Full Report

AN INTERNSHIP REPORT

ON

DEPOSIT AND LOAN MANAGEMENT OF IFIC BANK LIMITED

Prepared By

Syeda Rebeca Haque

Student ID: 0603012

BBA

Level-4, Semester-II

Supervised By

Rafia Akhtar,

Assistant Professor,

Department of Management,

HSTU, Dinajpur-5200

This report is submitted to the Business Studies Facultyin partial fulfillment of the requirements for the degree of

Bachelor of Business Administration (BBA)

Hajee Mohammad Danesh Science and Technology University,Dinajpur-5200

Aug-2010

DEPOSIT AND LOAN MANAGEMENT OF IFIC BANK LIMITED

An Internship Report

By

Syeda Rebeca Haque

Student ID: 0603012Session: 2005-2006

Semester: July-December 2009

Approved as to style and content by

( Rafia Akhtar)Supervisor,

Internship ProgramAnd

Assistant Professor, Department of Management

(Prof. Dr. Fahima Khanam)Chairman,

Examination CommitteeAnd

Dean, Faculty of Business Studies

Faculty of Busines StudiesHajee Mohammad Danesh Science and Technology

University, Dinajpur-5200

Aug-2010

Letter of Submittal

August 17, 2010

Rafia Akhtar,


Department of Management,

HSTU, Dinajpur-5200

Subject: Submission of Internship Report on Deposit and Loan Management of IFIC Bank Limited

Dear Madam,

I would like to thank you for assigning me this subject to prepare the internship

report. In connection of my practical orientation in IFIC Bank Ltd., I would like to

submit my report to you for your perusal.

I have prepared this report on the basis of my practical exposure both at Dinajpur

Branch and Head Office in the aspects of Deposit Management, Management of

Loans & Advances as well as General Banking activities of IFIC Bank Ltd.

I will be very glad if the report can serve its actual purpose and I am ready to explain

anything to you if you feel necessary.

Sincerely Yours,

Syeda Rebeca Haque

Student ID: 0603012

BBA

Level-4, Semester-II

Hajee Mohammad Danesh Science and Technology University,

Dinajpur-5200

Supervisor’s Declaration

I hereby declare that Syeda Rebeca Haque, Student no. 0603012, BBA, Level-

4, Semester-II, have submitted her internship report entitled “The Deposit and Loan

Management of IFIC Bank” after completing her internship program under my

supervision. This report has been submitted in partial fulfillment of the requirement

for the degree of Bachelor of Business Administration (BBA) at Hajee Mohammad

Danesh Science and Technology University, Dinajpur-5200.

_________________Rafia Akhtar


Department of Management

Faculty of Business Studies

HSTU, Dinajpur-5200

ACKNOWLEDGEMENT

At the very beginning, I would like to express my sincere gratitude to Allah, who has

given me the chance to complete my internship report in a very comfortable manner.

This is an attempt to make an analysis of Deposit Management and Loan

Management of IFIC Bank Limited as a part of the internship program.

However to make this I am indebted to many persons for their ideas and

assistance.

First of all, I would like to thank to Prof. Dr. Fahima Khanam, Dean,Faculty of

Business Studies, Hajee Mohammad Danesh Science & Technology

University ,Dinajpur-5200 who forwarded for placement to carry out the Internship

program in IFIC Bank Limited.

I would like to express my indebtedness to my internship supervisor Rafia

Akhtar, Assistant Professor, Department of Management, Hajee Mohammad

Danesh Science and Technology University, Dinajpur, for helping me and giving

assistance in preparing the report.

I would like to thank to Mr. Mosharraf Hossain, Managing Director, IFIC Bank,

to allow me for the program in this well-reputed organization. I’m very grateful

to Md. Mostaque Hossain Chowdhury, FAVP & Manager of Dinajpur Branch of

the IFIC Bank and every official and employees of that branch for their

continuous cooperation, sharing their time, supplying necessary documents and

giving suggestions and supervisions.

Author

Executive Summary

A bank as an institution whose debts (bank deposits) are widely accepted in settlement

of other peoples debts to each other. So Deposit and Loan Management is the supreme

aspect of banking activities. Loan is a lender’s trust in a person’s/ firm’s/ or

company’s ability or potential ability and intention to repay. In other words, loan and

credit is the ability to command goods or services of another in return for promise to

pay such goods or services at some specified time in the future. For a bank, it is the

main source of profit and on the other hand, the wrong use of credit would bring

disaster not only for the bank but also for the economy as a whole.

The objectives of The Deposit and Loan Management are to maximize the performing

asset and to minimize the non-performing asset as well as ensuring the optimal point

of loan and advance and their efficient management The overall success in Deposit

and Loan Management depends on the banks deposits and credit policy, portfolio of

credit, monitoring, supervision and follow-up of the loan and advance.

Like other Commercial Bank the IFIC Bank also invests their money to earn profit. But

they are differs in the manner of operation. The IFIC Bank is a customer-oriented bank.

The philosophy of The IFIC Bank is to be the most caring and customer friendly

provider of financial services, creating opportunities for more people in more places.

The IFIC Bank is committed to ensure stability and sound growth while enhancing the

value of shareholders investments by effective Deposit Management and Loan

Management. As bank of new millennium IFIC Bank aggressively adopt technology at

all levels of operations to improve efficiency and reduce cost per transaction. To ensure

a high level of transparency and ethical standards in all business transaction it trains

and equips fresh recruits for building a strong foundation and appoints skilled

manpower to cope with the growing business need. To improve efficiency and

effectiveness of Deposit and Loan Management they are building up infrastructure to

introduce Online Banking facility, Credit Card system as soon as possible. The IFIC

Bank is also working actively to set up new branches in different prime location to

ensure their presence closer to their customers.

TABLE OF CONTENTS

Letter of Transmittal ivSupervisor’s Declaration vCertificate from IFIC Bank viAcknowledgement viiExecutive Summary viiiList of Figures xiList of Tables xi

SL. No.CHAPTER ONE

IntroductionPage No.

1. 1 Background of the Study 01

1. 2 Objectives of the Study 011. 3 Scope of the Study 021. 4 Limitations of the Study 02

CHAPTER TWOMethodology of the Study

2. 1 Introduction 032. 2 Selection of Study Area 032. 3 Population and Sample 032. 4 Sampling Technique 042. 5 Data Collection 042. 6 Statistical Tools Used 042. 7 Study Time Line and Cost 05

CHAPTER THREEOverview of the Bank

3. 1 Banks in our country 06

3. 2 Introduction of IFIC Bank 063. 3 Milestones in the Development of IFIC BANK 063. 4 Objective of the Bank 07

3. 5 Mission of the Bank 07

3. 6 Management Structure 07

3. 7 Human Resources Development (HRD) 09

3. 8 Activities at A glance 09

SL. No.CHAPTER FOUR

Results and DiscussionsPage No.

