Professional Documents
Culture Documents
1 Prolegomenon
from customers and in turn makes loans based on those deposits. Some
banks (called Banks of issue) issue banknotes as legal tender. Many banks
A bank generates a profit from the differential between what level of interest it
pays for deposits and other sources of funds, and what level of interest it charges
1
in its lending activities. This difference is referred to as the spread between the
cost of funds and the loan interest rate.
Historically, profitability from lending activities has been cyclic and dependent
on the needs and strengths of loan customers. In recent history, investors have
demanded a more stable revenue stream and banks have therefore placed more
emphasis on transaction fees, primarily loan fees but also including service
charges on array of deposit activities and ancillary services (international
banking, foreign exchange, insurance, investments, wire transfers, etc.).
However, lending activities still provide the bulk of a commercial bank's income.
Any institution offering deposit (a sum of money paid by a buyer as part of the
sale price of something in order to reserve it) subject to withdrawal on demand
and making portfolios (diversify the fund to reduce the risk) of loan is known as
bank. The bank is the life blood of modern economy. Modern banks play an
important part in promoting economic developing of a country. Banks provide
necessary funds for executing various programs underway in the process of
economic development.
2
1.2 The Internship
We the students of business do this usually for three months. In our country
there are many banks particularly the esteemed private sector banks, and elite
business firms provide this. In this respect I have done my internship at IFIC
Bank Ltd. the one of the most renowned private bank in Bangladesh. I am
thankful to for this.
3
1.3 Origin of the Report
The internship program is required for the student of BBA. It is a program with
duration of three months. Students who have completed all the required courses
are eligible for this program. In the internship program I was attached to the IFIC
Bank Limited, Ashulia Branch for three months. During this period I have
learned how the organization works.
4
1.4 Objectives of the study
The primary objective of this report is to use the theoretical concepts in analyzing
real life of Practical Orientation in Banking activities, which is a partial
requirement of the BBA program. But the objective behind this study is
something broader. The broad objectives of this report are summarized in the
following, manner:
This report helps me to understand the clear real-time experience about the total
management of IFIC Bank Ltd. It helps me to understand, how the bank manage
its total process? It also helps me to understand how they deal with the customer .
5
1.6 Methodology
This report has been prepared on the basis of experience gathered during the
period of internship from 14th June to 14th September. Within this period I visited
two department namely General Banking and Loans & Advances departments.
Firstly total duration was divided into total working days that came to a total
working day of 90 days and were distributed in the following manner :
6
1.7 Sources of Data
The nature of the report is analytical in nature. Collecting primary and secondary
data regarding practical orientation in banking activities. I have found the
strengths and weakness and based on those I have made some recommendations.
I have collected primary and secondary data for my research paper. So this report
is based on both primary and secondary data.
7
Official Website of the Bank
In the very beginning of this report a brief description of IFIC Bank has been
furnished. Then in the subsequent chapters, elaboration of the two departments
of the branch, say general banking, and Loans & Advance has been presented. At
last few pages of the main report, some problems in banking which are observed
while doing work in the branch are detected along with some recommendations
to overcome these problems. At the end of this report appendices and
bibliography are added.
One of the major limitations is the shortage of internship period. Since three
month is not enough to know everything of a Bank, so this report does not contain
all the area of IFIC Bank Ltd.
Because of the limitations of various sources of information the report doesn’t
contain many important information and data. All scheduled commercial bank
regulated by the instruction do central bank. Most of the instructions are
confidential to the commercial bank. So, I was incapable to provide valuable
information.
The main constraints of the study are inadequate access to information, which has
hampered the scope of analysis required for the study.
Due to time limitation; many of the aspects could not be discussed in the present.
8
CHAPTER TWO-2
INTRODUCING IFIC BANK LIMITED
9
2.1 Preamble
IFIC Bank Ltd. is one of those banks that plays important role in the economy of
Bangladesh. There are Seventy Six branches of IFIC Bank in our country. The
activities of the branches are more or less same but there are some differences as
per the size of the branches. As I was placed to Ashulia Branch of IFIC Bank as an
intern, my focus of the report will be basically on the functions of Ashulia branch
only. The format of the report is being followed as per the guideline given by the
Stamford University authority.
10
11
2.3 Bank’s Mission
Our Mission is to provide service to our clients with the help of a skilled and dedicated
workforce whose creative talents, innovative actions and competitive edge make our
position unique in giving quality service to all institutions and individuals that we care
for.
We are committed to the welfare and economic prosperity of the people and the
community, for we drive from them our inspiration and drive for onward progress to
prosperity.
We want to be the leader among banks in Bangladesh and make our indelible mark as an
active partner in regional banking operating beyond the national boundary.
12
Current Board of Directors is:
13
2.5 Composition of the Board
Unlike other banks in the private sector, Board of Directors of the bank is a unique
combination of both private and Govt. sector experience. Currently it consists of 13
Directors. Of them five represent the sponsors and general public and four senior
officials in the rank and status of joint Secretary/ Additional Secretary represent the
Govt. Managing Director is the ex-officio Director of the Board.
14
2.6 Objectives of the Bank
The objectives of the bank are to promote joint participation of Government and
private sponsors to establish joint venture banks, financial companies,
branches and affiliates abroad to satisfy their customers.
15
To purchase, or otherwise acquire, undertake, the whole or any part of or
any interest in the business, goodwill, property, contract, agreement, right,
private assets and liabilities of any other company, bank, corporation,
partnership, body person or persons carrying on, or having ceased to carry
on, any business which the company is authorized to carry on, upon such
terms and may be deemed expedient.
To encourage, sponsor and facilitate participation of private capital in
financial, industrial or commercial investments, shares and securities and
in particular by providing finance in the form of long, medium or short
term loans or share participation by way of subscription to the promoter
shares or underwriting support or bridge finance loans and/or by any
manner.
16
2.7 Strategies
IFIC Bank Limited mainly follows top down approach to take necessary decisions
for the company. Basically they follow the centralize strategy where the
Head Office of the Bank control and monitor all the activities of its
branches. In case of marketing strategy they basically depend on ‘word of
mouth’ as they are already well reputed for its long-term service in the
banking industry.
IFIC bank has been consistently maintaining the ‘Capital Adequacy Ratio’, as
prescribed by Bangladesh Bank. This has been made possible by a policy of
building up both capital and reserves. It started with an Authorized and
Paid up capital of Tk.100 crore and Tk.63.20 crore respectively in 1983.
Authorized and paid up capital increased to Tk.500 crore and Tk.134.66
crore respectively in 31.12.2008.
Starting with a modest deposit of only Tk.863.40 million in 1983, the Bank had
closed its business with a deposit of Tk.35000.08 million as of 31st December,
2008. Total credit stood at Tk.30000.66 million as on 31.12.2008 against Tk.21,
17
694.90 million last year. Bank has posted an operating profit (un-audited) of
Tk.366940986 during the year ended 31st December, 2008.
2.10 Credit Policy & Portfolio
Credit policy of the Bank works within the framework of three main objectives,
namely, maintenance and improvement of quality of assets, recovery on time and
building-up of an efficient customer oriented credit delivery system.
Project Loans are extended for setting up of new projects and BMRE of the
existing Projects as well. Due emphasis was given to financing export oriented
and export linked industries without loosing sight of the need for long term loans
by other domestic market based industries and ventures. The Bank has financed
34 projects during the year 2009 amounting to Tk.2529.45 million. In long term
portfolio, the bank has been diversifying from textile and RMG industries to steel
industries, CNG filling stations, Power Sector, Pharmaceuticals Sector, Telecom
industries, Chemical project etc. The Bank also participates in syndicate
financing. During the year 2009 the Bank sanctioned syndicated term loan of
Tk.1175.09 million and successfully arranged a syndicated term loan facility of
Tk.565.04 million as the Lead Arranger.
18
IFIC Bank Limited has also started lease financing in August 2004 operating
under CRM Division. Lease financing has been proved to various concerns in
different sectors especially:
19
In Small Enterprise Financing collateral free loan under the name and style
“Retailers’ Loan” has been introduced to finance small traders who have no
collaterals to offer. Another product titled “Possession Right Loan” offered to the
proprietor of the business concerns, only against Possession Right Deed is also
very popular. Besides, there are other products designed to fulfill the needs of the
small businessmen. Total outstanding of Small Enterprise loan stands at
Tk.7412.28 million as on 30.12.2008
The bank is in the process of launching Credit Card to expand the retail portfolio.
As approved by the Visa Asia-Pacific. Board of Directors, IFIC Bank has got
Principal Membership of Visa and Plus program. Now IFIC Bank is allowed to
issue Visa Cards and can set-up electronic and acceptance machine and ATMs in
various merchant locations wherein both the IFIC Bank Visa Cards and other
Banks’ Visa Cards can be used. The forma operation of Credit Card has already
been started.
20
2.11 Organization Structure & Responsibilities
The thirteen members of the Board of Directors are responsible for the strategic
planning and overall policy guidelines of the Bank. Further, there is an
Executive Committee of the Board to dispose of urgent business proposals.
