Report on First Security Bank_General Banking

7/31/2019 Report on First Security Bank_General Banking

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Term paper on General Banking Performance of FSBL

Chapter one-Introduction

1.1 Introduction of the study

In todays fast moving world, business is more complex and competitive.

Banking is an essential industry. It is where we often wind up when were

seeking a loan to purchase a new automobile, tuition for college or trade

school, financial advice on how to invest our savings, credit to begin a new

business, a safe deposit box to safeguard our valuable documents or even

more commonly, a checking account or Credit card to keep track of when

and where we spend our money. This industry, composed of thousands of

firms worldwide, literally affects the welfare of every other industry and the

economy as a whole.

In fact, bank is the vitality of modern economy. Developed and organized

banking system is a prerequisite of every kinds of economy- capitalistic,

socialist, developed and underdeveloped countries whatever it may be.Todays banking is an industry in change. Rather than being something in

particular, it is continually becoming new- offering new services, merging

and consolidating into much larger and more complex business, adopting

new technologies that seem to change faster than most of us can

comprehend, and facing a new and changing set of rules as more and more

nation cooperate to regulate and supervise the banks that serve their citizen.

Bangladesh is not exception in this case. Marketing strategies for banking

business is one of the most vital issues now in Bangladesh. Because, after

liberation, the government of the Peoples Republic of Bangladesh formally

took over the charge of administration of different banks. The banking

Bachelor of Business Administration (BBA) ---------------------------------------- Page 1 of 36


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institutions are the custodians of private savings and a powerful instrument

to provide credit. They mobilize resources of the country by accepting

deposits and canalize them for industrial and national development by

granting advances. Hence, in order to implement the above-mentioned state

policy, the Government of Bangladesh decided to nationalize all the banks

of the country. At that time all the existing 12 banks were nationalize and

were converted into six new banks.

From 1983, privatization and denationalization process started in the

banking sector. As a result 2 (out of 6) nationalized commercial banks were

completely denationalized (in 1983) and one partly denationalized and other

three were kept under government ownership. In addition, 8 new private

commercial banks were permitted to function in the banking sector. Over the

time there are 31 private commercial banks and 14 foreign banks now

operating their business in Bangladesh.

During the last six years, many new banks have emerged to cater the needs

of the customers. They are continuously trying to attract people towards

them by offering new types of products and services to face competition and

fresh challenges thrown by their rival. Efforts are made to satisfy customers

needs by providing superior value than their competitors.

FSBL, Agrabad Branch is a bank of 21 st century commenced their journey

only 4 years ago. Within these 4 years, the bank has developed many

attractive financial products and services at a pretty interest rate to help the

people for saving their money and for meeting loan demand.



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Ive tried to know about the general banking services offered by FSBL the

problems faced by them and the prospects they will enjoy.

1.2 Significance of the study

The study carries much importance in view of the fact that the economic

development of Bangladesh is closely linked with the strong and healthy

financial organizations, which facilitate mobilization of domestic and

foreign funds on a large scale. Banking organizations are doing their jobs

more competitively now a day. Attracting the people to save their money by

developing various products and schemes, investing the funds in different

profitable sectors, helping in export and import business, providing services

in case of inward and outward remittance etc. are the main focus of the

banking institutions. As First Security Bank Limited is a new bank; no

research work has been made to highlight the banking system, the problems

and the prospects in this regard. This research gap induced me to undertake

the study. It is hoped that the findings of the study will be useful for the

readers and young learners to get knowledge about the topic.

1.3 Scope and Objectives

At FSBL, Agrabad Branch, Chittagong, Ive tried to acquire knowledge

about the overall banking system. The bank has classified its total operation

into three sections. These are:

General Banking

Credit



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Foreign Exchange

Ive worked with two of those three sections to acquire knowledge about the

operations, procedures of the work followed by the bank.

Analyzing the variable, like different deposits, loans and advances, customer

services, profitability of the bank is one of the objectives of the study.

In addition of the principal objective, the following are some of the common

but significant objectives of the study:

1. To know about the general banking operation of FSBL Limited.

2. To know about the scopes of Deposit collection of the bank.

3. To know about the area of general Credit.

4. To know about the procedure of settle Loan.

5. To examine the loan collection process.

6. To know about the documents of the Credit.

7. To identify the problems of FSBL, Agrabad Branch, Chittagong is

facing and the possible solutions of these problems.

1.4 Methodology of the study

Sample design: In this Project work, FSBL, Agrabad Branch, Chittagong is

selected to conduct the study.

Selection of variables: Deposits, Loans and Advances, Customer services,

Profits etc. are selected as variables.

Data collection: For conducting the study I used the following methods-

Collection of primary data: Some study related data are collected from

designing questionnaires, personal interview, and from related instruments.



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Collection of secondary data: To prepare the report, I used many data and

literary information for which I had to depend on secondary sources. This

are-

Annual reports of FSBL Limited.

Different prospectors of FSBL,Agrabad Branch,

FSBL Limited.

Others related books.