Deposit Management of IFIC Bank Limited

4. 1 Introduction of Deposit Management 104. 2 Objectives of Deposit Management 104. 3 Various Deposits Accounts Served by IFIC Bank 10

4. 3. 1 Current Deposit Account 114. 3. 2 Saving Deposit Account 114. 3. 3 FDR Section 12

4. 3. 3.1 Short Term Deposit Account 124. 3. 3. 2 Term Deposits 12

4. 4 Deposit Schemes of IFIC Bank 134. 4. 1 Monthly Income Scheme 134. 4. 2 Pension Saving Scheme 134. 4. 3 Education savings Scheme 144. 4. 4 Double Return Deposit Scheme 144. 4. 5 Three Years Deposit Plus 144. 5 Utilization of Deposit Fund 15

4. 5. 1 IFIC Bank Treasury Division 154. 5. 2 Major Functions of Treasury Division 154. 6 Customer Services for the Depositors 16

Loan Management of IFIC Bank

4. 7 Loan Management 164. 8 Objectives of Loan Management 174. 9 Loan Policy of IFIC Bank Limited 174. 10 Various Types of Loans, Advances and Investment 184. 11 Loans at a glance 18

4.12Loan Management Practice of IFIC Bank and Guideline of Bangladesh Bank

24

4.13 Credit Rating of IFIC Bank 284. 13. 1 CAMELS Rating of Banks- Bangladesh 284. 14 Deposit and Loan Management in Abroad 294.15 Recent Performance of Deposit and Loan Management 30

CHAPTER FIVE Summary of the Findings and Discussions

5. 1 SWOT Analysis of IFIC Bank 32

SL. No.CHAPTER SIX

Conclusion and Recommendation Page No.

6.1 Conclusion 336.2 Recommendations 33

References and Bibliography 35

Appendix 36

SL LIST OF FIGURES Page

F-1 Organizational Structure of IFIC Bank 08F-2 Loan Approval Process of IFIC Bank 26

SL LIST OF TABLES Page

T-1 Sample Size of the Study 03T-2 Primary and Secondary Sources of Data 04T-3 Study Timeline 05T-4 Activities At a Glance of IFIC Bank 09T-5 Rate of FDR 12T-6 Monthly Income Scheme 13T-7 Education Saving Scheme 14T-8 Various Loans at a glance 18T-9 Credit Rating of IFIC Bank Ltd 28T-10 CAMELS Rating of Banks in Bangladesh 28T-11 Recent Performance of Deposit and Loan Management 30T-12 SWOT Analysis of IFIC Bank Ltd 32

CHAPTER ONE

Introduction

1. 1 Background of the study

Banking system occupies an important place in a nation’s economy. It plays a pivotal

role in the economic development of a country and forms the core of the money

market in an advanced country. Early banking system served mainly as depositors for

funds, while the more modern system has considered the supplying of credit their main

purpose. A Bank not only accepts money or deposits, but it also lends money and

creates its own credit, Crowther has defined a bank as “a dealer in debts- his own and

of other people.” Sawyers states, “We can define a bank as an institution whose debts

(bank deposits) are widely accepted in settlement of other peoples debts to each other”

The commercial bank has one important characteristic that distinguishes it from all

other kinds of financial institutions. This important distinction is that it alone can hold

deposits to be drawn upon by check; it has the power to create and destroy money,

within limits, through the use of loans and demand deposits. Commercial banks lend

money by creating demand deposits and retire loans by canceling demand deposits.

International Finance Investment and Commerce Bank Limited (IFIC Bank)

is a banking company incorporated in the People’s Republic of Bangladesh with

limited liability. It was set up at the instance of the Government in 1976 as a joint

venture between the Government of Bangladesh and sponsors in the private sector

with the objective of working as a finance company within the country. To fulfill the

requirement of B.B.A program, this report has been made on the basis of Deposit

Management and Loan Management of IFIC Bank.

1. 2 Objectives of the Study

There are some objectives for making this report, those are as follows:

To fulfill the requirement of BBA program.

To asses the different Deposits and Loan policies of IFIC Bank Limited.

To identify and suggest the scopes of improvement in Deposit

Management and Loan Management of IFIC Bank Limited.

1. 3 Scope of the Study

The study has focused on the following areas of IFIC Bank Limited:

Procedure for different Deposits and Credit facilities.

Loan and Credit appraisal system of this Bank.

Management efficiency in Deposits, Loan and Advances.

Organization structures and responsibilities of management etc.

Each of the above areas would be critically analyzed in order to determine the

efficiency of Deposits and Loan Management of IFIC Bank Limited.

1. 4 Limitations of the Study

Many problems appeared in the way of conducting the study. These are as follows:

Time limitation is a big factor, which hinders the data collection process. Only

forty five days are not enough to study deeply all types of deposit, loans and

advances and their management process.

The distance of head office of IFIC Bank is so far from Dinajpur Branch.

Because of being private limited companies, IFIC Bank Limited keeps some

information restricted.

As a newcomer, there was a lack of previous experience in this concern. Many

practical matters have been written from own observation that may vary from person

to person.

CHAPTER TWO

Methodology of the Study

2. 1 Introduction

The study has been performed based on the information extracted from different sources

collected by using a specific methodology. The methods of completing the report have included

some steps which are followed by one by one.

2. 2 Selection of the Study Area

The area of the study was Dinajpur Branch of IFIC Bank. The Dinajpur Branch of IFIC

Bank was selected purposively because of easiest communication, comfortable workplace,

fully computerized accounts maintenance, well decorated and air conditioned facilities that

helped to collect the information easily. A fully operational computer network; Local Area

Network (LAN) and Wide Area Network (WAN) installation having reliable and secured

communication also helped to collect reliable data.

2. 3 Population and Sample

All the Branches of IFIC located in everywhere in Bangladesh has been taken into consideration

as population. Sample is the representative part of the population. In case of this study the

sample includes the manpower of the Dinajpur Branch of IFIC Bank Limited:

Name of the post Number of Sample

First Assistant of Vice President 01Senior Manager 01Manager 01

Senior officer, Librarian/Medical officer, Security officer 10

Class-׀׀׀ 05Class-׀v 05Clients 20Grand Total 43

Table: T-1: Sample Size

2. 4 Sampling Technique

Here non-probability judgmental sampling has been used that attempts to obtain a sample of

convenient element based on the judgment.

2. 5 Data collection

In order to carry out this study, two sources of data have been used.

a) Primary data b) Secondary data

Primary Sources

Respective officer(s) and employee(s) of

IFIC Bank were interviewed by an

unstructured questionnaire.

Direct communication with the clients

Exposure on different desk of the bank

File study etc

Expert opinion: Head of the Department comprised

of Deputy General Manager, Manger and Assistant Manager.

Official records etc.

Secondary SourcesAnnual Report of IFIC Bank Ltd. Periodicals published by the Bangladesh BankDifferent publications regarding banking

functions, deposits, foreign exchange operation, deposit and credit policies of IFIC Bank Limited.

JournalBanking related text books, Newspapers, and

Manuals.Research papers, training materials Internet

Table: T-2: Primary and Secondary Sources of Data Collection

2. 6 Statistical Tools Used

Tabular presentation

Techniques of Percentage (In ratio)

CAMELS rating technique etc.