The CEO and Managing Director, Deputy Managing Director and Head of
Divisions are responsible for achieving business goals and overseeing the day to
day operation. The CEO and Managing Director are assisted by a Senior
Management Group consisting of Deputy Managing Director and Head of
Divisions who supervise operation of various Divisions centrally and co-ordinates
operation of branches. Key issues are managed by a Management Committee
headed by the CEO and Managing Director. This facilitates rapid decisions.
There is an Asset Liability Committee comprising member of the Senior
Executives headed by CEO and Managing Director to look into all operational
functions and Risk Management of the Bank. The workflow of the organizational
structure is given below:
21
22
23
2.12 Hierarchy of the Management of IFIC Bank Ltd
Executive Vice-President
Senior Vice-President
First Vice-President
Vice-President
Asstt. Vice-President
Officer Grade-I
Probationary Officer
Officer Grade-II
Assistant Officer
Officer Assistant
Driver
Officer Attendant
Security Staff
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2.13 Distribution of Branches
The bank covers by its activities all the important trading and commercial centers
of the country. As on december, 2009 it had 81 branches within Bangladesh.
All the branches are equipped with computers in addition to modern
facilities, logistics and professionally competent manpower.
2.14 Workforce
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2.15 Domestic Branches of the Bank
The branches of the Bank cover all tile important trading and commercial centers
in Bangladesh. At present it has 81 branches within Bangladesh. All the
branches are equipped with computers in addition to modern facilities,
logistics and professionally competent manpower. Steps are underway to
open new branches in important locations in the country during June 2009.
Auto Loan
Rolls Royce, Ferrari or a Cadillac that’s for one born with good luck. For the
one’s who dream to make their own luck? Come to IFIC for your desired
Car. We will make it come true whether it’s a Maruti or a Mercedes.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply
26
Consumer Loan
Life is complex as it is. IFIC makes your life-style easy and comfortable
with the Consumer Durable Loan. So avail the easy facility offer.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply.
27
Easy Loan
No limits for personal needs, needs are endless. Our EASY LOAN is to serve
your personal financial needs. Just walk-in to any of IFIC’s branch and avail
your EASY LOAN.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply
28
Porua Loan
A good education is the foundation for a successful life. IFIC is offering the
opportunity to students to pursue higher education opportunity with the loan
facility.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply
29
Flexi Loan
The demands and uncertainties of life getting you down. Here is the answer.
Come avail yourself IFIC’s Flexi Loan, to turn the uncertainties of life to a
certainty you can control.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply
30
Thikana Loan
A man’s home is just not his castle, it’s more than an asset, and it’s an
investment for his future generation. IFIC’s Thikana Loan helping you find
you’re ADDRESS. Your life’s Satisfaction First.
If you are an adult employed person and have an account with IFIC, then
you are eligible to apply for the loan.
Processing
Quick Processing Immediately.
Least Formalities.
* Conditions apply
31
Possession Loan
For those people running a successful business from rented premises, IFIC
BANK is there to finance you for POSSESSION LOAN. So your business
can have its own Permanent Address.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply.
32
Peshajibi Loan
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply
33
Retail Loan
To the small entrepreneurs who know their trade yet feel frustrated by the
lack of money to get a bigger share in the marketplace. IFIC BANK
understands their problem and believes that financial support at the right
time can take them to (their desired) right place.
Processing
Quick Processing Immediately.
Least Formalities.
*Conditions apply.
34
Pension Savings Scheme
Empower yourself for a secure and prosperous future with IFIC PSS. Partnership for a
prosperous and secure future.
Features:
Under this Scheme you can open a deposit scheme for Tk.500, Tk.1000, Tk.2000 and Tk.5000
and 50000 per month for 3 or 5 years whichever suits you.
You can make the deposit within 10th of each month (In case of holiday the next working day).
You can get Loan up to 80% of the deposited amount
You can receive the entire deposit amount with interest at one go or receive a pension on a
monthly basis at a desirable amount of your monthly installments.
For your clarity a Table of Deposit Scheme and after Maturity Payable Amount is given below:
Extra Benefits:
If you fail to deposit monthly installments continuously for 3 consecutive months your account
will become automatically inoperative. But, it can be revalidated on the 4th month on receiving
all outstanding installments along with a written application. You will be given two (2)
opportunities during the 3 years scheme and three (3) opportunities during the 5 years scheme to
35
avail this option.
You can pay installments by transferring from your CD/SB account maintained with the
concerned branch.
Installments may also be paid in advance.
You can close the account at any time by a written application*.
Monthly installments to PSS will qualify as investments in yearly Income Tax return.
As per decision of the management, the rates of interest on deposits are being
revised with effect from 01.03.2007
Types of Deposit Deposit Rates
Savings Bank Deposit (SB)
5.5%
Short Term Deposit (STD):
Less Than Tk. 1.00 crore
4.0%
Tk. 1.00 crore and above but less than Tk. 5.00 crore
4.5%
Tk. 5.00 crore and above but less than Tk. 10.00 crore
5.0%
Above Tk. 10.00 crore
6.0%
Bank to Bank
2.5%
36
FDR(Tenure 6 months & above ):</STRONG< td>
9.5%
A. Computer System
Computerized Branches: 78 out of 78 (i.e. 100%) Branches
are computerized throughout the country.
Local Area Network: All Branches (i.e. Motijheel, Federation,
Dhanmondi, Gulshan, Moulvi Bazar, Narayanganj & Agrabad)
are operating in Local Area Network environment.
Banking Software: Currently 64 LAN
Branches are using BexiBank 4000+ and
rests of the Branches are not online system.
37
B. Computerized Services
Tele Banking (Computerized Phone Banking): Our
Banking has implemented Computerized Phone Banking
technology in 64 Branches (i.e. Motijheel, Federation,
Dhanmondi & Gulshan).
SWIFT Network: Presently our International Division of
Head Office is operating their Foreign Trade related transaction
through SWIFT Network.
Electronic Mail: 64 Branches has (i.e. Motijheel,
Federation, Gulshan, Dhanmondi, Narayanganj & Agrabad) are
using Email facility for international and internal
correspondence. In future all AD Branches will be brought
under Email facility.
Home Banking: Our Bank is currently engaged in
implementing this new service for Bank’s high net-worth
selected business clients.
38
Divisions (i.e. Special Project Division, Credit Division etc.) of
Head Office is in under consideration.
1983 - Setup its first overseas joint venture (Bank of Maldives) on the Republic of
Maldives.
- Commenced operation as a full-fledged commercial Bank in Bangladesh.
1994 - Set up its first joint venture in Nepal for banking operation.
1999 - Set up its second joint venture in Nepal for lease financing.
39
2.19 Management Structure
The thirteen members of the Board of Directors are responsible for the strategic
planning and overall policy guidelines of the Bank. Further, there is an Executive
Committee of the Board to dispose of urgent business proposals.
The CEO and Managing Director, Deputy Managing Director and Head of
Divisions are responsible for achieving business goals and overseeing the day to
day operation.
Key issues are managed by a Management Committee headed by the CEO and
Managing Director. This facilitates rapid decisions.
40
2.20 Risk Management
In view of the global recognition towards need of an effective risk management
and control systems in financial sector, IFIC Bank being cognizant of the
importance of the subject, has prepared and implemented the following policy
guidelines on Risk Management:
• Credit Risk Management
• Asset Liability Management
• Foreign Exchange Risk Management
• Internal Control & Compliance
• Prevention of Money Laundering
Key Figures
Employees: 2009
Customers: 300,000
Branches: 78
Affiliates: 4
41
42
2.22 New Products
Besides providing traditional services in the areas like, deposit, advance, import-
export financing, remittance and collection, treasury operations and lockers, the
Bank has in the recent years introduced a good number of new products to meet
the increasing demands of the clients and the members of the public. Some of
them are Visa Credit cards, ATMs (Automated Teller Machine), Phone Banking,
Pension Savings Scheme, Death Risk Benefit Scheme, Monthly Income Scheme
and Consumer Credit Scheme, Education Assistance Plan (Deposit Scheme).
43
Karachi Branch was opened on 26th April 1987, while Lahore Branch was opened
on 23rd December 1993.
To meet the Minimum Capital Requirement (MCR) of the State Bank of Pakistan,
the Overseas Branches in Pakistan have been amalgamated with a reputed
leasing company in Pakistan named National Development Leasing Corporation
Ltd. Therefore, the existence of our above Overseas Branches has ceased w.e.f.
2nd October 2003 and a new joint venture bank entitled NDLC - IFIC Bank Ltd.
emerged in Pakistan w.e.f. 3rd October 2003. The Bank was subsequently
renamed as NIB Bank Ltd. IFIC Bank presently holds 7.31% equity in the Bank.
Nepal Bangladesh Bank Ltd. (NB Bank), a joint venture commercial bank
between IFIC Bank Ltd. and Nepal nationals, started operation with effect from
June 06, 1994 in Nepal with 50% equity from IFIC Bank Ltd.
Nepal Bangladesh Finance & Leasing Co. Ltd. (subsequently renamed as Nepal
Bangladesh Finance & Leasing Ltd.), another joint venture leasing company
between IFIC Bank Ltd. and Nepali Nationals, started its operation on April 18,
1999 in Nepal. IFIC Bank presently holds 15% share in the company.