Along with these, observation is another method that was also given

emphasis in the study.

1.5 Limitations of the study

In every program or activities, one has to face numerous constraints. During

my 2 months internship program, I have also faced some problems. These

are:

1.Bank is a busy organization with comparison to others. There are

rushes of people for about whole the day and the officers have to

transact with them. So it is very much tough for them to allocate time

for an internee.

2. The allocated time this project work is not sufficient for us to gatherknowledge and to make the study a complete and fruitful one.

3.The study is restricted only to FSBL, Agrabad Branch, Chittagong.

4.The study also suffered from inadequacy of data provided by FSBL

Limited.



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5.Most of the employees are not familiar with internship program.

Chapter Two-Profile of FSBL Limited

2.1 Background of FSBL Limited

FSBLis a bank of 21st century. It is a private commercial bank with head

office at Dilkhusa, Dhaka, Bangladesh . The bank has 25 branches spread all

over the country. The founders of FSBL Limited are committed to make it a

little more different and a bit special qualitatively.

This bank has a new vision to fulfill and a new goal to achieve. The bank has

been manned with experienced executives equipped with modern technology

so as to make it most efficient to meet the needs of 21st century. With assets

of TK.722,74,49,242 and more than 120 employees, the bank has diversified

activities in retail banking, corporate banking and international trade.

The total amount of Deposits is Tk.523, 03,01,832 and the total Loans and

Advances are Tk.410, 26,07,964 at the end of the year 2005 that shows a

great performance of FSBL Limited. The Credit-Deposit ratio is 78.44%.

Till 31st December 2005, the total amount of export is Tk.1988.40 million

and the total amount of import is Tk.3750.60 million. The total profit at the

end of the year 2005 is Tk.12.71 crore and the expected profit of year 2006is Tk.25 crore.

The bank has 10-division namely Human Resource Division, Credit

Division, International Division, Audit and Inspection Division,



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Development and Marketing Division, Research and Planning Division,

Information Technology Division, General Service Division, Treasury and

Money Market Division. The bank selects its basic workforce from internal

source mainly through directors recommendation.

So, in general the employees are not highly qualified. But the executives

were selected through interview and they had a long banking experience. So

they are now the assets of the company.

2.2 Management of FSBL Limited

The decision making process of FSBL is democratic and decentralized. The

upper level management hardly bothers about the operational task of the

bank.

The sponsors Directors of the bank are well-established businessmen and

professionals of the country having business in and out Bangladesh. A boardof Directors is formed taking 26 members out of the entrepreneurs and

Mrs.Nasim Sikder has elected as a chairperson unanimously.

Highly qualified and efficient professionals manage the bank. The Managing

Director of the bank is Mr.Syed Ashraf Ali who has rich experience of

managing both the nationalized and private sector banks as Chief Executive.

Most of the cases pending at Head Office level solved with higher priority

for smooth functioning of bank operation and quick disposal of the

proposals. All the decisions made at Head Office level through different

committee.

At branch level all the decision taken by the Branch manager complying

rules and regulations set by the Head Office. Branch manager has the

supreme authority to final disbursement of the facility to the customer. All

credit facilities under branch delegation exercise through credit committee.



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Deputy manager coordinates all the functions of the branch as Manager

Operation.

2.3 Organization structure of FSBL Limited

a. FSBL of Bangladesh Ltd. (Head Office)

Chairman

Managing Director (M.D)

Deputy Managing Director (D.M.D)

Executive Vice President (E.V.P)

Senior Vice President (S.V.P.)

Vice President (V.P)

Senior Assistant Vice President (S.A.V.P)

Assistant Vice President (A.V.P)

Senior Principal Officer (S.P.O.)

Principal Officer (P.O.)

Executive Officer (E.O.)

Officer

Junior Officer (J.O)



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b. FSBL of Bangladesh Ltd. (Agrabad Branch)

Senior Assistant Vice President (S.A.V.P)

Assistant Vice President (A.V.P.)

Principal Officer (P.O.)

Executive Officer (E.O.)

Officer

Junior Officer (J.O)

2.4 Sources of Fund

FSBL uses various sources to raise its funds. Among the available sources,

deposits occupy the lion share of the sources. FSBL has introduced various

types of attractive saving schemes that motivate the saver to save their

money at a pretty interest rate.

The total amount of deposits, which was Tk.3080.20 million at the end of

the year 2001 have increased to Tk.5230.30 million at the end of the year

2005. It shows a greater improvement in creating funds.

Besides deposits, paid up capital, provision and reserves and other liabilities

are the main sources of fund.



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2.5Capital Adequacy Ratio

In terms of section 13(A) of Banking Companies Act 1991 and BRPD

circular no. 01,14 and 10, required capital of the Bank at the close of

business on 31st December 2004 was required to be Tk.337,724,216as

against available core capital of Tk.253,660,186 and supplementary capital

of Tk.38,863,488, that is, a total of Tk.292,523,674.