2. 7 Study Timeline and Cost

Date Activities

April 29, 2010 Joining as internee at Dinajpur Branch, IFIC Bank Limited

May 13, 2010 Selection of the topic

May 14 to May 25, 2010 Collecting the secondary data from different sources

June 02-June 23, 2010 Analyzing the secondary data

June 24, 2010 Preparing a questionnaire to collect primary data

June 24 to June 30, 2010 Collecting primary data

July 01-July 30, 2010 Analyzing both primary and secondary data to prepare the report

Aug 06, 2010 Completion of the report

Aug 08, 2010 Submission of the draft report

Aug 08 to Aug 16, 2010 Correction of the report

August 17,2010 Submission of the report

Table: T-3: Study Timeline

*Cost of visiting the Bank, stationery cost etc is little in amount and are not

mentionable here.

CHAPTER THREE

Overview of the IFIC Bank Limited

3. 1 Banks in our country

There are about 48 scheduled banks in our country. The central Bank of our country

is Bangladesh Bank, established in 1971. There are four nationalized commercial

banks namely Agrani, Janata, Rupali, and Sonali Bank. Nine (9) foreign banks

operate their banking activities in our country. Now there are four specialized banks

in our country. The number of private commercial banks in our country is thirty (30).

IFIC Bank Limited is one of the leading commercial bank in our country.

3. 2 IFIC Bank Limited

International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking

company incorporated in the People’s Republic of Bangladesh with limited liability. It was

set up at the instance of the Government in 1976 as a joint venture between the Government

of Bangladesh and sponsors in the private sector with the objective of working as a finance

company within the country and setting up joint venture banks/financial institutions abroad.

The Government of the People’s Republic of Bangladesh now holds 33% of the share capital

of the Bank. Leading industrialists of the country having vast experience in the field of trade

and commerce own 35% of the share capital and the rest is held by the general public.

3. 3 Milestones in the Development of IFIC BANK

a) 1976-Established as an Investment & Finance Company under arrangement of joint

venture with the govt. of Bangladesh.

b) 1980-Commenced operation in Foreign Exchange Business in a limited scale

c) 1982-Obtained permission from the Govt. to operate as a commercial bank

d) 1983-Set up a its first overseas joint venture (Bank of Maldives Limited) in the

Republic of Maldives ( IFIC’s share in Bank of Maldives Limited was subsequently

sold to Maldives Govt. in 1992)

e) 1985-Commenced operation as a full-fledged commercial bank in Bangladesh

f) 1987-Set up a joint venture Exchange Company in the Sultanate of Oman, titled

Oman Bangladesh Exchange Company (subsequently renamed as Oman International

Exchange, LLC).

g) 1993- Set up its first overseas branch in Pakistan at Karachi.

h) 1993-Set up its second overseas branch in Pakistan at Lahore

i) 1994-Set up its first joint venture in Nepal for banking operation, titled Nepal

Bangladesh Bank Ltd.

j) 1999-Set up its second joint venture in Nepal for lease financing, titled Nepal

Bangladesh Finance & leasing Co. Ltd. (which was merged with NBBL in 2007)

k) 2003-Overseas Branches in Pakistan amalgamated with NDLC, to establish a joint

venture bank: NDLC-IFIC Bank Ltd., subsequently renamed as NIB Bank Ltd

l) 2005-Acquired MISYS solution for real time on-line banking application.

m) 2006-Corporate Branding introduced, Visa Principal and Plus (Issuer and Require)

Program Participant Membership obtained

n) 2008- Observing 25th Anniversary of Customer Satisfaction

o) 2009-64 Branches offering Real Time On-line banking facility.

p) 2010-All Branches of IFIC Bank is operating under state-of-art world class Real Time

On-line Banking Solution.

3. 4 Objective of the Bank

o To enhance savings tendency of the people by offering attractive and lucrative new savings scheme.

o To encourage and motivate new entrepreneur to establish industries and business in line with development of the national economy.

3. 5 Mission of the Bank

The mission of IFIC Bank is to provide service to clients with the help of a skilled

and dedicated workforce whose creative talents, innovative actions and competitive

edge make position unique in giving quality service to all institutions.

3. 6 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. Besides, there is an Audit Committee in the Board to

oversee compliance of major regulatory and operational issues. 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 is

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.

(Figure: F-1)

Organizational Structure & Responsibilities (Deposits and Loan perspective):Here the Organizational Structure & Responsibilities of IFIC Bank can be depicted as follows

at a glance:

Figure: F-1: Organizational Structure of IFIC Bank Limited

Board

Managing Director

Deputy Managing Director Internal Audit ( OtherDirect Report)

Head of Credit Risk Management

Head ofRecovery

Head of Corporate/ Commercial Banking

Credit Executives

CreditApproval

Credit Administration

Credit ManagerConsumer Finance

Credit AnalystTeam

Manager CreditADMN.

Consumer Finance

Disbursement Team

Custodian Team

Monitoring Team

Compliance Team

Corporate BankingExecutives

Relationship ManagerConsumer Finance

Relationship ManagerTeam

Business / ProductDevelopment

3. 7 Human Resources Development (HRD)

Human Resources Development is focused on recruitment and in-house training for both on

the job and off the job Bank staff members through the Bank’s Academy. IFIC Bank

Academy the oldest institution in the private sector was conceived of as an in-house training

center to take care of the training needs of the Bank internally. Academy is fully equipped

with a professional library, modern training aids and professional faculty. Library has about

4941 books on banking, economics, accounting, management, marketing and other related

subjects. Main training activities consist of in-depth foundation programmes for entry level

Management Trainees. Specialized training programmes in the areas like general banking,

advance, foreign exchange, marketing and accounts etc. are also organized by the Academy

depending on need. During its 23 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.

3. 8 Activities AT A Glance

The IFIC Bank engages in wide range of activities from small scale lending to large

industrial project financing. It involves export and import financing as well as many

other services, its range of activities at a glance are as follows:

Loans and dvances Trade finance Deposits Other services

Project loan

Working capital

loan

Cash credit

Overdraft

Packing credit &

trust receipt

House building

finance

Import finance

Guarantee and so on

Export

Import

Current account

Savings account

Short term deposits

Fixed deposit

Bearer certificate of

deposit

Non resident foreign

currency deposit account

Resident foreign

currency account

Special saving scheme

Safe custody (locker)

Travelers Cheque

Demand draft

Pay order

Telegraphic transfer

Selling and buying

foreign currency

Standing instruction

Lease financing

Table: T-4: Activities At A Glance

CHAPTER FOURResults and Discussion

Deposit Management of IFIC Bank Limited

4. 1 Deposit Management

The managerial process involved in collecting, organizing, maintaining and

utilization of the deposit schemes/deposits fund is called Deposits Management. The

Deposits Management of IFIC Bank Limited involves the following aspects.

Providing various Deposit Accounts & Schemes

Collecting Procedures of Deposits Fund

Customer Service for Depositors

Utilization of the Deposits Fund

Performance Appraisal of Deposits Management

4. 2 Objectives of Deposit Management

IFIC Bank Limited gives special importance on savings. The Objectives and principles of the

Savings Policy of the Bank are:

To encourage people to save for self and for the country as a whole.

To develop a sustained savings’ habit among the people.

4. 3 Deposit Accounts served by IFIC Bank limited

This part covers only following types of accounts-

1. Current Deposit Account

2. Savings Deposit Account

3. Fixed Deposits Receivers (FDR) Accounts

Short Term Deposit (STD)

Account, Term Deposits.