Oman International Exchange LLC (OIE), a joint venture between IFIC Bank
44
Limited and Oman nationals, was established in 1985 to facilitate remittance by
Bangladeshi wage earners in Oman. IFIC Bank holds 25% shares, and the balance
75% is held by the Omani sponsors. The exchange company has a network of 10
branches covering all the major cities/towns of Oman. The operations of the
branches are fully computerized having online system.
The affairs and business of the company is run and managed by the Bank under a
Management Contract.
Correspondent Banks
Swift
Country Correspondent Currency
Address
Standard Charted
U.S.A SCBL US 33 US DOLLAR
Bank, New York
Mashreq Bank psc.
U.S.A MSHQ US 33 US DOLLAR
New York
HSBC Bank USA,
U.S.A MRMD US 33 US DOLLAR
New York
American Express
U.S.A AEIB US 33 US DOLLAR
Bank Ltd. New York
Mashreq Bank psc.
HONG KONG MSHQHKHH US DOLLAR
Hong Kong
Standard Charted
U.K SCBL GB 2L US DOLLAR
Bank, London
City Bank N.A.,
U.S.A CITIUS 33 US DOLLAR
New York
J.P. Morgan Chase
U.S.A Bank N.A., New CHAS US 33 US DOLLAR
York
Standard
U.K. Chartered Bank, SCBL GB 2L GB POUND
London
H.S.B.C. Bank plc,
U.K. MIDL GB22 GB POUND
London
SWITZERLAND UBS AG., Zurich UBSW CH ZH SWISS FRANC
Bank of Tokyo- JAPANESE
JAPAN BOTKJPJT
Mitsubishi, Tokyo YEN
Hypovereins Bank
GERMANY HYVE DE MM EURO
AG, Munich
Commerz Bank AG,
GERMANY COBADEFF EURO
Frankfurt
JP Morgan Chase
GERMANY CHAS DE FX EURO
Bank AG, Frankfurt
45
HSBC Bank CANADIAN
CANADA HKBCCATT
Canada, Toronto DOLLAR
Sonali Bank,
INDIA BSONINCC ACU DOLLAR
Kolkata
State Bank of SBIN IN BB
INDIA ACU DOLLAR
India, Kolkata 106
Standard
SCBL IN BB
INDIA Chartered Bank, ACU DOLLAR
CAL
Kolkata
American Express AEIB IN DX
INDIA ACU DOLLAR
Bank Ltd., Kolkata CAL
Arab Bangladesh
INDIA ABBL IN BB ACU DOLLAR
Bank Ltd., Mumbai
The Hongkong &
Shanghai Banking
INDIA HSBC IN BB ACU DOLLAR
Corporation,
Mumbai
ICICI Bank Ltd.,
INDIA ICICINBBCTS ACU DOLLAR
Kolkata
Nations Trust Bank
SRILANKA NTBC LK LX ACU DOLLAR
Ltd., Colombo
Nepal Bangladesh
NEPAL Bank Ltd. NPBBNPKA ACU DOLLAR
Kathmandu
Bank of Bhutan,
BHUTAN BHUBBTBT ACU DOLLAR
Phuentosoling
NIB Bank Ltd.,
PAKISTAN NIBPPKKA ACU DOLLAR
Karachi
J.P.Morgan Chase AUSTRALIAN
AUSTRALIA CHAS AU 2X
Bank, Sydney DOLLAR
2.24 Technology
Since the beginning of its journey as a commercial bank in 1983, IFIC Bank has
been giving great emphasis on the adoption of modern technology. It became the
pioneer in the field of automation by introducing computerized branch banking
right in the same year. Subsequently, all the branches were brought under similar
automated platforms with upgraded software applications to offer all the critical
banking features. At present all 78 domestic branches are fully computerized
under networked environment.
46
The Bank has taken up a new project with Misys International Banking System
Inc. (UK) to further upgrade its banking operation to state-of-art world class on-
line banking solutions to provide faster and even more convenient centralized
services to the clients.
Besides, the Bank is also operating fully on-line Automated Teller Machine
(ATM) services under the banner Q-Cash at a number of locations in Dhaka and
Chittagong. The ATM facilities are available to the customers at Q-Cash booth.
Since the importance of Web presence in the Internet is absolutely critical, IFIC
Web Site www.ificbankbd.com has long been launched for the convenience of the
customers, where all the activities and information are constantly being posted
and updated. A Central Mailing System is operational at the Head Office to let the
customers have direct electronic access to the selected staff.
The Academy has a good collection of books, journals and magazines. The books
are mainly on subjects like Banking, Economics, Accounting, Management and
47
Marketing etc. As on December 31, 2008the library had 6,861 books/titles. The
books are issued to the employees usually for one month.
Frequently outreach programmes are organized to meet demand for new and
specialized skills.
During its 26 years of existence, Academy not only conducted courses, workshops
and seminars as required by the Bank, but it also organized training programmes
for the Bank of Maldives, Nepal Bangladesh Bank Limited and Oman
International Exchange LLC. In addition, Academy has also the credit of
organizing system of Bank of Maldives.
In addition to conducting courses internally, The Academy also selects candidates
for nomination to various courses conducted by distinguished training
organizations in the country including Bangladesh Bank Training Academy and
Bangladesh Institute of Bank Management.
The Academy also re-designs its courses, programs etc, regularly to med the
requirement of new skills arising out of various directives, guidelines of the
Central Bank and significant changes in the banking sector from time to time.
48
into the market and increase IFIC Bank’s market share, bank has executed an
agreement for principal visa membership. Upon implementation of the
agreement, bank shall issue IFIC Visa Card in the market. Its success would
depend largely on effective marketing strategy by the branch managers. This will
also help increasing branch income.
Leading Issues of IFIC Bank Ltd:
ACTIVITIES
All this products and services are implemented properly with the help of many
departments. The functions of those departments are:
49
A wide range of products and services different type of deposits such as SB, CD,
FDR etc are offered by this department. Local private banks is biggest threat a
they offer higher interest rate and better services.
Recovery Division
Recovery of stuck-up loans is a major concern for the bank. This division helps
general credit and project finance divisions to recover the loans and take legal
action against those creditors. Some time there is some usual recovery. Recovery
from written off loans goes to income account of the bank.
50
IFIC Bank’s corporate clients mainly comprise the top local and multinational
companies operating in Bangladesh. The main objective of this department is to
build and maintain positive relationships with their clients. As a result, each and
every company is assigned a Relationship Manager, who maintains regular
contacts with clients. Moreover, this department offers the following facilities to
its clients:
Project Finance.
Syndicated Loans.
Bonds and Guarantees, etc.
Treasury Division
The foreign exchange and money market operation of the IFIC Bank is broad.
Exotic currencies happen to be one of its specials areas of strength. A 24 hour-
service is provided to customers in Bangladesh through the Bank's network of
dealing centers placed in the principal of the world. The Bank's treasury
specializes in offering solutions to who wish to manage interest rate and currency
exposures that result from trade, investment and financing activities of other
dynamic economies of the region.
51
reliability of financial reporting and compliance with applicable laws, regulation
and internal policies.
Marketing Division
It basically handles all promotional campaign, branding both consumer and
corporate products and services for IFIC bank.
Law Division
In Bangladesh local banking laws regulate and rules set by the Ministry of
Finance and Bangladesh Bank is handling by this division. Law division has to
take care of are:
Any kind of legal issues
52
Compliance advisory service
Personal Division
It works with the administrative issues and supervise internal work environment.
It also encourages its staff to conform to an internal culture of ethical behavior
and sensitivities to the culture and religion of the country.
53
information are constantly being posted and undated. This gives all technical
support to all branches and Head Office.
Branch Network
involved in providing
various ways.
54
Major functions of IFIC Bank limited include general banking, loan and advance
and clearing and remittance and foreign exchange. The major functions are given
55
56
2.29 IFIC Bank’s Half yearly managers conference held 12th July 2009
Half yearly managers conference-2009
Program of conference
The Half-Yearly Managers Conference -2009 of IFIC Bank Ltd. was held on 12th
July 2009 in Pan Pacifif Sonargoan Hotel (Ball Room), Dhaka with the introductory
speech by Mr. Mosharraf Hossain, Managing Director. The main agenda of the
Conference was to highlight of bank performance-Jun 2009 & branch wise business
performance as on June 2009 & interaction with branch manager of the various
branches , identify the challenges and to make an action plan for achieving the target
for December,2009. Chairman, Vice-Chairman, Directors, Managing Director,
Deputy Managing Director, Senior Executives of Head Office and Managers from 76
branches attended the Conference.
The Conference was concluded with the speech of Mr. Mosharraf Hossain, Managing
Director of the Bank.
57
58
CHAPTER THREE-3
IFIC BANK’S ASHULIA BRANCH
59
3.1 Introduction
Banking is nothing but collecting money from the surplus units and deploying it to the
deficit units. In this regard Ashulia Branch plays an incredibly crucial role, because we
know that in this area most of the dwellers came from elite class and country’s major
portion of the money is owned by them. In my orientation period, I have observed that
IFIC Bank’s major portion of the deposits comes from Ashulia Branch.
IFIC Bank limited, Ashulia Branch was opened on 26 November 2007 with an
initial deposit of TK 211.08 Lac. 13 officials including 3 authorized officers are
posted in the “D” grade branch. Staff strength of the branch is adequate as to the
volume of their present business. In comparison with other bank’s branches in
this area at Jamgora,Ashulia mobilization of deposit, procurement of business,
assets management of our Ashulia branch are increasing gradually.