Amounts in

Taka

At 31st Dec.2004

Core Capital (Tier-1)

Paid up capital 200,000,000Statutory reserve 18,026,557

Other reserve 24,000,000

Retained profit 11,633,629

253,660,186

Supplementary capital (Tier-2)

General provision on unclassified loans (1%) 37,444,410

Exchange equalization account 1,419,078

38,863,488

292,523,674

This shortfall of Tk.45, 200,542 (337,724,216-292,523,674) is yet required

to be filled up.



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2.6 Credit and Advance Policy

FSBL invests both in public sector and private sector. Its credit portfolio is

consisted of Financing in export and import.

Financing in working capital.

Financing in business transaction.

Financing in purchasing consumer goods.

Financing in projects etc.

FSBL has been expediting financing in small and medium sized industries

and business with the aim of creating enthusiasm among the entrepreneurs.

2.7 Financial Products/Services of FSBL Limited

Products and Services of FSBL can be described in 3 dichotomies:

Depository Products:

01.Current Account 04. FDR

02. Saving Account 05. Deposit Schemes03. STD Account a) Monthly Saving Scheme

b) Double Benefit Deposit Scheme

c) Monthly Benefit Deposit Scheme

Loan Products:

1. Loan General

2. Secured Overdraft

3. Cash Credit (Hypo)

4. Lease Finance

5. Hire Purchase6. Consumer Credit Scheme

7. Packing Loan

8. Payment Against Document

9. Loan Against Trust Receipt

10.Loan Import Merchandise

11.Export Cash Credit



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Other Products and Services

01.Ready Cash

02.Remittance

03.Collection of Utility Bills

2.8 Special features of FSBL Limited

01.Encashment of Cheque within 45 seconds

02.Attractive interest rate

03.Competitive L/C commission and other charges

04.Emphasis on small loan disbursement

05.Promoting saving tendency of mass people by introducing attractive new

saving scheme.

06.Expedite industrialization by providing long-term loan through lease

finance.

07.Micro Credit facility for middle class people.

08.Step taken for elevation of poverty by opening branch in rural areas and

providing loan facility in income generating project of rural middle class and

others.

09.Reducing dependence on interest income by increasing fee based income.

10.Decentralized delegation of authority, 75% decision is taken at branch

level.11.Application of modern technology and producing quality service for the

customer.

2.9 Performance of FSBL Limited

As on Dec.31, 2004 As on Dec.31, 2005

Paid up Capital Tk.21, 12,40,429 Tk. 25, 36,60,186

Total asset Tk.4459529149 Tk.7227449242

Deposit Tk.3080.20 million Tk.5230.30 million

Loans and Advances Tk.2539.80 million Tk.4102.61 million

Import Tk.2222.60 million Tk. 3750.60 million

Export Tk.1514.50 million Tk.1988.40 million

Profit Tk.7.59 crore Tk. 12.71 crore

No of Branches 20 25

Manpower 165 225



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Chapter Three

Operations of FSBL,Agrabad Branch, Chittagong.

The importance of the mobilization of savings for the economic

development of our country can hardly be over emphasized. We consider

savings and deposits as lifeblood of the bank. More the deposit, greater is the

strength of the bank. The bank intends to launch various new savings

scheme with prospect of higher return duly supported by a well-orchestrated

system of customer services. The bank would cater to the credit needs of

individuals as well as corporate clients. Initially it will emphasize on trade

finance, which would be short term and self-liquidating in nature.

Considering the importance of foreign trade in our country, financing and

handling of Export & Import business and also handling of foreign

remittance would be given top most priority.

3.1 Customer Service & Account Opening Department

Functions:

Account opening Cheque book issuing

Signature scanning

MSS opening

MSS closing

Account transfer

Account closing

Answering customers quarries

Procedure of opens an Account in FSBL Limited:First of all, one has to fill up an Account opening form and a Cheque

requisition form. An introducer who is an account holder of this bank, attest

the customers photographs and the form. Then the banker will put an

account number and give a Deposit slip to the customer. The customer must

deposit minimum Tk.1000 to that account number of the bank. Then the



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Relationship between the Banker and the Customer will establish. After

that the bank will issue a Cheque Book on the customers name.

Procedure of close an Account in FSBL Limited:

At first the client will apply to close his account. The banker will verify the

signature of the application and take his Cheque book. Then the bank will

provide him the deposited amount after deduction of the closing charge(s).

In case of current account at first the liability will be adjusted with his

deposit and then make payment.

Requirements for Opening an Account:

SB (Savings)

An introducer

Photograph of the A/C holder (2 copies)

Nationality certificate/First 7 pages of passport (Photocopy)

Photograph and signature of nominee.

CD (Individual/Joint)

An introducer




CD (Proprietorship firm)

An introducer




Attested photocopy of trade license.

CD (Partnership firm)

An introducer




Attested photocopy of trade license



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Certified copy of Partnership Deed duly signed by all the partners.

Partnership A/C agreement

Resolution signed by all the partners to open A/C.