4.3.1 Current Deposit Account

General Procedures/Characteristics:

a. CD accounts are unproductive in nature as banks loanable fund is concerned. Sufficient fund has to be kept in liquid form, as current deposits are demand liability.

b. Thus huge portion of this fund become non-performing. For this reason banks do not pay any interest to CD Accountholders.

c. There is no restriction on the number and the amount of withdrawals from a current account.

d. Service charges are recovered form the depositors since the bank make payments and collect the bills, drafts, cheques, for any number of times, daily.

e. In practice of IFIC Bank, a minimum balance of Tk. 2000 has to be maintained.

4.3.2 Savings deposit Account

General Characteristics:

As per BB instruction 88% of SB deposits are treated as time liability and 12% of it

as demand liability.

a. Interest is paid on this account. IFIC Bank offers a reasonable rate of 5%

of interest for SB A/C.

b. Generally, banks require a 7-day prior notice if the total amount of one or

more withdrawals on any date exceeds 25% of the balance of the account

unless is given, but in IFIC Bank there is no restriction about drawing

money form savings account.

c. Minimum Balance of Tk. 2000 is to be maintained.

d. Interest will be counted on the average balance of month.

e. Service charges:

Balance up to 5,000/- free for charge

Balance 5,001/- up to 25000/- charges of TK. 100/-

Balance 25,001/- and above charges of TK. 300/-

4.3.3 FDR Section

This branch maintains a separate section for maintaining fixed Deposit. FDR is an

important factor for the bank and volume of FDR determines the investment base of

the Bank. This section deal with the customers of short-term deposit (STD), term

deposit (TD) A/C.

4.3.3.1 Short term deposit Account (STD)


Customers deposit money for a shorter period of time.

The interest offered for STD is less than that of savings deposit

In practice. IFIC Bank offers 2-4% rate interest for STD account.

Volume of STD A/C is generally high.

Frequent withdrawal is discouraged and requires prior notice.

.

4.3.3.2 Term Deposits


Popularly, it is known as Fixed Deposit Receipt (FDR), Term deposits are made with the bank for a fixed period of time.

The banks need not to maintain cash reserves against these deposits and therefore, the bank offers high rate of interest on such deposits.

In IFIC Bank, fixed deposit account is opened for only 3, 6 & 12 months. Types of FDR

maintained by this branch along with their respective interest rate.

Periods Proposed Rate Per Annum

Less Than 1 Crore Above 1 crore But Less Than 5 crore

Above 5 Crore

3 months8.25%

8.5 % 9.00%

6 months 8.25% 8.5% 9.00%

12 months 8.00% 8.25% 8.75%

Table: T-5: Rate of FDR

4. 4 Deposit schemes

The IFIC Bank has already introduced 4 (four) yielding deposit scheme, which have

been highly acclaimed by the depositors. These are.

1. Monthly Income Scheme (MIS)

2. Pension Saving Scheme (PSS)

3. Durable Return Deposit Scheme (DRDS)

4. Three Years Deposit Plus (3YDP)

5. Education Savings Schemes (ESS)

4.4.1 Monthly Income Scheme

Under Monthly Income Scheme any individual can keep the deposit in taka 50,000

or in multiples thereof. There is no upper limit.

Deposit Tk. 50,000 Tk. 1,00,000 Tk. 2,00,000 Tk. 5,00,000

Benefit each

month (for 3

years)

Tk. 350 Tk. 700 Tk. 1,400 Tk. 3,500

Table: T-6: Monthly Income Scheme

Benefits negotiable for deposit of Tk. 10,00,000 or above. Payment of benefit will

start after 30 days of deposit. In case of extreme emergency if any individual make

premature enactment, interest will be paid at savings rates. Depositors can also avail

loan up to 90% of the deposit. Nomination is also acceptable. No photograph or

introduction is required for opening this account. Bangladeshis living abroad may

also open this account for providing fixed amount of income to their dependent/

families in Bangladesh.

4.4.2 Pension Saving Scheme


a. Interest paid on this account 9.50% and tenure is 3 or 5 years.

b. A person of 18 years of age and above having a sound mind will be eligible to open

an account in his / her own name.

c. PSS account can not be opened in the name of minor, in joint names, or in name of any institution.

d. An account can be transferred from one branch to another branch of the bank by a written

application of the account holder. A fee of TK. 200/- is payable as bank’s service charge.

4.4.3 Education Saving Scheme

These days providing a good education for children are really costly. To ensure

bearing such costly education expenses of children every body need to start savings

early. The scheme provides opportunity for meeting educational expenses of children

at school, college or university.

Keep deposit of Tk. 25,000 or any multiple thereof for 5 years. There is no upper

limit. Children can maintain their educational cost on monthly basis for subsequent

five years or lump sum at maturity.

Term Deposit Monthly benefit For 5 years

or lump sum payment

5 Years Tk. 25,000 Tk. 980 Tk. 44,000

5 Years Tk. 50,000 Tk. 1,960 Tk. 88,000

Table: T-7: Education Saving Scheme

Loan can allowed up to 85% of deposits. In case of extreme emergency if any one

make premature enactment, interest will be paid at saving rate. The student in the

merit list will be awarded special stipend/ gift.

4.4.4 Double Return Deposit Scheme

Minimum deposit of this is 25,000 or its multiples. Term of this deposit is 8 and ½

years. An order instrument mentioning the amount payable after maturity shall be

issued favoring the depositors. However, if required, the instrument may be

discounted at the counter of issuing Bank at 8.50% interest for the remaining period

of maturity provided further that under no circumstances, the depositor shall get less

than the deposit at the initial period..

4.4.5 Three Years Deposit Plus

Minimum deposit of this is 50,000 or its multiples. Term of this deposit is 3 years.

An order instrument mentioning the amount payable after maturity shall be issued

favoring the depositors. The instrument shall not be enchased before maturity.

However, if required, the instrument may be discounted at the counter of issuing

Bank at 8.50% interest for the remaining period of maturity provided further that

under no circumstances, the depositor shall get less than the deposit at the initial

period.

4. 5 Utilization of Deposits Fund

Basically like others Bank IFIC also carry on their business with the deposits fund.

For maintaining & utilizing the deposits fund IFIC Bank Treasury Division deals

with the utilization of deposit fund.

4.5.1 IFIC Bank Treasury Division

The Treasury Division of IFIC Bank is engaged with Cash Management, Liquidity Planning

and Liquidity Protection. It is also conscious to protect all the bank’s Assets and Profits

against loss due to domestic as well as global financial realities, particularly Interest and

Exchange Rate fluctuations. The Treasury Department is also regarded as a Profit Center,

which generates income by trading instruments in the Financial Market. The Treasury is

constituted with well setup Front Office, Mid Office and Back Office.

4.5.2 Major Functions of Treasury

Fund Management

Management of Statutory Requirement

Investment

Trading of F Ex. & Money Market Instruments

Asset Liability Management

Risk Management

IFIC Treasury has four different desks, which are specialized in their own area to provide

best services with respect to pricing, best possible solution for customer requirement and

market information. The different Treasury Desks are as follows:

Foreign Exchange Desk

IFIC Foreign Exchange Desk is one of the leading market maker in spot, swaps, and forward

transactions in inter-bank market. The Bank has good sources of Foreign Currency through

its own export customers, Non-residence Remittances and local & multinational corporate

houses remittances/exports. The Treasury is connected to the International Market through

on-line Dealing Platforms of different international banks and controls the foreign deposit

funds.