In the year 2009, all targets were achieved by the branch except its Advance
target. However, all targets as on 30 th June, 2009 were achieved by the branch.
From the business position as on 13.04.08 (east date of inception), 30.08.09
(date of inception) revealed that credit portfolio of the branch has increasing
trend. Total loan & advances of the branch is TK 650.06 Lac as on September 7,
2009 which is 67% of its total deposit indicating very high credit portfolio. The
branch earns profit from loan & advances, interest on general account other
commission business like commission on L/C, LG, TT, DD, PO etc. Most positive
side of this branch is the work environment is very friendly and customers find a
comfortable place for their transactions.
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3.3 Functions of various departments in IFIC Bank,
Ashulia Branch
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CHAPTER FOUR-4
GENERAL BANKING
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4.1 Introduction
General banking is the heart of banking activities. Total banking procedure start with this
department. General banking department perform the core function of bank operation and
it is known as “Retail Banking”. They take the deposits from the customer and meet their
demand for cash honoring their checks. It opens new accounts, remit funds, issues bank
draft and pay order. Account opening section, Remittance, Checks clearing, Cash, FDR,
Accounts section are part of general banking.
General Banking
Receiving Disbursing
Cash Cash
Payment Demand Telegraphic
Order Draft Transfer
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4.3 Account Opening Section
This section opens Current Deposit (CD), Savings account (SB), STD, FDR. Most
vital work starts from here as selection of customer is very important for the bank
success and failure. If the account holder do money laundering through this
account than the bank will be legally responsible for that and bank has to answer
to Bangladesh bank or customer may occur fraud and forgery by this account and
thus destroy goodwill of bank’s. In branch account opening officer follow some
rules which are guided by IFIC Bank manual and senior opening form signature
is must in this case. Manager’s signature is must on every account opening form
as permission for opening the account. All these help to stop adverse situation.
(See Appendix: B)
Types of Accounts
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Current Account
Savings Account
The saving account is primarily for small-scale savers. The main objective of this
account promotion is thrift. Hence, there is restriction on withdrawals are
permitted only against prior,
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Short-Term Deposit (STD) Account
In short term deposit account, the deposit should be kept for at least six month to
get the interest. The STD account is a very important class of account in this
bank. The minimum amount of balance has to be maintained with STD account is
TK. 30000 Interest is given at a rate of 2% percent which is less than savings
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 the withdrawal of money from STD account.
The account holder must give seven days before the withdrawal that is why STD
is also called ‘Seven days notice’ current account.
Fixed period specified in advance. These deposits are time deposit. Normally the
money on a fixed deposit is not repayable before the maturity date of a fixed
period. At the time of opening the deposit account, the banker issued a receipt
acknowledging the receipt of money on deposit account. It is popularly known as
FDR. An interest rate ranging from 8.00 percent to 8.25 percent is offered
depending on different amount and tenure of deposit. Fixed deposits are the
deposits in which an amount of cash is deposited in bank for a
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Transfer of an account to another Branch
Sometimes the customer wants to transfer his account to another branch due to
various reasons. IFIC Bank, Ashulia Branch, also gives this kind of facility to the
customer. In this case, they will have to submit an application to the branch
manager stating the reasons. The officer verifies the signature and finds out the
balance of the account holder. The holder also submits the rest check leaves along
with the application. Then the officer issues an Inter Branch Credit Advice (IBCA)
to that branch and a debit voucher with the balance of deposit in that account. He
also sends the account opening form and specimen signature card to that new
branch. The new branch officer verifies the customer signature with account
opening form supplied to him. The amount mentioned in the (IBCA) considered
as the initial deposit of the new branch.
By Banker: banker has the right to close the account if the customer does
not maintain any transaction six years and the balance is become lower than the
minimum balance.
By Customer: if the customer wants to close his account he will write an
application to the manager and the manager then close the account.
Firstly, the concerned customer has to apply for closing his/her account. Then to
close the account the cheque book is to be returned to the bank. After charging
the account closing charge the Manager will close the account. Closing charges
are as follows:
For below 6 months 100 tk.
For over 6 months 200 tk.
The rest amount of money laid in the respective account is paid to
the customer by a payment order. In case of payment order certain
commissions and vat are cut off from the account.
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4.4 Cash Section
Cash department is the most vital and sensitive organ of the branch as it deals with all
kinds of cash transactions. This department starts the day with cash in vault. Each day
some cash that is opening cash balance are transferred to the cash officers from the cash
vault. Net figure of this cash receipts and payments are added to the opening cash
balance. The figure is called closing balance. This closing balance is then added to the
vault. And this is the final cash balance figure for the bank at the end of any particular
day.
Step 3 Gives pay cash seal and sends to the payment counter
Step 4 Payment officer makes payment
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Books Maintained by this Section
Vault Register Cash balance at the end of a day is recorded in this book
which is kept in the vault.
Cash Receipt Register Cash receipt in whole of the day is recorded here
Cash Payment Cash payments are made in a day are entered here
Register
Rough Vault Register Cash calculation for final entry in vault register is done
here, as error and correction here is not acceptable in
vault book or balance book.
Cash Balance Book Balance here is compared with vault register. If no
difference is found, indicates no error.
This department receives cheque from its depositors for the purpose of collection
by a deposit slip over the counter crediting their account. Clearing of cheque is
done through the clearinghouse in Bangladesh bank. Everyday the first house
starts at 10 a.m. and returns house at 6 p.m.
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Inward Clearing
Step 1 The instruments drawn on IFIC Bank are received from other Banks in the
Clearing House by the representing branch of the Bank.
Step 2 The amount and number of instruments received are entered in the House Book
from the main schedules of respective banks.
Step 3 The amount of instruments delivered, received and difference is written in a slip
provided in the Clearing House and the Slip is returned.
Step 4 The instruments with schedule are arranged branch wise.
Step 5 A copy of each schedule is detached.
Step 6 The amount of each schedule received is entered in the House pages of the
respective branches.
Step 7 The respective House pages are totaled and the total of each is noted on a Slip
and a grand total is taken out.
Step 8 The grand total is agreed with the total of the House Book.
Step 9 The instruments are sent to the respective branches with Slip showing total
amount and number of instruments.
Step 10 The instruments are sent to the branches concerned for clearance along with the
IBDA with the total amount of the instruments.
Step 11 The House pages along with the duplicate schedules are filed.
Step 12 Particulars of the instruments are compared with the schedule and the Slip and
the schedules are detached (Receipt of instruments in the Branches).
Step 13 The instruments are sent to the respective departments and the schedules are
filed.
Outward Clearing
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Step 1 The instruments drawn on other banks are received duly entered in the Pay-
in-Slip or voucher.
Step 2 The instruments are checked and compared with the particulars noted in the
Pay-in-Slip and its counter folio.
Step 3 In case an Order instrument is being deposited in second payee's account,
guarantee is obtained from the second payee on the reverse of the
instruments.
Step 4 In case the payee's name on the specially crossed instrument differs slightly
from that of the depositor, the instrument may be accepted but only from the
customer's well known to the Bank and after obtaining an Indemnity this is
attached to the Pay-in-Slip.
Step 5 Proper stamp(s) is/ are affixed on the instruments and on Pay-in-Slip and the
counter folio.
Step 6 The instrument is suitably endorsed/ discharged.
Step 7 The instrument along with the Pay-in-Slip is sent to the In-charge for
checking and signature.
Step 8 The instrument and Pay-in-Slip are detached from the counter folio which is
handed over to the customer.
Step 9 The particulars of the instrument and the voucher are entered in the Outgoing
Clearing Register.
Step 10 Serial number Is given on each voucher.
Step 11 The Register is balanced; the vouchers are separated from the instruments
and released after lodgment to the respective departments against
acknowledgement in the Register.
Step 12 The instruments are arranged bank-branch-wise.
Step 13 The Sub-Main-Schedules are prepared in triplicate, two copies of which are
attached with the relative instruments.
Step 14 The grand total of the schedules is taken and agreed with that of the Register.
Step15 The House Page is prepared in duplicate.
Step 16 The IFIC General A/C Clearing House representing branch is debited with
the amount of the instruments and IBDA is sent to that branch and the party's
account is credited.
Step 17 The instruments with the schedules are sent to the branch representing to the
Clearing House.
Step 18 The instrument is received in the manner similar to that explained in
foregoing paras (Receipt of instruments by the Branch representing to the
Clearing House).
Step 19 The instruments with schedules are received from the branches (Lodgment by
the branch representing to Clearing House).
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For payment of Bills presented to a particular branch of the Bank through another branch
of the Bank, the procedures are the same as those applicable to Inward Clearing. The only
exception is that there are no clearing house formalities. The concerned branches of the
Bank directly deal with Inter-branch clearing.
For collecting of Bills by a particular branch of the Bank, drawn on another branch of the
Bank the procedures are the same as those applicable to Outward Clearing. The only
exception is that there are no clearing house formalities. The concerned branches of the
Bank directly deal with Inter-branch clearing.
Step 1 The returns of the outward clearing/ transfer delivery are received by the
branch in the same manner as the inward clearing/ transfer delivery (Return
of Instruments).