CD (Limited Company) An introducer



Certified copy of the Memorandum & Articles of Association

Certified copy of Certificate of Incorporation

Certified copy of Certificate of Commencement (In case of Public

Limited Co.)

List of Directors

Certified copy of Resolution of the Board of Directors for opening &operating of the A/C.

Interest Rate of Different Deposits:

Deposits Rate

1. Short term deposit

2. Savings deposit3. Fixed deposit

For one month

For three months

For six months

For one year & above

5.5%

7.5%

8%

9.5%

10.00%

10.50%

Monthly Savings Scheme:Small savings can formulate large deposit. Savings increases mental power

of a man, form capital and increases the confidence of a depositor.

FSBLintroduce a saving scheme with high profit for the purpose of increases

saving mentality. In this savings scheme one can deposit money in every

month and will get a handsome amount of money at the end of certain



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period. The amount of savings/deposits as per monthly installment and

period is shown in below:

Period Monthly

installment

Tk.250

Monthly

installment

Tk.500

Monthly

installment

Tk.1000

Monthly

installment

Tk.50005 years Tk.19615 Tk.39230 Tk.78460 Tk.392300

8 years Tk.37367 Tk.74735 Tk.149470 Tk.747350

10 years Tk.52702 Tk.105405 Tk.210810 Tk.1054050

3.2 Bills and Remittance Department

Bank has branches throughout the country and therefore, they serve as best

medium for remittance of funds from one place to another. This service is

available to both customers and non-customers of the bank.

Functions:

Issuing TT, DD, PO, SDR

Collection of outward Cheque

Collection of inward Cheque

Providing Accounts statement

Settlement of MBSS, DBDS, FDR

Solvency certificate issuing

Payment Order / Pay Order (P.O)

This is an instrument issued by the branch of a bank for enabling the

Customer/Purchaser to pay certain amount of money to the order of a certain

person/firm/organization/office within the same clearinghouse area of thepay order-issuing branch.

Characteristics of P.O

The issuing branch and paying branch are same.

Application for payment within the clearinghouse area of the

issuing branch.

This may be open or can be crossed.



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Demand Draft (D.D)

This is an instrument through which customers money is remitted to another

person/firm/organization in outside the clearinghouse area from a branch ofone bank to an outstation branch of the same bank or to a branch of another

bank (with prior arrangement between that bank with the issuing branch).

This is an order instrument in which the issuing branch gives instruction to

the payee/drawer branch to pay certain amount of money to the order of

certain person/firm/organization.

Telegraphic/ Telephonic Transfer (T.T)

This is a mode of transfer of customers money from a branch of one bank to

another branch of the same bank through telegraphic/telephonic message.

The issuing branch used to send the message of such remittance through

telegraph/telephone adding certain code number or test number on the basis

of test key apparatus developed by the concerned bank for its different

branches.

Characteristics of T.T

Issued by one branch to other branch and message is tale-

communicated.

Remittance/ transfer of money is done through tested tale-messages. Remittance is affected on the basis of tested message.

Test key apparatus is required.

Clearing house

Clearing House is a place in the Central Bank where different banks come to

settle their interrelated liabilities.

Clearing House SystemThe mechanism of working at a Clearing House in general is as follows:

Every Bank of the locality, which is a member of the clearinghouse,

prepares a Bank-wish list of cheques after receive from customers and

drawn on different Banks of the locality.



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An officer, in charge of clearinghouse, goes to the clearinghouse in the

morning with the cheques and their list. He delivers the cheques to the

officials of the respective banks. Similarly, he also receives the cheques

drawn on his Bank from the officials of the other banks.

The official of each bank computerizes the final balance, payable or

receivable by his Bank after taking into account the various amount of

receipt and payment.

The official return of their respective Bank to meet again in the afternoon

to return any dishonored instruments to the officials of the respective

Banks.

The final settlement is effective by the supervisor of the clearinghouse by

debiting or crediting, as the case may be, the accounts of the respective

Banks as maintained with the clearinghouse.

3.3 FOREIGN EXCHANGE DEPARTMENT

Foreign Exchange refers to the process or mechanism by which the currency

of one country is converted into another country. Foreign exchange is the

means and methods by which rights to wealth in a countrys currency are

converted into rights to wealth in another countrys currency. The foreign

exchange department of FSBL,Agrabad branch is playing an important role

in enhancing exports earning. Which aids economic growth and will be

helpful for economic boost. On the other hand, it also helps to meet those

goods and services, which are more demanding and note adequate in our

country.



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Foreign Exchange Department in FSBL Agrabad Branch:

Foreign exchange department of FSBLAgrabad Branch has been

divided into two sections----

1. Foreign Remittance.

2. L/C Operation.

L/C operation can be aging classified into two sections: Import Section.

Export Section.

Bachelor of Business Administration (BBA) ----------------------------------------

Importoperation.

Foreign CurrencyA/C

Exportoperation.