Money Market Desk

Money market dealers arrange short and medium term deposit funds at most economical

terms which are required by the bank aside from customer deposit mobilization efforts. In

stress liquidity condition the desk always manages sufficient fund to provide business needs.

Investment Desk

Investment desk in Treasury Front Office operates within the policy frame approved by the

Board of Directors of the Bank. Deposit fund invested in different securities both for

maintenance of SLR & income generating activities. The philosophy is to manage and

maximize income within certain parameters and limits.

Asset Liability Management Desk

Asset Liability Management is one of the major functions of IFIC Bank Treasury. Objective

of the desk is to ensure efficient allocation of deposit and other fund within an acceptable,

measurable and defined risk structure.

4. 6 Customer Services for the depositors

The IFIC Bank ensures better customer services. IFIC Bank has the following

arrangement of remittance within and outside the country:

(a) Pay order

(b) Demand draft

(c) Telegraphic transfer etc.

Loan Management of IFIC Bank Limited

4. 7 Loan Management

The word “Loan’’ is directly related with “Credit” in Banking activities. The word

credit comes from the Latin word “Credo” meaning “I believe”. It is a lender’s trust in a

person’s/ firm’s/ or company’s ability or potential ability and intention to repay. In other

words, credit/loan is the ability to command goods or services of another in return for

promise to pay such goods or services at some specified time in the future. For a bank, it is

the main source of profit and on the other hand, the wrong use of credit would bring disaster

not only for the bank but also for the economy as a whole. Credit management is a dynamic

field where a certain standard of long-range planning is needed to allocate the fund in

diverse field and to minimize the risk and maximizing the return on the invested fund. The

overall success in loan and credit management depends on the followings:

The banks credit policy,

Portfolio of credit,

Monitoring,

Supervision and follow-up of the loans and advances

4. 8 The objective of the Loan management

The objective of the credit management is to maximize the performing asset and the minimization of the non-performing asset as well as ensuring the optimal point of loan and advance and their efficient management.

4. 9 Loan Policy of IFIC Bank Limited

One of the most important ways, a bank can make sure that its loan meet organizational and

regulatory standards and they are profitable is to establish a loan policy. Such a policy gives

loan management a specific guideline in making individual loans decisions and in shaping the

bank’s overall loan portfolio In the feature, credit principles includes the general guidelines

of providing credit by branch manager or credit officer.

In IFIC Bank Limited they follow the following guideline while giving loan and advance to

the client.

Credit advancement shall focus on the development and enhancement of customer

relationship.

All credit extension must comply with the requirements of Bank’s Memorandum and

Article of Association, Banking Company’s Act, Bangladesh Bank’s instructions,

other rules and regulation as amended from time to time.

Loans and advances shall normally be financed from customer’s deposit and not out

of temporary funds or borrowing from other banks.

The bank shall provide suitable credit services for the markets in which it operates.

It should be provided to those customers who can make best use of them.

The conduct and administration of the loan portfolio should contribute with in defined

risk limitation for achievement of profitable growth and superior return on bank

capital.

Interest rate of various lending categories will depend on the level of risk and types of

security offered.

4. 10 Various Types of Loans, Advances and Investment

IFIC Bank Limited generally gives short-term fund to various sector of the country

like industrial loan, agricultural loan, consumer credit and so on. Short-term loan is

generally payable on demand or at short notice.In practice however banks allow

midterm and also some long-term loan. Bank's credit creates deposit in the country.

Loan on the basis of security:

On the basis of the security bank credit is of two types:

Clean or unsecured credit

Secured credit

Clean credit: These are the advances of the bank, \\'hich are disbursed based on the

personal security of the borrower. Such advances are not made to the ordinary customer

of the bank, these types of credit are given to the valued customer who has a good credit

standing.Secured credit: In case of the secured advances the bank has recourse to the security in

addition to the personal security of the borrower. It means that the borrower is also liable for

any shortfall that may arise after the sale proceeds of the security.

4. 11 Loans At a Glance

Sector wise loans provided by IFIC Bank Limited are discussed briefly as follows:

Types of Loans Terms and conditions

Easy Loan (Personal

Secured)

Loan Size: Depend on value of security. Tenure: 12 months as SOD, 36 months as

loan General / Term loan. Rate of interest: 2% above that the FDR

but not less than 10.50%. 14.50% against PSS or other financial obligation.

Consumer Durable

Loan

Loan Size: Max. 1.00 lac. DER: 80:20 Tenure: Min. 12-36 months DBR: 33% Rate of interest: 16.50%

Porua Loan

(Education)

Loan Size: Max. 3.00 lac without security, Max. 8.00 lac with security.

DER: 70:30 Tenure: Min. 12-48 months DBR: 35% Rate of interest: 16.50%

Thikana Loan (House

Building)

Loan Size: Max. 75.00 lac DER: 70:30 Tenure: Max. 15 years DBR: 35% Rate of interest: 15.00%

Pheshajeebi Loan Loan Size: Max. 5.00 lac without security, Max 10.00 lac with security.

DER: 60:40 Tenure: Min 12 months, Max 48 months DBR: 33% Rate of interest: 16.50%

Auto Loan Loan Size: Max. 20.00 lac DER: 70:30 Tenure: Min 12 months, Max 60 months DBR: 35% Rate of interest: 15.50%

Festival Loan Loan Size: Max. 0.50 lac Tenure: Min.& Max. 12 minths DBR: 35% Rate of interest: 16.50%

Any Purpose Loan Loan Size: Max. 3.00 lac. Tenure: Min 12 months, Max 36

months DBR: 35% Rate of interest: 16.50%

Marriage Loan Loan Size: Max. 3.00 lac Tenure: Min 12 months, Max 36


CNG Conversion Loan Loan Size: Max 1.00 lac Tenure: Min 12 months, Max 36


Home Renovation /

Interior Decoration

Loan

Loan Size: Max. 3.00 lac Tenure: Min 12 months, Max 36


Medical Loan Loan Size: Max. 3.00 lac Tenure: Min 12 months, Max 36


Holiday Loan Loan Size: Max. 3.00 lac Tenure: Min 12 months, Max 36


Loans on Small & Medium Enterprise

There are 15 (Fifteen) products under Small & Medium Enterprise. Which are follows as under:


Easy Commercial Loan Loan Size: Depend on the value of security.

Tenure: 12 months Nature: OD/ Loan General. Rate of interest: 2% above that the FDR

& other financial obligation but not less than 10.50%.

Retailer’s Loan Loan Size: Max. 2.00 lac.

Tenure: Max. 24 months for TK. 1.00 lac, Max. 30 months for TK. 1.50 lac, Max. 36 months for above TK. 1.50 lac.

Rate of interest: 16.00%

Transport Loan Loan Size: Max. TK. 50.00 lac. Tenure: Max. 48 months. DBR: 60% DER: 60:40 Nature: Term Loan Rate of interest: 15.50% Legal Mortgage required.