Step 2 Depositor's account is debited with the amount of the instrument.
Step 3 The instrument together with the Check Returning Memo in Bank's form is
sent to the depositor with covering memo immediately.
Step 4 The instrument together with the Check Returning Memo is sent to the
department concerned if lodged by them.
Step 5 It the instrument is to be re-lodged, a credit voucher is prepared and attached
with it and the instrument is presented again.
Step 6 The instruments returned unpaid by the various departments are received in
the Clearing Department attached with Memo in standard form and entered in
the Register (Inward Clearing Transfer Delivery).
Step 7 The returns of inward clearing/ transfer delivery are sent by the branch in the
same manner as the outward clearing/ transfer delivery.
Step 8 The credit voucher is not posted unless the relative instrument is paid
(Internal Transfer).
Step 9 If the instrument is returned, the entry is cancelled and initialed in the
Transfer Book.
Step 10 The instrument together with the Check Returned Memo is sent to the
depositor covering memo through Dispatch Department.
Step 11 If the amount of the advice received is less than the amount of the instrument
received or the amount of the advice sent is more than the amount of the
instrument delivered, the excess amount is sent to the Bank concerned by a
Pay Order and the following entries are passed (Difference in Clearing):
Debit: Sundry Deposit A/C- Difference in clearing Credit: Bills Payable A/C-
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Pay Order issued
Step 12 If the amount of the advice received is more than the amount of the
instruments received or the amount of the advice sent is less than the amount
of the instruments delivered, the following entry is passed and the entry is
reversed when the Pay Order is received. Debit: Sundry Asset A/C- Clearing
Adjustment
Step 13 When an instrument is presented in special clearing on request of the
customer, the instrument is stamped and suitably endorsed (Special Clearing).
Step 14 Such instruments should invariably be drawn on Bank with whom the main
branch maintains account (Bangladesh Bank & Sonali Bank).
Step15 Branch sends the instrument duly entered in Outward Clearing Register and
Sub-main Schedule to the branch representing the Clearing 1 louse (When
representing branch maintains A/C).
Step 16 Branch representing the Clearing Mouse sends the instruments to the drawee
Bank duly entered in Pay-in-Slip of the Bank for credit of the proceeds in the
account maintained with them.
Step 17 On receipt of the information of credit of the proceeds from the drawee Bank,
the branch representing Clearing House then sends an Inter Branch Credit
Advice (IBCA) to the branch concerned.
Step 18 Where instruments drawn on Banks other than those, with whom the branch,
representing Clearing House does not maintain account, Pay Order/
Bangladesh Bank Check issued by the drawee Bank in payment of the
instrument are lodged in clearing.
Bank's Locker service is also delivered from this department. In IFIC Bank,
Ashulia Branch, this department is maintained by two officers.
Local Remittance
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Sending money from one place to another place for the customer is another
important service of banks. And this service is an important part of country's
payment system. For this service, people, especially businessmen can transfer
funds from one place to another place very quickly. There are five kinds of
techniques for remitting money from one place to another place. These are:
1) Demand Draft
2) Pay Order
3) Telegraphic Transfer
4) Telephone Transfer
5) Mail Transfer - Time consuming and not frequently used
Money Transfer
IFIC Bank Ltd. earns a huge amount of money by selling several customer
services. The IFIC Bank Ltd. offers the following services to its customer :
A payment order is an instrument from one branch to another of the same bank
to pay specified sum of money to the person named therein of his order. Unlike
cheque, there is no possibility of dishonoring pay order because before issuing
bank takes our money of the pay order in advance.
Amount of DD Commission (TK)
TK 0 to TK. 1000 10
TK. 1000 to TK. 100000 25
TK 100000 to TK 500000 50
Above TK. 500000 100
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TT is the fastest means of money transfer between two branches of the same bank. The
formalities of TT is as same as MT, there are taken some extra charge for telephone.
Telegraphic and Telephone transfer are almost the same, both are them are known as TT
in short. IFIC bank helps people transfer their money from one district to another in the
quickest possible time at the lowest service charge.
Scroll Book:
Token Book:
Verifying the given cheque as follows:
Verify the date of the cheque (No money will be given to future date
cheque)
Verify the amount and compare mathematical and written amount.
Then the cheque’s information is written in Token Book and gives a token (metal)
to the customer.
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This is obviously an independent and unique department, which works as the
composition of all the departments of the branch, but it is under the In-Charge of
the General Banking in this branch. This section in this branch is fully
computerized. So the conventional large ledger and journal books are not kept
like the nationalized banks. Only two personnel maintain the entire accounts
Section. It receives the vouchers from all departments and prepares the
subsidiaries and maintains accounts. End of the day all data are stored in CD and
at the month end they are send to Head Office.
Accounts department prepares statement for Head Office Purpose and for
submission to Bangladesh Bank as follows:
Weekly Position
SBS 1
SBS 2
Size wise, Range wise & Sector wise statement of deposit
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IFIC Bank uses computers extensively all over the branches and head office.
Computer system is assigned with the responsibility of maintaining accounts
records. All the account SB, CD, STD, Loan accounts are maintained in computer.
The statement of affairs and other daily and monthly statements are produced
from this system. The security measure of the branch is also maintained by this
computer system.
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CHAPTER FIVE-5
ADVANCE DEPARTMENT
5.1 Introduction
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Banking is essentially a business dealing with money and credit. Like over other
business activity, Banks are profit oriented. It depends mainly on how much
profit they can make. Profit is the yardstick for the bank to move on. They work
as reserves of “savings’ of the community and also as lenders or investors for
trade business and industry. A bank invests its funds in many ways to earn
income. The bulk of its income is derived from loans and advances.
Credit is continuous process. Recovery of one credit gives rise to another credit.
In this process of revolving of funds, bank earns income in the form of interest. A
bank can invest its fund in many ways. Bank makes loans and advances to
traders, businessmen, and industrialists. Moreover nature of credit may differ in
terms of security requirement, disbursement provision, terms and conditions etc.
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Bank often uses loans and advances as an alternative to one another. But
academically this concept is incorrect. Academically Advances is the combination
such items where loans is a part only. For this credit section of the banks is
known as advance section. It is the main profit source of the Bank. Banking
business is like all other profit-oriented business. It depends mainly on how
much profit they can make. Profit is the yardstick for the bank to move on.
Banking is a business that deals only with money and credit. Banks are profit
oriented. They invest their fund in many to earn income. Huge amount of income
derives from loans and advances. Banks makes loans and advances to traders,
businessman and industrialists against the security.
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5.4 Analyzing the Information
Banks then starts examination that whether the loan applied for is complying
with its lending policy. If comply, then it examines the documents submitted and
the credit worthiness. Credit worthiness analyses, i.e. analysis financial
conditions of the loan applicant are very important. If loan amount is more than
50 lakh then bank goes for Lending Risk Analysis (LRA) and Spreadsheet
Analysis (SA) which are recently introduced by Bangladesh Bank According to
Bank rule. LRA and SA are must for the loan exceed one core.
If these two analyses reflect favorable condition and documents submitted for the
loan appear to be satisfactory, then bank goes for further action.
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5.6 Relevant matter of Document checked before
sanctioning any Loan
There must be an account of the person want to take loan. The account
must transact for not less than 3 months to 6 months. Otherwise the loan
will not be sanctioned.
After checking the duration of account than the transaction made by the
account holder must be checked. The debit credit position must be also
checked, because it is related with future dealings of the borrower.
The purpose for what the loan is taken by the borrower is another
important matter to see and check. Whether the purpose is business or
else must be checked with its marketability. Because there is risk of fraud
and forgery by the borrower by seeing one purpose in cash of ding any
illegal business.
The banker should check through security whether it is enough or not.
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5.9 Documentation of the loan
These are the most common documents for creation of above mentioned charges
and for other formalities of sanctioning loan.
1. Demand promissory note: Here, the borrower promises to pay the loan as
and when demand by bank to repay the loan.
2. Letter of arrangement.
3. Letter of continuity.
4. Letter of hypothecation of goods and capital machinery.
5. Stock Report: This report is used for CD and CC. In this report,
information about the quality and quantity of goods hypothecated
furnished.
6. Memorandum of deposit to title of property duly signed by the owners of
the property with resolution of Board of Directors of the company owning
the landed property.
7. Personal guarantee of the owners of the property.
8. Guarantee of the all directors of the company.
9. Resolution of the board of director to borrow fund to execute documents
and completes other formalities.
10. Letter of Disclaimer: By this letter, the borrower withdraws his all claim on
the claim of the property/ goods lined/ mortgaged.
11. Form no. 18/19 for filling charges with the register of joint stock
companies under relevant section.
12. Tax paying certificate.
13. Letter of installment.
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5.10 Advances
Forms of Advance
Bank generally offers different kinds of credit facilities to their customer. They
are in different forms with different categories. The credit facilities may be
broadly classified into four categories. They are as follows:
1. Loans
2. Cash credit
3. Overdraft
4. Bills purchased and discount
Loans
In case of loan, the banker advances a lump sum for a certain period at an agreed
rate of interest. The entire amount is paid an occasion either in cash or by credit
in this current account, which he can draw at any time. The interest is charged for
the full amount sanctioned whether he withdraws the money from his account of
not. The loan may be repaid in installments or at expire of a certain period. Loan
may be demand loan or a term loan. Advance made in a lump sum repayment
either on fixed installment basis or in lump sum on subsequent debit except by
way of interest, incidental charge, etc. is called a loan. After creation of loan there
will be only repayment by borrower. The loan may be repaid in installment or at
expire of a certain period. Loans are normally allowed to those parties who have
either fixed source of income who desire to pay it in lump sum. Banks gives
different types of loan to his party.
