributed heavily towards the growth and
development of the bank. The top management officials have all worked in
reputed banks and their years of banking experience, skill, and expertise will

32
continue to contribute towards further expansion of the bank. At SBL, the top
management is the driving force and the think tank of the organization where
policies are crafted and often cascaded down.

Market share profitability:

As already mentioned earlier, SBL has established a fin-n footing among the
new comers in the banking industry of Bangladesh. They have already
achieved a high growth rate accompanied by an impressive profit growth rate
in 2000. The number of deposits and the loans and advances are also increasing
rapidly.

 Strong financial resources:

Southeast Bank Limited has strong financial resources to run the banking
business. In the year 2000 the capital fund of the bank including paid up
capital, reserves, retained earnings stood at around Tk 56.00 core. It is expected
that in the near future the banks financial resources will get much stronger.

Facilities and Equipment:

SBL has adequate physical facilities and equipment’s to provide better service
to the customers. The bank has computerized banking operations under the
software called PC Bank. Counting machines in the teller counters have been
installed for speedy service at the cash counters. Computerized statements for
the customers as well as for the internal use of the banks are also available. All
the branches of SBL are equipped with telex or fax facilities. The Head Office
and the Dhaka & Chittagong based branches also have Internet facilities.

Impressive Branches:

SBL has earned a reputation in the banking sector for establishing impressive
branches. The Gulshan Branch, Dhanmondi Branch, KawranBazar Branch and
Uttara Branch and the Agrabad Branch are the most lavish and impressive
branches of SBL. This creates a positive image in the minds of the potential
customers and many people get attracted to the bank. This is also an indirect
marketing campaign for the bank for attracting customers. The other branches
of the bank are also impressive and are compatible to foreign banks.

33
Interactive Corporate Culture:

SBL has an interactive corporate culture. Unlike other local organization,

SBL’s working environment is very friendly, interactive and informal. There
are no hidden barriers or boundaries while interactive among the superior or the
subordinate. The environment is also lively and since the nature of the banking
job itself is monotonous and routine, SBL’s lively work environment boosts up
the sprit and motivation of the employees. At the same time, music system in
the office also plays a key role in making the environment lively.

Team work at mid level and lower level:

At SBL’s mid level and lower level management, there are often team works.
Many jobs are performed in-groups of two or three in order to reduce the
burden of the workload and enhance the process of completion of the job.
People are eager to help each other and people in general are devoted to work.

 Relatively less intervention from the Board of Directors compared to

other banks:

At SBL, the scenario is relatively better in terms of intervention of the board in

management practices compared to other banks. Though, in a private bank
there are often undue interventions from the board regarding the processing of
credit facilities. However, at SBL the scenario is somewhat better and has
fewer interventions from the board in the management practices. However,
certain interventions from the board are inevitable in a Bangladesh Bank.

Weaknesses:
No Vision:

The greatest irony is that despite claiming to be “A Bank with Vision” which is
used as its advertising platform and mission statement, the bank as of today has
failed to develop a prescribed set of vision as it embarks in to the cyber age of
twenty first century. The bank still could not identify the core area of business
and where it should concentrate in its business, as the new millennium is about
to start. The bank does not have any long-term strategies of whether it wants to
focus on retail banking or become a corporate bank. Till now, the bank is in a
nowhere situation. Unofficially, retail banking is discouraged but at the same
time the bank is not being able to pull itself away from retail banking. At the

34
same time SBL has failed to be a full-fledged corporate bank. The path for the
future should be determined right now.

Advertising and Promotion:

This is a major set back for SBL and one of its weakest areas. SBL does not
pursue an aggressive marketing campaign. It does not expose itself to the
general public and are not in the lime light unlike other banks. Other than the
neon sign at Farm gate Over Bridge, SBL does not have neon sign or any
advertisement in the city. As a result people are not aware of the existence of
this bank.

Poor Recruitment:

During its inception, SBL has not recruited competent people in filling up its
lower and some mid level positions. Other than the recruitment of the
Probationary Officers and Management Trainees, people who were recruited
from banks for the lower management are not competent enough to provide the
best output. As a result the services of the bank are being jeopardized. The
external search of the bank in attracting people from other banks had flaws in it
and the right people were not taken from the right bank.