Commercial House Building Loan

Loan Size: Max. TK. 50.00 lac. Tenure: Max. 60 months. DBR: 60% DER: 70:30 Nature: Term Loan Rate of interest: 15.00% Legal Mortgage required

Possession Right Loan Loan Size: Max. TK. 5.00 lac. Tenure: Max. 36 months. DBR: 50% DER: 50:50 Nature: Term Loan. Rate of interest: 16.00%

Contractor’s Loan Loan Size: Max. TK. 50.00 lac. Tenure: Max 12 months. DER: 50:50 Nature: SOD Rate of interest: 15.50% Legal Mortgage required

Bidder’s Loan Loan Size: Max. TK. 50.00 lac. Tenure: Max 12 months. Nature: Loan Gen. (Revolving) Rate of interest: 15.50%

Working Capital Loan Loan Size: Max. TK. 50.00 lac. Tenure: Max 12 months. Nature: Cash Credit. Rate of interest: 15.50%

Project Loan Loan Size: Max. TK. 50.00 lac. Tenure: Max. 60 months. DER: 70:30 Rate of interest: 15.50%.

Bank Guarantee Loan Size: Max. TK. 50.00 lac. Tenure: As required by borrower. Rate of interest: As per prescribed rate. DER / Margin: Banker customer

relationship.

Loan Against Imported Merchandise (LIM)

Loan Size: Max. TK. 50.00 lac. Tenure: Nature of goods and as per

Bangladesh Bank guideline. Rate of interest: 15.50%. DER / Margin: Banker customer

relationship

Loan Against Trust Receipt (LTR)

Loan Size: Max. TK. 50.00 lac. Tenure: Nature of goods and as per

Bangladesh Bank guideline. Rate of interest: 15.50%. DER / Margin: Banker customer

relationship.

Letter of Credit (L/C) Loan Size: Max. TK. 50.00 lac. Tenure: As required by borrower. Rate of interest: As per prescribed rate. DER / Margin: Banker customer

relationship.

Muldhon Loan Loan Size: Min. TK.2.00 lac, Max. TK.50.00 lac.

Tenure: Max.36 months for TK. 5.00 lac, Max. 60 months for above TK. . 5.00 lac.

Nature: Term Loan. Rate of interest: 16.50% without

collateral security, 15.50% with collateral security.

Woman Entrepreneurs (Prottashaya):

Loan Size: Min. TK.0.50 lac, Max. TK.3.00 lac.

Tenure: Max. 18 months for TK. 0.50 lac, Max. 24 months for TK. 1.00 lac & Max. 36 months for loan up to TK. 3.00 lac.

Nature: Term Loan. Rate of interest: 15.00%

Loans on Agriculture Sector:

There are 5 (Five) products under Agriculture Sector. Which are follows as under:


Krishi Saranjam Rin Loan Size: Min. TK.0.50 lac, Max. TK.10.00 lac.

Tenure: Min.12 months, Max. 36 months. Nature: Lease Finance. Rate of interest: 12.00% Collateral Security: Preferable but not

mandatory.

Shech Saranjam Rin Loan Size: Min. TK.0.20 lac, Max. TK.10.00 lac.

Tenure: Min.12 months, Max. 36 months up to loan for TK. 3.00 lac, Max. 60 months above 3.00 lac.

Nature: Term Loan. Rate of interest: 12.00% Collateral Security: Above 1.00 lac

required collateral security. DER: 70:30

Poshupokhi &

Matshokhamar Rin

Loan Size: Min. TK.0.20 lac, Max. TK.3.00 lac.

Tenure: 12 months. Nature: Term Loan. Rate of interest: 12.00% Collateral Security: Above 1.00 lac


Phalphosali Rin Loan Size: Min. TK.0.20 lac, Max. TK.3.00 lac.

Tenure: 12 months. Nature: Term Loan. Rate of interest: 12.00% Collateral Security: Above 1.00 lac


Phasali Rin Loan Size: Min. TK.0.20 lac, Max. TK.1.00 lac.

Tenure: Depending on nature crops cycle, Min. 6 months, Max. 12 months.

Nature: Short Term Loan / Loan Gen. Rate of interest: 12.00% Collateral Security: Personal guarantee of

spouse/parent/other family member

acceptable to the bank.

Table: T-8: Various Loans At A Glance

4. 12 Loan Management Practice of IFIC Bank and guidelines of Bangladesh Bank

Comparing IFIC Bank’s current loan management system with Bangladesh Bank’s guideline

we see that IFIC Bank lacks some of the best practices in banking industry which can be

generated in the following way-

Loan and Credit Policies/ Lending Guidelines: IFIC Bank Limited has no written credit policy though it follows some policy. As there is no written credit policy, branch managers sometimes get confused whether to go with a project or not.IFIC Bank Limited should have a lending guideline available in every branch so that credit officers can take quick decision whether to accept or reject a project. The lending guideline should include the following-

• Industry or business segment focus.• Types of loan facilities• Details of single borrower/ group limit• Lending caps• Discouraged business type• Loan facility Parameters• Cross Border risk

Credit Assessment & Risk Grading: Though credit is properly assessed in IFIC

Bank Limited, but there is no risk grading system applied here. It should adopt a

credit risk grading system to ensure account management, structure and pricing are

commensurate with the risk involved.

Approval Authority of the loan: In Bangladesh Bank’s guideline it is written that

“Approval authority should be delegated to individual executives and not to

committees to ensure accountability in approval process”. But in IFIC Bank Limited

we see that every credit goes to the board via credit committee. As a result, wastage of

time occurs and no one is held accountable for a bad loan.

Segregation of Duties: According to Bangladesh Bank Guideline Banks should aim

to segregate the following lending functions to improve the knowledge levels and

expertise in each department:

Credit Approval/ Risk Management

Relationship Management/ Marketing

Credit Administration

In small branches of IFIC Bank Limited only single loan officer do all the jobs like loan marketing, risk assessing and credit administration.

Internal Audit: IFIC Bank Limited has a segregated internal audit/ control

department charged with conducting audit of all departments as suggested by

Bangladesh bank guideline.

Preferred Organizational Structure: Currently IFIC Bank Limited does not follow

the preferred management structure as suggested by Bangladesh Bank guideline. The

key feature in the preferred management structure is the segregation of Marketing/

Relationship function from approval/Risk management/ Administration function.

Approval process: According to Bangladesh Bank’s best practice guideline, ‘the

recommending or approving executives should take responsibility for and be held

accountable for their recommendations and approval’. The recommended delegated

approval authority levels are as follows:

Head of Credit/CRM Executives__________Up to 15% of capital

Managing Director/ CEO ______________ Up to 25% of capital

EC/ Board _________________________ All exceed 25% of capital

But in IFIC Bank Limited we see that every credit proposal goes to Executive

committee i.e. board.