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Types of loans
The different types of loan that banks give to his party are as following:
Term loan:
Industrial
Transport loan
House building loan
Others
Staff house building loan
Loan against trust receipt
Staff loan against PF (Provident Fund)
Consumer credit
LIM (Loan against Imported Merchandise)
Loan general/Demand loan
Before give loan credit department has to do certain functions. First they have to
send CIB to Bangladesh Bank, Lending Risk Analysis, and Issuance of Bank
Guarantee after completion of these jobs if the result is positive than officer can
sanction loan. Every Bank has to send a quarterly CIB Report to the Bangladesh
Bank for amounts due up to TK.50,000/- mentioning the name of the borrower
and the purpose for which loan has been sanctioned and a monthly statement for
the amount due more 1 core Taka. Bangladesh Bank provides CL (Classification
Form) to every bank for preparing this report. The procedure for loan
classification is given by Bangladesh Bank under BRPD circular no 16, dated
06/12/1998.
LRA is a very important and vital analysis for deciding whether the loan proposal
is potential or not. Many types of scientific, mathematical, statistical and
managerial tools and devices are required to perform this analysis. Before LRA the
following analysis were used to analyze the loan proposals. This branch maintains a
prescribed format containing 14 pages for Lending Risk Analysis, which includes
a spreadsheet to analyze a lot of things. It is not possible to discuss the entire LRA in
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this report but the entire framework under which it works has given in the following
manner:
Decision matrix from LRA
Status 1 2 3 4
A A A A
B B B B
Criteria
C C C C
D D D D
Decision Good Acceptable Marginal Poor
1A - Indicates that the loan is least risky hence it should or could be given From the LRA
sheet we can calculate the following numbers and plotting them into the matrix we can
arrive into the decision of lending. The calculated result criteria is as under
1 2 3 4
Business Risk
13-19 20-26 27-34 34 ++
A B C D
Security Risk
-20 ~ -15 -14 ~0 0 ~ 10 10 ++
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(2) Validity (contract period/claim submission period/clause of extension etc.)
and (3) responsibility of the bank (on demand unconditional/at own initiative
etc.) should stand clearly defined. The particulars of the guarantee issued should
be recorded in the Letter of Guarantee Register and Letter of Guarantee margin
ledger.
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Cash Credit
Cash credit is given through cash credit amount. Cash credit amount is basically a
current account, however a little different exist between them. The distinction
between a current account and cash credit account is that the former is intended
to be an account with credit balance and the letter and account for drawing of
advances. Operation of cash credit is same as that of overdraft. The purpose of
cash credit is to meet working capital need of traders, farmers and industrialists.
Overdraft
Overdraft is that advance which is allowed on current account operated upon by
check. The customer may be sanctioned a certain limit within which he can
overdraw his current A/C within a certain period The customer can withdrawals
or deposits any numbers of within his limit. Interest is calculated and charged
only on the actual debit balances on daily product basis. Overdraft facility is
generally given to businessman for expansion of their business. Bank gives
overdraft in following two ways:
SOD (secured overdraft)
Cash credit
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If any customer wants to get SOD facility from the Bank, he has to submit an
application to the Bank manager It must be done in prescribed form of the bank.
In this has to submit details about his business. After getting application form
bank made an office note. In this note bank officer write down the following
things:
Nature of limit
Extent of limit
Security
Margin
Rate of interest rate
Validity
Then the Bank Authority mark the security as a lien in their register. For getting
any credit facility from the Bank the customer must have a current account in
that bank branch. Bank can give up to 80% credit facility of the security like FDR,
BSB, PSP, ICB unit certificate.
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SOD on Work Order
If any party wants to get SOD facility from the bank after getting work order, he
has to submit an application with reliable security mention there In past time
bank give SOD facility without any collateral security. But now bank do not give
any SOD facility against work order If bank see that all of his papers are eligible
for getting SOD facility, bank asks him to give a power of attorney to the bank for
receiving all kinds of payment for the work. He can get up to 50%of the amount
of the work that he has to done. But he has to submit his collateral security for
that. He gets 50% SOD facility against his collateral security. After getting power
of attorney bank sends a request letter to the authority by which the work has
been issued. Then that authority sends a letter to the bank that they will make all
of the payment of the party through the bank. After getting the letter the bank
credits the SOD amount to the customer’s current account. When bank gets
payment from the authority, they make a ratio and cut off their amount from that
payment.
1) Single DP note
2) Joint DP note
3) Joint and several DP note
Letter of arrangement
Letter of continuity
Letter of lien for advances against share, stocks and security.
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Cash Credit (CC)
Cash credit is the favorite mode of borrowing by traders, industrialist etc. for
meeting their working capital. Cash credit is a kind of continuous overdraft. For
cash credit facilities Banks allow a limit for his customer. Cash credit facility is
given for one year. In banking system cash credit is given for two purposes. The
purposes are as following:
Working capital
Trading purpose
It is a favorite mode of advance for the customer. For cash credit facility bank
allow a limit for his customer. The customer can make continuous transaction
with in that limit. CC is given for one year. After one year the customer can renew
his CC facility.
Interest
For CC facility interest is counted daily basis. That means customer has to only
that amount of interest which is outstanding in his CC account. Interest is cut off
from customer current in tram wise.
Mode of security
For CC banks take two type of security. These are as following:
Pledge
Hypothecation
In branch level bank cannot give more then 30 lac taka to his customer. But if
bank want give more then 30 lacs. The branch has to get approval from head
office of the bank.
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For giving CC bank takes following charge document:
1. DP note
2. Letter of arrangement
3. Letter of continuity
4. Letter of hypothecation of goods
5. Stock of goods report
6. Personal guarantee of all the director of the company
7. Deed on additional charge on the fixed assets of the company
8. Form for filling charge with register of joint stock companies
9. Resolution of board of directors
10. Insurance policy for stock
In CC facility bank only allow 50% credit facility of the stock that the customer
has been pledge or -hypothecation. Bank gives CC only for one year. After one
year customer has to renewal it.
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3. Shares quoted in the Dhaka Stock Exchange and Chittagong
Stock Exchange.
4. Pledge of Goods, produce.
5. Hypothecation of goods, produce and machinery.
6. Fixed assets of manufacturing unit.
7. Shipping documents.
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2. Staff house building loan:
SHBL is provided to three years confirm staff. Ceiling of the loan is 120 times of
basic amount. Rate of interest is one percent more than bank rate. Repayment
procedure is 180 equal monthly installments.
Relation between Advances with the Security
Types of Advance Securities
Loans Lien of various kinds of sanchay patras, Govt. Securities,
FDR, Collateral of immovable property, shares quoted in
stock exchange, Debentures, Fixed Deposit Receipts,
Pledge of gold/Gold ornaments, Hypothetication of
Ornaments, Hypothetication of vehicles, Collateral of
immovable properties
Overdraft Sanchaypatra, Non-resident Foreign currency deposit
(NFCD), shares, Debentures, Govt. promissory note, Fixed
Deposit Receipt, Life insurance policies, Gold and gold
ornaments, Shares quote din stock exchange, Work Order
Cash credit Pledge of Hypothecation of stock-in-trade, Goods, Produce
and merchandise, Machineries, Land & building on which
machineries are installed
Bills purchased Bill itself
PAD Shipping documents for import
LIM Pledge of imported merchandise
Trust Receipt Trust Receipt obtained in lieu of import documents
Export Cash Credit Pledge or hypothecation of goods or export Trust Receipt
Foreign Bills Shipping documents for export
Purchased
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charge should be created on the security. Creating charge means marketing in
available a cover for advance. The following modes of charging securities are
applied in IFIC Bank.
1. Lien
A lien is right of banker to hold the debtor’s property until the debt is discharged, bank
generally retain the assets in his own custody but sometimes this goods is in the hand of
third party with lien marked. When it is in the hand of third party, the third party cannot
discharge it without the permission of bank. Lien gives banker the right to retain the
property not the right to sell. For sell, permission from the appropriate court is necessary.
Lien can be made on movable goods only such as raw materials finished goods, shares,
debentures etc.
2. Pledge
Pledge is also like lien but here bank enjoys more right. Bank can sell the property
without the intervention of any court, in case of default on loan, but for such selling
proper notice must be given to the debtor. To create pledge, physical of goods to the bank
is must.
3. Hypothecation
In this charge creation method, physically the goods remained in the hand
of debtor. But the documents of title of goods are handed over to the
banker. The method is also called equitable charge. Since the goods are in
the hand of borrower, bank inspects the goods regularly to judge its quality
and quantity for the maximum safety of loan.
4. Mortgage
98
by registration of the mortgage deed. Another method called equitable mortgage
is also used in bank for creation of charge. Here mere deposit of title to goods is
sufficient for creation of charge. Registration is not required. In both the case, the
mortgaged property is retained in the bank of borrower.