Reference appointment:

This is one of the set backs of SBL and will have a long-term repercussion on
the quality of Human Resource. Many people have been recruited under the
reference of the recommendation of the Board of Directors, which has become
a chronic disease in the PCB’s. As a result, people having inadequate
qualifications and experience have been recruited only because of their ties
with the sponsors. The practice must be stopped considering the future of the
bank and it is very important to have a component workforce.

Disguised Employment:

This has also become growing problem at SBL. Currently there are “Too many
heads but few hands.” Again this is related to the problem of reference
appointment. There are people who are only drawing salaries at the end of the
month but making a minimum or no contribution towards the organization. On
the other hand there are officers who work hard but are not apprised
accordingly.

35
Poor Service Quality:

This has become a major problem for the bank. The customer service quality in
all the departments and in most of the branches is very low. The quality of the
service at SBL is lower than those in the contemporary banks such as Dhaka
Bank, Prime or Dutch-Bangla. Where as SBL was suppose to provide services
compared to those in the FCB’s, they are not being able to complete with its
contemporary rivals in terms of service quality. If this trend continues, SBL
will soon fall into the category of the traditional banks. The service quality is
worst in the General Banking Division, as there are several system errors.

Low remuneration package:

The remuneration package for the entry and the mid-level management is
considerably low. The compensation package for SBL entry-level positions is
even lower than the contemporary banks. Under the existing low pay structure,
it will be very difficult to attract and retain MBA’s at SBL. Since foreign banks
pay double that of SBL, it will be very difficult to attract competent MBA’s in
future for SBL. Therefore SBL will fall to attract competent NOA’s and retain
them if they do not revise their pay structure.

Human Resources Department:

The HR department is another weak area of SBL. The HR department is very

small relative to the size of the bank and other than the Head of HR wing; the
staffs in this wing are incompetent to be an official in the HR department. Most
of the HR practices and policies are not being followed or implemented here.
The annual performance appraisal report of the employees has not been
scrutinized yet and employees are not getting the required feedback. There is
also no prescribed set of promotion policies. The bank is still practicing the
traditional method where solely the experience or length of service is
considered as the criteria for promotion. On the other hand, a criterion for work
output or productivity is not considered. Moreover, the HR department is only
confined in the Head Office and does not have any role in the branch level
activities.

36
Centralized Decision-Making:

At SBL corporate decisions the CEO, DMD and other top management
officials craft policies and strategies and then they are cascaded down. At times
the Board of Directors is also engaged in making corporate decisions. As a
result of this practice there is only a top down flow of communication at SBL.
The scope for bottom up communication is very limited and many bright ideas
or opinions are not being able to climb up the ladder to the top management.
Ideas remain their forever.

Noise Pollution:

This has become another major problem SBL. Since there are no cubical
shaped offices, there is a tremendous noise in each department of the Gulshan
Branch. The noise greatly hampers the work activity and the level of
concentration. This is the problem of having an open space office where
everyone is communicating with each other and creates noise.

Lack of qualified system operators and computer operators:

Currently at SBL’s head office and in the Branches, there are system operators
who do not have any background academic knowledge on computer
applications. As a result they frequently make mistakes in the preparation of
various computerized statements. At the same time, computer operators do not
have the skill to carry out their activities.

Few staff meetings:

It has been observed that there are very few staff meetings and departmental
meetings at the branch level. During the last four months there was only one
staff meeting and one departmental meeting. This is not a good management
practice.

Limitations of the PC Bank:

PC Bank is not modern and comprehensive banking software. It does not

provide adequate support in providing the services. It is not user friendly and
management should consider replacing the PC Bank system by a more
comprehensive banking system.

37
Opportunities

Diversification:

SBL can pursue a diversification strategy in expanding its current line of

business. The management can consider options of starting merchant banking
of diversify in to leasing and insurance. By expanding their business portfolio,
SBL can reduce their business risk.