Loan Approval Process of IFIC Bank Limited:

Head of Corporate (Marketing)

Head of Credit / CRM Team Approved/Declined as per delegation

Deputy Managing Director Approved/Declined as per delegation

Managing Director Approved/Declined as per delegation

Board of Directors Approved/Declined

Relationship Manager (RM)Assessment of credit application and

preparing credit proposal

Credit Committee

Recommended to

Forward to

Beyond capacity recommended to



Figure: F-2: Loan Approval Process of IFIC Bank Limited

Credit and Loan Administration: The Bangladesh Bank guidelines suggest that

Credit administration be strictly segregated from relationship management/

marketing. As a result the possibility of controls being compromised or issues not

being highlighted at the appropriate level can be avoided. The credit administration

has the following functions-

• Disbursement

• Custodial duties

• Compliance requirement

In IFIC Bank Limited credit officers under supervision of Branch Credit In-charge or

Manager also carry out all the three functions of credit administration. But Credit

Marketing and administration is yet to be segregated.

Loan and Credit Monitoring: To minimize credit losses, monitoring procedures and

systems should be in place that provides an early indication of the deteriorating

financial health of a borrower. Early identification, prompt reporting and proactive

management of Early Alert Accounts are prime credit responsibilities of all

relationship Managers. An early Alert Account is one that has risks or potential

weakness of a material nature requiring monitoring, supervision or close attention by

management.

In IFIC Bank Limited credit monitoring is also done by credit In charge or branch

managers. As a result Early Alert Accounts do not get that much attention as needed.

Loan and Credit Recovery: According to Bangladesh Bank guideline the recovery

unit (RU) of CRM should directly manage accounts with sustained deterioration.

Credit Risk Management (CRM): Oversight of the bank’s credit policies,

procedures and controls relating to all credit risks arising from

corporate/commercial/institutional banking, personal banking, & treasury operations

is called credit risk. Credit Risk management is handled by Credit approval Authority,

Internal Auditors, Relationship Management/Marketing (RM), Credit Administration

Department etc.

Incentive Program for loan: The BBk guideline also encourages Banks to introduce

incentive programs for the Recovery Unit Account Managers to bring down the NON

Performing Loans (NPLs) IFIC Bank Limited currently has no incentive program as it

does not have any Recovery Unit.

4. 13 Credit Rating of IFIC Bank Limited

Credit Rating Information and Services Limited (CRISL) has assigned A

(pronounced as single A) rating in the long term and ST - 2 in the short term to

International Finance Investment and Commerce (IFIC) Bank Limited for the year

2010.

CREDIT RATING ON IFIC BANK LIMITED

Long Term Short Term

Surveillance Rating 2010 A ST - 2

Entity Rating – 2009 A ST - 3

Outlook Stable

Date of Rating June 29, 2010

Table: T-9: Credit rating of IFIC Bank Limited

4.13.1 CAMELS Rating of Banks - Bangladesh

Capital, Asset, Management, Earning, Liquidity and Sensitivity (CAMELS) Rating of different commercial banks in 2010 were done recently by the regulatory authority. The serial is made on the basis of performance of 2009and local banks first, then foreign banks.

Rank Bank Name

Strong or A-class banks

Prime Bank Ltd., Shahjalal Islami Bank Limited,

Commercial Bank of Ceylon, State Bank of India, Standard

Chartered Bank, Citi N.A

Satisfactory or B-class

banks

Standard Bank Limited, Exim Bank Ltd., Mercantile Bank,

NCC Bank, BASIC Bank, Pubali Bank, Southeast Bank,

Mutual Trust Bank Limited, Dutch-Bangla Bank, Premier

Bank, The Trust Bank, Bank Asia, Jamuna Bank, BRAC

Bank, One Bank, Dhaka Bank, Eastern Bank, Islami Bank

Bangladesh Ltd., Uttara Bank, National Bank, The City

Bank, Social Investment Bank, Habib Bank, National Bank

of Pakistan, Bank Alfalah, Woori Bank, HSBC

Fair or C-class banks

First Security Bank, IFIC Bank, AB Bank, United

Commercial Bank, Al-Arafah Islami Bank, Bangladesh

Shilpa Rin Sangstha, Agrani Bank Ltd, Rupali Bank Ltd.

Marginal or D-class banksSonali Bank Ltd, Janata Bank Ltd, Bangladesh Shilpa Bank

Bangladesh Krishi Bank, Rajshahi Krishi Unnyan Bank

Unsatisfactory or E-class

banksBangladesh Commerce Bank, Oriental Bank Ltd

Table: T-10: CAMELS Rating of Banks - Bangladesh

4. 14 Deposits and Loan Management in Abroad: Joint Ventures Abroad

Bank of Maldives Limited

IFIC is the first among the banks in the private sector to have operations of deposits and loans

management in abroad. In 1983, the Bank set up a joint venture bank in Maldives known as

'Bank of Maldives Limited' (BML) at the request of the Government of the Republic of

Maldives. This is the only national bank in that country having branches throughout that

country. IFIC Bank managed the affairs of BML from 1983 to 1992. IFIC Bank sold its

shares in 1992 to the Government of the Republic of Maldives and handed over the

Management of BML to Maldives Government.

NIB Bank Ltd., Pakistan:

IFIC Bank had two branches in Pakistan, one in Karachi and the other in Lahore. 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.

Nepal Bangladesh Bank Ltd. (NB 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 Limited (NB Finance):

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)

Oman International Exchange LLC (OIE), a joint venture between IFIC Bank 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.

4. 15 Recent Performance of Deposit and Loan Section of IFIC Bank

Accounts Year-2010,March Year-2009, December

Total Loans and Advances 39,222,528,529 Taka 37,793,886,723 Taka

Total Deposits and other

Accounts47,592,949,475 Taka 50,017,960,808 Taka

Table: T-11: Recent Performance of Deposit and Loan Management

From the above table it is clear that the recent performance of Loan Management is more

efficient than Deposits Management of this bank.

Chapter FiveSummary of the Findings and Discussions

The following points came out while analyzing the findings of this study:

1. Total deposits amount is decreased in 2009 compared to 2008 due to economic

regression and inefficiency of deposit management.

2. IFIC Bank Limited has Real time online banking activities at all the Branches.

3. IFIC Bank Limited has the website, which has not been updated and it is less

informative.

4. IFIC Bank Limited has poor ATM Card/Credit card facility. Five Booths are located

in Dhaka and Chittagong city. This discourages the depositors.

5. Banking operation in abroad (in Maldives, Nepal, Oman etc.) is satisfactory for IFIC

Bank Limited than that of others.

6. IFIC Bank Limited has 65 Branches in Bangladesh. More branches are needed in

competitive market. It has some proposed branches which going to be established as

early as possible.

7. Deviation with income statement of IFIC Bank Limited was lower than that of the

contestants, which shows low risk of operating results.

8. Investments and liabilities of IFIC Bank Limited appeared off-putting.. Investment in

loans and advances was the highest deviating factor along with borrowings, total

liabilities, and total equity.

9. Due to unavailability of local capital market, IFIC Bank Limited has been suffering

from investing idle fund in liquid venture. The largest source of fund was deposit

followed by a tiny portion of equity capital.

10. IFIC Bank can recruit experienced, efficient and knowledgeable work force as it

offers good working environment.

11. Lack of awareness and understanding clogged the ways of credit disbursement for

IFIC Bank Limited. Credit to total asset ratio has been the lowest for IFIC Bank

Limited compared to other generations and industry average.