Inwardremittance

Page 19 of 36

Foreign RemittanceL/C Operation

Outward

remittance


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Some important terms of foreign exchange:

Letter of Credit:

Letter of credit can be defined as a Credit Contract whereby the buyersbank is committee (on behalf of the buyers) to place an agreed amount of

money at the sellers disposal under some agreed conditions. Since the agreed

conditions include amongst other things, the presentation of some specified

documents, the letter of credit is called Documentary letter of credit. The

uniform customs and practices for documentary (UCPDC) published by

International Chamber of Commerce (1993) revision, publication no 500

define Documentary Credit.

Any arrangement however named or described whereby a bank (the issuing

bank) acting at the request and on the instruction of customs (the Application)

or on its own behalf,

Is to make a payment to or to the order of a third party (the

beneficiary) or is to accept and pay bills of exchange (Drafts) drawn

by the beneficiary or

Authorize another bank to effect such payment or to accept and pay

such bills of exchange (Drafts)

Authorize another bank to negotiate against stipulated documents

provide that terms and conditions are complied with.

FORMS OF DOCUMENTARY CREDIT:

1. Revocable Credit:

A revocable credit is one where the issuing bank at liberty to revoke i.e.

cancels the credit at any time. According to UCPDC a revocable credit may

amend or cancelled by the issuing bank at any moment and without prior

notice to the beneficiary before shipment of consignment against the L/C.

2. Irrevocable Credit:

An irrevocable L/C is one, which cannot be revoked, amended or modified

by the bank with the concurrence of the interested parties.

Parties involved in the process of Letter of Credit

Importer (Buyer)/ Application.

The Issuing Bank (Opening Bank)

The Advising Bank/ Notifying Bank



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Exporter/ Seller (Beneficiary)

Confirming Bank

Negotiating Bank

The Paying/ Reimbursing/ Accepting/ Remitting Bank.

a) Applicant:The person/ body (customer of the bank) that request the bank (opening

bank) to issue letter of credit. As per instruction and on behalf of the

applicant, bank open L/C in line with terms and condition of the sales

contract between the buyer and seller.

b) Opening bank/ issuing bank:

The bank which open/ issue on behalf pf the applicant/import. Issuing

banks obligation is to make payment against presentation of documents

drawn strictly as per terms of the L/C.

c) Advising/ notifying bank:The bank through which the L/C is advised/ forwarded to the beneficiary

(exporter). The responsibility of advising bank is to communicate the L/C to

the beneficiary after checking the authenticity of the credit. The advising

bank acts only as agent of the issuing bank without having any engagement

on their part.

d) Beneficiary:

Beneficiary of the L/C is the party in whose favor the letter of credit is

issued. Usually they are the seller or exporter.

e) Confirming bank:

The bank, which under instruction in the under letter of credit, addconformation of making payment in addition to the issuing Bank. It is done

at the request of the issuing Bank having arrangement with them. This

conformation constitutes a definite undertaking on the part of the confirming

Bank in addition to that of issuing Bank.

f) Negotiating Bank:

The Bank, which negotiate documents and pays the amount to the

beneficiary when presented complying credit terms. If the negotiation ofdocuments is not restricted to a particular Bank is the Banker of the

beneficiary.

g) Reimbursing / Paying Bank:

The Bank nominated in the credit by the issuing Bank to make payment

stipulated in the document, complying with the reimbursement Bank.



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Mechanism of L/C operation

Legends:

1. L/C opening

2. Present document.

3. Payment against document.

4. Confirming L/C.

5. Submit document.6. Makes document.

7. Issue L/C.

8. Forward Document.

9. Makes document.

IMPORT SECTION

Bachelor of Business Administration (BBA) ----------------------------------------

Buyer

(Importer) Seller (Exporter)

Issuing

Bank

Reimbursement Bank

Advising bank

Page 22 of 36


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Import section deals with L/C opening and post import financing i.e. LIM &

LTR. Now the procedure from opening L/C to disbursement against L/C is

given below:

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

following documents.

An application.

Indent or Proforma Invoice.

Import Registration Certificate (IRC).

Taxpayers Identification Certificate (TIN)

Insurance cover note with money receipt.

A bank account in First Security Bank, Agrabad Branch.

Membership of chamber of commerce.

Indent or Proforma invoice:

Indent or proforma Invoice is the sale contract between seller and buyer in

import- export business. There is slight difference between indent and

proforma invoice. The sales contract, which is direct correspondence

between importer and exporter, is called Proforma invoice. There is no

intermediary between them. On the other hand, there may be an agent of

exporter in importers country. In this regard, if the sale contract is occurred

between the agent of exporter and importer then it is called indent.

DELIVERED FORMS BY BANKER TO IMPORTER:

After scrutinizing above-mentioned documents carefully, officer delivers the

following forms to be filled up by importer and banker should check:

Whether the goods to be imported is permissible or not.

Whether the goods to be imported is demanding or not.

The forms are:L/C Application Form:

L/C Application Form is a sort of an agreement between customer and bank

on the basis of which letter of credit is opened. First Security Bank, Agrabad

Branch provides a printed form for opening of L/C to the importer. A special

adhesive stamp of value Tk. 150 is affixed on the form in accordance with



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Stamp Act in force. While opening, the stamp is cancelled. Usually the

importer gives the following information.