Product line proliferation:

There are several opportunities for SBL to expand its product line. In this
competitive environment SBL must expand its product line to enhance its
Sustainable Competitive Advantage (SCA). As a part of its product line
proliferation, SBL can introduce the following products.

ATM:

This is the fastest growing modern banking concept. SBL should grab this
opportunity and take preparations for launching ATM. Since SBL is a local
bank, they can form an alliance with other contemporary banks in launching
the ATM. Standard Chartered has already successfully launched the ATM.

Credit Cards and Tele banking:

These are the new retail banking services provided by the foreign banks. SBL
can evaluate the option of launching credit cards and Telebanking system.
There are the recent developments in the banking sector and SBL should also
evaluate the option of doing it.

On-line banking:

SBL should move towards the on line banking operations. It is high time that
they should go for this because the foreign banks as well as some local banks
are already in to the on line banking operations.

Introduction of SBL’s own savings scheme:

This can be another new retail product for SBL. They can start introducing
their own savings scheme or pension scheme for different professions. For
example, Standard Chartered Grind lays has SYFANZ and PLANZ and
Standard Chartered also has similar offers. Therefore for attracting more

38
depositors, the management should consider the option of its own savings
scheme.

 Introduction of corporate scheme:

This is an innovative way of attracting corporate clients to the bank. Instead of

providing CCS to executives of various companies, SBL can introduce a
special scheme for corporate officers for the purchase of consumer durable at
an attractive interest rate. In this way, the bank will be able to attract a lot of
corporate clients and in the long run the bank would be benefited by getting
business for the bank from the corporate clients in terms of L/C, Loans and
advances etc. for example, officers of BTC, Lever Brothers, Square, Beximco
can be entered in to the corporate scheme.

Separate schemes for service holders:

The bank as a part of expanding its loan portfolio can assistance in terms of giving
loans to service holders under various professions under a separate scheme. The bank
can provide assistance to Engineers, Doctors, Lawyers and other professions under a
separate scheme. Standard Chartered Grindlays has already introduced such a scheme
for different professions.

Threats
Multinational Banks

The emergence of the multinational banks and their rapid expansion poses a
potential threat to the new PCB’s. Due to the booming energy sector, more
foreign banks are

Expected to arrive in Bangladesh. Moreover, the already existing foreign bank

such as Standard Chartered is now pursuing an aggressive branch expansion
strategy. This bank is establishing more branches countrywide and is expected
to get into for operation soon. Since the foreign banks have tremendous
financial strength, it will pose a threat to local banks to a certain extent in terms
of grabbing the lucrative clients.

39
Upcoming Banks:

The upcoming private local banks can also pose a threat to the existing PCB’S.
it is expected that in the next few years more local private banks may emerge.
If that happens the intensity of competition will rise further and banks will have
to develop strategies to complete against an on slaughter of foreign banks.

Contemporary Banks:

The contemporary banks of SBL such as Dhaka Bank, Prime Bank and Dutch-
Bangla are its major rivals. Prime Bank and others are carrying out aggressive
campaign to attract lucrative corporate clients as well as big time depositors.
SBL should remain vigilant about the steps take by these banks, as these will in
turn affect SBL strategies.

No new deposit creation:

This is a problem and a threat faced by the whole banking sector of

Bangladesh. Due to the current economic slowdown, there is hardly any new
deposit creation as they’re few investments and savings accompanied by a
galloping inflation. As a result the new banks are not being able to attract
absolutely new depositors but rather they have to hunt or snatch away
depositors from other banks. Moreover, due to financial turmoil in Southeast
Asia, foreign remittance of Bangladeshis is also decreasing due to the massive
retrenchment. Therefore all these adversaries are blocking the creation of new
deposits and banks are operating by snatching away depositors from one to
another.

Default Culture:

This is a major problem in Bangladesh. As SBL is a very new organization the

problem of non-performing loans is very minimum or insignificant. However,
as the bank becomes older this problem arises and the whole community
suffers from this chronic disease. SBL has to remain vigilant about this
problem so that proactive strategies are taken to minimize this problem if not
elimination.

40