12. Loan processing time and interest rate of IFIC Bank Limited are high than that of

other Bank

13. IFIC Bank Limited has performed poorly in terms of the percentage of non-

performing loans, which has increased the requirement for income cut to escalate the

amount of provision against classified loans (bad loans).

14. It has a vast year of experience since its establishment in 1976.

So, from this above discussion it is clear that IFIC Bank has some strengths and weakness. To overcome the weakness some policy guidelines should be taken.5. 1 SWOT AnalysisSWOT Analysis is an important tool for evaluating the company’s Strengths,

Weaknesses, Opportunities and Threats. The SOWT analyses of IBBL are presented

below:

S stands for StrengthW stands for WeaknessO stands for OpportunityT stands for Threat

Strength

Foreign Exchange business Overseas joint Venture ( In

Maldives, Nepal, Oman etc) Real time online Banking in

all branches Vast years of experience since

its establishment in 1976 Has a research division Sound financial strength Already achieved a goodwill

among the clients.

Weakness

Lack of well-trained human resource in some branch.

lacks aggressive advertising The procedure of credit

facility is to long compare to other banks.

Employees are not motivated in some areas.

Absence of structured marketing and credit policy

Lack of coordination among

the branches and Head Office. Poor ATM Card/Credit card

facility Website is not updated and it

is less informative.

Opportunities

Emergence of E-banking will open more scope for IFIC Bank

IFIC Bank can introduce more innovative and modern customer service.

Many branches can be open in remote location.

IFIC Bank can recruit experienced, efficient and knowledgeable work force as it offers good working environment.

Threats

The worldwide trend of mergers and acquisition in financial institutions

Frequent taka devaluation and foreign exchange rate fluctuation

Lots of new banks are coming in the scenario with new service.

Local competitors can capture huge market share by offering similar products.

Table: T-12: SWOT Analysis of IFIC Bank

Chapter Six

Conclusion and Recommendations

6. 1 Conclusion

A banker can not sleep well with bad debts in his portfolio. The failure of commercial banks

occurs mainly due to bad loans, which occurs due to inefficient management of the loans and

advances portfolio. Therefore any banks must be extremely cautious about its lending

portfolio and credit policy. So far IFIC Bank Limited has been able to manage its credit

portfolio skillfully and kept the classified loan at a very lower rate.

But all things around us are changing at an accelerating rate. Today is not like yesterday and

tomorrow will be different from today. Given the fast changing, dynamic global economy

and the increasing pressure of globalization, liberalization, consolidation and

disintermediation, it is essential that IFIC Bank Limited has a robust deposit and loan

management policies and procedures that are sensitive to these changes.

6. 2 Recommendations

To improve the Deposit and loan Management culture, IFIC Bank Limited should adopt

some of the industry best practices that are not practiced currently. These are:

ATM Card/Credit card facility should be increased not only in Dhaka and Chittagong

city but also in all over the country.

More branches should be established to compete with other commercial banks.

IFIC Bank Limited should have a clear written lending guideline that should include

Industry and Business Segment Focus, Types of deposits and loan facilities, Single

Borrower and group limit, Lending caps, Discouraged Business Types, Loan Facility

Parameters and Cross boarder Risk.

It should adopt a credit grading system and the borrowers risk grades should be

clearly stated on credit application.

Approval authority should be delegated to individual executives rather than

Executive Committee/ Board to ensure accountability. It should has the followings:

* Credit Approval / Risk Management

* Reltaionship Management / Marketing Management

* Credit Administration etc.

The organization structure should have to be changed to put in place the segregation

of the Marketing/ Relationship Management function from Approval / Deposits and

Loan Management / Administration function.

An Early Alert Account system should be introduced to have adequate monitoring,

supervision or close attention by management.( An early Alert Account is one that

has risk and potential weaknesses of a material nature)

There should be a Recovery Unit to manage directly accounts with sustained

deterioration. To encourage Recovery Unit incentive program may also introduced.

To minimize credit loan losses, monitoring procedures and systems should be in

place that provides an early indication of the deteriorating financial health of a

borrower.

Timely corrective action should be taken to address findings of any internal,

external or regulator inspection/audit.

Development of the standard of living of the limited income group by offering

consumer credit scheme should be brought.

It is needed to boost up mobilization of savings both from urban and rural areas.

Model of participatory banking should be developed.

It is needed to develop competitive, most modern scientific and social welfare

oriented banking institution on the country.

To ensure stability and sound growth while enhancing the value of shareholders

investment.

Above all the Bank should ensure a high level of transparency and ethical standards in all

operations and a congenial atmosphere which will attract competent work force. It should be

socially responsible making effective contribution to national development.

References and Bibliography

o IFIC Bank Limited, Working Manual for Deposits and other accounts, 2010

o IFIC Bank Limited, Working Manual for Loan and Advances, 2010

o IFIC Bank Limited, Annual Report, 2009

o IFIC Bank Limited (1989): Memorandum and Articles of Association

o IFIC Bank Limited: Central Account Deposits.

o Bank Book of Instructions (General Banking) – IFIC.

o Bangladesh Laws on Banks and Banking.

o Industry. Journal of Economic Policy-2009, Review, 1-18.

o Bangladesh Bank (2009). Prudential Regulations for Consumer Financing.

Ahmed, Iftekhar Uddin, Crisis of Credit Management, Ruprekha Publisher, Mirpur

Dhaka.

Credit Management (Planning, Appraisal and Supervision) edited by S.L.N Simha,

Indian Institute of Financial Management and Research.

Ministry of Finance. (2009).The Activities of Banks and Financial Institutions, 2008-

2009. Publication No. 329 EX-1400, Dhaka, Bangladesh Government Press.

Kothari, C.R. Research Methodology (Methods and Techniques) Revised edi.2nd ,

New Age International Publishers.

Ali, A., & Howlader, R. A. (2005). Banking Law and Practice. Agami Prakashoni,

Dhaka, Bangladesh

o www.bangladeshbank.org

o www.ificbank.bd.com

http://www.ificbank.bd.com/

http://www.bangladeshbank.org/

AppendixVarious questions that were used in un-structured questionnaire are mentioned below:

1. What is the background of IFIC Bank Limited?

2. Please mention some milestones of development of this Bank?

3. What are the objectives of the bank?

4. What is its mission?

5. What is the hierarchy of the organizational structure of IFIC Bank?

6. Please explain about the deposit management.

7. What are the main objectives of deposit management?

8. How many deposits account are served by IFIC Bank?

9. How many deposit Schemes offered by IFIC Bank?

10. How IFIC Bank utilize the deposited funds?

11. What is loan management?

12. For whom you provide loans?

13. Please mention some categories of loans with respective terms and conditions?

14. What is your plan to reduce bad loans?

15. What are the main problems in deposit and loan management?

16. What are the strengths of IFIC Bank?

17. What are the weaknesses of IFIC Bank?

18. What are the opportunities of IFIC Bank?

19. What are the threats of IFIC Bank?

20. What are the prospects of IFIC Bank?

21. What are the proposed branches of IFIC Bank to be established?

22. Has any plan to increase the ATM card facilities? If yes, mention please.

23. What are the present and prospected manpower of your bank?

24. Are the employees satisfied? If not, why?

25. Do you take any policy to improve the CAMELS Rate?

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