Full name and address of the importer.

Full name and address of the beneficiary.

Draft amount.A availability of the credit by the sight

payment/acceptance/negotiation/deferred payment.

Time bar within which the documents should be presented.

Sales type (CIF/FOB/C&F).

Brief specification of commodities, price, quantity, indent no.

Country of origin.

Bangladesh Bank registration no.

Import License/LACF no.

IRC no. Account on.

Documents no.

Insurance Cover Note/Policy no. date, amount.

Name and address of Insurance Company.

Whether the partial shipment is allowed or not.

Whether the transshipment is allowed or not.

last date of shipment.

Last date of negotiation.

Other terms and conditions (if any).

Whether the confirmation of the credit is requested by thebeneficiary or not.

The L/C application must be completed/filled in properly a

signed by the authorized person of the importer before it is

submitted to the issuing bank.

L/C Authorization Form (L/CAF):

The Letter of Credit Authorization Form (LCAF) is the form prescribed for

the authorization of opening letter of credit/payment against import and usedin lieu of import license. The authorized dealers are empowered to issue

LCA forms to the importers as per basis of licensing of the Import Policy

order in force to allow import in Bangladesh. If foreigner exchange is

intended to be bought from the Bangladesh Bank against an LCAF, it has to

be registered with Bangladesh Banks Registration unit located in the

concerned area office of the CCI&E. The LCA Forma available with



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authorized dealers is issued in set of five (05) copies each. First Copy is

exchange control area of CCI&E office by authorized dealer/Registration

Unit of Bangladesh Bank. Quadruplicate Copy is kept as office copy by

authorized dealer/ Registration Unit. The Letter of Credit Authorization

Form (LCAF) contains the following- Name and address of the importer.

IRC no. and year of renewal.

Amount of L/C applied for (both in figure and word).

Description of item(s) to be imported.

ITC Number/ HS code no.

Signature of the importer with seal.

List of goods to be imported.

Imports permit form (IMP): L/C authorization form no.

Date

Value of taka

Registration of LCAF.

Quantity of goods.

Invoice value.

Country of origin.

Port of shipment.

Name of the vessel. Indenters address.

Preparation of L/C by Banker:

Banks officer prepares L/C when above-mentioned forms are to be

submitted by customer of importer. Before preparing L/C DBL

officer scrutinizes the application in the following manner.

1. The terms and conditions of the L/C must be complied with

UCPDC 500 and Exchange Control & Import Trade Regulation

2. Eligibility of the goods to be imported.3. The L/C must not be opened in favor of the importer.

4. Radioactivity report in case of food item.

Survey reports or certificate in case of old machinery is required.

Bank of the importer is called L/C Issuing Bank. Then issuing bank

inform its corresponding bank, called Advising Bank or

Confirming Bank located in exporters country to advise and the



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credit forward to the exporter and simultaneously officer makes L/C

opening vouchers.

Deskwork:

One debit voucher to be passed. Corresponding credit vouchers to be

passed (margin, commission, postage, stamp, F.F.C/ and othersLiability voucher to be passed.

Some inevitable notion in foreign exchange:

Bill of exchange:

According to the Section 05, Negotiable instrument (NI) Act- 1881 A

Bill of exchange is an instrument in writing containing an unconditional

order signed by the maker, directing a certain person to pay (on demand or

at fixed or a determinable future rate) a certain some of money only to or

to the order of a certain person or to the bearer of the instrument.

It may be either at sight or day sight. At sight means making payment

whenever the document will reach in the issuing Bank.

Commercial Invoice:

Commercial invoice issued by Exporter in the accounting document bywhich the seller charges the goods to buyer.

CHAPTER FOUR

Performance of FSBL AgrabadBranch



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4.1 Deposits of FSBL Agrabad Branch

Since this is a branch of FSBLso its main source of deposit is public deposit.

The various deposited amount of 30th September 2006 and 31st December

2006 is shown in the following table:

Deposits 30th Sep. 2006 31st Dec. 2006

C.D Tk.1, 65, 45,765.10 Tk.1, 88, 41, 884.15

S.D Tk.2, 99,38,149.55 Tk.3, 07, 33, 972.13

S.T.D Tk.3, 56,72,183.12 Tk.3, 41,67,222.80

F.D Tk.51, 79,27,390.00 Tk.51, 93,47,860.00

MSS

MBSS

DBDS

Tk.4, 45,32,575.85

Tk.9, 58,47,500.00

Tk.4, 55,11,578.32

Tk.4, 98,82,507.70

Tk.9, 79,22,500.00

Tk.4,59,93,594.16

Total Tk.78, 59,75,141.90 Tk.79, 68,89,540.90

So from the above table it is clear that the maximum deposit is Fixed

Deposit. And the total amount is increasing. So as per deposit the

performance is satisfactory.