99
Advance against Fixed Deposit Receipt will be subject to credit restrictions
imposed from time to time by Head Office/ Bangladesh Bank. Scrutinize the
Fixed Deposit Receipts with regard to the following points:
i. The fixed Deposit Receipt is not in the name of a minor.
ii. The depositor on revenue stamp of adequate value discharges in hand his
signature is verified.
iii. Creation of liability on Fixed Deposit issued in joint names by any one of
the depositors is irregular.
iv. It the deposit receipt is offered as a security for allowing advances, a letter
of line shall be obtained from the depositors, on the appropriate form.
v. If the deposit receipt has been issued by the branch-allowing advance, line
against that specific deposit receipt to be marked in the fixed deposit
register of the branch.
vi. The discharged receipt, the letter of lien duly verified by the issuing
branch and the letter confirming registration of the lien on the deposit
receipts shall be kept along with other documents under safe custody of
the bank.
vii. Lien on the partial amount of deposit shall not be accepted.
Objectives
100
The objectives of this loan are to provide essential Household durable to the fixed
income group (Service Holders) and other eligible borrowers under the scheme.
The abbreviated name of the scheme will be “consumer”.
Documentation:
1. D.P. Note
2. Letter of Revival.
3. Letter of Arrangement
4. Letter of Disbursement of loan
5. Letter of Hypothecation with Supplementary Agreement
6. General letter of trust receipt
7. Personal guarantee as per clause ‘3’ under line ‘B’.
8. Undertaking and observation of formalities as per clause under line ‘B’.
Eligibility:
The criteria to become eligible for availing the facility under the scheme are given
bellow;
a) The borrower must be confirmed official of any of the following
organizations:
1) Government Organization
2) Semi-Government Organization/ Autonomous body
3) Multinational Organization
4) Banks and Insurance Companies
5) Reputed Commercial Organization
101
growth of 14 percent, but the growth was offset by the write-off of classified loans and
advances amounting to TK. 2989.60 million. At the end December 2003, the position of
loans and advances stood at TK. 20450.90 million as against TK. 20596.58 million in
December 2002.
Fig: Showing the disbursement of loan and advance of the IFIC Bank
from
1999 to 2003
25000
20000
15000
10000
5000
0
1999 2000 2001 2002 2003
Table-4.1
Credit portfolio shows marked increase
Showing the Classification of loans and advances of the IFIC bank from
102
2002 to 2003
This figure is showing the increase and decrease of the different items of loan and
advances.
103
CHAPTER SIX-6
FINANCIAL ANALYSIS
6.1 Introduction
104
Financial Analysis is the process of identifying the financial strengths and weaknesses of
the firm by property establishing relationships between the items of the balance sheet and
the profit and loss account. Financial analysis can be undertaken by management of the
firm, or by parties outside the firm, viz. Owners, creditors, investors and others. The
nature of analysis will differ depending on the purpose of the analyst.
First of the financial analyst is to select the information relevant to the decision under
consideration from the total information contained in the financial statement. The second
step involved in financial analysis is to arrange the information in way to highlight
significant relationships.
In brief, financial analysis is the process of selection, relation and evaluation of the
financial statements. Common Size Statement, Trend analysis and Ratio analysis are
widely used technique of financial statement analysis. In this section at first we have
introduced the comparative income statements and comparative balance of the IFIC Bank
Ltd. and then analyzed through common size statements.
105
106
107
108
109
6.3 CREDIT RATING REPORT ON IFIC BANK LIMITED
The above rating has been done on the basis of Bank's fundamentals
such as good asset quality, good profitability, moderate growth rate,
reasonable capital adequacy and diversified product lines. However,
the above factors are moderate to some extent by limited market
share, high dependence on term deposits and average risk
management.
Mentionable that the above ratings were based on the position of the
Bank as of 31st December, 2006 and the date of rating by CRISL was
19th June,2009.
110
CHAPTER SEVEN-7
SWOT ANALYSIS
111
7.1 Introduction
SWOT analysis is the detailed study of an organization’s exposure and potential
in perspective of its strength, weakness, opportunity and threat. This method
uses the organization to make their existing line of performance and also foresee
the future to improve their performance in comparison to their competitors. By
SOWT analysis, an organization can also study their current position, it can also
be considered as an important tool for making changes in the strategic
management of the organization.
Strengths:
IFIC bank has already established a favorable reputation in the banking
industry of the country. It is one of the leading private sector commercial
bank in Bangladesh. The bank has already shown a tremendous growth
in the profits and deposits sector.
IFIC Bank Ltd. has a long-term reputation in the banking industry as it is
one of the oldest players here. So, their enduring good will in the field
works as a vital strength.
IFIC bank has an interactive corporate culture. The working
environment is very friendly, interactive and communicate provides as a
great motivation factor among the potential customer.
It has excellent Management.
It has high commitment of customer, qualified and experienced Human
Resource.
It has sophisticated automated banking system in most of its branches
which foster the overall banking activity.
112
Weakness:
Lack of motivation among the workers.
Heavy dependency on Head Office in decision making sometimes slower
the work process.
Lack of extrinsic and intrinsic reward & incentives for the employees from
management sometimes result to job burn out.
High dependency on ‘word of mouth’ strategy instead of obtaining any
marketing strategy.
Absence of teamwork between branches.
Opportunity
Other unexplored district where branches can be set up.
High awareness among all level of people to deposit money in the banks.
Increasing the demand of customer finance.
Investment potential of Bangladesh.
Relationship Management.
Threats:
Some commercial/ Foreign Bank as well as private bank are
increasing
Similar type of retail banking products, such as insurance company,
stock exchange, financial institution etc.
Frequent changes in rules and regulations from Bangladesh Bank.
Customer awareness of pricing and service.
113
7.3 Findings
All the section of this branch is computerized, without checque
collection sector. Hopefully the management decided to provide
computer for departments, which will bolster services of the bank.
When a joint stock company comes to open an account if the company
happens to be an existing one, the banker should demand copies of the
balance sheet and profit and loss account, which will reflect the financial
growth of the company and its soundness. But in practice companies and
the bankers as well don’t even brother.
Encoding and decoding process of test number eat up the lion share of
the time of the officer who works in that desk. But a simple computer
program could do the same if the desk were computerized.
Officers of the bank are competent. Even though many of them simply
know the working procedure of what they are doing but don’t know the
philosophy behind doing those.
Project loan requires testing of feasibility of project and judging the
marketability of the product. It requires infusion of knowledge of both
the fields-marketing and Banking. But the bank has hardly any person
with this kind of ability.
Like most of the private bank, IFIC Bank Ltd. also imposes a target
deposit for collection upon its employees. Every employee has to go out
for the purpose of deposit collection, which they call “development
purpose”. It is an effective method no question about it, since many
banks of our country relies on this method. But sometime affect
negatively and cause job dissatisfaction. Officers of the desk, where
workload is very high, hardly get the chance to go out for development
purpose and always feel that their duties for the organization would not
be evaluated unless they can show a good amount of deposit collection
against their name.
114
CHAPTER EIGHT-8
115
8.1 Recommendation
In order to get competitive advantage and to deliver quality service, top
management should to modify the services.
As there is no classified loan, branch should monitor the loans & advances
closely to avoid classification in future.
Ashulia Branch should extend with their all out effort to increase the credit
portfolio and to procure more low cash deposit, increase non funded
business so as to minimize dependency on interest earning from IFIC Bank
general account and to improve overall business performance of the
branch to maintain earning.
Ashulia Branch should set up more CC camera in the branch to hold more
control of manager in the branch. It can install CC camera in accounts
department and clearing department as it is an important past of the
branch and it is not always possible for the manager to visit all
departments which has become important.
Ashulia Branch can contact with the existing customers to make the
dormant accounts operative.
116
company and its soundness but in practice bank do not do this. If they
have all these that will help them to examine money laundering risk.
There are numbers of new private banks and some have already activated
with their extended customer service pattern in a completely competitive
market. Where as IFIC Ashulia branch is far behind. They are not
competitive in customer service because the officers do not behave in
professional manner in fort of customer. Some time they are late in there
service, which ultimately disturbs the respective customer.
117
IFIC Bank should always monitor the performance of its competitors in
the field of Foreign Trade.
Without proper knowledge in different laws, rules which set by
Bangladesh Bank efficiency of employees cannot be optimize. Bank can
arrange training program on these subjects and can test its employees
which will improve their qualities.
IFIC Bank Ltd. should focus on their promotional activities. They should
also focus on the marketing aspects to let customers know about their
products and offerings and more promotion is should be given to attract
new customer.
IFIC Bank Ltd. must develop electronic banking system to moderate the
service. Technological advantage of a bank ensuring its competitive edge
in the market place which can only be achieved by improved technology,
efficient manpower and better services. If bank get more market share
through all these than it will reduce operating cost and generate new
revenue. The bank can offer to its customer better service if all of its
departments are computerized and incorporated under local area network
(LAN).
Bank is providing both internal and external training for the officers but
bank should be scrupulous about the training facilities so that officials can
implicate this in their job. People are very choosy about environment now
a day, so bank premises should be well decorated and IFIC Bank Ltd.