4.2 Loans & Advances Portfolio

Now we show the credit portfolio of FSBLAgrabadBranch,in 31st December2006

Types of Loan 31st Dec.2006

Loan General Tk.1, 91,24,632.77

Loans against imported merchandise Tk.1, 89,71,801.52

LTR Tk.82, 62,362.52

Packing Credit Tk.15, 04,118.37

House Building Loan Tk.25, 29,194.43

P.A.D Tk.33, 69,943.13

Cash Credit (Hypo) Tk.3, 62,74,847.48SOD Tk.22, 17,39,491.87

CFS Tk.42, 85,489.89

Hire purchase Tk.36, 91,032.17

Car loan Tk.5, 44,993.00

FDBP Tk.36, 63,74,361.64

SOD: Export Tk.2, 66,24,455.85



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Total Tk.71, 32,96,724.64

From the above table we see the position of different types of loans

sanctioned by FSBL AgrabadBranch,4.3 Deposits and Loans & Advances

The total amount of Deposits and Loans & Advances made by FSBL,

Agrabad Branch from the year 2002 to 2003 are shown in the

following table:

2005 2006

Deposits Tk.58, 91,32,572.18 Tk.79, 68,89,540.90

Loans & Advances Tk.51, 16,97,445.56 Tk.71, 32,96,724.64

From the above table it is clear that Loans & Advances made by the branch

are less than its Deposits. Both Deposits and Loans & Advances are

increasing from year 2002 to tear 2003 that is good for the bank. The Credit-

Deposit ratio is 89.51% for the year 2003 that is good for the bank.

4.4 Income, Expenditure & Profit

The total amount of Income, Expenditure & Profit made by FSBLAgrabad

Branch, from the year 2002 to 2003 are shown in the following

table:

Year 2002 Year 2003

Income Tk.7, 85,92,954.57 Tk.11, 51,37,642.28

Expenditure Tk. 5,46,11,917.91 Tk. 7,40,31,287.84

Profit Tk.2, 39,81,036.66 Tk. 4,11,06,354.44

From the above table, it is clear that the profit of FSBLAgrabad Branch isincreases significantly in year 2003 from year 2002. So it is a satisfactory

performance of FSBLAgrabadBranch.

4.5 Customers Satisfaction Level



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By assessing the customers satisfaction, we find that around 85% customer

are satisfied with the services provided by FSBL AgrabadBranch. So, it isclear that FSBL AgrabadBranch provides a reasonably satisfactory serviceto the customer. But they have to improve their services to compete with

other Private Banks of our country.Reasons of Satisfaction

Well-furnish and air condition room.

Officers are cordial and well mannered.

Reasonably quick service.

Various types of saving deposit schemes and interest rate on these

schemes is competitively high.

Various types of Loans & Advance opportunities and Bank take very

little time to sanction Loan.

Transactions continue at launch period in the Bank.

Customer friendly terms & conditions.

Competitive interest rate.

Reasons of dissatisfaction

Junior officers & Assistant officers are not well qualified.

Some customer hopes more entertainment from the Bank.

Some customer think long-term credit facility is not available.

Absence of on-line Banking facility.

Very much profit oriented.

Limitations:

1. The promotional measures for marketing of existing services are not

taken aggressively to reach every initiatives and special facilities at

the door of the customers.



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2. Schemes for poor are not available.

3. The branch network is limited to some area. In Chittagong city there

are only two branches.

4. Maximum officers are working in a specific desk for a long period of

time. As a result, they may feel monotony, their skills do not increase,they do not know about the overall banking.

5. Absence of long-term credit.

6. Number of employees is more than required.

7. Officers in the junior level are not highly qualified.

8. Lack of modern business methods.

9. Training facility is not available, especially for lower level officers.

10.Necessary Documents like Prospectus, Annual Report, Bulletin,

Brochure etc. are not available in the Bank.

4.6 SOWT Analysis

By analyzing the performance of the bank, we get the following Strengths,

Weaknesses, Opportunities and Threats (SWOT).

Strengths:

1. It has well reputation in the market.

2. Not engaged in unfair business practice.

3. Executives are highly educated and experienced.

4. Bank has many attractive deposit schemes.

5. Well-furnished and Air-conditioned Bank.

6. Efficient management practice in the Bank.

7. Located in important commercial area.

Weaknesses:

1. Officers in the junior level are not highly qualified.

2. Short time experience of the Bank.

3. Absence of long-term credit.

4. Small market shares in banking business.



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5. Lack of training facility.

6. Lack of promotional activities.

Opportunities:1. Can increase the credit scheme.

2. Private Banks becomes more reliable to local public.

3. Have opportunity to increase market share.

4. Private Banks can contribute more in the economic

development of our country.

5. By doing social welfare activities it can create a good impact on

public mind.

Threats:

1. There are many competitors in the market.

2. Govt. pressures to reduce interest rate.

3. Banking technologies are changed.

4. Govt. imposes tax & VAT on profit.

5. Govt. restricted Banking activities.

Chapter Five- Recommendations & Conclusion

5.1 Areas Of Improvements



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From the driven findings, the following recommendations can be formulated

for FSBL:

Reduce the rate interest of loans & advances so that the borrowers havethe ability to conduct business as usual.

FSBL is running the risk of lending more than what they are provisioned

for. Albeit the negative relationship between banks credit risk and return

on equity is not significant in context of Bangladesh, FSBL can manage

to reduce their credit risk by increasing their amount of deposits.

FSBL can use its total assets so that it can increase the profit.

Increasing the individual banks deposit can also enhance the market size

of FSBL as a sequel they can improve their return on equity. This can be

concluded from the significant relationship existing between market size

and return on equity in context of Bangladesh.

FSBL can improve their distribution channel so that they can give

customers a sense of availability of their desired products.

To reduce cost of information.

FSBL considering the concentration factor can think of creating more

brand awareness as the reputed ones are enjoying the advantage.

FSBL can introduce new products so that customer can determine the

right product offering for their portfolio.

FSBL can bring in flexible loan offers to make them more attractive in

the core level.

FSBL will have to adopt standards in capital adequacy, income

recognition and provisioning norms.

Risk management setup in FSBL will need to be strengthened.



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Benchmark standards could be evolved.

Payment and settlement system will have to be strengthened to ensure

transfer of funds on real time basis eliminating risks associated with

transactions and settlement process.

Regulatory set-up will have to be strengthened, in line with the

requirements of a market-led integrated financial system.

Banks may have to evaluate on an ongoing basis, internally, the need to

effect structural changes in the organization. This will include capital

restructuring through mergers / acquisitions and other measures in the

best business interests.

There should be constant and continual up gradation of technology in the

Banks, benefiting both the customer and the bank. Banks may enter into

partnership among themselves for reaping maximum benefits, through

consultations and coordination with reputed IT companies.

The skills of bank staff should be upgraded continuously through

training. In this regard, the banks may have to re-look at the existing

training modules and effect necessary changes, wherever required.

Seminars and conferences on all relevant and emerging issues should be

encouraged.

Banks will have to set up Research and Market Intelligence units within

the organization, so as to remain innovative, to ensure customer

satisfaction and to keep abreast of market developments. Banks will

have to interact constantly with the industry bodies, trade associations,

farming community, academic / research institutions and initiate studies,

pilot projects, etc. for evolving better financial models.

5.2 Conclusion

FSBL have introduced a new dimension in the field of innovative and

benevolent banking in our country. The bank has successfully made a

positive contribution to the economy of Bangladesh with in very short period

of time. Its profit is gradually increasing.



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It plays a great role in collecting scattered Deposit, Loan settlement and

International Trade etc. The Bank ensures quality services to the customers.

For better growth and healthy economic position, it should introduce new

and lucrative long-term credit schemes especially for new investors andschemes for poverty alleviation like micro credit.

We hope FSBL do more work for socio-economic development besides

there banking business. To keep pace with ever-changing uncertain domestic

business environment and face the challenges of revised global economic

scenario, the bank should be more pro-active and responsive to introduce

new marketing strategy to hold the strong position in home and abroad.

I wish continuous success and healthy business portfolio of FSBL Agrabad

Branch, Chittagong.

BIBLIOGRAPHY

Books:

1. Principles Of Managerial Finance By



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Lawrence J. Gitman

2. Financial Management By

Brigham & Ehrhardt

3. Strategic Management By

Pearce & Robinson

Manual:

4. First Security Bank Limited Manual.

5. Annual Report Of First Security Bank Limited.

6. The website of First Security Bank Limited (www. first securitybank.com)

7.Various leaflets of the Bank.

8.Daily affairs of FSBL AgrabadBranch.9.Previous years internship report.

10. Iqbal Kabir Mohon- Modern Banking.

KEY WORD and SPECIAL TERMS

EXIM Export Import Bank of Bangladesh LimitedCD Current DepositSB Savings BankSTD Short Term DepositPO Pay-Order

http://www.prime-bank.com/http://www.prime-bank.com/http://www.prime-bank.com/http://www.prime-bank.com/http://www.prime-bank.com/


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TT Telegraphic TransferMT Mail TransferDD Demand DraftIBC Inward Bills for CollectionOBC Outward Bills for CollectionSOD Secured OverdraftCC(H) Cash Credit (Hypo)CC(P) Cash Credit (Pledge)ECC Export Cash CreditDA Documents Against AcceptanceDP Demand Promissory NotePAD Payment Against DocumentLIM Loan Against Imported MerchandiseLTR Loan Against Trust ReceiptsLBP(D) Local Bill Purchase by Documents

LBP(C) Local Bill Purchase by CleanLBP(F) Local Bill Purchase by ForeignPC Packing CreditMC Micro CreditLG Letter of GuaranteeIRC Import Registration CertificateERC Export Registration CertificateSTA Special Trading Arrangement

Report on First Security Bank_General Banking

Documents

Transcript of Report on First Security Bank_General Banking