118
should look into the matter very seriously as well. Side by side it will give
customers better felling about the bank.
8.2 Implementation
119
Comments:
The bank can offer to its customer better service if all of its departments are
computerized and incorporated under local area network (LAN).
At the entry position the bank should enroll more expertise people to augment
quality services.
Bank is providing both internal and external training for the officers but bank
should be scrupulous about the training facilities so that official can implicate this
in their job.
People are very choosy about environment now a day, so bank premises should be
well decorated and IFIC Bank Ltd. should look into the matter very seriously.
Bank should provide advances towards the true entrepreneur with reconsidering
conventional system of security and collateral, moreover, the whole process
should be completed within an acceptable time.
120
8.3 Conclusion
From the learning and experience point of view I can say that I really enjoy
my internship at IFIC Bank of Bangladesh Ltd. From the very first day, I
was confident that this 3 months internship program at IFIC Bank Ltd. of
Bangladesh will definitely help me to realize my future carrier in the job
market. Performance analysis of a department of a bank is not so sufficient
to measure and express perfectly within this short time of my internship
period. But it is a great opportunity for me to get use to with the
operational environment of commercial banking of IFIC Bank. I have tried
by soul to incorporate the research report with necessary relevant
information in my report. Few loyal committed customer bases, lack of
modern and effective technology or facilities, not enough skilled employees
in some sector, considering all of these very important factors, IFIC Bank
should always try to improve their service level in every term.
121
BIBLIOGRAPHY
Andley, K. K & Mattoo, V. J., Foreign Exchange Principles and
Practices
Different prospectus of IFIC Bank Ltd.
Henry Waren; How to use your bank
Horne Van; Financial Management and Policy, Tenth Edition
Kotler Philip(1997); Marketing Management, Ninth Edition,
Prentice Hall of India pvt. New Delhi
Robbinson; The Management of Bank Funds, Second Edition
Scall Lawrence D. Charles Halley W.(1999); Introduction to
Financial Management, McGraw-Hill, Inc., Singapore
Report on Practical Orientation in Banks, Several Issues
www.ificbank.bd.com
122
REFERENCES
Acronyms
123
A/C – Account
APG – Advanced Payment Guarantee
B/L – Bill of Landing
BB – Bangladesh Bank
BOE – Bill of Exchange
BCD – Bearer Certificate Deposit
BGMEA – Bangladesh Garments Manufacturers Exporter’s Association
BML – Bank of Maldives Limited
CC – Cash Credit
CCI & E – Chief Controller of Import & Exports
CIB – Credit Information Bureau
CIF – Cost Insurance & Freight
CLP – Credit Line Proposal
DD – Demand Draft
DPN – Demand Promissory Note
ERC – Export Registration Certificate
EXP – Export
FC – Foreign Currency
FDBP – Foreign Documentary Bill Purchase
FDD – Foreign Demand Draft
FDR – Fixed Deposit Receipt
FSRP – Financial Sector Reform Project
GD – General Diary
HBL – House Building Loan
HOCC – Head Office Credit Committee
HO – Head Office
ID – International Division
IBC – Inward Bills for Collection
IBCA – Inter Branch Credit Advance
IBDA – Inter Branch Debit Advance
124
IFIC – International Finance Investment & Commerce Bank Limited
IMP – Import
IRC – Import Registration Certification
LC – Letter of Credit
LIM – Loan against Imported Merchandise
NCB – Nationalized Commercial Bank
NFCD – Non-resident Foreign Currency Deposit
OBC – Outward Bills for Collection
PAD – Payment against Deposit
PO – Payment Order
RFCD – Resident Foreign Currency Deposit
SAARC – South Asian Association of Regional Co-operation
SND – Short Notice Deposit
STD – Short Term Deposit
SOD – Secured Over Draft
TC – Traveler’s Cheque
TT – Telegraphic Transfer
TIN – Taxpayer’s Identification Number
UCPDC – The Uniform Customs and Practices for Documentary Credit
URC – The Uniform Rules for Collection
VAT – Value Added Tax
WES – Wage Earner’s Scheme
125
Internship Report
“General Banking Activities of IFIC Bank Ltd.”
Submitted For:
Submitted To:
Md.Rabiul Kabir
Assistant Professor
Department of Marketing
Stamford University Bangladesh
Submitted By:
Md.Mahfuze Alam
ID NO-BBA 02707017
Program : BBA
Major : Marketing
Batch: 27th(C)
Date of Submission: October 12 , 2009
126
General Banking Activities of IFIC Bank Ltd.”
127
Internship Report
“General Banking Activities of IFIC Bank Ltd.”
Submitted For:
Submitted To:
Md.Rabiul Kabir
Assistant Professor
Department of Marketing
Stamford University Bangladesh
Submitted By:
Md.Mahfuze Alam
ID NO-BBA 02707017
Program : BBA
Major : Marketing
Batch: 27th(C)
Date of Submission: October 12 , 2009
128
Letter of Transmittal
To
Md. Rabiul kabir
Assistant Professor
Department Of Marketing
Stamford University Bangladesh
Dhanmondi, Dhaka.
Dear Sir,
I have the pleasure to submit a report on “General Banking Activities Of IFIC Bank
Ltd”. You are aware of it that I was attasted with IFIC Bank. I am fortunate enoughp that
I hav got an experienced and professional team in the bank. I truly belive that this report
will satisfy your requirements.
I have tried my best to prepare this report to be as informative and relevent as possible.
To prepare this report I have collected the information from the Bank,reviewed some
journals and download some information from the internet.
I will be available for further query and clarification regarding this report whenever
necessary. I tried my best to my skill, which is achieved by three month practical
experience through this report. I beg to your kind advice or suggestion regarding any
mistake which will help me academic and practical work in future. I like to thank for
your co-operation.
Thanking You,
Sincerely Yours,
Md.Mahfuze Alam
ID No: BBA 02707017
Dept: BBA
Batch: 27th(c)
Major: Marketing
Stamford University Bangladesh
129
DECLARATION
I declare that the internship report entitled “General Banking Activities of IFIC
Bank Bank Limited” embodies the results of my own research work, prepared
under the supervision of Assistant Professor, Md.Rabiul Kabir & Branch Manager
of IFIC Bank Ltd. (Ashulia Branch).
I further affirm that the work reported in this internship is original and is no part or
whole of the report has been submitted by any other students for the completion of
BBA or other degree.
____________
Md.Mahfuze Alam
ID No: BBA 02707017
Dept: BBA
Batch: 27th(c)
Major: Marketing
Stamford University Bangladesh
130
Acknowledgement
First of all, I would like to express my gratitude to Almighty Allah for keeping me
mentally and physically sound to prepare this report. Then I would like to convey
my sincere gratitude to my supervisor Md.Rabiul Kabir, Assistant Prof.
Department of Marketing, Stamford University Bangladesh, who have helped me
with his valuable advice and relevant articles and journals for my project
throughout the internship period.
Secondly, I like to thank specially to Mr. Khairul Anam Joarder, Assistent Vice
President & relationship Manager, IFIC Bank Ltd, Ashulia Branch And My
gratefulness to Mr. Md.Kamrujjaman Mithu (Officer Grade-1), Md.Abul Kalam
Azad (Staff officer), Abu Mayeen Palash (Credit Incharge), Fayzul Kabir (Cash
Officer) They have guided me from the very beginning in the accounts opening
section and help me in gaining practical experiences in banking and to all
employees of IFIC Bank Ltd, Ashulia Branch for their whole hearted co-operation.
Finally, I am very much grateful to my beloved parents and dear brother and all of
my friends and relatives who in different ways inspired me in completing this
report.
131
CERTIFICATE
…………………………….
Md.Rabiul Kabir
Assistant Professor
Department of Marketing
Stamford University Bangladesh
132
EXECUTIVE SUMMERY
This report not only explores IFIC Bank’s activities as one of the leading non-
government companies, but also highlights the role of IFIC Bank in the financial sector
of Bangladesh.
This report contains information about all commercial activities that the bank is dealings
with. I have discussed with banking activities in a classified manner. I have divided this
report in two major parts. First one is “General Banking operations”. The second part
belongs to “Loans and Advanced”.
General banking operation includes all the general activities performed by the bank. The
part one covers the following tropic in a systematic manner. Then I have discussed about
the types of account holder and different type of account such as-Saving Account,
Current Account, and Fixed Deposit Rate (FDR), Pension Saving Scheme (PSS) etc.
The activities performed in cash department and the basic matter to be look after.
Remittance collection and bill payment procedure section covers the pay order, TT, and
DD, clearing of cheque, IDBC, IDBR. I have discussed about the account section where
the maintenance of transfer book, cash vouchers, and different types of register book.
The report also covered the Loans and Advance Section of the branch where I explain
different types of loan such as-Auto loan, Consumer loan, Easy loan, Porua Loan, Flexi
Loan, Thikana Loan, Possession Loan, Peshajibi Loan, and Retail Loan etc.
Then I have explained credit policy and portfolio, risk management, financial highlight,
new product, history of Ashulia Branch, function and various department, target customer
of IFIC Bank, documentation of Loan, credit Folio, manager conference, yearly report,
SWOT analysis and many other thing are included this report.
133
TABLE OF CONTENT
134
CHAPTER ONE-1
INTRODUCTION
135
136